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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): JANUARY 30, 2006
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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
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
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
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(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.
1. On January 30, 2006, the independent members of the Board of Directors of
PRG-Schultz International, Inc. (the "Company") authorized the adoption of
the 2006 Performance Bonus Plan.
The following are the material terms of the plan:
(i) Participants - Eligibility for participation is based on job
grades. Approximately 113 current U.S and international employees
(excluding Meridian employees) are eligible for participation,
including all the named executive officers.
(ii) Bonus Targets - No bonuses are earned under the plan until the
consolidated 2006 EBITDA before certain one time charges (adjusted
"EBITDA") for the Company reaches a specified minimum level. If this
threshold is achieved, then all adjusted EBITDA above the threshold
will be allocated to a target bonus pool not to exceed the amount
equal to the aggregate potential target bonuses for all participants.
If consolidated 2006 adjusted EBITDA exceeds the specified minimum
level, plus the aggregate potential target bonuses for all
participants, then 50% of such excess will be paid as additional
bonuses to the participants in the Corporate and the operational
groups that exceeded their respective adjusted EBITDA plan, up to an
amount equal to the difference between (x) the aggregate amount of
potential maximum bonuses of the Corporate participants and the
participants whose operational units exceeded their adjusted EBITDA
plans and (y) the aggregate potential target bonuses of all such
participants.
There are no previously unreported material relationships with any of the
foregoing executive officers of the Company.
2. Also, on January 30, 2006, the independent members of the Board of
Directors of the Company authorized the adoption of the Management
Incentive Plan effective upon the successful completion of the exchange
offer for the Company's outstanding 4.75% Convertible Subordinated Notes
Due 2006 that commenced February 1, 2006 and the takeout of the existing
senior debt with the new $45 million senior credit facility.
The following are the material terms of the plan:
(i) Participants - Key executives of the Company who are critical to
the implementation of the restructuring plan that are selected by the
Compensation Committee of the Company's Board of Directors. James B.
McCurry, the Company's Chief Executive Officer, will be a participant
and the other named executive officers of the Company will be eligible
to participate.
(ii) Notional Account - The plan provides for phantom shares of common
stock representing approximately 10% of the Company's outstanding
common stock to be deposited to individual notional accounts for the
participants. Mr. McCurry will receive at least 40% of the phantom
shares available under the plan. The phantom stock is subject to
standard anti-dilution provisions and adjustments for conversion of
the preferred stock issued in connection with the exchange offer or
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upon exercise of the conversion rights of the convertible notes issued
in connection of the exchange offer. Plan distributions of common
stock will not result in anti-dilution adjustments to the account
balances. Prior to the final distribution of the vested account
balances, the Compensation Committee of the Board of Directors will
allocate any unallocated and/or forfeited phantom shares to one or
more of the plan participants.
(iii) Vesting - For the initial participants, the account balances
will vest 1/3 at closing of the exchange offer, and then 1/24 per
month thereafter. The Compensation Committee will set the vesting
schedule for participants joining the plan later. All accounts fully
vest upon a change of control.
(iv) Distribution - Vested benefits will be distributed in increments
of 25% on the each of the second, third, fourth and fifth
anniversaries of the closing of the exchange. Distribution of all
undistributed vested amounts will also occur on the participant's
death, disability, termination of employment or change of control.
Once the shareholders of the Company approve the plan, the
distributions will be in common stock of the Company, less cash
necessary to satisfy applicable taxes to the participants resulting
from the distribution. Before the shareholders approve the plan, each
distribution will be made in cash in an amount equal to the product of
(x) the number of shares of common stock that would have been
distributed to the participant on the distribution date, multiplied by
(y) the average closing price of the common stock for the 30-day
period ending on such date.
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 3, 2006 By: /s/ Clinton McKellar, Jr.
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Clinton McKellar, Jr.
General Counsel and Secretary
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