EXHIBIT 10.11
THIRD AMENDMENT
TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of September 12, 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 Borrower has requested and the Required Lenders have
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. Amended Definition. The definition of "Fixed Charge Coverage
Ratio" set forth in Section 1.1 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"Fixed Charge Coverage ratio" means, as of the end of each
fiscal quarter of the Consolidated Parties for the twelve month period
ending on such date, the ratio of (a) the sum of (i) Consolidated EBIT
for the applicable period plus (ii) Consolidated Rental Expense for the
applicable period plus (iii) any amortization of intangible assets
(other than accelerated amortization of goodwill required under FASB
142) for the applicable period to (b) the sum of (i) Consolidated
Interest Expense for the applicable period plus (ii) Consolidated
Rental Expense for the applicable period plus (iii) any payment of cash
dividends by the Parent to its shareholders during the applicable
period.
2. Section 7.11(iv). The last sentence of Section 7.11(iv) is
amended and restated in its entirety to read as follows:
For purposes of determining compliance with the Net Worth covenant set
forth above, the base number of $200,000,000 set forth above shall be
(a) reduced by the amount of any net book losses realized from the
sale of the Logistics Division or the Groupe Alma Business, (b)
reduced (or increased) by the amount of any "mark to market" net book
losses (or gains) required in accordance with GAAP to be recorded
prior to the sale of the
Logistics Division or any Discontinued Operation or non-cash charges
(or gains) related to the reclassification of any such Discontinued
Operation as "continuing" or "operating", (c) reduced by the amount of
accelerated amortization of goodwill required under FASB 142, in each
case occurring or incurred subsequent to September 30, 2001, (d)
reduced by the amount of the write-off of all capitalized loan fees
made during the period in which the Closing Date occurs and (e)
reduced by the amount of any repurchases by the Parent of shares of
its Capital Stock in accordance with Section 8.7 in an amount not to
exceed $25,000,000 in the aggregate for all such repurchases occurring
after September 12, 2002.
3. Section 8.7. Subsection (e) of Section 8.7 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
(e) so long as no Default or Event of Default exists prior to and
after giving effect to such transaction, the Parent may repurchase
shares of its Capital Stock and may make cash dividends to its
shareholders, provided that, after giving effect to any such
transaction on a pro forma basis, (A) the Senior Leverage Ratio is
less than 1.0 to 1.0, (B) the Credit Parties are in compliance with
the financial covenants set forth in Section 7.11 and (C) the total
outstanding amount of Revolving Obligations is less than or equal to
$40,000,000 (in each case as demonstrated in an officer's certificate
in a form satisfactory to the Administrative Agent).
4. Schedule 6.13. Schedule 6.13 to the Credit Agreement is
hereby deemed amended to include the following information:
PRG-Schultz Australia, Inc., a Texas corporation wholly owned by
PRG-Schultz International, Inc., was merged into PRG-Schultz
Australia, Inc., a Georgia corporation wholly owned by PRG-Schultz
International, Inc.
5. Conditions Precedent. This Amendment shall become effective
immediately upon receipt by the Administrative Agent of each of the following,
each in form and substance satisfactory to the Administrative Agent:
(a) Counterparts of this Amendment duly executed by the
Borrower, the Guarantors, the Administrative Agent and the Required
Lenders; and
(b) For the account of each Lender who executes this
Amendment on or before September 12, 2002, an amendment fee equal to
0.125% of such Lender's existing Revolving Commitment.
6. 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
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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 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,
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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.
(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.
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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.
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Name: Donald E. Ellis, Jr.
Title: Executive Vice President -- Finance,
Chief Financial Officer and Treasurer
PRGFS, INC.,
PRGLS, INC.,
each a Delaware corporation
By: Donald E. Ellis, Jr.
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Name: Donald E. Ellis, Jr.
Title: Executive Vice President -- Finance
PRGRS, INC., a Delaware corporation
By: John M. Cook
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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: Donald E. Ellis, Jr.
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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.
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Name: Donald E. Ellis, Jr.
Title: Executive Vice President -- Finance,
Chief Financial Officer and Treasurer
HS&A ACQUISITION -- UK, INC.,
a Texas corporation
By: /s/ Donald E. Ellis, Jr.
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Name: Donald E. Ellis, Jr.
Title: Executive Vice President -- Finance,
Chief Financial Officer and Treasurer
ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A.
By: /s/ Scott E. Reed
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Name: Scott E. Reed
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Title: SVP
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LENDERS: BANK OF AMERICA, N.A.
By: /s/ Nancy S. Goldman
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Name: Nancy S. Goldman
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Title: Senior Vice President
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LASALLE BANK, NATIONAL ASSOCIATION
By: /s/ Sara A. Huizinga
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Name: Sara A. Huizinga
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Title: Commercial Banking Officer
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WACHOVIA BANK, NATIONAL ASSOCIATION
(formerly known as Wachovia Bank, N.A.)
By: /s/ Katherine W. Glista
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Name: Katherine W. Glista
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Title: Senior Vice President
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