Form 8-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
washington,
d.c. 20549
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): March 28,
2006
_______________________
PRG-SCHULTZ
INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
_________________________
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Georgia
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000-28000
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58-2213805
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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600
Galleria Parkway, Suite 100, Atlanta, Georgia 30339-5949
(Address
of principal executive office) (zip code)
Registrant’s
telephone number, including area code: (770) 779-3900
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
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):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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o
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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.
New
Director Compensation
See
Item
5.02 below, the contents of which are incorporated by reference herein, for
disclosure regarding the compensation of newly elected directors.
Amendment
to Investor Rights Agreement
On
March
28, 2006, the registrant entered into an amendment, effective March 30, 2006,
to
an Investor Rights Agreement among the registrant and certain affiliates of
Berkshire Investors LLC and Blum Strategic Partners II, L.P. Pursuant to the
amendment, the Berkshire affiliates have waived and relinquished all rights
under the agreement, including their rights to designate a Board member and
to
have an observer present at Board meetings. Garth Greimann, an affiliate of
Berkshire, served on the registrant’s Board of Directors until his resignation
effective March 30, 2006. See Item 5.02 below, the contents of which are
incorporated by reference herein, for a description of the Blum affiliates’
material relationships with the registrant.
Item
1.02 Termination of a Material Definitive Agreement.
Termination
of Retainer Agreement Payments
On
March
30, 2006, James McCurry, the Company’s President and Chief Executive Officer,
was elected Chairman of the Board, succeeding David Cole, who continues as
a
director. As a result, Mr. Cole will now be compensated in accordance with
the
registrant’s standard non-employee director compensation arrangements, which
have been previously reported. Mr. Cole has no relationships with the Company
other than as a director.
Item
5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
Reconstitution
of Board
As
required under the terms of the exchange offer for its outstanding 4.75% Senior
Convertible Notes Due 2006 which was completed on March 17, 2006, the registrant
has reconstituted its Board of Directors. See the press release dated March
31,
2006 filed as exhibit 99.1 hereto and incorporated by reference
herein.
On
March
30, 2006, Eugene I. Davis, Patrick G. Dills, N. Colin Lind, Philip J. Mazzilli,
Jr., and Steven Rosenberg were appointed to the Company’s Board of Directors.
These new directors replace Gerald E. Daniels, Garth H. Greimann, Thomas S.
Robertson and Jimmy M. Woodward, who resigned as directors of the Company
effective March 30, 2006, and fill an additional existing vacant position on
the
board. Mr. McCurry and Mr. Cole will continue as directors. All non-employee
directors will be compensated pursuant to the registrant’s previously reported
standard compensation arrangements for non-employee directors. Committee
assignments following the reconstitution are as follows:
Audit
Committee: Mr. Mazzilli, Chairman, Mr. Davis and Mr. Dills.
Compensation
Committee: Mr. Davis, Chairman, Mr. Cole and Mr. Dills.
Nominating
and Corporate Governance Committee: Mr. Cole, Chairman, Mr. Lind and Mr.
Rosenberg.
The
five
new directors were chosen by the prior Board and the members of the Ad hoc
Bondholders Committee formed in connection with the exchange offer, pursuant
to
an arrangement contained in a restructuring support agreement, as previously
reported. Other than Mr. Lind, none of the new directors has any relationship
with the registrant other than as a director.
Mr.
Lind
is a managing partner of Blum Capital Partners, L.P. (together with its
affiliates, “Blum”). Mr. Lind was a director of the registrant from May 2002 to
October 2005. As previously reported, Blum affiliates were holders of the
Company’s convertible notes due 2006 which they exchanged for new securities in
the exchange offer. Mr. Lind represented Blum affiliates on the Ad hoc
Bondholders Committee. Blum affiliates are lenders under the registrant’s
current senior secured credit facility. Their participation in the loan is
approximately $7 million. Blum affiliates were also lenders under the Company’s
prior $10 million bridge loan that was repaid on March 17, 2006. Their
participation was approximately $6 million. In connection with the foregoing,
Blum received the following:
Interest
and commitment and origination fees of approximately $236,000 in 2005 related
to
the bridge loan and approximately $152,000 in
interest related to the bridge loan in 2006; and
Blum
is
expected to receive interest under the senior secured credit facility of
approximately $748,125 in 2006. In addition, the Ad hoc Bondholders Committee,
of which Blum was a member, was reimbursed for legal and financial advisory
fees
of approximately $498,354 in 2005 and $2,043,083 in 2006. Blum
affiliates are holders of $14,929,736 of the registrant’s 11% senior notes,
$17,282,880 of the registrant’s10% senior convertible notes and 36,006 shares of
the registrant’s convertible Series A preferred stock.
Section
9 Financial
Statements and Exhibits.
Item
9.01(d) Exhibits.
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Exhibit
Number
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Description
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99.1
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Press
Release dated March 31, 2006
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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.
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PRG-SCHULTZ
INTERNATIONAL, INC.
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Date:
April 3, 2006
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By:
/s/ Clinton McKellar
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Clinton
McKellar,
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General
Counsel and Secretary
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