EXHIBIT 10.1
EXECUTION COPY
AMENDED AND RESTATED
RESTRUCTURING SUPPORT AGREEMENT
This AMENDED AND RESTATED RESTRUCTURING SUPPORT AGREEMENT is made and
entered into as of February 1, 2006 (the "Agreement") by and among PRG-Xxxxxxx
International, Inc., a Georgia corporation ("PRG" or the "Company"), and (i)
each of the undersigned beneficial owners (or investment managers or advisors
for the beneficial owners) of the Notes (as defined below) and (ii) each other
beneficial owner (or investment manager or advisor for such beneficial owner) of
the Notes that executes a counterpart signature page to this Agreement after the
date of this Agreement, as provided herein (each, a "Noteholder" and
collectively, the "Noteholders").
RECITALS:
A. PRG has issued and outstanding $125,000,000 aggregate principal amount
of its 4-3/4% Convertible Subordinated Notes due 2006 (the "Notes") pursuant to
that certain indenture, dated as of November 26, 2001 (the "Indenture"), between
PRG (as successor in interest to The Profit Recovery Group International, Inc.)
and SunTrust Bank, as trustee.
B. The Noteholders are beneficial owners of the Notes (and/or are serving
as the investment advisors or managers or in a similar capacity for the
beneficial owners of such Notes, having the power to enter into this Agreement
on behalf of such beneficial owners) in the respective aggregate principal
amounts separately disclosed to PRG on a confidential basis (provided that the
aggregate principal amount of the holdings of all the Noteholders shall not be
deemed confidential).
C. The Company and the Noteholders are currently parties to that certain
Restructuring Support Agreement dated as of December 23, 2005 (the "Original
RSA") setting forth the terms of a proposed financial restructuring of the
Notes.
D. The Company and the Noteholders desire to modify and amend the terms of
the Original RSA as set forth herein.
E. Exhibit A hereto (the "Term Sheet") and the provisions hereof set forth
the basic terms of a financial restructuring of the Notes to be realized through
an exchange offer (the "Exchange Offer" and, collectively with any transactions
substantially as contemplated by the Term Sheet or this Agreement, the
"Restructuring").
F. The parties have agreed to the terms of the Restructuring and the
Noteholders each have agreed to support the Restructuring on the terms and
conditions set forth herein.
G. The Company intends to (i) conduct the Exchange Offer as soon as
practicable and (ii) use commercially reasonable efforts to obtain acceptance of
the Exchange Offer by the holders of 99% of the outstanding Notes.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
Section 1. General.
(a) The Company agrees and covenants that, subject to the conditions set
forth on the Term Sheet, it will use its commercially reasonable best efforts to
complete the Restructuring through the Exchange Offer.
(b) The parties shall negotiate in good faith (i) the documentation
regarding the Restructuring contemplated by the Term Sheet, (ii) the Exchange
Offer, and (iii) the other documents contemplated hereby and thereby
(collectively, the "Restructuring Documents").
(c) The parties hereto shall not (i) object to, delay, impede, or commence
any proceeding pertaining to, or take any other action to interfere, directly or
indirectly, in any material respect with the acceptance or implementation of,
the Restructuring provided that the terms of the final Restructuring Documents
are materially consistent with the Term Sheet and otherwise in form and
substance satisfactory to the Company and the Noteholders in their reasonable
discretion, (ii) encourage or support any person or entity to do any of the
foregoing, (iii) in the case of the Noteholders, exercise any rights under any
indenture or other agreement with the Company or instruct any trustee to
exercise any such rights except as consistent with this Agreement, or (iv) seek
or solicit, propose, file, support, encourage, vote for, consent to, instruct,
or engage in discussions with any person or entity, other than PRG, concerning
any restructuring, workout, plan of reorganization, dissolution, winding up,
acquisition or liquidation of PRG and/or its affiliates, other than the Exchange
Offer, provided that the Company may, upon one Business Day's notice to the
other parties hereto, respond to and engage in discussions concerning
unsolicited offers that the Company's board of directors believes in good faith
will lead to an alternative transaction that would provide more value to the
holders of the Notes and to PRG's current shareholders than the Restructuring.
(d) The parties agree nothing in this Agreement shall limit, modify or
otherwise effect any of the Lenders' rights under that certain Credit Agreement
among PRG-Xxxxxxx USA, Inc as Borrower, PRG and certain of its other affiliates,
as Guarantors and certain of the Noteholders, as Lenders, dated December 23,
2005 (the "Bridge Loan Credit Agreement"), or any documents related thereto
(collectively, the "Bridge Loan Documents").
Section 2. Support for the Restructuring.
