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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 7, 2005
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PRG-SCHULTZ INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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GEORGIA 000-28000 58-2213805
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
600 GALLERIA PARKWAY, SUITE 100
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: (770) 779-3900
N/A
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Amendments to Employment Agreements
On February 11, 2005, following negotiation and recommendation of the
Compensation Committee of the Board of Directors (the "Board") of PRG-Schultz
International, Inc. (the "Company"), the independent directors of the Board
approved final forms of agreement with Mr. Cook, Chairman and Chief Executive
Officer, Mr. Toma, Vice Chairman, and the Company's Executive Vice Presidents
implementing the change of control program approved by the Compensation
Committee on October 19, 2004, and previously reported on Form 8-K filed with
the U.S. Securities and Exchange Committee on October 26, 2004, which is
incorporated herein by reference.
The final, material terms and conditions of the agreements between the Company
and those executive officers who were named in its 2004 annual proxy statement
and those expected to be named in the 2005 annual proxy statement (collectively,
Messrs. Cook, Toma, Bacon, Benjamin, Goldfarb, and Moylan, hereafter the "Named
Executive Officers") are as previously reported, except in the following
respects:
o Restrictive Covenants. The restrictive covenants have been narrowed to
increase the likelihood that they will be enforceable under Georgia
law.
o Transaction Success Fees. If any of Mr. Toma and the Executive Vice
Presidents has not remained in service with the Company through the
date of a change of control, he or she will nonetheless be entitled to
the entirety of the Transaction Success Fee, if he or she was
terminated in contemplation of a Change of Control, or at the
insistence of the prospective purchaser of the Company, but only if
the Change of Control actually occurs prior to a particular date set
forth in the agreement. The Transaction Success Fee will be payable 30
days following the termination or Change of Control, whichever occurs
later.
o Forfeiture. A portion of the cash and restricted stock provided under
the agreements is subject to forfeiture in the event of specified
breaches of the restrictive covenants.
o Mr. Toma's Agreement. With respect to Mr. Toma's agreement, the
termination payment benefit remains substantially unaltered from his
pre-existing employment agreement, except that the definitions of Good
Reason and Change of Control were updated and standardized to be
consistent with those of the other Key Officers. However, consistent
with his pre-existing agreement, Mr. Toma's termination payment
benefit remains payable in the event of a Change of Control without
regard to the date of its occurrence. Mr. Cook's departure as CEO of
the Company for any reason will constitute involuntary termination of
Mr. Toma's employment without cause, except with respect to the
acceleration of his restricted stock award, which is governed by the
terms of the Company's Stock Incentive Plan.
o Mr. Moylan's Agreement. Following valuation of Mr. Moylan's
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restrictive covenants, the Compensation Committee determined to
increase Mr. Moylan's termination payment benefit to provide him a
benefit comparable to that of the other Key Officers. Due to the
unique nature of Mr. Moylan's position as chief financial officer of a
public company, the Compensation Committee determined it appropriate
to provide that in the case of Mr. Moylan, the definition of Good
Reason would include the event that the Company ceases to be a public
company.
The agreements are not effective until fully executed and delivered.
Appointment of Special Committee and Approval of Retainer Fee
On February 8, 2005, at a regularly scheduled meeting of the Board of Directors
(the "Board") of PRG-Schultz International, Inc. (the "Company"), the Board
determined to create a new special committee for the purpose of analyzing the
Company's strategic alternatives and to consider, evaluate and approve any such
potential alternatives (to the extent permitted by law) or otherwise make
recommendations to the Board regarding same. The Board named the following
independent directors to serve on the special committee:
o Garth H. Greimann (chair);
o David A. Cole;
o Gerald E. Daniels;
o N. Colin Lind; and
o Jimmy M. Woodward.
In connection therewith, the Board determined that because of the substantial
amount of time and effort which will be required in connection with such an
undertaking, members who serve on the new special committee are entitled to a
one-time supplemental retainer fee of $20,000 for the chair, and $15,000 for the
other members, plus reimbursement for all out-of-pocket expenses reasonably
incurred. Committee members will not be entitled to any additional attendance
fees for attending meetings of the special committee.
Option Grants to Non-employee Directors
On February 7, 2005, in consultation with the Nominating and Corporate
Governance Committee of the Board, the Compensation Committee granted options to
purchase 10,000 shares of the Company's common stock to the following
non-employee directors:
o David A. Cole;
o Gerald E. Daniels;
o Jonathan Golden;
o Garth H. Greimann;
o N. Colin Lind;
o Thomas S. Robertson; and
o Jimmy M. Woodward.
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The exercise price will be set at the closing price of the Company's common
stock on February 25, 2005. The options will be exercisable as of February 25,
2005, will expire on February 25, 2010, and are fully vested. A form of the
non-employee director option agreement is attached.
Material Relationships
Neither the Company nor any of its affiliates has any material relationship with
any of the above-referenced directors or its Named Executive Officers, apart
from their status as directors and officers of the Company, as holders of
Company securities, and as otherwise described in the Company's previously filed
annual proxy statement and periodic reports.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit Number Description
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99.1 Form of Non-employee Director Option Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
PRG-Schultz International, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PRG-SCHULTZ INTERNATIONAL, INC.
Date: February 11, 2005 By: /s/ C. McKellar, Jr.
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Clinton McKellar, Jr.
General Counsel and Secretary
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