UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 3)
Under the Securities Exchange Act of 1934
PRG-SCHULTZ INTERNATIONAL, INC.
------------------------------------------
(Name of Issuer)
COMMON STOCK
-------------------------------------
(Title of Class of Securities)
69357C107
---------
(CUSIP Number)
Murray A. Indick
BLUM Capital Partners, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
(415) 434-1111
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 21, 2002
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 48
CUSIP NO. 69357C107 SCHEDULE 13D Page 2 of 48
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1. NAME OF REPORTING PERSON BLUM CAPITAL PARTNERS, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-3205364
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION California
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7. SOLE VOTING POWER -0-
NUMBER OF -----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 8,956,842**
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
-----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 8,956,842**
------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,956,842**
------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0**
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14. TYPE OF REPORTING PERSON PN, IA
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 69357C107 SCHEDULE 13D Page 3 of 48
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1. NAME OF REPORTING PERSON RICHARD C. BLUM & ASSOCIATES, INC.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-2967812
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION California
------------------------------------------------------------------------------
7. SOLE VOTING POWER -0-
NUMBER OF -----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 8,956,842**
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
-----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 8,956,842**
------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,956,842**
------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0**
------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON CO
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 69357C107 SCHEDULE 13D Page 4 of 48
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1. NAME OF REPORTING PERSON BLUM STRATEGIC GP, L.L.C.
(formerly RCBA GP, L.L.C.)
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-3303831
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
------------------------------------------------------------------------------
7. SOLE VOTING POWER -0-
NUMBER OF -----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 8,956,842**
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
-----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 8,956,842**
------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,956,842**
------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0**
------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON OO (Limited Liability Company)
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 69357C107 SCHEDULE 13D Page 5 of 48
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1. NAME OF REPORTING PERSON BLUM STRATEGIC PARTNERS II, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-3395151
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
------------------------------------------------------------------------------
4. SOURCE OF FUNDS* See Item 3
------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
------------------------------------------------------------------------------
7. SOLE VOTING POWER -0-
NUMBER OF -----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 8,956,842**
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
-----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 8,956,842**
------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,956,842**
------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0**
------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON PN
------------------------------------------------------------------------------
** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 69357C107 SCHEDULE 13D Page 6 of 48
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1. NAME OF REPORTING PERSON BLUM STRATEGIC GP II, L.L.C.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-3395150
------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
------------------------------------------------------------------------------
3. SEC USE ONLY
------------------------------------------------------------------------------
4. SOURCE OF FUNDS* See Item 3
------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
------------------------------------------------------------------------------
7. SOLE VOTING POWER -0-
NUMBER OF -----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 8,956,842**
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
-----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 8,956,842**
------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,956,842**
------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0**
------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON OO (Limited Liability Company)
------------------------------------------------------------------------------
** See Item 5
CUSIP NO. 69357C107 SCHEDULE 13D Page 7 of 48
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1. NAME OF REPORTING PERSON RICHARD C. BLUM
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
------------------------------------------------------------------------------
3. SEC USE ONLY
------------------------------------------------------------------------------
4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
------------------------------------------------------------------------------
7. SOLE VOTING POWER -0-
NUMBER OF -----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 8,956,842**
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
-----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 8,956,842**
------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,956,842**
------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.0**
------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON IN
------------------------------------------------------------------------------
** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 69357C107 SCHEDULE 13D Page 8 of 48
Item 1. Security and Issuer
----------------------------
This Amendment No. 3 amends the Statement on Schedule 13D (the "Schedule 13D")
filed with the Securities and Exchange Commission (the "Commission") on
December 5, 2001 by Blum Capital Partners, L.P., a California limited
partnership, ("BLUM L.P."); Richard C. Blum & Associates, Inc., a California
corporation ("RCBA Inc."); Blum Strategic GP, L.L.C. (formerly RCBA GP,
L.L.C.), a Delaware limited liability company ("Blum GP"); Blum Strategic GP
II, L.L.C., a Delaware limited liability company ("Blum GP II"); Blum
Strategic Partners II, L.P., a Delaware limited partnership ("Blum Strategic
II"); and Richard C. Blum, the Chairman and a substantial shareholder of RCBA
Inc. and a managing member of Blum GP and Blum GP II (collectively, the
"Reporting Persons"). This amendment to the Schedule 13D relates to the
purchase of shares of Common Stock of PRG-Schultz International, Inc.
(formerly Profit Recovery Group International, Inc.), a Georgia corporation
(the "Issuer"). The principal executive office and mailing address of the
Issuer is 2300 Windy Ridge Parkway, Suite 100 North, Atlanta, Georgia 30339-
8426. The following amendments to Items 2, 4, 5 and 6 of the Schedule 13D are
hereby made arising out of the purchase of Common Stock by Blum Strategic II,
L.P. in the transaction described in Item 4 below. Unless otherwise defined
herein, all capitalized terms shall have the meanings ascribed to them in the
Schedule 13D.
Item 2. Identity and Background
--------------------------------
Item 2 of the Schedule 13D is hereby amended to include the following
additional information:
In February 2002, RCBA GP, L.L.C. and RCBA Strategic Partners, L.P. changed
their names to Blum Strategic GP, L.L.C. and Blum Strategic Partners, L.P.
("Blum Strategic"), respectively. Blum GP is a Delaware limited liability
company whose principal business is acting as general partner for Blum
Strategic.
Item 4. Purpose of Transaction
--------------------------------
In connection with a Stock Purchase Agreement ("the SPA", attached hereto as
Exhibit B, and incorporated by reference herein) dated February 21, 2002,
between certain Sellers and Blum Strategic II, Blum Strategic II acquired
1,106,682 shares of the Common Stock of the Issuer at a price of $9.3683 per
share, or an aggregate price of $10,367,729.
In connection with the purchase, Blum Strategic II also entered into a
Registration Rights Agreement ("RRA", attached hereto as Exhibit C, and
incorporated by reference herein) dated February 21, 2002, with the Issuer.
The RRA grants certain registration rights to Blum Strategic II as set forth
therein.
CUSIP NO. 69357C107 SCHEDULE 13D Page 9 of 48
Item 5. Interest in Securities of the Issuer
---------------------------------------------
(a),(b) According to information furnished to the Reporting Persons by the
Issuer, there were 63,575,920 shares of Common Stock issued and outstanding as
of January 31, 2002. Based on such information, after taking into account the
transactions described in Item 5(c) below, the Reporting Persons report direct
holdings as follows:
(i) BLUM L.P. and RCBA Inc. report holdings of 1,540,700 of the Common Stock
on behalf of the limited partnerships for which BLUM L.P. serves as the
general partner and BLUM L.P.'s investment advisory clients, which represents
2.4% of the outstanding shares of the Common Stock; (ii) Blum GP reports
holdings of 117,700 shares of the Common Stock on behalf of the limited
partnership for which it serves as the general partner, which represents 0.2%
of the outstanding shares of the Common Stock; (iii) Blum GP II reports
holdings of 1,964,082 shares of the Common Stock on behalf of the limited
partnership for which it serves as the general partner, which represents 3.1%
of the outstanding shares of the Common Stock; and (iv) Mr. Blum reports the
aggregate of these shares for a total of 3,622,482 shares of the Common Stock,
which represents 5.7% of the outstanding shares of the Common Stock.
In addition, because BLUM L.P. has voting and investment power with respect to
166,400 shares that are legally owned by The Common Fund for the accounts of
its Value Opportunity Fund and Multi-Strategy Equity Fund (collectively, "The
Common Fund"), those shares are reported as beneficially owned by BLUM L.P.
The Common Fund is principally engaged in the business of managing investments
for educational institutions. The principal administrative office of The
Common Fund is located at 15 Old Danbury Road, Wilton, Connecticut 06897-0812.
The Common Fund disclaims membership in a group with any of the
Reporting Persons, and disclaims beneficial ownership of any shares held by
the Reporting Persons.
Voting and investment power concerning the above shares are held solely by
BLUM L.P., Blum GP and Blum GP II. The Reporting Persons therefore may be
deemed to be members in a group, in which case each Reporting Person would be
deemed to have beneficial ownership of an aggregate of 3,788,882 shares of the
Common Stock, which is 6.0% of the outstanding Common Stock. As the sole
general partner of BLUM L.P., RCBA Inc. is deemed the beneficial owner of the
securities over which BLUM L.P. has voting and investment power. As Chairman,
director and a substantial shareholder of RCBA Inc., Richard C. Blum might be
deemed to be the beneficial owner of the securities beneficially owned by RCBA
Inc. Additionally, Mr. Blum may be deemed to be the beneficial owner of the
securities over which Blum GP and Blum GP II have voting and investment power.
