EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), is entered into as
of March 17, 2006, by and among PRG-Schutlz International, Inc., a Georgia
corporation (the "COMPANY"), and the holders listed on the Schedule of Holders
attached hereto as Exhibit A (each, an "AFFILIATE HOLDER" and, collectively, the
"AFFILIATE HOLDERS").
THE PARTIES TO THIS AGREEMENT enter into this agreement on the basis of the
following facts, intentions and understanding:
A. The Company and certain of the holders of 4 3/4% Convertible
Subordinated Notes due 2006 of the Company (the "EXISTING NOTES") entered into
that certain Restructuring Support Agreement, dated as of December 23, 2005 (the
"RESTRUCTURING SUPPORT AGREEMENT"), and, upon the terms and subject to the
conditions of the Restructuring Support Agreement, the Company has agreed to
issue to the holders of the Existing Notes in exchange for the Existing Notes
held by such holders (the "EXCHANGE") an aggregate of (A) Fifty Million Dollars
($50,000,000) of the Company's 11% Senior Notes due 2011, plus an additional
principal amount equal to the aggregate accrued and unpaid interest on the
Existing Notes (such 11% Senior Notes, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof (the "SENIOR
NOTES")), (B) Sixty Million Dollars ($60,000,000) of the Company's 10% Senior
Convertible Notes due 2011 (such 10% Senior Convertible Notes, as the same may
be amended, modified or supplemented from time to time in accordance with the
terms thereof (the "CONVERTIBLE NOTES" and, together with the Senior Notes, the
"NOTES")), which shall be convertible into shares of Senior Series B Convertible
Participating Preferred Stock (the "SERIES B PREFERRED STOCK") of the Company,
which shall be convertible into shares of Common Stock, without par value (the
"COMMON STOCK") of the Company, and (C) Fifteen Million Dollars ($15,000,000) of
Senior Series A Convertible Participating Preferred Stock (the "SERIES A
PREFERRED STOCK" and, together with the Series B Preferred Stock, the "PREFERRED
Stock") of the Company, which shall be convertible into shares of Common Stock
(such Common Stock, together with the Common Stock issued upon conversion of the
Series B Preferred Stock, the "CONVERSION SHARES").
B. To induce the Affiliate Holders to consummate the Exchange, the Company
has agreed to provide certain registration rights to the Affiliate Holders under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Affiliate Holders hereby agree as follows:
Section 1. Definitions As used in this Agreement, the following terms shall
have the following meanings:
"AFFILIATE" means a person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company.
"BUSINESS DAY" means any day other than Saturday, Sunday or any other day
on which commercial banks in The City of New York are required by law to remain
closed.
"CLOSING DATE" means the date upon which the Exchange has been completed.
"COMMISSION" means the Securities and Exchange Commission.
"INVESTOR" means each Affiliate Holder and any transferee or assignee
thereof to whom an Affiliate Holder assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 of this Agreement, and any subsequent transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 of this Agreement.
"PERSON" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization or
association and governmental or any department or agency thereof.
"REGISTER," "REGISTERED," and "REGISTRATION" means a registration effected
by preparing and filing one or more Registration Statements (as defined below)
in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or
any successor rule providing for offering securities on a continuous or delayed
basis ("RULE 415"), and the declaration or ordering of effectiveness of such
Registration Statements by the Commission.
"REGISTRABLE SECURITIES" means (i) the Senior Notes, (ii) the Convertible
Notes, (iii) the Series A Preferred Stock, (iv) the Series B Preferred stock,
(v) the Conversion Shares issued or issuable upon conversion of the Convertible
Notes, the Series A Preferred Stock and the Series B Preferred Stock, (vi) any
shares of capital stock issued or issuable with respect to the Conversion Shares
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitations on conversions of
the Series A Preferred Stock or the Series B Preferred Stock, and (vii) any
shares of capital stock of any entity issued in respect of the capital stock
referenced in the immediately preceding clauses (i), (ii), (iii), (iv), (v) and
(vi) as a result of a merger, consolidation, sale of assets, sale or exchange of
capital stock or other similar transaction; provided, that any Registrable
Securities that (A) have been sold pursuant to a Registration Statement or Rule
144 promulgated under the 1933 Act or (B) are eligible to be sold without
restriction under the 1933 Act, shall no longer be Registrable Securities.
