Restructuring Agreement

A restructuring agreement is a contract between a company and consultant that describes the terms under which the company will reorganize. The purpose of restructuring can be to make a business run more efficiently, make more money, or to adapt to a changing market. Under the agreement, companies typically agree to pay a fee to the consultant to assist them in creating a plan for the company's unique needs. In exchange, consultants commit to delivering recommendations by a certain date. The exact deliverables that must be given are described aptly in the contract.

Common Sections in Restructuring Agreements

Below is a list of common sections included in Restructuring Agreements. These sections are linked to the below sample agreement for you to explore.

Restructuring Agreement Sample

RESTRUCTURING AGREEMENT (this “ Agreement ”), dated as of May 7, 2006, by and among Silicon Graphics, Inc., a Delaware corporation (“ SGI ”), and [Holder] in its capacity as a holder or investment manager or adviser for the beneficial owners (“ Holder ”) of certain of SGI’s 6.50% Senior Secured Convertible Notes due 2009 (the “ Notes ”).

WHEREAS, SGI and Holder have engaged in good faith negotiations with the objective of reaching an agreement with regard to a financial restructuring of SGI, including the restructuring of indebtedness outstanding under the Indenture (as defined below);

WHEREAS, SGI and Holder desire to implement a financial restructuring of SGI on the terms and subject to the conditions set forth in the Plan Term Sheet outlining the provisions of a plan of reorganization embodying the terms of such consensual restructuring (the “ Plan Term Sheet ”) attached hereto as Exhibit A (unless otherwise stated, capitalized terms used but not otherwise defined herein having the respective meanings ascribed to them in the Plan Term Sheet);

WHEREAS, in order to implement such financial restructuring, SGI has agreed, on the terms and subject to the conditions of this Agreement and applicable law, to use its reasonable best efforts to cause a plan of reorganization to be confirmed in connection with one or more cases (collectively, the “ Chapter 11 Case ”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as amended, the “ Bankruptcy Code ”), incorporating the terms and conditions set forth in the Plan Term Sheet and such other terms and conditions as are otherwise acceptable to Holder in its sole discretion (consummation of such a plan of reorganization in the Chapter 11 Case being the “ Financial Restructuring ”); and

WHEREAS, to expedite and ensure the implementation of the Financial Restructuring, the undersigned Holder is prepared to commit, on the terms and subject to the conditions of this Agreement and applicable law, if and when solicited to do so, to vote (or, in the case of managed or advised accounts, instruct its custodial agents to vote or, if Holder does not have discretionary authority over such account, recommend to vote) to accept the Joint Reorganization Plan (as defined below) in the Chapter 11 Case.

NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, SGI and Holder hereby agree as follows:

1. Agreement to Complete the Financial Restructuring . Subject to the terms and conditions of this Agreement, SGI shall use its reasonable best efforts and shall cause each of the U.S. Subsidiaries (as defined below) to use its reasonable best efforts to effectuate the Financial Restructuring through the Chapter 11 Case, under which SGI shall file a voluntary petition for relief under chapter 11 of the Bankruptcy Code and cause each of its subsidiaries listed on Exhibit B attached hereto (collectively, the “ U.S. Subsidiaries ”) simultaneously to file voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”), and use its reasonable best efforts to cause the Joint Reorganization Plan (as defined below) to be confirmed by the Bankruptcy Court in accordance herewith.

2. Forbearance . Subject to the terms and conditions of this Agreement, for a period commencing on the Agreement Date (as defined below) and ending on the occurrence of an Agreement Termination Event (as defined below) and subject to SGI’s continuing compliance with its obligations to provide adequate protection under the DIP Financing Commitment Letter (as defined below) and the definitive documents in connection with the DIP Financing (as defined below) and the Interim Order (as defined below) and the Final Order (as defined below) and their being no Event of Default under the DIP Financing (as defined below), Holder hereby agrees to forbear from seeking to lift the automatic stay to foreclose on the collateral securing the obligations under the indenture pursuant to which the Notes were issued (the “ Indenture ”).

3. Voting . Holder agrees that, subject to the conditions that (a) the terms and conditions of the Restructuring Documents (as defined below) implementing the Financial Restructuring shall be consistent with those set forth in the Plan Term Sheet and otherwise acceptable to Holder as provided herein, (b) each of the Restructuring Documents (as defined below) shall be in form and substance acceptable to Holder as provided herein; and (c) no Agreement Termination Event (as defined below) or other termination of this Agreement shall have occurred, Holder shall (i) when properly solicited to do so pursuant to a disclosure statement in compliance with section 1125 of the Bankruptcy Code, vote (or, in the case of managed or advised accounts, instruct its custodial agents to vote or, if Holder does not have discretionary authority over such account, recommend to vote) to accept the Joint Reorganization Plan (as defined below) in the Chapter 11 Case, (ii) support confirmation of the Joint Reorganization Plan (as defined below) in the Chapter 11 Case, (iii) provide to SGI, subject to any limitations contained in section 1125 of the Bankruptcy Code or order of the Bankruptcy Court, a letter to other holders of the Notes in support of the Joint Reorganization Plan (which letter shall be in form and substance satisfactory to Holder in its sole discretion) for inclusion in the solicitation packages for the Joint Reorganization Plan and (iv) refrain from supporting any other proposed plan of reorganization for SGI and the U.S. Subsidiaries.

