EXHIBIT 10.2
May 14, 2002
Xx. Xxxx X. Xxxx
0000 Xxxxxxxxx Xxxxx, XX
Xxxxxxx, XX 00000
Dear Xxxx:
This letter confirms our agreement to amend, effective January 25,
2002, your Employment Agreement with PRG-Xxxxxxx USA, Inc., successor to The
Profit Recovery Group International II, L.P., dated as of March 20, 1996 (the
"Agreement") in the following respects:
1. UPDATE OF TITLE. Section 1 of the Agreement is amended by
deleting the first full sentence and replacing it with the following: "Employee
shall serve as Vice Chairman of PRG-Xxxxxxx International, Inc., a Georgia
corporation ("PRGX") and of PRG-Xxxxxxx USA, Inc., successor to The Profit
Recovery Group International II, L.P., The Profit Recovery Group International
I, Inc., a Georgia corporation ("PRGI"), the sole general partner of the
Company."
2. UPDATE OF BASE SALARY. Section 1(a) of Exhibit C to the
Agreement is amended by deleting said subsection and replacing it with the
following:
"(a) Base Salary. Four-Hundred Thousand and no/100 dollars
($400,000.00) on an annual basis ("Base Salary") shall be payable in
accordance with the Company's customary payroll procedures."
3. UPDATE OF BONUS. Section 1(b) of Exhibit C to the Agreement is
amended by deleting subsections 1(b)(i), (ii) and (iii) and replacing them with
the following:
"(i) "Target" - Employee shall be entitled to a Bonus
in an amount equal to fifty (50%) percent of his Base Salary
if PRGX meets the target goals established for other senior
executive officers by the Compensation Committee of the Board
of Directors; and
(ii) "Stretch" - Employee shall be entitled to a
Bonus in an amount equal to one hundred (100%) percent of his
Base Salary if PRGX meets the stretch goals established for
other senior executive officers by the Compensation Committee
of the Board of Directors."
4. CHANGE SEVERANCE PAYMENT. Section 3(b) of Exhibit C to the
Agreement is deleted in its entirety and the following substituted in lieu
thereof:
"(b) In the event Employee's employment hereunder is
terminated by the Company without cause or by Employee for Good Reason,
Employee shall be entitled to receive Base Salary and Bonus for the
Term Year in which the termination occurs (prorated through the date of
such termination and determined after the end of the applicable Term
Year), plus an additional payment equal to 2
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May 14, 2002
Page 2
times the sum of (A) Employee's Base Salary at the rate then in effect,
(B) the annual Bonus calculated as if the Company achieved its Target
level of performance for the Term Year in which termination occurs, (C)
auto allowance at the rate then in effect and (D) the Annual Deferred
Compensation Credit then in effect. Employee shall not be entitled to
receive any other amount in respect of the Term Year in which
termination occurs or in respect of any subsequent years. The prorated
Base Salary shall be payable in a lump sum within sixty (60) days after
termination, the prorated Bonus shall be payable in a lump sum within
ninety (90) days after the end of the Term Year to which it relates,
and the additional payment shall be payable in equal monthly
installments for the two (2) year term commencing on the last day of
the first month following termination. If the Company gives Employee
notice of non-renewal pursuant to Section 2 of this Agreement, it shall
be deemed to be a termination of Employee's employment without cause
and Employee shall be entitled to compensation pursuant to this Section
3(b)."
5. ADDING PROVISION RE HEALTH INSURANCE. Section 3(f) of Exhibit
C to the Agreement is amended by adding a period after the words "this Exhibit
C", deleting the remainder of Section 3(f) and inserting a new Section (g)
immediately after Section (f), as follows:
(g) Upon the expiration or sooner termination of Employee's
employment with the Company for any reason (including death) other than
termination by the Company for cause pursuant to Section 11(a) of the
Agreement, or upon Employee's otherwise becoming ineligible for
coverage as an employee under the group health plan sponsored by the
Company, the Company shall provide Employee and his spouse with
coverage required by Section 4980B of the Internal Revenue Code and
Part 6 of Subtitle B of Title I of ERISA ("COBRA Coverage") and shall
not charge any otherwise applicable premium or charge for such
coverage. Upon expiration of COBRA Coverage for either of Employee or
his spouse or both (as applicable), the Company shall assist Employee
and/or his spouse in obtaining an individual health insurance policy
which provides health coverage on terms substantially similar to those
provided under COBRA Coverage (the "Individual Replacement Policy").
