EXHIBIT 99.3
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of July __,
2005 (the "Effective Date") among PRG-XXXXXXX USA, INC., a Georgia corporation
(the "Company"), PRG-XXXXXXX INTERNATIONAL, INC., a Georgia corporation that
owns all of the capital stock of the Company ("PRGX"), and XXXXX X. XXXXXXX
("Executive").
The parties agree as follows:
1. Certain Definitions. Certain words or phrases with initial capital
letters not otherwise defined herein are to have the meanings set forth in
paragraph 8.
2. Employment. The Company shall employ Executive, and Executive accepts
employment with the Company, as of the Effective Date, upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date and ending as provided in paragraph 5 (the "Employment Period").
3. Position and Duties.
(a) During the Employment Period, Executive shall serve as the President
and Chief Executive Officer of the Company and is to have the normal duties,
responsibilities and authority of an executive serving in such position, subject
to the power of the board of directors of the Company (the "Company Board") and
the board of directors of PRGX (the "PRGX Board") to provide oversight and
direction with respect to such duties, responsibilities and authority, either
generally or in specific instances and consistent with such position.
(b) During the Employment Period, the PRGX Board shall nominate Executive
to serve as a member of the PRGX Board. Subject, as required, to reelection by
PRGX's shareholders, Executive shall serve as a member of the PRGX Board, with
no additional remuneration payable to Executive for that service. Upon the Date
of Termination, Executive shall, at the PRGX Board's request, resign from the
PRGX Board.
(c) During the Employment Period, the PRGX Board shall appoint Executive to
serve as president and chief executive officer of PRGX. Executive shall serve as
the president and chief executive officer of PRGX, with no additional
remuneration payable to Executive for that service. Upon the Date of
Termination, Executive shall, at the PRGX Board's request, resign from the
position of president and chief executive officer of PRGX.
(d) Executive shall report to the Company Board and the PRGX Board.
(e) During the Employment Period, Executive shall devote Executive's best
efforts and Executive's full professional time and attention (except for
permitted vacation periods and reasonable periods of illness or other
incapacity) to the Business and affairs of the Company, its subsidiaries and
affiliates. Executive shall perform Executive's duties and responsibilities to
the best of Executive's abilities in a diligent, trustworthy, business-like and
efficient manner. During the Employment Period, Executive shall not serve as a
director or a principal of another company or any charitable or civic
organization without the PRGX Board's prior consent, except that the PRGX Board
hereby approves and consents to Executive's continued service on the board of
directors of Interstate Hotels and Resorts, Inc. (or its successors) and on the
board of trustees of The Xxxxxxxx School, of Atlanta, Georgia.
(f) Executive shall perform Executive's duties and responsibilities
principally in the Atlanta, Georgia metropolitan area.
(g) Executive shall acquire, through purchase on the open market, that
number of shares of the Company's common stock as is required by any PRGX
Board-approved share ownership program applicable to all of the Company's senior
executives as may be in effect from time to time. Executive shall maintain this
minimum ownership requirement at all times during the Employment Period in
accordance with the provisions of the share ownership program.
4. Compensation and Benefits.
(a) Salary. The Company agrees to pay Executive a salary during the
Employment Period in installments based on the Company's payroll practices as
may be in effect from time to time. The Company shall set Executive's initial
salary at the rate of $500,000 per year ("Base Salary"). The Compensation
Committee of the PRGX Board shall review Executive's Base Salary from time to
time. The Compensation Committee of the PRGX Board may, in its sole discretion,
increase Executive's Base Salary, but may decrease Executive's Base Salary only
to the extent that the Company institutes a salary reduction generally and
ratably applicable to all senior executives of the Company. If the Company
modifies the Base Salary as defined, "Base Salary" in this Agreement is to refer
to the modified Base Salary.
(b) Annual Bonus.
(i) For fiscal year 2005, Executive is entitled to receive a bonus equal to
70% of Base Salary, prorated based on the number of days actually employed
during fiscal year 2005, payable to Executive in a lump sum not later than 75
days after the end of the fiscal year.
(ii) For each fiscal year following fiscal year 2005 during the Employment
Period, Executive shall be eligible to receive an annual bonus, with the annual
bonus potential to be between 70% of Base Salary (i.e., 70% upon achievement of
annual "target" performance goals) and a maximum of 140% of Base Salary (i.e.,
140% upon achievement of annual "maximum" performance goals), with the "target"
and "maximum" performance goals and bonus criteria to be defined and approved by
the Compensation Committee of the PRGX Board in advance for each fiscal year.
The Company shall pay any such annual bonus earned to Executive in a lump sum
not later than 75 days after the end of the fiscal year.
(c) Stock Options. Contemporaneously with Executive's entering into
employment with the Company, PRGX shall grant Executive a stock option with
respect to 2,000,000 shares of the common stock of PRGX, in accordance with a
stock option agreement in the form attached hereto as Exhibit A and executed
contemporaneously with this Agreement.
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(d) Expense Reimbursement. The Company will reimburse Executive for all
reasonable expenses incurred by Executive during the Employment Period in the
course of performing Executive's duties under this Agreement in accordance with
the Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, and subject to the Company's
requirements applicable generally with respect to reporting and documentation of
such expenses.
(e) Standard Executive Benefits Package. Executive is entitled during the
Employment Period to participate, on the same basis as the Company's other
senior executives, in the Company's Standard Executive Benefits Package. A
summary of such benefits as in effect on the date of this Agreement is attached
hereto as Exhibit B.
(f) Vacation; Holidays. Executive is entitled to four weeks of paid
vacation, without carryover for unused vacation, as well as paid holidays in
accordance with the Company's policies in effect from time to time.
(g) Indemnification. Contemporaneously with this Agreement, PRGX and
Executive shall execute PRGX's standard form of Indemnification Agreement, in
the form attached hereto as Exhibit C.
(h) Professional Fees. Promptly following receipt of invoices therefor, the
Company will reimburse Executive for Executive's reasonable professional fees
and costs (and related disbursements) incurred in connection with Executive's
negotiation and execution of this Agreement, in an amount not to exceed $15,000.
(i) Additional Compensation/Benefits. The Compensation Committee of the
PRGX Board, in its sole discretion, will determine any compensation or benefits
to be provided to Executive during the Employment Period other than as set forth
in this Agreement, including, without limitation, any future grant of stock
options or other equity awards.
(j) Disgorgement of Compensation. If the Company is required to prepare an
accounting restatement due to its material noncompliance, as a result of
misconduct, with any financial reporting requirement under the federal
securities laws, to the extent required by law, Executive will reimburse the
Company for (i) any bonus or other incentive-based or equity-based compensation
received by Executive from the Company (including such compensation payable in
accordance with this paragraph 4 and paragraph 6) during the 12-month period
following the first public issuance or filing with the Securities and Exchange
Commission (whichever first occurs) of the financial document embodying that
financial reporting requirement; and (ii) any profits realized by Executive from
the sale of the Company's securities during that 12-month period.
(k) COBRA Reimbursement. Until the expiration of any applicable waiting
periods necessary for Executive to commence participation in the Company's
healthcare plans, the Company shall reimburse to Executive, upon Executive's
written requests therefor from time to time, the amounts paid on account of
premiums to FedEx Kinko's by Executive in connection with Executive's rights
under COBRA (as defined below) to maintain the healthcare benefits provided to
Executive under FedEx Kinko's healthcare plans.
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5. Employment Period.
(a) Subject to subparagraph 5(b), the Employment Period will commence on
the Effective Date and will continue until, and will end upon, the third
anniversary of the Effective Date; except that on the third anniversary of the
Effective Date, unless either party shall have given the other 30-days' written
notice otherwise, the Employment Period will be extended automatically for one
additional year.
(b) The Employment Period will end upon the first to occur of any of the
following events: (i) Executive's death; (ii) the Company's termination of
Executive's employment on account of Disability; (iii) the Company's termination
of Executive's employment for Cause (a "Termination for Cause"); (iv) the
Company's termination of Executive's employment without Cause (a "Termination
without Cause"); (v) Executive's termination of Executive's employment for Good
Reason (a "Termination for Good Reason"); or (vi) Executive's termination of
Executive's employment for any reason other than Good Reason (a "Voluntary
Termination").
