PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING ON MAY 15, 2002
The undersigned shareholder hereby appoints John M. Cook, Donald E. Ellis,
Jr., Clinton McKellar, Jr. or any of them, with full power of substitution, to
act as proxy for, and to vote the stock of, the undersigned at the Annual
Meeting of Shareholders of PRG-Schultz International, Inc. (the "Company") to be
held on May 15, 2002, and any adjournments or postponements thereof. The
undersigned acknowledges receipt of this Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated April 16, 2002, and grants
authority to said proxies, or their substitutes, and ratifies and confirms all
that said proxies may lawfully do in the undersigned's name, place and stead.
The undersigned instructs said proxies to vote as indicated hereon.
THE PROXIES SHALL VOTE AS DIRECTED ON THIS PROXY CARD, OR IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE LISTED NOMINEES, "FOR" THE
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION, "AGAINST" THE SHAREHOLDER
PROPOSAL TO REDEEM THE COMPANY'S SHAREHOLDER PROTECTION RIGHTS AGREEMENT, "FOR"
THE AMENDMENT TO THE STOCK INCENTIVE PLAN, AND "FOR" THE AMENDMENT TO THE
EMPLOYEE STOCK PURCHASE PLAN.
Please Vote, Sign, Date And Return This Proxy Card Promptly Using The Enclosed
Envelope.
1. Election of Class III Directors
|_| FOR the nominees listed below |_| FOR the nominees listed |_| WITHHOLD AUTHORITY to vote for
below except as marked to all nominees listed below
the contrary
|
(Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, strike a
line through that nominee's name in the list below)
CLASS III DIRECTOR
NOMINEES: Arthur N. Budge, Jr. N. Colin Lind Thomas S. Robertson Jackie M. Ward
|
(Continued on the Reverse Side)
2. Proposal to approve an amendment to the Company's Articles of Incorporation
to provide that shareholders may only remove directors for cause.
FOR |_| AGAINST |_| ABSTAIN |_|
3. Shareholder proposal to redeem the Company's Shareholder Protection Rights
Agreement. The Board of Directors recommends a vote "AGAINST" Proposal 3.
FOR |_| AGAINST |_| ABSTAIN |_|
4. Proposal to approve an increase in the number of shares available for
issuance under the Company's Stock Incentive Plan by 1,750,000 shares.
FOR |_| AGAINST |_| ABSTAIN |_|
5. Proposal to approve an increase in the number of shares available for
issuance under the Company's Employee Stock Purchase Plan by 1,500,000
shares.
FOR |_| AGAINST |_| ABSTAIN |_|
6. In the discretion of the proxies, upon such other matters as may properly
come before the meeting or any adjournment thereof.
Dated: ___________________, 2002
Signature
Signature (if held jointly)
Title(s)
(Shareholders should sign exactly as name
appears on stock. Where there is more
than one owner, each should sign.
Executors, Administrators, Trustees and
others signing in a representative
capacity should so indicate.)
ANNEX A
THE PRG-SCHULTZ INTERNATIONAL, INC.
STOCK INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of The Profit Recovery Group International, Inc. Stock
Incentive Plan (the "Plan") is to enable The Profit Recovery Group
International, Inc. (the "Company") to attract, retain and reward directors,
officers and other employees of, and consultants and advisors to, the Company,
and any Subsidiaries, Parent or Affiliates thereof, and strengthen the mutuality
of interests between such persons and the Company's shareholders, by offering
such persons performance based stock incentives and/or other equity interests or
equity-based incentives in the Company.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any corporation, partnership or other entity
controlled by, or under common control with, the Company. For these purposes,
control shall consist of the ownership, either directly or indirectly, of more
than 50% of the ownership interests of an entity.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(d) "Committee" means the Committee referred to in Section 3 of the Plan.
If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan may be exercised by the Board, as set forth in
Section 3 hereof.
(e) "Company" means The Profit Recovery Group International, Inc., a
corporation organized under the laws of the State of Georgia, or any successor
corporation.
(f) "Fair Market Value" means, for purposes of determining the exercise
price for a Stock Option or SAR granted hereunder, as of any given date:
(i) if the Stock is listed on an established stock exchange or
exchanges, or traded on the Nasdaq National Market System ("Nasdaq/NMS")
the closing price of the Stock as listed thereon on the applicable day, or
if no sale of Stock has been made on any exchange on that date, on the next
preceding day on which there was a sale of Stock;
(ii) if the Stock is not listed on an established stock exchange or
Nasdaq/NMS but is instead traded over-the-counter, the mean of the dealer
"bid" and "ask" prices of the Stock in the over-the-counter market on the
applicable day, as reported by the National Association of Securities
Dealers, Inc.;
(iii) if the Stock is not listed on any exchange or traded
over-the-counter, the value as determined in good faith by the Committee;
(g) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(h) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(i) "Optionee" means any person holding an Option in accordance with the
terms of this Plan.
(j) "Parent" means any corporation (other than the Company) and any
successor corporation in an unbroken chain of corporations ending with the
Company if each of the corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
(k) "Plan" is defined in Section 1 hereof and includes the Plan as
hereinafter amended from time to time.
(l) "Plan Participant" means any person granted an Option SAR or Stock
Award pursuant to the Plan.
