SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 30, 1999
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Date of Report (Date of earliest event reported)
PRT GROUP INC.
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Exact Name of Registrant as Specified in Charter)
Delaware 0-23315 13-3914972
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
Incorporation)
342 Madison Avenue,
11th Floor, New York, New York 10173
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(Address of Principal Executive Offices) (Zip Code)
212) 922-0800
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Registrant's telephone number, including area code
Not Applicable
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Former Name or Former Address, if Changes Since Last Report)
Item 5. Other Events.
Item 6. Resignations of Registrant's Directors
On June 30, 1999, PRT Group Inc. (the "Registrant") announced that
Douglas K. Mellinger, Chairman and Chief Executive Officer of the
Registrant (i) resigned his positions as Chairman of the Board of Directors
(the "Board") and Chief Executive Officer of the Registrant, and all other
offices of the Registrant and its affiliates, and (ii) was appointed to the
newly created position of Non-Executive Chairman of the Board. Douglas
Mellinger will continue to serve as a director of the Company. The
Registrant further announced that Gregory S. Mellinger, former Chief
Operating Officer and current President of the Registrant's Professional
Services Group business unit resigned his positions as an officer and
director of the Registrant, and all other offices of the Registrant and its
affiliates. Each of Douglas Mellinger and Gregory Mellinger will remain
employees of the Registrant to consult with the senior management of
Registrant until October 1, 2000. Attached hereto as Exhibits 99.1 and 99.2
are the Agreements between the Registrant and each of Douglas Mellinger and
Gregory Mellinger with respect to the foregoing, each of which is
incorporated by reference herein, and the foregoing is qualified in its
entirety thereby.
The Registrant also announced that Dan S. Woodward, President
and Chief Operating Officer of the Registrant had been appointed Chief
Executive Officer of the Registrant. Attached hereto as Exhibit 99.3 is a
Press Release of the Registrant with respect to the foregoing, which Press
Release is incorporated by reference herein, and the foregoing is qualified
in its entirety thereby.
Also on June 30, 1999, the Registrant entered into a Nomination
Agreement with Douglas Mellinger, Gregory Mellinger and certain members of
the Mellinger family, pursuant to which the Mellinger family will have
certain rights to nominate up to three persons acceptable to the Board for
appointment and election to the Board, which shall include Douglas
Mellinger and initially include Ronald Weinberg. These nomination rights
will diminish to two and one nomination as the aggregate holdings of the
Mellinger family decrease, and such rights will terminate at the earlier to
occur of (i) such time as the Mellinger family collectively holds less than
10% of the outstanding common stock of the Registrant, and (ii) June 30,
2005, unless the Nomination Agreement is earlier terminated at any time at
the option of the Mellinger family. In addition, pursuant to the Nomination
Agreement, for so long as the Mellinger family shall have the above
described nomination rights, the Mellinger family has agreed to vote for
the slate of directors nominated by the Registrant. The Nomination
Agreement also contains certain preemptive rights. A copy of the Nomination
Agreement is attached hereto as Exhibit 99.4 and is incorporated by
reference herein, and the foregoing is qualified in its entirety thereby.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Agreement, by and between Douglas K. Mellinger and the
Registrant, dated as of June 30, 1999.
99.2 Agreement, by and between Gregory S. Mellinger and the
Registrant, dated as of June 30, 1999.
99.3 Press Release issued by the Company, dated June 30, 1999.
99.4 Nomination Agreement, by and among Douglas K. Mellinger,
Gregory S. Mellinger, certain members of the Mellinger family,
and the Registrant, dated as of June 30, 1999.
99.5 Resolution of the Board of Directors of the Registrant creating
the position of Non-Executive Chairman of the Board.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
PRT GROUP INC.
Date: June 30, 1999 By: /s/ DAN S. WOODWARD
-----------------------
Dan S. Woodward
President, Chief Executive Officer
and Chief Operating Officer
EXHIBIT INDEX
Exhibit No. Description
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99.1 Agreement, by and between Douglas K. Mellinger and the
Registrant, dated as of June 30, 1999.
99.2 Agreement, by and between Gregory S. Mellinger and the
Registrant, dated as of June 30, 1999.
99.3 Press Release issued by the Company, dated June 30,
1999.
99.4 Nomination Agreement, by and among Douglas K. Mellinger,
Gregory S. Mellinger, certain members of the Mellinger
family, and the Registrant, dated as of June 30, 1999.
99.5 Resolution of the Board of Directors of the
Registrant creating the position of Non-Executive
Chairman of the Board.