In addition to the foregoing, in the event that the Reporting Persons
converted the Convertible Notes into Common Stock (see the Schedule 13D
Amendment Number 2, filed by the Reporting Persons on December 5, 2001, the
Reporting Persons would be deemed to have beneficial ownership of an aggregate
of 8,956,842 shares, and the Issuer would be deemed to have 68,743,880 shares
issued and outstanding. The Reporting Persons would thus be deemed to have
beneficial ownership of 13.0% of the Common Stock, as follows:
CUSIP NO. 69357C107 SCHEDULE 13D Page 10 of 48
(i) BLUM L.P. and RCBA Inc. would be deemed to have beneficial
ownership of 4,770,675 shares, which represents 6.9% on an as converted basis;
(ii) Blum GP II would be deemed to have beneficial ownership of
3,902,067 shares, which represents 5.7% on an as converted basis;
(iii) Blum GP would be deemed to have beneficial ownership of 117,700
shares, which represents 0.2% on an as converted basis; and
(iv) Mr. Blum might be deemed to have beneficial ownership of 8,790,442
shares, which represents 13.83% on an as converted basis.
Although Mr. Blum is joining in this Schedule as a Reporting Person, the
filing of this Schedule shall not be construed as an admission that he, or any
of the other shareholders, directors or executive officers of RCBA Inc., or
any of the managing members and members of Blum GP and Blum GP II, is, for any
purpose, the beneficial owner of any of the securities that are beneficially
owned by RCBA Inc., Blum GP or Blum GP II, except to the extent of any
pecuniary interest therein.
(c) The Reporting Persons have engaged in no transaction involving shares of
Common Stock in the last 60 days other than the transaction described in Item
4 above.
(d) and (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
------------------------------------------------------------------------
None of the Reporting Persons or, to the best knowledge of the Reporting
Persons, the other persons named in Item 2 of the Schedule 13D, is a party to
any contract, arrangement, understanding or relationship with respect to any
securities of the Issuer, including but not limited to the transfer or voting
of any securities of the Issuer, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies, except (i) as previously
disclosed, (ii) as noted above, BLUM L.P. has voting and investment power of
the shares held by it for the benefit of The Common Fund, or (iii) Blum
Strategic entered into a Stock Purchase Agreement and Registration Rights
Agreement both dated as of February 21, 2002, and attached hereto as Exhibits B
and C, respectively.
(d) and (e) Not applicable.
Item 7. Material to be Filed as Exhibits
-----------------------------------------
Exhibit A Joint Filing Undertaking
Exhibit B Stock Purchase Agreement
Exhibit C Registration Rights Agreement
CUSIP NO. 69357C107 SCHEDULE 13D Page 11 of 48
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: March 1, 2002
RICHARD C. BLUM & ASSOCIATES, INC. BLUM CAPITAL PARTNERS, L.P.
By Richard C. Blum & Associates, Inc.
its general partner
By /s/ Murray A. Indick By /s/ Murray A. Indick
------------------------------- -----------------------------------
Murray A. Indick Murray A. Indick
Partner, General Counsel Partner, General Counsel
and Secretary and Secretary
BLUM STRATEGIC GP, L.L.C. RICHARD C. BLUM
(Formerly RCBA GP, L.L.C.)
By /s/ Murray A. Indick /s/ Murray A. Indick
------------------------------- ---------------------------------------
Murray A. Indick, Member By Murray A. Indick, Attorney-in-Fact
BLUM STRATEGIC GP II, L.L.C. BLUM STRATEGIC PARTNERS II, L.P.
By: Blum Strategic GP II, L.L.C.,
Its General Partner
By /s/ Murray A. Indick By /s/ Murray A. Indick
---------------------------- ----------------------------
Murray A. Indick, Member Murray A. Indick, Member
CUSIP NO. 69357C107 SCHEDULE 13D Page 12 of 48
Exhibit A
JOINT FILING UNDERTAKING
The undersigned, being duly authorized thereunto, hereby execute this
agreement as an exhibit to this Schedule 13D to evidence the agreement of the
below-named parties, in accordance with the rules promulgated pursuant to the
Securities Exchange Act of 1934, to file this Schedule jointly on behalf of
each such party.
Dated: March 1, 2002
RICHARD C. BLUM & ASSOCIATES, INC. BLUM CAPITAL PARTNERS, L.P.
By Richard C. Blum & Associates, Inc.
its general partner
By /s/ Murray A. Indick By /s/ Murray A. Indick
------------------------------- -----------------------------------
Murray A. Indick Murray A. Indick
Partner, General Counsel Partner, General Counsel
and Secretary and Secretary
BLUM STRATEGIC GP, L.L.C. RICHARD C. BLUM
(Formerly RCBA GP, L.L.C.)
By /s/ Murray A. Indick /s/ Murray A. Indick
------------------------------- ---------------------------------------
Murray A. Indick, Member By Murray A. Indick, Attorney-in-Fact
BLUM STRATEGIC GP II, L.L.C. BLUM STRATEGIC PARTNERS II, L.P.
By: Blum Strategic GP II, L.L.C.,
Its General Partner
By /s/ Murray A. Indick By /s/ Murray A. Indick
---------------------------- -----------------------------
Murray A. Indick, Member Murray A. Indick, Member
CUSIP NO. 69357C107 SCHEDULE 13D Page 13 of 48
Exhibit B
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of
February 21, 2002, is made between Blum Strategic Partners II, L.P., a
Delaware limited partnership ("Blum"), and each of the entities or
Individuals listed in Exhibit A hereto (each a "Seller," and
collectively the "Sellers").
WHEREAS, the Sellers are the direct beneficial owners of 1,106,682
shares of common stock (the "Common Stock") of PRG-Schultz
International, Inc. ("PRG").
WHEREAS, Blum desires to purchase, and the Sellers desire to
sell, 1,106,682 shares of Common Stock owned by the Sellers
(such shares of Common Stock, the "Shares"), upon the terms set forth
herein, at a price of $9.3683 per share.
WHEREAS, certain capitalized terms used herein are defined in
Section 5.1 hereof.
NOW, THEREFORE, in consideration of the premises and agreements
hereinafter set forth, intending to be legally bound, the parties
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES;
ASSIGNMENT OF REGISTRATION RIGHTS; THE CLOSING
1.1 Purchase and Sale of Shares.
Upon the terms set forth herein, at the Closing (as defined in
Section 1.3) the Sellers shall sell, assign, transfer and deliver to
Blum and Blum shall accept and purchase from the Sellers the Shares,
free and clear of all Encumbrances, for $9.3683 per Share, or an
aggregate of $10,367,728.96, in immediately available funds.
1.2 Assignment of Registration Rights.
Pursuant to Section 7.2 of the Registration Rights Agreement (the
"Registration Rights Agreement") entered into as of January 24, 2002, by
and among Profit Recovery Group International, Inc., a Georgia corporation,
Howard Schultz & Associates International, Inc., a Texas corporation,
and the persons listed on Exhibit A to the Registration Rights Agreement,
the Sellers hereby assign to Blum their rights and interests in the
Registration Rights Agreement with respect to the Shares.
1.3 Closing.
Upon the terms contained in this Agreement, the closing of the
purchase and sale of the Shares (the "Closing") shall take place at the
offices of Blum Capital Partners, L.P., 909 Montgomery Street, Suite 400,
San Francisco, California 94133, at 11:00 A.M., San Francisco Time,
on the date hereof or at such other time and place as the Sellers and
Blum shall mutually agree upon. The date on which the Closing takes
place is referred to as the "Closing Date".
CUSIP NO. 69357C107 SCHEDULE 13D Page 14 of 48
1.4 Deliveries by the Sellers.
At the Closing, the Sellers are delivering to Blum the following:
(a) stock certificates representing the Shares, accompanied by
stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer, with all necessary transfer tax and other
revenue stamps affixed thereto;
(b) a receipt for the payments provided for by Section 1.1 hereof; and
(c) an opinion of Sellers' counsel in the form of Exhibit B hereto that
the sale of Shares to Blum hereunder is made in compliance with the
Securities Act or an available exemption therefrom.
