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EMPLOYMENT AGREEMENT
Agreement dated as of November 24, 1997 between PRT Group Inc., a Delaware
Corporation (the "Company"), with its principal office at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, and Xxxxxx X. Xxxxxxxx, the employee ("Employee")
residing at 000 Xxxx Xxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The parties agree as follows:
1. (a) The Company shall employ the Employee as Executive Vice President
of Finance and Administration and Chief Financial Officer of the Company to
carry out the duties and responsibilities more fully described in Exhibit A and
as shall from time to time be assigned to him by the Company's Chief Executive
Officer and President commensurate with his position as Executive Vice President
of Finance and Administration and Chief Financial Officer. The Employee accepts
such employment and agrees to devote his full time and effort to the business
and affairs of the Company. The Employee shall carry out such duties at the
Company's principal office at the address set forth above.
(b) The term of Employee's employment shall commence on November 24,
1997 and terminate on the fourth anniversary thereof, unless sooner terminated
pursuant to the provisions set forth below in paragraph 2 (the "Term").
Commencing on the fourth anniversary date of this Agreement, and on each
anniversary thereafter, the Term shall automatically be extended for one
additional year unless either party shall have notified the other party 180 days
prior to such date that it does not wish to extend the Term.
(c) The Company shall pay the Employee for all services to be
rendered by him to the Company the compensation set forth in Exhibit B, payable
during the Term in accordance with the Company's payroll practices for employees
as in effect from time to time, but not less often than monthly.
(d) During the Term, the Employee shall be entitled to receive
reimbursement in accordance with the Company's established policies and
procedures for all reasonable expenses incurred by him in connection with
performance of his duties hereunder.
2. (a) If, during the Term, the Employee is unable to perform his duties
hereunder on account of illness, accident or other physical or mental
incapacity, as determined by an independent medical doctor, and such illness or
other incapacity shall continue for a period of more than three consecutive
months or four months out of any twelve month period, the Company shall have the
right, on one month's written notice (given after such period) to Employee, to
terminate this Agreement. In such event, the Company shall be obligated to pay
to Employee his base salary, provide Employee health benefits and shall treat
Employee's Stock Options (as defined in Exhibit B hereto) as follows: (i) if
such termination occurs during the first year of the Term, the Company shall
continue to pay Employee his base salary and provide health benefits, including
medical insurance, life insurance and accidental death and dismemberment
insurance, and $10,000 (after tax) to cover the costs of Employee's prior
disability and life insurance premiums (each as set forth on Exhibit B hereto)
(collectively,
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"Health Benefits"), for a period of 12 months and, if the Stock Option Value (as
hereafter defined) is equal to less than $2,000,000, an additional number of
Stock Options shall immediately vest such that the aggregate Stock Option Value
is equal to $2,000,000; if such termination occurs during the second year of the
Term, the Company shall continue to pay Employee his base salary and provide
Health Benefits hereunder for a period of 12 months and, if the Stock Option
Value is equal to less than $3,000,000, an additional number of Stock Options
shall immediately vest such that the aggregate Stock Option Value is equal to
$3,000,000; and (iii) if such termination occurs during the third or fourth year
of the Term, the Company shall continue to pay Employee his base salary
hereunder and provide Health Benefits for a period of eighteen (18) months. As
used herein, the term "Stock Option Value" shall mean the value computed by (A)
multiplying the number of Employee's then vested Stock Options on the date of
termination by the closing price of the Company's common stock on the NASDAQ NMS
on the date immediately preceding the date of termination (unless Employee is
prevented from trading any securities of the Company on the date of termination
due the Company's standard trading prohibition policies and procedures, in which
case the Stock Option Value shall be determined on the first day after such
trading prohibition is lifted), and (B) deducting an amount equal to the
exercise price of the vested Stock Options multiplied by the number of vested
Stock Options on the date of termination. Other than as set forth in is
paragraph, the Company shall have no further obligation to Employee hereunder
other than accrued but unpaid obligations. However, if, prior to the date
specified in such notice, the Employee's illness or incapacity shall have
terminated and he shall have taken up the performance of his duties hereunder,
the Employee shall be entitled to renew his employment and receive the
compensation payable hereunder as though such notice had not been given.