"REGISTRATION STATEMENT" means a registration statement or registration
statements of the Company filed under the 1933 Act and covering all of the
Registrable Securities.
"REQUIRED HOLDERS" means the holders of a majority of the value of the
outstanding Registrable Securities, which value, in the case of Registrable
Securities that are shares of Common Stock, shall be determined by the last sale
price of such Common Stock on the trading date prior to the date for which the
Required Holders approval is relevant, and otherwise shall be determined as the
outstanding principal or face amount of the Registrable Securities.
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Section 2. Registration
(a) Mandatory Registration. The Company shall prepare and not later than
the earlier of 60 calendar days after the Closing Date or May 15, 2006 (assuming
that the Closing Date has occurred) (the "FILING DEADLINE"), file with the
Commission a Registration Statement on Form S-3 covering the resale of all of
the Registrable Securities of the Affiliate Holders. In the event that Form S-3
is unavailable for such a registration, the Company shall comply with the
provisions of Section 2(c) of this Agreement. The Registration Statement
prepared pursuant hereto shall register all of the Registrable Securities for
resale in accordance with the methods of distribution elected by the Required
Holders. The Registration Statement shall contain (except if otherwise directed
by the Required Holders) the "Selling Securityholders" and "Plan of
Distribution" sections in the form and substance substantially similar to
Exhibit B hereto. The Company shall use reasonable best efforts to have the
Registration Statement declared effective by the Commission as soon as
practicable, but not later than 150 calendar days after the Closing Date (the
"EFFECTIVENESS DEADLINE").
(b) Legal Counsel. Subject to Section 5 of this Agreement, the Required
Holders shall have the right to select one legal counsel to review and comment
upon any registration pursuant to this Agreement (the "LEGAL COUNSEL"), which
the Investors agree shall be Schulte Roth & Zabel LLP or such other counsel as
thereafter designated in writing by the Required Holders. Schulte Roth & Zabel
LLP, or any other counsel designated in writing by the Required Holders, shall
not represent any Investor that sends such counsel written notice that such
Investor does not wish such counsel to represent it in connection with the
matters discussed in this Section 2(b). The Investors, other than any Investor
that delivers the notice discussed in the preceding sentence, hereby waive any
conflict of interest or potential conflict of interest that may arise as a
result of the representation of such Investors by Schulte Roth & Zabel LLP in
connection with the subject matter of this Agreement.
(c) Ineligibility for Form S-3. If Form S-3 is not available for the
registration of the resale of the Registrable Securities hereunder or the
Company is not permitted by the 1933 Act or the Commission to use Form S-3, then
the Company shall (i) register the resale of the Registrable Securities on
another appropriate form reasonably acceptable to the Required Holders, and (ii)
undertake to register the Registrable Securities on Form S-3 as soon as such
form is available; provided, however, that the Company shall use reasonable best
efforts to maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering all of
the Registrable Securities has been declared effective by the Commission or, if
earlier, until the end of the Registration Period (as defined in Section 3(a)).
