EXHIBIT B
CONVERSION AND SUPPORT AGREEMENT
July 16, 2007
PRG- Xxxxxxx International, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
This letter is being delivered by the undersigned to PRG-Xxxxxxx
International, Inc. (the "Company") in connection with the Company's efforts
to obtain a new credit facility (the "New Credit Facility"), the proceeds of
which will be used by the Company to refinance and/or redeem (a) all amounts
owed by the Company under that certain Financing Agreement dated as of March
17, 2006 among the Company, its subsidiaries, the lenders party thereto,
Ableco Finance LLC, as collateral agent and CIT/Business Group Credit, Inc.,
as administrative agent (the "Existing Credit Facility"); (b) the Company's
11% Senior Notes due 2011 (the "Senior Notes"); and (c) to the extent not
converted, (i) the Company's 10% Senior Convertible Notes due 2011 (the
"Convertible Notes") and (ii) the Company's 9% Senior Series A Convertible
Participating Preferred Stock (the "Preferred Stock"). The repayment and
redemption of the Existing Credit Facility, the Senior Notes and, to the
extent not converted, the Convertible Notes and the Preferred Stock, with the
proceeds of the New Credit Facility is hereinafter referred to as the
"Refinancing".
The undersigned and its affiliated entities identified on Schedule I
hereto (collectively, the "Xxxx Entities") are, collectively, the holders of
(i) $14,471,619 in aggregate principal amount of the Senior Notes; (ii)
$17,580,874 in principal amount of the Convertible Notes; and (iii) 34,901
shares of the Preferred Stock. In addition, the Xxxx Entities are lenders
under the Existing Credit Facility.
The Xxxx Entities hereby acknowledge that, upon receipt of a notice of
redemption of the Convertible Notes and Preferred Stock held by the Xxxx
Entities, it will be in the best interests of the Xxxx Entities and the
Company for the Xxxx Entities to convert such Convertible Notes and such
Preferred Stock into shares of the Company's no par value common stock (the
"Common Stock") in accordance with the terms of the Convertible Notes and the
Preferred Stock, as the case may be.
In order to induce the new lenders in the Refinancing to enter into the
New Credit Facility and to enhance the benefits of the New Credit Facility to
the Company, which enhanced benefits will inure to the benefit of the Xxxx
Entities as owners of the Common Stock of the Company, and for other good and
valid consideration, including the proposed amendment to the Standstill
Agreement between the Company and the Xxxx Entities, as discussed below, the
receipt and sufficiency of which is hereby acknowledged, the undersigned, on
behalf of the Xxxx Entities, hereby agrees, subject to the conditions
contained herein, that the Xxxx Entities will, immediately upon receipt of a
notice from the Company stating that (i) a credit agreement documenting the
New Credit Facility has been executed by both the Company and the lenders
named therein and (ii) that a notice of redemption, in full and not in part,
has been issued with respect to the Senior Notes, the Convertible Notes and
the Preferred Stock, submit a conversion notice or otherwise initiate the
process to convert all Convertible Notes and shares of Preferred Stock held
by the Xxxx Entities into shares of Common Stock pursuant to the terms of the
Convertible Notes and the Preferred Stock, as the case may be, such that the
conversion will occur and be effective prior to the applicable redemption
date in accordance with the terms of the Convertible Notes or the Preferred
Stock, as the case may be. Nothing in this agreement shall prohibit the Xxxx
Entities from converting the Convertible Notes or the Preferred Stock held by
them at any time prior to the receipt of the notice referenced in this
paragraph.
The conversion of the Convertible Notes and the Preferred Stock held by
the Xxxx Entities under this Agreement is subject to the expiration of the
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), or the parties' receipt of early
termination thereof, prior to such conversion; provided, however, that this
provision shall only apply to that portion of the Convertible Notes and
Preferred Stock held by the Xxxx Entities that, if converted, would violate
the ownership thresholds established under the HSR Act. The parties will use
their reasonable best efforts to take all steps necessary to cause the
waiting period under the HSR Act to expire (or to receive early termination
with respect thereto) as soon as practicable after the date hereof.
