UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 2009
GP STRATEGIES CORPORATION
(Exact name of registrant as specified in its charter)
1-7234
(Commission File Number)
Delaware |
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13-1926739 |
(State or other jurisdiction of incorporation) |
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(I.R.S. Employer Identification No.) |
6095 Marshalee Drive, Suite 300
Elkridge, MD 21075
(Address of principal executive offices, with zip code)
(410) 379-3600
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into A Material Definitive Agreement
Securities Purchase Agreement
On December 30, 2009, GP Strategies Corporation (the Company) entered into a Securities Purchase Agreement (the Purchase Agreement) with a single accredited investor, Sagard Capital Partners, L.P. (Sagard), pursuant to which the Company sold to Sagard, in a private placement, an aggregate of 2,857,143 shares (the Shares) of the Companys common stock, par value $0.01, at a price of $7.00 per share (the Offering), for an aggregate purchase price of $20,000,000. The Offering closed on December 30, 2009.
Pursuant to the Purchase Agreement, Sagard has certain preemptive rights with respect to future issuances of equity or equity equivalent securities by the Company, which expire under the conditions described in the Purchase Agreement. These preemptive rights allow Sagard to maintain its pro rata ownership in the Company, subject to certain exceptions. Also, during a period ending no later than the second anniversary of the closing of the Offering, Sagard has the additional, special preemptive right to purchase up to $5,000,000 in additional equity or equity equivalent securities issued in future offerings, in each case subject to certain exceptions. In addition, pursuant to the Purchase Agreement, Sagard agreed to certain standstill provisions that, among other things, prohibit Sagard from acquiring beneficial ownership of more than 19.9% of the Companys common stock (calculated on a fully diluted basis) for two years from the date of the Purchase Agreement (excluding, for purposes of this calculation, securities Sagard may acquire pursuant to the special preemptive rights referenced above, which are not subject to the 19.9% maximum), and from acquiring beneficial ownership of more than 23% of the Companys common stock (calculated on a fully diluted basis) thereafter.
The Offering is exempt from registration pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(2) the Securities Act of 1933, as amended (the Securities Act), and Regulation D under the Securities Act.
The securities sold and issued in connection with the Purchase Agreement have not been registered under the Securities Act, or any state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements.
The information regarding the terms of the Purchase Agreement contained in Item 5.02 is incorporated herein by reference.
Registration Rights Agreement
In connection with the Offering, on December 30, 2009, the Company entered into a Registration Rights Agreement (the Registration Rights Agreement) with Sagard. Pursuant to the Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the Securities and Exchange Commission (the SEC) no later than September 30, 2010 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). The Company agreed to use its reasonable best efforts to cause this registration statement to be declared effective by the SEC no later than December 30, 2010. If the Company fails to meet either of these deadlines, fails to meet filing or effectiveness deadlines with respect to any additional registration statements required by the Registration Rights Agreement, or fails to keep any registration statements continuously effective (with limited exceptions), the Company 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 $2,400,000. The Company 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 the Companys obligations under the Registration Rights Agreement.
Employment Agreement Amendments
In connection with the Offering, the Board of Directors approved certain amendments to the employment agreements of Scott N. Greenberg, Chief Executive Officer, and Douglas E. Sharp, President, which were entered into on December 30, 2009. The amendments to both employment agreements modify the provision for termination by either party on two years notice, such that the earliest date the employment agreements may terminate pursuant to this provision is December 31, 2012.
The amendment to Mr. Greenbergs employment agreement provides that, on January 8, 2010, the Company will grant to Mr. Greenberg, under the Companys 2003 Stock Incentive Plan, options to purchase 120,000 shares of the Companys common stock at an exercise price equal to the market price on the date of grant. The options vest 20% per year beginning on the first anniversary of the date of grant, and terminate after six years after the date of grant (subject to acceleration). The amendment to Mr. Sharps employment agreement contains comparable provisions with respect to options to purchase 105,000 shares of the Companys common stock.
The amendments to both employment agreements provide that, for purposes of the employment agreements, no change in control or management change in control (as such terms are defined in the employment agreements) will be deemed to occur as a result of Sagards beneficial ownership of the Companys securities unless Sagard becomes the beneficial owner of securities representing 25% or more of the combined voting power of the Companys then outstanding securities.
In addition, the amendment to Mr. Sharps employment agreement increases by 100% his severance pay in the event of a termination by Mr. Sharp as a result of a management change in control. Pursuant to the amendment, in the event of such a termination, the Company will pay to Mr. Sharp, in a lump sum, an amount equal to twice the average annual cash compensation received by Mr. Sharp from the Company in the three full calendar years preceding the date of termination.
The foregoing description of each of the documents referred to in this Item 1.01 is only a summary and is qualified in its entirety by reference to the Purchase Agreement, the Registration
Rights Agreement and the employment agreement amendments, copies of which are filed as exhibits hereto and are incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities
The information called for by this item is contained in Item 1.01, which is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Pursuant to the terms of the Purchase Agreement, the Company agreed to take all corporate and other action necessary to cause one designee of Sagard to be elected or appointed to the Companys Board of Directors, effective as of December 30, 2009, in all cases subject to compliance with relevant NYSE rules and regulations and all other legal and governance requirements regarding service as a director of the Company. Accordingly, on December 18, 2009, the Board of Directors unanimously approved resolutions increasing the number of Directors on the Board of Directors from seven to eight and, effective as of the date of the closing of the Offering, elected Daniel Friedberg to serve on the Board of Directors for an initial term commencing as of the date of the closing of the Offering and ending at the next annual meeting of the shareholders of the Company. From and after the expiration of such initial term until Sagard and/or its affiliates cease to beneficially own, in the aggregate, at least 900,000 shares of the Companys common stock, the Company will reduce the size of the Board of Directors to seven and will not increase the size of the Board of Directors to more than seven directors, without the prior written consent of Sagard. In accordance with the terms of the Purchase Agreement, on December 30, 2009, Mr. Friedberg was appointed to each committee of the Board of Directors.
Daniel M. Friedberg has been President and CEO of Sagard Capital Partners Management Corporation, the investment manager of Sagard, since its founding in 2005. Since 2005, he has also been a Vice President and Officer of Power Corporation of Canada, a diversified international management and holding company. Prior to that, he was a Partner at Bain & Company. Mr. Friedberg joined Bain & Company in 1987 in the London office, and was a founder of the Toronto office in 1989 and the New York office in 2000. Mr. Friedberg is also a member of the Board of Directors of X-Rite, Incorporated (Nasdaq: XRIT).
Except as described above, Mr. Friedberg is not a party to any other arrangements pursuant to which he was selected as a director. Except in connection with the Transaction, Mr. Friedberg has not been involved in any transaction since the beginning of the Companys last fiscal year, or any currently proposed transaction, in which the Company was or is to be a participant and the amount of which involved exceeds $120,000.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Effective as of December 29, 2009, the Company amended its Amended and Restated By-Laws to delete Section 5 of Article VI of the Amended and Restated By-Laws in its entirety. The deleted section related to a rights agreement that is no longer in effect.
Item 8.01 Other Information
On December 30, 2009, the Company issued the press release attached hereto as Exhibit 99.1 regarding the transactions described in this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following material is filed as an exhibit to this Current Report on Form 8-K:
10.1 |
Securities Purchase Agreement, dated as of December 30, 2009, between the Company and Sagard Capital Partners, L.P. |
10.2 |
Registration Rights Agreement, dated as of December 30, 2009, between the Company and Sagard Capital Partners, L.P. |
10.3 |
Amendment, dated December 30, 2009, to Employment Agreement by and between GP Strategies Corporation and Scott N. Greenberg dated July 1, 1999. |
10.4 |
Amendment, dated December 30, 2009, to Employment Agreement by and between General Physics Corporation and Douglas Sharp dated July 1, 1999. |
99.1 |
Press Release of GP Strategies Corporation dated December 30, 2009. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GP STRATEGIES CORPORATION |
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Date: December 31, 2009 |
By: |
/s/ Scott N. Greenberg |
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Scott N. Greenberg |
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Chief Executive Officer |
EXHIBIT INDEX
10.1 |
Securities Purchase Agreement, dated as of December 30, 2009, between the Company and Sagard Capital Partners, L.P. |
10.2 |
Registration Rights Agreement, dated as of December 30, 2009, between the Company and Sagard Capital Partners, L.P. |
10.3 |
Amendment, dated December 30, 2009, to Employment Agreement by and between GP Strategies Corporation and Scott N. Greenberg dated July 1, 1999. |
10.4 |
Amendment, dated December 30, 2009, to Employment Agreement by and between General Physics Corporation and Douglas Sharp dated July 1, 1999. |
99.1 |
Press Release of GP Strategies Corporation dated December 30, 2009. |
Exhibit 10.1
GP STRATEGIES CORPORATION
SECURITIES PURCHASE AGREEMENT
December 30, 2009
TABLE OF CONTENTS
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Page |
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1. |
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PURCHASE AND SALE OF COMMON STOCK |
1 |
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(A) |
COMMON STOCK |
1 |
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(B) |
CLOSING |
1 |
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(C) |
PURCHASE PRICE |
1 |
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(D) |
FORM OF PAYMENT |
1 |
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2. |
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INVESTORS REPRESENTATIONS AND WARRANTIES |
2 |
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(A) |
ORGANIZATION; AUTHORITY |
2 |
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(B) |
NO PUBLIC SALE OR DISTRIBUTION |
2 |
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(C) |
ACCREDITED INVESTOR STATUS |
2 |
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(D) |
RELIANCE ON EXEMPTIONS |
2 |
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(E) |
INFORMATION |
2 |
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(F) |
NO GOVERNMENTAL REVIEW |
3 |
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(G) |
TRANSFER OR RESALE |
3 |
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(H) |
LEGENDS |
4 |
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(I) |
VALIDITY; ENFORCEMENT |
4 |
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(J) |
NO CONFLICTS |
4 |
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(K) |
RESIDENCY |
4 |
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3. |
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
4 |
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(A) |
ORGANIZATION AND QUALIFICATION OF THE COMPANY AND ITS SIGNIFICANT SUBSIDIARIES |
5 |
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(B) |
AUTHORIZATION; ENFORCEMENT; VALIDITY |
5 |
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(C) |
ISSUANCE OF PURCHASED SHARES; NO RESTRICTIONS ON TRANSFER |
5 |
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(D) |
NO CONFLICTS |
5 |
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(E) |
CONSENTS |
6 |
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(F) |
NO GENERAL SOLICITATION; PLACEMENT AGENTS FEES |
6 |
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(G) |
NO INTEGRATED OFFERING |
6 |
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(H) |
APPLICATION OF TAKEOVER AND OTHER PROTECTIONS; RIGHTS AGREEMENT |
7 |
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(I) |
SEC DOCUMENTS; FINANCIAL STATEMENTS |
7 |
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(J) |
ACCURACY OF INFORMATION |
8 |
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(K) |
ABSENCE OF CERTAIN CHANGES |
8 |
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(L) |
NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES |
9 |
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(M) |
CONDUCT OF BUSINESS; REGULATORY PERMITS |
9 |
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(N) |
FOREIGN CORRUPT PRACTICES AND/OR OTHER PAYMENTS |
10 |
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(O) |
SARBANES-OXLEY ACT |
10 |
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(P) |
TRANSACTIONS WITH AFFILIATES |
11 |
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(Q) |
EQUITY CAPITALIZATION |
11 |
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(R) |
INDEBTEDNESS AND OTHER CONTRACTS |
12 |
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(S) |
ABSENCE OF LITIGATION |
12 |
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(T) |
INSURANCE |
12 |
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(U) |
EMPLOYEE RELATIONS |
12 |
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(V) |
COMPANY BENEFIT PLANS |
13 |
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(W) |
TITLE |
14 |
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(X) |
INTELLECTUAL PROPERTY RIGHTS |
14 |
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(Y) |
ENVIRONMENTAL LAWS |
15 |
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(Z) |
SUBSIDIARIES |
15 |
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(AA) |
TAX STATUS |
16 |
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(BB) |
INTERNAL ACCOUNTING AND DISCLOSURE CONTROLS |
16 |
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(CC) |
OFF BALANCE SHEET ARRANGEMENTS |
17 |
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(DD) |
INVESTMENT COMPANY STATUS |
17 |
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(EE) |
MANIPULATION OF PRICE |
17 |
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(FF) |
SHELL COMPANY STATUS |
17 |
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4. |
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COVENANTS |
17 |
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(A) |
FORM D AND BLUE SKY |
17 |
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(B) |
REPORTING STATUS |
18 |
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(C) |
USE OF PROCEEDS |
18 |
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(D) |
FINANCIAL INFORMATION; ACCESS |
18 |
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(E) |
LISTING |
19 |
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(F) |
FEES |
19 |
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(G) |
PLEDGE OF PURCHASED SHARES |
19 |
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(H) |
INTEGRATION |
20 |
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(I) |
DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION |
20 |
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(J) |
ADDITIONAL REGISTRATION STATEMENTS |
20 |
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(K) |
ACTIONS REGARDING ANTI-TAKEOVER AND OTHER PROTECTIONS; RIGHTS AMENDMENT |
20 |
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(L) |
PREEMPTIVE RIGHTS - ADDITIONAL ISSUANCES OF PURCHASED SHARES |
21 |
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(M) |
BOARD MATTERS |
25 |
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(N) |
OBSERVER RIGHTS |
27 |
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(O) |
STANDSTILL |
28 |
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(P) |
LEGENDS |
30 |
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(Q) |
TRANSFER TAXES |
31 |
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(R) |
FORM W-9 |
31 |
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(S) |
NO SHORT SALES, ETC. IN VIOLATION OF THE 1933 ACT |
31 |
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5. |
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INVESTOR CLOSING DELIVERABLES |
31 |
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6. |
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COMPANY CLOSING DELIVERABLES |
32 |
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7. |
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TERMINATION |
34 |
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(A) |
TERMINATION |
34 |
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(B) |
EFFECTS OF TERMINATION |
34 |
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8. |
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MISCELLANEOUS |
34 |
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(A) |
DEFINITIONS |
34 |
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(B) |
GOVERNING LAW; JURISDICTION; JURY TRIAL |
39 |
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(C) |
COUNTERPARTS |
40 |
EXHIBITS
Exhibit A |
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Form of Registration Rights Agreement |
Exhibit B |
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Form of Investor Officers Certificate |
Exhibit C |
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Form of Director Indemnification Agreement |
Exhibit D |
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Form of Company Secretarys Certificate |
Exhibit E |
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Form of Company Officers Certificate |
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the Agreement ), dated as of December 30, 2009, by and among GP Strategies Corporation, a Delaware corporation, with headquarters located at 6095 Marshalee Drive, Suite 300, Elkridge, MD 21075 (the Company ), and Sagard Capital Partners, L.P., a Delaware limited partnership (the Investor ). Certain defined terms used herein are listed in Section 8(a) .
