<PAGE>
EXHIBIT 10.46
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL
PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED
WITH BRACKETS ("[***]"). THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
CHANGE OF CONTROL AND RESTRICTIVE
COVENANT AGREEMENT
This Change of
Control and Restrictive Covenant Agreement ("Agreement") is
entered into this 14th day of February,
2005 by and among Richard J. Bacon
("Executive"), PRG-Schultz USA, Inc., a
Georgia corporation ("USA") and
PRG-Schultz International, Inc., a Georgia
corporation that owns all of the
capital stock of USA ("PRGS").
WHEREAS,
Executive and USA entered into that certain offer letter
agreement
("Offer Letter") dated September 1, 2003
which set forth the terms of employment
under which USA employed Executive as the
Executive Vice President,
International, for USA;
WHEREAS, in
connection with Executive's employment, Executive executed that
certain Employee Agreement (the "Employee
Agreement") dated [2/14/05], which
contained certain restrictive
covenants;
WHEREAS,
Executive is a senior executive of USA whose services are
extremely valuable to USA, and whose
services include responsibilities for
international sales for PRGS, and PRGS'
affiliates and subsidiaries;
WHEREAS,
Executive has had and will have access to the valuable and
proprietary trade secrets of USA and its
customers, and Executive has had and
will have close contact with the customers
and employees of USA;
WHEREAS,
Executive and USA desire to enter into this Change of Control
and
Restrictive Covenant Agreement to (a) amend
certain provisions of the Offer
Letter regarding termination of employment
and severance in the manner set forth
herein, (b) provide Executive additional
security and benefits in the event of
any actual or threatened change of control
of PRGS, (c) provide incentives to
Executive to remain employed with USA, (d)
provide PRGS with reasonable
protection of the valuable trade secrets
and confidential information of USA and
its customers, as well as the relationships
between USA and its customers and
employees, and (e) preserve the goodwill of
PRGS for the benefit of the
shareholders in the event a change of
control occurs;
NOW, THEREFORE,
for good and valuable consideration, the receipt and
sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have
the meaning specified:
"Business of
USA" shall mean (a) audit services (i) to identify and recover
lost profits from any source, including,
without limitation, payment errors,
missed or inaccurate discounts, allowances,
or rebates, vendor pricing errors,
or duplicate payments and (ii) to identify
expense containment opportunities;
(b) development and use of technology to
provide such services; and (c)
provision of related consulting
services.
"Cause" shall
mean, as determined by the Board of Directors of PRGS (the
"Board") in good faith: (1) a material
breach by Executive of the duties and
<PAGE>
responsibilities of Executive or any
written policies or directives of USA
(other than as a result of incapacity due
to physical or mental illness) which
is (i) willful or involves gross
negligence, and (ii) not remedied within thirty
(30) days after receipt of written notice
from USA which specifically identifies
the manner in which such breach has
occurred; (2) Executive commits any felony
or any misdemeanor involving willful
misconduct (other than minor violations
such as traffic violations) that causes
damage to the property, business or
reputation of USA, as determined in good
faith by the Board; (3) Executive
engages in a fraudulent or dishonest act,
as determined in good faith by the
Board; (4) Executive engages in habitual
insobriety or the use of illegal drugs
or substances; (5) Executive breaches his
fiduciary duties to the Company, as
determined in good faith by the Board; or
(6) Executive engages in activities
prohibited by Sections 9 through 15
hereof.
"Change of
Control" shall mean the occurrence, on or before [***], of any
of the following events: (i) a majority of
the outstanding voting stock of PRGS
shall have been acquired or beneficially
owned by any person (other than PRGS or
a subsidiary of PRGS) 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 PRGS; or (ii) a merger or a
consolidation of PRGS with or into another
corporation, other than (A) a merger or
consolidation with a subsidiary of PRGS,
or (B) a merger or consolidation in which
the holders of voting stock of PRGS
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 (iii) a
statutory exchange of shares of one or
more classes or series of outstanding
voting stock of PRGS for cash, securities,
or other property, other than an exchange
in which the holders of voting stock
of PRGS 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 PRGS stock is being exchanged; or
(iv) the sale or other disposition of
all or substantially all of the assets of
PRGS, in one transaction or a series
of transactions, other than a sale or
disposition in which the holders of voting
stock of PRGS 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
PRGS are being sold; or (v) the
liquidation or dissolution of PRGS; ; or
(vi) the entry into a definitive
agreement with respect to any of the events
specified in the foregoing clauses
(i) through (v) on or prior to [***] if the
transactions contemplated by such
agreement shall thereafter be consummated
on or before [***]. In the event of
the occurrence of a Change of Control under
clause (vi) above, for all purposes
hereof, other than the determination under
this Agreement that a Change of
Control has occurred on or before [***],
the date the transactions contemplated
by such agreement are consummated shall be
deemed to be the date of such Change
of Control.
