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Exhibit 10.1 EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
(this "Agreement") is made and entered into as of January 8,
2009, to be effective January 21, 2009 (the "Effective Date"),
by and between PRG-Schultz International, Inc., a Georgia
corporation (the "Company"), and Romil Bahl (the "Executive").
W I T N
E S S E
T H:
WHEREAS , the Company considers the availability of the
Executive’s services to be important to the management and
conduct of the Company’s business and desires to secure the
availability of the Executive’s services; and
WHEREAS , the Executive is
willing to make the Executive’s services available to the
Company on the terms and subject to the conditions set forth
herein. NOW, THEREFORE , in
consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth and intending to be legally bound,
the Company and the Executive agree as follows:
1. Employment and
Duties .
(a)
Position . The Company hereby employs the Executive,
and the Executive hereby accepts such employment, as the Chief
Executive Officer and President of the Company, effective as of the
Effective Date, on the terms and subject to the conditions of this
Agreement. The Executive agrees to perform such duties and
responsibilities as are customarily performed by persons acting in
such capacity or as are assigned to Executive from time to time by
the Board of Directors of the Company or its designees. The
Executive acknowledges and agrees that from time to time the
Company may assign Executive additional positions with the Company
or the Company’s subsidiaries, with such title, duties and
responsibilities as shall be determined by the Company. The
Executive agrees to serve in any and all such positions without
additional compensation. The Executive will report directly to the
Board of Directors of the Company.
(b)
Duties . The Executive shall devote the
Executive’s best efforts and full professional time and
attention to the business and affairs of the Company and the
Company’s subsidiaries. During the Term, Executive shall not
serve as a director or principal of any other company or
charitable, religious or civic organization without the prior
written consent of the Board of Directors of the Company. The
principal place of employment of the Executive shall be the
Company’s executive offices in Atlanta, Georgia, subject to
reasonable travel on the business of the Company or the
Company’s subsidiaries. The Executive shall be expected to
follow and be bound by the terms of the Company’s Code of
Conduct and Code of Ethics for Senior Financial Officers and any
other applicable policies as the Company from time to time may
adopt. 2. Term .
The term of this Agreement is effective as of the Effective Date,
and will continue through the fourth anniversary of the Effective
Date, unless terminated or extended as hereinafter provided. This
Agreement shall be extended for successive one-year periods
following the original term (through each subsequent anniversary
thereafter) unless any party notifies the other in writing at least
90 days prior to the end of the original term, or the end of
any additional
one-year renewal term, that the Agreement shall not be extended
beyond its then current term. The term of this Agreement, including
any renewal term, is referred to herein as the "Term."
3. Compensation .
(a)
Base Salary . The Company shall pay the Executive an
annual base salary of $600,000. The annual base salary shall be
paid to the Executive in accordance with the established payroll
practices of the Company (but no less frequently than monthly)
subject to ordinary and lawful deductions. The Compensation
Committee of the Company will review the Executive’s base
salary from time to time, not less frequently than annually, to
consider whether any increase should be made. The base salary
during the Term will not be less than that in effect at any time
during the Term.
(b)
Annual Bonus . During the Term, the Executive will be
eligible to participate in an annual incentive bonus plan that will
establish measurable criteria and incentive compensation levels
payable to the Executive for performance in relation to defined
targets established by the Compensation Committee of the
Company’s Board of Directors, after consultation with
management, and consistent with the Company’s business plans
and objectives. To the extent the targeted performance levels are
exceeded, the incentive bonus plan will provide a means by which
the annual bonus will be increased. Similarly, the incentive plan
will provide a means by which the annual bonus will be decreased or
eliminated if the targeted performance levels are not achieved. In
connection with such annual incentive bonus plan, subject to the
corresponding performance levels being achieved, the Executive
shall be eligible for an annual target bonus equal to
100 percent of the Executive’s annual base salary and an
annual maximum bonus equal to 150 percent of the
Executive’s annual base salary, subject to pro-ration for
2009 based on the number of days that Executive is actually
employed by the Company during 2009 (beginning with the Effective
Date). Any bonus payments due hereunder shall be payable to the
Executive no later than the 15th day of the third month following
the end of the applicable year to which the incentive bonus
relates. The Executive’s annual incentive bonus for calendar
year 2009 will be no less than 100% of Executive’s annual
base salary, subject to the Executive’s continued employment
through December 31, 2009, and subject to pro-ration based on the
number of days that Executive is actually employed by the Company
during 2009 (beginning with the Effective Date).