WHEREAS:
A. Each of the Company and the Investor is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the 1933 Act ), and Rule 506 of Regulation D ( Regulation D ) as promulgated by the United States Securities and Exchange Commission (the SEC ) under the 1933 Act.
B. The Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, 2,857,143 shares (the Purchased Shares ) of the Companys common stock, par value $0.01 per share (the Common Stock ).
C. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit A (the Registration Rights Agreement ), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities Laws.
NOW, THEREFORE, the Company and the Investor hereby agree as follows:
(a) Common Stock . Subject to the receipt (or waiver) of the deliverables set forth in Sections 5 and 6 below, the Company shall issue and sell to the Investor, and the Investor agrees to purchase from the Company on the Closing Date, the Purchased Shares.
(b) Closing . The closing (the Closing ) of the purchase of the Purchased Shares by the Investor shall occur at the offices of Finn Dixon & Herling LLP, 177 Broad Street, Stamford, Connecticut 06901. The date and time of the Closing (the Closing Date ) shall be 10:00 a.m., New York City Time, on the first Business Day on which the conditions to the Closing set forth in Sections 5 and 6 below have been satisfied or waived (or such other date and time as is mutually agreed to by the Company and the Investor).
(c) Purchase Price . The aggregate purchase price for the Purchased Shares to be purchased by the Investor (the Purchase Price ) shall be $20,000,001.00. The Investor shall pay $7.00 for each share of Common Stock to be purchased by the Investor at the Closing.
(d) Form of Payment . On the Closing Date, (i) the Investor shall pay the Purchase Price to the Company for the Purchased Shares to be issued and sold to the Investor at the
Closing, by wire transfer of immediately available funds in accordance with the Companys written wire instructions, minus amounts withheld pursuant to Section 4(f)(i) and the Company shall deliver to the Investor the Purchased Shares, evidenced by one or more stock certificates, free and clear of all restrictive legends (except as expressly provided in Section 4(p) hereof).
As of the date hereof, the Investor represents and warrants that:
(a) Organization; Authority . The Investor is a limited partnership duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization with the requisite limited partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(b) No Public Sale or Distribution . The Investor is acquiring the Purchased Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided , however , that by making the representations herein, the Investor does not agree to hold any of the Purchased Shares for any minimum or other specific term and reserves the right to dispose of the Purchased Shares at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. The Investor is acquiring the Purchased Shares hereunder in the ordinary course of its business. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Purchased Shares in violation of the 1933 Act.
(c) Accredited Investor Status . The Investor is an accredited investor as that term is defined in Rule 501(a) of Regulation D.
(d) Reliance on Exemptions . The Investor understands that the Purchased Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities Laws and that the Company is relying in part upon the truth and accuracy of, and the Investors compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Purchased Shares.
(e) Information . The Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Purchased Shares which have been requested by the Investor. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Investor or its advisors or representatives, nor any other statement in this Section 2 , shall modify, amend or affect the Companys representations and warranties contained herein or the Investors right to rely thereon. The Investor understands that its investment in the Purchased Shares involve a high degree of risk. The Investor has sought such accounting, legal and tax advice as it
has considered necessary to make an informed investment decision with respect to its acquisition of the Purchased Shares.
(f) No Governmental Review . The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Purchased Shares or the fairness or suitability of the investment in the Purchased Shares nor have such authorities passed upon or endorsed the merits of the offering of the Purchased Shares.
(g) Transfer or Resale . The Investor understands that except as provided in the Registration Rights Agreement:
The Purchased Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Purchased Shares and such pledge of Purchased Shares shall not be deemed to be a transfer, sale or assignment of the Purchased Shares hereunder, and the Investor shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 2(g) , in connection with such a pledge.
Investor has not, in anticipation of this Agreement and its acquisition of and investment in the Purchased Shares, and in any case during forty-five (45) days prior to the date hereof, effected any short sales with respect to the Common Stock or entered into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether
any such transaction, swap or series of transactions is to be settled by delivery of securities, in cash or otherwise.
(h) Legends . The Investor understands that, until such time as the resale of the Purchased Shares has been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock certificate(s) representing the Purchased Shares, except as set forth in Section 4(p) , shall bear any legend as required by the blue sky Laws of any state and a restrictive legend in substantially the form set forth in Section 4(p) (and a stop-transfer order may be placed against transfer of such stock certificates).
(i) Validity; Enforcement . This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered on behalf of the Investor and shall constitute the legal, valid and binding obligations of the Investor enforceable against the Investor in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar Laws relating to, or affecting generally, the enforcement of applicable creditors rights and remedies.
(j) No Conflicts . The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation by the Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) result in a violation of any Law (including federal and state securities Laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations hereunder.
(k) Residency . The Investors principal office is located in the State of Connecticut.
The Company represents and warrants to the Investor as of the date hereof that, except as otherwise disclosed or incorporated by reference in: (i) the Companys Annual Report on Form 10-K for the year ended December 31, 2008, or its other reports and forms filed with or furnished to the SEC under Sections 12, 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the 1934 Act ), after December 31, 2008 and before the date of this Agreement (including any amendments or supplements thereto, but excluding risk factors and/or any other disclosures of risks included in any forward-looking statement disclaimers or other statements that are similarly nonspecific and are predictive and forward-looking in nature) (all such reports covered by this clause (i), collectively, the SEC Reports ); or (ii) as set forth in the disclosure letter dated as of the date hereof provided to the Investor separately (the Disclosure Letter ), specifically identifying the relevant subparagraph(s) hereof ( provided , that disclosure in any subparagraph of such disclosure letter shall apply to any section or subparagraph hereof to the
extent it is reasonably apparent on its face that such disclosure is relevant to such section or subparagraph of this Agreement):
(a) Organization and Qualification of the Company and its Significant Subsidiaries . The Company and General Physics Corporation, a Delaware corporation, are entities duly organized and validly existing and in good standing under the Laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted. General Physics (UK) Ltd, a United Kingdom limited company, is an entity duly organized and validly existing under the Laws of the jurisdiction in which it is formed, and has the requisite power and authority to own its properties and to carry on its business as now being conducted. Each of the Company and its Significant Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.
(b) Authorization; Enforcement; Validity . The Company has the requisite power and authority to enter into and perform its obligations under this Agreement, the Registration Rights Agreement, the Confidentiality Agreement and each of the other agreements entered into by the Company in connection with the transactions contemplated by this Agreement (collectively, the Transaction Documents ) and, in the case of the Company, to issue the Purchased Shares in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Purchased Shares, have been duly authorized by the Companys board of directors (the Board of Directors ). No further corporate consent, or authorization is required by the Company, the Board of Directors or the Companys stockholders in connection with the execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the performance of the Companys obligations hereunder and thereunder. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally, the enforcement of applicable creditors rights and remedies.
(c) Issuance of Purchased Shares; No Restrictions on Transfer . The issuance of the Purchased Shares has been duly authorized by all necessary corporate action and, upon issuance in accordance with this Agreement, such Purchased Shares will be validly issued, fully paid and nonassessable, and free and clear of all liens and/or restrictions on transfer (other than restrictions on transfer provided for by applicable federal and state securities Laws) and will not be subject to preemptive rights of any other stockholder of the Company. Subject to the representations and warranties of the Investor in this Agreement, the offer and issuance by the Company of the Purchased Shares are exempt from registration under the 1933 Act.
(d) No Conflicts . Except as set forth on Section 3(d) of the Disclosure Letter, the execution, delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Purchased Shares) will not (i) violate the Certificate of Incorporation or any certificate of incorporation, certificate of formation, or any certificate of designations or other constituent document of any of its Subsidiaries, or the Bylaws or any of its Subsidiaries bylaws, (ii) violate, conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, (iii) assuming the filing of a Form D and state securities Law filings, result in a violation of any Law (including federal and state securities Laws and the rules and regulations of the New York Stock Exchange or such other Eligible Market on which the Company may list the Common Stock from time to time (such Eligible Market, the Principal Market )) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected or (iv) result in or require the creation or imposition of any lien upon or with respect to any of the properties or assets of the Company or any of its Subsidiaries, except in the case of clauses (ii) , (iii) and (iv) , as would not reasonably be expected to have a Material Adverse Effect.
(e) Consents . Other than the filing with the SEC of a Form D and one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement and any other filings as may be required by any state securities agencies, except as set forth on Section 3(e) of the Disclosure Letter, neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency (including the Principal Market) or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any such Subsidiary is required to obtain pursuant to the preceding sentence will be obtained or effected on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence except as set forth on Section 3(c) of the Disclosure Letter. The Company is not in violation of the requirements of the Principal Market and has no Knowledge of any facts which would reasonably be expected to lead to delisting or suspension of the Common Stock in the foreseeable future.
(f) No General Solicitation; Placement Agents Fees . Neither the Company, nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Purchased Shares. The Company shall be responsible for the payment of any placement agents fees, financial advisory fees, or brokers commissions (other than for Persons engaged by the Investor or any Person acting or claiming to act on behalf of the Investor) relating to or arising out of the transactions contemplated hereby. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Purchased Shares.
(g) No Integrated Offering . None of the Company, its Subsidiaries, any of their Affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Purchased Shares under the 1933 Act or cause this offering of the Purchased Shares to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the Principal Market or any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company or its Subsidiaries or any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Purchased Shares under the 1933 Act (except as contemplated by the Registration Rights Agreement) or cause the offering of the Purchased Shares to be integrated with other offerings.
(j) Accuracy of Information . All factual information, taken as a whole, furnished by or on behalf of the Company and its Subsidiaries in writing to the Investor on or prior to the date of this Agreement, for purposes of this Agreement and all other such factual information, taken as a whole, furnished by the Company on behalf of itself and its Subsidiaries in writing to the Investor pursuant to the terms of this Agreement does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading when considered with respect to the Company and/or its Subsidiaries, taken as a whole; provided , however , that with respect to any projected financial information or forward-looking statements, business assumptions, strategic plans or similar information, the Company represents only that such information was prepared in good faith based upon assumptions, and subject to such qualifications, believed to be reasonable at the time. The Company understands and confirms that the Investor will rely on the representations and warranties contained in this Section 3 for purposes of purchasing the Purchased Shares pursuant to this Agreement.
(k) Absence of Certain Changes . Except as disclosed in Section 3(k) of the Disclosure Letter, since December 31, 2008, no event or events have occurred that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
(l) No Undisclosed Events, Liabilities, Developments or Circumstances . Neither the Company nor any of the Companys Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the Companys financial statements included in the SEC Documents to the extent required to be so reflected or reserved against in accordance with generally accepted accounting principles in the United States, except for (i) liabilities that have arisen in the ordinary course of business consistent with past practice and that have not had a Material Adverse Effect, and (ii) liabilities that have not had and would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(m) Conduct of Business; Regulatory Permits . Except as set forth on Section 3(m) of the Disclosure Letter:
(n) Foreign Corrupt Practices and/or Other Payments . Neither the Company nor, to the Knowledge of the Company, any of its Subsidiaries nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) made any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other anti-bribery or anti-corruption Laws applicable to the Company or any of its Subsidiaries; (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee; or (v) made any bribe, rebate, payoff, influence payment, kickback or other payment to, for the benefit of, or at the request of, any employee of any customer of the Company or any Subsidiary which might reasonably be expected to result in such customer modifying its purchases of services and/or products from the Company.
(o) Sarbanes-Oxley Act . The Company is in material compliance with (x) any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and (y) any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof, in the case of (x) and (y), when taken as a whole.
(p) Transactions With Affiliates . Except as set forth in the SEC Documents filed at least ten (10) days prior to the date hereof and other than the outstanding stock options and/or restricted stock disclosed on Section 3(p) of the Disclosure Letter, none of the officers, directors or employees of the Company or any of its Significant Subsidiaries is presently a party to any transaction with the Company or any of its Significant Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any such officer, director or employee or, to the Knowledge of the Company or any of its Significant Subsidiaries, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.
