EXHIBIT 10.38
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made as of this
24th day of, January 2001, by and among THE PROFIT RECOVERY GROUP INTERNATIONAL,
INC., a Georgia corporation ("PRGX"), XXXXXX XXXXXXX & ASSOCIATES INTERNATIONAL,
INC., a Texas corporation ("HSA-Texas"), XXXXXX XXXXXXX, a Texas resident ("X.
Xxxxxxx"), XXXXXX X. XXXXXXX, a Texas resident ("X. Xxxxxxx"), each of the
trusts identified on the signature pages hereto (collectively, the "Trusts" and
individually a "Trust") and X. XXXXXXX, as the Shareholders' representative
("Shareholders' Representative").
WITNESSETH:
WHEREAS, X. Xxxxxxx, X. Xxxxxxx and the Trust are the holders of a
majority of the outstanding equity of HSA-Texas;
WHEREAS, X. Xxxxxxx is the holder of a majority of the outstanding
equity of XXXXXX XXXXXXX & ASSOCIATES (ASIA) LIMITED, a Hong Kong corporation
("Asia"), and HS&A INTERNATIONAL PTE LTD., a Singapore corporation
("Singapore");
WHEREAS, the Trust is the sole holder of the outstanding equity of
XXXXXX XXXXXXX & ASSOCIATES (AUSTRALIA), INC., a Texas corporation ("Australia")
and XXXXXX XXXXXXX & ASSOCIATES (CANADA), INC., a Texas corporation ("Canada");
WHEREAS, in accordance with that certain Agreement and Plan of
Reorganization relating to the acquisition of assets of HSA-Texas (the "Asset
Agreement") dated as of August 3, 2001 by and among PRGX, HSA-Texas, X. Xxxxxxx,
X. Xxxxxxx and the Trust, PRGX has agreed to acquire substantially all of the
assets and certain of the liabilities of HSA-Texas for the consideration and
upon the terms and conditions set forth in the Asset Agreement; and
WHEREAS, in accordance with that certain Agreement and Plan of
Reorganization relating to the acquisition of equity of Asia, Singapore,
Australia and Canada (the "Stock Agreement") dated as of August 3, 2001 by and
among PRGX, X. Xxxxxxx, X. Xxxxxxx, the Trust and X. Xxxxxxx, PRGX has agreed to
acquire substantially all of the outstanding equity of the following entities:
Asia, Singapore, Australia and Canada (collectively, Asia, Singapore, Australia
and Canada being the "Stock Companies"); and
WHEREAS, in accordance with Article 7 of the Asset Agreement, (a)
HSA-Texas, X. Xxxxxxx, X. Xxxxxxx and the Trusts (other than the AHS Irrevocable
Trust), jointly and severally, have agreed, and the AHS Irrevocable Trust,
severally, has agreed, to indemnify and hold PRGX, and its subsidiaries,
affiliates, directors, officers, employees and agents (collectively, the "PRGX
Indemnified Parties"), harmless from and against all Section 7.1 Indemnified
Claims as defined therein and (b) PRGX has agreed to indemnify and hold
HSA-Texas, X. Xxxxxxx, X. Xxxxxxx, the Trust and the affiliates, directors,
officers, employees and agents of HSA-Texas, X. Xxxxxxx, X. Xxxxxxx, the Trust
(collectively, the "HSA-Texas Indemnified Parties") harmless from and against
all Section 7.2 Indemnified Claims as defined therein;
WHEREAS, in accordance with Article 6 of the Stock Agreement, (a) X.
