EX-99 4 exhibit993.txt EXHIBIT 3-COMMITMENT LETTER EXHIBIT 3 EXECUTION COPY PETRUS SECURITIES L.P. BLUM STRATEGIC PARTNERS II, L.P. PARK CENTRAL GLOBAL HUB LIMITED BLUM STRATEGIC PARTNERS II GMBH & CO. KG. November 28, 2005 PRG-Schultz International, Inc. 600 Galleria Parkway Suite 100 Atlanta, Georgia 30339 Attention: James B. McCurry Re: FINANCING COMMITMENT Dear Mr. McCurry: PRG-Schultz International, Inc., a Georgia corporation (the "PARENT"), and its domestic subsidiaries (together with the Parent, each a "COMPANY" and collectively, the "COMPANIES") have advised each of Petrus Securities L.P. ("PETRUS"), Parkcentral Global Hub Limited (together with Petrus, collectively, the "PETRUS ENTITIES"), Blum Strategic Partners II GmbH & Co. KG. ("BLUM") and Blum Strategic Partners II, L.P. (together with Blum, collectively, the "BLUM ENTITIES" and, together with the Petrus Entities, each a "LENDER" and collectively, the "LENDERS"), that the Companies require financing (i) to fund certain of the Companies' working capital needs, (ii) to fund an interest payment due under the 4-3/4% Convertible Subordinated Notes due November 26, 2006 (the "CONVERTIBLE NOTES"), issued by the Parent pursuant to the Indenture, dated as of November 26, 2001, between the Parent and SunTrust Bank, as trustee and (iii) to pay transaction fees and expenses related to the Financing Facility referred to below. We are pleased to advise you that the Lenders, or one or more of their affiliates, are willing to provide the Companies with a credit facility in the aggregate principal amount of $8,000,000 (the "FINANCING FACILITY"), substantially on the terms and conditions set forth in the Outline of Terms and Conditions attached hereto as Exhibit A (the "TERM SHEET"). The Blum Entities will provide 60% of the Financing Facility and Petrus Entities will provide 40% of the Financing Facility. The obligations of each Lender to provide its portion of the Financing Facility shall be several, not joint and several, and will be subject to each other Lender providing its portion of the Financing Facility. The obligations of the Companies under the Financing Facility will be secured by a lien on, and security interest in, all of the assets and properties of the Companies as described in the collateral and security documents of the BOA Credit Facility (as defined in the Term Sheet) as in effect on the date of this letter. Each Lender's commitment to provide the Financing Facility is subject in all respects to the satisfaction of the terms and conditions contained in this commitment letter and in the Term Sheet. The Parent, on behalf of itself and the Companies, acknowledges that the Term Sheet is intended as an outline only and does not purport to summarize all the conditions, covenants, representations, warranties and other provisions which would be contained in definitive legal documentation for the Financing Facility. The loan documentation for the Financing Facility will include, in addition to the provisions that are summarized in this PRG-Schultz International, Inc. November 28, 2005 Page 2 commitment letter and the Term Sheet, provisions that, in the opinion of each Lender, are customary or typical for this type of financing transaction and other provisions that such Lender determines to be appropriate in the context of the proposed transaction. By its execution hereof and its acceptance of the commitments contained herein, the Parent agrees to indemnify and hold harmless each Lender and each of its assignees, its affiliates and its directors, officers, members, employees and agents (each an "INDEMNIFIED PARTY") from and against any and all losses, claims, damages, liabilities or other expenses to which such Indemnified Party may become subject, insofar as such losses, claims, damages, liabilities (or actions or other proceedings commenced or threatened in respect thereof) or other expenses arise out of or in any way relate to or result from, this commitment letter, the commitments made herein or the extension of the Financing Facility contemplated by this commitment letter, or in any way arise from any use or intended use of this commitment letter or the proceeds of the Financing Facility contemplated by this commitment letter, and the Parent agrees to reimburse each Indemnified Party for any legal or other out-of-pocket expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability or action or other proceeding (whether or not such Indemnified Party is a party to any action or proceeding out of which indemnified expenses arise), but excluding therefrom all expenses, losses, claims, damages and liabilities which are finally determined in a non-appealable decision of a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of the Indemnified Party. In the event of any litigation or dispute involving this commitment letter or the Financing Facility, no Lender shall be responsible or liable to any Company, or any other person for any special, indirect, consequential, incidental