(q) Equity Capitalization . As of the date hereof, the authorized capital stock of the Company consists of (i) 35,000,000 shares of Common Stock, of which as of the date hereof, 15,723,767 are issued and outstanding and 1,250,682 shares are reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 10,000,000 shares of preferred stock of which, as of the date hereof, none are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as set forth on Section 3(q) of the Disclosure Letter, (i) none of the Companys capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Significant Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Significant Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Significant Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Significant Subsidiaries; (iii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities, whether presently outstanding or securities that may be issued subsequently, under the 1933 Act (except pursuant to the Registration Rights Agreement); (iv) there are no outstanding securities or instruments of the Company or any of its Significant Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Significant Subsidiaries is or may become bound to redeem a security of the Company or any of its Significant Subsidiaries; (v) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Purchased Shares; and (vi) the Company does not have any stock appreciation rights or phantom stock plans or agreements or any similar plan or agreement. To the Companys Knowledge, no stockholder of the Company has entered into any agreement with respect to the voting of equity securities of the Company. The Company has furnished to the Investor true, correct and complete copies of the Companys Certificate of Incorporation, as amended and as in effect on the date hereof (the Certificate of Incorporation ), and the Companys Bylaws, as amended and as in effect on the date hereof (the Bylaws ), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto. Section 3(q) of the Disclosure Letter sets forth
the shares of Common Stock owned beneficially or of record and Common Stock Equivalents (as defined below) held by each director and executive officer.
(r) Indebtedness and Other Contracts . Except as set forth in Section 3(r) of the Disclosure Letter: (i) neither the Company nor any of its Significant Subsidiaries has any outstanding Indebtedness (as defined below), (ii) neither the Company nor any of its Subsidiaries is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably be expected to result in a Material Adverse Effect, or (iii) neither the Company nor any of its Significant Subsidiaries is in material violation of any term of or in material default under any material contract, agreement or instrument relating to any Indebtedness. The Company has provided the Investor with a true, correct and complete list of: (i) all presently existing contracts or agreements (or series of related contracts or agreements) to which the Company or its Subsidiaries are party or by which they are bound involving payments in excess of $250,000 in calendar year 2009 and (ii) all contracts or agreements with the top ten (10) customers of the Company and its Significant Subsidiaries (based on total purchases, in dollars) during the fiscal year ended December 31, 2008 and current year-to-date (collectively, the Material Contracts , and each a Material Contract ).
(s) Absence of Litigation . Except as set forth in Section 3(s) of the Disclosure Letter, there is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, or, to the Companys Knowledge, any of the Companys or its Subsidiaries officers or directors, that (i) is reasonably likely to have a Material Adverse Effect, (ii) purports to affect the legality, validity or enforceability of this Agreement or any other Transaction Document or the consummation of the transactions contemplated by this Agreement or by any of the other Transaction Documents or (iii) alleges criminal conduct.
(t) Insurance . The Company and each of its Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Significant Subsidiaries are engaged. Except as set forth on Section 3(t) of the Disclosure Letter, the Company does not engage in any self-insurance arrangements. Neither the Company nor any such Significant Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Significant Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to result in a Material Adverse Effect. The Company has provided the Investor with a true, correct and complete list of all existing insurance policies, including their respective retention amounts and/or deductibles.
Company, no executive officer (as defined in Rule 501(f) of the 1933 Act) of the Company or any of its Significant Subsidiaries has notified the Company or any such Significant Subsidiary that such officer intends to leave the Company or any such Significant Subsidiary or otherwise terminate such officers employment with the Company or any such Significant Subsidiary. To the Knowledge of the Company, no executive officer of the Company or any of its Significant Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Significant Subsidiaries to any liability with respect to any of the foregoing matters.
Except for the representations and warranties of the Company expressly set forth in this Section 3(v) , the Company makes no other express or implied representation or warranty with respect to the Plans, or the matters covered by the representations and warranties contained in this Section 3(v) , and none of the other representations and warranties contained in this Agreement shall be deemed to be given in relation to the Plans.
(w) Title . Except as set forth on Section 3(w) of the Disclosure Letter, the Company and its Subsidiaries have good and marketable fee simple title to, or a valid leasehold interest in, all of the real property owned or leased by the Company, and good and marketable title to, or valid leasehold interests in, all of their personal property, except where the failure to hold such title or leasehold interests, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries enjoy peaceful and undisturbed possession under all of their respective leases except where the failure to enjoy such peaceful and undisturbed possession, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(x) Intellectual Property Rights . The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, original works of authorship, trade secrets and other intellectual property rights and all applications related thereto necessary to conduct their respective businesses as now conducted, except where the failure to so own or possess would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect (collectively, Intellectual Property Rights ). None of the patents, patent applications, trademark and service mark registrations and applications, or copyright registrations and applications owned by the Company and its Subsidiaries and included in the Intellectual Property Rights (collectively, the Registered Intellectual Property ) has expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned, within three years from the date of this Agreement, except where such expiration, termination or
abandonment, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. The Company does not have any Knowledge of any infringement by the Company or any of its Subsidiaries of Intellectual Property Rights of third parties that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. There is no claim, action or proceeding pending, or to the Knowledge of the Company, threatened, against the Company or any of its Subsidiaries challenging the validity, enforceability, ownership or use of any item of the Registered Intellectual Property that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The Company and its Significant Subsidiaries use commercially reasonable efforts to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(y) Environmental Laws . The Company and its Subsidiaries (i) have complied in all material respects with any and all applicable Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals currently required of them under applicable Environmental Laws to conduct their respective businesses and (iii) have complied in all material respects with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i) , (ii) and (iii) , the failure to so comply or have received such permits, licenses or approvals would be reasonably expected to result in, individually or in the aggregate, a Material Adverse Effect. The term Environmental Laws means all federal, state, local or foreign Laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, Laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, Hazardous Materials ) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials. Except for the representations and warranties of the Company expressly set forth in this Section 3(y) , the Company makes no other express or implied representation or warranty with respect to matters covered by the representations and warranties contained in this Section 3(y) , and none of the other representations and warranties contained in this Agreement shall be deemed to be given in relation to the matters covered by the representations and warranties contained in this Section 3(y) .
(z) Subsidiaries . Section 3(z) of the Disclosure Letter sets forth a complete and accurate list of all active direct and indirect Subsidiaries of the Company, showing, in each case, as of the date of this Agreement (as to each such Subsidiary) the jurisdiction of its formation, and, with respect to each non-wholly owned Subsidiary, the number of shares, membership interests or partnership interests (as applicable) of each class of its equity interests authorized, and the number outstanding, on the date of this Agreement and the percentage of each such class of its equity interests owned (directly or indirectly) by the Company, and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights as of the date of this Agreement. All of the outstanding equity interests in each of the Subsidiaries of the Company have been validly issued, are fully paid and non-assessable and are owned by the Company or one or more of its subsidiaries, free and clear of all liens. Except as set forth in Schedule 3(z) , the Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable Law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary. Except for the Significant Subsidiaries, the Company has no direct or indirect
Subsidiaries which, individually or if considered in the aggregate as a single subsidiary, would satisfy the criteria for being a significant subsidiary as such term is defined in Rule 1-02(w) of Regulation S-X under the 1934 Act.
(aa) Tax Status . Each of the Company and its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject, and (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith or where the failure to file such returns, reports or declarations or pay such taxes, assessments or charges would not, individually or in the aggregate, have or be reasonably likely to have a Material Adverse Effect. All such returns were complete and correct in all material respects, except for any deficiency that would not, individually or in the aggregate, have or be reasonably expected to have a Material Adverse Effect. The Company has no Knowledge of a material tax deficiency which has been asserted or threatened in writing against the Company or any of its Subsidiaries which would, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect. The Company has set aside on its books provision which is reasonably adequate (as determined with respect to the date with respect to which such provision was made) for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply through the date of such books, except for a deficiency that would not, individually or in the aggregate, have or be reasonably likely to have a Material Adverse Effect. Except as set forth on Section 3(aa) of the Disclosure Letter, neither the Company nor any of its Subsidiaries is under audit by any taxing authority for which a material amount of taxes might be asserted.
(bb) Internal Accounting and Disclosure Controls . The Company and its Subsidiaries, taken as a whole, maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with managements general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with managements general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-14 under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed in to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Companys management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Except as set forth in Section 3(bb) of the Disclosure Letter, during the twelve (12) months prior to the date hereof neither the Company nor any of its Subsidiaries have received any notice or correspondence from any accountant relating to any potential material weakness in any part of the system of internal accounting controls of the Company or any of its Subsidiaries.
(cc) Off Balance Sheet Arrangements . There is no material transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed.
(dd) Investment Company Status . The Company is not, and upon consummation of the sale of the Purchased Shares will not be, an investment company, a company controlled by an investment company or an affiliated person of, or promoter or principal underwriter for, an investment company as such terms are defined in the Investment Company Act of 1940, as amended.
(ee) Manipulation of Price . The Company has not, and to its Knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Purchased Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Purchased Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.
(ff) Shell Company Status . The Company is not, and during the last three (3) years has not been, an issuer of the type described in paragraph (i) of Rule 144 under the 1933 Act.
Except for the representations and warranties expressly set forth in this Agreement, Investor acknowledges that none of the Company or any of its respective Subsidiaries and Affiliates or any other Person makes any representation or warranty, express or implied, at law or in equity, with respect to the Company or any of its respective Subsidiaries or Affiliates, the Common Stock or any of the assets or liabilities of the Company and its respective Subsidiaries and Affiliates, or with respect to any other information provided to Investor, whether on behalf of the Company or such other Persons, including as to the probable success or profitability of the Company after the Closing. Neither the Company nor any other Person will have or be subject to any Liability or indemnification obligation to Investor or any other Person resulting from the distribution to Investor, or Investors use of, any such information, including any information, document or material made available to Investor in certain data rooms, management presentations or in any other form in expectation or contemplation of the transactions contemplated by this Agreement.
(a) Form D and Blue Sky . The Company agrees to file a Form D with respect to the Purchased Shares as required under Regulation D and to provide a copy thereof to the Investor promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Purchased Shares for sale to the Investor at the Closing pursuant to this Agreement under applicable securities or Blue Sky Laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Investor on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Purchased Shares required under applicable securities or Blue Sky Laws of the states of the United States following the Closing Date.
(b) Reporting Status . Until the date on which the Investor shall have sold all the Purchased Shares (the Reporting Period ), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination. The Company shall take all actions necessary to maintain its eligibility to register the Purchased Shares for resale by the Investor on Form S-3.
(c) Use of Proceeds . The Company will use the proceeds from the sale of the Purchased Shares for general corporate purposes; provided , however , that such proceeds shall not be used to pay dividends or other distributions (as opposed to share repurchase programs which, for the avoidance of doubt, shall be permitted).
(e) Listing . The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) upon the Principal Market and shall maintain such listing of all Registrable Securities from time to time issuable under the terms of the Transaction Documents. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(e) .
(g) Pledge of Purchased Shares . The Company acknowledges and agrees that the Purchased Shares may be pledged by an Investor (as defined in the Registration Rights Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Purchased Shares. The pledge of Purchased Shares shall not be deemed to be a transfer, sale or assignment of the Purchased Shares hereunder, and no Investor effecting a pledge of Purchased Shares shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Purchased Shares may reasonably request in connection with a pledge of the Purchased Shares to such pledgee by an Investor.
(h) Integration . The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933 Act) that would be integrated with the offer or sale of the Purchased Shares for purposes of the rules and regulations of any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: NYSE Amex, The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market or the New York Stock Exchange, such that it would require stockholder approval before the closing of such other transaction, unless stockholder approval is obtained before the closing of such subsequent transaction.
(i) Disclosure of Transactions and Other Material Information . On or before 8:30 a.m., New York City time, on the third (3 rd ) Business Day following the date of this Agreement, the Company shall issue a press release and file a current report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement, and the form of the Registration Rights Agreement) as exhibits to such filing (including all attachments, the 8-K Filing ). Subject to the foregoing, none of the Company, its Subsidiaries or the Investor shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided , however , that (i) the Company shall be entitled, without the prior approval of the Investor, to make any press release or other public disclosure with respect to such transactions in substantial conformity with the 8-K Filing and contemporaneously therewith (provided that the Company shall consult with the Investor in connection with any such press release or other public disclosure prior to its release) and (ii) either party may make such disclosure as is required by applicable Law.
(j) Additional Registration Statements . Until the Effective Date (as defined in the Registration Rights Agreement), the Company shall not file a registration statement under the 1933 Act relating to securities held by any selling security holder other than the Investor.
(k) Actions Regarding Anti-Takeover and Other Protections; Rights Amendment . The Company and the Board of Directors shall take all necessary action, if any, in order to render inapplicable Article Thirteenth and any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Companys certificate of incorporation (or similar charter documents) or other agreements or the laws of its state of incorporation (including, without limitation, Section 203 of the Delaware General Corporation Law) that is or could become applicable to the Investor as a result of, or with respect to, (A) the 18,700 shares of Common Stock presently held by the Investor, (B) the Purchased Shares, (C) any additional securities acquired pursuant to Section 4(l) and (D) any other securities permitted to be acquired by the Investor under Section 4(o)(iv) hereof.