"Code" shall
mean the Internal Revenue Code of 1986, as amended.
"Competing
Business" shall mean any business engaging in the same or
substantially similar business as the
Business of USA.
"Confidential
Information" shall mean any confidential or proprietary
information relating to USA or its
customers or affiliates that is not a Trade
Secret.
"Good Reason"
shall mean any one of the following: (i) USA's demotion of
CONFIDENTIAL
PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED
WITH BRACKETS ("[***]"). THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
2
<PAGE>
the Executive to a lesser position than the
position in which he is serving
prior to such demotion; (ii) the assignment
to Executive of duties materially
inconsistent with his position or material
reduction of the Executive's duties,
responsibilities or authority, all of
which, as of the date hereof, are as set
forth on Exhibit A attached hereto and
incorporated herein, in either case
without the Executive's prior written
consent; provided, however, that a change
in the foregoing a that results solely from
PRGS ceasing to be a publicly traded
entity or from PRGS becoming a wholly owned
subsidiary of a publicly traded
entity shall not, in either event and
standing alone, constitute grounds for
"Good Reason"; (iii) any reduction in
Executive's base salary, target bonus or
target bonus plan without the Executive's
prior consent unless other executives
who are parties to agreements similar to
this one also suffer a comparable
reduction in their base salaries, target
bonus or target bonus plan (for
purposes of this subsection (iii) "other
executives" shall refer to James
Benjamin, Marie Neff, James Moylan, Richard
Bacon, Eric Goldfarb, Paul van
Leeuwen or John Toma); or (iv) unless
agreed to by Executive, the relocation of
Executive's principal place of business
outside of the metropolitan area of
Atlanta, Georgia, in each case not remedied
by USA within thirty (30) days after
receipt by USA of written notification from
Executive as provided in Section 18
of this Agreement to USA that specifically
identifies the Good Reason. The
Executive must notify USA of any event that
constitutes Good Reason within
ninety (90) days following the Executive's
knowledge of its occurrence or
existence or such event shall not
constitute Good Reason under this Agreement.
"Per Share
Price" shall mean the value of the consideration received by a
shareholder of PRGS in exchange for one
share of the Common Stock of PRGS in
connection with a transaction which
constitutes a Change of Control.
"Secret
Information" means Confidential Information and Trade Secrets.
"Trade Secrets"
shall mean information of USA, its affiliates or customers,
without regard to form, including, but not
limited to, technical or nontechnical
data, a formula, a pattern, a compilation,
a program, a device, a method, a
technique, a drawing, a design, a process,
financial data, financial plans,
product plans, or a list of actual or
potential customers or suppliers which is
not commonly known by or available to the
public and which information: (a)
derives economic value, actual or
potential, from not being generally known to,
and not being readily ascertainable by
proper means by, other persons who can
obtain economic value from its disclosure
or use, and (b) is the subject of
efforts that are reasonable under the
circumstances to maintain its secrecy.
"Works" shall
mean any work of authorship, code, invention, improvement,
discovery, process, formula, code
algorithm, program, system, method, visual
work, or work product, whether or not
patentable or eligible for copyright, and
in whatever form or medium and all
derivative works thereof, which are, have
been or will be created, made, developed,
or conceived by Executive in the
course of employment with USA, with USA's
time, on USA's premises, using USA's
resources or equipment, or relating to the
Business of USA.
2. Transaction
Success Fee.
(a) Amount of Transaction Success Fee. Subject to the conditions
set
forth in Section 2(b) below, USA shall pay
to Executive an amount (the
"Transaction Success Fee") in the event a
Change of Control occurs on or before
[***] as follows:
(i) If the Per Share Price received by the PRGS shareholders in
connection with the Change of Control is
equal to or less than $[***] per share,
the amount of the Transaction Success Fee
shall be equal to $162,500.00.