4. Preparation of Restructuring Documents .

(a) In order to effectuate the Financial Restructuring, SGI shall promptly instruct its counsel to prepare, for the review and approval of Holder:

(i) voluntary petitions (the “ Petitions ”) for relief under chapter 11 of the Bankruptcy Code for SGI and each of the U.S. Subsidiaries;

(ii) a motion to approve the DIP Financing and certain adequate protection provisions contained in the Commitment Letter, dated as of May 5, 2006, regarding that certain debtor in possession facility described therein and in Appendix I and Annex I thereto (the “ DIP Financing Commitment Letter ” and the postpetition financing set forth in the DIP Financing Commitment Letter and to be set forth in definitive documentation, the “ DIP Financing ”), a copy of which is attached hereto as Exhibit C , on the terms and subject to the conditions contained in the DIP Financing Commitment Letter;

(iii) a joint disclosure statement to accompany the Joint Reorganization Plan reasonably acceptable to Holder in its sole discretion (as amended, modified or supplemented from time to time with the prior consent of Holder, the “ Disclosure Statement ”) under section 1125 of the Bankruptcy Code; and

(iv) all schedules, motions, pleadings (including without limitation all first-day pleadings) and other papers and documentation necessary or desirable in connection with the filing of the Petitions.

(b) Counsel for SGI and the U.S. Subsidiaries, in consultation with counsel for the ad hoc Committee of holders of the Notes (the “ Committee ”) shall prepare, for the review and approval of the parties hereto, a joint plan of reorganization containing terms and conditions consistent with the Plan Term Sheet and otherwise acceptable to Holder in its sole discretion and such other terms and conditions as are acceptable to the Holder in its sole discretion (the “ Joint Reorganization Plan ”) and other restructuring agreements and documents in respect of the Joint Reorganization Plan necessary or desirable in order to implement the Financial Restructuring, including, without limitation, documents to implement the rights offering, charter, bylaws, and registration rights agreement.

(c) SGI shall use its reasonable best efforts to cause counsel for the lenders under the Loan Agreement to prepare, for the review and approval of the parties hereto, all restructuring agreements and documents in respect of such facilities reasonably necessary or desirable in order to implement the Financial Restructuring.

(d) All documents and instruments referred to in this Section prepared in connection with the Financial Restructuring are referred to collectively herein as the “ Restructuring Documents ”. The parties hereto shall coordinate with one another in good faith in the preparation and negotiation of the Restructuring Documents, and, except as otherwise provided in the Plan Term Sheet, all Restructuring Documents shall be in form and substance satisfactory to Holder in its reasonable discretion.

5. Related Undertakings .

(a) SGI hereby agrees to use its reasonable best efforts (a) to obtain, within one (1) business day of the execution hereof, approval by its board of directors of this Agreement, and (b) promptly to take all other steps reasonably necessary to consummate the Financial Restructuring including the filing of the Joint Reorganization Plan and the Disclosure Statement with the Bankruptcy Court no later than thirty (30) days after the date on which the petitions are filed (the “ Petition Date ”); provided that, in the event that the DIP Lenders (as defined in the DIP Financing Commitment Letter) do not deliver, prior to the fifth (5th) business day following the Petition Date, the consent of a majority in interest of the holders of the 6.50% Secured Notes to the liens and superpriority claims granted to the DIP Lenders as proposed in the DIP Financing Commitment Letter, the deadline for the filing of the Joint Reorganization Plan and the Disclosure Statement shall be extended to within thirty-five (35) days of the Closing Date (as defined below). Without limiting the generality of the foregoing, SGI agrees to recommend to the holders of all impaired claims or interests that they vote in favor of confirmation of the Joint Reorganization Plan in the Chapter 11 Case.

(b) Neither SGI nor any of the U.S. Subsidiaries nor Holder shall, so long as this Agreement is in effect, (i) object to confirmation of the Joint Reorganization Plan in the Chapter 11 Case or otherwise commence any proceeding to oppose or alter the Financial Restructuring or any Restructuring Document so long as the Restructuring Documents contain terms and conditions consistent with those contained in the Plan Term Sheet, the DIP Financing Commitment Letter, and otherwise agreed in writing by the parties hereto; or (ii) vote for, consent to, support or participate in the formulation of any other out-of-court restructuring or chapter 7 or chapter 11 plan in respect of SGI and/or one or more of its direct or indirect subsidiaries proposed or filed or to be proposed or filed (other than the Financial Restructuring or as agreed in writing by SGI and the Holder); provided , that Holder shall not be barred from (x) objecting as to compliance with Bankruptcy Code Section 1125 or other applicable law relating to disclosure, if the Disclosure Statement or any other document received by Holder in the Chapter 11 Case contains a material misstatement or omission or (y) taking any action with respect to any matter, if such action is not inconsistent with the Financial Restructuring; and, provided , further , that nothing in this Agreement shall be deemed to prevent Holder from taking, or failing to take, any action that it is obligated to take (or not to take) in the performance of any fiduciary or similar duty that Holder may owe to any other person or entity.