The Company shall pay all premiums for any Individual Replacement
Policy for Employee and his spouse up to $20,000 per calendar year in
the aggregate, which maximum amount shall be increased each calendar
year commencing January 1, 2003, by a percentage equal to the
percentage increase in the "CPI" occurring since January 1, 2002. For
purposes hereof, "CPI" means the index now known as the "Consumer Price
Index for All Urban Consumers, All Items, U.S. Cities Average,
(1982-1984 = 100)", issued and published by the Bureau of Labor
Statistics of the United States Department of Labor. If the CPI ceases
to use 1982-1984 equaling 100 as the basis of calculation, or if a
change is made in the terms or number of items contained in the CPI, or
if the CPI is altered, modified, converted or revised in any way, then
the increase in annual premiums hereunder shall be determined by
reference to the index
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May 14, 2002
Page 3
designated as the successor to the CPI or other substitute index
published by the government of the United States. In the event the CPI
shall hereafter be converted to a different standard reference base or
otherwise revised, determinations based upon the CPI shall be made with
the use of such conversion factor, formula or table for converting the
CPI as may be published by the Bureau of Labor Statistics, or, failing
such publication, with the use of such conversion factor, formula, or
table as may be published by any other nationally recognized publisher
of similar statistical information. In the event the publication of the
CPI is hereafter discontinued, PRGX shall designate a comparable index
to be used in lieu thereof. For purposes hereof, the CPI for a given
date shall be determined by reference to the CPI for the calendar month
in which such date falls. Upon Employee and/or his wife becoming
enrolled for Medicare coverage, the obligation of the Company with
respect to the Individual Replacement Policy shall terminate but the
Company shall become responsible for paying (or reimbursing Employee
and/or his spouse for) any premiums required by Medicare for Part A or
B coverage and for any premiums associated with any supplemental
individual insurance policy selected and obtained by Employee and/or
his spouse for each up to the age of 80, respectively. In no event,
however, shall the Company's obligation pursuant to the immediately
preceding sentence exceed $20,000 per year, as adjusted by the CPI
escalator described above. The Company's obligations with respect to
Employee and/or his spouse under this paragraph shall terminate upon
Employee or his spouse becoming covered under a group health plan
sponsored by any other employer due to the employment of Toma or his
spouse."
6. CERTAIN PAYMENTS UPON CHANGE OF CONTROL. The current Section 3
of Exhibit C to the Agreement is amended by adding new subsections (h) and (i)
below:
"(h) The parties agree that a portion of the payments provided
for in this Section 3 to be paid in the event of a Change of Control
shall be in consideration of the post-termination non-competition,
non-solicitation and confidentiality restrictive covenants of Employee
contained herein (collectively, the "Non-competition Payment"). The
amount of the payments allocated to the Non-competition Payment shall
be the reasonable value of the post-termination restrictive covenants
of Employee upon a Change of Control determined by an independent
appraiser, selected by the Company, its successor or assign. The
parties hereto specifically acknowledge that by virtue of Employee's
unique position as a founder and executive in charge of business
operations of the Company, his knowledge and services are substantial
assets of the Company and the Company would suffer irreparable damage
if the Employee were not to comply with the post-termination
restrictive covenants contained herein. Accordingly, in the event there
is a Change of Control and Employee's employment hereunder is
terminated by Employee, the Company or the Company's successor or
assign, the Company shall, and Employee hereby acknowledges the
Company's intention to, enforce the post-termination restrictive
covenants contained herein against Employee to the fullest extent
permitted by applicable law.
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May 14, 2002
Page 4
(i) None of the payments required under this Section 3 shall
be increased as a result of any tax liabilities that may result from
such payment."
7. DEFERRED COMPENSATION. The second sentence of Section 4(a) of
Exhibit C to the Agreement is amended by changing the amount stated therein from
"Fifty-Five Thousand and No/100 Dollars ($55,000.00)" to "Sixty-Five Thousand
and No/100 Dollars ($65,000.00)".
8. ADDITIONAL GOOD REASON. Section 11(c) of the Agreement is
amended by deleting the word "or" preceding subsection (iv) and deleting
subsection (iv) and replacing it with the following: "(iv) there is a "Change of
Control" of PRGX, as defined below or (v) PRGX removes Xxxx Xxxx as CEO without
cause."
In addition, Section 11(c) of the Agreement is further amended by
adding the following immediately after the last sentence thereof:
"For purposes of this Agreement, a "Change of Control" shall have occurred if:
(A) a majority of the directors of PRGX shall be persons other than
persons:
(1) for whose election proxies shall have been solicited by
the board; or
(2) who are then serving as directors appointed by the board
to fill vacancies on the board caused by death or resignation, but not
by removal, or to fill newly-created directorships; or
(B) a majority of the outstanding voting power of PRGX shall have been
acquired or beneficially owned by any person (other than PRGX or a subsidiary of
PRGX) or any two or more persons 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; or
(C) there shall have occurred:
(1) a merger or consolidation of PRGS with or into another
corporation, other than (1) a merger or consolidation with a subsidiary
of PRGX or (2) a merger or consolidation in which the holders of voting
stock of PRGX immediately prior to the merger as a class hold
immediately after the merger at least a majority of all outstanding
voting power of the surviving or resulting corporation or its parent;
or
(2) a statutory exchange of shares of one or more classes or
series of outstanding voting stock of PRGX for cash, securities or
other property, other than an exchange in which the holders of voting
stock of PRGX immediately prior to the exchange as a class hold
immediately after the exchange at least a majority of all outstanding
voting power of the entity with which the PRGX stock is being
exchanged; or
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May 14, 2002
Page 5
(3) 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 prior to the sale or disposition as a class hold 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; or
(4) the liquidation or dissolution of PRGX."
9. OPTIONS. The parties hereto hereby agree to delete any and all
provisions in the Agreement, and terminate any and all understandings between
Employee and the Company, pursuant to which Employee is eligible for, or might
be entitled to, any grant of options to purchase shares of PRGX Common Stock
based on the achievement of Company performance goals by PRGX. A new section 5
is added to Exhibit C to the Agreement ,as follows:
"5. OPTIONS. Employee shall be eligible for grants of
nonqualified options to purchase shares of PRGX Common Stock as the
Compensation Committee of the Board of Directors of PRGX may from time
to time determine in its sole discretion."
Except as herein amended, all other terms of your Agreement shall
remain unchanged.
Yours very truly,
/S/ Xxxxx Xxxx
Xxxxx Xxxx
Senior Vice President, Human Resources
Accepted and agreed to
this 14th day of May, 2002:
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