or punitive damages. In addition, the Parent agrees to reimburse each Lender for all reasonable fees and out-of-pocket expenses (the "EXPENSES") incurred by or on behalf of such Lender in connection with the negotiation, preparation, execution and delivery of this commitment letter, the Term Sheet and any and all definitive documentation relating to the Financing Facility, including, but not limited to, the reasonable fees and expenses of counsel to such Lender and the reasonable fees and expenses incurred by such Lender in connection with any due diligence, appraisals, collateral reviews and field examinations. The obligations of the Parent under this paragraph shall remain effective notwithstanding any termination of this commitment letter, but shall terminate upon the execution of definitive loan documentation by the Companies and the Lenders. Upon the Parent's execution of this commitment letter, the Parent shall pay to the Lenders based on their ratable portion of the Financing Facility, in immediately available funds, a non-refundable commitment fee equal to $100,000 (the "COMMITMENT FEE"), which fee shall be earned in full and payable on the date hereof. Notwithstanding anything contained in this commitment letter or the Term Sheet to the contrary, the Companies agree to use their best efforts to obtain an alternative financing arrangement from a third party that is not an affiliate of any Lender for the purposes of funding the use of proceeds as described in the Term Sheet. PRG-Schultz International, Inc. November 28, 2005 Page 3 The commitment by each Lender to provide the Financing Facility shall be subject to (i) the negotiation, execution and delivery of definitive loan documentation in form and substance satisfactory to such Lender and its counsel, (ii) the satisfaction of each Lender that since the date hereof there has not occurred or become known to any Company or any Lender any material adverse change with respect to the financial condition, business, operations, assets, liabilities or prospects of the Parent or the Companies (taken as a whole), as determined by each Lender in its reasonable discretion (a "MATERIAL ADVERSE CHANGE"), and (iii) such other customary conditions as set forth in the Term Sheet. If at any time any Lender shall determine (in its sole discretion) that either (A) the Companies will be unable to fulfill any condition set forth in this commitment letter or in the Term Sheet or (B) any Material Adverse Change has occurred, the Lenders may terminate this commitment letter by giving notice thereof to the Parent (subject to the obligation of the Parent to pay all fees, reasonable costs and expenses and other payment obligations expressly assumed by the Parent hereunder, which shall survive the termination of this commitment letter or any commitment contained herein). The Parent represents and warrants that (i) all written information and other materials concerning the Parent and the other Companies (collectively, the "INFORMATION") which has been, or is hereafter, made available to the Lenders by, or on behalf of the Parent or any other Company is, or when delivered will be, when considered as a whole, complete and correct in all material respects and does not, or will not when delivered, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statement has been made and (ii) any projections (which have been, or are hereafter, made available to the Lenders by or on behalf of the Parent or any other Company) were prepared in good faith on the basis of (A) assumptions, methods and tests stated therein which are believed by the Parent and the other Companies to be reasonable and (B) information believed by the Parent and the other Companies to have been accurate based upon the information available to the Parent and the other Companies, in the case of both clauses (A) and (B), at the time such projections were furnished to the Lenders. This commitment letter is delivered to the Parent upon the condition that, prior to its acceptance of this offer and the payment of the Commitment Fee, neither the existence of this commitment letter or the Term Sheet, nor any of their contents, shall be disclosed by the Parent or any other Company, except as may be compelled to be disclosed in a judicial or administrative proceeding or as otherwise required by law or, on a confidential and "need to know" basis, solely to the directors, officers, employees, lenders, advisors and agents of the Parent. In addition, the Parent agrees that it will (i) consult with the Lenders prior to the making of any filing in which reference is made to any Lender or the commitment of any Lender contained herein, and (ii) obtain the prior approval of the Lenders before releasing any public announcement in which reference is made to any Lender or to the commitment of any Lender contained herein. The Parent acknowledges that the Lenders and their respective affiliates may now or hereafter provide financing or obtain other interests in