(d) Effect of Failure to File, Obtain, and Maintain Effectiveness of
Registration Statement. Subject to any elections made pursuant to Section 4(b),
if (i) a Registration Statement covering all the Registrable Securities is not
filed with the Commission on or before the Filing Deadline or is not declared
effective by the Commission on or before the Effectiveness Deadline, (ii) on any
day after such Registration Statement has been declared effective by the
Commission, sales of all of the Registrable Securities required to be included
on such Registration Statement cannot be made as a matter of law (other than
during an Allowable Grace Period (as defined in Section 3(m) of this Agreement)
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
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Statement or to register a sufficient number of shares of Common Stock), or (iv)
a Grace Period (as defined in Section 3(m) of this Agreement) exceeds the length
of an Allowable Grace Period (each of the items described in clauses (i), (ii)
and (iii) above shall be referred to as a "REGISTRATION DELAY"), then, as
damages to any Affiliate Holder by reason of any such delay in or reduction of
its ability to sell the Registrable Securities, then liquidated damages (the
"REGISTRATION DELAY PAYMENTS") will accrue (with respect to each Affiliate
Holder, based on the principal amount of the Notes or Convertible Notes or
liquidation preference on the Preferred Stock or, in the event of Conversion
Shares, the liquidation preference of the Preferred Stock from which the
Conversion Shares were converted) on Registrable Securities (in addition to the
stated interest or dividends on the Notes, Convertible Notes and Preferred
Stock) from and including the date on which any such Registration Delay shall
occur to but excluding the date on which all Registration Delays have been
cured. During the continuation of a Registration Delay, Registration Delay
Payments will accrue at a rate of 0.05% per month during the 90-day period
immediately following the occurrence of such Registration Default and shall
increase by 0.05% per month at the end of each subsequent 90-day period, but in
no event shall such rate exceed 3.00% per annum. The Registration Delay Payments
shall be due and payable (1) with respect to the Notes, on the next scheduled
interest payment date, (2) with respect to Preferred Stock, upon the next
scheduled dividend payment date and (3) with respect to Conversion Shares, on
the 30th day following the Registration Delay (and, if such Registration Delay
is continuing, each 30th day thereafter so long as any Registration Delay
Payments remain due and payable. Following the cure of all Registration Delays,
the accrual of Registration Delay Payments shall cease. The Registration Delay
Payments under this Section 2(d) shall be the sole and exclusive remedy of the
Affiliate Holders of Registrable Securities under this Agreement for a
Registration Delay. Notwithstanding the foregoing, no Registration Delay
Payments will be due hereunder to any Affiliate Holder with respect to any
Notes, Preferred Stock or Conversion Shares that are not Registrable Securities.
Section 3. Related Obligations At such time as the Company is obligated to
file a Registration Statement with the Commission pursuant to Section 2 of this
Agreement, the Company will use reasonable best efforts to effect the
registration of all of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
(a) The Company shall promptly prepare and file with the Commission a
Registration Statement with respect to all of the Registrable Securities (but in
no event later than the applicable Filing Deadline) and use reasonable best
efforts to cause such Registration Statement relating to all of the Registrable
Securities required to be covered thereby to become effective as soon as
practicable after such filing (but in no event later than the applicable
Effectiveness Deadline). The Company shall submit to the Commission, within five
(5) Business Days after the Company learns that no review of a particular
Registration Statement will be made by the staff of the Commission or that the
staff has no further comments on a particular Registration Statement, as the
case may be, a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than 48 hours after the submission of
such request. The Company shall, subject to the terms of this Agreement, keep
each Registration Statement effective pursuant to Rule 415 at all times during
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the period from the date it is initially declared effective until the earlier of
(i) the fifth anniversary of the date such Registration Statement is declared
effective, and (ii) the date as of which all of the Investors no longer hold
Registrable Securities (the "REGISTRATION PERIOD"), which Registration
Statement, as of its filing and effective dates (including all amendments or
supplements thereto, as of their respective filing and effective dates), shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
not misleading, and the prospectus contained in such Registration Statement, as
of its filing date (including all amendments and supplements thereto, as of
their respective filing dates), shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated thereon, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.
(b) Subject to Section 3(m) of this Agreement, the Company shall prepare
and file with the Commission such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with such Registration Statement, which prospectus is to be
filed pursuant to Rule 424 (or any successor rule thereto) promulgated under the
1933 Act, as may be necessary to keep such Registration Statement effective at
all times during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act. In the case of amendments and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any similar successor statute (the "1934 ACT"), the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the Commission on
the same day on which the 1934 Act report is filed which created the requirement
for the Company to amend or supplement such Registration Statement and
prospectus.
