Item 1.01 Entry into a Material Definitive Agreement.
On February 5, 2020, PAR Technology Corporation ("PAR," "Company," "we," "our"
or "us") entered into a Purchase Agreement between PAR and Jefferies LLC, (the
"Initial Purchaser"), relating to its issuance and sale of $120 million in
aggregate principal amount of 2.875% Convertible Senior Notes due 2026 (the
"2026 notes"). The closing with respect to the issuance and sale of the 2026
notes occurred on February 10, 2020, including the simultaneous closing of the
full exercise on February 6, 2020 of the Initial Purchaser's option to purchase
an additional $15 million in aggregate principal amount of 2026 notes.
PAR received approximately $115.9 million of net proceeds from the issuance and
sale of the 2026 notes, including net proceeds from the option to purchase
additional 2026 notes. Approximately $66.25 million (excluding cash payments
relating to accrued interest and fractional shares) of the proceeds and 722,423
shares of the Company's common stock, par value $0.02 per share, will be used to
repurchase $66.25 million in aggregate principal amount of the Company's
outstanding 4.500% convertible senior notes due 2024 (the "2024 notes") through
individually negotiated transactions. PAR intends to use the remaining proceeds
for general corporate purposes, including continued funding investment in PAR's
Brink business and for other working capital needs. PAR may also use a portion
of the proceeds to acquire or invest in other assets complementary to its
business.
The 2026 notes are senior, unsecured obligations of PAR. The 2026 notes will pay
interest at a rate equal to 2.875% per year. Interest on the 2026 notes will be
payable semiannually in arrears on April 15 and October 15 of each year,
beginning October 15, 2020. Interest will accrue on the 2026 notes from the last
date to which interest has been paid or duly provided for or, if no interest has
been paid or duly provided for, from April 15, 2020. Unless earlier converted,
redeemed or repurchased, the 2026 notes will mature on April 15, 2026.
The 2026 notes are convertible, at the option of the holder, at any time prior
to the close of business on the business day immediately preceding October 15,
2025, but only in the following circumstances: (1) during any calendar quarter
commencing after the calendar quarter ending on March 31, 2020 (and only during
such calendar quarter), if the last reported sale price of PAR's common stock
for each of at least 20 trading days (whether or not consecutive) during the 30
consecutive trading days ending on, and including, the last trading day of the
immediately preceding calendar quarter is greater than 130% of the conversion
price on such trading day; (2) during the five consecutive business day period
immediately after any five consecutive trading day period (the five consecutive
trading day period being referred to as the ''measurement period'') in which the
trading price (as defined in the offering memorandum) per $1,000 principal
amount of the 2026 notes, as determined following a request by a holder of the
2026 notes, for each trading day of the measurement period was less than 98% of
the product of the last reported sale price of PAR's common stock and the
conversion rate on such trading day; (3) upon the occurrence of certain
specified corporate events; or (4) if PAR has called the 2026 notes for
redemption. In addition, regardless of the foregoing circumstances, holders may
convert their 2026 notes at any time on or after October 15, 2025 until the
close of business on the second business day immediately preceding the maturity
date. Upon conversion, PAR will satisfy its conversion obligation by paying or
delivering, as the case may be, cash, shares of PAR common stock or a
combination of cash and shares of PAR common stock, at PAR's election.
Indenture
The 2026 notes were issued pursuant to an indenture, dated February 10, 2020,
between PAR and The Bank of New York Mellon Trust Company, N.A. ("Trustee"),
referred to herein as the "Indenture." The Indenture contains covenants that,
among other things, restrict PAR's ability to merge, consolidate or sell, or
otherwise dispose of, substantially all of its assets. These limitations are
subject to a number of important qualifications and exceptions.
The Indenture contains customary Events of Default (as defined in the
Indenture), including: default in the payment when due (at maturity, upon
redemption or otherwise) of the principal of the 2026 notes; default for 30 days
in the payment when due of interest on the 2026 notes; failure to comply with
covenants and other obligations under the Indenture, including delivery of
required notices and obligations in connection with conversion, in certain cases
subject to notice and grace periods; payment defaults and accelerations with
respect to other indebtedness of PAR and its significant subsidiaries in the
aggregate principal amount of $15.0 million or more; failure by PAR or its
significant subsidiaries to pay certain final judgments aggregating in excess of
$15.0 million within 60 consecutive days of such final judgment; and specified
events involving bankruptcy, insolvency or reorganization of PAR or its
significant subsidiaries.