other companies in respect of which the Parent or its affiliates may be business competitors, and that the Lenders and their respective affiliates will PRG-Schultz International, Inc. November 28, 2005 Page 4 have no obligation to provide to the Parent or any of its affiliates any confidential information obtained from such other companies. The offer made by the Lenders in this commitment letter shall expire, unless otherwise agreed by the Lenders in writing, at 9:30 a.m. (New York City time) on November 28, 2005, unless prior thereto (A) each Lender has received a copy of this commitment letter, signed by each other Lender and the Parent accepting the terms and conditions of this commitment letter and the Term Sheet and (B) the Lenders have received the Commitment Fee, in immediately available funds. The commitment by the Lenders to provide the Financing Facility shall expire at 5:00 p.m. (New York City time) on December 9, 2005, unless prior thereto, definitive loan documentation shall have been agreed to in writing by all parties and the conditions set forth therein shall have been satisfied (it being understood that the Parent's obligation to pay all amounts in respect of indemnification and Expenses shall survive termination of this commitment letter). Should the terms and conditions of the offer contained herein meet with your approval, please indicate your acceptance by signing and returning a copy of this commitment letter to the Lenders. PRG-Schultz International, Inc. November 28, 2005 Page 5 This commitment letter, including the attached Term Sheet (i) supersedes all prior discussions, agreements, commitments, arrangements, negotiations or understandings, whether oral or written, of the parties with respect thereto, (ii) shall be governed by the law of the State of New York, (iii) shall be binding upon the parties and their respective successors and assigns, (iv) may not be relied upon or enforced by any other person or entity, and (v) may be signed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. If this commitment letter becomes the subject of a dispute, each of the parties hereto hereby waives trial by jury. This commitment letter may be amended, modified or waived only in a writing signed by the parties hereto. Very truly yours, BLUM STRATEGIC PARTNERS II, L.P. By: /s/ Gregory Hitchan ----------------------------------- Name: Gregory Hitchan Title: General Counsel and Secretary BLUM STRATEGIC PARTNERS II GMBH & CO. KG. By: /s/ Gregory Hitchan ----------------------------------- Name: Gregory Hitchan Title: General Counsel and Secretary PARKCENTRAL GLOBAL HUB LIMITED By: /s/ Steven Blasnik ----------------------------------- Name: Steven Blasnik Title: President PETRUS SECURITIES L.P. By: /s/ Steven Blasnik ----------------------------------- Name: Steven Blasnik Title: President PRG-Schultz International, Inc. November 28, 2005 Page 6 Agreed and accepted on this ___ day of November 2005: PRG-SCHULTZ INTERNATIONAL, INC. By: /s/ James B. McCurry ----------------------------------------------- Name: James B. McCurry Title: President and Chief Executive Officer EXHIBIT A PRG-SCHULTZ INTERNATIONAL, INC. OUTLINE OF TERMS AND CONDITIONS FOR FINANCING FACILITY This Outline of Terms and Conditions is part of the Commitment Letter, dated November 28, 2005 (the "COMMITMENT LETTER"), addressed to PRG-Schultz International, Inc. (the "PARENT") by Petrus Securities L.P. ("PETRUS"), Parkcentral Global Hub Limited (together with Petrus, collectively, the "PETRUS ENTITIES"), Blum Strategic Partners II GmbH & Co. KG. ("BLUM") and Blum Strategic Partners II, L.P. (together with Blum, collectively, the "BLUM ENTITIES" and, together with the Petrus Entities, each a "LENDER" and collectively, the "LENDERS") and is subject to the terms and conditions of the Commitment Letter. Capitalized terms used herein shall have the meanings set forth in the Commitment Letter unless otherwise defined herein. BORROWER: PRG-Schultz USA, Inc. GUARANTORS: The Parent and all domestic subsidiaries of the Parent other than the Borrower (each a "GUARANTOR" and collectively, the "GUARANTORS" and, together with the Borrower, each a "COMPANY" and collectively, the "Companies"). LENDERS: The Lenders and their respective affiliates and such other lenders designated by the Lenders. FINANCING FACILITY: A term loan facility in the aggregate principal amount of $8,000,000 (the "FINANCING FACILITY"). The term loan (the "TERM LOAN") will be made on the Closing Date. TERM: The Financing Facility will terminate on the earlier of (x) May 15, 2006 and (y) the date on which the "Transactions" as described in the Summary of Financial Restructuring Term Sheet, dated November __, 2005 shall have been substantially consummated (the "MATURITY DATE"). The Term Loan and all other obligations outstanding under the Financing Facility will be payable on the Maturity Date. MANDATORY Subject to the intercreditor AND OPTIONAL arrangements with the Existing Lender, PREPAYMENTS: mandatory