(n) Observer Rights . In addition to the rights of the Investor under Section 4(m) , during the Designated Period, the Investor may designate one additional Person to attend meetings of the Board of Directors, the board of directors of any Subsidiary and each committee of any of the foregoing as an observer ( Observer ). Following the termination of the Designated Period, the Company shall have no obligation to permit any Person designated by the Investor to attend meetings of the Board of Directors, the board of directors of any Subsidiary and any committee of any of the foregoing or otherwise receive any information under this Section 4(n) . The Observer shall be entitled to receive notice of and have the right to attend any and all meetings of the Board of Directors, the board of directors of any Subsidiary and each committee of any of the foregoing in an observer capacity; provided , however , that the Observer shall not have the right to attend any meeting of (x) the board of directors of any Subsidiary or (y) any committee of the Board of Directors or the board of directors of any Subsidiary, in either
case (x) and/or (y), at which the Board Representative is present. The Company shall provide the Observer with copies of all notices, minutes, consents and other material in connection therewith at the same time as such materials are distributed to members of the Board of Directors, the board of directors of any Subsidiary and each committee of any of the foregoing; provided , that (i) the Investor shall cause the Observer to agree to, and shall be responsible for the Observers failure to, hold in confidence and trust and to act in a fiduciary manner with respect to all information provided to such Observer pursuant hereto and (ii) the Company, the Board of Directors, the board of directors of any Subsidiary and each committee of any of the foregoing shall have the right to withhold any information and to exclude the Observer from any meeting or portion thereof (A) if doing so is, in the opinion of counsel to the Company, advisable or necessary to protect the attorney-client privilege between the Company and counsel or (B) if the Board of Directors, the board of directors of any Subsidiary or any committee of any of the foregoing determines in good faith, after consultation with counsel, that fiduciary requirements under applicable Law would make attendance by such Observer not advisable. The Company may require the Board Observer to enter into a confidentiality agreement, in a form reasonably satisfactory to the Company and the Investor, as may be reasonably necessary to preserve the confidentiality of any information provided to the Board Observer in connection with the observation rights granted hereunder. The Observer shall have no right to vote on any matters presented to the Board of Directors, the board of directors of any Subsidiary or any committee of any of the foregoing. All obligations of the Company pursuant to this Section 4(n) shall terminate upon the Investor ceasing to have the right to designate an Observer pursuant to this Section 4(n) . The Observer shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors, the board of directors of any Subsidiary and each committee of any of the foregoing, to the same extent as members of such boards or committees consistent with the Companys past reimbursement practice for board or committee members.
(o) Standstill . The Investor hereby agrees that during the Designated Period, unless specifically invited in writing by the Company, neither the Investor nor any entity or person which is controlled (as defined in Rule 12b-2 under the 1934 Act) directly or indirectly by the Investor (but specifically excluding, for the avoidance of doubt, any of the Investors portfolio companies in which the Investor holds less than 25% of the outstanding voting securities and where the Investor does not have representatives constituting a majority of the board of directors thereof) (each, a Investor Controlled Entity ), will in any manner, directly or indirectly (including by directing or causing any other Person that is not the Investor or a Investor Controlled Entity):
Notwithstanding the foregoing, if (x) the Board of Directors decides, in its sole discretion, to engage in a process that solicits third parties to determine their interest in a potential transaction (a Sale Process ) that is intended to, or would reasonably be expected to, give rise to a Triggering Event, the Company shall invite the Investor to participate in such Sale Process on the terms and conditions generally made available to the other participants in such Sale Process or (y) a Triggering Event shall occur without the Company conducting such a Sale Process (either within a reasonable time period before or at any time after such Triggering Event), nothing in this Section 4(o) shall prohibit the Investor from submitting a proposal to the Board of Directors which competes with the Triggering Event (provided that nothing in this clause (y) shall entitle the Investor to any preferential treatment, compared to other parties). Nothing contained in this Section 4(o) shall require the Board of Directors to engage in a Sale
Process either before or after a Triggering Event. At the discretion of the Board of Directors, for the avoidance of doubt, for so long as (and only for so long as) the Investor is participating in such a process or is submitting a competing proposal, the Board of Directors may require that the Board Representative resign and/or that the Observer rights in Section 4(n) be suspended (provided that, thereafter, (1) the Investors right to nominate a Board Observer under Section 4(m) shall be reinstated and the Company shall reappoint a Board Observer to the Board of Directors as soon as reasonably possible and (2) the Observer rights in Section 4(n) shall be reinstated). For purposes of this Agreement, (i) a Triggering Event shall mean (A) the recommendation by the Board of Directors that stockholders tender their shares of Common Stock into a tender offer conducted by any party other than the Company or one of its Subsidiaries, which, if consummated, would result in a Change of Control, (B) the public disclosure that securities representing 33-1/3% or more of the voting power of the Companys voting equity securities have been acquired, with the approval of the Board of Directors, by any Person (including any group of Persons acting in concert) other than the Investor and its Affiliates or (C) the Company publicly announces that it has entered into a definitive agreement providing for a merger, consolidation, share exchange, business combination, recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction, in each case involving a Change of Control or any purchase of substantially all of the assets or business of the Company and its Subsidiaries, taken as a whole, in each case conducted by any Person (including any group of Persons acting in concert) other than the Investor and its Affiliates, and (ii) Change of Control means the consummation of any transaction or series of related transactions, the result of which is that the stockholders of the Company as a group immediately prior thereto will have beneficial ownership of less than 50.1% of the equity securities of the surviving entity in such transaction immediately thereafter.
Furthermore, notwithstanding the foregoing, the provisions of this Section 4(o) shall terminate in the event of (x) the filing by the Company of a voluntary petition in bankruptcy; (y) the entry of an order of relief in any bankruptcy or insolvency proceeding in respect of the Company or the entry of an order that the Company is a bankrupt or insolvent; or (z) any involuntary proceeding seeking liquidation, reorganization or other relief against the Company under any bankruptcy, insolvency or other similar law now or hereafter in effect that has not been dismissed sixty (60) days after the commencement thereof.
The Investor also agrees during such period not to request that the Company amend or waive any provision of this Section 4(o) (including this sentence).
(p) Legends . The Investor agrees that the Company shall affix the following legend to the certificate(s) delivered to the Investor at Closing:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Purchased Shares upon which it is stamped, unless otherwise required by state securities Laws, if (i) such Purchased Shares are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Purchased Shares may be made without registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Purchased Shares can be sold, assigned or transferred pursuant to Rule 144(b)(1)(i).
(q) Transfer Taxes . Any stock transfer, stamp, registration or other similar taxes or fees payable as a direct result of the sale and transfer of the Purchased Shares to the Investor hereunder shall be paid by the Company. The party required by applicable Law to file tax returns required in connection with such taxes and fees shall file such tax returns. Each party hereto shall use its commercially reasonable efforts to minimize such taxes and fees and to cooperate in the preparation, execution and filing of all tax returns and other documents required in connection with such taxes and fees.
(r) Form W-9 . At the Closing, the Investor shall deliver to the Company two duly completed and executed copies of Internal Revenue Service Form W-9.
(s) No Short Sales, Etc. in Violation of the 1933 Act . Except in compliance with the 1933 Act and any applicable interpretations of the SEC promulgated thereunder (including Interpretation A.65 of the SECs July 1997 Manual of Publicly Available Interpretations) the Investor will not effect any short sales with respect to the Purchased Shares or enter into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Purchased Shares, whether any such transaction, swap or series of transactions is to be settled by delivery of securities, in cash or otherwise.
The obligation of the Company hereunder to issue and sell the Purchased Shares to the Investor at the Closing is subject to the receipt at or before, or accuracy at, the Closing, as the case may be, of each of the following; provided , that these deliverables are for the Companys sole benefit and may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:
The obligation of the Investor hereunder to purchase the Purchased Shares at the Closing is subject to the receipt at or before, or accuracy at, the Closing, as the case may be, of each of the following; provided that these deliverables are for the Investors sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:
(a) Termination . This Agreement may be terminated prior to the Closing by mutual written agreement of the Company and the Investor.
(b) Effects of Termination . In the event of any termination of this Agreement as provided in Section 7(a) , this Agreement (other than this Section 7(b) and Section 8 , which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided , that nothing herein shall relieve any party from liability for intentional breach of this Agreement or fraud.
8-K Filing has the meaning set forth in Section 4(i) .
1933 Act has the meaning set forth in the preamble.
1934 Act has the meaning set forth in Section 3 .
Affiliate means any Person controlling, controlled by or under common control with any other Person. For purposes of this definition, control (including 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 the ownership of securities, partnership or other ownership interests, by contract or otherwise.
Agreement has the meaning set forth in the preamble.
Article Thirteenth means Article Thirteenth of the Certificate of Incorporation.
Benefit Plan means any employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment, change of control, consulting or fringe benefit plan, program, agreement or policy.
Board of Directors has the meaning set forth in Section 3(b) .
Board Representative has the meaning set forth in Section 4(m)(i)(A) .
Business Day has the meaning set forth in Section 4(d)(i) .
Bylaws has the meaning set forth in Section 3(p) .
Certificate of Incorporation has the meaning set forth in Section 3(p) .
Change of Control has the meaning set forth in Section 4(o ).
Closing has the meaning set forth in Section 1(b) .
Closing Date has the meaning set forth in Section 1(b) .
Code means the Internal Revenue Code of 1986, as amended.
Common Stock has the meaning set forth in the preamble.
Common Stock Equivalents has the meaning set forth in Section 4(l) .
Company has the meaning set forth in the preamble.
Company Controlled Affiliates has the meaning set forth in Section 4(o)(i) .
Confidentiality Agreement shall mean that certain Confidentiality Agreement by and among the Investor and its management company, Sagard Capital Partners Management Corporation, and the Company, dated as of October 6, 2009.
Contingent Obligation means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
Convertible Securities has the meaning set forth in Section 4(l) .
Designated Period means the period from and after the Closing Date until the first Business Day on which the Investor (and/or its Affiliates) cease(s) to beneficially own, in the aggregate, at least 900,000 shares of Common Stock (adjusted to take into account any stock splits, reverse stock splits, stock dividends, recapitalizations, conversions and the like).
Disclosure Letter has the meaning set forth in Section 3 .
Eligible Market means the NYSE Amex, The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
Employee Pension Benefit Plan has the meaning set forth in ERISA §3(2).
Environmental Laws has the meaning set forth in Section 3(x) .
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means each entity that is treated as a single employer with the Company for purposes of Code §414.
Fully-Diluted Basis means, in the case of any calculation of the number of shares of Common Stock deemed outstanding, that effect is first given to (i) all shares of Common Stock outstanding at the time of determination, (ii) all shares of Common Stock issuable upon the exercise of any in-the-money or at-the-money option, warrant or other right outstanding at the time of determination and (iii) all shares of Common Stock issuable upon the exercise of any in-the-money or at-the-money conversion or exchange right contained in any security outstanding at the time of determination that is convertible into or exchangeable for shares of Common Stock.
Governmental Entity means any federal, state, local or foreign, court, governmental, legislative, judicial, administrative or regulatory authority, agency, commission, body or other governmental entity or self regulatory organization or stock exchange.
Hazardous Materials has the meaning set forth in Section 3(x) .
Indebtedness of any Person means, without duplication (i) all indebtedness (including principal, interest, fees and charges) for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, capital leases in accordance with generally accepted accounting principles) (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
Insolvent means, with respect to any Person (i) the present fair saleable value of such Persons assets is less than the amount required to pay such Persons total Indebtedness, (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
Intellectual Property Rights has the meaning set forth in Section 3(w) .
Investor has the meaning set forth in the preamble.
Investor Controlled Entity has the meaning set forth in Section 4(o) .
Knowledge of the Company or phrases of similar effect, means the knowledge, after reasonable investigation, of the individuals listed on Schedule 8(a) attached hereto.
Law means any statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity, including, without limitation, any of the foregoing which relate to government contracts, national security, and protection of classified information.
Material Adverse Effect means any material adverse effect on the business, properties, assets, operations, results of operations or condition (financial or otherwise) of the Company and/or its Subsidiaries, taken as a whole, or on the transactions contemplated hereby or by the other Transaction Documents or by the other agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below), but shall not include facts, circumstances, events or changes: (i) generally affecting any of the industries in which the Company and its Subsidiaries operate; (ii) any conditions in or changes affecting the United States general economy or the general economy in any geographic area in which the Company or its Subsidiaries operate or developments in the financial and securities markets in the United States or elsewhere in the world; (iii) political conditions, including acts of war (whether or not declared), armed hostilities and terrorism, or developments or changes therein; (iv) any conditions resulting from natural disasters; (iv) resulting from changes in applicable legal requirements or Generally Accepted Accounting Principles or accounting standards; (vi) resulting from changes in the market price or the trading volume in the Common Stock in and of itself (it being understood that the underlying circumstances, event or reasons giving rise to any such changes (to the extent provided for in this definition) can be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur); or (vii) resulting from a failure to meet securities analysts published revenue or earnings predictions for the Company in and of itself (it being understood that the underlying circumstances, event or reasons giving rise to any such failure (to the extent provided for in this
definition) can be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur); provided , however , that the facts, circumstances, events or changes set forth in clauses (i) , (ii) , (iii) and (v) above may be taken into account in determining whether there is or has been a Material Adverse Effect if and only to the extent such act, development, occurrence, circumstance, event or change has a disproportionate impact on the Company and/or its Subsidiaries, relative to the other participants in the industries in which the Company and/or its Subsidiaries operate.
Material Contract and Material Contracts have the respective meanings set forth in Section 3(q) .
Multiemployer Plan has the meaning set forth in ERISA §3(37).
Notice of Acceptance has the meaning set forth in Section 4(l) .
Observer has the meaning set forth in Section 4(n) .
Offer has the meaning set forth in Section 4(l) .
Offer Notice has the meaning set forth in Section 4(l) .
Offer Period has the meaning set forth in Section 4(l) .
Offered Securities has the meaning set forth in Section 4(l) .
Options has the meaning set forth in Section 4(l) .
Person means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
Plan and Plans has the meaning set forth in Section 3(v) .
Principal Market has the meaning set forth in Section 3(d) .
Pro Rata Percentage has the meaning set forth in Section 4(l) .
Purchase Price has the meaning set forth in Section 1(c) .
Purchased Shares has the meaning set forth in the preamble.
Refused Securities has the meaning set forth in Section 4(l) .
Registration Rights Agreement has the meaning set forth in the preamble.
Regular Preemptive Period has the meaning set forth in Section 4(l) .
Regular Preemptive Right has the meaning set forth in Section 4(l) .
Regular Termination Event has the meaning set forth in Section 4(l) .
Regulation D has the meaning set forth in the preamble.
Reporting Period has the meaning set forth in Section 4(b) .
Rule 144 has the meaning set forth in Section 2(g)(i) .