(b) The Company may terminate the Employee's employment with the Company
and all rights and obligations of the parties hereunder except with regard to
this contract by a one (1) month prior written notice. Upon such a termination
Without Cause the Company shall provide Employee with the following: (i) if such
termination Without Cause occurs during the first year of the Term, the Company
shall continue to pay Employee his base salary hereunder and provide Health
Benefits for a period of 12 months and, if the Stock Option Value is equal to
less than less than $2,000,000, an additional number of Stock Options shall
immediately vest such that the aggregate Stock Option Value is equal to
$2,000,000; (ii) if such termination Without Cause occurs during the second year
of the Term, the Company shall continue to pay Employee his base salary
hereunder and provide Health Benefits for a period of 12 months and, if the
Stock Option Value is equal to less than less than $3,000,000, an additional
number of Stock Options shall immediately vest such that the aggregate Stock
Option Value is equal to $3,000,000; and (iii) if such termination Without Cause
occurs during the third or fourth year of the Term, the Company shall continue
to pay Employee his base salary and provide Health Benefits hereunder for a
period of eighteen (18) months. Notwithstanding the foregoing, a termination
Without Cause shall include, without limitation, (w) any demotion resulting in a
material adverse change in the duties or reporting relationships of the Employee
set forth on Exhibit A hereto, (x) movement of the Company's principal offices
(as set forth in the first paragraph of this Agreement) in excess of fifty
miles, (y) after the initial public offering of the Company's securities, the
Employee providing the services set forth on Exhibit A to any entity other than
the Company or the ultimate parent entity of the Company which is the public
company, or (z) Employee's voluntary termination upon the occurrence and
continuance of any of the foregoing clauses (w),
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(x) or (y). Other than the payments set forth in this Section 2(c), the Company
shall have no further obligation to Employee hereunder, other than accrued but
unpaid obligations, in the event of a termination Without Cause.
(c) If the Company does not intend to renew Employee's employment at
the end of the Term or any extension of the Term pursuant to paragraph 1(b)
hereof, the Company shall give Employee 180 days prior written notice and shall
continue to pay Employee his base salary hereunder and provide Health Benefits
for a period of 12 months after the date of termination.
(d) The Employee may terminate the Employee's employment with the
Company and all rights and obligations, other than accrued but unpaid
obligations, of the parties hereunder except with regard to this contract by a
one (1) month prior written notice to the other.
(e) The Company shall have the right to terminate this Agreement and
Employee's employment by the Company immediately for justifiable Cause, which is
limited to (i) 30 days after delivery of written notice of a material breach by
Employee of any material provision of this Agreement, during which 30 day period
Employee may cure such breach and upon such cure such notice shall be withdrawn,
(ii) any act of fraud, misappropriation of funds or embezzlement by the Employee
in connection with his employment thereunder, and (iii) action by Employee
constituting willful malfeasance having a materially adverse effect on the
Company. Upon such termination, the company shall have no further obligations to
Employee hereunder other than accrued but unpaid obligations.
(f) If there shall occur a Change in Control (as hereinafter
defined) of the Company and, within six (6) month before or after such Change in
Control, there occurs (i) the Employee's termination Without Cause, (ii) any
demotion resulting in a material adverse change in the duties or reporting
relationships of the Employee set forth on Exhibit A hereto, (iii) such duties
being provided to any entity other than the ultimate parent of the surviving
entity of such transaction, (iv) movement of the Company's principal offices (as
set forth in the first paragraph of this Agreement) in excess of fifty miles, or
(v) Employee's voluntary termination upon the occurrence and continuance of any
of the foregoing clauses (ii), (iii) or (iv), all of the Employee's Stock
Options shall immediately vest and be exercisable and Employee shall be entitled
to twenty four (24) months severance, bonus and applicable benefits. A "Change
in Control" as used herein shall mean any (x) merger, consolidation or
amalgamation of the Company with another entity in which the shareholders of the
Company prior to such transaction hold less than 51% of the voting power of the
securities of the surviving entity after such transaction, (y) sale of all or
substantially all of the Company's assets, or (z) tender offer or other
transaction or series of related transactions which results in any entity (other
than The Xxxxxxxxx Group LLC) holding in excess of 51% of the voting power of
the securities of the Company outstanding immediately after such tender offer,
transaction or series of related transactions.
