As filed with the Securities and Exchange Commission on September 23, 1998
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
The Profit Recovery Group International, Inc.
(Exact name of issuer as specified in its charter)
Georgia 58-2213805
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2300 Windy Ridge Parkway, Suite 100 North, Atlanta,
Georgia 30339-8426 (Address of principal executive
offices, including zip code)
The Profit Recovery Group International, Inc. 1996 Stock Incentive Plan
(f/k/a 1996 Stock Option Plan)
(Full title of the plan)
-------------------
Clinton McKellar, Jr., Esq. Copy to:
The Profit Recovery Group International, Inc.
2300 Windy Ridge Parkway B. Joseph Alley, Jr., Esq.
Suite 100 North Arnall Golden & Gregory, LLP
Atlanta, Georgia 30339-8426 2800 One Atlantic Center
(Name and address of agent for service) 1201 West Peachtree Street
(770) 779-3051 Atlanta, Georgia 30309-3450
(Telephone number, including area code, of (404) 873-8688
agent for service)
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<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities to be Amount to be Offering Price Per Share Aggregate Offering Price Amount of
Registered Registered (1) (1) Registration Fee (1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par 1,000,000 $27.6875 $27,687,500 $8,168.00
value per share
==============================================================================================================================
</TABLE>
(1) The offering price for such shares is estimated pursuant to Rule 457(c)
and (h) under the Securities Act of 1933, as amended, solely for the
purpose of calculating the registration fee and is based upon the
average of the high and low prices of the Registrant's Common Stock on
September 21, 1998 as quoted on The Nasdaq Stock Market.
545925.3
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents heretofore filed by The Profit Recovery Group
International, Inc. (the "Company" or the "Registrant") with the Securities and
Exchange Commission (the "Commission") hereby are incorporated herein by
reference as of their respective dates:
(1) The Company's Annual Report on Form 10-K, as amended, for the year
ended December 31, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998;
(3) The Company's Current Reports on Form 8-K filed on August 12, 1998.
(4) The description of the Company's Common Stock as contained in the
Company's Registration Statement on Form 8-A (Registration No.
0-28000) as declared effective by the Commission on March 26,
1996.
In addition, all reports and documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and made a part hereof from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
Item 5. Interest of Named Experts and Counsel
Certain legal matters in connection with the Common Stock covered by
this Prospectus are being passed upon by Arnall Golden & Gregory, LLP. Jonathan
Golden, the sole stockholder of Jonathan Golden P.C. (a partner of Arnall Golden
& Gregory, LLP), is a director of the registrant, and beneficially owns 882,928
shares of Company Common Stock. As of the date hereof, attorneys with Arnall
Golden & Gregory, LLP beneficially own an aggregate of approximately 900,000
shares of the registrant's Common Stock.
Item 6. Indemnification of Directors and Officers
Article 8 of the Company's Articles of Incorporation and Article VII of
the Company's Bylaws set forth the extent to which the Company's directors and
officers may be indemnified against liabilities they may incur while serving in
such capacities. Such indemnification will be provided to the fullest extent
allowed by the Georgia Business Corporation Code, as amended from time to time.
Under these indemnification provisions, the Company is required to indemnify any
of its directors and officers against any reasonable expenses (including
attorneys' fees) incurred by such party in the defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
such person was made a party, or in defense to any claim, issue or matter
therein, by reason of the fact that such person is or was a director or officer
of the Company or who, while a director or officer of the Company, is or was
serving at the Company's request as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise to the extent that such director or
officer has been successful, on the merits or otherwise, in such defense. The
Company also is required to indemnify any of its directors or officers against
any liability incurred in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the name of the Company, in which
event, additional determinations must be made before
II-1
<PAGE>
indemnification is provided) by reason of the fact that he or she is or was a
director or officer of the Company who, while a director or officer of the
Company, is or was serving at the Company's request as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, if such director or
officer acted in a manner he or she believed in good faith to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The Company may also provide advances of expenses incurred by a director or
officer in defending such action, suit or proceeding upon receipt of a written
affirmation of such officer or director that he or she has met certain standards
of conduct and an undertaking by or on behalf of such officer or director to
repay such advances unless it is ultimately determined that he or she is
entitled to indemnification by the Company.
The Company's Articles of Incorporation contain a provision which
eliminates, to the fullest extent permitted by law, director liability for
monetary damages for breaches of the fiduciary duty of care or any other duty as
a director.
Pursuant to Sections 14-2-851 through 14-2-857 of the Georgia Business
Corporation Code, as amended, the directors, officers, employees and agents of
the Company may, and in some cases must, be indemnified by the Company under
certain circumstances against expenses and liabilities incurred by or imposed
upon them as a result of actions, suits or proceedings brought against them as
directors, officers, employees and agents of the Company (including actions,
suits or proceedings brought against them for violations of the federal
securities laws).
