[PRG SCHULTZ LOGO] EXHIBIT 10.2
www.prgx.com 600 Galleria Parkway, Suite 100, Atlanta, Ga 30339
Office 770.779 3900 Fax 770.779.3133
March 10, 2004
Mr. Donald E. Ellis, Jr.
607 Haddington Lane
Peachtree City, Georgia 30269
Dear Gene:
As you know, the Board of Directors and I are extremely grateful for your
numerous contributions to PRG-Schultz over the years and we hold you in the
highest esteem. Nevertheless, we believe that the operational challenges facing
our company are such that a different CFO skill set is needed at this time.
Accordingly, PRG-Schultz has recruited a replacement CFO and he will commence
employment on Wednesday, March 10, 2004.
Your current employment agreement with PRG-Schultz USA, Inc. in the capacities
as Executive Vice-President Finance, CFO and Treasurer of PRG-Schultz USA, Inc.
and PRG-Schultz International, Inc. (PRG-Schultz USA, Inc. and PRG-Schultz
International, Inc. hereinafter shall be referred to only as "PRGX") consists of
letters from me to you dated January 15, 2001 and June 18, 2003. Your current
employment in your capacities as Executive Vice-President Finance, CFO and
Treasurer of PRGX will conclude on March 10, 2004. Although you must sign a
standard company release in the form attached in order to receive your severance
benefits, your termination of employment from these positions will be treated by
PRGX as a termination "without cause" for the purpose of your receipt of
severance under section 9 of your employment letter of January 15, 2001.
Accordingly, upon termination of your employment in the capacities as Executive
Vice-President Finance, CFO and Treasurer of PRGX, you will be entitled to
receive severance payments as set forth in subsection 9(b) of your January 15,
2001 employment letter (as such subsection has been amended by your June 18,
2003 employment letter to reflect your current level of compensation and other
matters). You will also be entitled to any other benefits explicitly accorded to
you by any and all applicable agreements that you may have with PRGX.
With respect to your termination benefits:
(1) You (or your estate should you become deceased) will be paid the
sum of $800,000 due to you under the above-referenced subsection
9(b) on Friday, March 19, 2004, assuming that you execute PRGX's
standard form release by no later than March 11, 2004 (and thereby
voluntarily waive the twenty-one (21) day consideration period
provided to you by law under the Older Workers' Benefits
Protection Act). This amount consists of (A) two times the sum of
(i) your
current annual base salary ($325,000) and (ii) your current annual
auto allowance ($25,000), plus (B) the amount of $100,000. PRGX
does not believe that any amounts are due to you pursuant to
subclauses 9(b)(iv) and 9(b)(v) of your January 15, 2001
employment letter, but PRGX acknowledges its responsibility to
subsequently pay such amounts should they be determined to apply
to your employment termination benefits.
(2) You (or your estate should you become deceased) will be paid any
earned but unused vacation/PTO time applicable to 2004 upon the
final separation of your employment with PRGX in May 2004 (as
hereinafter discussed).
(3) You (or your estate should you become deceased) will be paid the
pro-rated portion of your 2004 minimum bonus when such bonus
payments are made to other PRGX executives in the first quarter of
2005. It is agreed that such prorated portion of your stipulated
2004 minimum bonus will be deemed to be $16,667, calculated as
$50,000 multiplied by [4 months/12 months].
(4) Since your employment termination is deemed to be a termination by
PRGX "without cause", your "PRG NON-QUALIFIED STOCK OPTION
AGREEMENT" dated October 26,2000 and pertaining to 250,000 option
shares will continue to remain in full force and effect as
provided in such agreement.
(5) Your "PRG-SCHULTZ NON-QUALIFIED STOCK OPTION AGREEMENT" dated
March 3, 2003 and pertaining to 40,000 option shares will remain
in full force and effect as provided in such agreement.
(6) The Indemnification Agreement dated October 26, 2000 between you
and PRGX shall remain in full force and effect.
(7) You (or your estate should you become deceased) will be paid your
2003 minimum bonus of $50,000 when such bonus payments are paid on
March 19, 2004.
You have agreed to remain in the employ of PRG-Schultz in a non-officer capacity
through Friday, May 7, 2004 to assist with an orderly transition of your former
responsibilities. In this position, you will continue to be compensated at your
same base salary and will be eligible to participate in all employee benefit
plans, subject to any continuing eligibility requirements, during the period
from March 10, 2004 through May 7, 2004. You will also continue to be accorded
the benefit of first class airline travel for all PRG-Schultz business trips you
take during this period. You will cease to be an employee of PRG-Schultz as of
May 8, 2004.