1.5 Deliveries by Blum.
At the Closing, Blum is delivering to the Sellers by wire
transfer to the accounts of the Sellers previously provided in
writing to Blum the payment provided for in Section 1.1 hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to Blum as follows:
2.1 Authorization; Binding Obligation.
This Agreement has been duly and validly executed and delivered by the
Sellers and, assuming due authorization, execution and delivery by Blum,
constitutes a legal, valid and binding obligation of the Sellers, enforceable
against them in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other federal or state laws of general applicability relating
to or affecting creditors' or secured parties' rights and remedies generally
and general principles of equity, whether considered in an action at law or
in equity. The Sellers have the legal capacity and all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and to perform its obligations hereunder.
Such execution, delivery and consummation has been duly and validly authorized
by all necessary action on the part of the Sellers, and no other corporate or
other proceedings on the part of the Sellers are necessary to authorize such
execution, delivery and consummation.
2.2 Title to the Shares.
Immediately prior to the Closing, the Sellers were the record and
beneficial owner of, and had good and marketable title to, the Shares
free and clear of all Encumbrances. The Shares owned by the Sellers are
validly issued, duly authorized and free of any preemptive rights;
there are no voting trusts or other agreements or understandings to
which the Sellers are a party with respect to the voting of the
Shares. The Shares are not subject to any restrictions on transferability
other than those imposed by the Securities Act and applicable state
securities laws. There are no options, warrants, calls, commitments or
rights of any character to purchase or otherwise acquire Shares from the
Sellers pursuant to which the Sellers may be obligated to sell, transfer
CUSIP NO. 69357C107 SCHEDULE 13D Page 15 of 48
or otherwise dispose of any of the Shares. At the Closing, Blum is
acquiring good and marketable title to the Shares, free and clear of all
Encumbrances.
2.3 Consents and Approvals; No Violation.
None of the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby, or compliance with any of the provisions
hereof, will (i) require any consent, waiver, approval, authorization or
permit of, or filing with or notification to, or any other action by, any
Governmental Authority by the Sellers, (ii) violate the certificate of
incorporation or bylaws of the Sellers, or any Law of any Governmental
Authority which may be applicable to the Sellers, or by which any of the
Sellers' activities, properties or assets (including, without limitation,
the Shares) may be bound or affected or (iii) violate, breach, or conflict
with, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration or any obligation to pay or result in the imposition of any
Encumbrance upon any of the property of the Sellers (including, without
limitation, the Shares)) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, Encumbrance, contract, agreement,
Permit, Order, or other instrument or obligation to which the Sellers are a
party or by which any of the Sellers' activities, properties or assets
(including, without limitation, the Shares) may be bound or affected.
2.4 Brokers and Finders.
No agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
2.5 Termination of Certain Agreements.
Each contract or agreement between the Sellers and PRG or any other
party which is binding upon the Sellers with respect to the Shares
has been terminated so far as it relates to the Shares and is not
and will not be binding upon Blum or the Shares after the Closing.
PRG has approved of the assignment by the Sellers to Blum of the
Sellers' rights under the Registration Rights Agreement so far as
they relate to the Shares. There are no other contracts, agreements
or understandings, written or oral, between the Sellers and PRG or
any other party with respect to the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BLUM
Blum represents and warrants to the Sellers as follows:
3.1 Authorization; Binding Obligation.
Blum has all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and to
perform its obligations hereunder. The execution and delivery of this
Agreement by Blum and the consummation of the transactions contemplated
hereby by Blum have been duly and validly authorized by Blum and no other
proceedings on the part of Blum are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has
CUSIP NO. 69357C107 SCHEDULE 13D Page 16 of 48
been validly executed and delivered by Blum and, assuming due authorization,
execution and delivery by the Sellers, constitutes the legal, valid and
binding obligation of Blum, enforceable against Blum in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other federal or state
laws of general applicability relating to or affecting creditors' or secured
parties' rights and remedies generally and general principles of equity,
whether considered in an action at law or in equity.
3.2 Consents and Approvals; No Violation.
None of the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby, or compliance with any of the provisions
hereof, will (i) require any consent, waiver, approval, authorization or
permit of, or filing with or notification to, or any other action by, any
Governmental Authority by Blum, (ii) violate the limited partnership
agreement of Blum, or any Law of any Governmental Authority which may be
applicable to Blum, or by which any of Blum's businesses, properties or
assets may be bound or affected or (iii) violate, breach, or conflict with,
or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or any obligation to pay or result in the imposition of
any Encumbrance upon any of the property of Blum) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
Encumbrance, contract, agreement, Permit, Order, or other instrument or
obligation to which Blum is a party or by which any of Blum's businesses,
properties or assets may be bound or affected.
3.3 Securities Act.
Blum is acquiring the Shares solely for its own account for investment
purposes and not with a view to, or for sale in connection with, any
distribution or other disposition thereof, except as otherwise provided
under the Registration Rights Agreement. Blum acknowledges that as of
the Closing Date the Shares have not been registered under the
Securities Act and are "restricted securities" under the Securities Act.
3.4 Brokers and Finders.
No agent, broker, investment banker, financial advisor or other firm
or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement.
3.5 Investment Experience and Accreditation.
Blum hereby represents that it is an "accredited investor," as defined in
Rule 501(a) of Regulation D under the Securities Act, and is experienced in
evaluating the transactions contemplated hereby. Blum has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Shares and has the
ability to bear the economic risks of its prospective investment and can
afford the complete loss of such investment.
3.6 Disclosure of Information.
Blum has received a copy of an Offering Memorandum dated November 30,
2001, PRG's definitive proxy statement dated December 19, 2001, PRG's
CUSIP NO. 69357C107 SCHEDULE 13D Page 17 of 48
Reports on Form 8-K filed with the Securities and Exchange Commission on
January 2, 2002 and January 17, 2002, respectively, PRG's press release
dated January 24, 2002 announcing the closing of the Schultz acquisition
and PRG's disclosure letter dated January 24, 2002 (collectively, the
"Offering Documents") and has acknowledged that it has had access to such
financial and other information, and has been afforded the opportunity
to ask questions of PRG and receive answers thereto, as it deemed
necessary in connection with its decision to purchase the Shares.
3.7 Restrictions.
Blum agrees that if it should resell or otherwise transfer the
Shares it will do so only:
(a) to PRG or any affiliate thereof,
(b) to an accredited investor that, prior to the transfer,
furnishes to PRG a signed letter containing representations and
agreements relating to the restrictions on transfer of the Shares
reasonably acceptable to PRG and, if PRG requests, an opinion of
counsel reasonably acceptable to PRG to the effect that the
transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act;
(c) pursuant to another available exemption from registration provided
under the Securities Act, if available, provided that the representations
and agreements and opinion described in (ii) above are delivered, if
requested by PRG, or
(d) pursuant to a registration statement which has been declared
effective under the Securities Act and which continues to be
effective at the time of such transfer.
Blum agrees that it will give each person to whom it transfers
such Shares notice of any restrictions on transfer of such Shares,
if then applicable. Blum acknowledges that PRG will rely upon the
truth and accuracy of the foregoing acknowledgements, representations,
warranties and agreements and agrees that if any of the acknowledgements,
representations, warranties and agreements deemed to have been made
by it by its purchase of the Shares are no longer accurate, it shall
promptly notify PRG. Blum acknowledges that none of PRG, Sellers or
any person representing PRG or Sellers has made any representation to
it with respect to PRG or the offering or sale of any Shares, other
than the information contained in the Offering Documents, which
Offering Documents have been delivered to it and upon which it
is making its investment decision with respect to the Shares.
3.8 Restrictive Legend.
Blum acknowledges that each certificate representing a Share
will bear a legend substantially to the following effect, unless
such Shares have been transferred pursuant to Rule 144 under
the Securities Act or pursuant to a registration statement that
has been declared effective under the Securities Act:
CUSIP NO. 69357C107 SCHEDULE 13D Page 18 of 48
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION, IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF SUCH LAWS. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, NOR
WILL AN ASSIGNEE OR ENDORSEE HEREOF BE RECOGNIZED AS AN
OWNER OF THE SHARES BY THE ISSUER, UNLESS: (I) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO THE
SHARES AND THE TRANSFER SHALL THEN BE IN EFFECT, OR (II) IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, THE SHARES
ARE TRANSFERRED IN A TRANSACTION WHICH IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS."