AGREEMENT
THIS AGREEMENT (this "Agreement"), made as of the 30th day of
June, 1999, by and between Douglas K. Mellinger (hereinafter referred to as
"Executive") and PRT Group Inc. (hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, Executive has been employed by the Company as Chairman
and Chief Executive Officer of the Company;
WHEREAS, Executive and the Company are parties to an Employment
Agreement, dated as of November 21, 1996, a copy of which is attached
hereto as Exhibit A (hereinafter referred to as the "Employment
Agreement");
WHEREAS, Executive and the Company have agreed that Executive's
employment as an officer of the Company shall terminate on the date hereof
(hereinafter referred to as the "Effective Date"); and
WHEREAS, Executive and the Company have negotiated and reached an
agreement with respect to the rights, duties and obligations arising
between them, including, but in no way limited to, the rights, duties and
obligations that have arisen or might arise out of or are in any way
related to the Employment Agreement or Executive's employment as an officer
of the Company and the conclusion of that employment.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Termination.
(a) Other than as a member of the Board of Directors of the
Company (the "Company Board"), Executive will, and hereby does, resign his
positions as Chairman of the Company Board and Chief Executive Officer and
any other office that he has been appointed to and now occupies with the
Company and any of the Company's affiliates and shall submit a letter of
resignation in the form attached hereto as Exhibit B upon the signing of
this Agreement. Upon the Company's request, Executive shall execute any
additional documents necessary to effect such resignation. Notwithstanding
the foregoing, Executive shall continue as a non-officer employee of the
Company during the Salary Continuation Period (as hereinafter defined).
During the Salary Continuation Period, Executive shall have no duties,
authority or time commitments to the Company, except that Executive shall
in such capacity make himself reasonably available to consult with the
senior officers of the Company, at the Company's expense, for consultation
from time to time as reasonably requested by the Company during the Salary
Continuation Period at such times and on such terms and with reasonable
notice as will not unreasonably interfere with Executive's other
activities. As of the Effective Date Executive shall no longer be
authorized to incur any expenses, obligations or liabilities on behalf of
the Company. Unless otherwise specified, as used in this Agreement, the
term "affiliates" shall include the Company or any subsidiary, joint
venture, division or organization of the Company.
(b) This Agreement shall supercede and terminate the Employment
Agreement, which shall hereafter be null and void and of no further force
or effect.
2. Company Board. As of the Effective Date Executive shall
continue as a director of the Company and shall be appointed as Non-
Executive Chairman of the Company Board to serve as Non-Executive Chairman
of the Company Board subject to the continued reasonable approval of the
Company Board until the earlier to occur of (i) the end of the Salary
Continuation Period, (ii) Executive's acceptance of employment with a
corporation or other entity primarily engaged in the information technology
services industry, or (iii) such time as Executive is no longer a director
of the Company. The Company Board shall promptly take all corporate action
necessary to carry out the foregoing. As Non-Executive Chairman of the
Company, Executive shall not be authorized to incur any expenses,
obligations or liabilities on behalf of the Company or, except in his
capacity as a director of the Company, to otherwise direct the affairs or
management or operations of the Company in any manner. Except as set forth
in Section 3 hereof, the Company will not be obligated to pay Executive any
additional compensation of any kind for his services as Non-Executive
Chairman or as a director of the Company, except that after Executive is no
longer an employee of the Company, Executive shall receive such
compensation as the Company shall pay to its other non-employee directors.
Executive shall also be entitled to reimbursement of expenses as a director
in accordance with the policies of the Company with respect to its
directors.
3. Salary and Benefits.
(a) The Company will pay Executive from the Effective Date
through October 1, 2000 (the "Salary Continuation Period"), the amount of
$250,000 per year, in equal bi-monthly installments in accordance with the
Company's normal payroll practices (collectively, the "Salary Continuation
Payments"), less all applicable withholding taxes. The Salary Continuation
Payments shall commence on June 30, 1999, and the final payment shall be
made on September 30, 2000.
(b) The Company will continue at its sole expense to provide to
Executive all medical, dental, life, and disability benefits provided to
Executive on the Effective Date in accordance with the Company's normal
practices until the earlier to occur of the end of the Salary Continuation
Period and such date as Executive shall begin paid employment with any
corporation, non-profit organization or other entity, other than the
Company, provided that such corporation, non-profit organization or other
entity provides Executive reasonably comparable medical, dental, life, and
disability benefits, in the aggregate.