Notwithstanding anything to the contrary contained in any agreement you may now
have with PRGX, I hereby reconfirm Section 14 of my employment letter to you
dated January 15, 2001, concerning further compensation that will be due to you
as an independent contractor for any post-employment-termination assistance you
may be called upon to provide to PRGX after May 7, 2004 (including, but not
limited to, any assistance prospectively requested by PRGX or its outside legal
counsel in connection with class action litigation involving PRGX and/or its
current and former executive officers).
In exchange for the foregoing, you shall execute PRGX's standard form release
(in the form attached as Exhibit A) of all claims as a condition precedent to
receiving any of the
consideration set forth herein. Furthermore, you agree that all non-disclosure,
non-solicitation and non-competition covenants provided by you to PRGX shall not
be impaired by your termination and shall continue according to their
terms.
Other than as set forth herein, your employment agreement with PRGX, as set
forth in my letters dated January 15, 2001 and June 18, 2003, and all
obligations of PRGX set forth in these letters will terminate as of March 10,
2004. Your employment during the transition period from March 10, 2004 through
May 7, 2004 will be on an "at will" basis, subject to PRGX's existing policies
and procedures.
If you have any questions regarding the terms of your separation, please contact
me at your earliest convenience.
Thank you again for all of your contributions to PRGX.
Sincerely,
/s/ John M. Cook
John M. Cook
Chairman and Chief Executive Officer
PRG-Schultz International, Inc.
CONSENTED TO, IN FORM AND IN
SUBSTANCE, HAVING READ AND
FULLY UNDERSTOOD ALL TERMS OF
THIS SEPARATION LETTER:
/s/ Donald E. Ellis, Jr.
- ---------------------------------
Donald E, Ellis, Jr.
Date: March 10, 2004
EXHIBIT A
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE ("Agreement") is entered into by and between
PRG-SCHULTZ USA, INC., a Georgia corporation ("PRG-Schultz") and Donald E.
Ellis, Jr. ("Employee"), as of the Effective Date of the Agreement as defined
below.
WITNESSETH:
WHEREAS, your employment relationship with PRG-Schultz in the positions
of Executive Vice-President Finance, Chief Financial Officer and Treasurer of
PRG-Schultz and PRG-Schultz International, Inc. ("PRGX") will be terminated,
subject to the terms hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
1. Termination. The parties hereto hereby acknowledge and agree
that Employee's employment with PRG-Schultz in the positions of Executive
Vice-President Finance, Chief Financial Officer and Treasurer of PRG-Schultz and
PRG-Schultz International, Inc. ("PRGX") will be terminated as of the close of
business on March 9, 2004. This Agreement therefore operates to cancel
Employee's existing employment agreements, as set forth in letters between
Employee and John M. Cook dated January 15, 2001 and June 18, 2003 as of the
close of business on March 9, 2004, regardless of when this Agreement is
executed by Employee.
2. Transition Services to be Performed by Employee. Employee
agrees to assist PRG-Schultz and PRGX in effectuating a smooth and orderly
transition of his responsibilities and complete assignments as directed by
PRG-Schultz and PRGX. Employee specifically agrees to remain employed in a
non-officer capacity by PRG-Schultz from March 10, 2004 through May 7, 2004. In
this non-officer and "at will" position, Employee will be compensated at his
regular base salary as of March 10, 2004 and will be eligible to participate in
all employee benefit plans, subject to any continuing eligibility requirements.
Employee, however, shall perform no services for PRG-Schultz or PRGX following
the close of business on May 7, 2004, at which time Employee shall be terminated
from all positions with PRG-Schultz and PRGX.
3. Consideration. In exchange for Employee executing the general
release set forth in paragraph 4 below, Employee shall receive the consideration
set forth in the letter agreement executed by Employee and John M. Cook, dated
March 10, 2004, and the consideration set forth in paragraph 2 above in the form
of continued employment through May 7, 2004. Employee acknowledges and agrees
that this consideration includes good and valuable consideration that he, in
whole or in part, would not have been entitled to receive from PRG-Schultz but
for his willingness to execute this Agreement.