ARTICLE IV
MISCELLANEOUS
4.1 Survival of Representation and Warranties.
All representations, warranties and covenants made by any party contained
in this Agreement, or any certificate delivered pursuant hereto or made in
writing to, by or on behalf of Blum or the Sellers, as the case may be, in
connection with the transactions contemplated by this Agreement shall
survive the Closing.
4.2 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
4.3 Notices.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, telecopied (with confirmation
of receipt), delivered by nationally-recognized overnight express
service or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses:
(a) If to Blum to:
Blum Strategic Partners II, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Telephone: (415) 434-1111
Telecopy: (415) 434-3130
Attention: Murray A. Indick
CUSIP NO. 69357C107 SCHEDULE 13D Page 19 of 48
(b) If to the Sellers to:
Malouf, Lynch, Jackson & Swinson
600 Preston Commons East
8115 Preston Road
Dallas, TX 75225
Telephone: (214) 273-0566 (direct dial)
Telecopy: (214) 273-0567 (direct fax)
Attention: Curtis R. Swinson, Esq.
or to such other address as the person to whom notice is to be given
may have previously furnished to the other in writing in the manner
set forth above, provided that notice of a change of address shall
be deemed given only upon receipt.
4.4 Expenses.
Each party hereto shall be solely responsible for all expenses
incurred by it or on its behalf in connection with the preparation
and execution of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation,
the fees and expenses of its counsel, accountants, brokers,
finders, financial advisors and other representatives.
4.5 Specific Performance.
Without limiting the rights of each party hereto to pursue all
other legal and equitable rights available to such party for the
other parties' failure to perform their obligations under this
Agreement, the parties hereto acknowledge and agree that the remedy
at law for any failure to perform their obligations hereunder would
be inadequate and that each of them, respectively, shall be entitled
to specific performance, injunctive relief or other equitable
remedies in the event of any such failure.
4.6 Descriptive Headings; Interpretation.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of
this Agreement. References in this Agreement to Sections mean Sections
of this Agreement, unless otherwise indicated. The term "person"
shall mean and include an individual, a partnership, a joint venture,
a corporation, a trust, a governmental entity or an unincorporated
organization. The parties hereto agree that they have been represented
by counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or
rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such
agreement or document.
4.7 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute
one instrument.
CUSIP NO. 69357C107 SCHEDULE 13D Page 20 of 48
4.8 Severability.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the parties shall
negotiate in good faith with a view to the substitution therefor of a
suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision,
provided, however, that the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
4.9 Entire Agreement; Third-Party Beneficiaries.
This Agreement (a) constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except for PRG, is not intended to confer
upon any person other than the parties hereto and their permitted assigns
any rights or remedies hereunder.
4.10 Assignment.
No party hereto may assign its rights or obligations under this Agreement,
provided that Blum may assign its rights to purchase Shares hereunder to
any one or more of its affiliates, and may assign and transfer any Shares
so purchased to any one or more of such affiliates.
4.11 Further Assurances.
The Sellers and Blum each agree to execute and deliver such other
documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to
implement the transactions contemplated by this Agreement.
ARTICLE V
DEFINITIONS
5.1 Definitions.
For purposes of this Agreement, the following terms shall have
the meanings set forth below (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Blum" shall have the meaning set forth in the preamble.
"Closing" shall have the meaning set forth in Section 1.3 hereof.
"Closing Date" shall have the meaning set forth in Section 1.3 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock " shall have the meaning set forth in the preamble.
CUSIP NO. 69357C107 SCHEDULE 13D Page 21 of 48
"Encumbrance" shall mean any lien, encumbrance, proxy, voting trust
arrangement, pledge, security interest, collateral security agreement,
financing statement (and similar notices) filed with any Governmental
Authority, claim (including any claim as defined in the Code), charge,
equities, mortgage, pledge, objection, title defect, option, restrictive
covenant or restriction on transfer of any nature whatsoever, and the
interest of the lessor in any property subject to a capital lease,
except for restrictions or transferability imposed by the Securities Act.
"Governmental Authority" shall mean any government or political subdivision
thereof, whether federal, state, local or foreign, or any agency, department,
commission, board, bureau, court, tribunal, body, administrative or regulatory
authority or instrumentality of any such government or political subdivision.
"Law" shall mean any law (including common law), rule, regulation, restriction
(including zoning), code, statute, ordinance, order, writ, injunction,
judgment, decree or other requirement of a Governmental Authority.
"Order" shall mean any order, judgment, injunction, award, decree,
writ, rule or similar action of any Governmental Authority.
"Permit" shall mean any franchise, license, certificate, approval,
identification number, registration, permit, authorization, order
or approval of, and any required registration with, any Governmental
Authority.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Shares" shall have the meaning set forth in the preamble.
[Remainder of Page Intentionally Left Blank]
CUSIP NO. 69357C107 SCHEDULE 13D Page 22 of 48
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
on the day and year first above written.
BLUM STRATEGIC PARTNERS II, L.P.
By: Blum Strategic GP II, L.L.C.
By:___/s/ N. Colin Lind__________
Name: N. Colin Lind
Title: Managing Member
CUSIP NO. 69357C107 SCHEDULE 13D Page 23 of 48
HHS CHARITABLE LEAD TRUST
By: ___/s/ Harold B. Berman______
Name: Harold B. Berman
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 24 of 48
LVS CHARITABLE LEAD TRUST
By: ___/s/ Harold B. Berman___
Name: Harold B. Berman
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 25 of 48
DANIEL ALAN SCHULTZ HHS (2001) GST TRUST
By: ___/s/ Harold B. Berman___
Name: Harold B. Berman
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 26 of 48
DANIEL ALAN SCHULTZ LVS (2001) GST TRUST
By: ___/s/ Harold B. Berman___
Name: Harold B. Berman
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 27 of 48
JAYNIE SCHULTZ ROMANER HHS (2001) GST TRUST
By: ___/s/ Harold B. Berman___
Name: Harold B. Berman
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 28 of 48
JAYNIE SCHULTZ ROMANER LVS (2001) GST TRUST
By: ___/s/ Harold B. Berman___
Name: Harold B. Berman
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 29 of 48
THE ANDREW H. SCHULTZ IRREVOCABLE TRUST
By: /s/ Andrew Schultz_______
Name: Andrew Schultz
Title: Trustee
CUSIP NO. 69357C107 SCHEDULE 13D Page 30 of 48
ANDREW H. SCHULTZ
By: /s/ Andrew Schultz_______
Name: Andrew Schultz
Title:
CUSIP NO. 69357C107 SCHEDULE 13D Page 31 of 48
EXHIBIT A
NAME NUMBER OF SHARES
HHS Charitable Lead Trust 55,334
LVS Charitable Lead Trust 55,334
Daniel Alan Schultz HHS (2001) GST Trust 110,668
Daniel Alan Schultz LVS (2001) GST Trust 110,668
Jaynie Schultz Romaner HHS (2001) GST Trust 110,668
Jaynie Schultz Romaner LVS (2001) GST Trust 110,668
Andrew Schultz 498,008
The Andrew H. Schultz Irrevocable Trust 55,334
TOTAL 1,106,682
CUSIP NO. 69357C107 SCHEDULE 13D Page 32 of 48
EXHIBIT B
February 21, 2002
Murray A. Indick
Blum Capital Partners, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Re: Sale of 1,106,682 Shares of the Common Stock of
The Profit Recovery Group International, Inc. by
the Sellers to Blum Strategic Partners II, L.P.
Dear Mr. Indick:
We have been requested by you to express our opinion as to whether
such shareholders have sold the above-referenced shares in compliance
with the Securities Act of 1933, as amended.
In this regard, we have reviewed a Stock Purchase Agreement executed by
Blum Strategic Partners II, L.P., dated February 21, 2002. In
rendering this opinion, we have assumed that the foregoing document is
accurate and complete in all material respects, and we have further
assumed the genuineness of all signatures, the authenticity of all
documents of those submitted to us as originals, the conformity to
original documents of those submitted as photostatic copies,
and the authenticity of such latter documents.
On the basis of the foregoing, we are of the opinion that the
above-referenced shares may be transferred in compliance with the
Securities Act of 1933, as amended, and the regulations promulgated
thereunder.