(c) Any termination of Executive's employment under subparagraph 5(b) must
be communicated by a Notice of Termination delivered by the Company or
Executive, as the case may be, to the other party.
(d) Executive will be deemed to have waived any right to a Termination for
Good Reason based on the occurrence or existence of a particular event or
circumstance constituting Good Reason unless Executive delivers a Notice of
Termination within 90 days from the date Executive first became aware of the
event or circumstance.
6. Post-Employment Period Payments.
(a) At the Date of Termination, regardless of the reason for termination of
employment, Executive will be entitled to (i) any Base Salary that has accrued
but is unpaid, any annual bonus that has been earned but is unpaid, any
reimbursable expenses that have been incurred but are unpaid, and any unexpired
vacation days that have accrued under the Company's vacation policy but are
unused, as of the end of the Employment Period, (ii) any plan benefits that by
their terms extend beyond termination of Executive's employment (but only to the
extent provided in any such benefit plan in which Executive has participated as
a Company employee and excluding, except as hereinafter provided in paragraph 6,
any Company severance pay program or policy) and (iii) reimbursement for any
benefits to which Executive is entitled and has paid in accordance with Part 6
of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974,
as amended ("COBRA") (such reimbursement to be made upon Executive's written
requests therefor from time to time). Except as specifically described in this
subparagraph 6(a) and in the succeeding subparagraphs of this paragraph 6 (under
the circumstances described in those succeeding subparagraphs), from and after
the Date of Termination Executive shall cease to have any rights to salary,
bonus, expense reimbursements or other benefits from the Company.
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(b) If the Employment Period ends in accordance with paragraph 5 on account
of Executive's death, Disability, Voluntary Termination or Termination for
Cause, the Company will make no further payments to Executive except as
contemplated in subparagraph 6(a).
(c) Subject to subparagraph (2), if the Employment Period ends in
accordance with paragraph 5 on account of a Termination without Cause or a
Termination for Good Reason, Executive shall be entitled to the following:
(1) a lump sum payment equal to either (i) in the event the Employment Period
ends prior to the date that is 16 months after the Effective Date, 0.125
times the number of months in the Employment Period multiplied by
Executive's Average Annual Compensation (as defined below) or (ii) in the
event the Employment Period ends on or after the date that is 16 months
after the Effective Date, 2 times Executive's Average Annual Compensation
(for purposes hereof, "Average Annual Compensation" means (x) Executive's
Base Salary for fiscal year 2005, if the Date of Termination occurs in
fiscal year 2005, or the average of Executive's Base Salary in effect for
the final two fiscal years in the Employment Period (including the fiscal
year in which the Date of Termination occurs), if the Date of Termination
occurs after December 31, 2005; plus (y) (A) if the Date of Termination
occurs prior to January 1, 2006, 70% of Base Salary, prorated based on the
number of days actually employed during fiscal year 2005; (B) if the Date
of Termination occurs after December 31, 2005 but prior to January 1, 2007,
70% of Executive's Base Salary for fiscal year 2005; (C) if the Date of
Termination occurs during fiscal year 2007, the actual annual bonus paid in
respect of fiscal year 2006; or (D) if the Date of Termination occurs after
December 31, 2007, the average of the actual annual bonuses paid or payable
in respect of the two full fiscal years immediately preceding the fiscal
year in which the Date of Termination occurs); and
(2) continued participation in the Company's medical and dental plans, on the
same basis (including cost) as active employees participate in such plans,
until the earlier of (i) Executive's eligibility for any such coverage
under another employer's or any other medical or dental insurance plans
sponsored by a subsequent employer of Executive or (ii) the second
anniversary of the Date of Termination; except that in the event that
participation in any such plan is barred, the Company shall pay Executive
on a monthly basis an amount that, following withholding for the
application or imposition of any income or employment taxes, is equal to
the amount of any premiums paid by Executive to obtain benefits (for
Executive and his dependents) equivalent to the benefits he is entitled to
receive under the Company's benefit plans.
(d) The Company shall make no payments in accordance with subparagraph 6(c)
if Executive declines to sign and return a Release Agreement or revokes the
Release Agreement within the time provided in the Release Agreement. The Company
shall make all payments required to be made in accordance with subparagraph 6(c)
within 30 days after the end of any revocation period provided by the Release
Agreement.
(e) Executive is not required to mitigate the amount of any payment or
benefit provided for in this Agreement by seeking other employment or otherwise.
7. Competitive Activity; Confidentiality; Non-solicitation.
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(a) Acknowledgements and Agreements. Executive acknowledges and agrees that
in the performance of Executive's duties to the Company during the Employment
Period, Executive will be brought into frequent contact, either in person, by
telephone or through the mails, with the Company's existing and potential
customers and employees. Executive also agrees that any Trade Secrets and
Confidential Information of the Company gained by Executive during Executive's
association with the Company have been developed by the Company through
substantial expenditures of time, effort and money and constitute the Company's
valuable and unique property. Executive further understands and agrees that the
foregoing makes it necessary, for the protection of the Business, that Executive
not compete with the Company during the Employment Period and not compete with
the Company for a reasonable period thereafter, as further provided in the
following subparagraphs.
(b) Confidentiality. During and after the Employment Period, Executive
shall treat as confidential and shall not, without the Company's prior written
approval, use (other than in the performance of Executive's designated duties
for the Company) or disclose any Trade Secrets or Confidential Information.
(c) Records. All records, notes, files, recordings, tapes, disks,
memoranda, reports, price lists, client lists, drawings, plans, sketches,
documents, equipment, apparatus, and like items, and all copies thereof,
relating to the Business or any Trade Secrets or Confidential Information that
may be prepared by Executive or that may be disclosed to or that may come into
the possession of Executive during the Employment Period, are to be and remain
the Company's sole and exclusive property. Executive shall promptly deliver to
the Company the originals and all copies of any of the foregoing that are in
Executive's possession, custody or control, at any time upon request from the
Company.
(d) Executive Inventions.
(i) All Works are to be the Company's sole and absolute property, including
all patent, copyright, trade secret, or other rights in respect thereof.
Executive shall assign to Company all right, title, and interest in and to any
and all Works, including all worldwide copyrights, patent rights, and all trade
secret information embodied therein, in all media and including all rights to
create derivative works thereof. Executive waives any and all rights Executive
may have in any Works, including but not limited to the right to acknowledgement
as author or moral rights. Executive shall not use or include in Works any
patented, copyrighted, restricted or protected code, specifications, concepts,
or trade secrets of any third party or any other information that Executive
would be prohibited from using by any confidentiality, non-disclosure or other
agreement with any third party. Executive shall fully and promptly disclose in
writing to the Company any such Works as such Works may arise from time to time.
(ii) Executive shall, without charge to the Company other than for
reimbursement of Executive's reasonable out-of-pocket expenses, execute and
deliver all such further documents and instruments, including applications for
patents and copyrights, and perform such acts, at any time during or after the
term of this Agreement as may be necessary or desirable, to obtain, maintain,
and defend patents, copyrights, or other proprietary rights in respect of the
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Works or to vest title to the Works in the Company, its successors, assigns, or
designees. Without limiting the generality of the foregoing, Executive shall
give all lawful testimony, during or after the term of Executive's employment,
that may be required in connection with any proceedings involving any Works so
assigned by Executive. Executive shall keep and maintain adequate and complete
records (in the form of notes, laboratory notebooks, sketches, drawings, optical
drives, hard drives and as may otherwise be specified by the Company) of all
inventions and original works of authorship made by Executive (solely or jointly
with others) in the course of employment with Company, with the Company's time,
on the Company's premises, or using the Company's resources or equipment, which
records are to be available to and remain the Company's sole property at all
times.
(e) Cooperation. Executive shall cooperate at all times to the extent and
in the manner requested by the Company and at the Company's expense, in the
prosecution or defense of any claims, litigation or other proceeding involving
the Works, the Company's property or the Trade Secrets or Confidential
Information. Executive shall comply with regulations, policies, and procedures
established by the Company, including, without limitation, all regulations,
policies, and procedures established for the purpose of protecting Trade Secrets
and Confidential Information.