(c) Except as set forth below in paragraph 3(d) with respect to
Executive's participation in the Company's Amended and Restated 1996 Stock
Incentive Plan (the "Company Option Plan"), and other than as specifically
set forth in this Agreement, Executive is not due under any contract,
agreement or understanding, oral or in writing, any compensation, including
compensation for unpaid salary, unpaid bonus, or accrued or unused vacation
or sick time or vacation or sick pay from the Company or any of its
affiliates, and as of the Effective Date, except as provided herein, he
shall not be eligible to participate in any of the benefit plans of the
Company or any of its affiliates or otherwise be entitled to any perquisite
therefrom, including, without limitation, continued participation in the
Company's incentive compensation plan, use of any Company owned apartment
or home, including, without limitation, those located in New York City and
Barbados, West Indies, or reimbursement for any expenses whatsoever,
including, without limitation, reimbursement for any travel, cellular or
wireless telephone costs, any Internet or network access costs,
subscription for any periodical, membership in any organization,
professional club or association, or any travel or other costs associated
with any such membership; provided, that, Executive shall be entitled to
receive benefits that are vested, or would become vested under Section 2(b)
of the Employment Agreement, and accrued prior to the Effective Date
pursuant to the benefit plans of the Company or its affiliates.
Notwithstanding the foregoing, Executive shall be entitled during the
Salary Continuation Period to (i) participate in the Company's 401(k) plan,
and (ii) $2,000 per month automobile allowance. Executive shall return to
the Company all Company credit cards on the date hereof; any charges
thereon billed on or after June 30, 1999 shall be borne by Executive.
Executive has returned or shall within five (5) days return to the Company
all Company paid cellular and/or other wireless telephones and beepers;
provided, that Executive may retain the cellular telephone provided to him
by the Company if Executive transfers billing for all costs associated
therewith to Executive within 30 days after the Effective Date and the
Company shall have no obligations to make any payments therefor. Executive
shall be entitled to retain possession of, and shall hereby receive title
to, the computer and other office equipment provided to Executive located
at the home of Executive to the extent such equipment is specifically set
forth on Exhibit C hereto; provided, that Executive agrees to return any
other equipment owned by the Company not set forth on Exhibit C.
(d) As of the Effective Date, Executive shall no longer be
eligible to receive additional stock options ("Options") under the Company
Option Plan. All Options granted to Executive under the Company Option
Plan prior to the Effective Date shall remain in effect in accordance with
their terms, including any applicable vesting periods. Executive agrees
that each Option and any warrant or other right to purchase shares of
Company common stock held by Executive on the date hereof shall terminate
and be of no further force or effect on the earlier to occur of (i) the
date 90 days after the end of the Salary Continuation Period and (ii) the
date on which each of such Options, warrants or other rights shall expire
in accordance with its terms.
(e) Until August 31, 1999, Executive shall be provided with the
services and assistance of Brian Hurwitz for not more than an aggregate of
two (2) work days per week.
4. Confidentiality.
(a) At all times hereafter, Executive shall maintain the
confidentiality of all confidential information in whatever form concerning
the Company or any of its affiliates relating to its or their businesses,
customers, finances, strategic or other plans, marketing, employees, trade
practices, trade secrets, know-how or other matters that are not publicly
known outside the Company, and Executive shall not, directly or indirectly,
make any disclosure thereof to anyone, or make any use thereof, on his own
behalf or on behalf of any third party, unless specifically requested by or
agreed to in writing by an executive officer of the Company; provided, that
Executive may divulge, discuss or provide confidential information to the
extent Executive is compelled by law to do so and, in such event, Executive
shall notify the Company immediately upon any request or demand for
information, but in any event, no later than two working days after
Executive first receives notice of such request or demand. Neither
Executive nor his counsel shall voluntarily comply with any such request or
demand prior to providing the Company to the extent possible with an
opportunity to seek a protective order or pursue any other appropriate
remedy. For the purposes of this Agreement, confidential information shall
not include information which (i) is known to the public prior to the
communication thereof by Executive, (ii) becomes known to the public
thereafter other than through communications by Executive, or (iii) becomes
known to Executive subsequent to the end of the Salary Continuation Period.
