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AMENDMENT TO FORBEARANCE AGREEMENT
AND CREDIT AGREEMENT
This
AMENDMENT TO FORBEARANCE AGREEMENT AND CREDIT AGREEMENT (this
"Agreement") is entered into as of December 23, 2005, between and
among
PRG-SCHULTZ USA, INC., a Georgia corporation (the "Borrower"),
PRG-SCHULTZ
INTERNATIONAL, INC., a Georgia corporation ("Parent"), each of the
Domestic
Subsidiaries of the Parent (such Domestic Subsidiaries, together
with the
Parent, individually a "Guarantor" and collectively the
"Guarantors"), and BANK
OF AMERICA, N.A. (the "Lender"). Capitalized terms used herein but
not otherwise
defined shall have the meanings set forth, or incorporated, in the
Forbearance
Agreement (defined below).
RECITALS
A.
The Borrower, the Parent, the Guarantors and the Lender are parties
to
that certain Amended and Restated Credit Agreement dated as of
November 30, 2004
(as amended and otherwise modified from time to time, the "Credit
Agreement").
B.
The Borrower, the Parent, the Guarantors and the Lender are parties
to
that certain Forbearance Agreement dated as of November 8, 2005 (as
amended and
otherwise modified from time to time, the "Forbearance Agreement")
pursuant to
which the Lender agreed to temporarily forbear from exercising its
rights and
remedies arising from the Acknowledged Events of Default pursuant
to the terms
and conditions set forth therein.
C.
The Borrower has requested that the Lender amend the
Forbearance
Agreement (i) to extend the deadline by which the Borrower is
required to
deliver to the Lender a bona fide commitment letter from a
recognized lender to
make a Refinancing Loan (as defined in the Forbearance Agreement),
(ii) to
require the pledge of certain Canadian Receivables (as defined
below) to the
Lender and (iii) to modify the requirement to pledge UK Receivables
(as defined
below).
D.
The Borrower has also requested that the Lender permit the Borrower
to
incur certain subordinated debt, as contemplated under the
Forbearance
Agreement, for working capital purposes and to enable the Borrower
to make the
November Interest Payment with respect to the Subordinated
Debt.
E.
The Lender has agreed to do so, but only pursuant to the terms
and
conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants
hereinafter contained, and for other good and valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto
agree as follows:
1.
Estoppel, Acknowledgement and Reaffirmation. As of December 22,
2005,
the total outstanding principal amount of Revolving Loans was not
less than
$14,600,000, which amount constitutes a valid and subsisting
obligation of the
Credit Parties under the Credit
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Documents that is not subject to any credits, offsets, defenses,
claims,
counterclaims or adjustments of any kind. Each of the Credit
Parties hereby
acknowledges its Credit Party Obligations under the Credit
Documents and
reaffirms that each of the Liens and security interests created and
granted in
or pursuant to the Credit Documents are valid and subsisting and
that this
Agreement shall in no manner impair or otherwise adversely effect
such Credit
Party Obligations, Liens or security interests.
2.
Amendments to Forbearance Agreement.
(a) Extension of Commitment Letter Deadline. Section 7 of the
Forbearance Agreement is hereby amended by deleting the reference
to
"December 23, 2005" contained in the first sentence thereof and
replacing
it
with "January 31, 2006".
(b) Waiver and Consent. Notwithstanding the provisions of Section 9
of
the
Forbearance Agreement, the Lender hereby waives notice of payment
with
respect to the November Interest Payment on the Subordinated Debt
and
acknowledges that the proceeds of the Subordinated Debt may be
applied to
such
payment.
(c) Pledge of Foreign Receivables.
(i) Section 4 of the Forbearance Agreement is hereby amended by
deleting the reference to "UK Receivables Documentation" contained
in
the proviso thereof and replacing it with "Foreign Receivables
Documentation."
(ii) Section 10 of the Forbearance Agreement is amended and
restated in its entirety so that such Section reads as follows:
10. Foreign Receivables. As soon as practicable but in any
event
on or before January 15, 2006, the Borrower shall (i) cause all
accounts receivable arising from the operations of PRG-Schultz UK
Ltd.
in the United Kingdom (excluding accounts receivable owed by
clients
for auditing services performed by independent contractors hired
by
PRG-Schultz UK, Ltd.) (the "UK Receivables") to be pledged to
the
Lender as collateral for the Credit Party Obligations pursuant
to
documentation satisfactory to the Lender, (ii) cause all
accounts
receivable arising from the operations of PRG-Schultz Canada Corp.
in
Canada (the "Canadian Receivables", and together with the UK
Receivables, the "Foreign Receivables") to be pledged to the Lender
as
collateral for the Credit Party Obligations pursuant to
documentation
satisfactory to the Lender, (iii) execute such other documents
or
instruments (including, without limitation, a guaranty by any
such
Subsidiaries or Affiliate of the Credit Party Obligations, limited
in
amount to
the value of the UK Receivables or the Canadian Receivables,
as applicable) as may be reasonably requested by the Lender in
connection with such pledge to ensure that the Lender has a
first
priority perfected security interest in such Foreign
Receivables
(collectively, the "Foreign Receivables Documentation").