SEC has the meaning set forth in the preamble.
SEC Documents has the meaning set forth in Section 3(i)(i) .
SEC Reports has the meaning set forth in Section 3 .
Significant Subsidiaries means General Physics Corporation, a Delaware corporation, and General Physics (UK) Ltd, a United Kingdom limited company.
Special Preemptive Period has the meaning set forth in Section 4(l) .
Special Preemptive Right has the meaning set forth in Section 4(l) .
Special Termination Event has the meaning set forth in Section 4(l) .
Subsequent Placement has the meaning set forth in Section 4(l) .
Subsequent Placement Agreement has the meaning set forth in Section 4(l) .
Subsidiaries means any joint venture or any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest.
Transaction Documents has the meaning set forth in Section 3(b) .
Volume-Weighted Average Price means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page GPX <equity> VWAP <go> (or its equivalent successor if such page is not available) in respect of the period from scheduled open of trading until the scheduled close of trading of the primary trading session on the Business Day immediately prior to the Closing Date (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on the Business Day immediately prior to Closing Date determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). The Volume-Weighted Average Price will be determined without regard to after hours trading or any other trading outside of the regular trading session trading hours.
(b) Governing Law; Jurisdiction; Jury Trial . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal Laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the Laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by Law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(c) Counterparts . This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided , that a facsimile or electronic ( i.e. , PDF) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original.
(d) Headings . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
(e) Severability . If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
(f) Entire Agreement; Amendments . This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Investor, the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and Sagard Capital Partners, L.P. (or any single assignee thereof). No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
(g) Notices . Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
GP Strategies Corporation |
|
6095 Marshalee Drive |
|
Suite 300 |
|
Elkridge, MD 21075 |
|
Telephone: |
(410) 379-3600 |
Facsimile: |
(410) 540-5302 |
Attention: |
Kenneth L. Crawford, General Counsel |
with a copy (for informational purposes only) to:
Latham & Watkins LLP |
|
885 Third Avenue |
|
New York, NY 10022 |
|
Telephone: |
(212) 906-1200 |
Facsimile: |
(212) 751-4864 |
Attention: |
David M. Schwartzbaum, Esq. |
If to the Investor:
Sagard Capital Partners, L.P. |
|
325 Greenwich Avenue |
|
Greenwich, CT 06830 |
|
Telephone: |
(203) 629-6700 |
Facsimile: |
(203) 629-6721 |
Attention: |
Daniel Friedberg |
with a copy (for informational purposes only) to:
Finn Dixon & Herling LLP |
|
177 Broad Street |
|
Stamford, CT 06901 |
|
Telephone: |
(203) 325-5000 |
Facsimile: |
(203) 325-5001 |
Attention: |
Charles J. Downey III, Esq. |
or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party pursuant to this Section. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the senders facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i) , (ii) or (iii) above, respectively.
(h) Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns. Neither party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party, including by way of merger, consolidation or otherwise. Notwithstanding the foregoing, the Investor may assign some or all of its rights hereunder to any of its Affiliates in connection with transfer (including by merger, consolidation or otherwise) of any of the Purchased Shares to such Affiliate without the consent of the Company, in which event such Affiliate-assignee shall be deemed to be the Investor hereunder with respect to such assigned rights; provided, that the Investor shall nonetheless remain responsible for all of its obligations hereunder.
(i) No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(j) Survival . The representations and warranties in this agreement shall expire at the Closing and have no further force or effect; provided , that (i) the representations and warranties in Sections 3(a) through 3(g) shall survive until the first anniversary of the Closing and (ii) the representations and warranties in Section 3(h) shall survive without limitation. The Investor may not first bring a claim in respect of a representation or warranty after such representation and warranty has expired or ceased to survive. All statements of the parties hereto as to factual matters contained any certificate or exhibit delivered by or on behalf of such party pursuant to this Agreement shall be deemed to be representations and warranties of such party hereunder as of the date of such certificate or exhibit. The agreements and covenants set forth in Sections 4 and 8 shall survive the Closing and the delivery and exercise of Purchased Shares, as applicable, in accordance with their terms. At such time that the Investor (or the Investors Affiliates) no longer beneficially owns any of the Purchased Shares, any remaining surviving provisions of this Agreement shall terminate, other than Sections 4(f) , 4(m)(vi) and this Section 8 . Nothing contained in this Section 8(j) shall be deemed to limit any rights of the Investor under applicable federal and state securities laws.
(k) Further Assurances . Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(l) No Strict Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
(m) Remedies . The Investor shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which it has been granted at any time under any other agreement or contract and all of the rights which such holders have under any Law.
The Investor shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by Law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at Law may prove to be inadequate relief to the Investor. The Company therefore agrees that the Investor shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security. Notwithstanding anything to the contrary contained herein, the Investor shall not be entitled to consequential, indirect or incidental damages hereunder. However, the foregoing shall not in any way limit the Investor from being reimbursed for its costs, fees or expenses, including, without limitation, reasonable attorneys fees and disbursements in connection with any of its rights and remedies hereunder.
(n) Acknowledgment Regarding Investors Purchased Shares . The Company acknowledges and agrees that the Investor is acting solely in the capacity of arms length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by the Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investors purchase of the Purchased Shares. The Company further represents to the Investor that the Companys decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.
[Signature Page Follows]
IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
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COMPANY: |
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GP STRATEGIES CORPORATION |
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By: |
/s/ Scott N. Greenberg |
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Name: Scott N. Greenberg |
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Title: Chief Executive Officer |
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INVESTOR: |
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SAGARD CAPITAL PARTNERS, L.P. |
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By: |
Sagard Capital Partners GP, Inc., |
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its general partner |
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By: |
/s/ Daniel Friedberg |
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Name: Daniel Friedberg |
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Title: Chief Executive Officer |
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
by and among
GP STRATEGIES CORPORATION
and
SAGARD CAPITAL PARTNERS, L.P.
Dated as of December 30, 2009
TABLE OF CONTENTS
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Page |
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1. DEFINITIONS |
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2. REGISTRATION |
3 |
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(A) |
MANDATORY REGISTRATION |
3 |
(B) |
INELIGIBILITY FOR FORM S-3 |
4 |
(C) |
SUFFICIENT NUMBER OF SHARES REGISTERED |
4 |
(D) |
UNDERWRITTEN OFFERING |
4 |
(E) |
PLAN OF DISTRIBUTION |
6 |
(F) |
LEGAL COUNSEL |
6 |
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3. RELATED OBLIGATIONS |
6 |
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4. OBLIGATIONS OF THE INVESTORS |
11 |
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5. SUSPENSION OF REGISTRATION RIGHTS |
12 |
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(A) |
SUSPENSION NOTICES |
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(B) |
HOLDBACK PERIODS |
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(C) |
DELAY PAYMENTS |
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6. EXPENSES OF REGISTRATION |
15 |
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7. INDEMNIFICATION |
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(A) |
OBLIGATIONS OF THE COMPANY TO INDEMNIFY |
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(B) |
OBLIGATIONS OF THE INVESTORS TO INDEMNIFY |
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(C) |
PROCEDURE |
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(D) |
CONTRIBUTION |
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(E) |
OTHER AGREEMENTS |
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(F) |
PAYMENTS |
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(G) |
SURVIVAL |
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8. REPORTS UNDER THE EXCHANGE ACT |
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9. MISCELLANEOUS |
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(A) |
OTHER REGISTRATION RIGHTS |
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(B) |
GENERAL PIGGYBACK RIGHTS OF THE INVESTORS |
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(C) |
ASSIGNMENT OF REGISTRATION RIGHTS |
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(D) |
SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES |
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(E) |
SEVERABILITY |
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(F) |
DESCRIPTIVE HEADINGS |
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(G) |
NOTICES |
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(H) |
GOVERNING LAW |
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(I) |
AMENDMENTS AND WAIVERS |
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(J) |
SPECIFIC PERFORMANCE |
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(K) |
DELAYS OR OMISSIONS |
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(L) |
FINAL AGREEMENT |
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(M) |
EXECUTION |
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(N) |
CONSENTS |
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(O) |
CONSTRUCTION |
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(P) |
TERMINATION OF AGREEMENT |
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Exhibit A - Plan of Distribution |
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Exhibit B - Notice of Registration and Selling Securityholder Questionnaire |
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Exhibit C - Notice of Transfer |
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this Agreement ), dated as of December 30, 2009, is by and among GP Strategies Corporation, a Delaware corporation (the Company ), and the undersigned Purchaser (the Purchaser ).
RECITALS
In connection with, and pursuant to, that certain Securities Purchase Agreement by and among the parties hereto of even date herewith (the Securities Purchase Agreement ), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue and sell to the Purchaser at the Closing 2,857,143 shares (the Purchased Shares ) of Common Stock, par value $0.01 per share (the Common Stock ), of the Company. Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement.
To induce the Purchaser to execute, deliver and perform the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the Securities Act ), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors (as defined below) hereby agree as follows:
1. DEFINITIONS . In addition to the capitalized terms elsewhere defined herein, the following terms, when used herein, shall have the following meanings, unless the context otherwise requires:
Agreement has the meaning set forth in the preface above.
Assignment Period has the meaning set forth in Section 5(c) .
Black Out Period has the meaning set forth in Section 5(a)(i)(B) .
Business Day means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in New York, New York generally are authorized or required by law or other governmental actions to close.
Claims has the meaning set forth in Section 7(a) .
Common Stock has the meaning set forth in the recitals above.
Company has the meaning set forth in the preface above.
Effective Date means the date a Registration Statement is declared or becomes effective under the Securities Act.
Effectiveness Deadline has the meaning set forth in Section 2(a) .
Exchange Act has the meaning set forth in Section 3(b) .
Filing Deadline has the meaning set forth in Section 2(a) .
Holdback Period has the meaning set forth in Section 5(b) .
Investor Representative means Sagard Capital Partners, L.P.
Investors means (i) the Purchaser, (ii) any transferee or assignee thereof to whom the Purchaser or an Investor assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9(c) , and (iii) any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9(c) .
Legal Counsel has the meaning set forth in Section 2(f) .
Liquidated Damages has the meaning set forth in Section 5(c) .
Notice and Questionnaire means the selling securityholder questionnaire attached to the Notice of Registration and Selling Securityholder Questionnaire attached as Exhibit B hereto.
Person means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, other entity, an unincorporated organization and a governmental or any department or agency thereof.
Purchased Shares has the meaning set forth in the recitals above.
Purchaser has the meaning set forth in the preface above.
Records has the meaning set forth in Section 3(q)(ii) .
Register , registered , and registration refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous or delayed basis ( Rule 415 ), and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.
Registrable Securities means (i) all Purchased Shares, (ii) all shares of Common Stock issued pursuant to Section 4(l) of the Securities Purchase Agreement (including shares of Common Stock issuable upon exercise, conversion or exchange of securities issued pursuant to such Section 4(l)) and (iii) any shares of capital stock issued or issuable with respect to the Purchased Shares or any of the shares described in clause (ii), in either case as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise; provided , however , that Registrable Securities shall not include any such shares (A) which have been disposed of pursuant to an effective registration statement under the Securities Act, (B) which
have been sold or otherwise transferred in a transaction in which the rights under the provisions of this Agreement have not been assigned, (C) which have been sold under Rule 144 or (D) which are owned by an Investor with respect to which this Agreement has terminated pursuant to Section 9(p) hereof.
Registrable Securities Purchase Price means, with respect to any Registrable Security, the purchase price actually paid by Sagard Capital Partners, L.P. for such Registrable Security (or, if such Registrable Security was acquired upon exercise or conversion of other equity securities, the exercise price or conversion price thereof), in all cases subject to adjustment for any stock split, dividend, spin-off or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization or business combination.
Registration Default has the meaning set forth in Section 5(c) .
Registration Period has the meaning set forth in Section 3(a) .
Registration Statement means a registration statement or registration statements of the Company filed under the Securities Act covering the Registrable Securities.
Rule 144 means Rule 144 promulgated by the SEC under the Securities Act.
Scheduled Earnings Blackouts has the meaning set forth in Section 5(a)(i)(B) .
SEC means the United States Securities and Exchange Commission.
Securities Act has the meaning set forth in the recitals above.
Securities Purchase Agreement has the meaning set forth in the recitals above.
Subsequent Registration Rights has the meaning set forth in Section 9(a)(ii) .
Suspension Notice has the meaning set forth in Section 5(a)(i) .
Underwritten Offering means an offering registered under the Securities Act in which securities of the Company are sold to an underwriter or underwriters for reoffering to the public.
(a) Mandatory Registration . The Company shall prepare and file with the SEC a Registration Statement on Form S-3 covering the resale of all of the Registrable Securities. The Company shall file the Registration Statement no later than ninety (90) days prior to the first anniversary of the Closing. Such deadline is referred to herein as the Filing Deadline . If Form S-3 is unavailable for such a registration, the Company shall use such other form as is available for such a registration, subject to the provisions of Section 2(b) . The Registration Statement prepared pursuant hereto shall register for resale at least that number of shares of Common Stock equal to the aggregate number of Registrable Securities issued and outstanding as of the trading day immediately preceding the date the Registration Statement is initially filed with the SEC, subject to adjustment as provided in Section 2(d) . The Company shall use its reasonable best
efforts to have the Registration Statement declared effective by the SEC no later than the first anniversary of the Closing (the Effectiveness Deadline ).
(b) Ineligibility for Form S-3 . If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Investor Representative and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.
