EXHIBIT 10.35
NONCOMPETITION, NONSOLICITATION AND
CONFIDENTIALITY AGREEMENT
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇)
This NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY AGREEMENT
("Agreement"), entered into as of the 24 day of January, 2002 (the "Effective
Date"), is made by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
("Shareholders") and THE PROFIT RECOVERY GROUP INTERNATIONAL, INC., a Georgia
corporation ("PRGX").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Amended and Restated Agreement and
Plan of Reorganization by and among PRGX, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates
International, Inc., a Texas corporation ("HSA-Texas") and others dated as of
December 11, 2001, (the "Acquisition Agreement"), PRGX is acquiring
substantially all of the assets of HSA-Texas, including all customer accounts of
HSA-Texas in existence on the date hereof, which accounts are listed on Exhibit
A attached hereto (the "HSA-Texas Accounts"); and
WHEREAS, Shareholders are an employee of HSA-Texas and are shareholders
of HSA-Texas and, as such, have had access to (a) Proprietary Information about
HSA-Texas, those entities designated as Subsidiaries on Schedule 1 attached
hereto, which are directly or indirectly owned subsidiaries of HSA-Texas
("Subsidiaries") (collectively the Stock Companies, as identified in Schedule 1,
and the Subsidiaries, being the "Affiliates") and HSA-Texas' Business, (b)
information about the HSA-Texas Accounts and the employees of HSA-Texas and (c)
other information about the HSA-Texas Business (as defined below) and the
Affiliates that PRGX is purchasing pursuant to the Acquisition Agreement; and
WHEREAS, the acquisition of the assets of HSA-Texas is structured as a
reorganization qualifying under Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended, wherein HSA-Texas has received PRGX stock in exchange
for the assets of HSA-Texas, and in conjunction therewith, the shareholders of
HSA-Texas shall receive stock of PRGX upon liquidation of HSA-Texas, which shall
serve as consideration for the Shareholders' entering into this Agreement; and
WHEREAS, in order to induce PRGX to enter into and consummate the
Acquisition Agreement, which HSA-Texas hereby acknowledges will benefit it and
io8ukjmn iouk which the Shareholders acknowledge will benefit such Shareholders,
Shareholders have agreed to accept certain restrictions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following definitions shall apply to this
Agreement:
(a) "HSA-Texas Business" means the business of (a)
auditing accounts payable records, occupancy costs, vendor statements and direct
to store delivery records to recover overpayments that are a result of missed
credits, duplicated payments, overlooked allowances, incorrect invoices and
other discrepancies, through its Global Data Services (GDS) Center, Associate
Support Center, Occupancy Cost Audit Group, Statement Audit Group, Direct to
Store Delivery Group and Commercial Audit Group and (b) operating a document
imaging service bureau and selling and dealing in electronic document imaging
and microfilming services.
(b) "Competing Business" means any Person that is engaged
in or conducts a business substantially the same as the HSA-Texas Business.
(c) "Person" means and includes any individual,
partnership, association, corporation, limited liability company, trust,
unincorporated organization, or any other business entity or enterprise.
(d) "Proprietary Information" means information (written,
oral, magnetic, photographic, optical, or in any other form or media) including
but not limited to:
(i) all data, documents, materials, drawings, or
any other information in tangible form and marked "Secret," "Proprietary,"
"Confidential" or any similar marking;
(ii) any and all ideas, concepts, know-how,
methods, techniques, structures, information, and materials relating to existing
software products (including without limitation data-handling procedures and
telecommunications) or for other products and software or firmware in various
phases of research and development including source or object code and
regardless of what medium such code is stored on, algorithms, routines, data
structures, systems designs, diagrams, flow charts, designs, drawings,
programmer notes, training materials, user manuals, processes, procedures,
requirement specifications, design specifications, design notes, coding sheets,
annotations, documentation, technical and engineering data and the structures,
organization, sequence, designs, formulas and algorithms which reside in the
software used by HSA-Texas and which are not generally known to the public or
within the industries or trades in which HSA-Texas competes;
(iii) any and all ideas, concepts, common
know-how, methods, techniques, structures, information, and materials relating
to the design, development, engineering, invention, patent, patent application,
manufacture, improvement of any and all equipment, components, devices,
techniques, processes, or formulas (including without limitation, mask works,
semiconductor chips, processors, memories, disk drives, tape heads, computer
terminals, keyboards, storage devices, printers, testers, and optical character
recognition devices) and any and all components, devices, techniques, or
circuitry incorporated in any of the above which is or are constructed,
designed, improved, altered, or used by HSA-Texas and which is not generally
known to the public or within the industries in which HSA-Texas competes;
(iv) internal business procedures and business
plans, including analytical methods and procedures, licenses and techniques,
manufacturing information, and procedures such as formulations, processes and
equipment, telecommunications, technical and engineering data, vendor names,
other vendor information, purchasing information, financial information,
configuration and design of computer and telecommunications network (including
without limitation the network topology and software setup), service and
operational manuals and documentation therefor, ideas for new products and
services, price lists, or other pricing information, policy, and other such
information which relates to the way HSA-Texas conducts its business and which
is not generally known to the public;
(v) information and documents regarding the
identity of the clients, customers, or accounts of HSA-Texas, any projects or
work performed for HSA-Texas' clients, customers, or accounts, any information
or documents concerning potential clients, customers, or accounts of HSA-Texas
from whom HSA-Texas is attempting or has attempted to obtain projects or work,
any information concerning volume, rates, or contracts pertaining to HSA-Texas'
clients, customers, or accounts or to any potential clients, customers, or
accounts of HSA-Texas from whom HSA-Texas is attempting or has attempted to
obtain projects or work;
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(vi) any and all information and materials in
HSA-Texas' possession or under its control from any other Person which HSA-Texas
is obligated to treat as confidential or proprietary (including, without
limitation, all freight transaction information);
(vii) patents, copyrights, trademarks,
servicemarks, trade secrets and proprietary process of HSA-Texas as may exist
from time to time, as well as business plans, strategies, concepts, prospects,
financial data of HSA-Texas, and any other special or unique asset of HSA-Texas
or method of operation; and
(viii) any and all information concerning the
HSA-Texas Business which is not generally known to the public or within the
industries or trades in which HSA-Texas competes;
provided, however, that "Proprietary Information" shall not include any
information that has been voluntarily disclosed to the public by HSA-Texas
(except where such public disclosure has been made by HSA-Texas without
authorization), that was already known (by means not in violation of any duty of
nondisclosure to HSA-Texas or PRGX) to the recipient of such information at the
time of disclosure to the recipient, that was disclosed to the recipient by a
third party who had no duty of nondisclosure to HSA-Texas or PRGX, that has been
independently developed and disclosed by others, or that otherwise enters the
public domain through lawful means. Proprietary Information may be marked by
HSA-Texas or either HSA-Texas' Affiliates as "proprietary" or "secret" or with
other words or markings of similar meaning, but such markings are not necessary
for such information to constitute "Proprietary Information" hereunder.