(f) Agreement Not to Compete. During the Employment Period and for a period
of two years from the Date of Termination, regardless of the reason for
termination of employment, Executive shall not, without the Company's prior
written consent, within the Restricted Territory, for Executive or on behalf of
another, directly or indirectly, engage in any business for which Executive
provides services that are the same or substantially similar to Executive's
services for the Company (as described in paragraph 3) to or on behalf of a
Competing Business. Executive acknowledges and agrees that Restricted Territory
is the geographic area within which Executive performs services for the Company.
(g) Agreement Not to Solicit Customers. During the Employment Period and
for a period of two years from the Date of Termination, regardless of the reason
for termination of employment, Executive shall not, without the Company's prior
written consent, directly or indirectly, on Executive's own behalf or in the
service or on behalf of others, (i) solicit or attempt to divert or appropriate
to a Competing Business any customer or actual prospect of the Company with whom
Executive dealt on the Company's behalf at any time during the 12-month period
immediately preceding the Date of Termination, or (ii) solicit or attempt to
divert or appropriate to a Competing Business, any customer or actual prospect
of the Company with whom an employee that was directly supervised by Executive
dealt on the Company's behalf at any time during the 12-month period immediately
preceding the Date of Termination.
(h) Agreement Not to Solicit Employees. During the Employment Period and
for a period of two years from the Date of Termination, regardless of the reason
for termination of employment, Executive shall not, without the Company's prior
consent, directly or indirectly, on Executive's own behalf or in the service or
on behalf of others, solicit, divert or recruit any Company employee to leave
such employment, whether such employment is by written contract or at will.
(i) Remedies.
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(i) By virtue of the duties and responsibilities attendant to Executive's
employment by the Company and the special knowledge of the Company's affairs,
Business, clients, and operations that Executive has and will have as a
consequence of Executive's employment, Executive acknowledges and agrees that
irreparable loss and damage will be suffered by the Company if Executive should
breach or violate any of the covenants and agreements contained in this
paragraph 7. Therefore, in addition to any other remedies available to the
Company, Executive acknowledges and agrees that the Company shall be entitled to
an injunction to prevent a breach or contemplated breach by Executive of any of
the covenants or agreements contained in this paragraph 7.
(ii) The existence of any claim, demand, action or cause of action of
Executive against the Company, whether predicated upon this Agreement or
otherwise, is not to constitute a defense to the Company's enforcement of any of
the covenants or agreements contained in paragraph 7. The Company's rights under
this Agreement are in addition to, and not in lieu of, all other rights the
Company may have at law or in equity to protect its confidential information,
trade secrets and other proprietary interests.
(j) Indirect Competition. Executive will be in violation of this paragraph
7 if Executive engages in any or all of the activities set forth in this
paragraph 7 directly as an individual on Executive's own account, or indirectly
as a partner, joint venturer, employee, agent, salesperson, consultant, officer
and/or director of any firm, association, partnership, corporation or other
entity, or as a shareholder of any corporation or the owner of the interests in
any other entity, in which Executive or Executive's spouse, child or parent
owns, directly or indirectly, individually or in the aggregate, more than 5% of
the outstanding stock or other ownership interests. Ownership of a lesser
percentage in any such entity, in and of itself, will not constitute a violation
of this paragraph 7, so long as Executive does not engage in action prohibited
in this paragraph 7 with regard to such entity.
(k) Definition of "Company". For purposes of this paragraph 7, the
"Company" includes any direct and indirect subsidiary, parent, affiliate, or
related company of the Company.
8. Definitions.
(a) "Business" means, with respect to the Company, (i) audit services (A)
to identify and recover lost profits or, in the case of governmental agencies or
programs, overpayments or erroneous or wrongful payments or reimbursements, from
any source, including, without limitation, payment errors, missed or inaccurate
discounts, allowances, or rebates, vendor pricing errors, or duplicate payments,
or any other services substantially similar to or readily suitable for any such
described services and (B) to identify expense containment opportunities; (ii)
development and use of technology to provide such services; and (iii) provision
of related consulting services, as further described in any and all Company
marketing and sales manuals and materials as the same may be altered, amended,
supplemented or otherwise changed from time to time.
(b) "Cause" means, as determined by the PRGX Board in good faith: (i) a
material breach of the duties and responsibilities of Executive or any written
policies or directives of PRGX or the Company (other than as a result of
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Disability) that is (A) willful or involves gross negligence, and (B) not
remedied within 30 days after receipt of written notice from the Company that
specifically identifies the manner in which such breach has occurred; (ii)
Executive's commission of any felony that causes damage to the property,
business or reputation of PRGX or the Company; (iii) Executive's engagement in a
fraudulent or dishonest act; (iv) Executive's engagement in habitual insobriety
or the use of illegal drugs or substances; (v) Executive's breach of Executive's
fiduciary duties to PRGX or the Company; (vi) Executive's willful failure to
cooperate, or willful failure to cause and direct the persons under Executive's
management or direction, or employed by, or consultants or agents to, the
Company or PRGX to cooperate, with all corporate investigations or independent
investigations by the PRGX Board or the Company Board, all governmental
investigations of the Company or PRGX and all orders involving Executive, the
Company or PRGX entered by a court of competent jurisdiction; (vii) Executive's
violation in any material respect of PRGX's Code of Conduct or PRGX's Code of
Ethics for Senior Financial Officers or any successor codes; or (viii)
Executive's engagement in activities prohibited by paragraph 7. Notwithstanding
the foregoing, however, Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to Executive (i) a
letter from the PRGX Board finding that, in the good faith opinion of the PRGX
Board, Executive was guilty of the conduct set forth in any of the clauses of
the preceding sentence and specifying the particulars thereof in detail and (ii)
a copy of a resolution duly adopted by the affirmative vote of the members of
the PRGX Board who are not officers of the Company at a meeting of the PRGX
Board called and held for such purpose (after reasonable notice to Executive and
an opportunity for Executive, together with Executive's counsel, to be heard
before the PRGX Board), finding, in the good faith opinion of the PRGX Board,
that Executive was guilty of such conduct and specifying the particulars thereof
in detail.
(c) "Change in Control" means the occurrence of any of the following
events: (i) the acquisition of beneficial ownership of a majority of the
outstanding voting stock of PRGX by any person (other than PRGX, a subsidiary of
PRGX or any person that, on the Effective Date, beneficially owned not less than
four million shares of the common stock of PRGX) or any two or more persons
(other than persons that, on the Effective Date, beneficially owned not less
than four million shares of the common stock of PRGX) acting as a partnership,
limited partnership, syndicate or other group, entity or association acting in
concert for the purpose of voting, acquiring, holding, or disposing of voting
stock of PRGX; at any time during any period of two consecutive years (not
including any period prior to the Effective Date, individuals who at the
beginning of such period constituted the PRGX Board, and any new directors,
whose election by the PRGX Board or nomination for election by the holders of
the voting stock of PRGX was approved by a vote of at least two-thirds of the
directors of PRGX then still in office who either were directors of PRGX at the
beginning of the period or whose election or nomination for election was
previously so approved (the "Current Directors"), cease for any reason to
constitute a majority thereof, (iii) a merger or a consolidation of PRGX with or
into another corporation or entity, other than (A) a merger or consolidation
with a subsidiary of PRGX, or (B) a merger or consolidation in which the holders
of voting stock of PRGX immediately before the merger hold as a class
immediately after the merger at least a majority of all outstanding voting power
of the surviving or resulting corporation or its parent, the Current Directors
constitute at least a majority of the board of directors of such surviving or
resulting corporation or its parent, and such surviving or resulting corporation
or its parent expressly assume and agree to perform the obligations of the
Company and PRGX under this Agreement; (iv) a statutory exchange of shares of
one or more classes or series of outstanding voting stock of PRGX for cash,
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securities, or other property, other than an exchange in which the holders of
voting stock of PRGX immediately before the exchange hold as a class immediately
after the exchange at least a majority of all outstanding voting power of the
entity with which PRGX stock is being exchanged, the Current Directors
constitute at least a majority of the board of directors of such entity, and
such entity expressly assumes and agrees to perform the obligations of the
Company and PRGX under this Agreement; (v) the sale or other disposition of all
or substantially all of the assets of PRGX, in one transaction or a series of
transactions, other than a sale or disposition in which the holders of voting
stock of PRGX immediately before the sale or disposition hold as a class
immediately after the exchange at least a majority of all outstanding voting
power of the entity to which the assets of PRGX are being sold, the Current
Directors constitute at least a majority of the board of directors of such
entity, and such entity expressly assumes and agrees to perform the obligations
of the Company and PRGX under this Agreement; or (vi) the liquidation or
dissolution of PRGX.