(c) The Company shall permit Legal Counsel, or if no Legal Counsel shall
have been chosen by the Investors, the Investors, to review and provide written
comment upon each Registration Statement, prospectus and all amendments and
supplements thereto at least three (3) Business Days prior to their filing with
the Commission, except for any amendment or supplement or document (a copy of
which has been previously furnished to the Investors and Legal Counsel) which
counsel to the Company shall advise the Company is required to be filed sooner
in order to comply with applicable law. The Company shall furnish to the
Investors and Legal Counsel, without charge, (i) promptly after receipt of such
correspondence, copies of all correspondence from the Commission or the staff of
the Commission to the Company or its representatives relating to each
Registration Statement, prospectus and all amendments and supplements thereto,
(ii) promptly after the same is prepared and filed with the Commission, one (1)
copy of each Registration Statement, prospectus and all amendments and
supplements thereto, including all exhibits and financial statements related
thereto, and (iii) promptly upon the effectiveness of each Registration
Statement and each amendment and supplement thereto, one (1) copy of the
prospectus included in each such Registration Statement and all amendments and
supplements thereto. The Company agrees that it will, and it will cause its
counsel to, consider in good faith any comments or objections from Legal
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Counsel, or if no Legal Counsel shall have been selected, the Investors, as to
the form or content of each Registration Statement, prospectus and all
amendments or supplements thereto or any request for acceleration of the
effectiveness of each Registration Statement, prospectus and all amendments or
supplements thereto.
(d) The Company shall furnish to each Investor whose Registrable Securities
are included in any Registration Statement, without charge to such Investor, (i)
upon the effectiveness of each Registration Statement, such number of copies of
the prospectus included in such Registration Statement and all amendments and
supplements thereto as such Investor may reasonably request, and (iii) such
other documents, including copies of any preliminary or final prospectus, as
such Investor may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities.
(e) Subject to Section 3(m) of this Agreement, and excluding any
Registrable Securities held by Investors electing to exclude their Registrable
Securities from the Registration Statement under Section 4(b), the Company shall
use commercially reasonable efforts to (i) promptly register and qualify, unless
an exemption from registration and qualification applies, the resale of the
Registrable Securities under such other securities or "blue sky" laws of all
applicable jurisdictions in the United States as any holder of Registrable
Securities reasonably requests in writing, (ii) promptly prepare and file in
those jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii)
promptly take such other actions as may be reasonably necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) promptly take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) file a general consent to service of
process in any such jurisdiction, except in such jurisdictions where the Company
is subject to service of process or (B) qualify generally to do business in any
such jurisdiction, except in such jurisdictions where the Company would
otherwise be required to qualify. The Company shall promptly notify each
Investor who holds Registrable Securities and Legal Counsel of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of notice of the initiation or threatening of any proceeding for
such purpose.
(f) Notwithstanding anything to the contrary set forth herein, as promptly
as practicable after becoming aware of such event, the Company shall notify each
Investor and Legal Counsel in writing of the happening of any event as a result
of which (i) the Registration Statement or any amendment or supplement thereto,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the prospectus related to such
Registration Statement or any amendment or supplement thereto includes an untrue
statement of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, subject to
Section 3(m) of this Agreement, promptly prepare a supplement or amendment to
such Registration Statement and prospectus to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to
each Investor and Legal Counsel as such Investor or Legal Counsel may reasonably
request. The Company shall also promptly notify each Investor and Legal Counsel
in writing (i) when a prospectus and each prospectus supplement or amendment
thereto has been filed, and when a Registration Statement and each amendment
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(including post-effective amendments) has been declared effective by the
Commission (notification of such effectiveness shall be delivered to each
Investor and Legal Counsel by facsimile on the same day of such effectiveness
and by overnight mail), (ii) of any request by the Commission for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company's reasonable determination that an
amendment (including any post-effective amendment) or supplement to a
Registration Statement or prospectus would be appropriate (subject to Section
3(n) hereof).