3
<PAGE>
(ii) If the Per Share Price received by the PRGS shareholders
in
connection with the Change of Control is
$[***] or more, but equal to or less
than $[***], the amount of the Transaction
Success Fee shall be calculated in
accordance with the following formula:
(1) Per Share Price
minus $[***] = Increase Dollar Amount;
(2) Increase Dollar
Amount divided by $[***] = Increase Percentage
Amount;
(3) Increase
Percentage Amount plus 50% = Aggregate Increase
Percentage;
(4) Multiply Aggregate
Increase Percentage by $325,000.00
For example, if the Per Share Price is
$[***], the Increase Dollar Amount will
equal $[***], the Increase Percentage
Amount will equal 50% (or .50) and the
Aggregate Increase Percentage will equal
100% (or 1). Accordingly, in such case,
the Transaction Success Fee would be
$325,000.00.
(iii) If the Per Share Price received by the PRGS shareholders
in
connection with the Change of Control is
$[***] or greater, the amount of the
Transaction Success Fee shall be equal to
$487,500.00.
If any written
agreement with any "other executive" as defined in the Good
Reason definition in Section 1 hereof,
similar to this Agreement, is amended to
reduce to a lower number the $[***] amount
in Section 2(a) of such agreement,
then the $[***] in this Section 2(a) shall
be automatically reduced to such
lower dollar amount. In the event of any
stock split, stock dividend, or similar
adjustment in the number of outstanding
shares of Common Stock of PRGS, then the
base prices of $[***] to $[***] that are
set forth above and that are used to
determine the amount of the Transaction
Success Fee shall be equitably adjusted
to reflect such split, dividend, or similar
adjustment and the base numbers of
$[***] and $[***] set forth in (ii)(1)-(2)
above shall also be equitably
adjusted.
(b) Conditions. In order for Executive to be eligible to receive
the
Transaction Success Fee, the Change of
Control must occur on or before [***],
and one of the following conditions must be
met:
(i) Executive is employed by USA or its affiliates on the date
of
a Change of Control, but Executive is not
offered a job after the Change of
Control with USA or its successor or
affiliates, or Executive is offered
employment after the Change of Control, but
the terms of such employment are
such that Executive would be entitled to
resign from employment for Good Reason;
or
(ii) Executive is employed by USA or its affiliates on the date
of a Change of Control and Executive
remains employed by USA or its successor or
affiliates during the period beginning with
the Change of Control and continuing
through the date that the Transaction
Success Fee (or portion thereof) is earned
and due for payment in accordance with
Section 2(c)(i) and (ii) below; or
(iii) Executive is employed by USA or its affiliates on the
date
of a Change of Control and Executive
remains employed by USA or its successor or
affiliates after the date of the Change of
Control, but Executive voluntarily
terminates such employment for Good Reason
during the 12-month period following
CONFIDENTIAL
PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED
WITH BRACKETS ("[***]"). THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
4
<PAGE>
the Change of Control;
(iv) Executive is
employed by USA or its affiliates on the date
of a Change of Control and Executive
remains employed by USA or its successor or
affiliates after the date of the Change of
Control, but such employment is
terminated by USA (or its successor or an
affiliate) without Cause during the
12-month period following the Change of
Control; or
(v) Executive's employment with USA or its affiliates is
terminated prior to the date of a Change of
Control without Cause or for Good
Reason, either in contemplation of a Change
of Control or at the insistence of
the prospective purchaser of PRGS;
provided, however, that, notwithstanding
anything to the contrary contained herein,
Executive shall have no right to
receive any portion of a Transaction
Success Fee, until the actual occurrence of
a Change of Control that occurs on or
before [***], and in the event a Change of
Control does not occur on or before [***],
Executive shall have no right to
receive a Transaction Success Fee.
(c) Payment Terms. The Transaction Success Fee shall be due and
payable as follows:
(i) If Executive is employed by USA or its successor or
affiliates on the six-month anniversary of
the Change of Control, one-third of
the Transaction Success Fee shall be due
and payable by USA to Executive within
30 days after such six-month
anniversary.
(ii) If Executive is employed by USA or its successor or
affiliates on the one-year anniversary of
the Change of Control, two-thirds of
the Transaction Success Fee shall be due
and payable by USA to Executive within
30 days after such one-year
anniversary.
(iii) Upon the occurrence of the events described in Section
2(b)(i) through (iv) above, the entire
Transaction Success Fee (less any amounts
previously paid hereunder) shall be due and
payable in a lump sum within 30 days
after the occurrence of such event.
(iv) Upon the occurrence of the event described in Section
2(b)(v) above, the entire Transaction
Success Fee shall be due and payable 30
days after the later to occur of
termination of employment or the date of the
Change of Control.