(d) "Competing Business" means any business engaging in the same or
substantially similar business as the Business.
(e) "Confidential Information" means any confidential or proprietary
information relating to the Company or its customers that is not a Trade
Secret., except for information that (i) was generally known prior to the
Effective Date; (ii) was in Executive's possession prior to the Effective Date
(other than information supplied to him by the Company or its agents), to the
extent Executive has written record of possessing such information prior to the
Effective Date; (iii) becomes generally known through no act or omission by
Executive; (iv) is supplied to Executive subsequent to the Effective Date by a
third party not under an obligation of confidentiality with respect to such
information; (v) was independently developed by Executive without reference to
or knowledge of any information, data, or disclosures received from the Company;
or (vi) is required to be disclosed pursuant to an order of a court or other
governmental agency of competent jurisdiction.
(f) "Date of Termination" means (i) if Executive's employment is terminated
by the Company for Disability, 30 days after the Company gives Notice of
Termination to Executive (provided that Executive has not returned to the
performance of Executive's duties on a full-time basis during this 30-day
period), (ii) if Executive's employment is terminated by Executive for Good
Reason, the date specified in the Notice of Termination, and (iii) if
Executive's employment is terminated by the Company for any other reason, the
date on which a Notice of Termination is given.
(g) "Disability" means Executive's inability or expected inability (or a
combination of both) to perform the services required of Executive under this
Agreement due to illness, accident or any other physical or mental incapacity
for an aggregate of 90 days within any period of 180 consecutive days during
which this Agreement is in effect, as agreed by the parties or as determined in
accordance with the next sentence. If there is a dispute between Executive and
the Company in the determination of Disability as to whether an illness,
accident or any other physical or mental incapacity exists or existed during the
applicable period, then such dispute is to be decided by a medical doctor
selected by the Company and a medical doctor selected by Executive and
Executive's legal representative (or, in the event that these doctors fail to
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agree, then in the majority opinion of these doctors and a third medical doctor
chosen by these doctors). Each party shall pay all costs associated with
engaging the medical doctor selected by such party and the parties shall each
pay one-half of the costs associated with engaging any third medical doctor.
(h) "Good Reason" means, subject to the next sentence, any of the
following: (i) the Company's demotion of Executive to a lesser position than the
position that he is serving in prior to the demotion; (ii) the assignment to
Executive of duties materially inconsistent with his position or material
reduction of Executive's duties, responsibilities or authority (as described in
paragraph 3), in either case without Executive's prior written consent; except
that a change in the foregoing that results solely from PRGX ceasing to be a
publicly traded entity or from PRGX becoming a wholly owned subsidiary of a
publicly traded entity will not, in either event and standing alone, constitute
grounds for "Good Reason"; (iii) any decrease in Executive's Base Salary or
annual bonus or benefits under the Standard Executive Benefits Package, except
to the extent that the Company has instituted a salary, bonuses or benefits
reduction generally and ratably applicable to all senior executives of the
Company and so long as such reduction does not occur in contemplation of a
Change in Control; (iv) unless agreed to by Executive, the relocation of
Executive's principal place of business outside of the xxxxxxxxxxxx xxxx xx
Xxxxxxx, Xxxxxxx; (v) the PRGX Board's failure to nominate Executive to serve as
a member of the PRGX Board; or (vi) the failure by the Company, without
Executive's consent, to pay to Executive any portion of Executive's Base Salary,
annual bonus or other benefits within ten business days after the date the same
is due, in each case not remedied by the Company within 30 days after receipt by
the Company of written notification from Executive to the Company that
specifically identifies the Good Reason. During the one-year period following a
Change in Control, however, (i) no Good Reason for termination can occur under
this Agreement because of any change in Executive's title or reporting
relationship as a consequence of the Change in Control and any determination of
Good Reason, if the determination relates to Executive's title or reporting
relationship, is to be made by reference to Executive's title or reporting
relationship that exists as a consequence of the Change in Control; and (ii)
without limiting the occurrence of Good Reason as defined in the preceding
sentence other than because of a change in, or by reference to, Executive's
title or reporting relationship as specified in clause (i) of this sentence,
Good Reason for termination can also occur under this Agreement upon: (A) the
failure by the Company to continue to provide Executive with benefits at least
as favorable in the aggregate to those enjoyed by Executive under the Standard
Executive Benefits Package in which Executive was participating at the time of
the Change in Control, (B) the taking of any action by the Company that would
directly or indirectly materially reduce any such benefits or deprive Executive
of any material fringe benefit (including equity-based benefits) enjoyed at the
time of the Change in Control, or (C) the Company's failure to provide Executive
with the number of paid vacation days to which Executive is entitled at the time
of the Change in Control, excluding in subclauses (A) - (C), any failure or
action by the Company that is not taken in bad faith and that is remedied by the
Company promptly after receipt of notice thereof from Executive.
(i) "Notice of Termination" means a written notice that indicates those
specific termination provisions in this Agreement relied upon and that sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated. For purposes of this Agreement, no purported termination by either
party is to be effective without a Notice of Termination.
11
(j) "Release Agreement" means an agreement, substantially in the form
attached hereto as Exhibit D, approved by the Company, pursuant to which
Executive releases all current or future claims, known or unknown, arising on or
before the date of the release against the Company or any direct and indirect
subsidiary, parent, affiliated, or related company of the Company, or their
respective officers and directors.
(k) "Restricted Territory" means, and is limited to, Xxxxxx County,
Georgia.
(l) "Standard Executive Benefits Package" means those benefits (including
retirement, insurance and other welfare benefits, but excluding, except as
provided in paragraph 6, any severance pay program or policy of the Company) for
which substantially all of the Company's senior executives are from time to time
generally eligible, as determined from time to time by the PRGX Board.
(m) "Trade Secrets" means information of the Company without regard to
form, including, but not limited to, technical or non-technical data, a formula,
a pattern, a compilation, a program, a device, a method, a technique, a drawing,
a design, a process, financial data, financial plans, product plans, or a list
of actual or potential customers or suppliers that is not commonly known by or
available to the public and which information: (a) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (b) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
(n) "Works" means any work of authorship, code, invention, improvement,
discovery, process, formula, code algorithm, program, system, method, visual
work, or work product, whether or not patentable or eligible for copyright, and
in whatever form or medium and all derivative works thereof, that may be
created, made, developed, or conceived by Executive in the course of employment
with the Company, with the Company's time, on the Company's premises, using the
Company's resources or equipment, or relating to the Business.
9. Executive Representations. Executive represents to the Company that (a)
the execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which Executive is bound, (b) Executive is not a party to or bound
by any employment agreement, noncompete agreement or confidentiality agreement
with any other person or entity and (c) upon the execution and delivery of this
Agreement by the Company, this Agreement will be the valid and binding
obligation of Executive, enforceable in accordance with its terms.
10. Withholding of Taxes. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city or other taxes that the
Company is required to withhold under any applicable law, regulation or ruling.
11. American Jobs Creation Act. Notwithstanding anything to the contrary in
this Agreement, in the event that it is determined that any payment to be made
under this Agreement in connection with a "separation of service" within the
meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as
amended (the "Code"), is considered "nonqualified deferred compensation" subject
12
to Section 409A of the Code, payment under this Agreement will be delayed for
six months following the Date of Termination, but only in the event Executive is
a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the
Code.
12. Successors and Assigns. This Agreement is to bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, executors, personal representatives, successors and assigns, except that
neither party may assign any rights or delegate any obligations hereunder
without the prior written consent of the other party. Executive hereby consents
to the assignment by the Company of all of its rights and obligations under this
Agreement to any successor to the Company by merger or consolidation or purchase
of all or substantially all of the Company's assets, provided that the
transferee or successor assumes the obligations of the Company and PRGX under
this Agreement.
13. Survival. Subject to any limits on applicability contained therein,
paragraph 7 will survive and continue in full force in accordance with its terms
notwithstanding any termination of the Employment Period.
14. Choice of Law. This Agreement is to be governed by the internal law,
and not the laws of conflicts, of the State of Georgia.