(m) "SAR" means a stock appreciation right which entitles a Plan
Participant to receive, in cash or Stock (as determined in accordance with
Section 6(g)) value equal to all or a portion of the excess of: (a) the Fair
Market Value of a specified number of shares of Stock at the time of exercise,
over (b) an exercise price established by the Committee.
(n) "Stock" means the common stock of the Company.
(o) "Stock Award" means a grant of shares of Stock or of a right to receive
shares of Stock (or their cash equivalent or a combination of both) in the
future.
(p) "Stock Option" or "Option" means any option to purchase shares of Stock
granted pursuant to the Plan.
(q) "Subsidiary" means any corporation (other than the Company) and any
successor corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
2
power of all classes of stock in one of the other corporations in the chain.
SECTION 3. ADMINISTRATION.
(a) By Committee. The Plan shall be administered by a Committee of not less
than two Directors who are not employees of the Company, who shall be members of
the Board and who shall serve at the pleasure of the Board. The functions of the
Committee specified in the Plan may be exercised by the Board, if and to the
extent that no Committee exists which has the authority to so administer the
Plan.
(b) Authority of Committee The Committee shall have full authority to
grant, pursuant to the terms of the Plan, Stock Options, SARs and Stock Awards
to directors, officers and other key employees, consultants and advisors
eligible to be Plan Participants under Section 5 hereof. The Committee shall
have the authority to adopt, alter and repeal such rules, guidelines and
practices governing the Plan as it shall, from time to time, deem advisable; to
interpret the terms and provisions of the Plan and any award under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan. Without limiting the generality of the foregoing, the Committee
shall have the authority:
(i) to select the directors, officers and other key employees of,
and consultants and advisors to, the Company and any Subsidiaries,
Parent and Affiliate to whom Stock Options, SARs and other Stock
Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, SARS and other Stock Awards or
any combination thereof are to be granted hereunder to one or more
eligible persons;
(iii) to determine the number of shares subject to each such
Option, SAR and other Stock Award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option, SAR or other Stock Award granted
hereunder including, but not limited to, the exercise price, or any
vesting, acceleration, or forfeiture restrictions regarding any
Option, SAR or other Stock Award and/or the shares of Stock relating
thereto, or any other restrictions and to waive any such terms or
conditions in each case on such factors as the Committee shall
determine, in its sole discretion; and
(v) to determine whether and under what circumstances cash
payments shall be made upon the termination of a Stock Option, SAR or
other Stock Award, and whether and under what circumstances Stock
acquired pursuant to the exercise of a Stock Option or SAR or pursuant
3
to the grant of a Stock Award shall be repurchased by the Company.
(c) Committee Decisions Final and Binding. All decisions made by the
Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and Plan Participants.
(d) Indemnification. In addition to such other rights of indemnification
that they may have as directors of the Company or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his or her duties.
SECTION 4. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 12,625,000 shares (including shares subject to previous
grants under the Company's 1996 Stock Option Plan), subject to adjustment as set
forth herein, increased from time to time by action of the Board of Directors
and the Stockholders of the Company. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares. If any outstanding
Option, SAR or other Stock Award under the Plan expires or is terminated, the
shares allocated to the unexercised portion of such Option, SAR or other Stock
Award shall again be available for future Stock Option grants.
Notwithstanding the foregoing,
(i) The maximum number of shares that may be covered by awards
granted to any one individual pursuant to Section 6 (relating to
Options and SARs) shall be 500,000 shares during any consecutive
12 month period.
(ii) On or before March 12, 2002, the maximum number of shares that
may be covered by Stock Awards granted to any one individual
pursuant to Section 7 shall be 500,000 shares during any
consecutive 12 month period. After March 12, 2002, the maximum
number of shares that may be covered by Stock Awards granted to
any one individual pursuant to Section 7 shall be 300,000 shares
during any consecutive 12 month period. The maximum number of
shares covered by Stock Awards that may be granted after March
4
12, 2002 pursuant to Section 7 shall be, in the aggregate,
300,000 shares.
In the event of any transaction described in Section 8(d) hereof, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the individual maximums set forth
above, in the number and option price of shares subject to outstanding Options
and SARs and in the number of shares subject to outstanding Stock Awards such
that each Plan Participant will continue to hold the same economic equivalent he
had immediately prior to such transaction and such that all maximums will be
increased or decreased in accordance with such transaction, provided that the
number of shares subject to any such award shall always be a whole number.
SECTION 5. ELIGIBILITY.
Directors, officers and key employees of, and consultants and advisors to,
the Company and any Subsidiaries, Parent and Affiliate thereof who are
responsible for or contribute to the management, growth and/or profitability of
the business of the Company and/or any Subsidiaries, Parent and Affiliate
thereof are eligible to be Plan Participants and to receive awards under the
Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS AND SARS.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options, and (ii) Non-Qualified Stock Options. The Committee shall have
the authority to grant to any eligible person Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options; provided, however,
that no person who is not an employee of the Company, its Parent or its
Subsidiaries shall be eligible to be granted Incentive Stock Options.
Options and SARs granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Designation. Each Option granted under the Plan shall be clearly
identified at the time of grant as an Incentive Stock Option or a Non-Qualified
Stock Option. An Incentive Stock Option may not be granted in tandem stock
option arrangements under the Plan (i.e., where an Incentive Stock Option is
issued together with a Non-Qualified Stock Option and the exercise of either
type of Option affects the right to exercise the other type of Option).