(a) PRG agrees and covenants that it will use commercially reasonable best
efforts to take or cause to be taken all actions commercially reasonably
necessary and appropriate in furtherance of the Exchange Offer, including as
promptly as practicable to:
(1) prepare the solicitation materials relating to the Exchange Offer (the
"Solicitation Materials") in form and substance consistent with the Term Sheet,
except to the extent otherwise consented to by the Noteholders;
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(2) commence the Exchange Offer and disseminate the Solicitation Materials
in a manner customary for comparable transactions;
(3) seek satisfaction of all conditions precedent to the Restructuring;
(4) defend in good faith any suit or other legal or administrative
proceeding seeking to interfere with, impair or impede the Restructuring;
(5) promptly amend the Solicitation Materials, as necessary and as may be
required by applicable law and provide a draft of such amended Solicitation
Materials to the Ad Hoc Committee prior to the distribution of such materials to
holders of the Notes;
(6) not solicit or encourage others to formulate any other tender offer,
settlement offer, or exchange offer for the Notes other than the Exchange Offer;
(7) so long as this Agreement is effective and has not been terminated in
accordance with Section 5 or 6, hereof, and except to the extent necessary for
the fulfillment of the fiduciary duties of the Company's board of directors as
referred to in Section 6(c) hereof, not object to, nor otherwise commence any
proceeding to oppose, the Restructuring, it being understood and agreed that the
Company shall not seek, solicit, support, consent to, participate in the
formulation of, or encourage any other plan, sale, proposal, or offer of winding
up, liquidation, reorganization, merger, consolidation, dissolution, or
restructuring of the Company;
(8) subject to the satisfaction or waiver of any conditions precedent to
the Exchange Offer, consummate the Exchange Offer, including delivery of all
securities required to be issued thereunder (within the time that is customary
for transactions of this type) and the other transactions that are part of the
Restructuring; and
(9) prior to consummation of the Restructuring, take all action necessary
to exempt, in a manner reasonably acceptable to the Noteholders, the proposed
Restructuring transactions and the acquisition of New Securities (as defined in
the Term Sheet) or common stock issuable on conversion thereof by any holder of
Notes.
(b) PRG agrees and covenants that it will not, and will cause each of its
direct and indirect subsidiaries not to, sell, liquidate, or dispose of any
assets, outside the ordinary course of business consistent with past practices,
prior to the date on which the Exchange Offer closes other than as permitted by
the Section 8.5 of the Bridge Loan Credit Agreement as in effect on the Closing
Date (as defined under the Bridge Loan Credit Agreement), without the prior
written consent of the holders of a majority of the Notes subject to this
Agreement.
(c) Each of the Noteholders agrees and covenants that it shall, as long as
this Agreement is in effect:
(1) no later than 15 days prior to the first date scheduled for the closing
of the Exchange Offer, (i) tender all Notes beneficially owned by it and (ii)
cause the beneficial owner of all Notes for which the Noteholder is the
investment advisor or manager having the power to vote and dispose of such Notes
on behalf of such beneficial owner, to tender all such Notes together with
properly completed and duly executed letter or letters of transmittal with
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respect to such Notes as required by the instructions to the letter of
transmittal pursuant to and in accordance with the Exchange Offer;
(2) not revoke any of the foregoing unless and until this Agreement is
terminated in accordance with its terms;
(3) not vote for, consent to, provide any support for, participate in the
formulation of, or solicit or encourage others to formulate any other tender
offer, settlement offer, or exchange offer for the Notes other than the Exchange
Offer; and
(4) so long as this Agreement is effective and has not been terminated in
accordance with Section 5 or 6 hereof and the final Restructure Documents are
materially consistent with the Term Sheet, not object to, nor otherwise commence
any proceeding to oppose, the Restructuring, it being understood and agreed that
each Noteholder shall not (i) directly or indirectly seek, solicit, support, or
encourage any other plan, sale, proposal, or offer of winding up, liquidation,
reorganization, merger, consolidation, dissolution, or restructuring of the
Company or (ii) commence an involuntary bankruptcy case against the Company.
Section 3. Representations and Warranties.
(a) Each of the parties severally represents and warrants to each of the
other parties that the following statements are true and correct as of the date
hereof:
(1) Power and Authority. It has all requisite power and authority to enter
into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement.
(2) Authorization. The execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly authorized by all
necessary action on its part.
(3) No Conflicts. The execution, delivery, and performance by it of this
Agreement do not and shall not (i) violate any provision of law, rule, or
regulation applicable to it or its certificate of incorporation or by-laws (or
other organizational documents) or (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation to which it is a party or under its certificate
of incorporation or by-laws (or other organizational documents), except, with
respect to the Company, for any contractual obligation that would not have a
material adverse effect on the business, assets, financial condition, or results
of operations of PRG and its subsidiaries, taken as a whole.