(e) "Prospective Client" means any Person to whom or
which the HSA-Texas has made oral presentations or proposals to or sent or
delivered a written sales or servicing proposal or contract (but not solely an
unsolicited general mass mailing) in connection with the HSA-Texas Business
within 24 months prior to the Effective Date.
(f) "Territory"" means the areas listed on Schedule 2
attached hereto, which the parties acknowledge to be the geographic area in
which HSA-Texas conducts HSA-Texas' Business on the Effective Date.
2. COVENANTS OF SHAREHOLDERS. Shareholders acknowledge that PRGX
would suffer substantial damage if PRGX's relations with the HSA-Texas Accounts
deteriorated or if PRGX lost the HSA-Texas Accounts after the closing of the
Acquisition Agreement. The covenants in this Section 2 are a material inducement
to PRGX to enter into the Acquisition Agreement, and the amounts payable to
HSA-Texas under the Acquisition Agreement are in past consideration for the
covenants in this Section 2. The parties hereto acknowledge that the assets
being purchased by PRGX are the core assets of the HSA-Texas Business, that the
HSA-Texas Business is of a limited and unusual nature and that the scope of the
HSA-Texas Business is sufficiently broad so that these restrictions shall apply
throughout the Territory, and HSA-Texas and Shareholders agree that the
Territory is reasonable under the circumstances. The parties hereto further
acknowledge that Shareholder have been entrusted with knowledge and possession
of Proprietary Information as a result of being shareholders of HSA-Texas and
that by virtue of the Shareholders' ownership of HSA-Texas and the knowledge of
the HSA-Texas Business, PRGX would be deprived of the value of the core assets
acquired by PRGX under the Acquisition Agreement if Shareholders breach the
covenants contained herein. The parties hereto also acknowledge and agree that
(i) the types and periods of restriction imposed in this Section 2 are fair and
reasonable and are reasonably required in order to protect and maintain the
Proprietary Information and the other proprietary interests of PRGX, other
legitimate business interests of PRGX, and goodwill associated with the business
of PRGX, including the HSA-Texas Business (including the HSA-Texas Accounts)
acquired under the Acquisition Agreement, and (ii) the time, scope, geographic
area, and other provisions of this Section 2 have been specifically negotiated
by sophisticated commercial parties, represented by legal counsel, and are
integral parts of the transactions contemplated by the
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Acquisition Agreement. Therefore, each of the Shareholders agrees to the
following covenants and agreements:
(a) Shareholder covenants that such Shareholder shall
not, for a period of five (5) years from and after the Effective Date, except on
behalf of PRGX, directly or indirectly, within the Territory (i) provide or
perform services which are in competition with the HSA-Texas Business, either on
his or her own behalf or on behalf of any other Person, whether as a
shareholder, owner, partner, proprietor, agent, consultant, independent
contractor or lender of a Competing Business or otherwise, or (ii) have a
financial interest in or be in any way connected with or affiliated with any
Competing Business. Nothing contained herein shall preclude Shareholder from
owning any shares of PRGX Common Stock or having a passive investment in less
than one percent (1%) of the outstanding capital stock of any other publicly
traded company that is, or is connected with or affiliated with, a Competing
Business.
(b) For a period of five (5) years from and after the
Effective Date, Shareholder shall hold in trust and in the strictest confidence
and shall not disclose to anyone other than PRGX, or use, reproduce, distribute,
disclose or otherwise disseminate to or for anyone other than PRGX, any
Proprietary Information or any physical embodiments thereof utilized by
HSA-Texas or any Affiliate in the HSA-Texas Business at any time prior to the
acquisition of assets of HSA-Texas by PRGX on the date hereof; provided, with
respect to any Proprietary Information utilized by HSA-Texas or any Affiliate
prior to the date hereof that constitutes a trade secret under applicable law,
Shareholder's obligation under this Section 2(b) shall remain in effect so long
as such information retains its status as a trade secret. In no event shall
Shareholder take any action causing any Proprietary Information disclosed to or
developed by HSA-Texas or its Affiliates to lose its character or cease to
qualify as Proprietary Information. Notwithstanding anything contained herein to
the contrary, this Section 2(b) shall not limit in any manner the protection to
PRGX with respect to its purchase of HSA-Texas' trade secrets otherwise afforded
by law.
(c) For a period of five (5) years from and after the
Effective Date, Shareholder covenants and agrees that such Shareholder will not,
except with the prior written consent of PRGX signed by its President, directly
or indirectly, solicit or call upon any of the HSA-Texas Accounts, former
clients of HSA-Texas to which services have been provided by HSA-Texas within
the last two (2) years prior to the Effective Date or any Prospective Client of
HSA-Texas (or any employee or independent contractor of any such client or
Prospective Client) for purposes of selling or providing any product, equipment
or service, which is competitive with any product, equipment or service sold,
leased, offered for sale or lease or under development by HSA-Texas during the
twenty-four (24) month period immediately preceding the Effective Date.
Notwithstanding anything contained herein to the contrary, this Section 2(c)
shall not limit Shareholder from soliciting the HSA-Texas Accounts, former
clients of HSA-Texas or any Prospective Client of HSA-Texas (or any employee or
independent contractor of any such client or Prospective Client) to provide
services which are not competitive with those provided by the HSA-Texas Business
as of the Effective Date.
(d) For a period of five (5) years from and after the
Effective Date, Shareholder covenants and agrees that such Shareholder will not,
without the prior written consent of PRGX signed by its President, directly or
indirectly:
(i) hire, solicit, entice, persuade or induce,
or attempt to hire, solicit, entice, persuade or induce any Person who was
employed by, or performing services as an independent contractor or as an
employee of an independent contractor for, HSA-Texas or an Affiliate and is
subsequently hired or engaged by PRGX in connection with PRGX's acquisition of
the HSA-Texas Business pursuant to the Acquisition Agreement, either to
terminate such Person's employment with PRGX or to cease performing such
services for PRGX; or
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(ii) authorize any Person to engage in or assist
any Person in any of the activities described in clause (i) of this subsection.
3. SEVERABILITY. In the event that one or more of the words,
phrases, sentences, clauses, sections, subdivisions or subsections contained
herein shall be held invalid, this Agreement shall be construed as if such
invalid portion had not been inserted, and if such invalidity shall be caused by
the length of any period of time, the number or location of Persons, the size of
any area, or the scope of the activities set forth in any part hereof, such
period of time, number or location of Persons, area, or scope, or any
combination thereof, shall be considered to be reduced to a period, number,
location, area or scope which would cure such invalidity and which will be
effective, binding and enforceable against Shareholders.
4. REMEDIES. Shareholders agree that if either Shareholder
breaches any provision of this Agreement, the damage to PRGX would be difficult
or impossible to ascertain, and money damages alone would not afford PRGX an
adequate remedy for any such breach. Therefore, if either Shareholder is in
breach of this Agreement, the parties hereto agree that PRGX will be entitled,
in addition to any and all rights and remedies as would be provided by law, to
specific performance, injunctive, and other equitable relief (without being
required to post bond or security and without having to prove the inadequacy of
available remedies at law) to prevent or restrain a breach of this Agreement or
otherwise to specifically enforce the provisions of Section 2 of this Agreement.