(b) Written Agreement. Each Option and SAR granted under the Plan shall be
evidenced by a written agreement in such form as the Committee shall from time
to time approve. All such agreements shall comply with and be subject to the
terms of the Plan.
(c) Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 6 shall be established by the Committee or shall be
5
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price shall not be less than the
greater of 100% of the Fair Market Value or the par value of a share of Stock as
of the Pricing Date, as defined below. However, if the Plan Participant owns
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary or Parent, the Exercise Price of an Incentive
Stock Option granted to such Plan Participant shall not be less than 110% of the
Fair Market Value of a share of Stock as of the Pricing Date. For purposes of
the preceding sentence, the "Pricing Date" shall be the date on which the Option
or SAR is granted, except that the Committee may provide that: (i) the Pricing
Date is the date on which the recipient is hired or promoted (or similar event),
if the grant of the Option or SAR occurs not more than 90 days after the date of
such hiring, promotion or other event; and (ii) if an Option or SAR is granted
in tandem with, or in substitution for, an outstanding award, the Pricing Date
is the date of grant of such outstanding award.
(d) Term. The term of each Stock Option and SAR shall be fixed by the
Committee, but no Stock Option granted on or before March 12, 2002 shall be
exercised more than ten years (or, in the case of an Incentive Stock Option
granted to an employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
or Parent, more than five years) after the date the Option is granted. Stock
Options and SARs granted after March 12, 2002 shall not be exercised more than
seven years after the date the Option is granted.
(e) Exercisability. Stock Options and SARs shall be exercised at such time
or times and subject to such terms and conditions as shall be determined by the
Committee at or after grant. If the Committee provides, in its sole discretion,
that any Stock Option or SAR is exercisable only in installments, the Committee
may waive such installment exercise provisions at any time at or after grant in
whole or in part, based on such factors as the Committee shall determine, in its
sole discretion.
(f) Method of Exercise. Subject to whatever installment exercise provisions
apply pursuant to Section 6(e) hereof, Options and SARs may be exercised in
whole or in part at any time during the term thereof, by giving written notice
of exercise to the Company specifying the number of shares to be purchased or
the amount of the SAR to be exercised.
Such notice shall be accompanied by payment in full of the purchase price
in the case of an Option, either by cash, check, note or such other instrument
as the Committee may accept. As determined by the Committee, in its sole
discretion, at or after grant, payment in full or in part may also be made in
the form of Stock already owned by the Optionee based, in each case, on the fair
market value of the Stock on the date the Option is exercised, as determined for
this purpose by the Committee in its sole discretion; provided, however, that in
no event shall payment in full or in part for the exercise of an Option be made
with any Stock which, as of the date of exercise of the Option, has been owned
by the Optionee less than six (6) months. If the Committee permits such payment
in the form of Stock, the certificate or certificates representing the shares of
6
Stock to be delivered shall be duly executed in blank by the Optionee or shall
be accompanied by a stock power duly executed in blank suitable for purposes of
transferring such shares to the Company. Fractional shares of Stock will not be
accepted in payment of the purchase price of shares acquired upon exercise of
the Option.
No shares of Stock shall be issued until full payment therefor has been
made.
(g) Settlement of Award. Distribution following exercise of an Option or
SAR, and shares of Stock distributed pursuant to such exercise, shall be subject
to such conditions, restrictions and contingencies as the Committee may
establish. Settlement of SARs may be made in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies and may
waive any such conditions, restrictions and contingencies, at or after grant, or
otherwise accelerate the vesting of any Option or SAR, at any time, in its
discretion with respect to shares of Stock acquired pursuant to the exercise of
an Option or an SAR as the Committee determines to be desirable.
SECTION 7. STOCK AWARDS.
Each Stock Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine. These may include continuous
service and/or the achievement of performance measures. The performance measures
that may be used by the Committee for such Awards shall be measured by revenues,
income, or such other criteria as the Committee may specify. The Committee may
designate a single goal criterion or multiple goal criteria for performance
measurement purposes, with the measurement based on absolute Company or business
unit performance and/or on performance as compared with that of other
publicly-traded companies. If the right to become vested in a Stock Award
granted under this Section 7 is conditioned on the completion of a specified
period of service with the Company or any Subsidiary or Parent without
achievement of performance measures or other objectives being required as a
condition of vesting, then the required period of service for vesting shall be
not less than three years (subject to acceleration of vesting, to the extent
permitted by the Committee, in the event of the Participant's death, disability,
change in control or involuntary termination).
SECTION 8. MISCELLANEOUS.
(a) Non-Transferability of Options, SARs and Stock Awards. No Option, SAR
or Stock Award shall be transferable by a Plan Participant otherwise than by
will or by the laws of descent and distribution, and all Options and SARs shall
be exercisable, during the Plan Participant's lifetime, only by the Plan
Participant.
(b) Investment Representations. The Company may require any grantee, as a
condition of exercising an Option or SAR, to give written assurances in
substance and form satisfactory to the Company to the effect that such person is
acquiring the Stock subject to the Option or SAR for his own account for
7
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effect as the Company deems necessary
or appropriate in order to comply with federal and applicable state securities
laws.
(c) Compliance with Securities Laws. Each Option and SAR shall be subject
to the requirement that, if at any time counsel to the Company shall determine
that the listing, registration, or qualification of the shares subject to such
Option and SAR upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental or regulatory body, is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, such Option or SAR may not be exercised in whole or in part unless
such listing, registration, qualification, consent, or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration, or qualification.