Xxxxxxx and X. Xxxxxxx, jointly and severally (and prior to the Closing as
defined in the Stock Agreement, X. Xxxxxxx and X. Xxxxxxx, and the Stock
Companies, jointly and severally), have agreed to indemnify and hold the PRGX
Indemnified Parties, harmless from and against all Section 6.1 Indemnified
Claims as defined therein and (b) PRGX has agreed to indemnify and hold the
HSA-Texas Indemnified Parties harmless from and against all Section 6.2
Indemnified Claims as defined therein;
WHEREAS, each of the parties to the Asset Agreement and the Stock
Agreement (collectively, the Asset Agreement and the Stock Agreement being the
"Acquisition Agreements") desires to set forth herein the procedures for
asserting and responding to claims for indemnification arising under the
Acquisition Agreements and set forth certain limitations on the indemnification
provided for in the Acquisition Agreements;
WHEREAS, pursuant to Article 11.1 of the Asset Agreement and Article
VIII of the Stock Agreement, each shareholder of HSA-Texas party to the Asset
Agreement and each shareholder of the Stock Companies irrevocably appointed X.
Xxxxxxx, and any successor to X. Xxxxxxx appointed pursuant thereto (referred to
herein as the "Shareholders' Representative"), as the true and lawful agent and
attorney-in-fact of such Person with full power of substitution and with full
power and authority to act in the name, place and stead of such Person with
respect to certain matters, including the settling of all claims, matters,
disputes or disagreements under this Indemnification Agreement; and
WHEREAS, as required by the Acquisition Agreements and as an inducement
to the consummation of the transactions contemplated in the Acquisition
Agreements, the parties hereto desire to set forth certain agreements regarding
indemnification under the Acquisition Agreements;
WHEREAS, capitalized terms not otherwise defined herein (or with
respect to which there is no reference to the document in which such capitalized
term is defined) shall have the meanings assigned to them in the Asset
Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. PROCEDURES REGARDING INDEMNIFICATION.
(a) Definitions. Each Person who has obligations to indemnify others
under either of the Acquisition Agreements is referred to herein in such
capacity as the "Indemnifying Party" and each Person who is entitled to be
indemnified under either of the Acquisition Agreements is referred to herein in
such capacity as the "Indemnified Party".
(b) Procedure-Third Party Claims. Promptly after receipt by an
Indemnified Party of notice by a third party of any claim, complaint or the
commencement of any action or proceeding with any Governmental Entity with
respect to which such Indemnified Party may be entitled to receive payment from
the Indemnifying Party(ies) for any indemnified claims under either or both of
the Acquisition Agreements, such Indemnified Party shall notify the Indemnifying
Party of such claim or demand or of the commencement of such action or
proceeding and provide copies of all
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pleadings and other documentation relating to such claim, demand, complaint,
action or proceeding; provided, however, that the failure so to notify the
Indemnifying Party shall relieve the Indemnifying Party from liability for such
claim only if, and only to the extent that, such failure to notify the
Indemnifying Party results in the forfeiture by the Indemnifying Party of
material rights and defenses otherwise available to the Indemnifying Party with
respect to such claim, demand, action or proceeding. The Indemnifying Party
shall have the right, upon written notice delivered to the Indemnified Party
within twenty (20) days thereafter, to assume the defense of such claim, demand,
action or proceeding, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of the fees and
disbursements of such counsel. In the event, however, that the Indemnifying
Party declines or fails to assume the defense of the claim, demand, action or
proceeding or to employ counsel reasonably satisfactory to the Indemnified
Party, in either case within such 20-day period, then such Indemnified Party may
employ legal counsel to represent or defend such Indemnified Party in any such
claim, demand, action or proceeding and the Indemnifying Party shall pay the
reasonable fees and disbursements of such legal counsel as incurred; provided,
however, that the Indemnifying Party shall not be required to pay the fees and
disbursements of more than one legal counsel for all Indemnified Parties in any
jurisdiction in any single claim, demand, action or proceeding. In any claim,
demand, action or proceeding with respect to which indemnification is being
sought hereunder, the Indemnified Party or the Indemnifying Party, whichever is
not assuming the defense thereof, shall have the right to participate in such
defense and to retain such party's own counsel at such party's own expense. The
Indemnifying Party or the Indemnified Party, as the case may be, shall at all
times use reasonable efforts to keep the other party(ies) reasonably apprised of
the status of the defense of any claim, demand, action or proceeding the defense
of which such party is maintaining, and to cooperate in good faith with each
other with respect to the defense of any such claim, demand, action or
proceeding.