15. Severability. Whenever possible, each provision of this Agreement is to
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, that invalidity, illegality or unenforceability is not to affect
any other provision or any other jurisdiction, and this Agreement is to be
reformed, construed and enforced in the jurisdiction as if the invalid, illegal
or unenforceable provision had never been contained herein.
16. Notices. Any notice provided for in this Agreement is to be in writing
and is to be either personally delivered, sent by reputable overnight carrier or
mailed by first class mail, return receipt requested, to the recipient at the
address indicated as follows:
Notices to Executive:
Xxxxx X. XxXxxxx
00 Xxxxx Xxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Notices to the Company or to PRGX:
PRG-Xxxxxxx USA, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
13
or any other address or to the attention of any other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement is to be deemed to have been given when so
delivered, sent or mailed.
17. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement is to affect the validity, binding effect or enforceability of this
Agreement.
18. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter hereof and
effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral, that
may have related to the subject matter hereof in any way.
19. Counterparts. This Agreement may be executed in separate counterparts,
each of which are to be deemed to be an original and both of which taken
together are to constitute one and the same agreement.
[ SIGNATURE PAGE TO FOLLOW ]
14
The parties are signing this Agreement as of the date stated in the
introductory clause.
PRG-XXXXXXX USA, INC.
By:
------------------------------------
Name:
Title:
PRG-XXXXXXX INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
---------------------------------------
Xxxxx X. XxXxxxx
[ Signature Page to Employment Agreement ]
EXHIBIT A
OPTION AGREEMENT
OPTION AGREEMENT
This Stock Option Agreement (this "Option Agreement") is entered into as of
________ __, 2005 between PRG-XXXXXXX INTERNATIONAL, INC., a Georgia corporation
("PRGX") and XXXXX X. XXXXXXX ("Executive").
PRGX, Executive and PRG-Xxxxxxx USA, Inc., a Georgia corporation and wholly
owned subsidiary of PRGX (the "Company") are parties to an employment agreement
dated of even date herewith (the "Employment Agreement").
In accordance with paragraph 4(c) of the Employment Agreement, in
connection with Executive's entering into employment with the Company, Executive
is to receive a stock option grant with respect to 2,000,000 shares of the
common stock, no par value per share, of PRGX (the "Common Stock").
Therefore, the parties agree as follows:
1. Grant of Non-Qualified Stock Option. PRGX hereby grants to Executive the
right and option to purchase from PRGX, on the terms and subject to the
conditions set forth in this Option Agreement, 2,000,000 shares of Common Stock
(such shares, the "Option Shares"; such option, the "Option"). The date of grant
of the Option (the "Grant Date") is ________ __, 2005. THE OPTION IS NOT TO
CONSTITUTE AN INCENTIVE STOCK OPTION WITHIN THE MEANING OF SECTION 422 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED. Of the 2,000,000 Option Shares,
500,000 Option Shares are time-vested Option Shares (the "Time-Vested Option
Shares") and 1,500,000 Option Shares are performance-based Option Shares (the
"Performance-Based Option Shares").
2. Exercise Price of the Option. The exercise price for the Option Shares
is $_______ per share, the closing price of the Common Stock on the NASDAQ
National Market on the last trading day preceding the Grant Date (the "Exercise
Price").
3. Vesting of the Option. Subject to the earlier expiration or termination
of this Option in accordance with its terms, the Option Shares granted under
this Option Agreement will be exercisable as follows:
(a) Time-Vested Option Shares. Subject to subparagraph 3(d), the
Time-Vested Option Shares will become exercisable on the first anniversary of
the Grant Date if Executive remains in the continuous employ of the Company as
of that date.
(b) Performance-Based Option Shares. Subject to subparagraphs 3(c) and
3(d), the Performance-Based Option Shares will become exercisable in three
Tiers, as follows:
(1) 500,000 Performance-Based Option Shares will become exercisable upon
attainment by PRGX, at any time following the first anniversary of the
Grant Date (but prior to termination or expiration of this Option pursuant
to Section 6), of a Market Price (as defined below) per share of the Common
Stock of not less than $4.50 per share for 45 consecutive trading days
("Tier 1");
(2) 500,000 Performance-Based Option Shares will become exercisable upon
attainment by PRGX, at any time following the second anniversary of the
Grant Date (but prior to termination or expiration of this Option pursuant
to Section 6), of a Market Price per share of the Common Stock of not less
than $6.50 per share for 45 consecutive trading days ("Tier 2"); and
(3) 500,000 Performance-Based Option Shares will become exercisable upon
attainment by PRGX, at any time following the third anniversary of the
Grant Date (but prior to termination or expiration of this Option pursuant
to Section 6), of a Market Price per share of the Common Stock of not less
than $8.00 per share for 45 consecutive trading days ("Tier 3"),
($4.50 per share, $6.50 per share and $8.00 per share being referred to herein
as the "Price Target" for Tier 1, Tier 2 and Tier 3, respectively). For purposes
of this Option Agreement, "Market Price" means with respect to shares of Common
Stock the daily closing price as reported by the NASDAQ National Market, or
national securities exchange on which shares of Common Stock are then listed
(or, if shares of Common Stock are not then quoted on the NASDAQ National Market
or listed on a national securities exchange, the daily closing price reported in
the over-the-counter market).
(c) Discretionary Acceleration of Exercisability. The Compensation
Committee of the Board of Directors of PRGX (the "Compensation Committee") may,
in its sole discretion except as provided in subparagraph 3(d), accelerate the
exercisability of all or a portion of Performance-Based Option Shares without
regard to whether the requirements for exercisability thereof in subparagraph
3(b) have been met.
(d) Mandatory Acceleration of Exercisability.
(i) Upon a Termination without Cause or a Termination for Good Reason (each
as defined in the Employment Agreement), (A) with respect to any Tier of
Performance-Based Option Shares for which the Price Target has been achieved for
45 consecutive trading days, the Option shall automatically become exercisable
for all shares included in such Tier without regard to the time period specified
for such Tier in subparagraph 3(b); and (B) if the Price Target for Tier 1 has
been exceeded for 45 consecutive trading days, but the Price Target for Tier 2
has not been achieved or exceeded for 45 consecutive trading days, the Option
shall automatically become exercisable for a number of shares included in Tier 2
equal to 500,000 multiplied by the quotient of dividing (x) the result of
subtracting 4.50 from the highest Market Price achieved by the Common Stock for
forty-five consecutive trading days at any time after the Grant Date by (y) 2;
and (C) if the Price Target for Tier 2 has been exceeded for 45 consecutive
trading days, but the Price Target for Tier 3 has not been achieved or exceeded
for 45 consecutive trading days, the Option shall automatically become
exercisable for a number of shares included in Tier 3 equal to 500,000
multiplied by the quotient of dividing (x) the result of subtracting 6.50 from
the highest Market Price achieved by the Common Stock for forty-five consecutive
trading days at any time after the Grant Date by (y) 1.50.
(i) Upon a Change in Control (as defined in the Employment Agreement) or if
PRGX ceases to be a public company with reporting obligations under the
Securities Exchange Act of 1934, as amended, (A)the Option will automatically
2
become exercisable with respect to all Time-Vested Option Shares; (B)the Option
will automatically become exercisable with respect to all Performance-Based
Option Shares included in a Tier for which the applicable Price Target is
exceeded by the Transaction Price; (C) if the Transaction Price exceeds the
Price Target for Tier 1 but is less than the Price Target for Tier 2, the Option
shall automatically become exercisable for a number of shares included in Tier 2
equal to 500,000 multiplied by the quotient of dividing (x) the result of
subtracting 4.50 from the Transaction Price by (y) 2; and (D) if the Transaction
Price exceeds the Price Target for Tier 2 but is less than the Price Target for
Tier 3, the Option shall automatically become exercisable for a number of shares
included in Tier 3 equal to 500,000 multiplied by the quotient of dividing (x)
the result of subtracting 6.50 from the Transaction Price by (y) 1.50. For
purpose hereof, "Transaction Price" means the per-share price consideration for
the Common Stock payable to the Company's public shareholders in connection with
the transaction resulting in, as applicable, (i) the Change in Control or (ii)
PRGX ceasing to be a public company with reporting obligations under the
Securities Exchange Act of 1934, as amended, or, in the case of clause (ii), if
there is no transaction, the Market Price on the last trading day preceding such
event. For purposes of determining the Transaction Price, any non-cash
consideration to be received by the Company's public shareholders will be valued
by the Compensation Committee, in good faith.