(b) Executive has returned or shall within five (5) days return
to the Company all cardkey passes, network tokens or cards (other than
Executive's Secure ID network token, which shall be returned within five
(5) days of termination of Executive's e-mail account at the Company), door
and file keys, and all confidential reports, files, memoranda, records,
software, computer access codes or disks and instructional manuals and
other physical or personal property that he received or prepared or helped
prepare in connection with his employment with the Company and its
affiliates and in Executive's possession, and Executive has not retained
and shall not retain any copies, duplicates, reproductions or excerpts
thereof. Notwithstanding the last sentence of Section 3(c) hereof,
Executive shall delete all confidential information of the Company on any
storage media and computer equipment provided by the Company to Executive,
shall destroy or return to the Company any copies thereof in any format or
media, and all network or Internet based connections of such computer
equipment to the computer network systems of the Company shall be
terminated as soon as reasonably practicable after the Effective Date. In
addition, Executive's access to (i) his e-mail account at the Company, and
(ii) the Company's voice mail system shall each be terminated ninety (90)
days after the Effective Date; provided, that, in order for Executive to
make an orderly transition, all e-mail delivered to Executive at his former
e-mail address at the Company shall be forwarded for a period of 90 days
from termination of access to an e-mail account designated by Executive.
In connection with the foregoing, the Company shall use its commercially
reasonable efforts to ensure that Executive's home office computer
equipment is capable of accessing such e-mail account.
5. No Solicitation. Other than Brian Hurwitz, for so long as
Executive is an employee or director of the Company, Executive shall not,
directly or indirectly, solicit, entice, persuade or induce (or authorize
or assist in the taking of any such actions by any third party) any
employee, agent or independent contractor of the Company or its affiliates
with a view to inducing or encouraging such employee, agent or independent
contractor to leave the employ of the Company or its affiliates or
otherwise terminate the agency or independent contractor relationship with
the Company for the purpose of being hired by Executive or any other
person.
6. Non-disclosure; Non-disparagement.
(a) Each of the Company and Executive agrees to keep the
circumstances concerning this Agreement and its terms, as well as any
negotiations and correspondence relating thereto, confidential and not to
disclose the same to any person, except as may be required by either party
to enforce this Agreement or to obtain legal or tax advice, or except as
may be required by law.
(b) Executive shall not disparage, orally or in writing, the
performance of the Company, the Company Board, any director of the Company,
any specific former or current officer of the Company or the Company's
management individually or as a group to any person.
(c) Neither the Company, nor any of its directors or officers,
shall disparage, orally or in writing, Executive.
7. Legal Counsel. The Company has advised Executive to consult
with an attorney of his choosing prior to the signing of this Agreement and
Executive hereby represents to the Company that he has consulted with an
attorney prior to the execution of this Agreement.
8. Cooperation. Executive agrees that, upon the reasonable
request, and at the expense, of the Company, Executive will cooperate in
good faith in any litigation to which the Company is a party and as to
which the Executive has relevant information or materials.
9. Legal Fees. The Company agrees to pay up to $25,000 of
reasonably documented legal fees of Executive incurred in connection with
the negotiation of this Agreement, as well as the related Agreement to be
entered into between Gregory S. Mellinger and the Company, and certain
other agreements related thereto, each of which are being entered into on
the date hereof.
10. Loan Forgiveness. In connection with the execution of this
Agreement, certain loans by the Company to Executive, totaling $28,638.62
in the aggregate, shall be forgiven as of the Effective Date. In addition,
in connection with the execution of this Agreement, certain loans by the
Company to The Mellinger Group L.L.C., of which Executive is a member,
totaling $14,744.00 in the aggregate, shall be forgiven as of the Effective
Date.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed and
enforced under the laws of the State of New York, without regard to its
conflict of laws rules.
(b) In the event that any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
(c) Each of the Company and Executive acknowledges and agrees
that the other party would suffer irreparable injury in the event of a
breach or violation or threatened breach or violation of the provisions set
forth in Sections 4, 5 or 6(a) hereof. Each of the Company and Executive
agrees that, in the event of an actual or threatened breach or violation of
such provisions, the non-breaching party shall be awarded injunctive relief
in a court of appropriate jurisdiction to prohibit or remedy any such
violation or breach or threatened violation or breach, without the
necessity of posting any bond or security, and such right to injunctive
relief shall be in addition to any other right or remedy available to the
Company or Executive.
(d) Any notice to be given hereunder shall be in writing and
shall be deemed given when mailed by certified mail, return receipt
requested, addressed as follows:
To Executive at:
__________________
__________________
To the Company at:
PRT Group Inc.
7 Skyline Drive
Hawthorne, NY 10532
Attention: General Counsel
(e) This Agreement sets forth the entire agreement between the
parties hereto with respect to the subject matter hereof and may not be
amended or altered without the written consent of the parties. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof, including, but not
limited to, the Employment Agreement, which Employment Agreement shall be
of no further force or effect. The parties may execute this Agreement in
counterparts.
(f) This Agreement is intended to be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
DOUGLAS K. MELLINGER PRT GROUP INC.