(c) Settlement of Third Party Claims. No Indemnified Party may settle
or compromise any claim, demand, action or proceeding or consent to the entry of
any judgment with respect to which indemnification is being sought hereunder
without the prior written consent of the Indemnifying Party, unless such
settlement, compromise or consent includes an unconditional release of the
Indemnifying Party from all liability arising out of such claim without payment
of consideration and without any adverse consequence whatsoever to the
Indemnifying Party of the type described below in clause (ii) of this Section
1(c). An Indemnifying Party may not, without the prior written consent of the
Indemnified Party, settle or compromise any claim, demand, action or proceeding
or consent to the entry of any judgment with respect to which indemnification is
being sought hereunder unless (i) the Indemnifying Party shall pay or cause to
be paid all amounts arising out of such settlement or judgment concurrently with
the effectiveness thereof; (ii) the terms or effect of the settlement shall not
encumber any of the assets of any Indemnified Party or any affiliate thereof, or
contain or result in any restriction, interference or condition that would apply
to such Indemnified Party or its affiliates or to the conduct of any of their
respective businesses; and (iii) shall obtain, as a condition of such
settlement, a complete and unconditional release of each Indemnified Party. If a
firm, written offer is made to settle any such third party claim, demand, action
or proceeding and the Indemnifying Party proposes to accept such settlement and
the Indemnified Party refuses to consent to such settlement, then: (A) the
Indemnifying Party shall be excused from, and the Indemnified Party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; and (B) the maximum liability of the Indemnifying Party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
Indemnified Party
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on such third party claim, demand, action or proceeding is greater than the
amount of the proposed settlement.
(d) Procedure-Other Claims. In the event an Indemnified Party shall
claim a right to payment pursuant to either or both of the Acquisition
Agreements which does not involve a third party claim, demand, action or
proceeding, such Indemnified Party shall send written notice of such claim to
the Indemnifying Party(ies). Such notice shall specify the basis for such claim
and shall be accompanied by copies of relevant documentation relating to such
claim. As promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the Indemnifying Party shall establish the
merits and the amount of such claim (by mutual agreement, litigation,
arbitration or otherwise) and within five (5) business days after the final
determination of the merits and amount of such claim, the Indemnifying Party
shall pay to the Indemnified Party immediately available funds in an amount
equal to such claim as determined hereunder.
(e) The Shareholders' Representative shall in all events act under this
Agreement for each and all of HSA-Texas, X. Xxxxxxx and X. Xxxxxxx, and the
Trusts whether as an Indemnified Party or an Indemnifying Party, pursuant to the
authority given to the Shareholders' Representative under the applicable
sections of the Acquisition Agreements. PRGX and each of the PRGX Indemnified
Parties shall have the right to deal exclusively with the Shareholders'
Representative in respect of all matters relating to HSA-Texas, X. Xxxxxxx and
X. Xxxxxxx under this Agreement.
2. PAYMENT OF INDEMNIFIED CLAIMS. The Shareholders' Representative
acting on behalf of each of HSA-Texas, X. Xxxxxxx and X. Xxxxxxx as indemnifying
parties (collectively, the "Xxxxxxx Indemnifying Parties") shall have the option
to pay any Section 7.1 Indemnified Claims, as defined in the Asset Agreement,
and any Section 6.1 Indemnified Claims, as defined in the Stock Agreement
(collectively, the Section 7.1 Indemnified Claims and the Section 6.1
Indemnified Claims being the "Xxxxxxx Indemnified Claims") either in cash or by
delivery of that number of shares of PRGX Common Stock equal to the amount of
such Xxxxxxx Indemnified Claim divided by the average closing sale price per
share of PRGX Common Stock as reported in The Wall Street Journal for the last
ten trading days immediately preceding the day such shares of PRGX Common Stock
are tendered to the PRGX Indemnified Parties in payment of such Xxxxxxx
Indemnified Claims.