(4) Governmental Consents. The execution, delivery, and performance by it
of this Agreement do not and shall not require any registration or filing with,
consent or approval of, or notice to, or other action to, with, or by, any
Federal, state, or other governmental authority or regulatory body, except (i)
such filings as may be necessary and/or required for disclosure by the
Securities and Exchange Commission and (ii) filings with NASDAQ in connection
with the Restructuring.
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(5) Binding Obligation. This Agreement is the legally valid and binding
obligation of it, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability.
(6) Proceedings. No litigation or proceeding before any court, arbitrator,
or administrative or governmental body is pending against it that would
adversely affect its ability to enter into this Agreement or perform its
obligations hereunder.
(b) Each of the Noteholders represents and warrants, severally and not
jointly, to each of the other parties that the following statements are true,
correct, and complete as of the date hereof:
(1) Ownership. It has disclosed to PRG on a confidential basis the
aggregate principal amount of the Notes for which (i) it is the sole beneficial
owner and (ii) it is the investment advisor or manager for the beneficial owners
of such Notes, having the power to vote and dispose of such Notes on behalf of
such beneficial owners. It is entitled (for its own account or for the account
of other persons claiming through it) to all of the rights and economic benefits
of such Notes.
(2) Transfers. It has made no prior assignment, sale, participation, grant,
conveyance, or other transfer of, and has not entered into any other agreement
to assign, sell, participate, grant, or otherwise transfer, in whole or in part,
any right, title, or interests in (or portion thereof) the Notes referred to in
Subsection 3(b)(1), except as permitted by Section 4 hereto.
(3) Laws. It (i) is a sophisticated investor with respect to the
transactions described herein with knowledge and experience in financial and
business matters sufficient to evaluate the merits and risks of owning and
investing in securities similar to the Notes (including any securities that may
be issued in connection with the Restructuring), making an informed decision
with respect thereto, and evaluating properly the terms and conditions of this
Agreement, and it has made its own analysis and decision to enter in this
Agreement, (ii) is, and any person for which it is the investment advisor or
manager and which is the beneficial owner of Notes is, an "accredited investor"
within the meaning of Rule 501 of the Securities Act of 1933, as amended, and
(iii) it has had the opportunity to meet with management of PRG and to ask
questions and review information with respect to PRG's business, financial
condition, results of operations and financial and operational outlook, and it
has obtained all information it deems necessary or appropriate in order to enter
into this agreement and make the investment decision contemplated hereby.
Section 4. Restriction on the Sale of the Notes. Each Noteholder
individually covenants that, from the date hereof until the termination of this
Agreement, such party shall not, directly or indirectly, sell, pledge,
hypothecate, or otherwise transfer any Notes or any option, right to acquire, or
voting, participation, or other interest therein, except to a purchaser or other
entity who executes and delivers to PRG, concurrently or prior to any binding
commitment with respect to such transfer, an agreement in writing to be bound by
all the terms of this Agreement with respect to the relevant Notes or other
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interests being transferred to such purchaser (which agreement shall include the
representations and warranties set forth in Section 3 hereof). This Agreement
shall in no way be construed to preclude a party from acquiring additional Notes
or other interests in PRG. All Notes held by a Noteholder, including Notes
acquired after the date hereof, shall be subject to all the terms of this
Agreement.
Section 5. Termination by the Noteholders. This Agreement may be terminated
by Noteholders that beneficially own or act as the investment advisor or manager
with respect to at least a majority of the Notes subject to the terms of this
Agreement on the occurrence of any of the following events (each a "Noteholder
Termination Event"), by delivering written notice of the occurrence of such
event in accordance with Section 13 below to the other parties:
(a) the Exchange Offer has not been commenced by February 1, 2006 or
completed by March 31, 2006;
(b) after the date hereof there shall have occurred any event or
circumstance that individually or in the aggregate reflect a material adverse
change in the financial condition, business, or operations of the Company and
its subsidiaries;
(c) the failure to repay all obligations under the facility contemplated by
the Bridge Loan Documents (the "Bridge Loan"), in full, in cash, concurrent with
the closing of the Exchange Offer;
(d) the exercise of any remedies under the Bridge Loan Documents following
an Event of Default (as defined therein) arising from any the following: (i) the
failure to make any scheduled payment of principal or interest as and when
required under the Bridge Loan Documents; (ii) the failure by the Company to
make any Mandatory Prepayments or Payment of Taxes; (iii) a default under any
Other Indebtedness, unless otherwise permitted by the Bridge Loan Documents;
(iv) the failure to maintain Insurance required by the Bridge Loan Documents;
(v) the incurrence of any Debt or Indebtedness in excess of the limitations in
the Bridge Loan Documents; (vi) any Consolidation, Dissolution or Merger in
violation of the Bridge Loan Documents; (vii) making any Restricted Payments in
violation of the Bridge Loan Documents; (viii) any Transactions with Affiliates
in violation of the Bridge Loan Documents; (ix) taking any Restricted Action in
violation of the Bridge Loan Documents; (x) making any Negative Pledge in
violation of the Bridge Loan Documents; or (xi) occurrence of any Bankruptcy
Event or Change of Control;(1)
(e) the exercise of any remedies under that certain Amended and Restated
Credit Agreement among PRG-Xxxxxx USA, Inc., as Borrower, PRG, and certain of
its other affiliates, as Guarantors, and Bank of America, N.A., dated as of
November 30, 2004, and any documents related thereto;
(f) the Restructuring or the final Restructuring Documents do not conform
to the Term Sheet with respect to the treatment of the Notes, except as modified
in any non-material respect or as approved by the Ad Hoc Committee of the
Noteholders (the members of which are identified on the signature pages hereto);
or
____________________
(1) All capitalized terms used in this Section 5(d) shall have the meaning
given such terms in the Bridge Loan Credit Agreement.