(c) Sufficient Number of Shares Registered . If the number of shares available under the Registration Statement filed pursuant to Section 2(a) is, or becomes, insufficient to cover all of the Registrable Securities required to be covered by the Registration Statement, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least 100% of the aggregate number of the Registrable Securities required to be registered hereunder as of the trading day immediately preceding the date of the filing of such amendment or new Registration Statement, in each case, as soon as practicable, but in any event not later than fifteen (15) days after the necessity therefor arises. The Company shall use its reasonable best efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For all purposes of this Agreement, such additional Registration Statement shall be deemed to be the Registration Statement required to be filed by the Company pursuant to Section 2(a) of this Agreement, and the Company and the Investors shall have the same rights and obligations with respect to such additional Registration Statement as they shall have with respect to the initial Registration Statement required to be filed by the Company pursuant to Section 2(a) .
(d) Underwritten Offering . If, at any time and from time to time, the Investor Representative wishes to effect an Underwritten Offering of any Registrable Securities:
The Investor Representative shall not be entitled to require more than one (1) Underwritten Offering in any 12-month period (counting only those Underwritten Offerings which have been consummated ( i.e. , the registration statement for the underwriting has been declared effective and the securities registered thereunder have actually been sold) in any such 12-month period). Furthermore, notwithstanding the foregoing, nothing in this Section 2(d) shall obligate the Company to file a Registration Statement prior to the Filing Deadline or to cause a Registration Statement for an Underwritten Offering to become effective prior to the Effective Date.
Notwithstanding anything contained herein to the contrary, no Investor may participate in any Underwritten Offering pursuant to a registration hereunder unless that Investor (i) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved
by the Investor Representative and (ii) completes and executes all questionnaires (including customary signed questionnaires for due diligence purposes in connection with any filing with the Financial Industry Regulatory Authority, Inc.), powers of attorney, indemnities (but only in the same manner and to the same extent as set forth in Section 7(b) ), underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.
(e) Plan of Distribution . The intended method or methods of disposition and/or sale (Plan of Distribution) of the Registrable Securities contained in the Registration Statement to be filed hereunder shall be in the form attached hereto as Exhibit A , with only such modifications and changes as expressly agreed by the Company and the Investor Representative.
(f) Legal Counsel . Subject to Section 6 hereof, the Investor Representative shall have the right to select one legal counsel in connection with any offering pursuant to this Section 2 ( Legal Counsel ), which shall be Finn Dixon & Herling LLP or such other counsel as hereafter designated by the Investor Representative. The Company shall reasonably cooperate with Legal Counsel in performing the Companys obligations under this Agreement.
3. RELATED OBLIGATIONS . At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2 or Section 3(p) , the Company will use its reasonable best efforts to effect the registration of the Registrable Securities covered by such Registration Statement in accordance with the intended method of disposition thereof and the Company shall have the following additional obligations:
the right of the Investors to require the Company to file any Registration Statement or, after the filing thereof, use any Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Securities pursuant thereto shall be suspended for a period (a Black Out Period ) of not more than 200 days in the aggregate in any 360 consecutive-day period; provided , however , that, during the period beginning on the earlier to occur of (i) the first anniversary of the date hereof, and (ii) the Effective Date of the initial Registration Statement required to be filed by the Company pursuant to Section 2(a) (the earlier of the two dates referred to in clauses (i) and (ii), the Reference Date ), and ending on the second anniversary of the Reference Date, such 200 day aggregate limit may be increased for up to two additional periods in any 12-month period, not to exceed 60 days in the aggregate in any 12 consecutive-month period, but only in the case of a Suspension Notice(s) approved by all of the members of the executive committee of the Board of Directors (other than any representative of the Investor to the extent a member thereof) delivered in respect of a material transaction described in Section 5(a)(i)(A) ; and provided , further , however , that following the second anniversary of the Reference Date, such 200 day aggregate limit may be increased (such increase in the 200 day aggregate limit pursuant to the immediately preceding proviso or this proviso, the Limit Increase ) for up to two additional periods in any 12-month period, not to exceed 30 days
in the aggregate in any 12 consecutive-month period, but only in the case of a Suspension Notice(s) approved by all of the members of the executive committee of the Board of Directors (other than any representative of the Investor to the extent a member thereof) delivered in respect of a material transaction described in Section 5(a)(i)(A) . If the Company modifies its earnings blackout policy, or its implementation thereof, to reduce the number of days comprising Scheduled Earnings Blackouts, the 200 day aggregate limit in the preceding sentence (as may be increased pursuant to the first proviso or the second proviso in the preceding sentence) shall be reduced by a like number of days. Furthermore, in addition to the 200 day (or such greater or lesser period, as applicable, pursuant to the Limit Increase and any decrease pursuant to the previous sentence, respectively) aggregate limit on Blackout Periods per each 360 day period, no Black Out Period shall last for more than 45 consecutive days in any 360 consecutive day period except (i) in the case of a Suspension Notice delivered, or a Scheduled Earnings Blackout designated, in respect of the Companys year-end earnings reports, no more than 65 consecutive days after delivery of such Suspension Notice or start of such Scheduled Earnings Black Out and (ii) in the case of a Suspension Notice delivered in respect of a material transaction described in Section 5(a)(i)(A) , no more than 100 consecutive days after delivery of such Suspension Notice. For the avoidance of doubt, with respect to any Registrable Security, no Registration Default shall be applicable to such Registrable Security during any Black Out Period permitted to be imposed on the holder of such Registrable Security pursuant to this Section 5 .
A Suspension Notice shall not disclose the specific material, non-public information with respect to any Black Out Period, unless the Investor specifically requests in writing to receive such material, non-public information and agrees in writing to keep such material, non-public information confidential.
(b) Holdback Periods . If any sale of securities in connection with a registration hereunder shall be in connection with an underwritten public offering, each of the Company and each Investor which is actually selling shares in such underwritten public offering agree and, if so requested by any underwriter in connection with such offering or sale, each director or executive officer of the Company, shall enter into a customary agreement with such underwriter agreeing not to effect any sale or distribution (subject to customary carveouts or such other exceptions as the managing underwriter may agree to), including, in the case of such selling Investors, any sale pursuant to Rule 144 under the Securities Act, of any such securities of the Company, or options or other rights convertible into, or exchangeable or exercisable for, such
securities (other than as part of such underwritten public offering), within seven (7) days before, or ninety (90) days (or such lesser period as the managing underwriters may permit) after, the effective date of any such registration or the closing of any sale of securities in connection with a registration (except as part of any such registration or sale) (such period, a Holdback Period ); provided , that, notwithstanding the foregoing, with respect to any offering by the Company as to which the Investors exercise rights under Sections 9(a) or 9(b) , the selling Investors shall have no obligation under this Section 5(b) , and shall not be required to enter into any agreement with an underwriter pursuant to this Section 5(b) , in each case that is more restrictive than the obligations imposed on and agreements required to be entered into by the directors and senior executive officers of the Company in connection with such offering.
(c) Delay Payments . The Company and each Investor each agree that any such Investor will suffer damages, and it would not be feasible to ascertain the extent of such damages with precision, if the Company fails to fulfill its obligations hereunder. Subject in all cases to Section 5 (including any applicable Blackout Period or Holdback Period imposed in accordance therewith, whether such period is pursuant to the agreement set forth in Section 5 or a separate agreement with the underwriters of any company offering or Underwritten Offering), if (i) a Registration Statement is not filed on or prior to any required date hereunder, (ii) a Registration Statement is not declared effective by the SEC or any order of a governmental authority preventing or suspending the use of any prospectus is not lifted prior to any Effective Date or Effectiveness Date applicable thereto, (iii) the Company fails to file with the SEC a request for acceleration of effectiveness in accordance with Rule 461 promulgated under the Securities Act, within five (5) Business Days after the date that (A) the Company is notified in writing by the SEC that a Registration Statement will not be reviewed, or is not subject to further review and (B) Legal Counsel has given its prior approval to request acceleration of effectiveness pursuant to Section 3(c) , or (iv) after the Effective Date, a Registration Statement required to be effective hereunder ceases for any reason to remain effective (without being succeeded immediately by a replacement Registration Statement filed and declared effective) or usable (excluding as a result of a post-effective amendment thereto that is required by applicable law in order to cause a permitted assignee hereunder to be named as a selling securityholder therein, provided that such post-effective amendment is filed by the Company within ten (10) Business Days after the Company receiving notice from any Investor that such post-effective amendment is required (any such ten (10) Business Day period, an Assignment Period ) for the resale of Registrable Securities, or the Investors are otherwise unable to effect the resale of any Registrable Securities hereunder as a result of a breach by the Company of its obligations hereunder, in each case for such period of time (excluding the duration of any Black Out Period applicable to such Registrable Securities, any Holdback Period, or any Assignment Period) as to any Registrable Securities for which any Registration Statement is then required to be effective hereunder (each of the events referred to in clauses (i) through (iv) , a Registration Default ) the Company shall pay to any Investor holding any Registrable Securities not eligible for resale as a result of such Registration Default, for the duration of such Registration Default as it applies to such Registrable Securities held by such Investor an amount equal to one percent (1%) of the Registrable Securities Purchase Price of such Registrable Securities per thirty (30) days (or portion thereof), payable in cash on the second business day of each calendar month in respect of payments accruing through the last day of the preceding calendar month, with late payments accruing interest at a rate of eighteen percent (18%) per annum (or such lesser maximum amount that is permitted to be paid by applicable law), compounding on each payment date (the
payments described in this Section 5(c) , the Liquidated Damages ); provided , however, that the aggregate amount of Liquidated Damages payable by the Company to the Investors, for all Registration Defaults, shall not exceed $2,400,000. Each of the Company and each Investor agree that the Liquidated Damages provided for in this Section 5 constitute a reasonable estimate of the monetary damages that may be incurred by the Investor by reason of a Registration Default and that such Liquidated Damages are the only monetary damages available to the Investors in the event of a Registration Default. Notwithstanding anything to the contrary set forth in this Section 5 , no event shall be considered a Registration Default hereunder if such event or the primary cause thereof (i) was consented to in writing by the Investor Representative or (ii) results (and shall not be considered a Registration Default for as long as it continues to result) solely from (A) any breach or delay in performance by any Investor of any of its obligations set forth in this Agreement or (B) any delay solely caused or requested by any underwriter or underwriters in connection with an Underwritten Offering.
6. EXPENSES OF REGISTRATION . The Company shall bear all expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3 , including, without limitation, all registration, listing and qualification fees, printers and accounting fees, fees and disbursements of counsel for the Company in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement, fees and disbursements of Legal Counsel (up to an aggregate of $25,000 for Legal Counsel) and reasonable fees and disbursements of underwriters and their counsel customarily paid by the issuers or sellers of securities (such as fees and expenses related to dealings with and filings with the Financial Industry Regulatory Authority, Inc. and any blue-sky related filings). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.
For the avoidance of doubt, each Investor shall pay all underwriting and placement discounts and commissions, agency and placement fees, brokers commissions and transfer taxes, if any, relating to the sale or disposition of such Investors Registrable Securities.
7. INDEMNIFICATION . If any Registrable Securities are included in a Registration Statement under this Agreement:
(a) Obligations of the Company to Indemnify . In the event of any registration of any Registrable Securities pursuant to this Agreement, the Company shall indemnify and hold harmless each Investor and its directors, officers, partners, agents, stockholders, managers, members, employees, each underwriter, if any, in the offering or sale of such securities, and each other Person, if any, who controls such Investor or any such underwriter within the meaning of the Securities Act, and the directors, officers, partners, agents, stockholders, managers, members and employees of each such controlling Person, from and against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel) to which each such indemnified party may become subject under the Securities Act, the Exchange Act or otherwise (collectively,
Claims ), insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such securities were registered under the Securities Act or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any untrue statement or alleged untrue statement of a material fact contained in any preliminary, final or summary prospectus or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided , however , that the Company shall not be liable to any such indemnified party in any such case to the extent such Claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in such registration statement or amendment thereof or supplement thereto or in any such prospectus or any preliminary, final or summary prospectus or free writing prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of such indemnified party specifically for use therein; provided , further , however , that the Company shall not be liable to any such indemnified party with respect to any amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld). Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of Registrable Securities by an Investor. Notwithstanding any of the foregoing to the contrary, the foregoing indemnity agreement shall not inure to the benefit of any Investor or underwriter, or any person controlling or claiming through such Investor or underwriter, from whom the person asserting any such Claim purchased shares in the offering (i) with respect to any preliminary prospectus, if a copy of the prospectus (as then amended or supplemented and previously provided by the Company to the Investor or underwriter, as applicable, in accordance with Section 3(d) ) was not sent or given by or on behalf of such Investor or underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such Person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such Claim and (ii) with respect to any Registration Statement, preliminary, final or summary prospectus or any amendment or supplement thereto, or any free writing prospectus utilized in connection therewith, if any such document was used during a Black Out Period.
(b) Obligations of the Investors to Indemnify . Each Investor selling Registrable Securities shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7(a) ) the Company, its officers, directors, employees, legal counsel and accountants, each Person controlling the Company within the meaning of the Securities Act and each of the other Investors and their respective directors, officers, stockholders, fiduciaries, managing directors, agents, affiliates, consultants, representatives, successors, assigns or general and limited partners and respective controlling Persons for Claims insofar as such Claims arise out of are based upon any untrue statement or alleged untrue statement of any material fact in, or omission or alleged omission of any material fact from, such
registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or any free writing prospectus utilized in connection therewith, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Investor specifically for use therein, and each such Investor shall reimburse such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided , however , that the aggregate amount which any such Investor shall be required to pay pursuant to this Section 7(b) and/or any other provisions of this Section 7 shall in no case be greater than the amount of the net proceeds received by such Investor upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such Claim.
