EXHIBIT 99.14
RESTRUCTURE AGREEMENT
THIS RESTRUCTURE AGREEMENT (this "Agreement") executed as of April 14,
2003 is entered into by and among PERSONNEL GROUP OF AMERICA, INC. (the
"Borrower"), certain subsidiaries of the Borrower identified on the signatures
pages hereto (the "Guarantors"), the financial institutions identified on the
signature pages hereto and BANK OF AMERICA, N.A., formerly known as NationsBank,
N.A., as agent for the Lenders (in such capacity, the "Agent"). Except as
expressly defined or otherwise referenced herein, capitalized terms used herein
shall have the meanings set forth in the Credit Agreement (defined below).
RECITALS:
A. The Borrower, the Agent, the Guarantors and the financial
institutions from time to time party thereto (the "Lenders") are parties to that
certain Amended and Restated Credit Agreement, dated as of June 23, 1997 (as
from time to time amended, restated, supplemented or otherwise modified and in
effect, the "Credit Agreement"), pursuant to which the Agent and Lenders made
available Loans to the Borrower with such loans guaranteed by the Guarantors.
B. Certain Defaults and Events of Default are expected to exist
under the Credit Agreement as a result of the Borrower's failure to comply with
the financial covenants set forth in Sections 7.11(e) of the Credit Agreement
for the fiscal month ending nearest March 31, 2003.
C. As of the Amendment Date (defined below), there remains due
and owing $103,000,000 in Revolving Loans (the "Pre-Restructure Principal"),
$7,975,000 in undrawn Letters of Credit (the "Pre-Restructure Letters of
Credit") and a total of $286,424.65 in accrued and unpaid interest thereon (the
"Pre-Restructure Interest").
D. The Borrower and the Guarantors have requested that the
Lenders agree to restructure the Loans, including (i) the forgiveness of
significant portions of the Pre-Restructure Principal and (ii) the extension of
the Termination Date.
E. The Lenders have agreed to do so, upon the terms and
conditions set forth herein.
NOW, THEREFORE, for valuable consideration, the mutual receipt of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
In addition to the definitions set forth or incorporated
elsewhere herein, the following terms used herein shall have the
following meanings (such definitions to be equally applicable to both
the singular and the plural forms of the defined terms):
"Amendment Date" means the date of this Agreement.
"Contractual Obligation" means with respect to a Person, any
provision of (i) any security issued by such Person, including
provisions contained in the articles or certificate of incorporation or
bylaws or other organizational or governing documents of such Person,
or (ii) any agreement, franchise, license, lease, permit, undertaking,
contract, indenture, mortgage, deed of trust or other instrument or
understanding to which such Person is a party.
"Forgiven Balance" shall have the meaning set forth in Section
3(a).
"Lender Warrants" shall have the meaning set forth in Section
5.
"Mutual Release" shall have the meaning set forth in Section
8.
"Prepayment" shall have the meaning set forth in Section 3(b).
"Pre-Restructure Indebtedness" means a collective reference to
the Borrower's Obligations as of the Amendment Date, including without
limitation, the Pre-Restructure Principal and the Pre-Restructure
Interest but excluding the Pre-Restructure Letters of Credit.
"Proceeding" means any insolvency, bankruptcy, receivership,
dissolution, reorganization or similar proceeding, whether federal or
state, voluntary or involuntary, under any present or future law or
act.
"Restructure Credit Agreement" shall have the meaning set
forth in Section 4(a).
"Restructure Credit Documents" shall mean the "Credit
Documents" as defined in the Restructure Credit Agreement.
"Restructuring Agreement" shall have the meaning set forth in
Section 6(a).
"Revolving Restructure Notes" shall have the meaning set forth
in Section 3(b).
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
and any successor Person thereof.
2. CONDITIONS PRECEDENT.
As conditions precedent to the effectiveness of this Agreement:
(a) The Borrower and the Guarantors shall have (or, where
applicable, caused to have been) executed and delivered to the Agent,
for the benefit of the Lenders, each of the documents referred to in
Sections 4(a) and (b) below;
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(b) The Borrower and the Guarantors shall have (or, where
applicable, caused to have been) executed and delivered to the Agent,
for the benefit of the Lenders, each of the documents referred to in
Section 5.1 of the Restructure Credit Agreement and have otherwise
satisfied all conditions precedent to the effectiveness of the
Restructure Credit Agreement as set forth in Section 5.1 thereof;
(c) The parties hereto each shall have executed the
Mutual Release;
(d) The Borrower shall have executed and delivered to the
Agent, for the benefit of the Lenders, the Lender Warrants; and
(e) The Borrower shall have executed and delivered to the
Agent the Registration Rights Agreement.