The rights of PRGX to enforce the covenants in this Agreement are in addition
to, and not in lieu of, any and all rights PRGX may have at law and in equity to
protect its business interests. The existence of any claim, demand, action or
cause of action that Shareholders may have against PRGX, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by PRGX of any of the covenants contained in Section 2 hereof.
5. RIGHTS ARE CUMULATIVE AND EFFECT OF WAIVER. The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure to exercise nor any delay by any party in exercising any
right, power or privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement.
6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Acquisition Agreement constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersede all prior written
and oral agreements and understandings between PRGX, on the one hand, and
Shareholders, on the other, with respect to the subject matter of this
Agreement. No amendment or modification of this Agreement shall be valid or
binding upon PRGX unless made in writing and signed by a duly authorized officer
of PRGX, or upon Shareholders unless made in writing and signed by Shareholders.
7. ASSIGNMENT. This Agreement may not be assigned by
Shareholders, and any purported assignment shall be void and ineffective. This
Agreement may be assigned by PRGX to any Related Entity of PRGX without the
consent of Shareholders and, in the event of a merger consolidation,
reorganization or similar transaction of PRGX with a Person where such other
Person is the surviving entity of such transaction, this Agreement may be
assigned by PRGX without the prior consent of, but with notice to, Shareholders.
The provisions of this Agreement shall be binding upon and inure to the benefit
of PRGX, Shareholders and their respective successors and permitted assigns. As
used herein, "Related Entity" of PRGX means PRGX and all entities, whether now
or hereafter existing, fifty-one percent (51%) or more of
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the outstanding capital stock of which is owned by any combination of PRGX
and/or any Related Entity of the foregoing entities and which are engaged in
substantially the same business as the business of PRGX regardless of the
industry segment of its clients and/or which provide services or employees to
PRGX or any Related Entity in connection with the operations thereof.
8. NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below:
If to Shareholders: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to: ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------
Attention: ▇▇▇▇ ▇▇▇▇▇
------------------------------------
Telefax: ▇▇▇ ▇▇▇-▇▇▇▇
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If to PRGX: The Profit Recovery Group International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
Senior Vice President and General Counsel
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party hereto notifies the other parties hereto
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by
certified U.S. Mail, will be deemed received three (3) business days immediately
following the date sent. For purposes of this Agreement, a "business day" is a
day on which U.S. national banks are open for business and shall not include a
Saturday or Sunday or legal holiday. Notwithstanding anything to the contrary in
this Agreement, no action shall be required of the parties hereto except on a
business day and in the event an action is required on a day which is not a
business day, such action shall be required to be performed on the next
succeeding day which is a business day.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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10. GOVERNING LAW. This Agreement, and all issues and matters
related to this Agreement, shall be governed by and enforced and construed under
the laws of the State of Texas.
11. CONSTRUCTION. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular, as the circumstances require. Unless otherwise expressly provided,
the word "including" does not limit the preceding words or terms.
12. ATTORNEYS' FEES. In the event a dispute arises in relation to
this Agreement, the prevailing party thereto will be entitled to receive from
the non-prevailing party all expenses, including reasonable attorneys' fees,
incurred by the prevailing party in ascertaining such party's rights or in
preparing to enforce, or in enforcing, such party's rights under this Agreement.
The parties agree that the issue of which party(ies) constitute the "prevailing
parties" will be submitted to the court for its determination.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
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Its: Chairman of the Board and CEO
-----------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
HSA-TEXAS ACCOUNTS
8
SCHEDULE 1
AFFILIATES
Subsidiaries
▇. ▇▇▇▇▇▇▇ & Associates Europe, S.A., a Belgian corporation
▇. ▇▇▇▇▇▇▇ & Associates, S.A., a Belgian corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates Nederland, BV
HS&A France, S.A., a French corporation
▇. ▇▇▇▇▇▇▇ & Asociados Espana, S.A., a Spanish corporation
▇. ▇▇▇▇▇▇▇ & Associates Italia SRL, an Italian corporation
▇. ▇▇▇▇▇▇▇ de Mexico, S.A. de C.V., a Mexican corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates International (Thailand) Limited
HS&A Imaging, Inc., a Texas corporation
Stock Companies
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Asia) Limited
HS&A International Pte Ltd
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Australia), Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Canada), Inc.
Others
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners (Deutschland) GmbH
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates International Limited
9
SCHEDULE 2
TERRITORY
United States
Canada
Germany
China
Portugal
United Kingdom
Spain
Mexico
Italy
France
Thailand
Austria
Belgium
Netherlands
Luxemburg
Asia (China, Hong Kong, Thailand, Singapore)
Mexico
New Zealand
Australia
10
EXHIBIT 10.35
NONCOMPETITION, NONSOLICITATION AND
CONFIDENTIALITY AGREEMENT
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇)
This NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY AGREEMENT
("Agreement"), entered into as of the 24 day of January, 2002 (the "Effective
Date"), is made by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Shareholder") and THE PROFIT
RECOVERY GROUP INTERNATIONAL, INC., a Georgia corporation ("PRGX").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Amended and Restated Agreement and
Plan of Reorganization by and among PRGX, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates
International, Inc., a Texas corporation ("HSA-Texas") and others dated as of
December 11, 2001 (the "Acquisition Agreement"), PRGX is acquiring substantially
all of the assets of HSA-Texas, including all customer accounts of HSA-Texas in
existence on the date hereof, which accounts are listed on Exhibit A attached
hereto (the "HSA-Texas Accounts"); and
WHEREAS, Shareholder is an employee of HSA-Texas and is a shareholder
of HSA-Texas and, as such, have had access to (a) Proprietary Information about
HSA-Texas, those entities designated as Subsidiaries on Schedule 1 attached
hereto, which are directly or indirectly owned subsidiaries of HSA-Texas
("Subsidiaries") (collectively the Stock Companies, as identified in Schedule 1,
and the Subsidiaries, being the "Affiliates") and HSA-Texas' Business, (b)
information about the HSA-Texas Accounts and the employees of HSA-Texas and (c)
other information about the HSA-Texas Business (as defined below) and the
Affiliates that PRGX is purchasing pursuant to the Acquisition Agreement; and
WHEREAS, the acquisition of the assets of HSA-Texas is structured as a
reorganization qualifying under Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended, wherein HSA-Texas has received PRGX stock in exchange
for the assets of HSA-Texas, and in conjunction therewith, the shareholders of
HSA-Texas shall receive stock of PRGX upon liquidation of HSA-Texas, which shall
serve as consideration for Shareholder's entering into this Agreement; and
WHEREAS, in order to induce PRGX to enter into and consummate the
Acquisition Agreement, which HSA-Texas hereby acknowledges will benefit it and
which Shareholder acknowledges will benefit such Shareholder, Shareholder has
agreed to accept certain restrictions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following definitions shall apply to this
Agreement:
(a) "HSA-Texas Business" means the business of (a)
auditing accounts payable records, occupancy costs, vendor statements and direct
to store delivery records to recover overpayments that are a result of missed
credits, duplicated payments, overlooked allowances, incorrect invoices and
other discrepancies, through its Global Data Services (GDS) Center, Associate
Support Center, Occupancy Cost Audit Group, Statement Audit Group, Direct to
Store Delivery Group and Commercial Audit Group and (b) operating a document
imaging service bureau and selling and dealing in electronic document imaging
and microfilming services.