3. SURVIVAL. All representations and warranties contained in (a) the
Acquisition Agreements, (b) the HSA-Texas Transaction Documents and the PRGX
Transaction Documents, as defined in the Asset Agreement, and (c) the
Shareholders' Transaction Documents and the PRGX Transaction Documents, as
defined in the Stock Agreement, delivered at the Closing or made in writing in
connection herewith shall survive the execution and delivery of the Acquisition
Agreements and this Agreement, any examination by or on behalf of the party or
parties to whom they were made, the Closing and the completion of the
transactions contemplated herein for a period ending on that date (the "General
Expiration Date"), which is 60 days after the date of issuance of PRGX
independent auditor's report in respect of the second annual audited financial
statements issued after the Closing Date which include the Acquired Assets under
the Asset Agreement and the business of the Stock Companies in the financial
position and results of operation of PRGX and shall thereafter cease to be of
any force and effect, except for:
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(i) claims as to which notice has been given in
accordance with Section 1 hereof prior to the General Expiration Date and which
are pending on such General Expiration Date;
(ii) claims based on the breach or nonfulfillment of
representations, warranties, covenants and agreements relating to (A) Taxes, (B)
Employee Benefit Plans, or (C) any litigation, arbitrations and mediations that
existed on or at any time prior to the Effective Date, each of which shall
survive until the end of the statute of limitations applicable to the underlying
claim for which indemnification is sought;
(iii) claims based on the breach or nonfulfillment of
representations, warranties, covenants and agreements relating to compliance by
any of the Companies with applicable laws, orders, rules and regulations of all
Governmental Entities, each of which shall survive until the third anniversary
of the Closing Date; and
(iv) representations and warranties with respect to
ownership of the capital stock of each Company, as defined in the Asset
Agreement, and of the Stock Companies, each of which shall survive without
expiration. All covenants and agreements contained in (A) the Acquisition
Agreements, (B) the HSA-Texas Transaction Documents and the PRGX Transaction
Documents, as defined in the Asset Agreement, and (C) the Shareholders'
Transaction Documents and the PRGX Transaction Documents, as defined in the
Stock Agreement shall survive the execution, delivery and closing of this
Acquisition Agreements and the consummation of the transactions contemplated
therein for a period ending on the General Expiration Date, provided that any
covenant which expressly specifies a period for performance shall survive until
the end of such specified period. In addition, notwithstanding anything to the
contrary contained herein or in the Acquisition Agreements, in the event of a
breach of a representation or warranty or failure to perform a covenant or
agreement by a party which constitutes civil fraud, the representation,
warranty, covenant or agreement shall survive the consummation of the
transactions contemplated in the Acquisition Agreements and continue in full
force and effect thereafter with respect to such fraud until the expiration of
the applicable statute of limitations for civil fraud.
4. LIMITATIONS.
(a) Base Amount.
(i) Notwithstanding anything to the contrary
contained herein or in the Acquisition Agreements, PRGX will not assert a claim
against any Xxxxxxx Indemnifying Party for indemnification pursuant to Section
7.1 of the Asset Agreement and/or pursuant to Section 6.1 of the Stock Agreement
until the total of all Section 7.1. Indemnified Claims under the Asset Agreement
and all Section 6.1 Indemnified Claims under the Stock Agreement equals or
exceeds in the aggregate $3,000,000 (the "Base Amount"), at which time, all
Section 7.1 Indemnified Claims under the Asset Agreement and Section 6.1
Indemnified Claims under the Stock Agreement, including the Base Amount, may be
claimed in full and, if indemnifiable under the Article 7 of the Asset Agreement
or Article 6 of the Stock Agreement, as the case may be, shall be indemnified in
full; provided however, PRGX shall have the right to be indemnified without
regard to such Base Amount for claims relating to or arising from (A) the
matters described in Section 7.1(c)-(j) of the Asset Agreement, except with
respect to claims under
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Section 7.1(g) of the Asset Agreement, the deductible contained therein shall
apply; (B) Section 6.1(c)-(h) of the Stock Agreement, except with respect to
claims under Section 6.1(e) of the Stock Agreement, the deductible contained
therein shall apply; (C) claims in respect of payroll and other Tax liabilities;
(D) liabilities arising from breaches of representations and warranties
contained in Section 5.22 of the Asset Agreement; (E) compliance with Executive
Order 11246; (F) ownership of any equity interest in any Company; (G) existing
litigation, arbitrations, or mediations, and (H) claims based on noncompliance
by any of the Companies with applicable laws, orders, rules and regulations of
Governmental Entities.
