Exhibit 10.3
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND, AMONG OTHER RESTRICTIONS,
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT
PROMISSORY NOTE
$5,250,955 October 21, 2003
FOR VALUE RECEIVED, on or before October 21, 2008, the undersigned, GP
Strategies Corporation, a Delaware corporation ("Maker"), promises to pay to
ManTech International Corporation, a Delaware corporation or its permitted
successors and assigns (the "Holder") at 12015 Lee Jackson Highway, Fairfax, VA
22033 or to such other person or address as Holder may from time to time
designate in writing, the principal sum of Five Million Two Hundred Fifty
Thousand Nine Hundred Fifty-five and No/100 Dollars ($5,250,955), or so much
thereof as shall be from time to time remain unpaid, plus interest on the
principal balance thereof from time to time outstanding from the date of this
Note until the date paid, at five percent (5%) per year payable in the manner
set forth herein. Unless otherwise defined herein, capitalized terms shall have
the meanings attributed to such terms in that certain Purchase and Sale
Agreement of even date herewith (as the same may be modified or amended from
time to time, the "Purchase Agreement") by and among the Maker and Holder.
1. Payments.
(a) The entire principal balance of this Note, together with all accrued
and unpaid interest thereon and other sums payable hereunder, shall be,
unless sooner accelerated in accordance with the terms of this Note,
due and payable in full on October 21, 2008 (the "Maturity Date").
Accrued interest on the unpaid principal balance hereof shall be
payable quarterly in arrears on the 31st day of March, the 30th day of
June, the 30th day of September, and the 31st day of December in each
year, commencing on December 31, 2003 (each such date and the Maturity
Date being a "Payment Date").
(b) If any Payment Date falls on a day that is not a Business Day (as
defined below), the payment due on such Payment Date will be made on
the next succeeding Business Day with the same force and effect as if
made on the Payment Date. "Business Day" means any day which is not a
Saturday or Sunday and is not a day on which banking institutions are
generally authorized or obligated to close in the City of New York, New
York.
(c) Any amounts outstanding hereunder may be prepaid, in whole or in part,
without penalty or premium. Partial prepayments of this Note shall not
relieve the Maker of the obligation to pay periodic installments of
interest hereunder as and when the same would otherwise be due
hereunder.
(d) All payments hereunder shall be payable in lawful currency of the
United States and in immediately available funds, and payments shall be
applied first to any costs of collection (including, without
limitation, reasonable attorneys' fees) incurred by Holder in enforcing
any terms of this Note, then to accrued and unpaid interest, and then
to reduce the principal balance hereof.
2. Conversion.
(a) Subject to the provisions of this Section 2, Holder may, by notice (a
"Conversion Notice") given by Holder to the Maker from time to time as
provided below, convert all or a portion of the principal balance of
this Note into the common stock of Maker ("GPX Common Stock") at a
conversion price (the "Conversion Price") equal to the closing price of
the GPX Common Stock on the New York Stock Exchange (or, if that is not
the principal market on which the GPX Common Stock is then traded, then
in such principal market) on the last trading date preceding the date
of the Conversion Notice. The number of shares of GPX Common Stock
issuable in any such conversion shall equal the principal amount of
this Note to be converted (the "Conversion Amount") divided by the
applicable Conversion Price, determined to the nearest lesser whole
number of shares.
(b) Any Conversion Notice shall
(i) state the Conversion Amount;
(ii) be accompanied by the Note, for cancellation, in whole or in part, as
provided below, and;
(iii) include representations by Holder that;
(A) Holder is obtaining the shares of GPX Common Stock issuable upon such
conversion ("Conversion Shares") for investment for Holder's own
account only and not with a view to, or for resale in connection with,
any "distribution" thereof within the meaning of the Securities Act;
(B) Holder understands that the Conversion Shares have not been registered
under the Securities Act and are being issued to Holder in reliance
upon the exemption from such registration provided by Section 4(2) of
the Securities Act;
(C) Holder has been informed that Conversion Shares are restricted
securities under the Securities Act and may not be resold or
transferred unless the Conversion Shares are first registered under the
Federal securities laws or by any applicable state securities laws,
unless an exemption from such registration is available; and
(D) Holder understands that the certificate(s) evidencing the Conversion
Shares will be imprinted with an appropriate legend which prohibits the
transfer of the Conversion Shares unless the shares are registered or
such registration is not required in the opinion of counsel
satisfactory to Maker.