The Company has entered into Indemnification Agreements with each of
its directors and certain executive officers ("Indemnitees"). Pursuant to such
agreements, the Company shall indemnify each Indemnitee whenever he or she is or
was a party or is threatened to be made a party to any proceeding, including
without limitation any such proceeding brought by or in the right of the
Company, because he or she is or was a director or officer of the Company or is
or was serving at the request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, or because
of anything done or not done by the Indemnitee in such capacity, against
expenses and liabilities (including the costs of any investigation, defense,
settlement or appeal) actually and reasonably incurred by the Indemnitee or on
his or her behalf in connection with such proceeding, if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that an Indemnitee did not act in
good faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his or her conduct
was unlawful. If in the judgment of the Board of Directors of the Company an
Indemnitee is reasonably likely to be entitled to indemnification pursuant to
the Agreement, all reasonable expenses incurred by or on behalf of such
Indemnitee shall be advanced from time to time by the Company to the Indemnitee
within thirty (30) days after the Company's receipt of a written request for an
advance of expenses by such Indemnitee, whether prior to or after final
disposition of a proceeding.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing provisions
of the Georgia Business Corporation Code and the Company's Articles and Bylaws,
the Company has been informed that indemnification is considered by the
Securities and Exchange Commission to be against public policy and therefore
unenforceable.
The Registrant currently maintains an insurance policy which insures
the directors and officers of the Registrant against certain liabilities,
including certain liabilities under the 1933 Act.
Pursuant to the Registration Rights Agreement dated April 29, 1995
between predecessors of the Company, Third Berkshire Fund III, A Limited
Partnership, Prudential Securities Incorporated, Garth H. Greimann, a director
of the Company, and certain other affiliates of Third Berkshire Associates, the
general partner of Third Berkshire Fund III, A Limited Partnership, the Company
is obligated to pay certain expenses incurred by Mr. Greimann in connection with
the exercise of rights under the Registration Rights Agreement.
Pursuant to the Underwriting Agreement entered into by the Company in
connection with its initial public offering of Common Stock and the Underwriting
Agreement entered into in connection with its secondary public
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<PAGE>
offering of Common Stock in March 1998, the Underwriters thereunder have agreed
to indemnify the directors and officers of the Registrant and certain other
persons against certain civil liabilities.
Pursuant to the 1996 Stock Incentive Plan (the "Plan"), in addition to
such other rights of indemnification that they may have as directors of the
Company or as members of the Compensation Committee of the Board of Directors of
the Company (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.
Item 8. Exhibits
Exhibit
Number Description
*4.1 Specimen Stock Certificate
4.2 Applicable provisions of the Articles of Incorporation and Bylaws
of the Registrant (incorporated by reference to Exhibits 3.1 and
3.2 of the Registrant's Registration Statement on Form S-1
(Registration No. 333-1086))
5 Opinion of Arnall Golden & Gregory, LLP
10.1 1996 Stock Incentive Plan
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Arnall Golden & Gregory, LLP (included in Exhibit 5)
23.3 Consent of ERNST & YOUNG Entrepreneurs
- ---------------------------
* Incorporated by reference to Exhibit of same number of the Registrant's
Registration Statement on Form S-1 (Registration No. 333-1086).
Item 9. Undertakings
A. Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the 1933 Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
II-3
<PAGE>
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraph (A.)(1)(i) and
(A.)(1)(ii) shall not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. Subsequent Documents Incorporated by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Indemnification of Officers, Directors and Controlling Persons.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 6 above, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on September 21, 1998.
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By: /s/ John M. Cook
John M. Cook
Chairman of the Board and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John M. Cook, Clinton McKellar, Jr. and Donald E.