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(g) a material breach of this Agreement by the Company that is not, by its
terms, curable or that is, by its terms, curable and is not cured by the fifth
calendar day after notice of such breach (for the purposes of this Agreement,
the term "material breach" includes a breach of the covenant in Section 2(b)).
Section 6. Termination by the Company. The Company shall have the right to
terminate this Agreement on the occurrence of any of the following events (each
a "Company Termination Event") by giving written notice in accordance with
Section 13 below to the other parties:
(a) the exercise of any remedies under the Bridge Loan Documents;
(b) a material breach of this Agreement by any of the Noteholders that is
not, by its terms, curable or that is, by its terms, curable and is not cured by
the fifth calendar day after notice of such breach; or
(c) a good faith determination by the Company's board of directors
(following consultation with its reputable outside legal counsel and its
financial advisor of national recognized reputation) that such termination is
required by its fiduciary duty to the Company, its then current shareholders,
and its creditors in order to enter into an alternative transaction (whether in
the form of a merger, consolidation or combination with a third party or the
sale of all, substantially all, or a significant portion of, the assets or
businesses of the Company) that will be at least as favorable to each of such
parties but more favorable to the parties as a whole, from a financial
perspective, than the Restructuring and is reasonably capable of being
consummated, taking into account, among other things, all legal, financial,
regulatory and other aspects of the alternative transaction and the person or
group making such proposal (a "Superior Proposal"); provided that (i) the Bridge
Loan has been paid in full, in accordance with the Bridge Loan Documents, (ii)
the Company provides the Noteholders five (5) business days prior notice of the
Company's intent to terminate this Agreement under this Section 6(c) and the
terms and conditions of such Superior Proposal (including the identity of the
person or group making such Superior Proposal), and (iii) the Company provides
the Noteholders and their representatives a good faith opportunity during such
five (5) business day notice period and prior to any such termination to revise
the terms of the Restructuring.
Section 7. Termination of Agreement. Notwithstanding anything to the
contrary in this Agreement, the Term Sheet or any other agreement, this
Agreement shall terminate on the earliest of (a) the occurrence of a Noteholder
Termination Event, after expiration of any cure periods and satisfaction of any
conditions set forth in Section 5 of this Agreement, (b) the occurrence of a
Company Termination Event, after expiration of any cure periods and satisfaction
of any conditions set forth in Section 6 of this Agreement, and (c) if the
Restructuring has not been consummated prior to such date, 5:00 pm on June 15,
2006.
Section 8. Effect of Termination and of Waiver of Termination Event. On the
delivery of the written notice referred to in Sections 5 or 6 in connection with
the valid termination of this Agreement, the obligations of each of the parties
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hereunder shall thereupon terminate and be of no further force and effect. Prior
to the delivery of such notice the Noteholders may waive the occurrence of a
Noteholder Termination Event and PRG may waive the occurrence of a Company
Termination Event. No such waiver shall affect any subsequent termination event
or impair any right consequent thereon. Upon termination of this Agreement, no
party shall have any continuing liability or obligation to the other parties
hereunder; provided, however, that no such termination shall relieve any party
from liability for its breach or non-performance of its obligations hereunder
prior to the date of such termination.
Section 9. Amendments. This Agreement may be modified, amended, or
supplemented by a written agreement executed by the Company and the Noteholders
that beneficially own or act as the investment advisors or managers with respect
to at least a majority of the aggregate principal face amount of the Notes
subject to this Agreement, provided, however, that in the event of a material
change to the Term Sheet, or a change of any of the economic terms of the Term
Sheet, any Noteholder that does not consent shall have no further obligations
under the Agreement.
Section 10. Further Assurances. Each of the parties to this Agreement
hereby further covenants and agrees to cooperate in good faith to execute and
deliver all further documents and agreements and take all further action that
may be commercially reasonably necessary or desirable in order to enforce and
effectively implement the terms and conditions of this Agreement. Each
Noteholder agrees to advise the Company of any changes in the amount of Notes
beneficially owned by it and the amount of Notes for which such Noteholder is
the investment manager or advisor for beneficial owners.