(c) Notwithstanding the foregoing:
(i) No Conversion Notice may be given (and, if given, shall not be
effective) if the related Conversion Price would be less than $10
(subject to appropriate adjustment for any stock split, subdivision,
combination, recapitalization, or similar transaction).
(ii) The aggregate Conversion Amount converted in any Conversion Period (as
defined below) shall not exceed the sum of $1,050,191 (the "Cap
Amount") plus the excess, if any, of the aggregate Cap Amounts of the
prior Conversion Periods over the aggregate Conversion Amounts
converted in the prior Conversion Periods. A "Conversion Period" shall
mean a period commencing on any October 21 and ending on the subsequent
October 20.
(d) Upon each giving of a Conversion Notice in accordance with this Section
2, Holder shall be deemed to be the holder of record of the Conversion
Shares issuable thereupon as of the date of such Conversion Notice,
notwithstanding that the transfer books of the Maker shall then be
closed or certificates representing such Conversion Shares shall not
then have been actually delivered to Holder. As soon as practicable
after the giving of any Conversion Notice, the Maker shall deliver to
Holder a certificate for the related Conversion Shares, together with,
if the related Conversion Notice is for less than all of the then
outstanding principal balance of this Note, a replacement Note with a
principal balance equal to the prior principal balance less the
Conversion Amount.
(e) No later than thirty (30) days following Holder's initial conversion of
any portion of the principal balance of this Note into GPX Common
Stock, Maker shall prepare and file with the SEC a registration
statement on Form S-3 or such other successor form (except that if
Maker is not then eligible to register for resale the maximum number of
shares of GPX Common Stock as shall be issuable upon the conversion of
the entire outstanding principal amount of this Note on Form S-3, then
such registration shall be on Form S-1 or any successor form) to enable
the resale of the such shares issued or issuable from time to time.
(f) The Maker covenants that it will at all times reserve and keep
available out of its authorized GPX Common Stock, solely for the
purpose of issue upon conversion of the outstanding principal amount of
this Note, the maximum number of shares of GPX Common Stock as shall
then be issuable upon the conversion of the entire outstanding
principal amount of this Note.
3. Default and Remedies.
(a) The occurrence of any of the following events shall constitute an event
of default (an "Event of Default"):
(i) A default in the payment of any installment of principal or interest on
this Note, when and as the same shall become due and payable, which
default shall continue for five days after any applicable Payment Date.
(ii) A failure to perform or observe any other material covenant or
agreement contained in this Note, which failure shall continue for 30
days after the giving of notice by Holder specifying such failure in
reasonable detail (or, if such failure is not capable of being remedied
within such period, for such longer period, not to exceed 60 days, as
it is reasonably necessary to effect a remedy so long as the Maker
continues to diligently pursue remedy of such failure).
(iii) Theentry of a decree or order by a court having jurisdiction
adjudging the Maker a bankrupt or insolvent, or approving a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of the Maker, under federal bankruptcy law, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency, or other similar law, and the continuance of any such decree
or order unstayed and in effect for a period of 60 days; or the
commencement by the Maker of a voluntary case under federal bankruptcy
law, as now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency, or other similar law, or the consent by
the Maker to the institution of bankruptcy or insolvency proceedings
against it, or the filing by the Maker of a petition or answer or
consent seeking reorganization or relief under federal bankruptcy law or
any other applicable federal or state law, or the consent by the Maker
to the filing of such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, or similar official of the
Maker or of any substantial part of its property, or the making by the
Maker of an assignment for the benefit of creditors, or the admission by
the Maker in writing of its inability to pay its debts generally as they
become due, or the taking of action by the Maker in furtherance of any
such action.
(b) Upon the occurrence, and during the continuance, of an Event of
Default, Holder may declare all or any part of the unpaid principal
amount of this Note, and all interest accrued and unpaid thereon, to be
immediately due and payable, without presentment, demand, notice,
protest or other formalities of any kind, all of which are hereby
expressly waived by the Maker. No delay or failure in exercising any
rights under this Note in respect thereof shall operate as a waiver of
any of the rights of any Holder.
