EXHIBIT 10.10
SECOND AMENDMENT
TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of August 19, 2002, is by and among PRG-Schultz USA, Inc. (formerly The Profit
Recovery Group USA, Inc.), a Georgia corporation (the "Borrower"), PRG-Schultz
International, Inc. (formerly The Profit Recovery Group International, Inc.), a
Georgia corporation (the "Parent"), each of the Domestic Subsidiaries of the
Parent (together with the Parent, the "Guarantors"), the Lenders party thereto
and Bank of America, N.A., as Administrative Agent. All capitalized terms used
herein and not otherwise defined shall have the meanings provided in the Credit
Agreement (as defined below).
WITNESSETH:
WHEREAS, the Borrower, the Guarantors, the Lenders and the
Administrative Agent entered into that certain Credit Agreement dated as of
December 31, 2001 (as amended or modified from time to time, the "Credit
Agreement"); and
WHEREAS, the Lenders have requested and the Borrower has agreed to
amend certain terms of the Credit Agreement as set forth below;
NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the parties hereby agree as follows:
1. New Definitions. The following new definitions are hereby
added to Section 1.1 of the Credit Agreement in the appropriate alphabetical
order and shall read as follows:
"Additional Revolving Commitment" means, with respect to any
Person which executes a New Commitment Agreement in accordance with
Section 3.4(d), the commitment of such Person in an aggregate principal
amount up to the amount specified in such New Commitment Agreement to
make Revolving Loans in accordance with the provisions of Section
2.1(a).
"New Commitment Agreement" shall have the meaning assigned to
such term in Section 3.4(d).
2. Amended Definitions.
(a) The definition of "Foreign Currency Commitment Percentage" set
forth in Section 1.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"Foreign Currency Commitment Percentage" means, for any
Lender, the percentage identified as its Foreign Currency Commitment
Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3 or any
Additional Revolving Commitments made pursuant to Section 3.4(d).
(b) The definition of "Net Cash Proceeds" set forth in Section 1.1
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:
"Net Cash Proceeds" means the aggregate cash proceeds received by the
Consolidated Parties in respect of any Asset Disposition, Equity Issuance
or Debt Issuance, net of (a) direct costs (including, without limitation,
legal, accounting and investment banking fees, sales commissions and
compensation related expenses) and (b) taxes paid or payable as a result
thereof; it being understood that "Net Cash Proceeds" shall include,
without limitation, (i) cash received upon the sale or other disposition of
any non-cash consideration received by the Consolidated Parties in any
Asset Disposition, Equity Issuance or Debt Issuance, and (ii) for purposes
of calculating the Net Worth covenant in Section 7.11(iv), non-cash
consideration received by the Consolidated Parties in any Equity Issuance.
(c) The definition of "Revolving Committed Amount" set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
"Revolving Committed Amount" means Fifty Five Million Dollars
($55,000,000), as such amount may be reduced or increased pursuant to
Section 3.4.
(d) The definition of "Revolving Commitment Percentage" set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
"Revolving Commitment Percentage" means, for any Lender, the
percentage identified as its Revolving Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3 or any
Additional Revolving Commitments made pursuant to Section 3.4(d).
3. Amendment to Section 3.4. A new subsection (d) is hereby added to
Section 3.4 of the Credit Agreement and shall read as follows:
(d) Increase in Revolving Committed Amount. Prior to December 31,
2003, the Borrower shall have the right to cause the Revolving Committed
Amount to be increased by an aggregate amount of not more than $20,000,000
in one or more separate increases with additional Commitments from the
Lenders (which the Lenders may provide in their sole discretion) or new
Commitments from other financial institutions, subject, however, in any
such case, to satisfaction of the following conditions precedent:
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(i) no Default or Event of Default shall have occurred and be
continuing on the date on which such Revolving Committed Amount
increase is to become effective;
(ii) the representations and warranties set forth in Section 6
of this Credit Agreement shall be true and correct in all material
respects on and as of the date on which such increase is to become
effective (except for those which expressly relate to an earlier
date);
(iii) on or before the date on which such increase is to become
effective, the Administrative Agent shall have received (A) for its
own account, the mutually acceptable fees and expenses to be paid in
connection with such increase and (B) for the account of each Person
providing an Additional Revolving Commitment, a commitment fee on the
amount of such Additional Revolving Commitment in a mutually
acceptable amount to be determined at such time;
(iv) such requested increase shall be effective on such date
only to the extent that, on or before such date, the Administrative
Agent shall have received and accepted from (A) one or more Lenders or
(B) any other financial institution reasonably acceptable to the
Administrative Agent and the Borrower, an agreement in the form of
Exhibit 3.4(d) (each such agreement a "New Commitment Agreement"),
with respect to the Additional Revolving Commitment of such Person;
and
(v) upon the execution of any New Commitment Agreement from a
Person other than an existing Lender, the Borrower shall deliver an
appropriate new Revolving Note to such Person making an Additional
Revolving Commitment.