3. Employee agrees with the Company that Employee will not during or after
the Term disclose to anyone (except to the extent reasonably necessary for
Employee to perform his duties hereunder) any "confidential information" as such
term is hereinafter qualified concerning the business or affairs of the Company
which Employee may have acquired in the course of or as incident to his
employment or prior dealings with the Company, including, without limitation,
customer lists, business or trade secrets of, or methods or techniques used by,
the Company or any information concerning its customers. For purposes of this
Section, confidential information
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shall not include information which (i) is known to the public prior to the date
of communication thereof by the Employee, (ii) becomes known to the public
thereafter other than through communications by Employee, or (iii) becomes known
to Employee subsequent to the date of his termination of employment with the
Company. In the event that Employee is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, any informal or formal investigation by any state, local
or foreign government or governmental agency or authority or otherwise) to
disclose any confidential information, Employee will notify the Company promptly
so that the Company may seek a protective order or other appropriate remedy or,
in its sole discretion, waive compliance with the terms hereof. Employee agrees
not to oppose any action by the Company to obtain any protective order or other
appropriate remedy. In the event that no such protective order or other remedy
is obtained, or that the Company waives compliance with the terms hereof,
Employee will furnish only that portion of the confidential information which
Employee is advised by counsel is legally required and Employee will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the confidential information.
4. (a) Employee acknowledges that his services and responsibilities are of
unique and particular significance to the Company and that his position with the
Company will give him a close knowledge of its policies and trade secrets.
Employee agrees as follows: If prior to the expiration of the Term, he
voluntarily resigns his employment with the Company or the Company terminates
his employment for Cause, Employee will not, directly or indirectly, on behalf
of himself or others, commencing with the date of termination and ending one
year after the termination date, (A) compete directly or indirectly for any
Company business opportunity that he knew about through his employment with
Company, whether as an officer, director, employee, partner, investor, or agent
of any company, (B) solicit or attempt to solicit any employee of the Company to
terminate his or her employment by the Company, or (C) induce or attempt to
induce any customer or independent contractor of the Company to terminate its
relationship with or to take any action that would be disadvantageous to the
business of, the Company. Notwithstanding the foregoing, the Employee may own
solely as a passive investor up to 5% of the equity securities of any company
which has a class of securities that are publicly traded.
(b) Employee acknowledges that the provisions of this Section are
reasonable and necessary for the protection of the Company, and that each
provision and the period of time, geographic areas and types and scope of
restrictions on the activities specified herein are, and are intended to be,
divisible. If any provision of this Section, including any sentence or part
hereof, shall be deemed contrary to law or invalid on unenforceable in any
respect by a court of competent jurisdiction, the remaining provisions shall not
be affected, but shall, subject to the discretion of such court, remain in full
force and effect and any invalid and unenforceable provisions shall be deemed,
without further action on the part of the parties hereto, modified and limited
to the extent necessary to render this valid and enforceable. The parties
acknowledge that the Company shall be entitled to all remedies provided for at
law or in equity, including without limitation, an injunction to enforce the
provisions of this Section. This Section shall not be the exclusive remedy
available to the Company in the event of breach of this Agreement and the
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rights and remedies provided for in this Section shall be in addition to all
other rights and remedies available to the Company.
5. Employee represents and warrants to the Company that he is not under
any obligation of a contractual or other nature to any person, firm or
corporation other than the Company which would be inconsistent or in conflict
with this Agreement at the time Employee works on a full time basis with
Company.
6. (a) This Agreement contains the entire agreement between the parties hereto,
supersedes and nullifies all prior understandings, promises and undertakings, if
any, made orally or in writing by or on behalf of the parties with respect to
the subject matter hereof, and may not be modified or terminated orally. This
Agreement shall be construed and governed in accordance with the laws of the
State of New York.