/S/ Douglas K. Mellinger By: /S/ Dan S. Woodward
- ------------------------- -----------------------
Name: Dan S. Woodward
Title: President
EXHIBIT A
Employment Agreement
EXHIBIT B
June 30, 1999
Board of Directors
PRT Group Inc.
342 Madison Avenue
New York, New York 10173
Re: Letter of Resignation
Gentlemen:
Effective as of June 30, 1999, I am resigning as Chief Executive
Officer of, and from all other offices that I have been appointed or
elected to and now occupy with, PRT Group Inc. (the "Company") and any of
its respective affiliates, subsidiaries, joint ventures, divisions or
organizations. However, I am not resigning as a director of the Company
and intend to continue as the non-executive chairman of the board of
directors of the Company.
Very truly yours,
Douglas K. Mellinger
AGREEMENT
THIS AGREEMENT (this "Agreement"), made as of the 30th day of
June, 1999, by and between Gregory S. Mellinger (hereinafter referred to as
"Executive") and PRT Group Inc. (hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, Executive has been employed by the Company as Chief
Operating Officer of the Company;
WHEREAS, Executive and the Company are parties to an Employment
Agreement, dated as of November 21, 1996, a copy of which is attached
hereto as Exhibit A (hereinafter referred to as the "Employment
Agreement");
WHEREAS, Executive and the Company have agreed that Executive's
employment as an officer of, and position as a director of, the Company
shall terminate on the date hereof (hereinafter referred to as the
"Effective Date"); and
WHEREAS, Executive and the Company have negotiated and reached an
agreement with respect to the rights, duties and obligations arising
between them, including, but in no way limited to, the rights, duties and
obligations that have arisen or might arise out of or are in any way
related to the Employment Agreement or Executive's employment as an officer
of the Company and the conclusion of that employment.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Termination.
(a) Executive will, and hereby does, resign his positions as a
director and Chief Operating Officer of the Company and any other office
that he has been appointed to and now occupies with the Company and any of
the Company's affiliates and shall submit a letter of resignation in the
form attached hereto as Exhibit B upon the signing of this Agreement. Upon
the Company's request, Executive shall execute any additional documents
necessary to effect such resignation. Notwithstanding the foregoing,
Executive shall continue as a non-officer employee of the Company during
the Salary Continuation Period (as hereinafter defined). During the Salary
Continuation Period, Executive shall have no duties, authority or time
commitments to the Company, except that Executive shall in such capacity
make himself reasonably available to consult with the senior officers of
the Company, at the Company's expense, for consultation from time to time
as reasonably requested by the Company during the Salary Continuation
Period at such times and on such terms and with reasonable notice as will
not unreasonably interfere with Executive's other activities. As of the
Effective Date Executive shall no longer be authorized to incur any
expenses, obligations or liabilities on behalf of the Company. Unless
otherwise specified, as used in this Agreement, the term "affiliates" shall
include the Company or any subsidiary, joint venture, division or
organization of the Company.
(b) This Agreement shall supercede and terminate the Employment
Agreement, which shall hereafter be null and void and of no further force
or effect.
2. [Reserved]
3. Salary and Benefits.
(a) The Company will pay Executive from the Effective Date
through October 1, 2000 (the "Salary Continuation Period"), the amount of
$192,000 per year, in equal bi-monthly installments in accordance with the
Company's normal payroll practices (collectively, the "Salary Continuation
Payments"), less all applicable withholding taxes. The Salary Continuation
Payments shall commence on June 30, 1999, and the final payment shall be
made on September 30, 2000.
(b) The Company will continue at its sole expense to provide to
Executive all medical, dental, life, and disability benefits provided to
Executive on the Effective Date in accordance with the Company's normal
practices until the earlier to occur of the end of the Salary Continuation
Period and such date as Executive shall begin paid employment with any
corporation, non-profit organization or other entity, other than the
Company, provided that such corporation, non-profit organization or other
entity provides Executive reasonably comparable medical, dental, life, and
disability benefits, in the aggregate.