(b) "Competing Business" means any Person that is engaged
in or conducts a business substantially the same as the HSA-Texas Business.
(c) "Person" means and includes any individual,
partnership, association, corporation, limited liability company, trust,
unincorporated organization, or any other business entity or enterprise.
(d) "Proprietary Information" means information (written,
oral, magnetic, photographic, optical, or in any other form or media) including
but not limited to:
(i) all data, documents, materials, drawings, or
any other information in tangible form and marked "Secret," "Proprietary,"
"Confidential" or any similar marking;
(ii) any and all ideas, concepts, know-how,
methods, techniques, structures, information, and materials relating to existing
software products (including without limitation data-handling procedures and
telecommunications) or for other products and software or firmware in various
phases of research and development including source or object code and
regardless of what medium such code is stored on, algorithms, routines, data
structures, systems designs, diagrams, flow charts, designs, drawings,
programmer notes, training materials, user manuals, processes, procedures,
requirement specifications, design specifications, design notes, coding sheets,
annotations, documentation, technical and engineering data and the structures,
organization, sequence, designs, formulas and algorithms which reside in the
software used by HSA-Texas and which are not generally known to the public or
within the industries or trades in which HSA-Texas competes;
(iii) any and all ideas, concepts, common
know-how, methods, techniques, structures, information, and materials relating
to the design, development, engineering, invention, patent, patent application,
manufacture, improvement of any and all equipment, components, devices,
techniques, processes, or formulas (including without limitation, mask works,
semiconductor chips, processors, memories, disk drives, tape heads, computer
terminals, keyboards, storage devices, printers, testers, and optical character
recognition devices) and any and all components, devices, techniques, or
circuitry incorporated in any of the above which is or are constructed,
designed, improved, altered, or used by HSA-Texas and which is not generally
known to the public or within the industries in which HSA-Texas competes;
(iv) internal business procedures and business
plans, including analytical methods and procedures, licenses and techniques,
manufacturing information, and procedures such as formulations, processes and
equipment, telecommunications, technical and engineering data, vendor names,
other vendor information, purchasing information, financial information,
configuration and design of computer and telecommunications network (including
without limitation the network topology and software setup), service and
operational manuals and documentation therefor, ideas for new products and
services, price lists, or other pricing information, policy, and other such
information which relates to the way HSA-Texas conducts its business and which
is not generally known to the public;
(v) information and documents regarding the
identity of the clients, customers, or accounts of HSA-Texas, any projects or
work performed for HSA-Texas' clients, customers, or accounts, any information
or documents concerning potential clients, customers, or accounts of HSA-Texas
from whom HSA-Texas is attempting or has attempted to obtain projects or work,
any information concerning volume, rates, or contracts pertaining to HSA-Texas'
clients, customers, or accounts or to any potential clients, customers, or
accounts of HSA-Texas from whom HSA-Texas is attempting or has attempted to
obtain projects or work;
2
(vi) any and all information and materials in
HSA-Texas' possession or under its control from any other Person which
HSA-Texas is obligated to treat as confidential or proprietary (including,
without limitation, all freight transaction information);
(vii) patents, copyrights, trademarks,
servicemarks, trade secrets and proprietary process of HSA-Texas as may exist
from time to time, as well as business plans, strategies, concepts, prospects,
financial data of HSA-Texas, and any other special or unique asset of HSA-Texas
or method of operation; and
(viii) any and all information concerning the
HSA-Texas Business which is not generally known to the public or within the
industries or trades in which HSA-Texas competes;
provided, however, that "Proprietary Information" shall not include any
information that has been voluntarily disclosed to the public by HSA-Texas
(except where such public disclosure has been made by HSA-Texas without
authorization), that was already known (by means not in violation of any duty of
nondisclosure to HSA-Texas or PRGX) to the recipient of such information at the
time of disclosure to the recipient, that was disclosed to the recipient by a
third party who had no duty of nondisclosure to HSA-Texas or PRGX, that has been
independently developed and disclosed by others, or that otherwise enters the
public domain through lawful means. Proprietary Information may be marked by
HSA-Texas or either HSA-Texas' Affiliates as "proprietary" or "secret" or with
other words or markings of similar meaning, but such markings are not necessary
for such information to constitute "Proprietary Information" hereunder.
(e) "Prospective Client" means any Person to whom or
which the HSA-Texas has made oral presentations or proposals to or sent or
delivered a written sales or servicing proposal or contract (but not solely an
unsolicited general mass mailing) in connection with the HSA-Texas Business
within 24 months prior to the Effective Date.
(f) "Territory"" means the areas listed on Schedule 2
attached hereto, which the parties acknowledge to be the geographic area in
which HSA-Texas conducts HSA-Texas' Business on the Effective Date.
2. COVENANTS OF SHAREHOLDER. Shareholder acknowledges that PRGX
would suffer substantial damage if PRGX's relations with the HSA-Texas Accounts
deteriorated or if PRGX lost the HSA-Texas Accounts after the closing of the
Acquisition Agreement. The covenants in this Section 2 are a material inducement
to PRGX to enter into the Acquisition Agreement, and the amounts payable to
HSA-Texas under the Acquisition Agreement are in past consideration for the
covenants in this Section 2. The parties hereto acknowledge that the assets
being purchased by PRGX are the core assets of the HSA-Texas Business, that the
HSA-Texas Business is of a limited and unusual nature and that the scope of the
HSA-Texas Business is sufficiently broad so that these restrictions shall apply
throughout the Territory, and HSA-Texas and Shareholder agree that the Territory
is reasonable under the circumstances. The parties hereto further acknowledge
that Shareholder has been entrusted with knowledge and possession of Proprietary
Information as a result of being a shareholder of HSA-Texas and that by virtue
of Shareholder's ownership of HSA-Texas and the knowledge of the HSA-Texas
Business, PRGX would be deprived of the value of the core assets acquired by
PRGX under the Acquisition Agreement if Shareholder breaches the covenants
contained herein. The parties hereto also acknowledge and agree that (i) the
types and periods of restriction imposed in this Section 2 are fair and
reasonable and are reasonably required in order to protect and maintain the
Proprietary Information and the other proprietary interests of PRGX, other
legitimate business interests of PRGX, and goodwill associated with the business
of PRGX, including the HSA-Texas Business (including the HSA-Texas Accounts)
acquired under the Acquisition Agreement, and (ii) the time, scope, geographic
area, and other provisions of this Section 2 have been specifically negotiated
by sophisticated commercial parties,
3
represented by legal counsel, and are integral parts of the transactions
contemplated by the Acquisition Agreement. Therefore, Shareholder agrees to the
following covenants and agreements:
(a) Shareholder covenants that such Shareholder shall
not, for a period of five (5) years from and after the Effective Date, except on
behalf of PRGX, directly or indirectly, within the Territory (i) provide or
perform services which are in competition with the HSA-Texas Business, either on
its own behalf or on behalf of any other Person, whether as a shareholder,
owner, partner, proprietor, agent, consultant, independent contractor or lender
of a Competing Business or otherwise, or (ii) have a financial interest in or be
in any way connected with or affiliated with any Competing Business. Nothing
contained herein shall preclude Shareholder from owning any shares of PRGX
Common Stock or having a passive investment in less than one percent (1%) of the
outstanding capital stock of any other publicly traded company that is, or is
connected with or affiliated with, a Competing Business.