3. RESTRUCTURE OF PRE-RESTRUCTURE INDEBTEDNESS.
The Pre-Restructure Indebtedness is hereby restructured as follows:
(a) Partial Forgiveness. $10,300,000 of the
Pre-Restructure Indebtedness (the "Forgiven Balance"), shall be
forgiven and discharged, provided, however, that it is understood and
agreed that none of the Pre-Restructure Letters of Credit shall be
forgiven or discharged and that such Letters of Credit shall remain
outstanding as Borrower's Obligations under the Restructure Credit
Agreement.
(b) Revolving Restructure Loans. The Borrower shall
prepay $37,985,000 of the Pre-Restructure Principal (the "Prepayment").
The Pre-Restructure Indebtedness (other than the Forgiven Balance and
after giving effect to the Prepayment) and all of the Pre-Restructure
Letters of Credit shall remain outstanding as part of a $70,700,000
revolving credit facility evidenced by amended and restated promissory
notes dated as of the Amendment Date (the "Revolving Restructure
Notes") and governed in accordance with the terms and conditions of the
Restructure Credit Agreement and the other Restructure Credit
Documents.
The restructuring of the Pre-Restructure Indebtedness is not
intended by the parties hereto to be and should not be construed as a
novation.
4. RESTRUCTURE DOCUMENTS.
Contemporaneously with the effectiveness of this Agreement:
(a) The Credit Agreement shall be amended and restated by
an Amended and Restated Credit Agreement (the "Restructure Credit
Agreement") among the Borrower, the Guarantors, the Lenders and the
Agent dated as of the Amendment Date;
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(b) The Notes shall be amended and restated by the
Revolving Restructure Notes; and
(c) The Equity Appreciation Rights Agreement and the
Purchase Option Agreement shall be, and each such agreement hereby is,
terminated and of no further force and effect.
5. LENDER WARRANTS.
As a condition to the effectiveness of this Agreement, the Borrower
shall deliver to the Agent, for the benefit of the Lenders, common stock
purchase warrants entitling each Lender to purchase its ratable share of 10.0%
of the fully diluted equity of the Borrower, subject to adjustment pursuant to
the terms and conditions set forth therein (the "Lender Warrants").
Notwithstanding anything to the contrary in the Lender Warrants, the Lender
Warrants may only be transferred by a Lender in connection with a transfer of
the Note of such Lender (or part thereof), such transfer of the Lender Warrants
to be on a pro rata basis calculated based upon the ratio of the number of
shares of common stock referenced in such Lender Warrant to the Commitment of
such Lender on the date the Lender Warrants were issued.
6. REPRESENTATIONS AND WARRANTIES OF BORROWER.
The Borrower represents and warrants as follows:
(a) Authorized and Issued Capital. The authorized
capitalization of the Borrower and its Subsidiaries is set forth on
Schedule 6(a). The authorized capitalization of the Borrower and its
Subsidiaries, which reflects the note exchange transactions
contemplated by the Restructuring Agreement (the "Restructuring
Agreement") dated as of March 14, 2003 among the Borrower, certain of
its subsidiaries and certain holders of the Borrower's 5 3/4%
convertible subordinated notes due 2004 and the Participation Agreement
dated March 14, 2003 between the Borrower and LC Capital Master Fund,
Ltd., is set forth on Schedule 6(a). Except as set forth on Schedule
6(a), the Borrower and its Subsidiaries have not issued any other
shares of their capital stock and there are no further subscriptions,
contracts or agreements for the issuance or purchase of any other or
additional equity interest in the Borrower or any of its Subsidiaries,
either in the form of options, agreements, warrants, calls, convertible
securities or other similar rights, other than the Lender Warrants. All
the outstanding shares of capital stock have been duly and validly
authorized and issued and are fully paid and nonassessable and have
been offered, issued, sold and delivered in compliance with applicable
federal and state securities laws. The number of shares of the
Borrower's capital stock reserved for issuance as set forth on Schedule
6(a) is not subject to adjustment by reason of the issuance of the
Lender Warrants or the common stock issuable upon the exercise thereof.
Neither the Borrower nor any of its Subsidiaries is a party to any
"phantom stock" employee stock option plan, other equity-based
incentive plan or similar agreement, other than as specifically
disclosed on Schedule 6(a). Except as set forth on Schedule 6(a), (i)
there are no preemptive or similar rights to purchase or otherwise
acquire equity securities of, or
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interests in, the Borrower or any of its Subsidiaries pursuant to any
Requirement of Law or Contractual Obligation applicable to the Borrower
or any of its Subsidiaries and (ii) no registration rights under the
Securities Act have been granted by the Borrower or any of its
Subsidiaries with respect to its equity securities or interest, other
than the Registration Rights Agreement and the Registration Rights
Agreement delivered pursuant to the Restructuring Agreement.