Upon the effectiveness of any increase in the Revolving Committed
Amount pursuant to this subsection (d), the Revolving Commitment
Percentage and the Foreign Currency Commitment Percentage of each Lender
shall be automatically adjusted to give effect to such increase.
4. Schedule 2.1(a). Schedule 2.1(a) to the Credit Agreement is hereby
amended and amended in its entirety to read as provided on Schedule 2.1(a)
attached hereto.
5. New Exhibit 3.4(d). A new Exhibit 3.4(d) is hereby added to the Credit
Agreement and shall read as provided on Exhibit 3.4(d) attached hereto.
6. Schedule 6.13. Schedule 6.13 to the Credit Agreement is hereby deemed
amended to include the following information:
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The Profit Recovery Group Australia, Inc., a Georgia corporation wholly
owned by PRG-Schultz International, Inc., is now known as PRG-Schultz
Australia, Inc., a Georgia corporation.
The Profit Recovery Group Canada, Inc., a Georgia corporation wholly
owned by PRG-Schultz International, Inc., is now known as PRG-Schultz
Canada, Inc., a Georgia corporation.
PRG-Schultz Canada, Inc. (formerly known as Howard Schultz & Associates
(Canada), Inc.), a Texas corporation wholly owned by PRG-Schultz
International, Inc., was merged into PRG-Schultz Canada, Inc., a
Georgia corporation wholly owned by PRG-Schultz International, Inc.
PRG-Schultz Canada Corp., a Nova Scotia unlimited liability company, is
a wholly owned subsidiary of PRG-Schultz Canada, Inc., a Georgia
corporation.
7. Conditions Precedent. The effectiveness of this Amendment is
subject to satisfaction of each of the following conditions:
(a) The Administrative Agent shall have received
counterparts of this Amendment, duly executed by the Borrower, the
Guarantors, the Administrative Agent and the Lenders.
(b) The Administrative Agent shall have received a legal
opinion from counsel to the Credit Parties in form and substance
satisfactory to the Administrative Agent.
(c) The Administrative Agent shall have received copies
of resolutions (each in form and substance satisfactory to the
Administrative Agent) of the Board of Directors of each Credit Party
approving and adopting this Amendment and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary of
such Credit Party to be true and correct and in full force and effect
as of the date hereof.
8. Miscellaneous.
(a) The term "Credit Agreement" as used in each of the
Credit Documents shall hereafter mean the Credit Agreement as amended
by this Amendment. Except as herein specifically agreed, the Credit
Agreement, and the obligations of the Credit Parties thereunder and
under the other Credit Documents, are hereby ratified and confirmed and
shall remain in full force and effect according to their terms.
(b) The Credit Parties acknowledge and confirm (i) that
the Administrative Agent, on behalf of the Lenders, has a valid and
enforceable first priority security interest in the Collateral, (ii)
that the Borrower's obligation to repay the outstanding principal
amount of the Loans and reimburse the Issuing Lender for any drawing on
a Letter of Credit is unconditional and not subject to any offsets,
defenses or counterclaims, (iii) that
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the Administrative Agent and the Lenders have performed fully all of their
respective obligations under the Credit Agreement and the other Credit
Documents, and (iv) by entering into this Amendment, the Lenders do not waive
or release any term or condition of the Credit Agreement or any of the other
Credit Documents or any of their rights or remedies under such Credit Documents
or applicable law or any of the obligations of any Credit Party thereunder.
