EXHIBIT 10.3
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Agreement"), dated as
of March 4, 2004, 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 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 Definitions.
(a) The definition of Consolidated EBITDA set forth in
Section 1.1 of the Credit Agreement is hereby amended to read as
follows:
"Consolidated EBITDA" means, for any period, the sum
of (i) Consolidated EBIT for such period, plus (ii)
depreciation and amortization expense for such period (to the
extent deducted in calculating Consolidated Net Income for
such period).
(b) The definition of Consolidated EBIT set forth in
Section 1.1 of the Credit Agreement is hereby amended to read as
follows:
"Consolidated EBIT' means, for any period, the sum of
(i) Consolidated Net Income for such period, plus (ii) an
amount which, in the determination of Consolidated Net Income
for such period, has been deducted for (A) Consolidated
Interest Expense and (B) total federal, state, local and
foreign income, value added and similar taxes, plus (iii) from
July 1, 2003 through December 31, 2004, all charges up to $12
million in the aggregate directly related to the Borrower's
corporate restructuring plan made during such period plus (iv)
for the period from October 1, 2003 until September 30, 2004,
all non-cash, non-recurring charges
(A) up to $3 million in the aggregate directly related to the
impairment of the Schultz trade name made during such period
and (B) up to $ 1.8 million in the aggregate directly related,
to impairment of the Beacon audit software code made during
such period, in each case of the Parent and its Subsidiaries
on a consolidated basis, as determined in accordance with
GAAP.
(c) Subclause (a) in the proviso contained in the
definition of Consolidated Net Income set forth in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
(a) any net book loss realized in such period from the sale of
the Logistics Division, the Groupe Alma Business, the
Communications Division, the Meridian Business or the Ship &
Debit Division,
(d) The definition of Meridian set forth in Section 1.1
of the Credit Agreement is hereby amended to read as follows:
"Meridian" means Meridian Corporation Limited
(formerly known as Meridian VAT Corporation Limited), a company
incorporated in Jersey.
(e) A new subclause (xi) is hereby added at the end of
the definition of Permitted Liens and shall read as follows:
and (xi) Liens on Property of Meridian or any of its
Subsidiaries securing those obligations of Meridian or any of
its Subsidiaries permitted under Section 8.1(1).
2. Amendment to Section 1.3. The last sentence of Section 1.3 is
hereby amended to read as follows:
Notwithstanding the foregoing, following the disposition of the
Communications Division, the Meridian Business or the Ship & Debit
Division, as applicable, the income statement items (whether positive
or negative) attributable to such division or business shall be
included in the calculation of the financial covenants set forth in
Section 7.11 to the extent related to any period applicable in such
calculation.
3. Amendment to Section 3.3(c). The second sentence in Section
3.3(c) of the Credit Agreement is hereby amended to read as follows:
Notwithstanding the foregoing, the aggregate permanent reduction in the
Revolving Committed Amount in connection with the prepayment of the
Loans with Net Cash Proceeds from the Communications Division, the
Meridian Business and the Ship & Debit Division shall not exceed $20
million.
4. Amendments to Section 7.11(iv)
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(a) Subclause (a) in the second sentence of Section 7.11 (iv) of
the Credit Agreement is hereby amended to read as follows:
(a) reduced by the amount of any net book losses realized from the sale
of the Logistics Division, the Groupe Alma Business, the Communications
Division, the Meridian Business or the Ship & Debit Division,
(b) A new subclause (h) is hereby added at the end of the second
sentence of Section 7.ll(iv) of the Credit Agreement and shall read as follows:
and (h) reduced by all non-cash, non-recurring charges (i) up to $3
million in the aggregate directly related to the impairment of the
Schultz trade name and (ii) up to $1.8 million in the aggregate
directly related to impairment of the Beacon audit software code.
5. Amendment to Section 8.1. A new subclause (1) is hereby added
at the end of Section 8.1 of the Credit Agreement and shall read as follows:
and (1) obligations of Meridian or any of its Subsidiaries with respect
to any letter of credit, bond or other surety provided for the account
of Meridian or any of its Subsidiaries to support Meridian's or any of
its Subsidiaries' obligations to the French VAT authorities; provided,
that (i) the aggregate amount of such obligations shall not exceed
$5,800,000 in the aggregate and (ii) such Indebtedness shall not have a
cross-default to the Indebtedness arising under this Credit Agreement
and the other Credit Documents.
6. Amendment to Section 8.5. A new subclause (c) is hereby added
at the end of subclause (vi) in Section 8.5 of the Credit Agreement and shall
read as follows:
and (c) the sale of the Ship & Debit Division; provided that (A) the
Borrower receives at least $1,000,000 in Net Cash Proceeds from the
sale of such division and (B) the Borrower immediately prepays the
Loans with such Net Cash Proceeds in accordance with the terms of
Section 3.3(b)(ii).
7. Conditions Precedent. This Agreement 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 Agreement duly executed by the
Borrower, the Guarantors, the Administrative Agent and the Required
Lenders; and
(b) for the account of each Lender who executes and
delivers this Agreement to the Administrative Agent on or before March
4, 2004, an amendment fee equal to 0.25% of such Lender's Revolving
Commitment.
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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 Agreement. 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 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 Agreement, 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 Agreement 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 Agreement
to produce or account for more than one such counterpart.
(e) This Agreement shall be governed by and construed in
accordance with, the laws of the State of Georgia.
(f) This Agreement 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 Agreement 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 Agreement.
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(ii) This Agreement 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 Agreement.
(i) The Guarantors (i) acknowledge and consent to all of
the terms and conditions of this Agreement, (ii) affirm all of their
obligations under the Credit Documents and (iii) agree that this
Agreement 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 Agreement 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 Agreement
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/ Mark L. Henry
----------------------------------------
Name: Mark L. Henry
Title: Vice 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 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 MEXICO, INC.,
PRG-SCHULTZ FRANCE, INC. (formerly The Profit Recovery
Group France, Inc.)
PRG-SCHULTZ AUSTRALIA, INC. (formerly The Profit Recovery
Group Australia, Inc.),
PRG-SCHULTZ BELGIUM, INC. (formerly The Profit Recovery
Group Belgium, 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.,
PRG-SCHULTZ NORWAY, INC.
THE PROFIT RECOVERY GROUP PORTUGAL, INC.,
PRG-SCHULTZ JAPAN, INC. (formerly Payment Technologies,
Inc.)
THE PROFIT RECOVERY GROUP COSTA RICA, INC.,
PRG-SCHULTZ PUERTO RICO, INC. (formerly 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.,
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/ Laura B. Schmuck
--------------------------------------
Name: Laura B. Schmuck
Title: Agency Officer
Assistant 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. Huizinga
--------------------------------------
Name: Sara A. Huizinga
Title: Assistant Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
(formerly known as Wachovia Bank, N.A.)
By: /s/ Michael J. Romano
--------------------------------------
Name: Michael J. Romano
Title: Vice President