4. Method of Exercise of Option.
(a) To the extent then exercisable, Executive may exercise the Option in
whole or in part; except that no single exercise of the Option is to be for less
than 100 Option Shares, unless at the time of the exercise, the maximum number
of Option Shares available for purchase under the Option is less than 100 Option
Shares. In no event is the Option to be exercised for a fractional share of
Common Stock.
(b) To exercise the Option, Executive shall give written notice to PRGX
stating the number of shares for which the Option is being exercised and the
intended manner of payment. The date of this notice shall be the exercise date.
The notice must be accompanied by payment in full of the aggregate Exercise
Price, either by cash, check, note or any other instrument acceptable to the
Compensation Committee. Payment in full or in part may also be made in the form
of shares of Common Stock already owned by Executive based, in each case, on the
Market Price of the shares of Common Stock on the date the Option is exercised;
except that in no event is payment in full or in part for the exercise of an
Option to be made with any Option Shares that, as of the date of exercise of the
Option, have been owned by Executive less than six months. If the payment is in
the form of shares of Common Stock, then the certificate or certificates
representing the those shares must be duly executed in blank by Executive or
must be accompanied by a stock power duly executed in blank suitable for
purposes of transferring those shares to PRGX. Fractional shares of Common Stock
will not be accepted in payment of the purchase price of Option Shares. PRGX
shall not issue Option Shares until full payment for them has been made.
(c) As soon as practicable upon PRGX's receipt of Executive's notice of
exercise and payment, PRGX shall direct the due issuance of the shares so
purchased.
(d) As a further condition precedent to the exercise of this Option in
whole or in part, Executive shall comply with all regulations and the
requirements of any regulatory authority having control of, or supervision over,
the issuance of the shares of Common Stock and accordingly shall execute any
3
documents that the Board of Directors of PRGX (the "PRGX Board"), in its sole
discretion, deems necessary or advisable to effect such compliance.
(e) In the case of Executive's death, the Option, to the extent
exercisable, may be exercised by the executor or administrator of Executive's
estate or by any person or persons who have acquired the Option directly from
Executive by bequest or inheritance.
5. Non-Transferability of Options. Executive shall not assign or transfer
the Option, other than by will or the laws of descent and distribution. During
Executive's lifetime, only Executive (or, in the event of legal incapacity or
incompetency, Executive's guardian or legal representative) may exercise the
Option. Notwithstanding the foregoing, however, Executive, with the approval of
the Compensation Committee, may transfer the Option for no consideration to or
for the benefit of Executive's Immediate Family (including, without limitation,
to a trust for the benefit of Executive's Immediate Family or to a partnership
or limited liability company for one or more members of Executive's Immediate
Family, subject to such limits as the Compensation Committee may establish, and
the transferee(s) shall remain subject to all the terms and conditions
applicable to the Option prior to transfer. The term "Immediate Family" means
Executive's spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers and grandchildren (and, for this purpose, shall also include
Executive).
6. Termination of Option.
(a) The portion of the Option that is not exercisable pursuant to paragraph
3 as of the Date of Termination (as defined in the Employment Agreement) will
terminate automatically as of that date.
(b) This Option Agreement and any portion of the Option not either
terminated pursuant to subparagraph 6(a) or already exercised will terminate
automatically and without further notice at the close of business on the
earliest of the following dates: (i) on the Date of Termination, if termination
of Executive's employment is for Cause (as defined in the Employment Agreement);
(ii) on the first anniversary of the Date of Termination, if termination of
Executive's employment is for death or Disability (as defined in the Employment
Agreement); (iii) 75 calendar days following the Date of Termination, if
termination of Executive's employment is for any reason other than death,
Disability or for Cause; or (iv) the seventh anniversary of the Grant Date.
(c) In no event may the Option be exercised, in whole or in part, after
termination pursuant to subparagraphs 6(a) and 6(b).
7. Investment Representations. PRGX may require Executive, as a condition
of exercising the Option, to give written assurances in substance and form
satisfactory to PRGX to the effect that Executive is acquiring the Option Shares
for Executive's own account for investment and not with any present intention of
selling or otherwise distributing them, and to such other effect as PRGX deems
necessary or appropriate in order to comply with applicable federal and state
securities laws.
4
8. Registration of Option and Option Shares. As soon as practicable after
the date hereof, PRGX shall file a registration statement on Form S-8 under the
Securities Act of 1934, as amended, to register the resale of the Option Shares.
9. Compliance with Law. The Option is subject to the requirement that, if
at any time counsel to PRGX determines that the listing, registration or
qualification of the Option Shares 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 the Option Shares, then the Option may not to be
exercised, in whole or in part, unless the listing, registration, qualification,
consent or approval has been effected or obtained on conditions acceptable to
the Compensation Committee. Nothing in this Option Agreement will be deemed to
require PRGX to apply for or to obtain the listing, registration, qualification,
consent or approval.
10. Recapitalization. If the outstanding shares of Common Stock are changed
into or exchanged for a different number or kind of shares or other securities
of PRGX by reason of any recapitalization, reclassification, stock split, stock
dividend, combination, subdivision or similar transaction, then, subject to any
required action by PRGX's shareholders, the number and kind of Option Shares and
the Exercise Price for the Option Shares are to be proportionately adjusted;
except that no fractional Option Shares are to be issued or made subject to the
Option in making the foregoing adjustments. All adjustments made by the
Compensation Committee under this paragraph 10 will be final, conclusive and
binding upon Executive.
11. Reorganization. If, while all or any portion of the Option remains
exercisable, PRGX proposes to merge or consolidate with another corporation,
whether or not PRGX is to be the surviving corporation, or if PRGX proposes to
liquidate or sell or otherwise dispose of substantially all of its assets or
substantially all of the outstanding shares of Common Stock are to be sold, then
the Compensation Committee may, in its sole discretion, either (i) make
appropriate provision for the protection of the Option by the substitution on an
equitable basis of (A) 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 Option Shares then exercisable, or (B) any
alternative consideration as the Compensation Committee, in good faith, may
determine to be equitable in the circumstances; and, in either case, require in
connection therewith the surrender of the Option so replaced; or (ii) upon
written notice to Executive, provide that the unexercised (but exercisable)
portion of the Option must be exercised within a specified number of days of the
date of such notice or it will be terminated. In any such case, the Compensation
Committee may, in its discretion, accelerate the date on which the Option, in
whole or in part, becomes exercisable.
12. Rights as Shareholder. Neither Executive nor any executor,
administrator, distributee or legatee of Executive's estate will have any of the
rights or privileges of, a shareholder of PRGX in respect of any of the Option
Shares unless and until those Option Shares have been fully paid and
certificates representing those Option Shares have been endorsed, transferred
and delivered, and the name of Executive (or of Executive's personal
representative, administrator, distributee or legatee of Executive's estate) has
been entered as the shareholder of record on PRGX's books.
5
13. Withholding of Taxes. PRGX's obligation to deliver Options Shares upon
exercise of the Option is subject to Executive's satisfaction of any applicable
federal, state and local income and employment tax and withholding requirements
in a manner and form satisfactory to PRGX.
14. No Special Employment Rights. No provision in this Option Agreement
will be deemed to grant to Executive any right with respect to Executive's
continued employment with, 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
Executive's employment or other engagement or to increase or decrease
Executive's compensation from the rate in existence at the Grant Date.
15. Other Employee Benefits. The amount of any compensation deemed to be
received by Executive as a result of the exercise of the Option or the sale of
Option Shares received upon the exercise will not constitute "earnings" with
respect to which any other benefits of Executive are determined, including,
without limitation, benefits under any pension, profit sharing, life insurance
or salary continuation plan.
16. Interpretation of this Option Agreement. All decisions and
interpretations made by the PRGX Board or the Compensation Committee with regard
to any question arising under this Option Agreement will be binding and
conclusive on PRGX and Executive and any other person entitled to exercise the
Option as provided for in this Option Agreement.
17. Choice of Law. This Option Agreement is to be governed by the internal
law, and not the laws of conflicts, of the State of Georgia.