(c) The Credit Parties represent and warrant to the Lenders that (i) the
representations and warranties of the Credit Parties set forth in Section 6 of
the Credit Agreement are true and correct as of the date hereof and (ii) no
event has occurred and is continuing which constitutes a Default or an Event of
Default.
(d) This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Amendment to produce or account for more than one such
counterpart.
(e) This Amendment shall be governed by and construed in accordance with,
the laws of the State of Georgia.
(f) This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
(g) The Borrower and the Guarantors, as applicable, affirm the liens and
security interests created and granted in the Collateral Documents and agree
that this Amendment shall in no manner adversely affect or impair such liens
and security interests.
(h) Each Credit Party hereby represents and warrants as follows:
(i) Each Credit Party has taken all necessary action to authorize
the execution, delivery and performance of this Amendment.
(ii) This Amendment has been duly executed and delivered by the
Credit Parties and constitutes each of the Credit Parties' legal, valid
and binding obligations, enforceable in accordance with its terms, except
as such enforceability may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting creditors' rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or
third party is required in connection with the execution, delivery or
performance by any Credit Party of this Amendment.
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(i) The Guarantors (i) acknowledge and consent to all of the
terms and conditions of this Amendment, (ii) affirm all of their
obligations under the Credit Documents and (iii) agree that this Amendment
and all documents executed in connection herewith do not operate to reduce
or discharge the Guarantors' obligations under the Credit Agreement or the
other Credit Documents.
(j) This Amendment together with the other Credit Documents
represent the entire agreement of the parties and supersedes all prior
agreements and understandings, oral or written if any, relating to the
Credit Documents or the transactions contemplated herein and therein.
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Each of the parties hereto has caused a counterpart of this Amendment
to be duly executed and delivered as of the date first above written.
BORROWER: PRG-SCHULTZ USA, INC. (formerly The Profit Recovery
Group USA, Inc.), a Georgia corporation
By: /s/ Donald E. Ellis, Jr.
-------------------------------------------
Name: Donald E. Ellis, Jr.
Title: Executive Vice President-Finance,
Chief Financial Officer and Treasurer
GUARANTORS: PRG-SCHULTZ INTERNATIONAL, INC. (formerly The Profit
Recovery Group International, Inc.), a Georgia
corporation
By:/s/ Donald E. Ellis, Jr.
-------------------------------------------
Name: Donald E. Ellis, Jr.
Title: Executive Vice President-Finance,
Chief Financial Officer and Treasurer
PRGFS, INC.,
PRGLS, INC.,
each a Delaware corporation
By: /s/ Donald E. Ellis, Jr.
------------------------------------------
Name: Donald E. Ellis, Jr.
Title: Executive Vice President-Finance
PRGRS, INC., a Delaware corporation
By: /s/ John M. Cook
------------------------------------------
Name: John M. Cook
Title: President
PRG HOLDING CO. (FRANCE) NO. 1, LLC,
PRG HOLDING CO. (FRANCE) NO. 2, LLC,
each a Delaware limited liability company
By: /s/ Donald E. Ellis, Jr.
------------------------------------------
Name: Donald E. Ellis, Jr.
Title: Executive Vice President-Finance,
Chief Financial Officer and Treasurer
GUARANTORS: THE PROFIT RECOVERY GROUP U.K., INC.,
THE PROFIT RECOVERY GROUP ASIA, INC.,
PRG-SCHULTZ CANADA, INC. (formerly The Profit Recovery Group
Canada, Inc.),
THE PROFIT RECOVERY GROUP NEW ZEALAND, INC.,
THE PROFIT RECOVERY GROUP NETHERLANDS, INC.,
THE PROFIT RECOVERY GROUP BELGIUM, INC.,
THE PROFIT RECOVERY GROUP MEXICO, INC.,
THE PROFIT RECOVERY GROUP FRANCE, INC.,
PRG-SCHULTZ AUSTRALIA, INC. (formerly The Profit Recovery
Group Australia, Inc.),
THE PROFIT RECOVERY GROUP GERMANY, INC.,
PRG INTERNATIONAL, INC.,
THE PROFIT RECOVERY GROUP SWITZERLAND, INC.,
THE PROFIT RECOVERY GROUP SOUTH AFRICA, INC.,
THE PROFIT RECOVERY GROUP SPAIN, INC.,
THE PROFIT RECOVERY GROUP ITALY, INC.,
THE PROFIT RECOVERY GROUP GREECE, INC.,
THE PROFIT RECOVERY GROUP PORTUGAL, INC.,
PAYMENT TECHNOLOGIES, INC.,
THE PROFIT RECOVERY GROUP COSTA RICA, INC.,
PRG, INC.,
PRG USA, INC.,
each a Georgia corporation
By: /s/ Donald E. Ellis, Jr.