(b) Except with respect to suits brought by third parties against the Employee
and/or the Company, any controversy or dispute between the Employee and the
Company with respect to the application or interpretation of the terms of this
Agreement shall be determined by arbitration in the City of New York in
accordance with the rules of the American Arbitration Association then
obtaining, provided, however:
(i) Discovery shall be limited to three depositions for each
party, two interrogatories, and no more than 25 requests by
each party for production of documents,
(ii) The arbitrators shall have the power to issue subpoenas for
the attendance of witnesses and subpoenas duces tecum for the
production of documents.
(iii) Witnesses shall be entitled to receive fees and mileage,
(iv) The arbitrators shall decide the dispute in accordance with
applicable substantive law, and
(v) The decision shall include a determination of all the issues
submitted to the arbitrators (including claims of offset), the
decision of which is necessary to determine the controversy.
Any decision made in accordance with such issues shall be
binding on all parties in interest and judgment on the award
rendered may be entered in any court having jurisdiction
thereof.
The arbitration panel shall be composed of three members, one designated
by the Company, one designated by the Employee and the third designated jointly
by the Company and the Employee, or, failing to agree on such third arbitrator,
by the Company and Employee designated arbitrators. The cost of the arbitration
shall be paid by the non-prevailing party; provided, however, each party shall
bear the expenses of its own attorneys.
(c) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns and the Employee and his heirs,
executors, administrators and legal representatives, but no right or
responsibility the Employee hereunder may be assigned, pledged or encumbered by
him without the written consent of the Company.
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(d) Any notice referred to herein shall be sufficient if furnished in
writing, and delivered in person or mailed by overnight courier or certified
mail (return receipt requested) to the respective parties at his address set
forth above or such other address as either party from time to time shall
designate in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the data first above written.
PRT Group Inc.
BY: /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxx
Chief Executive Officer Employee
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EXHIBIT A
JOB DUTIES AND RESPONSIBILITIES
Xxxxxx X. Xxxxxxxx will assume the official title of Executive Vice President of
Finance and Administration and Chief Financial Officer reporting to Xxxxxxx X.
Xxxxxxxxx, CEO and President of PRT Group Inc. His responsibilities will include
directing, monitoring and controlling the PRT Group's financial and
administrative affairs. The duties and responsibilities set forth below
represent goals which Xx. Xxxxxxxx should strive to achieve subject to the need
to prioritize his efforts based upon circumstances and available time. The
following list of duties, responsibilities and goals is expected to be modified
both by formal action and informal course of conduct
Principle Duties and Responsibilities
o Develop and coordinate the annual operating and capital budgets.
o Supervise preparation for and completion of the annual Audit by Company's
Audit firm.
o Oversee and act as principal liaison with respect to the Company's
interactions with financial analysts, institutional investors, and
shareholders.
o Oversee, from the finance perspective, the Company's proposals to sell
equity to the public in an IPO and subsequent secondary offerings of
equity or debt.
o Develop and coordinate the Company's Finance and Administration budgets
and functions.
o Oversee the preparation and production of Company financial statements,
reporting requirements, financial analysis, and financing for mergers and
acquisitions.
o Manage the Company's banking and other financial institution relationships
to assist in Company financial and administrative preparedness.
o Monitor the financial performance of PRT and its affiliates and their key
engagements, including efforts to identify potential problems and
recommend resolutions.
o Maintain and periodically update the system of internal controls, which
system shall include documentation of key financial policies and
procedures.
o Maintain and periodically update an effective accounting operation and
system for PRT's global operations; oversee the development and
implementation of accounting and reporting systems and policies to be
utilized by the PRT Group in general; develop standardized financial
accounting and reporting processes to be utilized at all locations.