The undersigned, on behalf of the Xxxx Entities, further agrees that the
Xxxx Entities will not, without the prior written consent of the Company,
offer, sell, contract to sell, pledge or otherwise dispose of (or enter into
any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Xxxx
Entities or any affiliate of the Xxxx Entities or any person in privity with
the Xxxx Entities or any affiliate of the Xxxx Entities), directly or
indirectly, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of Section 16 of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any Convertible Notes or shares of Preferred Stock held by
the Xxxx Entities, or publicly announce an intention to effect any such
transaction until the earlier of (1) one hundred twenty (120) days after the
date hereof, or (2) the consummation and closing of the Refinancing;
provided, however, that the Xxxx Entities may transfer any such Convertible
Notes or shares of Preferred Stock if the transferee explicitly agrees in
writing to the Company to be bound by the terms of this Agreement.
Any shares of Common Stock issued to the undersigned upon conversion of
the Convertible Notes or the Preferred Stock will not be subject to the
restrictions imposed by this Agreement.
The undersigned, on behalf of the Xxxx Entities, further agrees that, at
the request of the Company, the Xxxx Entities, in their capacity as holders
of the Senior Notes, the Convertible Notes and/or as lenders under the
Existing Credit Facility, will consent to, vote in favor of or otherwise
\support:
(A) An amendment to the indenture governing the Senior Notes to (i)
permit the simultaneous redemption of all (but only all) of each of the
Senior Notes, the Convertible Notes and the Preferred Stock and (ii)
shorten the notice period for redemption of the Senior Notes as set
forth therein to not less than 15 days.
(B) An amendment to the indenture governing the Convertible Notes
to (i) permit the simultaneous redemption of all (but only all) of each
of the Senior Notes, the Convertible Notes and the Preferred Stock and
(ii) shorten the notice period for redemption of the Convertible Notes
as set forth therein to not less than 15 days.
(C) An amendment to the Existing Credit Facility that would (i)
permit the amendments to the indentures governing the Senior Notes and
the Convertible Notes as set forth in (A) and (B) above and (ii) allow
simultaneous repayment of all (but only all) of each of the Senior
Notes, the Convertible Notes and the Preferred Stock with the repayment
and termination of the Existing Credit Facility.
The Company agrees that if it enters into a conversion and support
agreement with any other holder of Convertible Notes and/or Preferred Stock,
which conversion and support agreement provides for a material economic
benefit to such holder that is not so provided for in this Agreement, the
Xxxx Entities shall be automatically entitled, upon written notice to the
Company, to receive the same economic benefit without the execution of any
amendment to this Agreement, it being understood that the economic benefit
given to Xxxx shall be given on a proportional basis (based on the aggregate
principal amount of Convertible Notes and liquidation preference of Preferred
Stock held by such holder) relative to such other holder's holdings.
In connection and simultaneous with the execution of this Agreement, the
Company and the undersigned, on behalf of the Xxxx Entities, shall enter into
an amendment to that certain Amended and Restated Standstill Agreement, dated
as of November 14, 2005 (the "Standstill Amendment"); provided, however, that
the effectiveness of the Standstill Amendment shall be subject to the
conditions specified in paragraph 7 thereof.
Notwithstanding anything in that certain Registration Rights Agreement,
dated August 27, 2002, by and among the Company, certain of the Xxxx Entities
and others (the "2002 Agreement"), for purposes of clarification, the parties
hereby confirm and acknowledge that the Company will be obligated to cause
any registration demanded or requested by any of the Xxxx Entities or their
Affiliates under that Agreement pursuant to the last sentence of Article I(a)
to become effective no later than 180 days following the effective date of a
Company- or stockholder-initiated registration (other than a registration
effected solely to qualify an employee benefit plan or to effect a business
combination pursuant to Rule 145).
This agreement shall terminate on the earlier of (1) one hundred twenty
(120) days after the date hereof, or (2) the closing of the Refinancing.
[Signature page follows]
* * * * * *
Yours very truly,
XXXX CAPITAL PARTNERS, L.P., for
itself and as representative of the
affiliated entities thereto listed on
Schedule I to this Agreement
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: General Counsel, Chief Operating
Officer, and Secretary
* * * * * *
Agreed and Accepted as of the
16th day of July, 2007:
PRG-XXXXXXX INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. XxXxxxx
President, Chief Executive Officer
and Chairman of the Board
* * * * * *
SCHEDULE I
BK Capital Partners IV, X.X.
Xxxxxxx Capital Partners, X.X.
Xxxxxxx Capital Partners II, X.X.
Xxxxxxx Capital Partners (QP), X.X.
Xxxxxxx Dominion, X.X.
Xxxx Strategic Partners, X.X.
Xxxx Strategic Partners II, X.X.
Xxxx Strategic Partners II GmbH & Co. KG