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(d) Addition of Acknowledged Event of Default. The
"Acknowledged
Events of Default" shall include the failure of the
representation
contained in Section 6.18 to be true (whether prior to the date
hereof or
hereafter).
3.
Amendments to Credit Agreement.
(a) Definitions.
(i) The following definitions set forth in Section 1.1 of the
Credit Agreement are hereby amended and restated in their entirety
to
read as follows:
"Amendment Effective Date" means the date which the
conditions specified in the Amendment to Forbearance Agreement
and Credit Agreement have been satisfied or waived.
"Credit Documents" means a collective reference to this
Credit Agreement, the Notes, the LOC Documents, each Joinder
Agreement, the Intercreditor Agreement, the Collateral
Documents
and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or thereto
(in each case as the same may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time),
and "Credit Document" means any one of them.
(ii) Subpart (xi) and (xii) of the definition of "Permitted
Liens" set forth in Section 1.1 of the Credit Agreement are
hereby
amended and restated in their entirety and the definition of
"Permitted Liens" is further amended by adding the new
subsections
(xiii) to read as follows:
(xi) Lien in favor of Meridian International on the Capital
Stock of PRG-Schultz UK Ltd. owned by Tamebond which Lien
secures
the Meridian Loan;
(xii) 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(h); and
(xiii) Liens in favor of the Subordinated Term Loan Lenders
to secure the Subordinated Term Loan Debt, provided that such
liens are subordinated to the Lien of the Lender pursuant to
the
Intercreditor Agreement.
(iii) The following new definitions are hereby added to Section
1.1 of the Credit Agreement in the appropriate alphabetical order
to
read as follows:
"Extraordinary Receipts" means any cash received by the
Parent or any of its Subsidiaries not in the ordinary course of
business
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(and not consisting of proceeds described in Section 3.3(b)(ii)
and (iii) hereof) including, without limitation, (i) foreign,
United States, state or local tax refunds, (ii) pension plan
reversions, (iii) proceeds of insurance, (iv) judgments,
proceeds
of settlements or other consideration of any kind in connection
with any cause of action, (v) condemnation awards (and payments
in lieu thereof), (vi) indemnity payments and (vii) any
purchase
price adjustment received in connection with any purchase
agreement.
"Intercreditor Agreement" means the Intercreditor and
Subordination Agreement, dated as of the 23rd day of December,
2005, by and between Lender, the Subordinated Term Loan
Lenders,
Borrower, Parent and the Guarantors (as amended from time to
time).
"Subordinated Term Loan Lenders" means the holders of the
Subordinated Term Loan Debt from time to time.
"Subordinated Term Loan Credit Agreement" the Credit
Agreement, dated as December 23, 2005, by and among each of the
Subordinated Term Loan Lenders, Blum Strategic Partners II,
L.P.
as collateral agent for the Subordinated Term Loan Lenders and
the Borrower (as amended from time to time to the extent
permitted under the Intercreditor Agreement).
"Subordinated Term Loan Debt" shall mean and include all
indebtedness, obligations and liabilities of any Credit Party
under the Subordinated Term Loan Documents, including, without
limitation, all principal, interest, expenses, and other
amounts
payable thereunder or with respect thereto.
"Subordinated Term Loan Documents" shall mean the
Subordinated Term Loan Credit Agreement and all agreements,
documents and instruments executed and delivered in connection
therewith (each as amended from time to time to the extent
permitted under the Intercreditor Agreement).
(b) Mandatory Prepayment. Section 3.3(b) of the Credit Agreement
is
hereby amended to add new subsection (v) to read as follows:
(v) Extraordinary Receipts. Upon the receipt by any Credit
Party
or any of its Subsidiaries of any Extraordinary Receipts, the
Borrower
shall repay the outstanding principal of the Loans in an amount
equal
to 100% of such Extraordinary Receipts, net of any reasonable
expenses
incurred in collecting such Extraordinary Receipts.
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(c) Information Covenant. Subsection (l) of Section 7.1 of the
Credit
Agreement is hereby amended and restated in its entirety and
Section 7.1 of
the
Credit Agreement is amended by adding the new subsection (m) to
read as
follows:
(l) Monthly Financial Statements. As soon as available, and in
any event within 30 days after the end of each fiscal month of
the
Consolidated Parties commencing with the first fiscal month of
the
Consolidated Parties ending after the Amendment Effective Date,
an
internally prepared consolidated bala