Section 11. Voting Agreement. As soon as reasonably practicable following
the consummation of the Restructuring, the Company will call a meeting of
shareholders at which it will seek approval of the Management Incentive Plan and
the amendment of the Company's articles of incorporation to authorize 140
million shares of common stock in order to provide for conversion in full of the
New Senior Convertible Notes, the New Senior Series A Convertible Participating
Preferred Stock, and the New Senior Series B Convertible Participating Preferred
Stock and the distribution of Company common stock under the Management
Incentive Plan, as set forth in the Term Sheet. Each of the Noteholders hereby
agrees to (i) attend (in person or by proxy) such shareholders meeting or
meetings and (ii) cause all Company common stock and other Company capital stock
entitled to vote on any such proposal that are beneficially owned by such
Noteholder to be voted in favor of the approval of such proposal.
Section 12. Governing Law; Jurisdiction. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflict of laws of the State of New York. By its execution and delivery of
this Agreement, each of the parties hereto hereby irrevocably and
unconditionally agrees for itself that any legal action, suit, or proceeding
against it with respect to any matter under or arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit, or proceeding, shall be brought in a federal court of
competent jurisdiction in the Southern District of New York. By execution and
delivery of this Agreement, each of the parties hereto hereby irrevocably
accepts and submits to the jurisdiction of such court, generally and
unconditionally, with respect to any such action, suit, or proceeding.
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Section 13. Notices. All demands, notices, requests, consents, and
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or by courier service, messenger, facsimile,
telecopy, or if duly deposited in the mails, by certified or registered mail,
postage prepaid-return receipt requested, and shall be deemed to have been duly
given or made (i) upon delivery, if delivered personally or by courier service,
or messenger, in each case with record of receipt, (ii) upon transmission with
confirmed delivery, if sent by facsimile or telecopy, or (iii) two business days
after being sent by certified or registered mail, postage pre-paid, return
receipt requested, to the following addresses, or such other addresses as may be
furnished hereafter by notice in writing, to the following parties:
If to PRG, or any of its subsidiaries, to:
PRG-Xxxxxxx International, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx XxXxxxxx, Esq.
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to the Noteholders, or any one Noteholder, to:
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
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Section 14. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subject
matter hereof, and supersedes all prior agreements with respect to the subject
matter hereof, including the Original RSA.
Section 15. Headings. The headings of the paragraphs and subparagraphs of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
Section 16. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of the parties and their respective permitted successors
and assigns, provided, however, that nothing contained in this paragraph shall
be deemed to permit sales, assignments, or transfers other than in accordance
with Section 4.
Section 17. Specific Performance. Each party hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause other parties to sustain damages for which such
parties would not have an adequate remedy at law for money damages, and
therefore each party hereto agrees that in the event of any such breach, such
other parties shall be entitled to the remedy of specific performance of such
covenants and agreements and injunctive and other equitable relief in addition
to any other remedy to which such parties may be entitled, at law or in equity.
Section 18. Several, Not Joint, Obligations. The agreements,
representations, and obligations of the parties under this Agreement are, in all
respects, several and not joint.
Section 19. Remedies Cumulative. All rights, powers, and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any right,
power, or remedy thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power, or remedy by such party.
Section 20. No Waiver. The failure of any party hereto to exercise any
right, power, or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power, or remedy or to
demand such compliance.
Section 21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement. Delivery of an executed signature page of
this Agreement by telecopier or email shall be as effective as delivery of a
manually executed signature page of this Agreement.
Section 22. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
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Section 23. No Third-Party Beneficiaries. Unless expressly stated herein,
this Agreement shall be solely for the benefit of the parties, and no other
person or entity shall be a third party beneficiary hereof.
Section 24. Additional Parties. Without in any way limiting the provisions
hereof, additional holders of Notes may elect to become parties by executing and
delivering to PRG a counterpart hereof. Each such additional holder shall become
a party to this Agreement as a Noteholder in accordance with the terms of this
Agreement.
Section 25. No Solicitation. This Agreement is not intended to be, and each
signatory to this Agreement acknowledges that this Agreement is not, a
solicitation with respect to the Exchange Offer or with respect to any other
mechanism to accomplish a restructuring of the obligations under the Notes,
whether such mechanism is to be accomplished in or outside a court.
Section 26. Consideration. It is hereby acknowledged by the parties hereto
that, other than the agreements, covenants, representations, and warranties set
forth herein and in the Term Sheet, no consideration shall be due or paid to the
Noteholders for their agreement to vote to accept the Exchange Offer in
accordance with the terms and conditions of this Agreement.
Section 27. Receipt of Adequate Information; Representation by Counsel.