(b) Authorization. The execution and delivery by the
Borrower and the Guarantors of this Agreement and each of the
Restructure Credit Documents to which they are a party, the performance
of such parties of their obligations hereunder and thereunder, and the
issuance to the Lenders of the Revolving Restructure Notes and the
Lender Warrants as herein provided, have been duly authorized by all
necessary actions of such parties so that when issued and delivered (i)
the Revolving Restructure Notes and the Lender Warrants will each
constitute the legal, valid and binding obligations of the appropriate
party, enforceable in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance or other
similar law of general applicability, relating to or affecting the
enforcement of creditors' rights generally or by general equitable
principles; (ii) the common stock to be issued upon the exercise of the
Lender Warrants will be validly authorized and, when issued upon due
exercise of the Lender Warrants, will be fully paid and nonassessable;
(iii) this Agreement and each of the Restructure Credit Documents to
which they are a party will each constitute the legal, valid and
binding obligations of the appropriate party, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or other similar law of general applicability,
relating to or affecting the enforcement of creditors' rights generally
or by general equitable principle and (iv) neither the execution and
delivery of this Agreement and each of the Restructure Credit Documents
to which they are a party, and the performance by such parties of its
obligations hereunder and thereunder, nor the issuance of the Revolving
Restructure Notes or the Lender Warrants, will be in contravention of
any Requirement of Law applicable to such party or any of its
Subsidiaries to which such party or its Subsidiaries may be subject.
(c) Compliance with Securities Laws. Based in part upon
the representations of the Lenders set forth in Section 7, (i) the
offer and sale of the Lender Warrants is not required to be registered
pursuant to Section 5 of the Securities Act or any state securities
laws and (ii) assuming the representations of the Lenders set forth in
Section 7 are true at the time the Lender Warrants are exercised as if
such representations were made at that time, the common stock to be
issued upon exercise of the Lender Warrants is not required to be
registered pursuant to Section 5 of the Securities Act or any state
securities laws. All prior offerings and sales of securities of the
Borrower and its Subsidiaries were in compliance with all applicable
federal and state securities laws.
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7. REPRESENTATIONS AND WARRANTIES OF THE LENDERS.
Each Lender, severally and not jointly, hereby represents and warrants,
as to itself only, as follows:
(a) It is an "accredited investor" as that term is
defined in Rule 501 of the Securities Act, and that, in making the
purchases contemplated herein, it is specifically understood and agreed
that such Lender is acquiring the Lender Warrants for the purpose of
investment and not with a view towards the sale or distribution thereof
within the meaning of the Securities Act; provided, however, that the
disposition of such Lender's property shall at all times be and remain
within its control. With respect to the Lender Warrants, it has had an
opportunity to discuss the Borrower's business, management, and
financial affairs with the Borrower's management and the opportunity to
review the Borrower's business plan, it has had an opportunity to ask
questions of and receive answers from officers of the Borrower, and it
acknowledges that it has had an opportunity to conduct its own
independent due diligence investigation of the Borrower.
(b) It understands that the Lender Warrants will not be
registered under the Securities Act, by reason of their issuance by the
Borrower in a transaction exempt from the registration requirements of
the Securities Act, and that it must hold the Lender Warrants
indefinitely unless a subsequent disposition thereof is registered
under the Securities Act and applicable state securities laws or is
exempt from registration. It further understands that the Lender
Warrants and the certificates evidencing the shares of common stock
issued upon exercise of the Lender Warrants shall bear the following
legend: THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE
PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS COMMON STOCK
PURCHASE WARRANT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO DISTRIBUTION, AND THIS COMMON STOCK PURCHASE WARRANT AND THE
SHARES THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSACTION DOES NOT
REQUIRE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS.
8. MUTUAL RELEASES.
Contemporaneously with the execution of this Agreement the parties
hereto shall execute a mutual release (the "Mutual Release") in the form of that
attached hereto as Exhibit A.
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9. AUTHORITY.
Each party to this Agreement represents and warrants to the other
parties that it has full power and authority to enter into and perform this
Agreement, and that this Agreement has been duly authorized by such party, is
legal, valid and binding and enforceable against such party in accordance with
its terms, and is not in contravention of any law, order or agreement by which
such party is bound or of such party's organizational documents.
10. CAPTIONS.
Underlined captions used in this Agreement are for ease of reference
only and shall not be used in the interpretation of this Agreement.
11. CREDIT DOCUMENT.
This Agreement is a Credit Document and shall be construed,
administered and applied in accordance with the terms and provisions of the
Restructure Credit Agreement.