Notwithstanding
the foregoing, if a portion of the Per Share Price to be
received by the PRGS shareholders is placed
in escrow, paid in installments or
over time, or otherwise deferred for any
reason, including in order to fund
potential claims in connection with a
breach of any representation or warranty
given in connection with a Change of
Control transaction or to be earned and
paid based on conditions to be determined
after the closing of the Change of
Control transaction, the Transaction
Success Fee shall be based on the Per Share
Price amount actually received by the PRGS
shareholders and any increase in the
Transaction Success Fee caused by any
post-closing payments shall be paid on the
later of the date set forth above or 30
days after the date of such post-closing
payment to the PRGS shareholders.
(d) Termination for Cause. If Executive's employment is terminated
by
USA (or a successor or affiliate) for Cause
prior to the six-month anniversary
of the Change of Control, Executive shall
not be entitled to receive any portion
CONFIDENTIAL
PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED
WITH BRACKETS ("[***]"). THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
5
<PAGE>
of the Transaction Success Fee. If
Executive's employment is terminated by USA
(or its successor or an affiliate) for
Cause after the six-month anniversary of
the Change of Control, USA shall pay the
portion of the Transaction Success Fee
due under Section 2(c)(i), but Executive
shall not be entitled to receive the
amount described in Section 2(c)(ii). To
the extent the amount due under 2(c)(i)
has been paid by USA prior to a termination
under the condition described in the
foregoing sentence, Executive shall not be
required to refund such portion of
the Transaction Success Fee.
3. Restricted
Stock Award. Executive acknowledges and agrees that execution
of this Agreement will also constitute
Executive's acceptance of a restricted
stock award of 40,000 shares of the Common
Stock of PRGS, the terms and
conditions of which are set forth on
Exhibit B attached hereto and incorporated
herein. This Agreement will not be deemed
accepted until Executive has delivered
an executed copy hereof to USA's Human
Resources Department at the address set
forth on the signature page hereto.
4. Additional
Payments. Upon a Change of Control that occurs on or prior to
[***], Executive shall be entitled to an
additional payment ("Additional
Payment") as follows:
(a) No Post-Closing Service. (i) Executive shall be entitled to
an
additional payment of $650,000.00, payable
in equal bi-weekly installments, over
the two-year period beginning six months
following the Change of Control if
Executive is employed by USA or its
affiliates on the date of a Change of
Control, but Executive is not offered a job
following the Change of Control with
USA or its successor or affiliates or
Executive is offered employment after the
Change of Control, but the terms of such
employment are such that Executive
would be entitled to resign from employment
for Good Reason.
(ii) If Executive's employment with USA or its affiliates is
terminated prior to the date of a Change of
Control without Cause or for Good
Reason, either in contemplation of a Change
of Control or at the insistence of
the prospective purchaser of PRGS,
Executive shall be deemed to have met the
requirements of this Section 4(a);
provided, however, that, notwithstanding
anything to the contrary contained herein,
Executive shall have no right to
receive any portion of an Additional
Payment, until the actual occurrence of a
Change of Control that occurs on or before
[***] and in the event a Change of
Control does not occur on or before [***],
Executive shall have no right to
receive an Additional Payment.
(b) Termination in First Six Months. Executive shall be entitled to
an
additional payment of $650,000.00, payable
in equal bi-weekly installments, over
the two-year period beginning six months
following termination of employment if
Executive is employed by USA or its
affiliates on the date of the Change of
Control, but (i) Executive terminates his
employment with USA or its successor
or affiliates for Good Reason during the
six-month period following the Change
of Control, or (ii) Executive's employment
is terminated by USA or its successor
or affiliates without Cause during the
six-month period following the Change of
Control; or
(c) Termination in Second Six Months. Executive shall be entitled
to
an additional payment of $487,500.00,
payable in equal bi-weekly installments,
over the 18-month period beginning six
months following termination of his
CONFIDENTIAL
PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED
WITH BRACKETS ("[***]"). THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
6
<PAGE>
employment if Executive is employed by USA
or its affiliates on the date of a
Change of Control, but (i) Executive
terminates his employment with USA or its
successor or affiliates for Good Reason
after the six-month anniversary of the
Change of Control but on or before the
one-year anniversary of the Change of
Control (the "Second Period"), or (ii)
Executive's employment is terminated by
USA or its successor or affiliates without
Cause during the Second Period.