(c) Procedure . Any Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 7 , but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 7 , except to the extent the indemnifying party is materially and actually prejudiced thereby, and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Agreement. In case any action or proceeding is brought against an indemnified party and it shall notify the indemnifying party of the commencement thereof (as required above), the indemnifying party shall be entitled to participate therein and to assume the defense thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided , however , that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within twenty (20) days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so; or (ii) if such indemnified party who is a defendant in any action or proceeding which is also brought against the indemnifying party reasonably shall have concluded that there may be one or more legal or equitable defenses available to such indemnified party which are not available to the indemnifying party or which may conflict with those available to another indemnified party with respect to such Claim; or (iii) if representation of both parties by the same counsel is otherwise, in the reasonable opinion of outside counsel to the indemnified party, a conflict of interest between such indemnified and indemnifying party may exist in respect of such claim, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction) and the indemnifying party shall be liable for any reasonable expenses therefor. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or
claim and (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) Contribution . If for any reason the foregoing indemnity is unavailable, unenforceable or is insufficient to hold harmless an indemnified party under Sections 7(a) or (b) , then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such Claim, as well as other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if any contribution pursuant to this Section 7(d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 7(d) . The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 7(d) to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 7(d) to contribute any amount in excess of the net proceeds received by such indemnifying party from the sale of Registrable Securities in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate, less the amount of any indemnification payment made by such indemnifying party pursuant to Section 7(b) .
(e) Other Agreements . Notwithstanding this Section 7 , to the extent that the provisions on indemnification and contribution contained in the underwriting agreement, if any, entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
(f) Payments . The indemnification and contribution required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.
(g) Survival . The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of any Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT . With a view to making available to the Investors all of the benefits of Rule 144 (or any similar successor rule), the Company agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 (or any similar successor rule), (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act and (iii) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (A) a written statement by the Company that it has complied with the reporting requirements of Rule 144 (or any similar successor rule) and the Exchange Act, (B) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (C) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 (or any similar successor rule) without registration.
(b) General Piggyback Rights of the Investors . If at any time during the Registration Period, there is not an effective Registration Statement covering all of the Registrable Securities for any reason whatsoever and the Company has filed, or is preparing to file, with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Investor written notice of such determination and (i) the Company shall not effect such filing without reasonable prior written notice to the Investor Representative and (ii) if, within ten (10) days after receipt of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Investor requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights, which customary underwriter cutbacks shall be applied such that shares of Common Stock are included in such registration as follows: first , all shares of Common Stock to be offered by the Company and all Registrable Securities to be offered by Investors, pro rata among the Company and such participating Investors, and second ,
shares of Common Stock to be offered by any other holders of registration rights. For the avoidance of doubt, all of the covenants and obligations of the Company hereunder shall apply to such piggy back registration, to the extent consistent with this Section 9(b) .
(c) Assignment of Registration Rights . The registration rights of any Investor under this Agreement with respect to any Registrable Securities may be assigned to:
Upon any such permitted assignment, (i) the Investor shall give the Company written notice at or prior to the time of such assignment stating the name and address of the assignee and identifying the shares with respect to which the rights under this Agreement are being assigned; (ii) such assignee shall agree in writing, in form and substance reasonably satisfactory to the Company, to be bound to the same extent and in the same capacity as the Investor by the provisions of this Agreement; and (iii) such assignee shall acknowledge, immediately following such assignment, that the further disposition of such securities by such assignee may be restricted under the Securities Act. In connection with any such transfer the Company shall, at its sole cost and expense, promptly after such assignment take such reasonable actions as shall be reasonably acceptable to the Investors and such permitted transferee to assure that the Registration Statement and related prospectus are available for use by such permitted transferee for sales of the Registrable Securities in respect of which the rights to registration have been so assigned. Notwithstanding any other provision of this Agreement, no Person who acquires securities transferred in violation of this Agreement, or who acquires securities that are not, or upon acquisition cease to be, Registrable Securities, shall have any rights under this Agreement with respect to such securities, and such securities shall not have the benefits afforded hereunder to Registrable Securities.
(d) Successors and Assigns; Third Party Beneficiaries . Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective permitted successors and assigns of the parties hereto, whether so expressed or not.
(e) Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will
be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
(f) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part of, and shall not be utilized in interpreting, this Agreement.
(g) Notices . Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service or (iv) five (5) days after deposit in the U.S. mail, return receipt requested, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
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GP Strategies Corporation |
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6095 Marshalee Drive |
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Suite 300 |
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Elkridge, MD 21075 |
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Telephone: |
(410) 379-3600 |
Facsimile: |
(410) 540-5302 |
Attention: |
Kenneth L. Crawford, General Counsel |
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With a copy to: |
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Latham & Watkins LLP |
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805 Third Avenue |
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New York, New York 10022 |
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Telephone: |
(212) 906-1200 |
Facsimile: |
(212) 751-4864 |
Attention: |
David M. Schwartzbaum, Esq. |
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If to the Purchaser: |
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Sagard Capital Partners, L.P. |
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325 Greenwich Avenue |
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Greenwich, Connecticut 06830 |
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Telephone: |
(203) 629-6700 |
Facsimile: |
(203) 629-6721 |
Attention: |
Daniel Friedberg |
If to Legal Counsel: |
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Finn Dixon & Herling LLP |
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177 Broad Street |
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Stamford, Connecticut 06901 |
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Telephone: |
(203) 325-5000 |
Facsimile: |
(203) 325-5001 |
Email: |
cdowney@fdh.com |
Attention: |
Charles J. Downey III, Esq. |
If to an Investor, to its address and facsimile number set forth on the Schedule of Investors attached hereto, with copies to such Investors representatives as set forth on the Schedule of Investors, or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt or deposit in the U.S. mail, as the case may be, (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the senders facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission, (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service or (D) by a signed return receipt in accordance with clause (i) , (ii) , (iii) , or (iv) above, respectively.
(h) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(i) Amendments and Waivers . The provisions of this Agreement may be amended, waived or otherwise modified upon the written agreement of the Company and the Investor Representative. Any waiver, permit, consent or approval of any kind or character on the part of any holders of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing.
(j) Specific Performance . The Company and the Investor acknowledge and agree that irreparable damage to the other party would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party shall be entitled to an injunction, injunctions or other equitable relief, without the necessity of posting a bond, to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which the parties may be entitled by law or equity.
(k) Delays or Omissions . It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.
(l) Final Agreement . This Agreement constitutes the complete and final agreement of the parties concerning the matters referred to herein and supersedes all prior agreements and understandings.
(m) Execution . This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
(n) Consents . All consents and other determinations to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Investor Representative.
(o) Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
(p) Termination of Agreement . This Agreement and all registration rights granted to an Investor shall terminate and be of no further force or effect with respect to that Investor if both of the following conditions are satisfied: (i) all Registrable Securities then held by and issuable to such Investor (and its affiliates, partners and former partners, members and former members) may be sold under Rule 144 during any ninety (90) day period and the certificates evidencing such Registrable Securities bear no legends restricting the transfer thereof (and, to the extent such securities are issued in global form, bear an unrestricted CUSIP number) and (ii) the
Companys Common Stock is traded on a national securities exchange or quoted on an automated inter-dealer quotation system; provided that Section 7 , Section 9 and any accrued but unpaid obligation of the Company in respect of Liquidated Damages shall survive any termination under this Section 9(p) .
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[Signature Page to GP Strategies Corporation
Registration Rights Agreement]
IN WITNESS WHEREOF, the Purchaser and the Company have caused this Registration Rights Agreement to be duly executed as of the date first written above.
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COMPANY : |
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GP STRATEGIES CORPORATION |
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By: |
/s/ Scott N. Greenberg |
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Name: |
Scott N. Greenberg |
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Title: |
Chief Executive Officer |
[Signature Page to GP Strategies Corporation
Registration Rights Agreement]
IN WITNESS WHEREOF, the Purchaser and the Company have caused this Registration Rights Agreement to be duly executed as of the date first written above.
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PURCHASER: |
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SAGARD CAPITAL PARTNERS, L.P. |
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By: |
Sagard Capital Partners GP, Inc., |
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its general partner |
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By: |
/s/ Daniel Friedberg |
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Name: |
Daniel Friedberg |
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Title: |
Chief Executive Officer |
SCHEDULE OF INVESTORS
Investors Name |
Investors Address, Facsimile Number and Email Address |
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Sagard Capital Partners, L.P. |
325 Greenwich Avenue |
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Greenwich, Connecticut 06830 |
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Attention: |
Daniel Friedberg |
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Facsimile: |
(203) 629-6721 |
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Email: |
On file with the Company |
EXHIBIT A
Plan of Distribution
Each Selling Stockholder (the Selling Stockholders ) of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock covered hereby on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares:
· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
· an exchange distribution in accordance with the rules of the applicable exchange;
· privately negotiated transactions;
· settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
· in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
· through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
· a combination of any such methods of sale; or
· any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the Securities Act ), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be underwriters within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be underwriters within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.
We agreed to keep this prospectus effective until all of the shares continuing to have registration rights have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares of Common Stock covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a
copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
EXHIBIT B
GP Strategies Corporation
Notice of Registration
Statement
and
Selling Securityholder Questionnaire
[Date]
Reference is hereby made to the Registration Rights Agreement (the Registration Rights Agreement ) between GP Strategies Corporation (the Company ) and the Investors named therein. Pursuant to the Registration Rights Agreement, the Company has filed or will file with the United States Securities and Exchange Commission (the Commission ) a registration statement on Form S-3 (the Shelf Registration Statement ) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the Securities Act ), of the Companys common stock issued in connection with the Companys recently completed private exchange offers (the Securities ). A copy of the Registration Rights Agreement has been filed with the Commission on Form 8-K and can be obtained from the Commissions website at www.sec.gov. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Each holder of Registrable Securities (as defined in the Registration Rights Agreement) is entitled to have the Registrable Securities held by it included in the Shelf Registration Statement (or a supplement or amendment thereto). In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire ( Notice and Questionnaire ) must be completed, executed and delivered to the Companys counsel at the address set forth herein for receipt ON OR BEFORE [ ] . Holders of Registrable Securities who do not properly complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.
ELECTION
The undersigned holder (the Selling Securityholder ) of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement, including, without limitation, Section 5 of the Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.
Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company, its officers who sign any Shelf Registration Statement, and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act of 1934, as amended (the Exchange Act ), against certain losses arising out of an untrue statement, or the alleged untrue statement, of a material fact in the Shelf Registration Statement or the related prospectus or the omission, or alleged omission, to state a material fact required to be stated in such Shelf Registration Statement or the related prospectus, but only to the extent such untrue statement or omission, or alleged untrue statement or omission, was made in reliance on and in conformity with the information provided in this Notice and Questionnaire.
Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and Transfer Agent the Notice of Transfer set forth in Exhibit C to the Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is true, accurate and complete:
QUESTIONNAIRE
(1) |
(a) |
Full legal name of Selling Securityholder: |
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(b) |
Full legal name of registered Holder (if not the same as in (a) above) of Registrable Securities listed in Item (3) below: |
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(2) |
Address for notices to Selling Securityholder: |
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Telephone: |
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Fax: |
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Contact Person: |
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E-mail for Contact Person: |
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(3) |
Beneficial Ownership of Securities: |
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Except as set forth below in this Item (3), the undersigned does not beneficially own any Securities. |
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(a) |
Number of shares of Registrable Securities beneficially owned: |
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(b) |
Number of shares of Common Stock other than Registrable Securities beneficially owned: |
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(c) |
Number of shares of Registrable Securities that the undersigned wishes to be included in the Shelf Registration Statement: |
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(4) |
Beneficial Ownership of Other Securities of the Company: |
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Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Company, other than the Securities listed above in Item (3). |
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State any exceptions here: |
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(5) |
Individuals who exercise dispositive powers with respect to the Securities: |
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If the Selling Securityholder is not an entity that is required to file reports with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (a Reporting Company ), then the Selling Securityholder must disclose the name of the natural person(s) who exercise sole or shared dispositive powers with respect to the Securities. Selling Securityholders should disclose the beneficial holders, not nominee holders or other such others of record. In addition, the Commission has provided guidance that Rule 13d-3 of the Exchange Act should be used by analogy when determining the person or persons sharing voting and/or dispositive powers with respect to the Securities. |
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(a) |
Is the holder a Reporting Company? |
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Yes o |
No o |
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If No, please answer Item (5)(b). |
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(b) |
List below the individual or individuals who exercise dispositive powers with respect to the Securities: |
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Please note that the names of the persons listed in (b) above will be included in the Shelf Registration Statement and related Prospectus. |
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(6) |
Relationships with the Company: |
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Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. |
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State any exceptions here: |
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(7) |
Plan of Distribution: |
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Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only in accordance with the Plan of Distribution section attached as Exhibit A to the Registration Rights Agreement. |
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State any exceptions here: |
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Note: In no event may such method(s) of distribution take the form of an Underwritten Offering of Registrable Securities without the prior written agreement of the Company. |
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(8) |
Broker-Dealers: |
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The Commission requires that all Selling Securityholders that are registered broker-dealers or affiliates of registered broker-dealers be so identified in the Shelf Registration Statement. In addition, the Commission requires that all Selling Securityholders that are registered broker-dealers be named as underwriters in the Shelf Registration Statement and related Prospectus, even if they did not receive the Registrable Securities as compensation for underwriting activities. |
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(a) |
State whether the undersigned Selling Securityholder is a registered broker-dealer: |
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Yes o |
No o |
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(b) |
If the answer to (a) is Yes, you must answer (i) and (ii) below, and (iii) below if applicable. Your answers to (i) and (ii) below, and (iii) below if applicable, will be included in the Shelf Registration Statement and related Prospectus. |
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(i) Were the Securities acquired as compensation for underwriting activities? |
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Yes o |
No o |
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If you answered Yes, please provide a brief description of the transaction(s) in which the Securities were acquired as compensation: |
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(ii) Were the Securities acquired for investment purposes? |
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Yes o |
No o |
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(iii) If you answered No to both (i) and (ii), please explain the Selling Securityholders reason for acquiring the Securities: |
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(c) |
State whether the undersigned Selling Securityholder is an affiliate of a registered broker-dealer and, if so, list the name(s) of the broker-dealer affiliate(s): |
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Yes o |
No o |
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(d) |
If you answered Yes to question (c) above: |
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(i) Did the undersigned Selling Securityholder purchase Registrable Securities in the ordinary course of business? |
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Yes o |
No o |
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If the answer is No to question (d)(i), provide a brief explanation of the circumstances in which the Selling Securityholder acquired the Registrable Securities: |
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(ii) At the time of the purchase of the Registrable Securities, did the undersigned Selling Securityholder have any agreements, understandings or arrangements, directly or indirectly, with any person to dispose of or distribute the Registrable Securities? |
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Yes o |
No o |
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If the answer is Yes to question (d)(ii), provide a brief explanation of such agreements, understandings or arrangements: |
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If the answer is No to Item (8)(d)(i) or Yes to Item (8)(d)(ii), you will be named as an underwriter in the Shelf Registration Statement and the related Prospectus. |
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(9) |
Hedging and short sales: |
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(a) |
State whether the undersigned Selling Securityholder has or will enter into hedging transactions with respect to the Registrable Securities: |
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Yes o |
No o |
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If Yes, provide below a complete description of the hedging transactions into which the undersigned Selling Securityholder has entered or will enter and the purpose of such hedging transactions, including the extent to which such hedging transactions remain in place: |
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(b) |
Set forth below is Interpretation A.65 of the Commissions July 1997 Manual of Publicly Available Interpretations regarding short selling: |
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An issuer filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling shareholders wanted to do a short sale of common stock against the box and cover the short sale with registered shares after the effective date. The issuer was advised that the short sale could not be made |
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before the registration statement becomes effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date. |
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By returning this Notice and Questionnaire, the undersigned Selling Securityholder will be deemed to be aware of the foregoing interpretation. |
* * * * *
By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the prospectus delivery and other provisions of the Securities Act and the Exchange Act, particularly Regulation M (or any successor rule or regulation).