(d) Recapitalization. If the outstanding shares of Stock are changed into
or exchanged for a different number or kind of shares or other securities of the
Company by reason of any recapitalization, reclassification, stock split, stock
dividend, combination, subdivision or similar transaction, then, subject to any
required action by the stockholders of the Company, the number and kind of
shares of Stock subject to outstanding Options, SARs or Stock Awards and
available under the Plan and price per share of Stock for any outstanding
Options and SARs shall be proportionately adjusted; provided, however, that no
fractional shares shall be issued or made subject to an Option, SAR or Stock
Award in making the foregoing adjustments. All adjustments made by the Committee
under this Section shall be final, conclusive and binding upon the holders of
Options, SARs and Stock Awards.
(e) Reorganization. If, while unexercised Options and/or SARs remain
outstanding under the Plan, the Company proposes to merge or consolidate with
another corporation, whether or not the Company is to be the surviving
corporation, or if the Company proposes to liquidate or sell or otherwise
dispose of substantially all of its assets or substantially all of the
outstanding shares of Stock of the Company are to be sold, then the Committee
may, in its sole discretion, either (i) make appropriate provision for the
protection of any such outstanding Options and SARs by the substitution on an
equitable basis of appropriate stock of the surviving corporation or its parent
in the merger or consolidation, or other reorganized corporation that will be
issuable in respect to the shares of Stock of the Company subject to such
Options and SARs, provided that, with respect to Incentive Stock Options, such
provision shall satisfy the requirement that no additional benefits shall be
conferred upon Optionees as a result of such substitution within the meaning of
Section 424(a) of the Code, and that the excess of the aggregate fair market
value of the shares subject to the Options immediately after such substitution
over the purchase price thereof is not more than the excess of the aggregate
fair market value of the shares subject to such Options immediately before such
substitution over the purchase price thereof, or (ii) upon written notice to the
Plan Participants, provide that all unexercised Options and SARs must be
exercised within a specified number of days of the date of such notice or they
will be terminated. In any such case, the Committee may, in its discretion,
accelerate the date on which outstanding Options and SARs become exercisable. In
8
no event, however, shall the Committee be obligated to take any action as a
result of any transaction described in this Section 8(e), it being acknowledged
that it is in the Committee's sole discretion to determine if, and to what
extent, the action authorized by this Section 8(e) shall be taken.
(f) Rights as a Shareholder. A Plan Participant shall have no rights as a
shareholder with respect to any shares subject to an Option or SAR until the
date of issue of a stock certificate to him or her for such shares and only
after such shares are fully paid. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
(g) Annual Limitation For Incentive Stock Options. To the extent that the
Fair Market Value (determined as of the date of grant of an Option) of shares of
Stock with respect to which an Incentive Stock Option first becomes exercisable
by an Optionee during any calendar year exceeds $100,000, such excess portion of
the Stock Option shall thereafter be treated as a Non-Qualified Stock Option.
SECTION 9. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any agreement pursuant to which an
Option, SAR or Stock Award is granted under the Plan shall confer upon any Plan
Participant any right with respect to the continuation of his employment or
other engagement by the Company or any Subsidiary, Parent or Affiliate or
interfere in any way with the ability of the Company or any Subsidiary, Parent
or Affiliate at any time to terminate such employment or other engagement or to
increase or decrease the compensation of the Plan Participant from the rate in
existence at the time of the grant of an award.
SECTION 10. OTHER EMPLOYEE BENEFITS.
The amount of any compensation deemed to be received by an Plan Participant
as a result of the exercise of an Option or the sale of shares received upon
such exercise will not constitute "earnings" with respect to which any other
benefits of such Plan Participant are determined, including, without limitation,
benefits under any pension, profit sharing, life insurance, or salary
continuation plan.
SECTION 11. WITHHOLDING.
The Company's obligation to deliver shares upon the exercise of any Option
or SAR granted under the Plan or to make any payments required by any option
agreement shall be subject to the grantee's satisfaction of any applicable
federal, state, and local income and employment tax and withholding requirements
in a manner and form satisfactory to the Company.
9
SECTION 12. GOVERNING LAW.
The Plan, all awards granted under the Plan and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Georgia.
SECTION 13. AMENDMENT OF THE PLAN.
The Board may at any time and from time to time amend, suspend, alter, or
discontinue the Plan in any respect, except that the Board may not, without the
approval of the Company's shareholders:
(a) except as expressly provided in Section 8(d) hereof, alter the total
number of shares reserved for issuance pursuant to the Plan;
(b) change the price at which Options and SARs may be granted pursuant to
Section 6(c) hereof;
(c) change the persons or class of persons eligible to participate in the
Plan;
(d) extend the maximum Option period under Section 6(d) hereof or the term
of the Plan described in Section 14(b) hereof; or
(e) materially increase the benefits accruing to Plan Participants.
The Committee may amend the terms of any award, prospectively or
retroactively, but, subject to Section 3 hereof, no such amendment shall impair
the rights of any holder without the holder's consent.
SECTION 14. EFFECTIVE DATE AND DURATION OF THE PLAN.
(a) Effective Date. The Plan shall become effective when approved by the
Company's shareholders.