(d) Limitation on Payments. The payments described in Section
4(a)
through (c) shall be paid in lieu of any
"severance" amount to which Executive
would be entitled under Section 8 of the
Offer Letter (as such Section is
amended by Section 5 hereof) should the
events described above occur. If a
Change of Control does not occur on or
before [***], Executive shall not be
entitled to any Additional Payments
pursuant to Section 4 of this Agreement, and
Executive shall be entitled to only those
severance benefits, if any, payable
under Section 8 of the Offer Letter (as
such Section is amended by Section 5
hereof). If Executive terminates his
employment with USA or its successor or
affiliates for Good Reason after the
one-year anniversary of the Change of
Control or Executive's employment is
terminated by USA or its successor or
affiliates without Cause after the one-year
anniversary following the Change of
Control, Executive shall not be entitled to
receive any Additional Payment under
Section 4 of this Agreement, and Executive
shall be entitled to only those
severance benefits, if any, payable under
Section 8 of the Offer Letter (as such
Section is amended by Section 5 hereof).
Executive shall not be entitled to any
payment under this Section 4 if Executive
is terminated for Cause. If Executive
receives the Additional Payments pursuant
to this Section 4, he shall not be
entitled to receive any severance benefits
under Section 8 of the Offer Letter
(e) Acceleration. To the extent that the American Jobs Creation Act
of
2004 (the "Act") is interpreted to allow
earlier payment of the Additional
Payments contemplated under Sections 4(a)
through (c), then Sections 4(a), (b),
and (c) shall be automatically amended to
delete the phrase "beginning six
months" which appears in each such Section
and such Additional Payment under
Section 4(a) shall be made as early as the
Act permits.
(f) Execution of General Release. Executive acknowledges and
agrees
that he is not eligible to receive any
Additional Payments unless and until he
executes a general release agreement and
covenant not to sue, in the form
attached hereto at Exhibit C.
(g) No Double Benefits. The Additional Payments contemplated
under
this Section 4 are intended to replace and
supersede any benefits Executive may
be entitled to under Section 8 of the Offer
Letter (as amended by Section 5 of
this Agreement) if a Change of Control
occurs. If a Change of Control does not
occur, Executive shall be entitled to only
those severance benefits, if any,
payable under Section 8 of the Offer Letter
(as such Section is amended by
Section 5 hereof). Under no circumstances
will Executive ever be entitled to
receive both the Additional Payments
pursuant to this Section 4 and the
severance benefits pursuant to Section 8 of
the Offer Letter (as amended by
Section 5 of this Agreement).
5. Amendments to
Offer Letter.
(a) Section 8 of the Offer Letter is hereby deleted in its
entirety
CONFIDENTIAL PORTIONS
OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED
WITH BRACKETS ("[***]"). THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
7
<PAGE>
and replaced by the following:
"(a) If your
employment with PRGS is terminated for Cause (as such term is
defined in that certain Change of Control
and Restrictive Covenant Agreement by
and between you and PRG-Schultz USA, Inc.,
dated February 14, 2005 ("Change of
Control Agreement") or if you voluntarily
resign without Good Reason (as such
term is defined in the Change of Control
Agreement), you will receive your base
salary prorated through the date of
termination, payable in accordance with
PRGS's normal payroll procedure, and you
will not receive any bonus or any other
amount in respect of the year in which
termination occurs or in respect of any
subsequent years.
(b) If your
employment with PRGS is terminated by PRGS without Cause or by
you for Good Reason, you will receive your
base salary and earned bonus for the
year in which such termination occurs
prorated through the date of such
termination, plus a severance payment equal
to continuation of your base salary
for twelve (12) months payable bi-weekly
conditioned upon signing release and
covenant not to sue. Except as provided in
the immediately preceding sentence,
you will not receive any other amount in
respect of the year in which
termination occurs or in respect of any
subsequent years. You will not be
entitled to any amounts under the Change of
Control Agreement, except for any
unpaid Transaction Success Fee earned prior
to your termination. The prorated
base salary and severance payments will be
paid in accordance with PRGS' normal
payroll procedures.
(c) If your
employment with PRGS is terminated by your death or retirement,
you (or your legal representative in the
case of death) will receive base salary
and bonus for the year in which such
termination occurs prorated through the
date of such termination and will not
receive any other amount in respect of the
year in which termination occurs or in
respect of any subsequent years. The
prorated base salary will be paid in
accordance with PRGS' normal payroll
procedure and the prorated bonus will be
paid in a lump sum within ninety (90)
days after the end of the year to which it
relates. You will not be entitled to
any amounts under the Change of Control
Agreement, except for any unpaid
Transaction Success Fee earned prior to
your termination.