(g) Subject to Section 3(m) of this Agreement, the Company shall use
reasonable best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction, and (ii) if such an order or suspension is issued, obtain the
withdrawal of such order or suspension at the earliest practicable moment and
notify each holder of Registrable Securities and Legal Counsel of the issuance
of such order and the resolution thereof or its receipt of notice of the
initiation or threat of any proceeding for such purpose.
(h) The Company shall use reasonable best efforts to cause all the
Conversion Shares to be listed on each securities exchange or traded on each
securities market on which securities of the same class or series issued by the
Company are then listed or traded, as the case may be, if any, if the listing or
trading of such Conversion Shares is then permitted under the rules of such
exchange or market. The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section 3(i).
(i) In connection with any sale or transfer of Registrable Securities
pursuant to a Registration Statement, the Company shall cooperate with the
Investors who hold Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the Investors may
reasonably request and, registered in such names as the Investors may request.
(j) If requested by an Investor, the Company shall (i) as soon as
practicable, incorporate in each prospectus supplement or post-effective
amendment to the Registration Statement such information as an Investor provides
in writing and reasonably requests to be included therein relating to the sale
and distribution of the Registrable Securities, and (ii) as soon as practicable,
make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment.
(k) The Company shall comply with all applicable rules and regulations of
the Commission in connection with any registration hereunder.
(l) Within two (2) Business Days after a Registration Statement is ordered
effective by the Commission, the Company will so notify the transfer agent for
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the Registrable Securities and the Investors whose Registrable Securities are
included in the Registration Statement.
(m) Notwithstanding anything to the contrary herein, at any time after a
Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Board of Directors of the Company, in the best
interests of the Company (a "GRACE PERIOD"); provided, however, that the Company
shall promptly (i) notify the Investors in writing of the existence of material
non-public information giving rise to a Grace Period (provided that the Company
shall not disclose the content of such material non-public information to the
Investors) and the date on which the Grace Period will begin, and (ii) notify
the Investors in writing of the date on which the Grace Period ends; provided
further, that no single Grace Period shall exceed an aggregate of thirty (30)
days in any three (3) month period, and during any three hundred sixty-five
(365) day period, the aggregate of all of the Grace Periods shall not exceed an
aggregate of ninety (90) days and the first day of any Grace Period must be at
least five (5) trading days after the last day of any prior Grace Period (each
Grace Period complying with this provision being an "ALLOWABLE GRACE PERIOD").
For purposes of determining the length of a Grace Period, the Grace Period shall
be deemed to begin on and include the date the Investors receive the notice
referred to in clause (i) above and shall end on and include the later of the
date the Investors receive the notice referred to in clause (ii) above and the
date referred to in such notice; provided, however, that no Grace Period shall
be longer than an Allowable Grace Period. The provisions of Section 3(g) of this
Agreement shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 3(f) of this Agreement.
(n) The Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with, and in
the manner provided by, the provisions of Rule 158 under the 1933 Act) covering
a twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration Statement,
and which requirement will be deemed to be satisfied if the Company timely files
complete and accurate information on Forms 10Q, 10-K and 8-K under the 1934 Act
and otherwise complies with Rule 158 under the 1933 Act.
Section 4. Obligations of the Investors
(a) At least ten (10) Business Days prior to the first anticipated filing
date of a Registration Statement, the Company shall notify each Investor in
writing of the information the Company requires from each such Investor if such
Investor elects to have any of such Investor's Registrable Securities included
in such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company promptly such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the effectiveness of the registration of such Registrable
Securities and shall execute such documents in connection with such registration
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as the Company may reasonably request. Each Investor shall promptly notify the
Company of any material change with respect to such information previously
provided to the Company by such Investor. No Investor shall be entitled to
Registration Delay payments pursuant to Section 2(d) hereof unless and until
such Investor shall have used its reasonable best efforts to provide all such
reasonably requested information.