(c) Except as set forth below in paragraph 3(d) with respect to
Executive's participation in the Company's Amended and Restated 1996 Stock
Incentive Plan (the "Company Option Plan"), and other than as specifically
set forth in this Agreement, Executive is not due under any contract,
agreement or understanding, oral or in writing, any compensation, including
compensation for unpaid salary, unpaid bonus, or accrued or unused vacation
or sick time or vacation or sick pay from the Company or any of its
affiliates, and as of the Effective Date, except as provided herein, he
shall not be eligible to participate in any of the benefit plans of the
Company or any of its affiliates or otherwise be entitled to any perquisite
therefrom, including, without limitation, continued participation in the
Company's incentive compensation plan, use of any Company owned apartment
or home, including, without limitation, those located in New York City and
Barbados, West Indies, or reimbursement for any expenses whatsoever,
including, without limitation, reimbursement for any travel, cellular or
wireless telephone costs, any Internet or network access costs,
subscription for any periodical, membership in any organization,
professional club or association, or any travel or other costs associated
with any such membership; provided, that, Executive shall be entitled to
receive benefits that are vested, or would become vested under Section 2(b)
of the Employment Agreement, and accrued prior to the Effective Date
pursuant to the benefit plans of the Company or its affiliates.
Notwithstanding the foregoing, Executive shall be entitled during the
Salary Continuation Period to (i) participate in the Company's 401(k) plan,
and (ii) $1,500 per month automobile allowance. Executive shall return to
the Company all Company credit cards on the date hereof; any charges
thereon billed on or after June 30, 1999 shall be borne by Executive.
Executive has returned or shall within five (5) days return to the Company
all Company paid cellular and/or other wireless telephones and beepers;
provided, that Executive may retain the cellular telephone provided to him
by the Company if Executive transfers billing for all costs associated
therewith to Executive within 30 days after the Effective Date and the
Company shall have no obligations to make any payments therefor. Executive
shall be entitled to retain possession of, and shall hereby receive title
to, the computer and other office equipment provided to Executive located
at the home of Executive to the extent such equipment is specifically set
forth on Exhibit C hereto; provided, that Executive agrees to return any
other equipment owned by the Company not set forth on Exhibit C.
(d) As of the Effective Date, Executive shall no longer be
eligible to receive additional stock options ("Options") under the Company
Option Plan. All Options granted to Executive under the Company Option
Plan prior to the Effective Date shall remain in effect in accordance with
their terms, including any applicable vesting periods. Executive agrees
that each Option and any warrant or other right to purchase shares of
Company common stock held by Executive on the date hereof shall terminate
and be of no further force or effect on the earlier to occur of (i) the
date 90 days after the end of the Salary Continuation Period and (ii) the
date on which each of such Options, warrants or other rights shall expire
in accordance with its terms.
4. Confidentiality.
(a) At all times hereafter, Executive shall maintain the
confidentiality of all confidential information in whatever form concerning
the Company or any of its affiliates relating to its or their businesses,
customers, finances, strategic or other plans, marketing, employees, trade
practices, trade secrets, know-how or other matters that are not publicly
known outside the Company, and Executive shall not, directly or indirectly,
make any disclosure thereof to anyone, or make any use thereof, on his own
behalf or on behalf of any third party, unless specifically requested by or
agreed to in writing by an executive officer of the Company; provided, that
Executive may divulge, discuss or provide confidential information to the
extent Executive is compelled by law to do so and, in such event, Executive
shall notify the Company immediately upon any request or demand for
information, but in any event, no later than two working days after
Executive first receives notice of such request or demand. Neither
Executive nor his counsel shall voluntarily comply with any such request or
demand prior to providing the Company to the extent possible with an
opportunity to seek a protective order or pursue any other appropriate
remedy. For the purposes of this Agreement, confidential information shall
not include information which (i) is known to the public prior to the
communication thereof by Executive, (ii) becomes known to the public
thereafter other than through communications by Executive, or (iii) becomes
known to Executive subsequent to the end of the Salary Continuation Period.
(b) Executive has returned or shall within five (5) days return
to the Company all cardkey passes, network tokens or cards (other than
Executive's Secure ID network token, which shall be returned within five
(5) days of termination of Executive's e-mail account at the Company), door
and file keys, and all confidential reports, files, memoranda, records,
software, computer access codes or disks and instructional manuals and
other physical or personal property that he received or prepared or helped
prepare in connection with his employment with the Company and its
affiliates and in Executive's possession, and Executive has not retained
and shall not retain any copies, duplicates, reproductions or excerpts
thereof. Notwithstanding the last sentence of Section 3(c) hereof,
Executive shall delete all confidential information of the Company on any
storage media and computer equipment provided by the Company to Executive,
shall destroy or return to the Company any copies thereof in any format or
media, and all network or Internet based connections of such computer
equipment to the computer network systems of the Company shall be
terminated as soon as reasonably practicable after the Effective Date. In
addition, Executive's access to (i) his e-mail account at the Company, and
(ii) the Company's voice mail system shall each be terminated ninety (90)
days after the Effective Date; provided, that, in order for Executive to
make an orderly transition, all e-mail delivered to Executive at his former
e-mail address at the Company shall be forwarded for a period of 90 days
from termination of access to an e-mail account designated by Executive.