(b) Termination. Unless the Plan is sooner terminated in accordance with
the terms herein, no further grants of awards may be made under the Plan after
the earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the shareholders and (ii) the date on
which all shares available for issuance under the Plan shall have been issued
pursuant to Stock Awards or the exercise of Options or SARs. Notwithstanding the
foregoing, Options granted prior to the date specified in (i) above may extend
beyond that date.
10
ANNEX B
PRG-SCHULTZ INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The Profit Recovery Group International, Inc. Employee Stock Purchase Plan
(the "Plan") is intended to encourage employee stock ownership by offering
employees of The Profit Recovery Group International, Inc. and certain of its
subsidiaries Purchase Rights (as such term is defined in Section 2 hereof) to
purchase shares of Common Stock. The Plan is intended to be an "employee stock
purchase plan" as defined in Section 423 of the Internal Revenue Code of 1986,
as amended (the "Code"). The provisions of the Plan shall, accordingly, be
construed in a manner consistent with the requirements of Section 423 of the
Code.
2. CERTAIN DEFINITIONS
"Base Pay" means regular straight-time and overtime earnings and
commissions received from the Company, including payments for incentive
compensation, but excluding other special payments.
"Board" means the Board of Directors of the Company.
"Committee" means the Compensation Committee of the Board.
"Common Stock" means the Common Stock, no par value per share, of the
Company.
"Company" means The Profit Recovery Group International, Inc. and each
Subsidiary (as defined in this Section 2).
"Custodian" means [TO BE DESIGNATED], whose address is [TO BE DESIGNATED],
or such other person as the Committee shall designate from time to time.
"Exercise Date" means the last day of a Purchase Period (as such term is
defined in Section 4(b) hereof), on which date all Participants' outstanding
Purchase Rights will automatically be exercised.
"Fair Market Value" means the closing sale price of a share of Common Stock
reported in the table entitled "Nasdaq National Market Issues" or any successor
table in The Wall Street Journal for such date or, if no shares of Common Stock
were traded on that date, on the next preceding day on which there was such a
trade.
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System.
"Participant" means an employee of the Company who has enrolled in the Plan
by filing a Participation Form (as such term is defined in Section 5 hereof)
with the Plan Administrator.
"Plan Administrator" means the [TO BE DESIGNATED] of the Company, or any
such other person so designated by the Committee.
"Purchase Right" means a Participant's option to purchase shares of Common
Stock that is deemed to be outstanding during a Purchase Period. A Purchase
Right represents an "option" as such term is used under Section 423 of the Code.
"Subsidiaries" means subsidiaries of The Profit Recovery Group
International, Inc. of which it owns the majority of the outstanding voting
shares and which have been designated by the Committee as Subsidiaries;
provided, however, that prior to any such designation by the Committee, each of
The Profit Recovery Group International I, Inc., The Profit Recovery Group
Canada, Inc., The ShapsGroup, Inc. and Accounts Payable Recovery Services, Inc.
shall be deemed a Subsidiary.
"Trading Day" refers to a day during which the Nasdaq National Market
System is available for trading shares of Common Stock.
3. ELIGIBILITY
(a) Participation in the Plan is voluntary. All employees of the Company,
including officers and directors, whose customary employment is at least 20
hours per week and 5 months per year who have been employed since the fifth day
of the first month of the preceding Purchase Period (January 5, 1997 for the
Purchase Period beginning July 1, 1997) are eligible to participate in the Plan.
(b) Notwithstanding any provision of the Plan to the contrary, no employee
may participate in the Plan:
(i) if following a grant of Purchase Rights under the Plan, the
employee would own, directly or by attribution pursuant to Section 424(d)
of the Code, stock, Purchase Rights or other stock options to purchase
stock representing 5% or more of the total combined voting power or value
of all classes of the Company's stock; or
(ii) to the extent a grant of Purchase Rights under the Plan would
permit the employee's rights to purchase stock under all the Company's Code
Section 423 employee stock purchase plans to accrue at a rate exceeding
$25,000.00, based on the Fair Market Value of the stock (at the time of
grant), for each calendar year in which such Purchase Right is outstanding.
4. SECURITIES SUBJECT TO THE PLAN AND PURCHASE PERIODS
(a) The Plan covers an aggregate of 2,625,000 shares of Common Stock
(subject to adjustment as provided in Section 15 hereof), which may be
authorized but unissued shares, reacquired shares or shares bought on the open
market. If any Purchase Right that shall have been granted shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares of Common Stock shall again become available for purposes of the Plan,
unless the Plan shall have been terminated.
(b) Except as discussed below for the first year the Plan is in effect,
there will be two purchase periods (each a "Purchase Period") each calendar
year. There will be only one Purchase Period in calendar 1997, which will begin
on July 1, 1997 and end on December 31, 1997. Thereafter, in each year that the
Plan is in effect, the first Purchase Period will begin on January 1 and end on
June 30 of each year that the Plan is in effect. The second Purchase Period will
begin on July 1 and end on December 31 of each year the Plan is in effect.
5. PARTICIPATION
Eligible employees become Participants in the Plan by authorizing payroll
deductions for that purpose through a form (the "Participation/Withdrawal Form")
filed with the Plan Administrator no later than fifteen (15) days prior to the
start date of a Purchase Period.