(b) Each Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement, in which case, such
Investor does not need to cooperate with the Company until it notifies the
Company of its desire to include one or more Registrable Securities in such
Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g) or 3(m) of
this Agreement or the first sentence of Section 3(f) of this Agreement, such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statements covering such Registrable Securities
until such Investor's receipt of the copies of the amended or supplemented
prospectus contemplated by Section 3(g) of this Agreement or the first sentence
of Section 3(f) of this Agreement or receipt of notice that no amendment or
supplement is required and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice (other than a single file copy, which such Investor may keep) in such
Investor's possession.
Section 5. Expenses of Registration All expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 of this Agreement, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, transfer agent fees and fees and disbursements of counsel
for the Company, shall be paid by the Company. The Company shall pay all of the
Investors' reasonable costs incurred in connection with the successful
enforcement of the Investors' rights under this Agreement; provided, however,
the Company shall be responsible for the reasonable fees and disbursements of
not more than one counsel, who shall be Legal Counsel.
Section 6. Indemnification In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Investor, the directors,
officers, members, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an "INDEMNIFIED PERSON"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys' fees, amounts paid in settlement or expenses, joint or several,
(collectively, "CLAIMS") incurred in investigating, preparing or defending any
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action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the Commission, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto ("INDEMNIFIED
DAMAGES"), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any amendment
(including post-effective amendments) or supplement thereto, or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus if
authorized for use by the Company prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if any) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other federal law, any state or common law, or any rule or
regulation promulgated thereunder in connection with a Registration Statement
(the matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to Section 6(c) of this Agreement, the Company shall
reimburse the Indemnified Persons promptly as such expenses are incurred and are
due and payable, for any legal fees or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by an Investor or its Legal Counsel expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, including a corrected prospectus, if
such prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d) of this Agreement; and (iii) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, conditioned or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9 of this Agreement.
(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a) of this Agreement, the Company, each of its directors,
officers, employees, agents, affiliates and each Person, if any, who controls,
or is alleged to control, the Company within the meaning of the 1933 Act or the
1934 Act (each, an "INDEMNIFIED Party"), against any Claims or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claims or Indemnified Damages arise out of or
are based upon any Violation (including for purposes of this paragraph, a
material violation of this Agreement by the Investor), in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
10
or its Legal Counsel expressly for use in connection with such Registration
Statement and, subject to Section 6(c) of this Agreement, such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnification agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 of this
Agreement shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld or delayed; provided, further, that
the Investor shall be liable under this Section 6(b) for only that amount of the
Claims and Indemnified Damages as does not exceed the net proceeds to such
Investors as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnification agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9 of this Agreement. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) Promptly after an Indemnified Person or Indemnified Party under this
Section 6 has knowledge of any Claim as to which such Indemnified Person or
Indemnified Party reasonably believes indemnity may be sought or promptly after
such Indemnified Person or Indemnified Party receives notice of the commencement
of any action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of such Claim, and
the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding; provided, further, that the indemnifying party shall not be
responsible for the reasonable fees and expense of more than one (1) separate
legal counsel for such Indemnified Person or Indemnified Party. In the case of
an Indemnified Person, the legal counsel referred to in the immediately
preceding sentence shall be selected by the Required Holders. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
11
Indemnified Party or Indemnified Person of a full release from all liability in
respect to such Claim and action and proceeding. After indemnification as
provided for under this Agreement, the rights of the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party as provided in this Agreement shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
(d) No Person involved in the sale of Registrable Securities who is guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification from any
Person involved in such sale of Registrable Securities who is not guilty of
fraudulent misrepresentation.