Each party acknowledges that it has received adequate information to enter into
this Agreement and that it has been represented by counsel in connection with
this Agreement and the transactions contemplated by this Agreement. Accordingly,
any rule of law or any legal decision that would provide any party with a
defense to the enforcement of the terms of this Agreement against such party
shall have no application and is expressly waived. The provisions of the
Agreement shall be interpreted in a reasonable manner to effect the intent of
the parties.
Section 28. Construction. To the extent that any ambiguity exists between
the descriptions contained in the Offering Circular and the terms set forth in
Exhibit A hereto, the descriptions in the Offering Circular shall control,
except to the extent that any such term or description within the Offering
Circular is inconsistent with the express provisions of this Agreement, in which
case this Agreement shall control.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
PRG-Xxxxxxx International, Inc.
By: /s/ Xxxxxxx XxXxxxxx, Xx.
------------------------------------------
Name: Xxxxxxx XxXxxxxx, Xx.
Title: Senior Vice President, General Counsel
and Secretary
[Signature Page to Amended and Restated Restructuring Support Agreement]
NOTEHOLDERS:
Xxxx Capital Partners, L.P.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Partner
Address:
000 Xxxxxxxxxx Xx., Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn.: Xxxx X. Xxxxxxxx
Parkcentral Global Hub Limited
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
Address:
0000 Xxxx Xxxxx Xxxxxxx
Xxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn.: Xxxxxx Xxxxxxx
Petrus Securities L.P.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President of General Partner
Address:
0000 Xxxx Xxxxx Xxxxxxx
Xxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn.: Xxxxxx Xxxxxxx
[Signature Page to Amended and Restated Restructuring Support Agreement]
Tenor Opportunity Master Fund, Ltd.
By: /s/ Xxxxx Xxxx
-------------------------------------------
Name: Xxxxx Xxxx
Title: Partner
Address:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn.:
Thales Fund Management, LLC
By: /s/ A. Xxxxx Xxxxxxx
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Name: A. Xxxxx Xxxxxxx
Title: Senior Analyst
Address:
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.:
Attn.:
[Signature Page to Amended and Restated Restructuring Support Agreement]
EXHIBIT A
TERM SHEET
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PROPOSED TRANSACTION: The following describes an agreement in principle between PRG-Xxxxxxx International,
Inc. and its subsidiaries (collectively, the "Company") and the Ad Hoc Committee of
Holders of the Company's 4.75% Convertible Subordinated Notes due 2006 (the "Ad Hoc
Committee") and to restructure the financial obligations of the Company.
The Transaction will involve the recapitalization of the Company through:
(i) A Bridge Loan (as defined below) of $10 million to provide the Company with
sufficient funds to pay the interest payment due on the Notes and
additional working capital, pending the closing of the Recapitalization
(as defined below);
(ii) A credit facility or facilities, consisting of a minimum revolver of $20
million and total commitments of no more than $47.5 million, amending or
refinancing (a) the Amended and Restated Credit Agreement, dated as of
November 30, 2004, among (x) PRG-Xxxxxxx USA, Inc., the Company, and
certain of the Company's subsidiaries and (y) Bank of America, N.A. (the
"Existing Credit Facility"), and (b) the Bridge Loan; and
(iii) A pro-rata exchange of the 4.75% Convertible Subordinated Notes due 2006 issued
by the Company (the "Notes") for three new securities including: (1) New
Senior Notes; (2) New Senior Convertible Notes; and (3) New Senior Series
A Convertible Participating Preferred Stock (collectively the "Transaction
Securities").
Points (i) through (iii), collectively, are defined as the "Recapitalization".
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CREDIT FACILITIES: Bridge Loan
$10 million second lien loan (the "Bridge Loan") to be provided by certain holders of
the Notes (or their affiliates). The Bridge Loan will have the following terms:
(i) Second lien on assets securing the Existing Credit Facility;
(ii) 12% interest in cash, payable monthly;
(iii) 50 bps closing fee;
(iv) Maturity date: Earlier of closing of the Recapitalization or August 15, 2006;
(v) Non-refundable commitment fee of 1.25% of $10 million, payable upon signing the
Commitment Letter; an additional 1.75% Placement Fee of the amount borrowed,
payable upon closing of the Bridge Loan; plus all out-of-pocket expenses;
(vi) Proceeds will be used for general corporate purposes to eliminate risk of
adverse customer actions, including paying the interest due on the existing
Notes. Up to $2.5 million may be used to fund foreign operations, provided
that, if requested by the Ad Hoc Committee, appropriate promissory note and
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A-1
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other documentation evidences such inter-company transfers and lien is
received on those promissory notes. Proceeds cannot be used to make
severance or similar payments to Xxxx Xxxx and Xxxx Xxxx.
Revolving Credit Facility/ New Second Lien Term Loan
The Existing Credit Facility will be either amended with Bank of America or refinanced
with a replacement lender to provide a minimum commitment of $20 million of senior
secured financing.