(d) If your
employment with PRGS is terminated for Disability (as defined
above), you or your legal representative
will receive all unpaid base salary and
bonus for the year in which such
termination occurs prorated through the date of
termination with such prorated base salary
payable in accordance with PRGS's
normal payroll procedure and the prorated
bonus payable in a lump sum within
ninety (90) days after the end of the year
to which it relates. You will not be
entitled to any amounts under the Change of
Control Agreement, except for any
unpaid Transaction Success Fee earned prior
to your termination."
(b) Section 7 of the Offer Letter is hereby deleted in its
entirety
and replaced by the following:
"(a) This
Agreement may be terminated by PRGS for Cause upon delivery to
you of a thirty (30) days notice of
termination. "Cause" shall have the meaning
ascribed to such term in the Change of
Control Agreement.
(b) Either
party, without Cause, may terminate this Agreement by giving
thirty (30) days written notice.
Additionally, your employment may be terminated
by you for "Good Reason". "Good Reason"
shall have the meaning ascribed to such
term in the Change of Control
Agreement.
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<PAGE>
(c) In the event
of your Disability, physical or mental, PRGS will have the
right, subject to all applicable laws,
including without limitation, the
Americans with Disabilities Act ("ADA"), to
terminate your employment
immediately. For purposes of this
Agreement, the term "Disability" shall mean
your inability or expected inability (or a
combination of both) to perform the
services required of you hereunder due to
illness, accident or any other
physical or mental incapacity for an
aggregate of ninety (90) days within any
period of one hundred eighty (180)
consecutive days during which this Agreement
is in effect, as agreed by the parties or
as determined pursuant to the next
sentence. If there is a dispute between you
and PRGS as to whether a Disability
exists, then such issue shall be decided by
a medical doctor selected by PRGS
and a medical doctor selected by you and
your legal representative (or, in the
event that such doctors fail to agree, then
in the majority opinion of such
doctors and a third medical doctor chosen
by such doctors). Each party shall pay
all costs associated with engaging the
medical doctor selected by such party and
the parties shall each pay one-half (1/2)
of the costs associated with engaging
any third medical doctor.
(d) In the event
this Agreement is terminated, all provisions in this
Agreement or the Change of Control
Agreement relating to any actions, including
those of payment or compliance with
covenants, subsequent to termination shall
survive such termination."
6.
Acknowledgement of Restrictive Covenant Consideration.
Executive
acknowledges and agrees that $707,500.00
(the "Restrictive Covenant
Consideration") of the aggregate value of
amounts that USA has agreed to pay
under Sections 3 and 4 hereof,
respectively, and any amounts that USA has agreed
to pay Executive under the Offer Letter as
a result of termination of his
employment, is being paid in consideration
of Executive's agreement to Sections
13, 14 and 15 below. Moreover, Executive
acknowledges and agrees that the
Restrictive Covenant Consideration is
subject to forfeiture in accordance with
Section 16(b) hereof in the event Executive
breaches any of the covenants set
forth in Section 13, 14 or 15 hereof.
7. Taxes. PRG
shall deduct or withhold such amounts as may be required
pursuant to applicable federal, state,
local, or other laws from all amounts
payable to Executive or awards to be made
to Executive pursuant to this
Agreement.
8. Excess
Payments. In the event that any payment or award to be received
by Executive pursuant to Sections 2, 3, or
4 hereof or the value of any
acceleration right occurring pursuant to
this Agreement in connection with a
Change of Control would be subject to an
excise tax pursuant to Section 4999 of
the Code (or any successor provision),
whether in whole or in part, as a result
of being an "excess parachute payment,"
within the meaning of such term in
Section 280G(b) of the Code (or any
successor provision), the amount payable
under Sections 2, 3, and 4 shall be reduced
so that no portion of such payment
or the value of such acceleration rights is
subject to the excise tax pursuant
to Section 4999 of the Code. If the amount
necessary to eliminate such excise
tax exceeds the amount otherwise payable
under Sections 2, 3, and 4, no payment
shall be made under these Sections and no
further adjustments shall be made.
Notwithstanding the previous sentence, no
portion of such payment or any
acceleration right which tax counsel,
selected by USA's ac