(e) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(f) The indemnification agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
Section 7. Contribution To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 of this Agreement to the fullest
extent permitted by law; provided, however, that: (i) no contribution shall be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6 of this
Agreement, (ii) no Person involved in the sale of Registrable Securities who is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who is not
guilty of fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement. The provisions of this Section 7 shall remain in
full force and effect, regardless of the investigation made by or on behalf of
the beneficiaries of this Section 7 and shall survive the transfer of
Registrable Securities by the Investors pursuant to Section 9 of this Agreement.
Section 8. Reporting.
(a) Reports Under The 1934 Act. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the Commission that may at any time permit the
12
Investors to sell securities of the Company to the public without registration
("RULE 144"), the Company shall use reasonable best efforts to:
(1) make and keep public information available, as those terms are
understood and defined in Rule 144;
(2) file with the Commission in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act; and
(3) furnish to each Investor, so long as such Investor owns Registrable
Securities, promptly upon request, (A) a written statement by the Company, if
true, that it has complied with the applicable reporting requirements of Rule
144, the 1933 Act and the 1934 Act, (B) a copy of the most recent annual or
quarterly report of the Company and copies of such other reports and documents
so filed by the Company, and (C) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144
without registration.
(b) Rule 144A Information. The Company shall, upon request of any Investor,
make available to such Investor the information required by Rule 144A(d)(4) (or
any successor rule) under the 1933 Act.
Section 9. Assignment of Registration Rights The rights under this
Agreement shall be assignable by an Investor to which the Registrable Securities
are transferable (other than pursuant to a Registration Statement or Rule 144
under the 1933 Act); provided that, if and to the extent that such Notes,
Preferred Stock or Conversion Shares remain Registrable Securities following
such transfer: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such rights are being transferred or
assigned; (iii) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence, the transferee or assignee agrees
in writing with the Company to be bound by all of the obligations of an Investor
under this Agreement; and (iv) such transfer shall have been conducted in
accordance with all applicable federal and state securities laws.
13
Section 10. Amendment of Registration Rights Any provision of this
Agreement may be amended and the observance of any provision of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders. Any amendment or waiver affected in accordance with
this Section 10 shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it does not apply to all of the
holders of the Registrable Securities. No consideration shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of this Agreement unless the same consideration also is offered to all of
the parties to this Agreement.
Section 11. Miscellaneous
(a) A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (evidenced by mechanically
or electronically generated receipt by the sender's facsimile machine); or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
PRG-Schultz International, Inc.
600 Galleria Parkway, Suite 600
Atlanta, GA 30239
Facsimile: (770) 779-3133
Attention: Clinton McKellar, Jr., Esq.
with an additional copy to:
Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300
Dallas, TX 75201
Facsimile: (214) 746-7777
Attention: W. Stuart Ogg, Esq.
with an additional copy to:
Arnall Golden Gregory LLP
171 17th Street NW, Suite 2100
Atlanta, GA 30363
14
Facsimile: (404) 873-8501
Attention: Joseph Alley, Jr., Esq.
If to Legal Counsel:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Facsimile: (212) 593-5955
Attention: Andre Weiss, Esq.
If to an Affiliate Holder, to its address and facsimile number set forth on the
Schedule of Affiliate Holders attached hereto as Exhibit A, with copies to such
Affiliate Holder's representatives as set forth on the Schedule of Affiliate
Holders, or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party. Failure to transmit notice or communication to
an Affiliate Holder or any defect in it shall not affect its sufficiency with
respect to other Affiliate Holders. If a notice or communication is given or
made in the manner provided above, it is duly given, whether or not the
addressee receives it.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting the City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
15
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
(e) This Agreement, the Restructuring Support Agreement, the Senior Notes,
the Convertible Notes, the Preferred Stock and the documents referenced herein
and therein (the "TRANSACTION DOCUMENTS") constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. The Transaction Documents supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(f) Subject to the requirements of Section 9 of this Agreement, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other parties hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(j) All consents and other determinations made by the Investors pursuant to
this Agreement shall be made, unless otherwise specified in this Agreement, by
the Required Holders.