The Bridge Loan will be repaid upon completion of the refinancing of the Existing Credit
Facility with a credit facility or facilities, consisting of a minimum revolver of $20
million and total commitments of no more than $47.5 million.
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TRANSACTION SECURITIES: In exchange for the $125 million principal amount of Notes, the Noteholders will
receive, upon the closing of the exchange offer (the "Closing Date"), their pro-rata
share of the following securities with preference options for the different securities
structured, if possible:
(i) New Senior Notes in a principal amount of $50 million, plus an additional
principal amount equal to accrued and unpaid interest on the Notes to, but
not including, the Closing Date;
(ii) New Senior Convertible Notes in a principal amount of $60 million; and
(iii) New Senior Series A Convertible Participating Preferred Stock with an initial
liquidation preference of $15 million.
The interest payment due November 26, 2005 on the Notes will be paid in cash from the
proceeds of the Bridge Loan during the 30 day grace period as soon as documentation is
completed and Bank of America agrees to the terms of an Intercreditor and Subordination
Agreement.
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NEW SENIOR NOTES: Issuer: Company
Face Amount: $50 million plus an additional principal amount equal to
accrued and unpaid interest on the Notes to, but not
including, the Closing Date
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A-2
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Coupon: 11.0% cash, payable semi-annually starting six months after
the Closing Date
Maturity: 5 years from the Closing Date
Call Protection: Callable at any time at 104 in year 1, 102 in year 2; par in
year 3 until maturity plus all accrued interest thereon
through the date of the prepayment
Convertible: Not convertible
Ranking: Senior to existing Notes
Security: General unsecured obligations
Covenants: See description thereof contained in the Offering Circular
to be dated February 1, 2006 (the "Offering Circular")
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NEW SENIOR CONVERTIBLE Issuer: Company
NOTES:
Face Amount: $60 million
Coupon: 10% cash or PIK, at the option of the Company, payable
semi-annually starting six months after the Closing Date
Maturity: Five years from the Closing Date
Redemption Rights: Callable at par plus accrued interest at any time after both
(i) payment of the New Senior Notes in full and (ii) increase
in the authorized Company common stock to provide for the
conversion in full of the New Senior Convertible Notes, the
New Senior Series A Convertible Participating Preferred Stock
and the New Senior Series B Convertible Participating
Preferred Stock (collectively, the "New Securities") and the
distribution in full of Company common stock under the
Management Incentive Plan and the effectiveness of a
registration statement registering the resale of the New
Securities by certain Company affiliates (the "new conversion
rights date")
Ranking: Pari passu with the New Senior Notes
Security: General unsecured obligations
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A-3
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Convertible: At the option of the holder, the New Senior Convertible Notes
are convertible into New Senior Series B Convertible
Participating Preferred Stock only at any time after August
15, 2006 but prior to the new conversion rights date, at a
conversion price of $480 per share.
At the option of the holder, the New Senior Convertible Notes
are convertible into Company common stock only after the new
conversion rights ate at a conversion price of $.65 per share.
Covenants: See the description thereof contained in the Offering
Circular
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NEW SENIOR CONVERTIBLE THE NEW SENIOR SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK SHALL HAVE THE
NOTES (CONTINUED): FOLLOWING TERMS:
Face Amount: Principal amount of New Senior Convertible Notes converted
plus accrued and unpaid interest. Initial liquidation
preference of $480 per share
Dividend: 10% annual dividend rate payable semi-annually in cash or by
accretion of the liquidation preference of the shares, at the
option of the Company
Maturity: Later of (i) five years after the Closing Date and (ii) 120th
day following the new conversion rights date
Convertible: At the option of the holder after the new conversion rights
date, the New Senior Series B Convertible Participating
Preferred Stock is convertible into common stock at $0.65 per
share.
Redemption: Optionally redeemable at face amount plus accrued dividends
only after the new conversion rights date, subject to prior
or simultaneous refinancing in full of the New Senior Notes
and the New Senior Convertible Notes
Put Rights: During the period from March 15, 2011 to the new conversion
rights date, any holder of the New Senior Series B
Convertible Participating Preferred Stock may require the
Company to redeem such shares on any semi-annual dividend
payment date by delivering 60 days prior written notice
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A-4
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Voting: Votes with common stock on all issues on an as converted basis
Form: Certificated security
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NEW SENIOR SERIES A Issuer: Company
CONVERTIBLE PARTICIPATING
PREFERRED STOCK: Face Amount: $15 million. Initial liquidation preference of $120 per
share.
Dividend: 9% annual dividend rate payable semi-annually in cash or by
accretion of the liquidation preference of the shares, at the
option of the Company
Maturity: 5 years from the Closing Date
Convertible: Convertible into the common stock of the Company at any time
at $0.28405 per share at the option of the holder
Initial conversion implies 45.9% of the Common Stock of the
Company prior to the conversion of the New Senior Convertible
Notes into New Senior Series B Convertible Participating
Preferred Stock or its conversion into common stock.