(c)
One-Time Bonus . The Executive also will be eligible
to receive an additional one-time bonus in the aggregate amount of
$1 million payable on the last regular payroll date in
July 2010, subject to the Executive’s continued
employment until such time.
(d)
Stock Compensation .
(i) The
Company shall grant to the Executive, effective on commencement of
his employment with the Company, as an initial equity award,
nonqualified stock options covering 111,111 shares of the common
stock, no par value per share, of the Company, with an exercise
price equal to the fair market value of the common stock on the
date of grant, and a term of seven years (the "Initial Options"),
and restricted stock covering 233,334 shares of such common stock
(the "Initial Restricted Stock"). The Initial Options and Initial
Restricted Stock will vest and become non-forfeitable as
follows:
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(1) The
Initial Options will be time vested options, having a term of seven
years, and vesting 25% on each of the first, second, third and
fourth anniversaries of the date of grant subject to the
Executive’s continued employment through such date(s).
(2) The
Initial Restricted Stock will be time-vested restricted stock,
vesting 25% on each of the first, second, third and fourth
anniversaries of the date of grant subject to the Executive’s
continued employment through such date(s).
(ii) The
Company also shall grant to the Executive, effective on
commencement of his employment with the Company, as an additional
one-time equity award, nonqualified stock options covering 185,185
shares of the common stock, no par value per share, of the Company,
with an exercise price equal to the fair market value of the common
stock on the date of grant, and a term of seven years (the
"One-Time Options"), and restricted stock covering 111,111 shares
of such common stock (the "One-Time Restricted Stock"). The
One-Time Options and One-Time Restricted Stock will vest and become
nonforfeitable as follows:
(1) The
One-Time Options will be time-vested options, having a term of
seven years, and vesting 50% on each of the second and fourth
anniversaries of the date of grant subject to the Executive’s
continued employment through such date(s).
(2) The
One-Time Restricted Stock will be time-vested restricted stock,
vesting 50% on each of the second and fourth anniversaries of the
date of grant subject to the Executive’s continued employment
through such date(s).
(iii) Beginning
in 2009, the Executive shall be eligible to receive stock options,
restricted stock, stock appreciation rights and/or other equity
awards under the Company’s applicable equity plans on such
basis as the Compensation Committee or the Board of Directors of
the Company or their designees, as the case may be, may determine
on a basis not less favorable than that provided to the class of
employees that includes the Executive. Except as specifically set
forth above, however, nothing herein shall require the Company to
make any equity grants or other awards to the Executive in any
specific year. 4
Indemnity. The Company and the Executive will enter
into the Company’s standard indemnification agreement for
executive officers. 5.
Benefits .
(a)
Benefit Programs . The Executive shall be eligible to
participate in any plans, programs or forms of compensation or
benefits that the Company or the Company’s subsidiaries
provide to the class of employees that includes the Executive, on a
basis not less favorable than that provided to such class of
employees, including, without limitation, group medical, disability
and life insurance, paid time off, and retirement plan, subject to
the terms and conditions of such plans, programs or forms of
compensation or benefits.
(b)
Paid Time-Off . The Executive shall be entitled to
five weeks of paid time-off, to be accrued and used in accordance
with the normal Company paid time-off policy.
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6 .
Reimbursement of Expenses .
(a)
Business Expenses . The Company shall reimburse the
Executive, subject to presentation of adequate substantiation,
including receipts, for the reasonable travel, entertainment,
lodging and other business expenses incurred by the Executive in
accordance with the Company’s expense reimbursement policy in
effect at the time such expenses are incurred. In no event will
such reimbursements, if any, be made later than the last day of the
year following the year in which the Executive incurs the expense.