prepayments to be included in the Loan Documents, including, without limitation, upon the issuance of indebtedness or stock, non-ordinary course sales or other dispositions of assets, casualty and condemnation events, tax refunds, proceeds of judgments and settlements, with exceptions to be mutually agreed upon. The Borrower may repay the Term Loan in whole or in part at A-1 any time without penalty or premium, provided that, in the case of a partial prepayment, such prepayment shall be in an amount which is an integral multiple of $1,000,000 (unless the amount of Term Loan outstanding immediately prior to such prepayment is less than $1,000,000). CLOSING DATE: The first date on which all definitive loan documentation satisfactory to each Lender (the "LOAN DOCUMENTS") is executed by the Companies and each Lender, which date shall not be later than December 9, 2005, unless otherwise agreed in writing by the Lenders and the Parent (the "CLOSING Date"). COLLATERAL: All obligations of the Companies to each Lender shall be secured by a perfected lien on and security interest in all assets and properties of the Companies as described in the collateral and security documents under the Companies' existing revolver credit facility (the "BOA CREDIT FACILITY") with Bank of America, N.A. (the "EXISTING LENDER"), which, in general, is substantially all of the Companies' now owned and hereafter acquired properties and assets, provided, that (x) the collateral securing such obligations of the Companies to the Lenders shall be the collateral as described in the collateral and security documents entered into as of November 30, 2004 in favor of the Existing Lender and without regard to any lien releases or terminations on or after the date of the Commitment Letter (except as otherwise agreed to by the Lenders), and (y) such liens shall be junior in priority solely to the liens granted by the Companies in favor of the Existing Lender, and the Existing Lender and the Lenders shall enter into an intercreditor agreement (in form and substance satisfactory to the Lenders) to evidence such lien subordination (the "INTERCREDITOR Agreement"). All borrowings by the Borrower, all interest on the foregoing, all costs, fees and expenses owed to the Lenders and all other obligations owed to the Lenders shall be secured as described above and shall be charged to the loan account to be established under the Financing Facility. INTEREST: The Term Loan shall bear interest at a rate per annum equal to 12%. Interest shall be due and payable monthly in arrears. All interest and fees shall be computed on the basis of a year of 360 days for the actual days elapsed. If any event of default shall occur and be continuing, interest shall accrue at a rate per annum equal to fourteen percent (14%). A-2 FEES: Commitment Fee: $100,000, earned in full, non-refundable and payable in accordance with the terms of the Commitment Letter. Closing Fee: 1.75% of the Financing Facility, earned in full, non-refundable and payable on the Closing Date. USE OF PROCEEDS: The Term Loan under the Financing Facility shall be used (i) to fund certain of the Companies' working capital needs; provided, however, that in no event shall the proceeds of the Term Loan be used to make any severance payments or other similar payments to John Cook or Jack Toma, (ii) to fund interest payments due on the Convertible Notes and (iii) to pay transaction fees and expenses related to the Financing Facility. A-3 CONDITIONS PRECEDENT: The obligation of the Lenders to make the Term Loan under the Financing Facility will be subject to customary conditions precedent including, without limitation, the following special conditions precedent: (a) The Lenders' completion of their legal due diligence, including, without limitation, with respect to regulatory matters, material permits, ERISA, environmental, tax, accounting and labor matters and material contracts, with results reasonably satisfactory to the Lenders. Such due diligence may include, without limitation, a review by the Lenders of the Companies' books and records, the results of which are satisfactory to the Lenders. (b) Execution and delivery of appropriate legal documentation (including, but not limited to, the Intercreditor Agreement) in form and substance satisfactory to the Lenders and the satisfaction of the conditions precedent contained therein. (c) No Material Adverse Change shall have occurred since the date of the Commitment Letter. (d) Each of the Companies shall be in good standing in its state of organization and be duly qualified to do business in any other state where any material portion of the Collateral is located. (e) The Lenders shall have been granted a perfected lien on all Collateral (which lien shall be junior in priority solely to the liens in favor of the Existing Lender thereon), and shall have received UCC, tax and judgment lien searches and other appropriate evidence of the absence of any other liens on the Collateral, except