12. JOINTLY DRAFTED AGREEMENTS.
The parties hereto hereby acknowledge and agree that each of them is
jointly responsible for the drafting and negotiation of all the terms and
provisions contained in this Agreement and in all the schedules, exhibits and
other agreements delivered in connection herewith, and that no such terms and
provisions should as a result of such negotiation and drafting be strictly
construed against any such party.
13. SEVERABILITY.
If any provision of this Agreement is determined to be illegal, invalid
or unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
14. ENTIRE AGREEMENT.
This Agreement, together with the other Restructure Credit Documents,
constitutes the complete and final agreement by and among the parties hereto. No
prior understandings or agreements with respect to the subject matter hereof
shall survive execution and delivery of this Agreement.
15. GOVERNING LAW; JURISDICTION AND VENUE.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF NORTH CAROLINA.
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(b) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY, IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE
NOTES OR ANY SECURITY DOCUMENT OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE
OF NORTH CAROLINA, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE WESTERN DISTRICT OF NORTH CAROLINA, AND APPELLATE
COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING
MAY BE BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT
TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF
BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR
FORM OF MAIL), POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS
SPECIFIED HEREIN AND, IF APPLICABLE, TO THE AGENT, THE ISSUING
BANK AND THE LENDERS AT THEIR RESPECTIVE ADDRESSES SPECIFIED
HEREIN OR AT SUCH OTHER ADDRESS OF WHICH THE AGENT OR THE
BORROWER, IF APPLICABLE, SHALL HAVE BEEN NOTIFIED PURSUANT
HERETO; AND
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO XXX IN ANY OTHER
JURISDICTION.
(c) EACH OF PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO OR
ARISING OUT OF THIS AGREEMENT, THE NOTES OR ANY SECURITY DOCUMENT AND
FOR ANY COUNTERCLAIM THEREUNDER.
16. COUNTERPARTS; TELECOPY SIGNATURES.
This Agreement may be executed in one or more counterparts, each of
which shall constitute an executed original of this Agreement and which together
shall constitute only one and the same executed original hereof. This Agreement
shall be deemed fully executed and
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delivered, and enforceable according to its terms, upon the receipt of telecopy
signatures of the parties hereto. Notwithstanding the foregoing, the parties
shall promptly provide the Agent with an executed original of this Agreement
after delivery of an executed copy hereof by telecopy.
[the remainder of this page intentionally left blank]
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Each of the parties hereto has caused a counterpart of this Agreement
to be duly executed and delivered as of the date first above written.
BORROWER: PERSONNEL GROUP OF AMERICA, INC.,
-------- a Delaware corporation
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: President and
Chief Financial Officer
GUARANTORS: STAFFPLUS, INC.,
---------- a Delaware corporation
INFOTECH SERVICES LLC,
a North Carolina limited liability company
BAL ASSOCIATES INCORPORATED,
a California corporation
ADVANCED BUSINESS CONSULTANTS, INC.,
a Kansas corporation
VENTURI STAFFING PARTNERS, LLC,
a California limited liability company
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President of
each of the above-named
Guarantors
PERSONNEL GROUP HOLDINGS, INC.,
a Florida corporation
PFI CORP.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
Title: President of each of the
above-named Guarantors
VENTURI TEXAS STAFFING PARTNERS, LP,
a Texas limited partnership
By: StaffPLUS, Inc.
Its: General Partner
By: /s/ Xxxxx X. Xxxx
--------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 0000
XXXX XX XXXXXXX, X.X., formerly known
as NationsBank, N.A. and Bank of
America Illinois, as Agent
By: /s/ H. Xxxxxxx Xxxxxx
---------------------------
Name: H. Xxxxxxx Xxxxxx
Title: Managing Director
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 0000
XXXX XX XXXXXXX STRATEGIC SOLUTIONS,
INC.
By: /s/ H. Xxxxxxx Xxxxxx
---------------------------
Name: H. Xxxxxxx Xxxxxx
Title: Managing Director
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 2003
BNP PARIBAS
By: /s/ Xxxxx Xxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxx
Title: Managing Director
BNP PARIBAS
By: /s/ Shayn March
----------------------------
Name: Shayn March
Title: Vice President
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 2003
BANK ONE, NA
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: First Vice President
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 2003
HBV CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxx X. Konomas
----------------------------
Name: Xxxxxx X. Konomas
Title: Portfolio Manager
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 0000
XXXXXX PARTNERS L.P.
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 2003
LINKS PARTNERS L.P.
By: /s/ Xxxxx X. Xxxx
----------------------------
Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 2003
MATLIN XXXXXXXXX GLOBAL OPPORTUNITIES PARTNERS L.P.
By: Matlin Xxxxxxxxx Global Advisers LLC
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: General Counsel
Signature Page to Restructure Agreement
Personnel Group of America, Inc.
April 2003