In connection with the foregoing, the Company shall use its commercially
reasonable efforts to ensure that Executive's home office computer
equipment is capable of accessing such e-mail account.
5. No Solicitation. For so long as Executive is an employee or
director of the Company, Executive shall not, directly or indirectly,
solicit, entice, persuade or induce (or authorize or assist in the taking
of any such actions by any third party) any employee, agent or independent
contractor of the Company or its affiliates with a view to inducing or
encouraging such employee, agent or independent contractor to leave the
employ of the Company or its affiliates or otherwise terminate the agency
or independent contractor relationship with the Company for the purpose of
being hired by Executive or any other person.
6. Non-disclosure; Non-disparagement.
(a) Each of the Company and Executive agrees to keep the
circumstances concerning this Agreement and its terms, as well as any
negotiations and correspondence relating thereto, confidential and not to
disclose the same to any person, except as may be required by either party
to enforce this Agreement or to obtain legal or tax advice, or except as
may be required by law.
(b) Executive shall not disparage, orally or in writing, the
performance of the Company, the Company Board, any director of the Company,
any specific former or current officer of the Company or the Company's
management individually or as a group to any person.
(c) Neither the Company, nor any of its directors or officers,
shall disparage, orally or in writing, Executive.
7. Legal Counsel. The Company has advised Executive to consult
with an attorney of his choosing prior to the signing of this Agreement and
Executive hereby represents to the Company that he has consulted with an
attorney prior to the execution of this Agreement.
8. Cooperation. Executive agrees that, upon the reasonable
request, and at the expense, of the Company, Executive will cooperate in
good faith in any litigation to which the Company is a party and as to
which the Executive has relevant information or materials.
9. Legal Fees. The Company agrees to pay up to $25,000 of
reasonably documented legal fees of Executive incurred in connection with
the negotiation of this Agreement, as well as the related Agreement to be
entered into between Douglas K. Mellinger and the Company, and certain
other agreements related thereto, each of which are being entered into on
the date hereof.
10. Loan Forgiveness. In connection with the execution of this
Agreement, certain loans by the Company to Executive, totaling $28,638.62
in the aggregate, shall be forgiven as of the Effective Date. In addition,
in connection with the execution of this Agreement, certain loans by the
Company to The Mellinger Group L.L.C., of which Executive is a member,
totaling $14,744.00 in the aggregate, shall be forgiven as of the Effective
Date.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed and
enforced under the laws of the State of New York, without regard to its
conflict of laws rules.
(b) In the event that any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
(c) Each of the Company and Executive acknowledges and agrees
that the other party would suffer irreparable injury in the event of a
breach or violation or threatened breach or violation of the provisions set
forth in Sections 4, 5 or 6(a) hereof. Each of the Company and Executive
agrees that, in the event of an actual or threatened breach or violation of
such provisions, the non-breaching party shall be awarded injunctive relief
in a court of appropriate jurisdiction to prohibit or remedy any such
violation or breach or threatened violation or breach, without the
necessity of posting any bond or security, and such right to injunctive
relief shall be in addition to any other right or remedy available to the
Company or Executive.
(d) Any notice to be given hereunder shall be in writing and
shall be deemed given when mailed by certified mail, return receipt
requested, addressed as follows:
To Executive at:
__________________
__________________
To the Company at:
PRT Group Inc.
7 Skyline Drive
Hawthorne, NY 10532
Attention: General Counsel
(e) This Agreement sets forth the entire agreement between the
parties hereto with respect to the subject matter hereof and may not be
amended or altered without the written consent of the parties. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof, including, but not
limited to, the Employment Agreement, which Employment Agreement shall be
of no further force or effect. The parties may execute this Agreement in
counterparts.
(f) This Agreement is intended to be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
GREGORY S. MELLINGER PRT GROUP INC.
/S/ Gregory S. Mellinger By: /S/ Dan S. Woodward
------------------------ ---------------------
Name: Dan S. Woodward
Title: President
EXHIBIT A
Employment Agreement
EXHIBIT B
June 30, 1999
Board of Directors
PRT Group Inc.
342 Madison Avenue
New York, New York 10173
Re: Letter of Resignation
Gentlemen:
Effective as of June 30, 1999, I am resigning as a director and
as Chief Operating Officer of, and from all other offices that I have been
appointed or elected to and now occupy with, PRT Group Inc. (the "Company")
and any of its respective affiliates, subsidiaries, joint ventures,
divisions or organizations.