Sincerely,
/s/ Curtis R. Swinson
Curtis R. Swinson
CUSIP NO. 69357C107 SCHEDULE 13D Page 33 of 48
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made as of the 21st day of February, 2002, by and between PRG-Schultz
International, Inc., a Georgia corporation ("PRGX"), and Blum Strategic
Partners II, L.P., a Delaware limited partnership ("Holder," and with any
permitted transferees thereof, "Holders").
RECITALS:
WHEREAS, Holder, Howard Schultz, Andrew Schultz and certain affiliates
thereof ("Sellers") have entered into a Stock Purchase Agreement dated
February 21st, 2002 (the "Stock Purchase Agreement") pursuant to which
Holder has purchased 1,106,682 shares of PRGX common stock Sellers;
WHEREAS, in order to facilitate the sale to Holder, PRGX has agreed
to grant Holder the rights contained herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits
to be derived herefrom, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEMAND REGISTRATION
(a) If PRGX shall receive, at any time prior to the second anniversary
of the date of this agreement, a written request from the Holder(s) of
Registrable Securities (as hereinafter defined) that PRGX file a
registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act") on Form S-3 or a successor form thereto
covering the registration of at least $5 million in value of the
Registrable Securities (a "Demand Registration"), then PRGX shall
use its reasonable best efforts to effect as soon as practicable the
registration under the Securities Act on Form S-3 of all Registrable
Securities which such Holder(s) have requested to be registered.
If PRGX is not eligible to use Form S-3 to register the Registrable
Securities at the time such request is made, PRGX shall register the
Registrable Securities on Form S-1 or other available form or a
successor form thereto. Within ten (10) business days after receipt
of any such request, PRGX shall give written notice of such requested
registration to all other Holders of Registrable Securities, if any, in
accordance with Section 9.1 hereof, and shall use its reasonable best
efforts to include in such registration all Registrable Securities with
respect to which PRGX has received written requests for inclusion therein
within 20 days after the mailing of PRGX's notice; provided, however, that
PRGX shall be required to file no more than one (1) registration statement
pursuant to the provisions of this Article I, regardless of whether or
not any Holder chooses not to include securities in any such registration
statement. The term "Registrable Securities" means (i) the 1,106,682 shares
of PRGX common stock acquired by the Holder pursuant to the Stock Purchase
Agreement, (ii) any other securities of PRGX issued as (or issuable
CUSIP NO. 69357C107 SCHEDULE 13D Page 34 of 48
upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to,
or in exchange for, or in replacement of, the Registrable Securities
or resulting from a subdivision of the outstanding shares of Registrable
Securities into a greater number of shares (by reclassification,
stock split or otherwise); provided, however, that the foregoing definition
shall exclude in all cases any Registrable Securities sold by a person
in a transaction in which his or her rights under this Agreement are not
assigned in conformity with the provisions of Article VI hereof.
Notwithstanding the foregoing, any particular shares of PRGX common
stock or other securities shall be treated as Registrable Securities
only if and so long as they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities
Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale. The term "Registrable Securities" shall not
include securities which are eligible for immediate sale under
Rule 144 or Rule 145 under the Securities Act. The foregoing
notwithstanding, PRGX shall not be obligated to cause a registration
to become effective prior to one hundred twenty (120) days
following the effective date of a PRGX-initiated registration (other
than a registration effected solely to qualify an employee benefit
plan, to effect a business combination pursuant to Rule 145 or to
satisfy contractual rights of other security holders, to the
extent such registration is not underwritten) or such longer
period not to exceed one hundred eighty (180) days as any
underwriter thereof shall require, provided that PRGX shall
use its best efforts to achieve such effectiveness promptly
following the end of such period;
(b) If the Holder(s) initially requesting the Demand Registration
intend to distribute the Registrable Securities covered by their
request by means of an underwriting, the request pursuant to
Article I(a) shall so state and the underwriter will be selected
by PRGX, subject to the approval of a majority in interest of the
Holders including Registrable Securities in the requested
registration, such approval not to be unreasonably withheld or
delayed. In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting
to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting. Notwithstanding
any other provision of this Article I, if the underwriter advises
the Holders in writing that marketing factors require a limitation
on the number of shares to be underwritten, then the number of
shares of Registrable Securities that may be included in the offering
shall be allocated among all Holders thereof in proportion
(as nearly as practicable) to the amount of Registrable Securities
of PRGX originally requested to be included by each Holder in the
underwriting; provided, however, that the number of shares of
Registrable Securities to be included in such offering shall not
be reduced unless all other securities, if any, are first entirely
excluded from the offering; and provided further, that, if a Holder
CUSIP NO. 69357C107 SCHEDULE 13D Page 35 of 48
has to reduce the amount of Registrable Securities to be included
in the offering, the Holders of Registrable Securities initially
requesting such Demand Registration shall be entitled to withdraw
such request and, if such request is withdrawn and the Holders pay
all Registration Expenses (as hereinafter defined) in connection
with such registration, such Demand Registration shall not count
as the one permitted Demand Registration hereunder.
(c) Notwithstanding the foregoing, if PRGX shall furnish to Holders
requesting a registration statement pursuant to this Article I, in
accordance with Section 9.1 hereof, a certificate signed by the General
Counsel, Chief Financial Officer or Chief Executive Officer of PRGX stating
that, in his good faith judgment, it would require the disclosure of
material, nonpublic information and would be seriously detrimental to
PRGX and its stockholders for such registration statement to be filed or
to be amended or supplemented in accordance with Article III(f) and it
is therefore essential to defer the filing of such registration statement
or amendment or supplement, PRGX shall have the right to defer such
filing for a period of not more than 60 days after receipt of the request
of the initiating Holders in the case of an initial filing, or not
more than 60 days after the date of delivery of such certificate in
the case of an amendment or supplement; provided, however, that if a
Demand Registration is delayed hereunder, the Holders of Registrable
Securities initially requesting such Demand Registration shall be
entitled to withdraw such request and, if such request is withdrawn,
such Demand Registration shall not count as one of the permitted Demand
Registrations hereunder and PRGX shall pay Registration Expenses in
connection with such registration to the extent set forth in Article IV.
ARTICLE II
PIGGYBACK REGISTRATION
If PRGX receives a request to file a registration statement by the
former security holders of Howard Schultz & Associates International,
Inc. pursuant to that certain registration rights agreement date
January 24, 2002, PRGX give each Holder written notice of such
registration. Upon the written request of each Holder given within
ten (10) days after mailing of such notice by PRGX in accordance with
Section 9, PRGX shall, subject to the provisions below regarding
underwritten registrations, cause to be registered under the Securities
Act all of the Registrable Securities that each such Holder has requested
to be registered. In connection with any offering involving an
underwriting of shares of PRGX's capital stock, PRGX shall not be
required under this Article II to include any of the Holders' securities
in such underwriting unless they accept the terms of the underwriting as
agreed upon between PRGX and the underwriters selected by it, and then
only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the selling
stockholders exercising demand rights. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included
in such offering exceeds the amount of securities to be sold that the
underwriters determine in their sole discretion is compatible with the
success of the offering, then PRGX shall be required to include in the
offering only that number of such securities, including Registrable
Securities, which the underwriters determine in their sole discretion will
CUSIP NO. 69357C107 SCHEDULE 13D Page 36 of 48
not jeopardize the success of the offering of the securities so included.
Securities shall be excluded from the offering in the order set forth
below:
First, the number of shares requested to be registered for the account
of persons, if any, whose rights to have their shares included in such
registration are subordinate to the rights granted pursuant to this
Agreement shall be reduced as required;
Second, the number of shares eligible to be registered for the
account of the Holders of registration rights granted pursuant to this
Agreement, the number of shares eligible to be registered by the
former Howard Schultz & Associates International, Inc. shareholders
as required by the rights agreement dated January 24, 2002 (the "Schultz
Agreement"), and the number of shares eligible to be registered by
persons, if any, holding registration rights on a parity with those
granted by this Agreement or the Schultz Agreement, shall be reduced,
pro rata as required;
Last, the number of shares requested for the account of persons,
if any, holding registration rights having priority over the rights
granted by this Agreement, or the Schultz Agreement, shall be
reduced as required.