(ii) Notwithstanding anything to the contrary
contained herein or in the Acquisition Agreements, neither X. Xxxxxxx, X.
Xxxxxxx, the Trust, HSA-Texas shall assert any claim against PRGX for
indemnification pursuant to Section 7.2 of the Asset Agreement or Section 6.2 of
the Stock Agreement until the total of all Section 7.2 Indemnified Claims under
the Asset Agreement and all Section 6.2 Indemnified Claims under the Stock
Agreement equal or exceed the Base Amount, at which time all such Section 7.2
Indemnified Claims and Section 6.2 Indemnified Claims including the Base Amount
may be claimed in full and if indemnifiable under the respective Acquisition
Agreements and this Agreement shall be indemnified in full.
(b) Cap.
(i) Notwithstanding anything to the contrary
contained herein or in the Acquisition Agreements, in no event will the Xxxxxxx
Indemnifying Parties be liable for aggregate Section 7.1 Indemnified Claims
under the Asset Agreement and Section 6.1 Indemnified Claims under the Stock
Agreement exceeding $53,300,000, being thirty-five percent (35%) the aggregate
amount of the Consideration under the Asset Agreement and the Consideration
under the Stock Agreement, with the shares of PRGX Common Stock constituting
such aggregate Considerations based on the PRGX Average Price as defined in the
Asset Agreement (the "Cap").
(ii) Notwithstanding anything to the contrary
contained herein or in the Acquisition Agreements, in no event will PRGX be
liable for aggregate Section 7.2 Indemnified Claims under the Asset Agreement
and Section 6.2 Indemnified Claims under the Stock Agreement exceeding the Cap.
(c) Materiality. Notwithstanding anything in this Agreement or
the Acquisition Agreements to the contrary, for purposes of determining (i)
whether the PRGX Indemnified Parties have a Section 7.1 Indemnified Claim under
the Asset Agreement or a Section 6.1 Indemnified Claim under the Stock Agreement
against any of the Xxxxxxx Indemnifying Parties or (ii) whether the X. Xxxxxxx,
X. Xxxxxxx, the Trust or HSA-Texas have a Section 7.2 Indemnified Claim under
the Asset Agreement or a Section 6.2 Indemnified Claim under the Stock Agreement
against PRGX, all references to "material,""materiality," "Material Adverse
Effect," or words of similar meaning or import included in any representation,
warranty, covenant or agreement shall be completely disregarded, and such
representation, warranty, covenant or agreement shall be read as if the
applicable representation, warranty, covenant or agreement, as the case may be,
had been written without such words. It is the intention of the parties hereto
that the concept of materiality as a limitation in any such representation,
warranty, covenant or agreement is for the purpose of determining whether the
closing conditions under the Acquisition Agreements have been
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fulfilled and met or whether the parties thereto have breached such
representation, warranty, covenant or agreement prior to Closing; however, such
words are not intended to limit the right of any PRGX Indemnified Party(ies) to
recover, or the amount of such recovery with respect to all claims, liabilities,
damages, losses, costs and expenses (including reasonable attorneys' fees and
costs of curing any breach of any representation, warranty, agreement or
covenant) incurred or suffered by any of them and arising out of any such
Section 7.1 Indemnified Claim or Section 7.2 Indemnified Claim under the Asset
Agreement or Section 6.1 Indemnified Claim or Section 6.2 Indemnified Claim
under the Stock Agreement, as the case may be.
5. MISCELLANEOUS PROVISIONS.
(a) Severability. If any provision of this Agreement is
prohibited by the laws of any jurisdiction as those laws apply to this
Agreement, that provision shall be ineffective to the extent of such prohibition
and/or shall be modified to conform with such laws, without invalidating the
remaining provisions hereto.