(b)
Relocation Expenses . The Company shall provide the
Executive with relocation benefits in accordance with the
Company’s Relocation Guidelines in connection with the
Executive’s relocation to Atlanta, Georgia, limited to total
reimbursements of $75,000 unless otherwise approved in advance in
writing by the Senior Vice President – Human Resources. Such
reimbursements, if any, will be made after the Effective Date and
no later than December 31, 2009. The Executive agrees to
relocate his primary residence to the Atlanta metropolitan area no
later than June 30, 2009.
7. Termination of
Employment .
(a)
Death or Incapacity . The Executive’s
employment under this Agreement shall terminate automatically upon
the Executive’s death. If the Company determines that the
Incapacity, as hereinafter defined, of the Executive has occurred,
it may terminate the Executive’s employment and this
Agreement. "Incapacity" shall mean the inability of the Executive
to perform the essential functions of the Executive’s job,
with or without reasonable accommodation, for a period of
90 days in the aggregate in any rolling 180-day period.
(b)
Termination by Company For Cause . The Company may
terminate the Executive’s employment during the Term of this
Agreement for Cause. For purposes of this Agreement, "Cause" shall
mean, as determined by the Board of Directors of the Company in
good faith, the following:
(i) the
Executive’s willful misconduct or gross negligence in
connection with the performance of the Executive’s duties
which the Board of Directors of the Company believes does or is
likely to result in material harm to the Company or any of its
subsidiaries;
(ii)
the Executive’s misappropriation or embezzlement of funds or
property of the Company or any of its subsidiaries;
(iii)
the Executive’s fraud or dishonesty with respect to the
Company or any of its subsidiaries;
(iv)
the Executive’s conviction of, indictment for (or its
procedural equivalent), or entering of a guilty plea or plea of no
contest with respect to any felony or any other crime involving
moral turpitude or dishonesty; or
(v) the
Executive’s breach of a material term of this Agreement, or
violation in any material respect of any code or standard of
behavior generally applicable to officers of the Company
(including, without, limitation the Company’s Code of
Conduct, Code of Ethics for Senior Financial Officers and any other
applicable policies as the Company from time to time may adopt),
after being advised in writing of such breach or
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violation and being given 30 days to remedy such breach or
violation, to the extent that such breach or violation can be
cured;
(vi)
the Executive’s breach of fiduciary duties owed to the
Company or any of its subsidiaries;
(vii)
the Executive’s engagement in habitual insobriety or the use
of illegal drugs or substances; or
(viii)
the Executive’s willful failure to cooperate, or willful
failure to cause and direct persons under the Executive’s
management or direction, or employed by, or consultants or agents
to, the Company or its subsidiaries to cooperate, with all
corporate investigations or independent investigations by the Board
of Directors of the Company or its subsidiaries, all governmental
investigations of the Company or its subsidiaries or orders
involving the Executive, the Company or the Company’s
subsidiaries entered by a court of competent jurisdiction.
Notwithstanding the above, and without limitation, the Executive
shall not be deemed to have been terminated for Cause unless and
until there has been delivered to the Executive (i) a letter
from the Board of Directors of the Company finding that the
Executive has engaged in the conduct set forth in any of the
preceding clauses and specifying the particulars thereof in detail
and (ii) a copy of a resolution duly adopted by the
affirmative vote of the majority of the members of the Board of
Directors of the Company who are not officers of the Company at a
meeting of the Board of Directors called and held for such purpose
or such other appropriate written consent (after reasonable notice
to the Executive and an opportunity for the Executive, together
with the Executive’s counsel, to be heard before the Board of
Directors of the Company), finding that the Executive has engaged
in such conduct and specifying the particulars thereof in detail.