6. PAYROLL DEDUCTIONS
(a) In order to purchase Common Stock an employee must indicate on the
Participation/Withdrawal Form the contribution percentage he or she wishes to
authorize the Company to deduct at regular payroll intervals, in integral
percentage amounts ranging from 1% to 10% of such Participant's Base Pay for the
applicable payroll period, with a minimum deduction of $10.00 per payday and a
maximum aggregate deduction of $10,625.00 during each Purchase Period. The
Committee has the power, exercisable at any time prior to the start of a
Purchase Period, to increase or decrease the $10,625.00 maximum for that
Purchase Period. The maximum, as thus adjusted, will continue in effect from
Purchase Period to Purchase Period until the Committee once again exercises its
power to adjust the maximum. The Participation/Withdrawal Form will include
authorization for the Company to make payroll deductions from the Participant's
Base Pay.
(b) In order to comply with the Federal tax laws, a Participant may not be
granted Purchase Rights under the Plan and any other Code Section 423 employee
stock purchase plan of the Company with respect to more than $25,000.00 worth of
Common Stock for any calendar year such Purchase Rights to purchase Common Stock
are outstanding pursuant to the terms of such plans. The $25,000.00 limit is
determined
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according to the Fair Market Value of the Common Stock on the first day (grant
date) of the Purchase Period. Participants will be notified if these limitations
become applicable to them.
(c) The amounts deducted shall be credited to the Participant's account
under the Plan, but no actual separate account will be established by the
Company to hold such amounts. There shall be no interest paid on the balance
outstanding in a Participant's account. The deducted amounts may be commingled
with the general assets of the Company and may be used for its general corporate
purposes.
(d) Payroll deductions begin on the first payday of each Purchase Period,
and end on the last payday of each Purchase Period. Eligible employees may
participate in the Plan and purchase shares only by means of payroll deductions,
except as set forth in the following sentence. A Participant may not make any
separate cash payment into his or her account, except that employees on an
approved leave of absence may continue participating in the Plan, at the sole
discretion of the Plan Administrator, by making cash payments to the Company on
a normal payday equal to the amount of the normal payroll deduction had a leave
of absence not occurred. The right of a Participant on an approved leave of
absence to continue participating in the Plan shall terminate if such leave of
absence exceeds 90 days, unless and so long as the Participant's right to re-
employment by the Company after a longer leave is guaranteed by statute or
contract.
(e) So long as a Participant remains an employee of the Company, payroll
deductions will continue in effect from Purchase Period to Purchase Period,
unless at least fifteen (15) days prior to the first day of the next succeeding
Purchase Period the Participant:
(i) elects a different rate by filing a new Participation/Withdrawal
Form with the Plan Administrator; or
(ii) withdraws from the Plan in accordance with Section 9 hereof.
(f) Unless a Participant files with the Plan Administrator a new
Participation/Withdrawal Form electing to withdraw prior to 15 days before the
beginning of the affected Purchase Period as permitted under the Plan, such
Participant's payroll deductions will continue throughout such Purchase Period
and his or her Purchase Right to purchase Common Stock will be deemed to be
fully and automatically exercised on the last day of such Purchase Period with
respect to payroll deductions made during that period.
7. PURCHASE PRICE
(a) On the first day of each Purchase Period, a Participant is deemed to
have been granted a Purchase Right to purchase on the last day of the Purchase
Period as many full shares of Common Stock as such Participant will be able to
purchase with the payroll deductions credited to such Participant's account
during such period.
(b) The price at which each Purchase Right to purchase Common Stock may be
exercised is 85% of the Fair Market Value of the Common Stock on the Nasdaq
National Market System on the first Trading Day of a Purchase Period.
(c) The number of shares purchasable by each Participant per Purchase
Period will be the number of whole shares obtained by dividing the amount
collected from the Participant (through payroll deductions during that Purchase
Period) by the purchase price in effect for that Purchase Period. Any amount
remaining in the Participant's account after such application will be held for
the purchase of Common Stock in the next Purchase Period.
8. EXERCISE OF PURCHASE RIGHT
(a) Each outstanding Purchase Right will be exercised automatically on the
Exercise Date. The exercise of the Purchase Right is to be effected by applying
the amount credited to each Participant's account as of the Exercise Date to the
purchase on the Exercise Date of whole shares of Common Stock at the purchase
price in effect for the Purchase Period.
3
(b) Fractional shares will not be issued under the Plan, and any amount
remaining in the Participant's account after such application will be held for
the purchase of Common Stock in the next Purchase Period.
(c) If the number of shares for which Purchase Rights are exercised exceeds
the number of shares available in any Purchase Period under the Plan, the shares
available for sale will be allocated by the Plan Administrator pro rata among
the Participants in such Purchase Period in proportion to the relative amounts
in their accounts. Any amounts not thereby applied to the purchase of Common
Stock under the Plan will be refunded to the Participants after the end of the
Purchase Period.