ARTICLE III
REGISTRATION PROCEDURES
Whenever the Holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, PRGX
will use its reasonable best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto PRGX will as
expeditiously as practicable:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement, with respect to such Registrable
Securities on Form S-3 or a successor form if PRGX is eligible to
use such form, or on such substitute form reasonably chosen by PRGX
if it is not so eligible, and use its reasonable best efforts to
cause such registration statement to become effective as soon as
practicable after filing; provided, however, that PRGX shall have no
obligation to include securities in a registration statement pursuant
to Article II if that registration statement is withdrawn in accordance
with the registration rights agreement between PRGX and the former
Howard Schultz & Associates International, Inc. shareholders dated
January 24, 2002; and
(b) Notify each Holder of the effectiveness of each registration
statement filed hereunder and prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period of not less than
ninety (90) consecutive days, or such shorter period which will
terminate upon the earlier to occur of that date when all Registrable
Securities covered by such registration statement have been sold
(but not before the expiration of the applicable prospectus
delivery period), and comply with the provisions of the Securities
CUSIP NO. 69357C107 SCHEDULE 13D Page 37 of 48
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement; and
(c) Furnish, without charge, to each seller of Registrable
Securities and each underwriter, if any, in accordance with Section 9.1
hereof, such number of copies of such registration statement (including
all exhibits), each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus) in conformity with the requirements of the Securities Act
and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities
owned by such seller; and
(d) Use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions within the United States as the sellers or any
managing underwriter shall request, to keep such registration or
qualification in effect for so long as the registration statement
is in effect and do any and all other acts and things which may be
reasonably necessary or advisable to enable such sellers to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such sellers (provided that PRGX will not be required to
qualify generally to do business or file any general consent to
service of process in any jurisdiction where it would not otherwise
be required to qualify or file but for this subparagraph); and
(e) Use its best efforts to obtain all other approvals, covenants,
exemptions or authorizations from such governmental agencies or
authorities as may be necessary to enable the sellers of such
Registrable Securities to consummate the disposition of such
Registrable Securities; and
(f) Notify each seller of such Registrable Securities promptly at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and
subject to Article I(c) hereof, prepare and file as soon as practicable
with the SEC and promptly notify each Holder of Registrable Securities
of the filing of, a supplement to such prospectus or an amendment to the
registration statement so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made
and in the case of an amendment to the registration statement, use
reasonable best efforts to cause it to become effective as soon as
possible; and
(g) Promptly notify each Holder selling Registrable Securities
covered by such registration statement and each managing underwriter,
if any: (i) when the registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement related
CUSIP NO. 69357C107 SCHEDULE 13D Page 38 of 48
thereto or post-effective amendment to the registration statement
has been filed and, with respect to the registration statement or
any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any state securities authority for
amendments or supplements to the registration statement or the
prospectus related thereto or for additional information; and
(iii) of the receipt by PRGX of any notification with respect to the
suspension of the qualification of any Registrable Securities for
sale under the securities or blue sky laws of any jurisdiction or
the initiation of any proceeding for such purpose; and
(h) Upon receipt of such confidentiality agreements as PRGX may
reasonably request, make reasonably available for inspection by any seller
of such Registrable Securities covered by such registration statement,
by any underwriter, if any, participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such
underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of PRGX, and supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement
in order to permit them to exercise their due diligence responsibility;
and
(i) Promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the
prospectus (after the initial filing of such registration statement)
and which contains information regarding the selling Holders, provide
copies of such document to counsel for the selling Holders of
Registrable Securities and to each managing underwriter, and make
such changes in such document concerning the selling Holders prior
to the filing thereof as counsel for such selling Holders or
underwriters may reasonably request; and
(j) Furnish to each Holder participating in the offering and the
managing underwriter, without charge, at least one signed copy of the
registration statement and any post-effective amendments thereto
(which may be a photocopy or conformed copy of such signed document),
excluding all documents incorporated therein by reference and all
exhibits; and
(k) Cooperate with the selling Holders of Registrable Securities
and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause
such Registrable Securities to be issued in such denominations and
registered in such names in accordance with the underwriting agreement
prior to any sale of Registrable Securities to the underwriters or, if not
an underwritten offering, in accordance with the written instructions
of the selling holders of Registrable Securities at least three
business days prior to any sale of Registrable Securities; and
(l) In the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or the initiation of any
proceeding for such purpose, or of any order suspending or preventing
the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, PRGX will promptly notify each seller of such order, and
CUSIP NO. 69357C107 SCHEDULE 13D Page 39 of 48
subject to Article I(c) hereof, will use its reasonable best efforts to
promptly obtain the withdrawal of such order; and
(m) If the offering is to be underwritten, enter into any necessary
agreements in connection therewith (including an underwriting agreement
containing customary representations, warranties and agreements); and
(n) Cause all such Registrable Securities registered pursuant hereto to
be listed on each securities exchange or other quotation service on which
similar securities issued by PRGX are then listed; and
(o) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereto and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date
of such registration.
ARTICLE IV
REGISTRATION EXPENSES
As used herein, "Registration Expenses" shall mean all expenses
(other than underwriting discounts and commissions) incurred in
connection with all registrations, filings or qualifications
pursuant hereto, whether or not such registration becomes effective
or remains effective for the applicable period contemplated hereby,
including (without limitation) all registration, filing and qualification
fees, printers' and accounting fees and fees and disbursements of
counsel for PRGX. All Registration Expenses shall be borne by Holders;
provided, however, that (i) in the case of a registration pursuant to
Article II, Holders shall pay only the registration fees and underwriting
discounts and commissions relating to the Registrable Securities
included in such registration and their own fees and expenses and
the fees and expenses of their counsel; (ii) in the case of a Demand
Registration that is withdrawn pursuant to Article I(c), Holders shall
pay all fees and expenses of counsel for Holders and any other out of
pocket expenses incurred by Holders, and PRGX shall pay all other
Registration Expenses; (iii) in the case of a Demand Registration in
which other security holders participate due to piggyback rights
contained in other registration rights agreements, such other security
holders shall pay the registration fees and underwriting discounts
and commissions relating to their Registrable Securities included
in such registration and their own fees and expenses and the fees
and expenses of their counsel, and Holders shall pay all other
Registration Expenses.
ARTICLE V
UNDERTAKINGS OF THE HOLDERS OF REGISTRABLE SECURITIES
5.1 Suspension of Sales. If any Registrable Securities are
included in a registration statement pursuant to the terms of
this Agreement, the Holder thereof will not (until further notice
delivered in accordance with Section 9.1 hereof) effect sales
thereof after receipt of written notice from PRGX pursuant to
Article III(f) and delivered in accordance with Section 9.1
hereof of the occurrence of an event specified therein in order
CUSIP NO. 69357C107 SCHEDULE 13D Page 40 of 48
to permit PRGX to correct or update the registration statement
or prospectus in accordance with Article III(f), provided that
the obligations of PRGX with respect to maintaining any
registration statement current and effective shall be extended
by a period of days equal to the period said suspension is in effect.
5.2 Compliance. If any Registrable Securities are being
registered in any registration pursuant to this Agreement, the
Holder thereof will comply with all anti-stabilization, manipulation
and similar provisions of Section 10 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and any rules promulgated
thereunder by the SEC.
5.3 Termination of Effectiveness. At the end of the period during
which PRGX is obligated to keep a registration statement current and
effective as described herein, each Holder of Registrable Securities
included in the registration statement shall discontinue sales thereof
pursuant to such registration statement, unless such Holder has received
written notice from PRGX delivered in accordance with Section 9.1 hereof
of its intention to continue the effectiveness of such registration
statement with respect to any of such securities which remain unsold.
5.4 Furnish Information. It shall be a condition precedent to the
obligations of PRGX to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to PRGX such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition
of such securities as shall reasonably be required to effect the
registration of such Holder's Registrable Securities or as shall
otherwise reasonably be requested by PRGX, which request shall be
delivered in accordance with Section 9.1 hereof; provided, however,
that this shall not affect the rights of, or the obligations of PRGX
under this Agreement to, any other Holder. Notwithstanding the
foregoing, PRGX shall have no obligation with respect to any
registration requested pursuant to Article I of this Agreement if,
as a result of the application of the preceding sentence, the
Registrable Securities of any Holder are excluded from any
Demand Registration and the value of the Registrable Securities
to be included in the registration is therefore reduced below
$5 million; provided, however, that in such event, the remaining
Holders requesting such Demand Registration shall be entitled to
(i) add additional securities so that the Registrable Securities
to be included in the registration is raised to $5 million; or
(ii) withdraw such request and, if such request is withdrawn and
the Holders pay all Registration Expenses in connection with such
registration, such Demand Registration shall not count as one of
the permitted Demand Registrations hereunder. PRGX shall only be
required to pay the Registration Expenses of such withdrawn
registration if the Holders inform PRGX that such registration
shall count as its one Demand Registrations hereunder.