(b) Amendment; Modification; Extension; Waiver.
(v) This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Acquisition by the shareholders of PRGX and HSA-Texas, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of the NASDAQ Stock Market requires further approval by the PRGX
shareholders without such further approval; provided, however, this Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
(vi) At any time prior to the Closing, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
9.2(g), waive compliance with any of the agreements or conditions contained in
this Agreement. Any such extension or waiver shall be valid only if set forth in
an instrument in writing signed by each of the parties hereto. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(c) Assignment, Survival and Binding Agreement. This
Agreement, the other HSA-Texas Transaction Documents and the other PRGX
Transaction Documents (a) may not be assigned by PRGX on or prior to the Closing
without the prior written consent of HSA-Texas and Shareholders (except for an
assignment to a wholly owned subsidiary of PRGX, which may be made without the
prior consent of, but with notice to, HSA-Texas provided that, in such event,
the assignor shall remain obligated hereunder in the same manner as if such
assignment had not been effected); (b) may not be assigned by PRGX after the
Closing without the prior written consent of HSA-Texas and Shareholders'
Representative, except for (i) an assignment to an affiliate of PRGX, which may
be made without the prior consent of, but with notice to, HSA-
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Texas and Shareholders' Representative; provided that, in such event, the
assignor shall remain obligated hereunder in the same manner as if such
assignment had not been effected and (ii) in the event of a merger,
consolidation, reorganization or similar transaction of PRGX with a Person where
such other Person is the surviving entity of such transaction, this Agreement
may be assigned by PRGX without the prior consent of, but with notice to,
HSA-Texas and Shareholders' Representative; and (c) may not be assigned by
HSA-Texas or Shareholders at any time, without the prior written consent of
PRGX. The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns. The parties hereto acknowledge that
PRGX intends to transfer and assign the Acquired Assets and the Assumed
Liabilities to PRGUSA, its wholly-owned subsidiary, as soon as practicable after
the Closing, whereupon all obligations of PRGX referred to herein with respect
to such Acquired Assets and Assumed Liabilities shall thereafter be deemed to be
primary obligations of PRGUSA, for which PRGX shall be secondarily liable, and
acknowledge that this sentence constitutes notice of such assignment.
(d) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(e) Notices. All notices, requests, demands, claims or
other communications hereunder will be in writing and shall be deemed duly given
if personally delivered, sent by telefax, sent by a recognized overnight
delivery service which guarantees next-day delivery ("Overnight Delivery") or
mailed by certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient, as set forth below:
If to any Xxxxxxx Indemnifying Party: Shareholders' Representative
Xxxxxx Xxxxxxx & Associates
International, Inc.
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telefax: (000) 000-0000
with a copy to: Xxxxxx Xxxxx Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxxx Xxxx
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telefax: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxx & Associates
International, Inc.
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Telefax: (000) 000-0000
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If to PRGX or PRGX: The Profit Recovery Group USA, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx XxXxxxxx, Xx.
Senior Vice President & General Counsel
Telefax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxx Xxxxxxx LLP
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxxx Xxxxxx, Esq.
Telefax: (000) 000-0000
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day (with written confirmation of receipt), (ii) by Overnight
Delivery, will be deemed received on the first business day immediately
following the date sent, and (iii) by certified U.S. Mail, return receipt
requested, will be deemed received three (3) business days immediately following
the date sent. For purposes of this Agreement, a "business day" is a day on
which U.S. national banks are open for business and shall not include a Saturday
or Sunday or legal holiday. Notwithstanding anything to the contrary in this
Agreement, no action shall be required of the parties hereto except on a
business day and in the event an action is required on a day which is not a
business day, such action shall be required to be performed on the next
succeeding day which is a business day.
(f) Entire Agreement; No Third Party Beneficiaries.