18. Successors and Assigns. Subject to paragraph 5, this Option Agreement
is to bind and inure to the benefit of and be enforceable by Executive, PRGX and
their respective heirs, executors, personal representatives, successors and
assigns.
19. Notices. Any notice provided for in this Option Agreement must be in
writing and is to be either personally delivered, sent by reputable overnight
carrier or mailed by first class mail, return receipt requested, to the
recipient at the address indicated as follows:
Notices to Executive:
Xxxxx X. XxXxxxx
00 Xxxxx Xxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Notices to PRGX:
PRG-Xxxxxxx International, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
6
or any other address or to the attention of any other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Option Agreement will be deemed to have been given when so
delivered, sent or mailed.
20. Severability. Whenever possible, each provision of this Option
Agreement is to be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Option Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any particular jurisdiction, that invalidity, illegality or
unenforceability is not to affect any other provision or any other jurisdiction,
and this Option Agreement shall be reformed, construed and enforced in the
particular jurisdiction as if the invalid, illegal or unenforceable provision
had never been contained herein.
21. Complete Agreement. This Option Agreement embodies the complete
agreement and understanding between the parties with respect to the subject
matter hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, that may have related to the subject matter hereof in any way.
22. Amendment and Waiver. Subject to the next sentence, the provisions of
this Option Agreement may be amended or waived only with the prior written
consent of PRGX and Executive, and no course of conduct or failure or delay in
enforcing the provisions of this Option Agreement is to affect the validity,
binding effect or enforceability of this Option Agreement. PRGX unilaterally may
waive any provision of this Option Agreement in writing to the extent that the
waiver does not adversely affect the interests of Executive under this Option
Agreement, but the waiver is not to operate as or be construed to be a
subsequent waiver of the same provision or a waiver of any other provision of
this Option Agreement.
[ SIGNATURE PAGE TO FOLLOW ]
7
The parties are signing this Option Agreement as of the date stated in the
introductory clause.
PRG-XXXXXXX INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
---------------------------------------
Xxxxx X. XxXxxxx
[ Signature Page to Option Agreement ]
EXHIBIT B
STANDARD EXECUTIVE BENEFITS PACKAGE
EXHIBIT C
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is entered into as of
July __, 2005, between PRG-XXXXXXX INTERNATIONAL, INC., a Georgia corporation
(the "Corporation"), and XXXXX X. XXXXXXX (the "Indemnitee").
Indemnitee is a director and officer of the Corporation, and in such
capacity is performing a valuable service for the Corporation.
Indemnitee is willing to serve, continue to serve, and take on additional
service for or on behalf of the Corporation on the condition that he be
indemnified as herein provided.
It is intended that Indemnitee shall be paid promptly by the Corporation
all amounts necessary to effectuate in full the indemnity provided herein.
Therefore the parties agree as follows:
1. Certain Definitions.
(a) References to the "Corporation" shall include any corporation which is
a parent corporation or a subsidiary corporation with respect to PRG-Xxxxxxx
International, Inc. within the meaning of Section 425(e) or (f) of the Internal
Revenue Code of 1986, as amended, and shall also include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Agreement
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
(b) "Disinterested Director" shall mean a director of the Corporation who
is not a party to the Proceeding in respect of which indemnification is being
sought by Indemnitee.
(c) "Expenses" shall mean all direct and indirect costs (including, without
limitation, attorneys' fees, retainers, court costs, costs of bonds,
transcripts, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or out-of-pocket expenses) actually and reasonably
incurred in connection with a Proceeding or establishing or enforcing a right to
indemnification under this Agreement, applicable law or otherwise; provided,
however, that "Expenses" shall not include any Liabilities.
(d) "Indemnification Period" shall mean the period of time during which
Indemnitee shall continue to serve as a director or as an officer of the
Corporation, and thereafter so long as Indemnitee shall be subject to any
possible Proceeding arising out of acts or omissions of Indemnitee as a director
or as an officer of the Corporation.
(e) "Liabilities" shall mean liabilities of any type whatsoever including,
but not limited to, any judgments, fines, ERISA excise taxes and penalties,
penalties and amounts paid or obligated to be paid in settlement (including all
interest assessments and other charges paid or payable in connection with or in
respect of such judgments, fines, penalties or amounts paid in settlement and
any sums paid in respect of any deductible under any policies of directors' and
officers' liability insurance) of any Proceeding.
(f) "Nonreimbursable Liability" shall mean any expenses or liability
incurred in a proceeding in which Indemnitee is adjudged liable, in a final and
non-appealable judgment, to the Corporation or is subjected to injunctive relief
in favor of the Corporation:
(i) for any appropriation, in violation of his duties, of any business
opportunity of the Corporation;
(ii) for acts or omissions which involve intentional misconduct or a
knowing violation of law;
(iii) for the types of liability set forth in Georgia Business Corporation
Code Section 14-2-832; and
(iv) for any transaction from which he received an improper personal
benefit.
(g) "Proceeding" shall mean any threatened, pending or completed action,
claim, suit, arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative, arbitrative or investigative, whether formal or informal,
including any appeal therefrom.
(h) For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans and trusts; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan or trust, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan or trust shall be deemed to have acted in a manner
"not opposed to the best interests of the Corporation" as referred to in this
Agreement.
2. Services by Indemnitee. Indemnitee agrees to serve as a director and/or
officer of the Corporation so long as he is duly appointed or elected and
qualified in accordance with the applicable provisions of the Articles of
Incorporation and By-laws of the Corporation (as each may be amended from time
to time) or any subsidiary of the Corporation and until such time as he resigns
or fails to stand for election or is removed from his position. Indemnitee may
at any time and for any reason resign or be removed from such position (subject
to any other contractual obligation or other obligation imposed by operation of
law), in which event the Corporation shall have no obligation under this
Agreement to continue Indemnitee in any such position.
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3. Indemnification.
(a) The Corporation shall indemnify Indemnitee, to the fullest extent
permitted by applicable law, whenever he 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 Corporation, because he is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, manager, officer, employee, agent, trustee or
plan fiduciary of another corporation, partnership, limited liability company,
joint venture, trust or other enterprise, or because of anything done or not
done by Indemnitee in such capacity, against Expenses and Liabilities (including
the costs of any investigation, defense, settlement or appeal) actually and
reasonably incurred by Indemnitee or on his behalf in connection with such
Proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
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 Indemnitee did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. The foregoing notwithstanding, in no event shall the Corporation
indemnify Indemnitee against any Nonreimbursable Liability.
(b) Without in any way limiting the foregoing, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding, he shall be indemnified against Expenses and Liabilities actually
and reasonably incurred by him in connection therewith.
4. Mandatory Advancement of Expenses. The Corporation shall advance to
Indemnitee from time to time all reasonable Expenses incurred by or on behalf of
Indemnitee within fifteen (15) days after the Corporation's receipt of a written
request for an advance of Expenses by Indemnitee, whether prior to or after
final disposition of a Proceeding. The written request for an advancement of any
and all Expenses under this Section shall contain reasonable detail of the
Expenses incurred by Indemnitee. The foregoing notwithstanding, the Corporation
shall not be obligated to advance Expenses hereunder unless it shall have
received from Indemnitee (a) a written affirmation of Indemnitee's good faith
belief that his conduct did not constitute behavior which could result in
Nonreimbursable Liability and (b) a written undertaking to repay any advances if
it is ultimately determined that he is not entitled to indemnification pursuant
to this Agreement.
5. Limitations. The foregoing indemnity and advancement of Expenses shall
apply only to the extent that Indemnitee has not been indemnified and reimbursed
pursuant to such insurance as the Corporation may maintain for Indemnitee's
benefit or pursuant to the Articles of Incorporation or Bylaws of the
Corporation (as each may be amended from time to time); provided, however, that
notwithstanding the availability of such other indemnification and reimbursement
pursuant to such Corporation-maintained policies, Indemnitee may, with the
Corporation's consent, claim indemnification and advancement of Expenses
pursuant to this Agreement by assigning Indemnitee's claims under such insurance
to the Corporation to the extent Indemnitee is paid by the Corporation.
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6. Insurance. The Corporation may, but is not obligated to, purchase and
maintain insurance to protect itself and/or Indemnitee against Expenses and
Liabilities in connection with Proceedings to the fullest extent permitted by
applicable laws. The Corporation may, but is not obligated to, create a trust
fund, grant a security interest or use other means (including, without
limitation, a letter of credit) to ensure the payment of such amounts as may be
necessary to effect indemnification or advancement of Expenses as provided in
this Agreement.