any liens acceptable to the Lenders. (f) Opinions from the Companies' counsel as to such matters as each Lender and its counsel may reasonably request. (g) Insurance reasonably satisfactory to the Lenders; such insurance to include liability insurance for which each Lender will be named as an additional insured and property insurance with respect to the Collateral for which each Lender will be named as loss payee, all as its interests may appear. A-4 (h) All necessary governmental and third party approvals, consents, licenses and permits in connection with the Term Loan and the operations by the Companies of their businesses shall have been obtained and remain in full force and effect. (i) There shall exist no claim, action, suit, investigation, litigation or proceeding, pending or, to the knowledge of any Company, threatened in any court or before any arbitrator or governmental instrumentality which relates to the Financing Facility or which, in the opinion of the Lenders, has a reasonable likelihood of having a material adverse effect on (i) the financial condition, operations, properties, assets, liabilities, business or prospects of the Parent or the Companies, (ii) the ability of any of the Companies to perform their obligations under the Loan Documents or (iii) the ability of the Lenders to enforce the loan documentation. (j) The Lenders shall have been satisfied with an amendment to and/or forbearance under the BOA Credit Facility permitting the transactions contemplated under the Financing Facility (the "BOA AMENDMENT"). (k) No default or event of default, or a forbearance from exercising remedies in respect thereof acceptable to the Lenders, shall exist under the Loan Documents or the BOA Credit Facility, after giving effect to the BOA Amendment. (l) No default or event of default shall exist under the Indenture or other related instrument, agreement or other document, after giving effect to the interest payment to be funded by the proceeds of the Term Loan. (m) The Companies shall have paid to the Lenders all fees and reasonable expenses then owing to the Lenders. REPRESENTATIONS Usual representations and warranties AND WARRANTIES: with materiality limitations and other exceptions reasonably acceptable to the Lenders, including, but not limited to, corporate existence and good standing, authority to enter into loan documentation, governmental approvals, non-violation of other agreements, financial statements, litigation, compliance with environmental, pension and other laws, taxes, insurance, absence of Material Adverse Change, absence of default or unmatured default under the Financing Facility and priority of the Lenders' liens. A-5 COVENANTS: Usual covenants (with materiality limitations and other exceptions reasonably acceptable to the Lenders), including, but not limited to, provision of financial statements, notices of litigation, defaults and unmatured defaults and other information, compliance with laws, permits and licenses, inspection of properties, books and records, maintenance of insurance, limitations with respect to liens and encumbrances, dividends and retirement of capital stock, guarantees, sale and lease back transactions, consolidations and mergers, investments, capital expenditures, loans and advances, indebtedness, compliance with pension, labor, environmental and other laws, transactions with affiliates and prepayment of other indebtedness and amendments to material agreements. Financial reporting to include: (i) annual, audited financial statements, (ii) quarterly, internally prepared, financial statements, (iii) monthly, internally prepared, financial statements, and (iv) other reporting as reasonably required by the Lenders. EVENTS OF DEFAULT: Usual events of default, including, but not limited to, payment, cross-default (including , without limitation, cross-default with the BOA Credit Facility and the Indenture), violation of covenants, breach of representations or warranties, bankruptcy or insolvency, judgment, ERISA, change of control and material adverse change. GOVERNING LAW: All documentation in connection with the Financing Facility shall be governed by the laws of the State of New York. ASSIGNMENTS, PARTICIPATIONS: Any Lender may sell or assign to one or more other persons a portion of its loans or commitments under the Financing Facility without the consent of the Companies. Any Lender may also sell participations in its loans and commitments under the Financing Facility without the consent of the Companies. OUT-OF-POCKET The Borrower shall pay all reasonable EXPENSES: out-of-pocket expenses incurred by the Lenders (including, without limitation, the reasonable fees and expenses of counsel, audit fees, search fees, appraisal fees, consultant fees, filing fees, documentation fees and other third party fees) in connection with the Commitment Letter and this Term Sheet and the transactions contemplated by the Commitment Letter and this Term Sheet, whether or not the transaction closes. A-6