Except for the Nondisclosure Agreement, which remains in full force and effect
in accordance with the terms thereof, and the Acquisition Agreements, this
Agreement constitutes the entire agreement and supersedes any and all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, is not intended to confer upon any Person other than
PRGX, HSA-Texas, the Stock Companies, X. Xxxxxxx, X. Xxxxxxx and the Trust, any
rights or remedies hereunder.
(g) Further Assurances. The parties to this Agreement
agree to execute and deliver, both before and after the closing, any additional
information or documents or agreements contemplated hereby and/or necessary or
appropriate to effect and consummate the transactions contemplated hereby.
(h) Choice of Law. This Agreement and all documents
executed in connection therewith shall be governed by, and construed in
accordance with, the laws of the State of Georgia, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(i) Consent to Jurisdiction. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any federal court
located in the Northern District of Georgia
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or, if there is not a basis for federal court jurisdiction, a Superior Court of
Xxxx County, Georgia in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal court sitting in the Northern
District of Georgia or a Xxxx County Superior Court.
(j) Dispute Resolution.
(i) Financial Matters. Notwithstanding any
provision of this Agreement to the contrary, all disputes, controversies or
claims arising out of or relating to this Agreement or the transactions
contemplated hereby relating to financial matters shall be resolved by agreement
among the parties, or, if not so resolved within forty-five (45) days following
written notice of dispute given by either party hereto to the other, by
arbitration in accordance with Title 9 of the United States Code (the United
States Arbitration Act), the Commercial Arbitration Rules of the American
Arbitration Association, and its Optional Rules for Emergency Measures of
Protection (the "Optional Rules"), all as amended from time to time
(collectively, the "Rules") and the provisions of this Section; provided,
however, that the provisions of this Section shall prevail in the event of any
conflict with such Rules. The parties agree that they shall use their best
efforts to cause the matter to be presented to the arbitral tribunal as soon as
possible in light of the complexity of the dispute. The arbitral tribunal,
except as provided under the Optional Rules, shall consist of three neutral
arbitrators experienced in the industry related to the dispute, one of whom
shall be chosen by the claimant and one chosen by respondent, and the two so
chosen shall choose the third arbitrator who shall act as chairperson. The
parties shall be entitled to engage in discovery in connection with arbitration,
which discovery shall be conducted in accordance with Georgia rules of Civil
Procedure and Evidence. Additionally, there shall be no evidence by affidavit
allowed, and each party shall disclose a list of all documentary evidence to be
used, a list of all witnesses and experts to be called by the party at least
twenty (20) days prior to the arbitration hearing. The decision of a majority of
the arbitral tribunal with respect to the matters referred to them pursuant
hereto shall be final and binding upon the parties to the dispute, and
confirmation and enforcement thereof may be rendered thereon by any court having
jurisdiction upon application of any Person who is a party to the arbitration
proceeding. The arbitral tribunal shall assess fees, expenses, compensation, and
attorney's fees in the award as provided in the Rules. The arbitral tribunal
shall have no power or authority under this Agreement or otherwise to award or
provide for the award of punitive or consequential damages against any party.
Any arbitration shall be conducted in Atlanta, Georgia.
(ii) Other Matters. Notwithstanding any provision
of this Agreement to the contrary, in respect of all disputes, controversies or
claims arising out of or relating to this Agreement or the transactions
contemplated relating to any matters other than financial matters the parties
may exercise any and all rights and remedies available at law or in equity.
Without limiting the generality of the foregoing, in the event of a breach or
threatened breach by any party hereto of any of its covenants or other
obligations hereunder, including, without limitation, the parties' respective
obligations to close the transactions contemplated hereby, each of the parties
hereby consents and agrees that the non-breaching party shall be entitled to an
injunction or similar equitable relief restraining the breaching party(s) from
committing or continuing any such breach or threatened breach or granting
specific performance of any act required to be
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performed by the breaching party(s) under any such provision, without the
necessity of showing any actual damage or that money damages would not afford an
adequate remedy and without the necessity of posting any bond or other security.
The right of the non-breaching party to injunctive relief shall be in addition
to any and all other remedies available to it and shall not be construed to
prevent it from pursuing, either consecutively or concurrently, any and all
other legal or equitable remedies available to them including the recovery of
monetary damages.
