Exhibit 14
RESTRUCTURE AGREEMENT
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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:
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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 $225,047.94 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.
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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:
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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:
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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:
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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:
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Name: Xxxxx X. Xxxx
Title: Senior Vice President
BANK OF AMERICA, N.A., formerly known as
NationsBank, N.A. and Bank of America Illinois,
as Agent
By:
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Name:
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Title:
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BANC OF AMERICA STRATEGIC SOLUTIONS, INC.
By:
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Name:
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Title:
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BNP PARIBAS
By:
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Name:
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Title:
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BANK ONE, NA
By:
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Name:
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Title:
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HBV CAPITAL MANAGEMENT LLC
By:
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Name:
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Title:
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INLAND PARTNERS L.P.
By:
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Name:
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Title:
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LINKS PARTNERS L.P.
By:
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Name:
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Title:
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MATLIN XXXXXXXXX GLOBAL OPPORTUNITIES
PARTNERS L.P.
By: Matlin Xxxxxxxxx Global Advisers LLC
By:
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Name:
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Title:
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