Upon an Event of Default, the trustee or the holders of at least 25% in
aggregate principal amount of the 2026 notes then outstanding may declare all
the 2026 notes to be due and payable immediately. In the case of Events of
Default relating to bankruptcy, insolvency or reorganization, all outstanding
2026 notes will become due and payable immediately without further action or
notice.
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Note Repurchase Transactions
On February 5, 2020, the Company entered into separate and privately negotiated
transactions with certain holders of its 2024 notes to repurchase $66.25 million
aggregate principal amount of the outstanding 2024 notes (each, a "2024 Notes
Repurchase Transaction" and, collectively, the "2024 Notes Repurchase
Transactions"). The 2024 Notes Repurchase Transactions will be consummated
pursuant to individually negotiated repurchase agreements with the holders of
the 2024 notes (each such agreement, a "Note Repurchase Agreement"). The closing
with respect to each of the 2024 Notes Repurchase Transactions is expected to
occur on or about February 10, 2020. In connection with the closing, the Company
will issue 722,423 shares of its common stock in the aggregate and pay a cash
amount of $66.25 million (excluding cash payments relating to accrued interest
and fractional shares) in the aggregate for the 2024 notes being repurchased in
the 2024 Notes Repurchase Transactions. Following the completion of the 2024
Notes Repurchase Transactions, $13.75 million in aggregate principal amount of
2024 notes will remain outstanding.
A copy of the Purchase Agreement, the Indenture and the form of Note Repurchase
Agreement are attached hereto as Exhibit 10.1, Exhibit 4.1 and Exhibit 10.2,
respectively, and are incorporated herein by reference. The description of the
2026 notes contained in this Current Report on Form 8-K is qualified in its
entirety by reference to the Indenture.
The Purchase Agreement, Indenture and form of Note Repurchase Agreement have
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 above is incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities.
The information in Item 1.01 above is incorporated by reference herein.
The 2026 notes and the shares of PAR's common stock into which the 2026 notes
are convertible were offered and sold pursuant to exemptions from registration
requirements afforded by Section 4(a)(2) of the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 144A under the Securities Act. The
issuance of the shares of common stock in connection with each 2024 Notes
Repurchase Transaction will be made pursuant to an exemption from the
registration requirements of the Securities Act afforded by Section 4(a)(2) of
the Securities Act.
No Offer or Solicitation
This Current Report on Form 8-K does not constitute an offer to sell or the
solicitation of an offer to buy any securities nor shall there be any offer,
solicitation or sale of any securities in any state in which such offer,
solicitation or sale would be unlawful. Neither the 2026 notes or the 2024 notes
have been, nor will be, registered under the Securities Act, or applicable state
securities laws, and neither the 2026 notes or the 2024 notes may be offered or
sold in the United States absent registration or pursuant to an applicable
exemption from the registration requirements of the Securities Act and
applicable state securities laws.
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Caution Regarding Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of
Section 21E of the Exchange Act, Section 27A of the Securities Act, and the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
not historical in nature, but rather are predictive of our future operations,
financial condition, business strategies and prospects. Forward-looking
statements are generally identified by words such as "anticipate," "believe,"
"belief," "continue," "could," "expect," "estimate," "intend," "may,"
"opportunity," "plan," "should," "will," "would," "will likely result" and
similar expressions. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties, which
could cause our actual results to differ materially from those expressed in, or
implied by, the forward-looking statements, including: risks related to the
intended use of the proceeds of the offering and the fact that the Company's
management will have broad discretion in the use of the proceeds from any sale
of the 2026 notes; delays in new product development and/or product
introduction; changes in customer base, or in product and service demands from
our customers, particularly as to the two restaurant chain customers and the
U.S. Department of Defense, each of which represent a significant portion of our
revenue; risks associated with the internal investigation into conduct at our
China and Singapore offices, including sanctions and fines that may be imposed
by China and Singapore authorities; our ability to successfully integrate our
recent acquisitions and realize expected synergies therefrom; and our ability to
execute our business plan and grow our Brink business. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in our Annual Report on Form 10-K for the year ended December 31, 2018
and our quarterly reports, including under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and our other filings with the Securities and Exchange Commission.
We undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events, or otherwise,
except as may be required under applicable securities law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description of Exhibit
4.1 Indenture, dated as of February 10, 2020, between PAR Technology
Corporation, as Issuer, and The Bank of New York Mellon Trust Company,
N.A., as Trustee.
4.2 Form of Global Note (included in Exhibit 4.1).
10.1 Purchase Agreement, dated February 5, 2020, by and between PAR
Technology Corporation and Jefferies LLC, as Initial Purchaser.
10.2 Form of Note Repurchase Agreement.
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