(c) This Agreement may be terminated in accordance with section 7 hereof if SGI and the U.S. Subsidiaries shall fail to (i) file the Joint Reorganization Plan and the Disclosure Statement on or before the date that is thirty (30) days from the Petition Date; provided that, in the event that the DIP Lenders (as defined in the DIP Financing Commitment Letter) do not deliver, prior to the fifth (5th) business day following the Petition Date, the consent of a majority in interest of the holders of the 6.50% Secured Notes to the liens and superpriority claims granted to the DIP Lenders as proposed in the DIP Financing Commitment Letter, the deadline for the filing of the Joint Reorganization Plan and the Disclosure Statement shall be extended to within thirty-five (35) days of the Closing Date (as defined below); (ii) cause the Joint Reorganization Plan to be confirmed on or before the date that is one-hundred-thirty-five (135) days from the Petition Date; and (iii) cause the Effective Date to occur on or before the date that is thirty (30) days from the date upon which the order is entered confirming the Joint Reorganization Plan; provided , however , that in no event shall the Effective Date occur on a date that is more than one-hundred-and-eighty (180) days from the Closing Date.

(d) SGI and the U.S. Subsidiaries shall use their best efforts to refinance the Postpetition Financing Agreement (as defined in the DIP Financing Commitment Letter) and the Existing Credit Agreement (as defined in the DIP Financing Commitment Letter) with a $130,000,000 permanent post-petition financing agreement (the “ Permanent Postpetition Financing Agreement ”), upon the entry of the Final Order (as defined below) on terms and conditions satisfactory to Holder in its sole discretion.

6. Conduct of Business Prior to the Effective Date . SGI agrees to comply and agrees to cause the U.S. Subsidiaries to comply with the following covenants at all times prior to the effective date (the “ Effective Date ”) of the Joint Reorganization Plan, unless otherwise agreed in writing by Holder, such consent not to be unreasonably withheld, delayed or conditioned:

(a) SGI shall not, and shall cause each of the U.S. Subsidiaries not to, directly or indirectly, take any action to or suffer or permit any of the following: (i) issue, sell, pledge,

dispose of or encumber any additional shares of, or any options, warrants, conversion privileges or rights of any kind to acquire any shares of, any of its equity interests, including without limitation joint venture interests, limited liability company interests, partnership interests or capital stock; (ii) amend or propose to amend its by-laws, articles of incorporation, joint venture agreements or comparable organizational documents; (iii) split, combine or reclassify any outstanding shares of its capital stock or other equity interest, or declare, set aside or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect to any of its equity interests, including, without limitation, joint venture interests, limited liability company interests, partnership interests or capital stock; (iv) redeem, purchase or acquire or offer to acquire any of its equity interests, including, without limitation, joint venture interests, limited liability company interests, partnership interests or capital stock; (v) acquire, transfer, sell or dispose of (by merger, exchange, consolidation, acquisition or disposition of stock or assets or otherwise), or grant any lien, pledge, charge or security interest, or otherwise encumber, any corporation, partnership, joint venture or other business organization or division, or any assets thereof or interest therein; (vi) incur any indebtedness for borrowed money (other than in connection with the DIP Financing) or issue any debt securities; (vii) enter into any transaction with any affiliate other than in the ordinary course of business without the consent of the Holder; (viii) redeem, purchase or acquire or offer to acquire any Notes (other than pursuant to the Financial Restructuring); or (ix) enter into, or modify, any agreement with respect to any of the matters set forth in this Section 6(a);

(b) SGI shall not, and shall cause each of the U.S. Subsidiaries not to, (i) directly or indirectly engage in, agree to or consummate any transaction outside the ordinary course of its business (other than as approved by the Bankruptcy Court and pursuant to the Financial Restructuring) or (ii) enter into any transaction or perform any act which would constitute any breach by it of any of its representations, warranties, covenants or obligations hereunder;

(c) SGI shall, and shall cause each of the U.S. Subsidiaries to, maintain its corporate existence and qualification in good standing under the laws of each state or other jurisdiction in which it is organized or required to be qualified to do business, respectively;

(d) SGI shall promptly, and in any event within one business day after receipt or knowledge of the same by SGI, notify the legal and financial advisors of the Committee (collectively, the “ Committee’s Advisors ”) of any governmental or third party notices, complaints, investigations, hearings, orders, decrees or judgments (or communications indicating that any of the foregoing may be contemplated or threatened) which could be anticipated to (i) materially adversely affect the business, property, assets, concessions, licenses, or condition (financial or otherwise) of SGI or any of the U.S. Subsidiaries or (ii) materially prevent or delay the consummation of the Financial Restructuring; and

(e) SGI shall keep the Committee’s Advisors informed promptly of material developments concerning the aggregate change in the equity ownership in SGI for purposes of determining the continued availability to SGI of its tax loss carryforwards under applicable United States tax law.

7. Termination of this Agreement .