4. General Release and Covenant. In consideration of the
covenants from PRG-Schultz to Employee set forth herein, the receipt and
sufficiency of which are hereby
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acknowledged, Employee, individually and for Employee's heirs, executors,
administrators, agents, assigns, receivers, attorneys, servants, legal
representatives, predecessors and successors in interest, regardless of form,
trustees in bankruptcy or otherwise, wards, and any other representative or
entity acting on Employee's or their behalf, pursuant to, or by virtue of the
rights of any of them, does hereby now and forever unconditionally release,
discharge, acquit and hold harmless PRG-Schultz and all of its present and
former officers, directors, employees, attorneys, parents (including PRGX), and
subsidiaries, (hereafter the "Released Parties"), from any and all claims,
rights, demands, actions, suits, damages, losses, expenses (including but not
limited to costs and attorneys' fees), liabilities, indebtedness, and causes of
action, of whatever kind or nature that existed from the beginning of time
through the execution of this Agreement by Employee, regardless of whether known
or unknown, arising from Employee's employment with PRG-Schultz, including, but
not limited to, claims under any federal, state or local statute or ordinance,
including but not limited to, the Civil Rights Act of 1866, the Age
Discrimination in Employment Act, the Older Workers' Benefits Protection Act,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Family and Medical Leave Act, the Americans with Disabilities Act, the Fair
Labor Standards Act, the Employee Retirement Income Security Act and any other
employment discrimination or civil rights law, state or federal, as well as any
other claims based on constitutional, statutory, common law or regulatory
grounds, or under common law, including, but not limited to, claims arising out
of tort, contract, quasi-contract or unemployment compensation.
Employee furthermore covenants and agrees not to file a lawsuit against
any of the Released Parties with respect to any claim or claims released
hereunder.
5. Return of Company Property and Proprietary Information.
Employee further promises, represents and warrants that Employee shall return to
Marie Neff, Executive Vice President of Human Resources, by no later than May 7,
2004 or at the earlier request of PRG-Schultz: (a) all property of PRG-Schultz,
including, but not limited to, any and all files, records, credit cards, keys,
identification cards/badges, computer access codes, computer programs,
instruction manuals, equipment (including computers) and business plans; (b) any
other property which Employee prepared or helped to prepare in connection with
Employee's employment with PRG-Schultz; and (c) all documents, including logs or
diaries, all tangible materials, including audio and video tapes, all intangible
materials (including computer files), and any and all copies or duplicates of
any such tangible or intangible materials, including any duplicates, copies, or
transcriptions made of audio or video tapes, whether in handwriting or
typewritten, that are in the possession, custody or control of Employee or his
attorneys, agents, family members, or other representatives, which are alleged
to support in any way any of the claims Employee has released under this
Agreement, including but not limited to, all audio and videotapes involving any
officer, director, shareholder, executive, manager, employee, agent,
representative or attorney of PRG-Schultz.
The foregoing representation shall include all Proprietary Information
of PRG-Schultz, including, but not limited to, all Proprietary Information
required by the Employee for performance of Employee's obligations under
paragraph 2 hereof. As used herein, "Proprietary Information" means information
in written form or electronic media, including but not limited to technical and
non-technical data, lists, training manuals, training systems, computer based
training modules, formulas, patterns, compilations, programs, devices, methods,
techniques,
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drawings, processes and plans regarding PRG-Schultz or its affiliates, clients,
prospective clients, methods of operation, billing rates, billing procedures,
suppliers, business methods, finances, management, or any other business
information relating to PRG-Schultz or its affiliates (whether constituting a
trade secret or proprietary or otherwise) which has value to PRG-Schultz or its
affiliates and is treated by PRG-Schultz or its affiliates as being
confidential; provided; however, that Proprietary Information shall not include
any information that has been voluntarily disclosed to the public by PRG-Schultz
or its affiliates (except where such public disclosure has been made without
authorization) or that has been independently developed and disclosed by others,
or that otherwise enters the public domain through lawful means. Proprietary
Information also includes information which has been disclosed to PRG-Schultz or
its affiliates by a third party and which PRG-Schultz or its affiliates are
obligated to treat as confidential. Proprietary Information may or may not be
marked by PRG-Schultz or its affiliates as "proprietary" or "secret" or with
other words or markings of similar meaning, and the failure of PRG-Schultz to
make such notations upon the physical embodiments of any Proprietary Information
shall not affect the status of such information as Proprietary Information.
6. Warranty and Representation. Employee represents and warrants
that as of the date of execution hereof, Employee has not assigned or
transferred or purported to assign or transfer any of the claims released
herein. Employee hereby agrees to indemnify and hold harmless the Released
Parties against, without any limitation, any and all claims and causes of action
(including, but not limited to, costs and attorneys' fees), arising out of any
such transfer or assignment.