(b) For a period of five (5) years from and after the
Effective Date, Shareholder shall hold in trust and in the strictest confidence
and shall not disclose to anyone other than PRGX, or use, reproduce, distribute,
disclose or otherwise disseminate to or for anyone other than PRGX, any
Proprietary Information or any physical embodiments thereof utilized by
HSA-Texas or any Affiliate in the HSA-Texas Business at any time prior to the
acquisition of assets of HSA-Texas by PRGX on the date hereof; provided, with
respect to any Proprietary Information utilized by HSA-Texas or any Affiliate
prior to the date hereof that constitutes a trade secret under applicable law,
Shareholder's obligation under this Section 2(b) shall remain in effect so long
as such information retains its status as a trade secret. In no event shall
Shareholder take any action causing any Proprietary Information disclosed to or
developed by HSA-Texas or its Affiliates to lose its character or cease to
qualify as Proprietary Information. Notwithstanding anything contained herein to
the contrary, this Section 2(b) shall not limit in any manner the protection to
PRGX with respect to its purchase of HSA-Texas' trade secrets otherwise afforded
by law.
(c) For a period of five (5) years from and after the
Effective Date, Shareholder covenants and agrees that such Shareholder will not,
except with the prior written consent of PRGX signed by its President, directly
or indirectly, solicit or call upon any of the HSA-Texas Accounts, former
clients of HSA-Texas to which services have been provided by HSA-Texas within
the last two (2) years prior to the Effective Date or any Prospective Client of
HSA-Texas (or any employee or independent contractor of any such client or
Prospective Client) for purposes of selling or providing any product, equipment
or service, which is competitive with any product, equipment or service sold,
leased, offered for sale or lease or under development by HSA-Texas during the
twenty-four (24) month period immediately preceding the Effective Date.
Notwithstanding anything contained herein to the contrary, this Section 2(c)
shall not limit Shareholder from soliciting the HSA-Texas Accounts, former
clients of HSA-Texas or any Prospective Client of HSA-Texas (or any employee or
independent contractor of any such client or Prospective Client) to provide
services which are not competitive with those provided by the HSA-Texas Business
as of the Effective Date.
(d) For a period of five (5) years from and after the
Effective Date Shareholder covenants and agrees that such Shareholder will not,
without the prior written consent of PRGX signed by its President, directly or
indirectly:
(i) hire, solicit, entice, persuade or induce,
or attempt to hire, solicit, entice, persuade or induce any Person who was
employed by, or performing services as an independent contractor or as an
employee of an independent contractor for, HSA-Texas or an Affiliate and is
subsequently hired or engaged by PRGX in connection with PRGX's acquisition of
the HSA-Texas Business pursuant to the Acquisition Agreement, either to
terminate such Person's employment with PRGX or to cease performing such
services for PRGX; or
4
(ii) authorize any Person to engage in or assist
any Person in any of the activities described in clause (i) of this subsection.
3. SEVERABILITY. In the event that one or more of the words,
phrases, sentences, clauses, sections, subdivisions or subsections contained
herein shall be held invalid, this Agreement shall be construed as if such
invalid portion had not been inserted, and if such invalidity shall be caused by
the length of any period of time, the number or location of Persons, the size of
any area, or the scope of the activities set forth in any part hereof, such
period of time, number or location of Persons, area, or scope, or any
combination thereof, shall be considered to be reduced to a period, number,
location, area or scope which would cure such invalidity and which will be
effective, binding and enforceable against Shareholder.
4. REMEDIES. Shareholder agrees that if such Shareholder breaches
any provision of this Agreement, the damage to PRGX would be difficult or
impossible to ascertain, and money damages alone would not afford PRGX an
adequate remedy for any such breach. Therefore, if Shareholder is in breach of
this Agreement, the parties hereto agree that PRGX will be entitled, in addition
to any and all rights and remedies as would be provided by law, to specific
performance, injunctive, and other equitable relief (without being required to
post bond or security and without having to prove the inadequacy of available
remedies at law) to prevent or restrain a breach of this Agreement or otherwise
to specifically enforce the provisions of Section 2 of this Agreement. The
rights of PRGX to enforce the covenants in this Agreement are in addition to,
and not in lieu of, any and all rights PRGX may have at law and in equity to
protect its business interests. The existence of any claim, demand, action or
cause of action that Shareholder may have against PRGX, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by PRGX of any of the covenants contained in Section 2 hereof.
5. RIGHTS ARE CUMULATIVE AND EFFECT OF WAIVER. The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure to exercise nor any delay by any party in exercising any
right, power or privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement.
6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Acquisition Agreement constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersede all prior written
and oral agreements and understandings between PRGX, on the one hand, and
Shareholder, on the other, with respect to the subject matter of this Agreement.
No amendment or modification of this Agreement shall be valid or binding upon
PRGX unless made in writing and signed by a duly authorized officer of PRGX, or
upon Shareholder unless made in writing and signed by Shareholder.
7. ASSIGNMENT. This Agreement may not be assigned by Shareholder,
and any purported assignment shall be void and ineffective. This Agreement may
be assigned by PRGX to any Related Entity of PRGX without the consent of
Shareholder and, in the event of a merger consolidation, reorganization or
similar transaction of PRGX with a Person where such other Person is the
surviving entity of such transaction, this Agreement may be assigned by PRGX
without the prior consent of, but with notice to, Shareholder. The provisions of
this Agreement shall be binding upon and inure to the benefit of PRGX,
Shareholder and their respective successors and permitted assigns. As used
herein, "Related Entity" of PRGX means PRGX and all entities, whether now or
hereafter existing, fifty-one percent (51%) or more of
5
the outstanding capital stock of which is owned by any combination of PRGX
and/or any Related Entity of the foregoing entities and which are engaged in
substantially the same business as the business of PRGX regardless of the
industry segment of its clients and/or which provide services or employees to
PRGX or any Related Entity in connection with the operations thereof.
8. NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below:
If to Shareholder: ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telefax:
------------------------------------
with a copy to:
--------------------------------------------
Attention:
----------------------------------
Telefax:
------------------------------------
If to PRGX: The Profit Recovery Group International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
Senior Vice President and General Counsel
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party hereto notifies the other parties hereto
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by
certified U.S. Mail, will be deemed received three (3) business days immediately
following the date sent. For purposes of this Agreement, a "business day" is a
day on which U.S. national banks are open for business and shall not include a
Saturday or Sunday or legal holiday. Notwithstanding anything to the contrary in
this Agreement, no action shall be required of the parties hereto except on a
business day and in the event an action is required on a day which is not a
business day, such action shall be required to be performed on the next
succeeding day which is a business day.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6
10. GOVERNING LAW. This Agreement, and all issues and matters
related to this Agreement, shall be governed by and enforced and construed under
the laws of the State of Texas.