Develop, manage, and seek to improve the efficiency of PRT's current
accounting staff.
o Analyze and counsel Company executives on the financial aspects of
business expansion or acquisition opportunities.
o Monitor PRT Group's capital needs and seek alternative sources of
financing.
o Manage PRT Group's daily cash position, seeking to maximize utilization
and control while ensuring that all obligations are met; develop and
periodically update a strategy to manage cash balances at all PRT Group
locations, seeking to maximize short-term investment opportunities while
maintaining a desired level of liquidity.
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o Periodically analyze PRT Group's corporate structure, seeking to optimize
income and other tax savings opportunities; monitor the capital structure
and the investment and funds distribution opportunities relating to PRT
Group's foreign locations; direct the preparation and filing of all
necessary United States, state, local and foreign income, franchise and
other tax filings.
o Serve as a focal point for identifying insurance requirements and exposure
and arrange for appropriate coverage.
o Hire and terminate Company employees reporting to Employee, with
appropriate CEO approval.
Inter-Company and Inter-Departmental Leadership
o Demonstrate strong verbal and written communication skills.
o Demonstrate effective inter-personal skills in coordination of
inter-departmental and inter-company communications.
o Derive methods for and coordinate the education of Company personnel on
relevant matters relating to the smooth operation of the finance function.
o Due to PRT's planned expansion, Employee may be assigned to lead or manage
selective additional functions as the need arises, subject to the
understanding that such additional functions will limit the time which
Employee can devote to his other duties and responsibilities.
o Report regularly to the Company's business executives on the financial
status of PRT's business and P&L units.
o Arrange for designated managers to be provided with available real time
financial information and reports.
o Effectively and efficiently service the internal and external customers of
Finance.
o Quarterly feedback on the performance of Finance from the business unit
leaders will be sought by the Company. Employee shall evaluate and, as
appropriate, integrate the feedback provided to him.
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EXHIBIT B
EMPLOYMENT AGREEMENT ADDENDUM
Salary and Benefits
o Your salary at PRT for the first year of the Term is $200,000 per year.
Future raises will be reviewed annually by the CEO in conjunction with the
Board of Director's Compensation Committee.
o During the Term, Employee shall be entitled to participate in an executive
performance based incentive compensation program developed by the Board of
Directors Compensation Committee for the Company's executives. Such
participation shall be based on the overall financial and profitable
growth of the Company and certain other factors. This compensation will be
paid not later than the first quarter of each calendar year.
o PRT will offer its standard personal day policy to you (20 days vacation
and 5 days sick time).
o Life and accidental death and dismemberment insurance coverage in the
amount of $30,000.00, for which PRT will pay 80% of the cost.
o Eligibility to participate within PRT's 401(k) Plan.
o You will receive a guaranteed grant of options to purchase shares of PRT
common stock ("Stock Options") in 1997 and are eligible to receive
additional performance-based stock options each year on a schedule no less
favorable than that offered to other executives, and, with respect to
1998, notwithstanding that Employee may not have been employed by the
Company for a full year prior to the date of the 1998 Stock Option grant.
All Stock Options issued are in accordance with and subject to the terms
of the Company's Amended and Restated 1996 Stock Incentive Plan ("Option
Plan"). The guaranteed stock options listed below are priced at the 1997
level of $13.00 per share:
Immediately receive 175,000 Stock Options with an exercise
price of $13.00 per share with PRT vesting schedule GIV (50% vests
immediately with such option shares subject to an 18 month lock-up
provision starting on the date of grant, 50% vests September 18,
1998 with such option shares subject to a 24 month lock-up provision
starting on the date of grant; provided that such lock-up provisions
shall automatically end on the date of termination of the Employee).
o During the Term, the Company shall make available for Employee's use an
automobile and insurance allowance of $600 per month, in the aggregate.
o During the Term, the Company shall make available a maximum of $10,000 per
year to cover the costs of Employee's prior disability and life insurance
premiums (which amount shall be grossed up in the amount of any federal,
state and local taxes payable).
o During the Term, Employee shall be eligible to participate in all employee
benefit plans and arrangements that may be offered from time to time by
the Company to its executive level employees, in accordance with the terms
and provisions of such plans.
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o Company will maintain Directors and Officers liability insurance.
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