9. WITHDRAWAL AND TERMINATION OF PURCHASE RIGHTS
(a) A Participant may withdraw from the Plan by providing written notice to
the Plan Administrator at any time prior to 15 days before the end of the
current Purchase Period. Such notice shall be on the Participation/Withdrawal
Form. The Participation/Withdrawal Form will permit such a Participant to make
the following election:
(i) The Participant may elect to immediately terminate his or her
outstanding Purchase Rights, and such withdrawal will become effective by
the tenth day following the Plan Administrator's receipt of the
Participant's Participation/Withdrawal Form, at which time all outstanding
Purchase Rights will be terminated and all accumulated payroll deductions
will be refunded without penalty; or
(ii) The Participant may elect to continue his or her participation in
the Plan through the end of the current Purchase Period, and thus exercise
such Participant's outstanding Purchase Rights on the following Exercise
Date, but terminate his or her participation in the Plan for subsequent
Purchase Periods. Payroll deductions for such a Participant will continue
until the end of the current Purchase Period. After the applicable Exercise
Date, no further Purchase Rights will be granted to the Participant, and no
further payroll deductions will be made.
(b) Except as otherwise provided by applicable law, any Participant who
withdraws from the Plan pursuant to Section 9(a) will not be eligible to rejoin
the Plan for the Purchase Period underway at the time of withdrawal, and will
have to re-enroll in the Plan by completing and filing a new
Participation/Withdrawal Form should such individual wish to resume
participation in a subsequent Purchase Period.
(c) If a Participant ceases to be an employee of the Company for any reason
during a Purchase Period, his or her outstanding Purchase Right will immediately
terminate, and all sums previously collected from such Participant during such
Purchase Period under the terminated Purchase Right will be refunded.
(d) The Committee may, at its option, treat any attempt to borrow by an
employee on the security of his or her accumulated payroll deductions as an
election under Section 9(a)(i) hereof to withdraw such deductions.
10. RIGHTS AS SHAREHOLDER
(a) A Participant is not a shareholder until the Participant exercises his
or her Purchase Right. Thus, a Participant will not have a right to any dividend
or distribution made prior to the Exercise Date. Following the Exercise Date,
however, the Participant shall have all of the rights of a shareholder with
respect to the shares purchased.
(b) Participants will be entitled to receive, as soon as practicable after
the Exercise Date, a stock certificate for the number of purchased shares upon a
written request made to the Custodian. The Custodian may impose upon, or pass
through to, the Participant a reasonable fee for withdrawal of shares of Common
Stock in the form of stock certificates. It is the responsibility of each
Participant to keep his or her address current with the Company through the Plan
Administrator and with the Custodian.
11. SALE OF COMMON STOCK ACQUIRED UNDER THE PLAN
(a) In general, participants who are not officers or directors of the
Company may sell the shares of Common Stock they acquire under the Plan at any
time without restriction. Officers and directors of the
4
Company should consult with legal counsel prior to attempting to sell or
otherwise dispose of any shares of Common Stock acquired under the Plan.
(b) A Participant shall immediately provide information to the Plan
Administrator if the Participant transfers any shares purchased through the Plan
within two (2) years from the date of grant of the related Purchase Right. Such
transfer shall include disposition by sale, gift or other manner. The
Participant may be requested to disclose the manner of the transfer, the date of
the transfer, the number of shares involved and the transfer price. By executing
the Participation/Withdrawal Form, each Participant obligates himself or herself
to provide such information to the Plan Administrator.
(c) The Company is authorized to withhold from any payment to be made to a
Participant, including any payroll and other payments not related to the Plan,
amounts of withholding and other taxes due in connection with any transaction
under the Plan, and a Participant's enrollment in the Plan will be deemed to
constitute his or her consent to such withholding.
12. PLAN ADMINISTRATION
(a) The Plan shall be administered by the Committee.
(b) The Committee shall have the plenary power, subject to and within the
limits of the express provisions of the Plan:
(i) to determine the commencement and termination date of the offering
of Common Stock under the Plan; and
(ii) to interpret the terms of the Plan, establish and revoke rules
for the administration of the Plan and correct or reconcile any defect or
inconsistency in the Plan.
(c) The Committee may delegate all or part of its authority to administer
the Plan to the Plan Administrator, who may in turn delegate the day-to-day
operations of the Plan to the Custodian. The Custodian will establish and
maintain, as agent for the Participants, accounts for the purposes of holding
shares of Common Stock and/or cash contributions as may be necessary or
desirable for the administration of the Plan.
(d) The Board may waive or modify any requirement that a notice or election
be made or filed under the Plan a specified period in advance in an individual
case or by adoption of a rule or regulation under the Plan, without the
necessity of an amendment to the Plan.
13. TRANSFERABILITY
(a) Any account maintained by the Custodian for the benefit of a
Participant with respect to shares acquired pursuant to the Plan may only be in
the name of the Participant; provided, however, that the Participant may elect
to maintain such account with right of joint ownership with such Participant's
spouse. Such election may only be made on a form (the "Joint Account Form")
provided by the Company.
(b) Neither payroll deductions credited to a Participant's account nor any
Purchase Rights of or other rights to acquire Common Stock under the Plan may be
assigned, transferred, pledged or otherwise disposed of by Participants other
than by will or the laws of descent and distribution, and during the lifetime of
a Participant, Purchase Rights may be exercised only by the Participant.
14. MERGER OR LIQUIDATION OF THE COMPANY
In the event the Company merges with another corporation and the Company is
not the surviving entity, or in the event all or substantially all of the stock
or assets of the Company are acquired by another company, or in the event of
certain other similar transactions, the Committee may, in connection with any
such transaction, cancel each outstanding Purchase Right and refund all sums
previously collected from Participants under the canceled Purchase Rights, or,
in its discretion, cause each Participant with outstanding Purchase Rights to
have his or her outstanding Purchase Right exercised immediately prior to such
5
transaction and thereby have the balance of his or her account applied to the
purchase of whole shares of Common Stock at the purchase price in effect for the
Purchase Period, which would be treated as ending with the effective date of
such transaction. The balance of the account not so applied will be refunded to
the Participant.