ARTICLE VI
UNDERWRITTEN REGISTRATIONS
If requested by the underwriters for any underwritten offering
CUSIP NO. 69357C107 SCHEDULE 13D Page 41 of 48
by the Holders pursuant to a registration requested under Article I
hereof, PRGX shall enter into a customary underwriting agreement
with the underwriters. Such underwriting agreement shall be
reasonably satisfactory in form and substance to the Holders and
shall contain such representations and warranties by, and such other
agreements on the part of, PRGX and such other terms as are generally
included in the underwriting agreements of nationally recognized
underwriters, including, without limitation, indemnities and
contribution agreements; provided however, that PRGX shall not
be required to make any representations or warranties with respect
to written information provided by a selling Holder for inclusion
in the registration statement. Such underwriting agreement shall
also contain such representations and warranties by the participating
Holders as are generally included in agreements of that type, including,
without limitation, indemnities and contribution agreements. Any
provisions in any such underwriting agreement with respect to
contribution and indemnity shall supersede and render null and void the
indemnification and contribution provisions of this Agreement with
respect to the securities contained in the underwriting.
ARTICLE VII
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of a Holder of Registrable Securities set forth in this
Agreement (including a Holder who received the Registrable Securities
by an assignment permitted pursuant to this Agreement), including the
right to cause PRGX to register Registrable Securities and pay the
Registration Expenses to the extent set forth in Article IV, may be
assigned by such Holder, but only to the extent that Registrable
Securities are concurrently transferred to the assignee, only to
(i) its successors-in-interest by merger, consolidation and similar
transaction or (ii) an Affiliate of such Holder or its successor-in-
interest which acquires Registrable Securities. For purposes of this
Agreement, the term "Affiliate" means any person that, directly or
indirectly, controls or is controlled by or is under common control
with the Holder or its successor-in-interest, as applicable. For
purposes of this definition, control of a person means the power,
directly or indirectly, to direct or cause the direction of the
management and policies of such person, whether by contract or
otherwise and, in any event and without limiting the foregoing,
any person owning fifty percent (50%) or more of the voting
securities of another person shall be deemed to control that
person. Notwithstanding the foregoing, in no event may less
than 50% of all Registrable Securities be transferred at any time.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by PRGX. PRGX shall indemnify and hold harmless,
with respect to any registration statement filed by it, to the fullest
extent permitted by law, each Holder of Registrable Securities covered
by such registration statement, its officers, directors, employees,
agents, affiliates and general or limited partners (and the directors,
officers, employees, affiliates and agents thereof) and each other
person, if any, who controls such Holder within the meaning of the
CUSIP NO. 69357C107 SCHEDULE 13D Page 42 of 48
Securities Act (collectively, the "Holder Indemnified Parties")
against all losses, claims, damages, liabilities and expenses,
joint or several (including reasonable fees of counsel and any
amounts paid in settlement effected with PRGX's consent, which
consent shall not be unreasonably delayed or withheld), to which
any such Holder Indemnified Party may become subject under the
Securities Act, the Exchange Act, any other federal law, any state
or common law, any rule or regulation promulgated thereunder
or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) are caused solely by (i) any
untrue statement or alleged untrue statement of a material fact
contained in any registration statement in which such Registrable
Securities were included as contemplated hereby or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary, final or
summary prospectus, together with the documents incorporated
by reference therein (as amended or supplemented if PRGX shall
have filed with the SEC any amendment thereof or supplement thereto),
or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or (iii) any violation by PRGX
of the Securities Act, the Exchange Act, any other federal law,
any state or common law, or any rule or regulation promulgated
thereunder in connection with any such registration; and in each
such case, PRGX shall reimburse each such Holder Indemnified Party
for any reasonable legal or any other expenses incurred by any of
them in connection with investigating or defending any such loss,
claim, damage, liability, expense, action or proceeding, provided,
however, that PRGX shall not be liable to any such Holder Indemnified
Party in any such case to the extent that any such loss, claim, damage,
liability or expense (or action or proceeding, whether commenced or
threatened, in respect thereof) arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment thereof or supplement
thereto or in any such preliminary, final or summary prospectus in reliance
upon written information furnished to PRGX by or on behalf of any such
Holder Indemnified Party for use in the preparation thereof, and provided
further, that PRGX shall not be liable to any such Holder Indemnified
Party with respect to any preliminary prospectus to the extent that
any such loss, claim, damage, liability or expense of such Holder
Indemnified Party results from the fact that such Holder Indemnified
Party sold Registrable Securities to a person to whom there was not
sent or given, at or before the written confirmation of such sale,
a copy of the prospectus (excluding documents incorporated by reference)
or of the prospectus as then amended or supplemented (excluding
documents incorporated by reference) if PRGX has previously
furnished copies thereof to such Holder Indemnified Party in
compliance with this Agreement and the loss, claim, damage,
liability or expense of such Holder Indemnified Party results from
an untrue statement or omission of a material fact contained in such
preliminary prospectus which was corrected in the prospectus (or the
prospectus as then amended or supplemented) and such corrected document
provides a defense to the claim upon which such loss claim, damage,
liability or expense was based. Such indemnity and reimbursement of
CUSIP NO. 69357C107 SCHEDULE 13D Page 43 of 48
expenses and obligations shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holder
Indemnified Parties and shall survive the transfer of such securities
by such Holder Indemnified Parties. In connection with an underwritten
offering, PRGX shall indemnify such underwriters, their officers and
directors and each person who controls such underwriters (within the
meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
8.2 Indemnification by Holders. Each Holder of Registrable Securities
participating in any registration hereunder shall severally, and not
jointly, indemnify and hold harmless, to the fullest extent permitted by
law, PRGX, its directors, officers, employees, affiliates and agents, and
each Person who controls PRGX (within the meaning of the Securities Act)
(collectively, "PRGX Indemnified Parties") against all losses, claims,
damages, liabilities and expenses, joint or several (including reasonable
fees of counsel and any amounts paid in settlement effected with such
Holder's consent, which consent shall not be unreasonably delayed or
withheld) to which any PRGX Indemnified Parties may become subject under
the Securities Act, the Exchange Act, any other federal law, any state or
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) are caused by (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement in which such Holder's Registrable Securities were included or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary, final or summary prospectus, together with
the documents incorporated by reference therein (as amended or
supplemented if PRGX shall have filed with the Commission any
amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in the cases
described in clauses (i) and (ii) of this Section 8.2, such indemnification
by such Holder of Registrable Securities shall apply only to the extent that
such untrue statement or omission is contained in any information furnished
in writing by such Holder for use in the preparation of the documents
described in such clauses (i) and (ii)), (iii) any violation by such
Holder of the Securities Act, the Exchange Act, any other federal law,
any state or common law, or any rule or regulation promulgated thereunder
applicable to such Holder and relating to action of or inaction by such
Holder in connection with any such registration other than in connection
with any such violation relating to an untrue statement or omission of a
material fact relating to information provided by PRGX contained in a
preliminary prospectus or prospectus hereunder and (iv) with respect to
any preliminary prospectus delivered in a non-underwritten offering,
the fact that such Holder sold Registrable Securities to a person to whom
there was not sent or given, at or before the written confirmation of such
sale, a copy of the prospectus (excluding the documents incorporated by
reference) or of the prospectus as then amended or supplemented (excluding
documents incorporated by reference) if PRGX has previously furnished copies
CUSIP NO. 69357C107 SCHEDULE 13D Page 44 of 48
thereof to such Holder in compliance with this Agreement and the loss, claim,
damage, liability or expense of such PRGX Indemnified Party results from an
untrue statement or omission of a material fact relating to information
provided by such Holder contained in such preliminary prospectus which was
corrected in the prospectus (or the prospectus as amended or supplemented)
and such corrected document provides a defense to the claim upon which such
loss claim, damage, liability or expense was based. Such indemnity
obligation shall remain in full force and effect regardless of any
investigation made by or on behalf of PRGX Indemnified Parties (except as
provided above) and shall survive the transfer of such securities by such
Holder.