(c) If Holder shall institute any proceedings to enforce payment of all or
any part of any sum due Holder hereunder, or if this Note is placed in
the hands of an attorney for collection, or if it is collected through
any legal proceedings, the Maker agrees to pay all costs, expenses and
fees incurred by Holder, including reasonable attorneys' fees.
4. Miscellaneous.
(a) In the event any one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Note, but this Note shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein or therein.
(b) This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom any waiver, change,
modification or discharge is sought to be enforced.
(c) The Maker acknowledges that it has had the opportunity to obtain the
advice of experienced counsel of its own choosing in connection with
the negotiation and execution of this Note and to obtain the advice of
such counsel with respect to all matters pertaining hereto, including,
without limitation, the provision set forth herein designating the
Commonwealth of Virginia as applicable law and the courts therein as
appropriate venue.
(d) This Note shall be binding upon and shall inure to the benefit of the
Maker and its respective successors and assigns and delegates;
provided, however, the Maker may not assign or transfer its interest
hereunder or delegate its duties without the prior written consent of
Holder, except to a corporation which has succeeded to substantially
all the business and assets of the Maker or to a corporation surviving
a merger or consolidation to which the Maker is a party and in either
instance, such successor corporation or surviving corporation has
assumed in writing its obligations under this Note. Notwithstanding
anything stated herein to the contrary, but subject to Section 4(g) of
the Purchase Agreement, the Maker agrees that all of Holder's right,
title and interest in and to this Note has been, or will be,
collaterally assigned to its current and future lenders (currently
Citizen's Bank of Pennsylvania, acting in its capacity as the
administrative agent for the lender parties) which are parties to that
certain Business Loan and Security Agreement dated December 17, 2001
(as the same has been and may be amended, modified substituted or
replaced from time to time) and the Maker will continue be bound by all
the terms and provisions of this Note as it may relate to (or be
enforced by) Holder's lenders as successors and assigns hereunder.
Except as provided herein, prior to April 21, 2006, Holder may not
assign or transfer this Note without the prior written consent of
Maker. Any assignee or transferee of this Note shall agree to be bound
by the provisions of Section 4(g) of the Purchase Agreement.
(e) This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, excluding any conflicts or choice
of law rule or principle that might otherwise refer construction or
interpretation of this Note to the substantive law of another
jurisdiction. The Maker hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Eastern District of
Virginia and of any Virginia state court for purposes of all legal
proceedings arising out of or relating to this Note or the transactions
contemplated hereby. The Maker irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such
a court, any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum, and any right to which it may be
entitled on account of its place of residence or domicile.
(f) The Maker irrevocably designates and appoints CT Corporation System,
whose address is 4701 Cox Road, Suite 301, Glenn Allen, VA 23060-6802,
as its agent to receive on its behalf' service of all process in any
such proceeding in any court in the Commonwealth of Virginia, such
service being hereby acknowledged by the Maker to be effective and
binding on it in every respect. A copy of any such process so served
shall be mailed by registered or certified mail to the Maker at the
address to which notices are to be addressed in accordance with the
Purchase Agreement, except that any failure to mail such copy shall not
affect the validity of service of process. The Maker shall at all times
maintain an agent for service of process pursuant to this provision. If
the Maker fails to appoint such an agent, or if such agent refuses to
accept service, the Maker hereby agrees that service upon it by mail to
the address to which notices are to be addressed in accordance with the
Purchase Agreement shall constitute sufficient notice. Nothing herein
shall affect the right to serve process in any other manner permitted
by law or shall limit the right of Holder to bring proceedings against
the Maker in the courts of any other jurisdiction.
(g) Time is of the essence. No failure or delay by Holder to insist upon
the strict performance of any term, condition, covenant or agreement
set forth in this Note, or to exercise any right, power or remedy
consequent upon a breach thereof, shall constitute a waiver of such
term, condition, covenant or agreement or of any such breach, or
preclude Holder from exercising any such right, power or remedy at any
later time or times.
MAKER:
GP Strategies Corporation
ATTEST:
By: /s/ Andrea D. Kantor By: /s/ Scott N. Greenberg
Name: Andrea D. Kantor Name: Scott N. Greenberg
Title: Vice President and Title: President and Chief
General Counsel Financial Officer