Ellis, Jr. and each of them, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
or her name, place, and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys in fact and agents, or any of
them, or their or his or her substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS AND DIRECTORS:
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ John M. Cook Chairman of the Board, Chief September 21, 1998
John M. Cook Executive Officer and Director
(Principal Executive Officer)
/s/ Donald E. Ellis, Jr. Senior Vice President - Finance,
Donald E. Ellis, Jr. Chief Financial Officer and Treasurer
(Principal Financial Officer) September 21, 1998
/s/ Michael R. Melton Vice President - Finance September 21, 1998
Michael R. Melton (Principal Accounting Officer)
/s/ John M. Toma Vice Chairman and Director September 21, 1998
- ------------------------------------
John M. Toma
/s/ Michael A. Lustig President and Director September 21, 1998
- ------------------------------------
Michael A. Lustig
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE>
/s/ Stanley B. Cohen Director September 21, 1998
- ------------------------------------
Stanley B. Cohen
/s/ Marc S. Eisenberg Director September 21, 1998
- ------------------------------------
Marc S. Eisenberg
/s/ Jonathan Golden Director September 21, 1998
Jonathan Golden
/s/ Garth H. Greimann Director September 21, 1998
- ------------------------------------
Garth H. Greimann
/s/ Fred W. I. Lachotzki Director September 21, 1998
Fred W. I. Lachotzki
/s/ E. James Lowrey Director September 21, 1998
- ------------------------------------
E. James Lowery
</TABLE>
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<PAGE>
EXHIBIT INDEX
Exhibit
*4.1 Specimen Stock Certificate
4.2 Applicable provisions of the Articles of Incorporation and
Bylaws of the Registrant (incorporated by reference to Exhibits
3.1 and 3.2 of the Registrant's Registration Statement on Form
S-1 (Registration No. 333-1086))
5 Opinion of Arnall Golden & Gregory, LLP
10.1 1996 Stock Incentive Plan
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Arnall Golden & Gregory, LLP (included in Exhibit 5)
23.3 Consent of ERNST & YOUNG Entrepreneurs
- ---------------------------
* Incorporated by reference to Exhibit of same number of the Registrant's
Registration Statement on Form S-1 (Registration No. 333-1086).
(404) 873-8500
(404) 873-8501
September 23, 1998
The Profit Recovery Group International, Inc.
2300 Windy Ridge Parkway
Suite 100 North
Atlanta, Georgia 30339-8426
Re: Registration Statement on Form S-8; Stock Incentive Plan
Ladies and Gentlemen:
This opinion is rendered in connection with the proposed issue and sale by The
Profit Recovery Group International, Inc., a Georgia corporation (the
"Company"), of up to 1,000,000 shares of the Company's Common Stock, no par
value (the "Shares"), pursuant to the Company's Stock Incentive Plan (the
"Plan") upon the terms and conditions set forth in the Plan and in the
Registration Statement on Form S-8 (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"). We have acted as counsel for the Company in
connection with the issuance and sale of the Shares by the Company.
In rendering the opinion contained herein, we have relied in part upon
examination of the Company's corporate records, documents, certificates and
other instruments and the examination of such questions of law as we have
considered necessary or appropriate for the purpose of this opinion. Based upon
the foregoing, we are of the opinion that the Shares have been duly and validly
authorized and when sold in the manner contemplated by the Plan, and (i)
assuming that the purchase price of, or value of other consideration received in
respect of, each of the Shares will equal or exceed the stated value thereof,
(ii) upon receipt by the Company of payment in full therefor as provided
therein, and (iii) upon issuance pursuant to a current prospectus in conformity
with the Act, they will be legally issued, fully paid and non-assessable.
545925.3
<PAGE>
We consent to the filing of this opinion as an exhibit to the Registration
Statement. This consent is not to be construed as an admission that we are a
party whose consent is required to be filed with the Registration Statement
under the provisions of the Act.
Sincerely,
/s/ ARNALL GOLDEN & GREGORY, LLP
ARNALL GOLDEN & GREGORY, LLP
545925.3
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
1996 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of The Profit Recovery Group International, Inc. 1996 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.;
515080.4
<PAGE>
(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
power of all classes of stock in one of the other corporations in the chain.
515080.4
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<PAGE>
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, NonQualified 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 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.
515080.4
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<PAGE>
(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 4,500,000 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) 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.
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
515080.4
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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
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 Incentive Stock Option shall be exercised more than ten years
(or, in the case of 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.
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(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 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
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<PAGE>
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
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
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<PAGE>
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
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 NonQualified
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
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"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.
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
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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
the exercise of Options or SARs. Notwithstanding the foregoing, Options granted
prior to the date specified in (i) above may extend beyond that date.
515080.4
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<PAGE>
Independent Auditors' Consent
The Board of Directors
The Profit Recovery Group International, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of The Profit Recovery Group International, Inc. of our report dated January
31, 1998, relating to the consolidated balance sheets of The Profit Recovery
Group International, Inc. and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of earnings, shareholders' equity (deficit),
and cash flows for each of the years in the three-year period ended December 31,
1997, which report appears in the December 31, 1997 annual report on Form 10-K,
as amended, of The Profit Recovery Group International, Inc.
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Atlanta, Georgia
September 22, 1998
545925.3
ERNST & YOUNG
ENTREPRENEURS
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Profit Recovery Group International, Inc.:
We consent to the use of our report, incorporated by reference dated January 31,
1998, relating to the consolidated balance sheet of Financiere Alma, S.A. and
subsidiaries as of December 31, 1997 and the related consolidated statements of
earnings, shareholders' equity and cash flows for the three months ended
December 31, 1997, which report appears in the December 31, 1997 annual report
on Form 10-K of The Profit Recovery Group International, Inc.
ERNST & YOUNG Entrepreneurs
Departement d'E&Y Audit
Any Antola
Paris, France
September 21, 1998
545925.3