11. CONSTRUCTION. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular, as the circumstances require. Unless otherwise expressly provided,
the word "including" does not limit the preceding words or terms.
12. ATTORNEYS' FEES. In the event a dispute arises in relation to
this Agreement, the prevailing party thereto will be entitled to receive from
the non-prevailing party all expenses, including reasonable attorneys' fees,
incurred by the prevailing party in ascertaining such party's rights or in
preparing to enforce, or in enforcing, such party's rights under this Agreement.
The parties agree that the issue of which party(ies) constitute the "prevailing
parties" will be submitted to the court for its determination.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Its: Chairman of the Board and CEO
------------------------------------
SHAREHOLDER:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
7
EXHIBIT A
HSA-TEXAS ACCOUNTS
8
SCHEDULE 1
AFFILIATES
Subsidiaries
▇. ▇▇▇▇▇▇▇ & Associates Europe, S.A., a Belgian corporation
▇. ▇▇▇▇▇▇▇ & Associates, S.A., a Belgian corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates Nederland, BV
HS&A France, S.A., a French corporation
▇. ▇▇▇▇▇▇▇ & Asociados Espana, S.A., a Spanish corporation
▇. ▇▇▇▇▇▇▇ & Associates Italia SRL, an Italian corporation
▇. ▇▇▇▇▇▇▇ de Mexico, S.A. de C.V., a Mexican corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates International (Thailand) Limited
HS&A Imaging, Inc., a Texas corporation
Stock Companies
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Asia) Limited
HS&A International Pte Ltd
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Australia), Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Canada), Inc.
Others
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners (Deutschland) GmbH
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates International Limited
9
SCHEDULE 2
TERRITORY
United States
Canada
Germany
China
Portugal
United Kingdom
Spain
Mexico
Italy
France
Thailand
Austria
Belgium
Netherlands
Luxemburg
Asia (China, Hong Kong, Thailand, Singapore)
Mexico
New Zealand
Australia
10
EXHIBIT 10.35
NONCOMPETITION, NONSOLICITATION AND
CONFIDENTIALITY AGREEMENT
(▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇)
This NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY AGREEMENT
("Agreement"), entered into as of the 24 day of January, 2002 (the "Effective
Date"), is made by and between ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ("Shareholder") and THE PROFIT
RECOVERY GROUP INTERNATIONAL, INC., a Georgia corporation ("PRGX").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Amended and Restated Agreement and
Plan of Reorganization by and among PRGX, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates
International, Inc., a Texas corporation ("HSA-Texas") and others dated as of
December 11, 2001 (the "Acquisition Agreement"), PRGX is acquiring substantially
all of the assets of HSA-Texas, including all customer accounts of HSA-Texas in
existence on the date hereof, which accounts are listed on Exhibit A attached
hereto (the "HSA-Texas Accounts"); and
WHEREAS, Shareholder is an employee of HSA-Texas and is a shareholder
of HSA-Texas and, as such, have had access to (a) Proprietary Information about
HSA-Texas, those entities designated as Subsidiaries on Schedule 1 attached
hereto, which are directly or indirectly owned subsidiaries of HSA-Texas
("Subsidiaries") (collectively the Stock Companies, as identified in Schedule 1,
and the Subsidiaries, being the "Affiliates") and HSA-Texas' Business, (b)
information about the HSA-Texas Accounts and the employees of HSA-Texas and (c)
other information about the HSA-Texas Business (as defined below) and the
Affiliates that PRGX is purchasing pursuant to the Acquisition Agreement; and
WHEREAS, the acquisition of the assets of HSA-Texas is structured as a
reorganization qualifying under Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended, wherein HSA-Texas has received PRGX stock in exchange
for the assets of HSA-Texas, and in conjunction therewith, the shareholders of
HSA-Texas shall receive stock of PRGX upon liquidation of HSA-Texas, which shall
serve as consideration for Shareholder's entering into this Agreement; and
WHEREAS, in order to induce PRGX to enter into and consummate the
Acquisition Agreement, which HSA-Texas hereby acknowledges will benefit it and
which Shareholder acknowledges will benefit such Shareholder, Shareholder has
agreed to accept certain restrictions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following definitions shall apply to this
Agreement:
(a) "HSA-Texas Business" means the business of (a)
auditing accounts payable records, occupancy costs, vendor statements and direct
to store delivery records to recover overpayments that are a result of missed
credits, duplicated payments, overlooked allowances, incorrect invoices and
other discrepancies, through its Global Data Services (GDS) Center, Associate
Support Center, Occupancy Cost Audit Group, Statement Audit Group, Direct to
Store Delivery Group and Commercial Audit Group and (b) operating a document
imaging service bureau and selling and dealing in electronic document imaging
and microfilming services.
(b) "Competing Business" means any Person that is engaged
in or conducts a business substantially the same as the HSA-Texas Business.
(c) "Person" means and includes any individual,
partnership, association, corporation, limited liability company, trust,
unincorporated organization, or any other business entity or enterprise.