Redemption: Redeemable at face amount plus accrued dividends only after
the operative conversion date, subject to prior or
simultaneous refinancing in full of the New Senior Notes and
the outstanding New Senior Convertible Notes
Votes with Common Stock on all issues on an as converted basis
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EXISTING COMMON The Company's existing common shareholders will retain their existing shares
SHAREHOLDERS: representing approximately 54.1% of the Common Stock following the initial dilution from
the New Senior Series A Convertible Participating Preferred Stock (30% assuming the full
and immediate conversion of the New Senior Convertible Notes into Common Stock).
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GOVERNANCE: Board of Directors:
The board will consist of seven members, four of whom will be designated by the
Noteholders Committee, two of whom will be designed by the members of the current board,
and one of whom shall be the Company's CEO.
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A-5
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MANAGEMENT INCENTIVE PLAN: Shares Phantom shares representing 10% of the Common Stock
Recordkeeping A notional account shall be established as to each
participating executive to which the phantom shares awarded
to such executive shall be credited ("Phantom Stock Account")
Vesting 1/3 on the effective date of the Recapitalization ("Effective
Date"), with the remainder vesting monthly over the two years
following the Effective Date
Vesting schedule for executives hired after the Effective
Date will be as determined by Company compensation committee.
100% vesting on a change in control. Conversion of the New
Senior Convertible Notes, the New Senior Series A Convertible
Participating Preferred Stock, and/or the New Senior Series B
Convertible Participating Preferred Stock into Common Stock
is not a change in control.
Allocation To be determined by the Compensation Committee of the new
board of directors upon the recommendation of the CEO;
provided, however, that the Company's CEO will receive a
minimum of 40% of amount allocated to Management Incentive
Plan
Prior to the last distribution from the Phantom
Stock Accounts under the Management Incentive Plan, the
compensation committee, after consultation with the Company's
CEO, will allocate any unallocated and/or forfeited phantom
shares to one or more of the Management Incentive Plan
participants.
Anti-Dilution
Provisions Standard anti-dilution provisions plus dilution protection
against conversion of the New Senior Convertible Notes, the
New Senior Series A Convertible Participating Preferred
Stock, and/or the New Senior Series B Convertible
Participating Preferred Stock into Common Stock will apply to
the Phantom Stock Account, but will not apply to shares of
Common Stock actually distributed to the executive from such
account.
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A-6
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Distribution Events Distribution of the Phantom Stock Account shall be made, at
the individual election of each executive, not earlier than
the dates and in the cumulative amounts set forth below.
2d anniversary of Effective Date 25%
3d anniversary of Effective Date 50%
4th anniversary of Effective Date 75%
5th anniversary of Effective Date 100%
Distribution of the undistributed vested amount of an
executive's Phantom Stock Account shall be made upon the
executive's death, disability, or termination of employment,
or a change in control (see "Vesting" above) of the Company.
Form of Payment Following the consummation of the Restructuring, the
Management Incentive Plan will be submitted to the Company
shareholders for approval.
In the event the Company shareholders decline to approve the
Management Incentive Plan, the value of an executive's
Phantom Stock Account will be distributed in cash based upon
the cash payment formula set forth below.
Following the receipt of such shareholder approval, the value
of an executive's Phantom Stock Account will be distributed
to the executive in cash to the extent required to satisfy
any applicable taxes (based on the 30-day average trading
price of the Common Stock at the time of distribution) and
the balance in shares of Common Stock.
Cash Payment
Formula The distributable cash value of an executive's Phantom Stock
Account shall be equal to (a) the number of shares of Common
Stock that would have been distributed to such executive on
the applicable distribution date multiplied by (b) the
average closing price of the Common Stock for the 30-day
period ending on such date.
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A-7
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Other Incentive
Payments This Management Incentive Plan is in addition to an annual
cash bonus program based on EBITDA or other targets
implemented by the Compensation Committee of the new board of
directors.
409A The Management Incentive Plan shall comply with the
requirements of Section 409A of the Tax Code, as applicable.
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CONDITIONS: (i) Acceptance of the proposed exchange offer by a minimum amount of 99% of Notes;
(ii) The Restructuring Documents are materially consistent herewith and are
otherwise are in form and substance satisfactory to the Company and the
Noteholders in their reasonable discretion;
(iii) Renewal of the Company's D&O policy or the purchase of an extended claims'
notice period for such policy, in either case, on terms reasonably
satisfactory to the current board of directors of the Company; and
(iv) Renegotiation or settlement of the severance agreements with Xxxx Xxxx and Xxxx
Xxxx on terms reasonably satisfactory to the Noteholders.
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A-8