The Selling Securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless the Company and certain other persons as set forth in the Registration Rights Agreement.
In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations, if any, under this Notice and Questionnaire and the Registration Rights Agreement (including Section 8(e) of the Registration Rights Agreement).
By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (9) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholders obligation under Section 3(a) of the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect and to provide such additional information that the Company may reasonably request regarding such Selling Securityholder and the intended method of distribution of Registrable Securities in order to comply with the Securities Act. Except as otherwise provided in the Registration Rights Agreement, all notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:
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(i) |
To the Company: |
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GP Strategies Corporation |
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6095 Marshalee Drive |
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Suite 300 |
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Elkridge, MD 21075 |
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Attention: Kenneth L. Crawford, General Counsel |
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(ii) |
With a copy to: |
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Latham & Watkins LLP |
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805 Third Avenue |
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New York, New York 10022 |
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Attention: David M. Schwartzbaum, Esq. |
Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above). This Notice and Questionnaire shall be governed in all respects by the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Dated: |
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Selling Securityholder |
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(Print/type full legal name of holder of Registrable Securities) |
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By: |
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Name: |
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Title: |
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PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [ ] TO THE COMPANY AT:
GP Strategies Corporation
6095 Marshalee Drive
Suite 300
Elkridge, MD 21075
Attention: Kenneth L. Crawford, General Counsel
EXHIBIT C
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
GP Strategies Corporation
c/o Computershare
[ADDRESS]
Attention: Transfer Agent and Registrar
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Re: |
GP Strategies Corporation (the Company ) |
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Common Stock |
Dear Sirs:
Please be advised that has transferred shares of the above-referenced Common Stock pursuant to an effective Registration Statement on Form S-3 (File No. 333- ) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied and that the above-named beneficial owner of the Common Stock is named as a Selling Holder in the Prospectus dated [date] or in amendments or supplements thereto, and that the number of shares of Common Stock transferred equals the number of shares of Common Stock listed in such Prospectus as amended or supplemented opposite such owners name.
Dated:
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Very truly yours, |
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(Name) |
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By: |
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(Authorized Signature) |
Exhibit 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment is dated and made as of December 30, 2009, modifying the Employment Agreement dated as of July 1, 1999 (together with any and all previous amendments, the Employment Agreement) between GP Strategies Corporation (the Company) and Scott N. Greenberg (Employee).
Whereas, the Company and Employee wish to amend the Employment Agreement to extend the minimum term of employment, modify the definition of change in control, and to provide for the future award of stock options if an investment in the Company by Sagard Capital Partners, L.P. occurs.
NOW, THEREFORE, intending to be legally bound, and for good and valuable consideration, including the mutual covenants set forth herein, the Company and the Employee hereby agree to amend the Employment Agreement as follows:
1. Section 3 (Term of Employment) of the Employment Agreement is hereby amended to read in its entirety as follows:
Unless sooner terminated in accordance with the provisions of this Agreement the term of employment of Employee by the Company pursuant to this Agreement shall be for the period (the Employment Period) commencing on the date hereof and ending on the earlier of (a) the date determined in accordance with Section 10 below, (b) the date which is not less than two (2) years after the Company or Employee has given written notice to the other of its decision to end the Employment Period (but in no case prior to December 31, 2012), or (c) the date mutually agreed in writing by Company and Employee.
2. Subsection 5(d) of the Employment Agreement is hereby amended by adding the following:
Provided that the Company received the investment by Sagard Capital Partners, L.P. contemplated by that certain Securities Purchase Agreement dated December 30, 2009, the Company shall grant to Employee under its 2003 Incentive Stock Plan, effective January 8, 2010, options to purchase 120,000 shares of the common stock of the Company at an exercise price equal to the market price on the date of grant. Such options shall vest 20% on the first and each subsequent anniversary of the date of grant, shall terminate six (6) years after the date of grant, and shall accelerate as provided in Section 11(d)(ii)(C).
3. Notwithstanding anything to the contrary in Subsection 10(d) of the Employment Agreement, with respect to beneficial ownership, directly or indirectly, of securities of the Company by Sagard Capital Partners, L.P. and/or its Affiliate(s) (collectively,
Sagard), no change in control or management change in control shall be deemed to occur unless Sagard is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Companys then outstanding securities. For purposes of this Amendment, the term Affiliate shall have the meaning ascribed to it in the Securities Purchase Agreement dated December 30, 2009 between the Company and Sagard.
4. Except as otherwise amended hereby, the Employment Agreement shall remain unmodified and in full force and effect as previously amended.
IN WITNESS WHEREOF, the Company and the Employee have duly executed this Amendment as of the date first above written.
GP STRATEGIES CORPORATION
By: |
/s/ Harvey P. Eisen |
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/s/ Scott N. Greenberg |
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Chairman of the Board |
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Scott N. Greenberg |
Exhibit 10.4
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment is dated and made as of December 30, 2009, modifying the Employment Agreement dated as of July 1, 1999 (together with any and all previous amendments, the Employment Agreement) between General Physics Corporation (the Company) and Douglas Sharp (Employee).
Whereas, the Company and Employee wish to amend the Employment Agreement to extend the minimum term of employment, modify the definition of change in control, provide for the future award of stock options if an investment in GP Strategies Corporation by Sagard Capital Partners, L.P. occurs, and to modify the compensation Employee will be entitled to receive if Employee shall terminate his employment for Good Reason as a result of a management change in control.
NOW, THEREFORE, intending to be legally bound, and for good and valuable consideration, including the mutual covenants set forth herein, the Company and the Employee hereby agree to amend the Employment Agreement as follows:
1. Section 3 (Term of Employment) of the Employment Agreement is hereby amended to read in its entirety as follows:
Unless sooner terminated in accordance with the provisions of this Agreement the term of employment of Employee by the Company pursuant to this Agreement shall be for the period (the Employment Period) commencing on the date hereof and ending on the earlier of (a) the date determined in accordance with Section 10 below, (b) the date which is not less than two (2) years after the Company or Employee has given written notice to the other of its decision to end the Employment Period (but in no case prior to December 31, 2012), or (c) the date mutually agreed in writing by Company and Employee.
2. Subsection 5(d) of the Employment Agreement is hereby amended by adding the following:
Provided that GP Strategies Corporation (GPS) received the investment by Sagard Capital Partners, L.P. contemplated by that certain Securities Purchase Agreement dated December 30, 2009, the Company shall cause GPS to grant to Employee under its 2003 Incentive Stock Plan, effective January 8, 2010, options to purchase 105,000 shares of the common stock of GPS at an exercise price equal to the market price on the date of grant. Such options shall vest 20% on the first and each subsequent anniversary of the date of grant, shall terminate six (6) years after the date of grant, and shall accelerate as provided in Section 11(d)(ii)(C).
3. Notwithstanding anything to the contrary in Subsection 10(d) of the Employment Agreement, with respect to beneficial ownership, directly or indirectly, of securities of GPS by Sagard Capital Partners, L.P. and/or its Affiliate(s) (collectively, Sagard), no change in control or management change in control shall be deemed to occur unless Sagard is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of GPS representing 25% or more of the combined voting power of GPSs then outstanding securities. For purposes of this Amendment, the term Affiliate shall have the meaning ascribed to it in the Securities Purchase Agreement dated December 30, 2009 between GPS and Sagard.
4. Subsection 11(e)(B) of the Employment Agreement is hereby amended to read in its entirety as follows:
(B) in lieu of any further salary or bonus payments to Employee for periods subsequent to the Date of Termination, the Company shall pay as severance pay to Employee an amount equal to twice Employees average annual cash compensation received from the Company during the three full calendar years immediately preceding the Date of Termination, such payment to be made in a lump sum on or before the fifth day following the Date of Termination;
5. Except as otherwise amended hereby, the Employment Agreement shall remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the Company and the Employee have duly executed this Amendment as of the date first above written.
GENERAL PHYSICS CORPORATION
By: |
/s/ Scott N. Greenberg |
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/s/ Douglas Sharp |
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Chief Executive Officer |
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Douglas Sharp |
Exhibit 99.1
NEWS RELEASE |
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GP STRATEGIES ANNOUNCES $20.0 MILLION EQUITY INVESTMENT BY
SAGARD CAPITAL PARTNERS, L.P.
Elkridge, MD. December 30, 2009. GP Strategies Corporation (NYSE: GPX) , a global provider of training, e-Learning solutions, management consulting, engineering and technical services through its principal operating subsidiary General Physics Corporation, today announced the completion of a private placement of 2,857,143 shares of common stock with Sagard Capital Partners, L.P., at a price of $7.00 per share, generating gross proceeds to GP Strategies of $20.0 million. Sagards equity investment equates to an ownership interest of approximately 15.4% at this time.
We are extremely pleased that an investor like Sagard Capital Partners shares our vision and we view their investment as a tangible sign of confidence in the direction GP Strategies is heading, commented Scott N. Greenberg, Chief Executive Officer of GP Strategies, In expanding GP Strategies platform as a leading customer training and performance improvement company, we will continue to look for opportunities to make strategic acquisitions and to fund internal growth, and this investment by Sagard strengthens our ability to do both.
We are very excited to be associated with a quality company like GP Strategies. GP has become a leader in the technical training, consulting and services area by building extremely strong relationships with their clients. said Daniel Friedberg, Managing Partner of Sagard Capital Partners, L.P. We look forward to supporting GP Strategies over the long term as they continue to expand their product offering and bring value to their clients.
In connection with the equity investment, Daniel Friedberg was elected to the board of directors of GP Strategies effective as of December 30, 2009.
The shares sold in the private placement have not been registered under the Securities Act of 1933, as amended, or state securities laws, and may not be offered or sold in the United States without being registered with the Securities and Exchange Commission (SEC) or through an applicable exemption from SEC registration requirements. The shares were offered and sold only to Sagard Capital Partners, L.P. GP Strategies has agreed to file a resale registration statement covering all the shares of the common stock issued to Sagard, up to the maximum number of shares permitted to be registered under the federal securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any of the securities referred to in this news release in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. Any offering of GP Strategies common stock under the resale registration statement referred to in this news release will be made only by means of a prospectus.
About GP Strategies Corporation
GP Strategies, whose principal operating subsidiary is General Physics Corporation (GP), is a NYSE-listed company (GPX). GP is a global performance improvement solutions provider of sales and technical
training, e-Learning solutions, management consulting and engineering services. GPs solutions improve the effectiveness of organizations by delivering innovative and superior training, consulting and business improvement services, customized to meet the specific needs of its clients. Clients include Fortune 500 companies, manufacturing, process and energy industries, and other commercial and government customers. Additional information may be found at www.gpworldwide.com .
About Sagard Capital Partners, L.P.
Sagard Capital is a long term impact investor in public and private small and mid-sized companies. Sagard is an evergreen fund with an indefinite holding period for its investments. Sagard specializes in flexible transaction structures, making minority investments with equity or debt to best address a companys needs. Sagard partners with management teams committed to driving long term shareholder value, through a combination of capital, a global network of relationships, and a team built to deliver value-add support. Additional information may be found at www.sagardcapital.com .
Forward-Looking Statements
We make statements in this press release that are considered forward-looking statements within the meaning of the Securities Exchange Act of 1934. These statements are not guarantees of our future performance and are subject to risks, uncertainties and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our periodic reports under the forward-looking statements and risk factors sections. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACTS:
Scott N. Greenberg |
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Sharon Esposito-Mayer |
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Ann M. Blank |
Chief Executive Officer |
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Chief Financial Officer |
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Investor Relations |
410-379-3640 |
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410-379-3636 |
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(410) 379-3725 |