(d) "Proprietary Information" means information (written,
oral, magnetic, photographic, optical, or in any other form or media) including
but not limited to:
(i) all data, documents, materials, drawings, or
any other information in tangible form and marked "Secret," "Proprietary,"
"Confidential" or any similar marking;
(ii) any and all ideas, concepts, know-how,
methods, techniques, structures, information, and materials relating to existing
software products (including without limitation data-handling procedures and
telecommunications) or for other products and software or firmware in various
phases of research and development including source or object code and
regardless of what medium such code is stored on, algorithms, routines, data
structures, systems designs, diagrams, flow charts, designs, drawings,
programmer notes, training materials, user manuals, processes, procedures,
requirement specifications, design specifications, design notes, coding sheets,
annotations, documentation, technical and engineering data and the structures,
organization, sequence, designs, formulas and algorithms which reside in the
software used by HSA-Texas and which are not generally known to the public or
within the industries or trades in which HSA-Texas competes;
(iii) any and all ideas, concepts, common
know-how, methods, techniques, structures, information, and materials relating
to the design, development, engineering, invention, patent, patent application,
manufacture, improvement of any and all equipment, components, devices,
techniques, processes, or formulas (including without limitation, mask works,
semiconductor chips, processors, memories, disk drives, tape heads, computer
terminals, keyboards, storage devices, printers, testers, and optical character
recognition devices) and any and all components, devices, techniques, or
circuitry incorporated in any of the above which is or are constructed,
designed, improved, altered, or used by HSA-Texas and which is not generally
known to the public or within the industries in which HSA-Texas competes;
(iv) internal business procedures and business
plans, including analytical methods and procedures, licenses and techniques,
manufacturing information, and procedures such as formulations, processes and
equipment, telecommunications, technical and engineering data, vendor names,
other vendor information, purchasing information, financial information,
configuration and design of computer and telecommunications network (including
without limitation the network topology and software setup), service and
operational manuals and documentation therefor, ideas for new products and
services, price lists, or other pricing information, policy, and other such
information which relates to the way HSA-Texas conducts its business and which
is not generally known to the public;
(v) information and documents regarding the
identity of the clients, customers, or accounts of HSA-Texas, any projects or
work performed for HSA-Texas' clients, customers, or accounts, any information
or documents concerning potential clients, customers, or accounts of HSA-Texas
from whom HSA-Texas is attempting or has attempted to obtain projects or work,
any information concerning volume, rates, or contracts pertaining to HSA-Texas'
clients, customers, or accounts or to any potential clients, customers, or
accounts of HSA-Texas from whom HSA-Texas is attempting or has attempted to
obtain projects or work;
2
(vi) any and all information and materials in
HSA-Texas' possession or under its control from any other Person which HSA-Texas
is obligated to treat as confidential or proprietary (including, without
limitation, all freight transaction information);
(vii) patents, copyrights, trademarks,
servicemarks, trade secrets and proprietary process of HSA-Texas as may exist
from time to time, as well as business plans, strategies, concepts, prospects,
financial data of HSA-Texas, and any other special or unique asset of HSA-Texas
or method of operation; and
(viii) any and all information concerning the
HSA-Texas Business which is not generally known to the public or within the
industries or trades in which HSA-Texas competes;
provided, however, that "Proprietary Information" shall not include any
information that has been voluntarily disclosed to the public by HSA-Texas
(except where such public disclosure has been made by HSA-Texas without
authorization), that was already known (by means not in violation of any duty of
nondisclosure to HSA-Texas or PRGX) to the recipient of such information at the
time of disclosure to the recipient, that was disclosed to the recipient by a
third party who had no duty of nondisclosure to HSA-Texas or PRGX, that has been
independently developed and disclosed by others, or that otherwise enters the
public domain through lawful means. Proprietary Information may be marked by
HSA-Texas or either HSA-Texas' Affiliates as "proprietary" or "secret" or with
other words or markings of similar meaning, but such markings are not necessary
for such information to constitute "Proprietary Information" hereunder.
(e) "Prospective Client" means any Person to whom or
which the HSA-Texas has made oral presentations or proposals to or sent or
delivered a written sales or servicing proposal or contract (but not solely an
unsolicited general mass mailing) in connection with the HSA-Texas Business
within 24 months prior to the Effective Date.
(f) "Territory"" means the areas listed on Schedule 2
attached hereto, which the parties acknowledge to be the geographic area in
which HSA-Texas conducts HSA-Texas' Business on the Effective Date.
2. COVENANTS OF SHAREHOLDER. Shareholder acknowledges that PRGX
would suffer substantial damage if PRGX's relations with the HSA-Texas Accounts
deteriorated or if PRGX lost the HSA-Texas Accounts after the closing of the
Acquisition Agreement. The covenants in this Section 2 are a material inducement
to PRGX to enter into the Acquisition Agreement, and the amounts payable to
HSA-Texas under the Acquisition Agreement are in past consideration for the
covenants in this Section 2. The parties hereto acknowledge that the assets
being purchased by PRGX are the core assets of the HSA-Texas Business, that the
HSA-Texas Business is of a limited and unusual nature and that the scope of the
HSA-Texas Business is sufficiently broad so that these restrictions shall apply
throughout the Territory, and HSA-Texas and Shareholder agree that the Territory
is reasonable under the circumstances. The parties hereto further acknowledge
that Shareholder has been entrusted with knowledge and possession of Proprietary
Information as a result of being a shareholder of HSA-Texas and that by virtue
of Shareholder's ownership of HSA-Texas and the knowledge of the HSA-Texas
Business, PRGX would be deprived of the value of the core assets acquired by
PRGX under the Acquisition Agreement if Shareholder breaches the covenants
contained herein. The parties hereto also acknowledge and agree that (i) the
types and periods of restriction imposed in this Section 2 are fair and
reasonable and are reasonably required in order to protect and maintain the
Proprietary Information and the other proprietary interests of PRGX, other
legitimate business interests of PRGX, and goodwill associated with the business
of PRGX, including the HSA-Texas Business (including the HSA-Texas Accounts)
acquired under the Acquisition Agreement, and (ii) the time, scope, geographic
area, and other provisions of this Section 2 have been specifically negotiated
by sophisticated commercial parties,
3
represented by legal counsel, and are integral parts of the transactions
contemplated by the Acquisition Agreement. Therefore, Shareholder agrees to the
following covenants and agreements:
(a) Shareholder covenants that such Shareholder shall
not, for a period of five (5) years from and after the Effective Date, except on
behalf of PRGX, directly or indirectly, within the Territory (i) provide or
perform services which are in competition with the HSA-Texas Business, either on
its own behalf or on behalf of any other Person, whether as a shareholder,
owner, partner, proprietor, agent, consultant, independent contractor or lender
of a Competing Business or otherwise, or (ii) have a financial interest in or be
in any way connected with or affiliated with any Competing Business. Nothing
contained herein shall preclude Shareholder from owning any shares of PRGX
Common Stock or having a passive investment in less than one percent (1%) of the
outstanding capital stock of any other publicly traded company that is, or is
connected with or affiliated with, a Competing Business.
(b) For a period of five (5) years from and after the
Effective Date, Shareholder shall hold in trust and in the strictest confidence
and shall not disclose to anyone other than PRGX, or use, reproduce, distribute,
disclose or otherwise disseminate to or for anyone other than PRGX, any
Proprietary Information or any physical embodiments thereof utilized by
HSA-Texas or any Affiliate in the HSA-Texas Business at any time prior to the
acquisition of assets of HSA-Texas by PRGX on the date hereof; provided, with
respect to any Proprietary Information utilized by HSA-Texas or any Affiliate
prior to the date hereof that constitutes a trade secret under applicable law,
Shareholder's obligation under this Section 2(b) shall remain in effect so long
as such information retains its status as a trade secret. In no event shall
Shareholder take any action causing any Proprietary Information disclosed to or
developed by HSA-Texas or its Affiliates to lose its character or cease to
qualify as Proprietary Information. Notwithstanding anything contained herein to
the contrary, this Section 2(b) shall not limit in any manner the protection to
PRGX with respect to its purchase of HSA-Texas' trade secrets otherwise afforded
by law.
(c) For a period of five (5) years from and after the
Effective Date, Shareholder covenants and agrees that such Shareholder will not,
except with the prior written consent of PRGX signed by its President, directly
or indirectly, solicit or call upon any of the HSA-Texas Accounts, former
clients of HSA-Texas to which services have been provided by HSA-Texas within
the last two (2) years prior to the Effective Date or any Prospective Client of
HSA-Texas (or any employee or independent contractor of any such client or
Prospective Client) for purposes of selling or providing any product, equipment
or service, which is competitive with any product, equipment or service sold,
leased, offered for sale or lease or under development by HSA-Texas during the
twenty-four (24) month period immediately preceding the Effective Date.