(c)
Termination by Executive for Good Reason . The
Executive may terminate the Executive’s employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean,
without the Executive’s consent, the following:
(i) any
action taken by the Company which results in a reduction in the
Executive’s authority, duties or responsibilities (except
that any change in the foregoing that results solely from the
Company ceasing to be a publicly traded entity or from the Company
becoming a wholly-owned subsidiary of another publicly traded
entity will not, in either event and standing alone, constitute a
substantial reduction in the Executive’s authority, duties or
responsibilities), including any requirement that the Executive
report directly to anyone other than the Board of Directors of the
Company;
(ii)
the assignment to the Executive of duties that are materially
inconsistent with Executive’s authority, duties or
responsibilities;
(iii)
any material decrease in the Executive’s base salary or
annual bonus opportunity or the benefits generally available to the
class of employees that includes the Executive, except to the
extent the Company has instituted a salary, bonus or benefits
reduction generally applicable to all executives of the Company
other than in contemplation of or after a Change in Control;
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(iv)
the relocation of the Executive to any primary place of employment
other than as specified in Section 1(b) above which might require
the Executive to move the Executive’s residence which, for
this purpose, means any reassignment to a place of employment 50
miles or more from the place (or, if applicable, all places) of
employment set forth in Section 1(b), without the Executive’s
express written consent to such relocation; provided, however, this
subsection (iv) shall not apply in the case of business travel
which requires the Executive to relocate temporarily for periods of
90 days or less;
(v) the
failure by the Company to pay to the Executive any portion of the
Executive’s base salary, annual bonus or other benefits
within 10 days after the date the same is due; or
(vi)
the Company’s failure to nominate Executive to serve as a
member of the Board of Directors of the Company (other than on and
after the Company has reason to terminate the Executive’s
employment for Cause), or the removal of the Executive from the
Board of Directors of the Company, by action of the Board of
Directors, other than for Cause; or
(vii)
any material failure by the Company to comply with the terms of
this Agreement. Notwithstanding the above, and without limitation,
"Good Reason" shall not include any resignation by the Executive
where Cause for the Executive’s termination by the Company
exists and the Company then follows the procedures described above.
The Executive must give the Company notice of any event or
condition that would constitute "Good Reason" within 30 days
of the event or condition which would constitute "Good Reason," and
upon the receipt of such notice the Company shall have 30 days to
remedy such event or condition. If such event or condition is not
remedied within such 30-day period, any termination of employment
by the Executive for "Good Reason" must occur within 30 days
after the period for remedying such condition or event has expired.
(d)
Termination by Company Without Cause or by Executive Other
than For Good Reason . The Company may terminate the
Executive’s employment during the Term of this Agreement
without Cause, and Executive may terminate the Executive’s
employment for other than Good Reason, upon 60 days’ written
notice. The Company may elect to pay the Executive during any
applicable notice period (in accordance with the established
payroll practices of the Company, no less frequently than monthly)
and remove him from active service.
(e)
Termination by Executive on Failure to Renew . The
Executive may terminate the Executive’s employment at any
time on or before the expiration of the Term of the Agreement, upon
30 days’ written notice, if the Company notifies the
Executive that the Term of the Agreement shall not be extended as
provided in Section 2 above.
8. Obligations of the
Company Upon Termination .