7. General Provisions.
(a) This Agreement and the covenants, representations,
warranties and releases contained herein shall inure to the benefit of and be
binding upon Employee and PRG-Schultz and each of their respective successors,
heirs, assigns, agents, affiliates, parents, subsidiaries and representatives.
(b) Each party acknowledges that no one has made any
representation whatsoever not contained herein concerning the subject matter
hereof to induce the execution of this Agreement. Employee acknowledges that the
consideration for signing this Agreement constitutes benefits to which Employee
would not have been entitled had Employee not signed this Agreement.
(c) Employee agrees that Employee shall refrain from
making any disparaging remarks about PRG-Schultz, its management, directors or
about Employee's employment with PRG-Schultz; provided that Employee shall not
be restricted from providing information required by law or governmental or
judicial order. Employee will not assist in, cooperate or consult with, or
encourage any other parties or their attorneys to commence or prosecute any
present or future lawsuit or administrative proceeding against PRG-Schultz or
any of its subsidiaries, or any officers, directors or employees of same.
Nothing contained herein however shall prevent Employee from providing truthful
testimony in response to a subpoena or any written request from a governmental
agency.
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(d) Employee acknowledges that, pursuant to the Older
Worker's Benefits Protection Act of 1990, Employee has the right to, and has
been advised by PRG-Schultz to, consult with an attorney before signing this
Agreement and that he either has consulted or consciously decided not to seek
legal counsel prior to executing this Agreement. Employee also acknowledges that
this Agreement releases only those claims which exist as of the date of his
execution of this Agreement. Employee further acknowledges Employee's
understanding that Employee has twenty-one (21) days to consider this Agreement
before signing it, that Employee or PRG-Schultz may revoke this Agreement within
seven (7) calendar days after signing it by delivering written evidence of such
revocation to the other within that seven (7) day period, and that this
Agreement will not be effective or enforceable until expiration of such seven
(7) day period.
The "Effective Date" of this Agreement shall be the eighth
(8th) day after the execution of the Agreement by Employee.
This Agreement does not constitute an admission of any
liability other than the obligations for the payments provided in the letter
agreement dated March 10, 2004.
The parties hereto and each of them agrees and acknowledges
that if any portion of this Agreement is declared invalid or unenforceable by a
final judgment of any court of competent jurisdiction, such determination shall
not affect the balance of this Agreement, which shall remain in full force and
effect. Any such invalid portion shall be deemed severable.
(e) Neither this Agreement nor any provision hereof may
be modified or waived in any way except by an agreement in writing signed by
each of the parties hereto consenting to such modification or waiver.
(f) Employee acknowledges and agrees that Employee is
bound by, and shall continue to be bound by, any post-termination
non-disclosure, non-solicitation and non-competition covenants executed by him
according to their terms.
(g) Other than as expressly provided herein, the parties
hereto acknowledge and agree that this Agreement supercedes all prior agreements
or other arrangements by and between PRG-Schultz and Employee with respect to
compensation and benefits payable by PRG-Schultz to Employee, including all of
PRG-Schultz's payment obligations for compensation set forth in any employment
agreement between the parties, and that such prior agreements or arrangements
with respect to compensation and benefits payable by PRG-Schultz to Employee
shall, upon the execution and delivery hereof by the parties hereto, be null and
void and of no force and effect whatsoever, except that all obligations set
forth in the agreement dated March 10, 2004 shall survive and remain in effect.
(h) This Agreement shall be governed by the laws of the
State of Georgia, without reference to principles of conflicts or choice of law
under which the laws of any other jurisdiction would apply.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the Effective Date.
EMPLOYEE ATTESTS THAT S/HE UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF
ALL KNOWN AND UNKNOWN CLAIMS.
EXECUTED THIS 10TH DAY OF MARCH, 2004.
EMPLOYEE: /s/ Donald E. Ellis, Jr.
Sworn to and subscribed before me this 10th day of March, 2004.
Notary Public, Cherokee County, Georgia
My Commission Expires August 22, 2005
Notary Public Sarah Drinnon
EXECUTED THIS 10TH DAY OF MARCH, 2004.
PRG-SCHULTZ: PRG-SCHULTZ USA, INC.
By: /s/ John Cook
---------------------------
Its: Chairman & CEO
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