---------------------------------
Name: Donald E. Ellis, Jr.
Title: Executive Vice President - Finance,
Chief Financial Officer and Treasurer
HS&A ACQUISITION - UK, INC.,
PRG-SCHULTZ AUSTRALIA, INC.,
each a Texas corporation
By: /s/ Donald E. Ellis, Jr.
---------------------------------
Name: Donald E. Ellis, Jr.
Title: Executive Vice President - Finance,
Chief Financial Officer and Treasurer
ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A.
By: /s/ Nancy S. Goldman
----------------------------
Name: Nancy S. Goldman
--------------------------
Title: Senior Vice President
-------------------------
LENDERS: BANK OF AMERICA, N.A.
By: /s/ Nancy S. Goldman
----------------------------
Name: Nancy S. Goldman
--------------------------
Title: Senior Vice President
-------------------------
LASALLE BANK, NATIONAL ASSOCIATION
By: /s/ Sara A. Huzinga
----------------------------
Name: Sara A. Huzinga
--------------------------
Title: Commercial Banking Officer
-------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION
(formerly known as Wachovia Bank, N.A.)
By: /s/ Katherine W. Glista
----------------------------
Name: Katherine W. Glista
--------------------------
Title: Senior Vice President
-------------------------
Schedule 2.1(a)
LENDERS
<Table>
<Caption>
Revolving Commitment Foreign Currency Foreign Currency
Lender Percentage Revolving Commitment Commitment Percentage Commitment
------ ---------- -------------------- --------------------- ----------
Bank of America, N.A. 45.454545454% $25,000,000.00 45.454545454% $11,363,636.36
LaSalle Bank, National
Association 27.272727273% $15,000,000.00 27.272727273% $ 6,818,181.82
Wachovia Bank,
National Association 27.272727273% $15,000,000.00 27.272727273% $ 6,818,181.82
-------------- -------------- ------------- --------------
Total: 100.000000000% $55,000,000.00 100.00% $25,000,000.00
</Table>
Exhibit 3.4(d)
FORM OF
NEW COMMITMENT AGREEMENT
Reference is made to the Credit Agreement dated as of December 31, 2001
among PRG-Schultz USA, Inc. (formerly The Profit Recovery Grout USA, Inc.) a
Georgia corporation (the "Borrower"), PRG-Schultz International, Inc. (formerly
The Profit Recovery Group International, Inc.), a Georgia corporation, certain
Subsidiaries of the Borrower, the Lenders party thereto and Bank of America,
N.A., in its capacity as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders. All of the defined terms in the Credit
Agreement are incorporated herein by reference.
1. Effective as of the Effective Date set forth below, the undersigned
Lender hereby confirms its Additional Revolving Commitment, in an aggregate
principal amount of up to the amount of set forth below, to make Revolving
Loans in accordance with the provisions of Section 2.1(a) and 3.4(d) of the
Credit Agreement. If the undersigned Lender is already a Lender under the
Credit Agreement, such Lender acknowledges and agrees that such Additional
Revolving Commitment is in addition to any existing Revolving Commitment of
such Lender under the Credit Agreement. If the undersigned Lender is not
already a Lender under the Credit Agreement, such Lender hereby acknowledges,
agrees and confirms that, by its execution of this New Commitment Agreement,
such Lender will, as of the Effective Date, be a party to the Credit Agreement
and be bound by the provisions of the Credit Agreement, have a Revolving
Commitment equal to such Additional Revolving Commitment and, to the extent of
its Revolving Commitment, have the rights and obligations of a Lender
thereunder.
2. This New Commitment Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
Amount of Additional Revolving Commitment $______________
Effective Date of Additional Revolving Commitment _________,____
The terms set forth above
are hereby agreed to:
[Lender]
By:_________________________
Title:______________________