Notwithstanding anything contained herein to the contrary, this Section 2(c)
shall not limit Shareholder from soliciting the HSA-Texas Accounts, former
clients of HSA-Texas or any Prospective Client of HSA-Texas (or any employee or
independent contractor of any such client or Prospective Client) to provide
services which are not competitive with those provided by the HSA-Texas Business
as of the Effective Date.
(d) For a period of five (5) years from and after the
Effective Date Shareholder covenants and agrees that such Shareholder will not,
without the prior written consent of PRGX signed by its President, directly or
indirectly:
(i) hire, solicit, entice, persuade or induce,
or attempt to hire, solicit, entice, persuade or induce any Person who was
employed by, or performing services as an independent contractor or as an
employee of an independent contractor for, HSA-Texas or an Affiliate and is
subsequently hired or engaged by PRGX in connection with PRGX's acquisition of
the HSA-Texas Business pursuant to the Acquisition Agreement, either to
terminate such Person's employment with PRGX or to cease performing such
services for PRGX; or
4
(ii) authorize any Person to engage in or assist
any Person in any of the activities described in clause (i) of this subsection.
3. SEVERABILITY. In the event that one or more of the words,
phrases, sentences, clauses, sections, subdivisions or subsections contained
herein shall be held invalid, this Agreement shall be construed as if such
invalid portion had not been inserted, and if such invalidity shall be caused by
the length of any period of time, the number or location of Persons, the size of
any area, or the scope of the activities set forth in any part hereof, such
period of time, number or location of Persons, area, or scope, or any
combination thereof, shall be considered to be reduced to a period, number,
location, area or scope which would cure such invalidity and which will be
effective, binding and enforceable against Shareholder.
4. REMEDIES. Shareholder agrees that if such Shareholder breaches
any provision of this Agreement, the damage to PRGX would be difficult or
impossible to ascertain, and money damages alone would not afford PRGX an
adequate remedy for any such breach. Therefore, if Shareholder is in breach of
this Agreement, the parties hereto agree that PRGX will be entitled, in addition
to any and all rights and remedies as would be provided by law, to specific
performance, injunctive, and other equitable relief (without being required to
post bond or security and without having to prove the inadequacy of available
remedies at law) to prevent or restrain a breach of this Agreement or otherwise
to specifically enforce the provisions of Section 2 of this Agreement. The
rights of PRGX to enforce the covenants in this Agreement are in addition to,
and not in lieu of, any and all rights PRGX may have at law and in equity to
protect its business interests. The existence of any claim, demand, action or
cause of action that Shareholder may have against PRGX, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by PRGX of any of the covenants contained in Section 2 hereof.
5. RIGHTS ARE CUMULATIVE AND EFFECT OF WAIVER. The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure to exercise nor any delay by any party in exercising any
right, power or privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement.
6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Acquisition Agreement constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersede all prior written
and oral agreements and understandings between PRGX, on the one hand, and
Shareholder, on the other, with respect to the subject matter of this Agreement.
No amendment or modification of this Agreement shall be valid or binding upon
PRGX unless made in writing and signed by a duly authorized officer of PRGX, or
upon Shareholder unless made in writing and signed by Shareholder.
7. ASSIGNMENT. This Agreement may not be assigned by Shareholder,
and any purported assignment shall be void and ineffective. This Agreement may
be assigned by PRGX to any Related Entity of PRGX without the consent of
Shareholder and, in the event of a merger consolidation, reorganization or
similar transaction of PRGX with a Person where such other Person is the
surviving entity of such transaction, this Agreement may be assigned by PRGX
without the prior consent of, but with notice to, Shareholder. The provisions of
this Agreement shall be binding upon and inure to the benefit of PRGX,
Shareholder and their respective successors and permitted assigns. As used
herein, "Related Entity" of PRGX means PRGX and all entities, whether now or
hereafter existing, fifty-one percent (51%) or more of
5
the outstanding capital stock of which is owned by any combination of PRGX
and/or any Related Entity of the foregoing entities and which are engaged in
substantially the same business as the business of PRGX regardless of the
industry segment of its clients and/or which provide services or employees to
PRGX or any Related Entity in connection with the operations thereof.
8. NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below:
If to Shareholder: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telefax:
------------------------------------
with a copy to:
--------------------------------------------
Attention:
----------------------------------
Telefax:
------------------------------------
If to PRGX: The Profit Recovery Group International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
Senior Vice President and General Counsel
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party hereto notifies the other parties hereto
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by
certified U.S. Mail, will be deemed received three (3) business days immediately
following the date sent. For purposes of this Agreement, a "business day" is a
day on which U.S. national banks are open for business and shall not include a
Saturday or Sunday or legal holiday. Notwithstanding anything to the contrary in
this Agreement, no action shall be required of the parties hereto except on a
business day and in the event an action is required on a day which is not a
business day, such action shall be required to be performed on the next
succeeding day which is a business day.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6
10. GOVERNING LAW. This Agreement, and all issues and matters
related to this Agreement, shall be governed by and enforced and construed under
the laws of the State of Texas.
11. CONSTRUCTION. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular, as the circumstances require. Unless otherwise expressly provided,
the word "including" does not limit the preceding words or terms.
12. ATTORNEYS' FEES. In the event a dispute arises in relation to
this Agreement, the prevailing party thereto will be entitled to receive from
the non-prevailing party all expenses, including reasonable attorneys' fees,
incurred by the prevailing party in ascertaining such party's rights or in
preparing to enforce, or in enforcing, such party's rights under this Agreement.
The parties agree that the issue of which party(ies) constitute the "prevailing
parties" will be submitted to the court for its determination.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Its: Chairman of the Board and CEO
------------------------------------
SHAREHOLDER:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
7
EXHIBIT A
HSA-TEXAS ACCOUNTS
8
SCHEDULE 1
AFFILIATES
Subsidiaries
▇. ▇▇▇▇▇▇▇ & Associates Europe, S.A., a Belgian corporation
▇. ▇▇▇▇▇▇▇ & Associates, S.A., a Belgian corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates Nederland, BV
HS&A France, S.A., a French corporation
▇. ▇▇▇▇▇▇▇ & Asociados Espana, S.A., a Spanish corporation
▇. ▇▇▇▇▇▇▇ & Associates Italia SRL, an Italian corporation
▇. ▇▇▇▇▇▇▇ de Mexico, S.A. de C.V., a Mexican corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates International (Thailand) Limited
HS&A Imaging, Inc., a Texas corporation
Stock Companies
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Asia) Limited
HS&A International Pte Ltd
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Australia), Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates (Canada), Inc.
Others
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners (Deutschland) GmbH
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates International Limited
9
SCHEDULE 2
TERRITORY
United States
Canada
Germany
China
Portugal
United Kingdom
Spain
Mexico
Italy
France
Thailand
Austria
Belgium
Netherlands
Luxemburg
Asia (China, Hong Kong, Thailand, Singapore)
Mexico
New Zealand
Australia
10