8.3 Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under Section 8.1 or 8.2 above of written notice delivered
in accordance with Section 9.1 hereof of the commencement of any action, suit,
proceeding, investigation or threat thereof with respect to which a claim for
indemnification may be made pursuant to this Section, such indemnified party
shall, if a claim in respect thereto is to be made against an indemnifying
party, give written notice delivered in accordance with Section 9.1 hereof to
the indemnifying party of the threat or commencement thereof, provided,
however, that the failure to so notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice in accordance with Section 9.1 hereof. If any
such claim or action referred to under Section 8.1 or 8.2 above is brought
against any indemnified party and it then notifies the indemnifying party of
the threat or commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other indemnifying party similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party.
After notice delivered in accordance with Section 9.1 hereof from the
indemnifying party to such indemnified party of its election so to assume the
defense of any such claim or action, the indemnifying party shall not be
liable to such indemnified party under this Article VIII for any legal
expenses of counsel or any other expenses (other than reasonable costs of
investigation) subsequently incurred by such indemnified party in connection
with the defense thereof, unless the indemnifying party has failed to assume
the defense of such claim or action or to employ counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to differing interests between such indemnified
party and any other party represented by such counsel in such action.
The indemnifying party shall not be required to indemnify the indemnified
party with respect to any amounts paid in settlement of any action,
proceeding or investigation entered into without the written consent of
the indemnifying party. No indemnifying party shall consent to the entry of
any judgment or enter into any settlement without the consent of the
indemnified party unless (i) such judgment or settlement does not impose any
obligation or liability upon the indemnified party other than the execution,
delivery or approval thereof, and (ii) such judgment or settlement includes
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a full release and discharge from all liability in
respect of such claim and a full release of all persons that may be entitled
to or obligated to provide indemnification or contribution under this Article.
CUSIP NO. 69357C107 SCHEDULE 13D Page 45 of 48
The obligations of PRGX and the Holders of Registrable Securities
under this Article VIII shall survive the completion of any offering of
Registrable Securities in a registration statement under this Agreement and
the termination of this Agreement.
8.4 Contribution. If the indemnification provided for in this
Article VIII is unavailable to or insufficient to hold harmless an
indemnified party under Section 8.1 or 8.2, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages, liabilities or expenses
(or actions or proceedings in respect thereof) referred to in Section 8.1
or 8.2 in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and the indemnified party on the
other in connection with the statements, omissions, actions or inactions
which resulted in such losses, claims, damages, liabilities or expenses.
The relative fault of the indemnifying party and the indemnified party shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party, any action or inaction by any
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement, omission, action or
inaction. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) pursuant to this Section 8.4 shall be deemed
to include any reasonable legal or other expenses incurred by such indemnified
party in connection with investigating or defending any such action or claim
(which shall be limited as provided in Section 8.3 if the indemnifying party
has assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this Section 8.4. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Promptly after receipt by
an indemnified party under this Section 8.4 of written notice delivered in
accordance with Section 9.1 hereof of the commencement of any action, suit,
proceeding, investigation or threat thereof with respect to which a claim for
contribution may be made against an indemnifying party under this Section 8.4,
such indemnified party shall, if a claim for contribution in respect thereto
is to be made against an indemnifying party, give written notice in accordance
with Section 9.1 hereof to the indemnifying party of the commencement thereof
(if the notice specified in Section 8.3 has not been given with respect to
such action), provided, however, that the failure to so notify the
indemnifying party shall not relieve it from any obligation to provide
contribution which it may have to any indemnified party under this
Section 8.4, except to the extent that the indemnifying party is actually
prejudiced by the failure to give notice in accordance with Section 9.1
hereof. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.4 were determined by pro rata
allocation or by any other method of allocation which does not take
account of equitable considerations referred to in this Section 8.4.
The provisions of this Section 8.4 shall be in addition to any other
rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract, shall remain in full force and
effect regardless of any investigation made by or on behalf of any
indemnified party, and shall survive the transfer of securities by
CUSIP NO. 69357C107 SCHEDULE 13D Page 46 of 48
any such party; provided that any indemnification of similar scope
entered into pursuant to an underwriting agreement in connection
with an offering contemplated herein shall supersede this Article VIII.
8.5 Indemnification and Contribution of Underwriters. In connection
with any underwritten offering contemplated by this Agreement which
includes Registrable Securities, PRGX and all sellers of Registrable
Securities included in any registration statement shall agree to
customary provisions for indemnification and contribution (consistent
with the other provisions of this Article VIII) in respect of losses,
claims, damages, liabilities and expenses of the underwriters of such
offering.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, requests and other communications
hereunder shall be in writing and will be deemed to have been duly
given and received by any party hereto and any permitted assignees
thereof (i) when personally delivered to the appropriate Notice
Person (as defined below), (ii) when sent by telefax to the
appropriate Notice Person at the number listed below for such Notice
Person, (iii) two (2) business days after the day on which the same has
been delivered prepaid to an international courier service for delivery
to the appropriate Notice Person, or (iv) five (5) business days after
the deposit in the United States mail, registered or certified, return
receipt requested, postage prepaid, for delivery to the appropriate
Notice Person, in each case addressed to the following addresses:
(i) if to PRGX: PRG-Schultz International, Inc.
2300 Windy Ridge Parkway
Suite 100 North Tower
Atlanta, Georgia 30339-8426
Attn: Clinton D. McKellar, Esq.
General Counsel
Telephone: (770) 779-3900
Facsimile: (770) 779-3034
copy to: Arnall Golden Gregory LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attn: Jonathan Golden, Esq.
Telephone: (404) 873-8705
Facsimile: (404) 873-8701
(ii) If to the Holder(s): Blum Strategic Partners II, L.P.
909 Montgomery Street
Suite 400
San Francisco, California 94133
Attn: Murray Indick
Telephone: (415)-434-1111
Facsimile: (415)-434-3130
CUSIP NO. 69357C107 SCHEDULE 13D Page 47 of 48
PRGX or any Holder (collectively, the "Notice Persons") from time to
time may change its or his or her address, telefax number or other
information for the purpose of notices to the specified parties by
giving notice specifying such change to the other Notice Persons.
9.2 Assignment. Subject to and without limiting the provisions of
Article VIII hereof, neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to
do so will be void. Subject to the preceding sentence, this Agreement
is binding upon, inures to the benefit of, and is enforceable by the
parties hereto and their respective successors and permitted assigns.
9.3 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving such
term or condition. No waiver by any party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.
9.4 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf
of each party hereto.
9.5 Remedies. Each party hereto will be entitled to enforce any
right granted to such party by any provision of this Agreement
specifically to recover damages caused by reason of any breach of any
provision of this Agreement and to exercise all other rights granted
by law. The parties hereto agree and acknowledge that money damages
may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction (without
posting any bond or other security) for specific performance and
for other injunctive relief in order to enforce or prevent violation
of the provisions of this Agreement.
9.6 Entire Agreement. This Agreement supersedes all prior
discussions and agreements among the parties hereto with respect
to the subject matter hereof and contains the sole and entire
agreement among the parties hereto with respect to the subject
matter hereof.
9.7 Captions. The captions used in this Agreement have been
inserted for convenience of reference only and do not define or
limit the provisions hereof.
9.8 Exhibits and Schedules. All exhibits and schedules, if any,
referred to in this Agreement, all attachments to such exhibits or
schedules, and any other attachment to this Agreement are hereby
incorporated by reference into this Agreement and hereby are made
a part of this Agreement as if set out in full herein.
9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia
applicable to a contract executed and performed in such State,
without giving effect to the conflicts of laws principles thereof.
CUSIP NO. 69357C107 SCHEDULE 13D Page 48 of 48
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
9.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction.
9.12 No Third Party Beneficiary. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
PRG-SCHULTZ INTERNATIONAL, INC.,
a Georgia corporation
By: /s/ John M. Cook
Name: John M. Cook
Title: President and Chief Executive Officer
BLUM STRATEGIC PARTNERS II, L.P.,
a Delaware limited partnership
By: BLUM STRATEGIC GP II, L.L.C.,
a Delaware limited liability company
By: /s/ John C. Walker
Name: John C. Walker
Title: Managing Member