Exhibit 10.1
June 18, 2003
Mr. Donald E. Ellis, Jr.
607 Haddington Lane
Peachtree City, Georgia 30269
Re: Employment Offer
Dear Gene:
I am pleased to memorialize the terms of your continued full time employment
with PRG-Schultz USA, Inc. ("PRG") as Executive Vice President-Finance, Chief
Financial Officer and Treasurer of PRG-Schultz USA, Inc. and of PRG-Schultz
International, Inc. ("PRGX"). You will continue to report to the Chief Executive
Officer of PRGX. You will continue to be responsible for all Finance Department
functions of PRG and PRGX, including financial planning, worldwide taxation
planning and compliance, budgeting, accounting and treasury functions and will
continue to serve as key spokesperson and contact for shareholders, investors
and banking agencies for PRGX.
The following confirms the terms of your continued employment with PRG:
1. Existing Letter Agreement. Except as specifically set forth below, the
terms set forth in that certain letter agreement from me to you dated
January 15, 2001 (the "Existing Agreement") shall remain in full force and
effect.
2. Base Salary. Section 1 of the Existing Agreement is modified such that
effective February 24, 2003 you will thereafter be paid base salary at the
rate of $325,000.00 per annum, paid $12,500.00 every two weeks and
pro-rated for partial years.
3. Performance Bonus. Section 2 of the Existing Agreement is modified such
that beginning with calendar year 2003 goals annual payout potentials
shall be increased from a maximum of 70% of your base salary to a maximum
of 80% of your base salary for achievement of your performance goals.
Additionally, beginning with calendar year 2003 goals, your payout
potential for achievement of your "target" goals will be increased to 40%
of your base salary. In addition, for calendar year 2003 only, if PRGX
does not achieve the revised "target" goals, but does achieve the goals
described in the minutes of the meeting of the Board of Directors of PRGX
held on February 25, 2003, you will be entitled to a special bonus of up
to 20% of your base salary as described in such minutes unless such goals
are changed hereafter by the Board. The remaining terms set forth in
Section 2 of the Existing Agreement shall remain in effect.
Mr. Donald E. Ellis, Jr.
June 18, 2003
Page 2
4. Options. The Board of Directors of PRGX has granted to you options to
purchase an additional 40,000 shares of Common Stock in PRG-Schultz
International, Inc. vesting ratably and annually over 4 years. This grant
is made pursuant to the terms of an option agreement, the form of which
will be delivered to you under separate cover.
5. Good Reason. The definition of "Good Reason" appearing in the second
sentence of Section 8(d) of the Existing Agreement is hereby deleted and
replaced with the following new sentence: For purposes of this Agreement,
"Good Reason" means any one of the following events: (i) the assignment to
you of duties or positions or titles inconsistent with or lower than any
of the duties, positions or titles provided in this Agreement; (ii) the
principal place where you are required to perform a substantial portion of
your employment duties hereunder is outside of the metropolitan Atlanta,
Georgia area; (iii) the reduction of your Base Salary, potential Bonus or
annual automobile allowance below amounts set forth herein; provided
however you shall have no right to terminate pursuant to this clause (iii)
of Section 8(d) if PRGX's Board of Directors or the Compensation Committee
of the Board of PRGX (the "Committee") has duly authorized and directed a
general compensation decrease for all executive employees of PRG and PRGX
and the reduction of the sum of your Base Salary, potential Bonus and
automobile allowance hereunder is reduced on a prorata basis in respect of
all other such executives; (iv) a "Change in Control" (as defined below)
shall have occurred; or (v) PRGX reassigns your reporting duties such that
you are no longer reporting directly to the Chief Executive Officer of
PRGX.
6. Change in Control. The last sentence of Section 8(d) of the Existing
Agreement is hereby deleted in its entirety and replaced with the
following new sentence:
For purposes of this Agreement, a "Change in Control" shall have
occurred if:
(A) a majority of the directors of PRGX shall be persons other
than persons:
(xx) for whose election proxies shall have been solicited by
the board; or
(yy) 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
-2-
Mr. Donald E. Ellis, Jr.
June 18, 2003
Page 3
concert for the purpose of acquiring, holding or disposing of
voting stock of PRGX; or
(C) there shall have occurred:
(ww) a merger or consolidation of PRGX 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
(xx) 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
(yy) 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
(zz) the liquidation or dissolution of PRGX.
7. Severance; Retirement.
(a) The clause "prior to October 26, 2003" is hereby deleted from the
first sentence of Section 9(b) of the Existing Agreement.
(b) The clause "is terminated on or after October 26, 2003 by PRG
without cause or by you for Good Reason or" is hereby deleted from
the first sentence of Section 9(c) of the Existing Agreement.
(c) The following new sentence is added after the current last sentence
of Section 9(c) of the Existing Agreement: "For purposes hereof,
"Retirement" means you terminate this agreement by giving PRG thirty
days' written notice in the manner specified in Section
-3-
Mr. Donald E. Ellis, Jr.
June 18, 2003
Page 4
11, effective on or after the date on which you turn 65; provided
that at the time of such notice to PRG, there is no basis for
termination by PRG of your employment for cause and the facts and
circumstances constituting cause have not been known by the Chief
Executive Officer of PRGX for thirty (30) days or more. "
8. Notices. Section 11 of the Existing Agreement is amended to change the
address to which all notices to PRGX and/or PRG should be sent to the
following:
"If to PRG: PRG-Schultz International, Inc.
600 Galleria Parkway
Suite 100
Atlanta, Georgia 30339
Attention: Chief Executive Officer"
9. Indemnification Agreement. The parties hereto acknowledge and agree that
the Indemnification Agreement (as defined in Section 17 of the Existing
Agreement) is and remains in full force and effect.
Please confirm your acceptance of these terms by signing and returning this
letter to me at your earliest convenience.
Best wishes,
/s/ John M. Cook
John M. Cook,
Chairman and Chief Executive Officer
Accepted and agreed:
/s/ Donald E. Ellis, Jr.
Donald E. Ellis, Jr.
Date: June 18, 2003
-4-