7. Procedure for Determination of Entitlement to Indemnification.
(a) Whenever Indemnitee believes that he is entitled to indemnification
pursuant to this Agreement, Indemnitee shall submit a written request for
indemnification to the Corporation. Any request for indemnification shall
include sufficient documentation or information reasonably available to
Indemnitee to support his claim for indemnification. Indemnitee shall submit
such claim for indemnification within a reasonable time not to exceed three
years after any judgment, order, settlement, dismissal, arbitration award,
conviction, acceptance of a plea of nolo contendere or its equivalent, final
termination or other disposition or partial disposition of any Proceeding,
whichever is the latest event for which Indemnitee requests indemnification. If
a determination is required by the Corporation that Indemnitee is entitled to
Indemnification, and the Corporation fails to respond within sixty (60) days of
such request, the Corporation shall be deemed to have approved the request. Any
indemnification or advance of expenses which is due and payable to Indemnitee
shall be made promptly and in any event within thirty (30) days after the
determination that Indemnitee is entitled to such amounts.
(b) If such a determination is required, the Indemnitee shall be entitled
to select the forum in which Indemnitee's request for indemnification will be
heard, which selection shall be included in the written request for
indemnification required in Section 7(a). The forum shall be any one of the
following:
(i) The shareholders of the Corporation; or
(ii) A majority vote of the Board of Directors consisting of Disinterested
Directors (even though less than a quorum); provided, however, that if there are
no Disinterested Directors, or if the Disinterested Directors so direct, the
determination shall be made by independent legal counsel in a written opinion.
If Indemnitee fails to make such designation, his claim shall be determined
by an appropriate court of the State of Georgia or a federal court located in
the State of Georgia.
8. Fees and Expenses of Counsel. The Corporation agrees to pay the
reasonable fees and expenses of independent legal counsel should such counsel be
retained to make a determination of Indemnitee's entitlement to indemnification
pursuant to Section 7 of this Agreement.
9. Remedies of Indemnitee.
(a) In the event that (i) a determination pursuant to Section 7 hereof is
made that Indemnitee is not entitled to indemnification, (ii) advances of
Expenses are not made pursuant to this Agreement for any reason, (iii) payment
has not been timely made following a determination of entitlement to
indemnification pursuant to this Agreement, or (iv) Indemnitee otherwise seeks
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enforcement of this Agreement, Indemnitee shall be entitled to a final
adjudication of his rights in an appropriate court. The Corporation shall not
oppose Indemnitee's right to seek any such adjudication.
(b) In the event that a determination that Indemnitee is not entitled to
indemnification, in whole or in part, has been made pursuant to Section 7
hereof, the decision in the judicial proceeding provided in paragraph (a) of
this Section 9 shall be made de novo and Indemnitee shall not be prejudiced by
reason of a determination that he is not entitled to indemnification.
(c) If a determination that Indemnitee is entitled to indemnification has
been made pursuant to Section 7 hereof or otherwise pursuant to the terms of
this Agreement, the Corporation shall be bound by such determination in the
absence of (i) misrepresentation of a material fact by Indemnitee or (ii) a
specific finding (which has become final) by an appropriate court that all or
any part of such indemnification is expressly prohibited by law.
(d) In any court proceeding pursuant to this Section 9, the Corporation
shall be precluded from asserting that the procedures and presumptions of this
Agreement are not valid, binding and enforceable. The Corporation shall
stipulate in any such court that the Corporation is bound by all the provisions
of this Agreement and is precluded from making any assertion to the contrary.
10. Modification, Waiver, Termination and Cancellation. No supplement,
modification, termination, cancellation or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver.
11. Notice by Indemnitee and Defense of Claim. Indemnitee shall promptly
notify the Corporation in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
matter, whether civil, criminal, administrative, arbitrative or investigative,
but the omission to so notify the Corporation will not relieve it from any
liability which it may have to Indemnitee if such omission does not prejudice
the Corporation's rights. If such omission does prejudice the Corporation's
rights, the Corporation will be relieved from liability only to the extent of
such prejudice. With respect to any Proceeding as to which Indemnitee notifies
the Corporation of the commencement thereof:
(a) The Corporation will be entitled to participate therein at its own
expense; and
(b) The Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee; provided, however, that the Corporation shall not be
entitled to assume the defense of any Proceeding if Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Corporation and Indemnitee with respect to such Proceeding. After notice from
the Corporation to Indemnitee of its election to assume the defense thereof, the
Corporation will not be liable to Indemnitee under this Agreement for any
Expenses subsequently incurred by Indemnitee in connection with the defense
thereof, other than reasonable costs of investigation or as otherwise provided
5
below. Indemnitee shall have the right to employ his own counsel in such
Proceeding but the fees and expenses of such counsel incurred after notice from
the Corporation of its assumption of the defense thereof shall be at the expense
of Indemnitee unless:
(i) The employment of counsel by Indemnitee has been authorized by the
Corporation;
(ii) Indemnitee shall have reasonably concluded that counsel engaged by the
Corporation may not adequately represent Indemnitee;
(iii) The Corporation shall not in fact have employed counsel to assume the
defense in such Proceeding or shall not in fact have assumed such defense and be
acting in connection therewith with reasonable diligence;
in each of which cases the fees and expenses of such counsel shall be at the
expense of the Corporation.
(c) The Corporation shall not settle any Proceeding in any manner which
would impose any penalty, liability, obligation or limitation on Indemnitee
without Indemnitee's written consent; provided, however, that Indemnitee will
not unreasonably withhold his consent to any proposed settlement.
12. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be sent by Federal Express or other
overnight or same day courier service providing a return receipt (and shall be
effective when received or when refused, as evidenced on the return receipt) to
the following addresses:
To Corporation:
PRG-Xxxxxxx International, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
To Indemnitee:
Xxxxx X. XxXxxxx
00 Xxxxx Xxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
13. Nonexclusivity. The rights of Indemnitee hereunder shall not be deemed
exclusive of any other rights to which Indemnitee may now or in the future be
entitled under the Georgia Business Corporation Code, the Corporation's Articles
of Incorporation or By-Laws (as each may be amended from time to time), or any
agreements, vote of shareholders, resolution of the Board of Directors or
otherwise. The provisions of this Agreement are hereby deemed to be a contract
right between the Corporation and the Indemnitee and any repeal of the relevant
6
provisions of the General Corporation law of the State of Georgia, or other
applicable law, shall not affect this Agreement or its enforceability.
14. Binding Effect, Duration and Scope of Agreement. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns (including any direct or
indirect successor, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Corporation), heirs and
personal and legal representatives. This Agreement shall continue in effect
during the Indemnification Period, regardless of whether Indemnitee continues to
serve as a director or as an officer.
15. Severability. If any provision or provisions of this Agreement (or any
portion thereof) shall be held to be invalid, illegal or unenforceable for any
reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby; and
(b) to the fullest extent legally possible, the provisions of this
Agreement shall be construed so as to give effect to the intent of any provision
held invalid, illegal or unenforceable.
16. Governing Law and Interpretation of Agreement. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia, as applied to contracts between Georgia residents entered into and
to be performed entirely within Georgia. If the laws of the State of Georgia are
hereafter amended to permit the Corporation to provide broader indemnification
rights than said laws permitted the Corporation to provide prior to such
amendment, the rights of indemnification and advancement of expenses conferred
by this Agreement shall automatically be broadened to the fullest extent
permitted by the laws of the State of Georgia, as so amended.
17. Entire Agreement. This Agreement represents the entire agreement
between the parties hereto, and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter of
this Agreement, except as specifically referred to herein or as provided in
Section 13 hereof.
18. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines or penalties actually and reasonably incurred by him
in the investigation, defense, appeal or settlement of any Proceeding but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses, judgments, fines or penalties to
which Indemnitee is entitled.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.
[ SIGNATURE PAGE TO FOLLOW ]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
PRG-XXXXXXX INTERNATIONAL, INC.
By:
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Name:
Title:
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Xxxxx X. XxXxxxx
[ Signature Page to Indemnification Agreement ]
EXHIBIT D
FORM OF RELEASE