(a)
Without Cause; Good Reason; Non-Renewal (No Change in
Control) . If, during the Term, the Company terminates the
Executive’s employment without Cause in accordance with
Section 7(d) hereof, the Executive terminates the Executive’s
employment for Good Reason in accordance with Section 7(c) hereof,
or the Executive terminates the Executive’s employment
upon
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the Company’s failure to renew the Agreement in accordance
with Section 7(e) hereof, other than within two years after a
Change in Control, subject to Section 20 below, the Executive
shall be entitled to receive:
(i)
payment of the Executive’s annual base salary in effect
immediately preceding the date of the Executive’s termination
of employment (or, if greater, the Executive’s annual base
salary in effect immediately preceding any action by the Company
described in Section 7(c)(iii) above for which the Executive has
terminated the Executive’s employment for Good Reason), for
the period equal to the greater of 18 months or the sum of
four weeks for each full year of continuous service the Executive
has with the Company and its subsidiaries at the time of
termination of employment, beginning immediately following
termination of employment (the "Severance Period"), payable in
accordance with the established payroll practices of the Company
(but no less frequently than monthly), beginning on the first
payroll date following 30 days after termination of
employment, with the Executive to receive at that time a lump sum
payment with respect to any installments the Executive was entitled
to receive during the first 30 days following termination of
employment, and the remaining payments made as if they had
commenced immediately following termination of employment;
(ii)
payment of an amount equal to the Executive’s actual earned
full-year bonus for the year in which the termination of
Executive’s employment occurs, prorated based on the number
of days the Executive was employed for the year, payable at the
time the Executive’s annual bonus for the year otherwise
would be paid had the Executive continued employment;
(iii)
continuation after the date of termination of employment of any
health care (medical, dental and vision) plan coverage, other than
that under a flexible spending account, provided to the Executive
and the Executive’s spouse and dependents at the date of
termination for the Severance Period, on a monthly or more frequent
basis, on the same basis and at the same cost to the Executive as
available to similarly-situated active employees during such
Severance Period, provided that such continued participation is
possible under the general terms and provisions of such plans and
programs and provided that such continued coverage by the Company
shall terminate in the event Executive becomes eligible for any
such coverage under another employer’s plans. If the Company
reasonably determines that maintaining such coverage for the
Executive or the Executive’s spouse or dependents is not
feasible under the terms and provisions of such plans and programs
(or where such continuation would adversely affect the tax status
of the plan pursuant to which the coverage is provided), the
Company shall pay the Executive cash equal to the estimated cost of
the expected Company contribution therefor for such same period of
time, with such payments to be made in accordance with the
established payroll practices of the Company (not less frequently
than monthly) for the period during which such cash payments are to
be provided;
(iv)
payment of any Accrued Obligations. For purposes of this Agreement,
"Accrued Obligations" shall mean the sum of (A) the
Executive’s annual base salary through Executive’s
termination of employment which remains unpaid, (B) the
amount, if any, of any incentive or bonus compensation earned for
any completed fiscal year of the Company which has not yet been
paid, (C) any reimbursements for expenses incurred
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but not yet paid, and (D) any benefits or other amounts,
including both cash and stock components, which pursuant to the
terms of any plans, policies or programs have been earned or become
payable, but which have not yet been paid to the Executive,
including payment for any unused paid time-off (but not including
amounts that previously had been deferred at the Executive’s
request, which amounts will be paid in accordance with the
Executive’s existing directions). The Accrued Obligations
will be paid to the Executive in a lump sum as soon as
administratively feasible after the Executive’s termination
of employment, which for purposes of any incentive or bonus
compensation described in (B) above shall mean at the same
time such annual bonus would otherwise have been paid;
(v)
vesting (i) of the Executive’s outstanding unvested
Initial Options, Initial Restricted Stock, One-Time Options and
One-Time Restricted Stock that would have vested based solely on
the continued employment of the Executive through the next
anniversary date of the commencement of the Executive’s
employment with the Company immediately following the termination
of the Executive’s employment and (ii) in full of the
Executive’s other outstanding unvested options, restricted
stock, and other equity-based awards that would have vested based
solely on the continued employment of the Executive. Additionally,
all of Executive’s outstanding stock options shall remain
outstanding until the earlier of (i) one year after the date
of termination of the Executive’s employment or (ii) the
original expiration date of the options (disregarding any earlier
expiration date provided for in any other agreement, including
without limitation any related grant agreement, based solely on the
termination of the Executive’s employment);
(vi)
payment of one year of outplacement services from Executrack or an
outplacement service provider of the Executive’s choice,
limited to $20,000 in total. This outplacement services benefit
will be forfeited if the Executive does not begin using such
services within 60 days after the termination of the
Executive’s employment; and
(vii)
payment of an amount equal to $1 million multiplied by a
fraction, the numerator of which is the number of days between the
Effective Date and the date of termination of the Executive’s
employment and the denominator of
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