(k) Reliance. Each party hereto acknowledges and
represents (i) that this Agreement is executed without reliance on any
agreement, promise, statement, or representation by or on behalf of any person,
except as set forth specifically herein, in the Acquisition Agreements, the
HSA-Texas Transaction Documents or the PRGX Transaction Documents, as defined in
the Asset Agreement, or the Shareholders' Transaction Documents or the PRGX
Transaction Documents, as defined in the Stock Agreement, or referred to herein
or therein, (ii) that no person, and no agent or attorney of any person, has
made any promises, representations, or warranties whatsoever, whether expressed
or implied, which are not expressly contained herein, and (iii) that he or its
authorized officer has read this Agreement and is fully aware of its contents
and legal effect.
(l) Marital Property Rights. The Persons signing in their
individual capacities below, whether as a party or as a spouse of a party,
acknowledge and agree that: (i) each is individually joining in and assenting to
this Agreement, (ii) each consents to and approves of the transactions
contemplated by this Agreement, and (iii) each intends individually to be
legally bound by this Agreement. Each such individual Person also acknowledges
that he or she will directly and personally benefit from the transactions
contemplated by this Agreement and the Acquisition Agreements to which such
individual or his or her spouse is a party, that such Person has had an
opportunity to review all such documents and consult with independent legal
counsel, and that PRGX is entering into this Agreement and the Acquisition
Agreements in reliance upon the agreements set forth in this paragraph.
(m) Section Headings; Construction. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
(n) Obligations of HSA-Texas Stockholders.
Notwithstanding anything to the contrary contained herein, no stockholder of
HSA-Texas (including the Shareholders) nor any of the stockholders of the Stock
Companies shall have any obligations under this Agreement unless and until the
Required HSA-Texas Vote as required by the Asset Agreement has been obtained
from the HSA-Texas stockholders and the required affirmation of the vote of the
stockholders of the Stock Companies as required by the Stock Agreement has been
obtained from each of such stockholders after delivery to them of the Joint
Proxy Statement/Prospectus.
[Signatures begin on next page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxx
--------------------------------------
Name: Xxxx X. Xxxx
Its: Chairman of the Board and CEO
HSA-TEXAS:
XXXXXX XXXXXXX & ASSOCIATES
INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxx
Its: Chairman of the Board and CEO
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxx, signing solely for the
purpose of acknowledging the provisions
of Section 5(l) hereof
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxx Xxxxxxx, signing solely
for the purpose of acknowledging the
provisions of Section 5(l) hereof
Xxxxxx X. Xxxxxxx Irrevocable Trust
u/a dated May 1, 1997
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx, Sole Trustee
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The Xxxxxxx Xxxxxx Xxxxxxx Trust
u/a dated June 3, 1997
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx, Sole Trustee
The Xxxxxxxxx Xxxxxxx Trust
u/a dated March 31, 1998
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx, Sole Trustee
The Xxxxxx Xxxx Xxxxxxx Trust
u/a dated July 3, 2001
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx, Sole Trustee
The HHS Charitable Lead Annuity Trust
u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
The LVS Charitable Lead Annuity Trust
u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
The Xxxxxx Xxxx Xxxxxxx HHS (2001) GST
Trust u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
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The Xxxxxx Xxxxxxx Xxxxxxx HHS (2001)
GST Trust u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
The Xxxxxx Xxxxxx Xxxxxxx HHS (2001)
GST Trust u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
The Xxxxxx Xxxx Xxxxxxx LVS (2001) GST
Trust u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
The Xxxxxx Xxxxxxx Romaner LVS (2001)
GST Trust u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
The Xxxxxx Xxxxxx Xxxxxxx LVS (2001)
GST Trust u/a dated April 5, 2001
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Sole Trustee
SHAREHOLDERS' REPRESENTATIVE:
/s/ Xxxxxx Xxxxxxx
--------------------------------------
Xxxxxx Xxxxxxx
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