15. ADJUSTMENT FOR CHANGES IN CAPITALIZATION
To prevent dilution or enlargement of the rights of Participants under the
Plan, appropriate adjustments may be made in the event any change is made to the
Company's outstanding Common Stock by reason of any stock dividend, stock split,
combination of shares, exchange of shares or other change in the Common Stock
effected without the Company's receipt of consideration. Adjustments may be made
to the maximum number and class of securities issuable under the Plan, the
maximum number and class of securities purchasable per outstanding Purchase
Right and the number and class of securities and price per share in effect under
each outstanding Purchase Right. Any such adjustments will be made by the
Committee in its sole discretion.
16. AMENDMENT AND TERMINATION
The Committee may terminate or amend the Plan at any time; provided,
however, such termination or amendment may not affect or change Purchase Rights
previously granted under the Plan without the consent of the affected
Participant, and any amendment that effects any change in the aggregate number
of shares which may be issued under the Plan or changes the type of corporation
whose employees may receive options under the Plan shall be subject to
shareholder approval. If not sooner terminated by the Committee, the Plan shall
terminate at the time Purchase Rights have been exercised with respect to all
shares of Common Stock reserved for grant under the Plan.
17. SHAREHOLDER APPROVAL
The Plan is subject to the approval of shareholders of the Company in
accordance with the provisions of Georgia law.
18. NO EMPLOYMENT RIGHTS
Participation in the Plan will not impose any obligations upon the Company
to continue the employment of the Participant for any specific period and will
not affect the right of the Company to terminate such person's employment at any
time, with or without cause.
19. STOCK LEGEND
All shares of Common Stock issued pursuant to the Plan shall contain the
following legend: "The shares of Common Stock represented by this Certificate
have been issued on __________ pursuant to PRG-Schultz International, Inc.
Employee Stock Purchase Plan."
20. COSTS
Except as set forth in Section 10(b), costs and expenses incurred in the
administration of the Plan and the maintenance of accounts with the Custodian
will be paid by the Company, to the extent provided in this Section 20. Any
brokerage fees and commissions for the purchase of Common Stock under the Plan
(including shares of Common Stock purchased upon reinvestment of dividends and
distributions) will be paid by the Company, but any brokerage fees and
commissions for the sale of shares of Common Stock under the Plan by a
Participant will be borne by such Participant.
21. REPORTS
After the close of each Purchase Period, each Participant in the Plan will
receive a report from the Custodian indicating the amount of the Participant's
contributions to the Plan during the Purchase Period, the amount of the
contributions applied to the purchase of Common Stock for the Purchase Period,
the purchase
6
price per share in effect for the Purchase Period and the amount of
the contributions (if any) carried over to the next Purchase Period.
22. GOVERNING LAW
The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan will be determined in accordance with laws of
the State of Georgia, without giving effect to principles of conflicts of laws,
and applicable Federal law.
23. COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS
The Plan, the granting and exercising of Purchase Rights hereunder, and the
other obligations of the Company, the Plan Administrator and the Custodian under
the Plan will be subject to all applicable federal, state or international laws,
rules, and regulations, and to such approvals by or registrations with any
regulatory or governmental agency as may be required. The Company may, in its
discretion, postpone the issuance or delivery of shares of Common Stock upon
exercise of Purchase Rights until completion of such registration or
qualification of such shares of Common Stock or other required action under any
federal or state law, rule, or regulation, listing or other required action with
respect to any automated quotation system or stock exchange upon which the
shares of Common Stock or other Company securities are designated or listed, or
compliance with any other contractual obligation of the Company, as the Company
may consider appropriate in connection with the issuance or delivery of shares
of Common Stock in compliance with applicable laws, rules, and regulations,
designation or listing requirements, or other contractual obligations.
24. WITHHOLDING OF TAXES
By electing to participate in the Plan, each Participant acknowledges that
the Company and its participating Subsidiaries are required to withhold taxes
with respect to the amounts deducted from the Participant's Base Pay and
accumulated for the benefit of the Participant under the Plan, and each
Participant agrees that the Company and its participating Subsidiaries may
deduct additional amounts from the Participant's Base Pay when amounts are added
to the Participant's account, used to purchase common stock or refunded, in
order to satisfy such withholding obligations. If the Participant makes a
disposition, within the meaning of Section 424(c) of the Code and the
regulations promulgated thereunder, of any share or shares issued to such
Participant pursuant to such Participant's exercise of an option, and such
disposition occurs within the two-year period commencing on the day after the
option is being treated as granted for purposes of Section 423 of the Code or
within the one-year period commencing on the day after the Exercise Date, such
Participant shall, within ten (10) days of such disposition, notify the Company
thereof and thereafter immediately deliver to the Company any amount of federal,
state or local income taxes and other amounts which the Company informs the
Participant the Company is required to withhold. The Company may also satisfy
any applicable withholding amounts by deducting the necessary amounts of
withholding from the Participant's wages and, in the Committee's sole
discretion, any other amounts owed to or held for the account of the
Participant.
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