(k) This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
(l) The obligations of each Affiliate Holder under any Transaction Document
are several and not joint with the obligations of any other Affiliate Holder,
and no Affiliate Holder shall be responsible in any way for the performance of
the obligations of any other Affiliate Holder under any Transaction Document.
Nothing contained herein or in any other Transaction Document, and no action
taken by any Affiliate Holder pursuant hereto or thereto, shall be deemed to
constitute the Affiliate Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Affiliate
Holders are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Affiliate Holder confirms that it has independently participated in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Affiliate Holder shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it
shall not be necessary for any other Affiliate Holder to be joined as an
additional party in any proceeding for such purpose.
16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY
PRG-SCHULTZ INTERNATIONAL, INC.
By: /s/ James B. McCurry
--------------------------------------
Name:
Title:
[Signatures of Affiliate Holders on Following Page]
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
BLUM STRATEGIC PARTNERS II, L.P.
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
BLUM STRATEGIC PARTNERS II GMBH & CO. KG
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
BLUM CAPITAL PARTNERS, L.P.
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
STINSON CAPITAL PARTNERS, L.P.
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
STINSON CAPITAL PARTNERS II, L.P.
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
STINSON CAPITAL PARTNERS QP, L.P.
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
STINSON CAPITAL PARTNERS S, L.P.
By: /s/ Jose Medeiros
--------------------------------------
Name: Jose Medeiros
Title: Partner
PARKCENTRAL GLOBAL HUB LIMITED
By: /s/ Steven Blasnik
--------------------------------------
Name: Steven Blasnick
Title: President
PETRUS SECURITIES, L.P.
By: /s/ Steven Blasnik
--------------------------------------
Name: Steven Blasnick
Title: President of General Partner
EXHIBIT A
EXHIBIT A TO REGISTRATION RIGHTS AGREEMENT
SCHEDULE OF HOLDERS
PRINCIPAL AMOUNT
PRINCIPAL AMOUNT OF CONVERTIBLE NUMBER OF SERIES A NUMBER OF SERIES B
NAME OF HOLDERS OF SENIOR NOTES(1) NOTES PREFERRED SHARES PREFERRED SHARES (2)
- -------------------------------- ------------------ ------------------ ------------------ --------------------
1. Blum Strategic Partners II, $[6,094,050] $7,054,560 14,697 [14,694.65]
L.P.
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
2. Blum Strategic Partners II $[125,638] $145,440 303 [302.95]
GmbH & Co. KG
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
3. Blum Capital Partners, L.P. $[2488] $2880 6 [6]
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
4. Stinson Capital Partners, $[3,046,402] $3,526,560 7,347 [7,345.82]
L.P.
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
5. Stinson Capital Partners $[2,710,540] $3,137,760 6,537 [6535.95]
(QP), L.P.
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
6. Stinson Capital Partners $[2,487,875] $2,880,000 6,000 [5999.04]
II, L.P.
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
7. Stinson Capital Partners S, $[462,745] $535,680 1,116 [1,115.82]
L.P.
909 Montgomery Street, Suite
400
San Francisco, CA 94133
Facsimile: (415) 283-0601
8. Parkcentral Global Hub $[8,311576] $9,621,600 20,045 [20,041.79]
Limited
2300 West Plano Parkway
Plano, TX 75075
Facsimile: (972) 535-1997
9. Petrus Securities, L.P. $[1,617,119] $1,872,000 3,900 [3,899.37]
2300 West Plano Parkway
Plano, TX 75075
Facsimile: (972) 535-1997
- ------------------
(1) The principal amount of the Senior Notes was calculated by issuing
$414.64583333 per $1,000 of existing notes surrendered. Please note that
the numbers listed in Exhibit A may not be exact due to rounding.
(2) No shares of Series B Preferred Shares are currently issued. This number
assumes full conversion of the Senior Convertible Notes.
EXHIBIT B