Very truly yours,
Gregory S. Mellinger
FOR: PRT Group Inc.
FOR IMMEDIATE RELEASE
CONTACT: Michele Katz/Elric Martinez
Morgen-Walke Associates
(212) 850-5600
Press:
Heather Stonebraker
IMEDIA Inc.
(973) 267-8500 Ext. 249
PRT GROUP ANNOUNCES APPOINTMENT OF
DAN S. WOODWARD AS CHIEF EXECUTIVE OFFICER
* PRT GROUP ANNOUNCES MANAGEMENT AND BOARD CHANGES
Hartford, CT - June 30, 1999--PRT Group Inc. (Nasdaq: PRTG) a provider of
application development, integration and technology migration services,
today announced that Dan S. Woodward, currently President and Chief
Operating Officer, has been appointed Chief Executive Officer. Mr. Woodward
succeeds Douglas K. Mellinger, who will continue as Non-Executive Chairman
of the Board of Directors. Mr. Mellinger founded PRT and has served as
Chairman and Chief Executive Officer of the Company for 10 years.
Douglas Mellinger, Chairman, Board of Directors, commented, "We are
delighted to announce Dan Woodward as PRT's new CEO. As a major
shareholder, I believe that the initiatives being announced and actions
underway should allow the Company to achieve its long-term goals."
Dan Woodward, President and CEO, stated, "PRT is moving forward
aggressively in developing and launching initiatives that I believe should
move us closer toward our long-term goals for increased market share and a
return to profitability. Today we are announcing details of our new
strategy focused on extending the valuable life-span of our customers'
legacy systems and offering new options to address customers' critical IT
staffing needs. I look forward to working with the entire PRT team of
professionals to implement our plan of action."
Mr. Woodward joined PRT Group on May 18, 1999 as President and Chief
Operating Officer. Previously, he was President of the Strategic Telecom
Division of Electronic Data Systems (EDS).
The Company also announced that Greg Mellinger, president of the Company's
Professional Services Group business unit and a director of PRT Group Inc.,
has resigned his positions to pursue other business interests.
In a separate press release issued today, PRT announced streamlining
initiatives, strategic direction and preliminary second quarter revenue.
About PRT Group Inc.
PRT Group Inc. (Nasdaq: PRTG) is an Application Services Integrator
committed to addressing customer applications development and management
needs, including--extending the value of substantial investments that have
been made in legacy applications, supporting customer migration plans to
next-generation E-Business platforms; and providing staffing and facility
options to address customer IT staffing gaps. The Company focuses on
long-term customer relationships as it strives to provide flexible and
evolutionary IT services through the life-cycle of its customers'
applications portfolio. PRT leverages its Customer Software Engineering
Center (CSEC) Model to provide centralized, comprehensive application
services, combining highly skilled IT professionals, proven quality
processes, and knowledge management systems. Founded in 1989, PRT Group
Inc. is headquartered in Hartford, CT. For more information visit
www.prt.com.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 about the future
operations and expectations of the Company and contains statements
regarding the Company's beliefs, intentions and expectations about
developments, results and events that will or may occur in the future. Such
forward-looking statements are based on certain assumptions and analyses
made by the Company derived from its experience and perceptions. Actual
results and developments may vary materially from those described, as they
are subject to a number of known and unknown risks and uncertainties. Such
risks and uncertainties include, but are not limited to, general economic,
market and business conditions; general conditions and competition in the
IT industry; concentration of revenues; the status of customer orders;
demand for the Company's services; analysis, predictions, and
decision-making by a new executive management team with limited experience
and time running the Company; and various other factors set forth under the
caption "Factors That May Affect Future Results" in Item 6 of PRT's Annual
Report on Form 10-K for the year ended December 31, 1998.
# # #
NOMINATION AGREEMENT
THIS NOMINATION AGREEMENT (the "Agreement"), made as of the
30th day of June, 1999, by and among Douglas Mellinger, Gregory Mellinger,
Paul Mellinger, Jerome Mellinger and Barbara Mellinger (hereinafter
collectively referred to as the "Mellinger Family") and PRT Group Inc.
(hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, Douglas Mellinger has been employed by the Company as
Chairman and Chief Executive Officer of the Company;
WHEREAS, Gregory Mellinger has been employed by the Company as
Chief Operating Officer of the Company;
WHEREAS, each of Douglas Mellinger and Gregory Mellinger are
resigning their positions as officers of the Company on the date hereof;
WHEREAS, in connection with the foregoing, each of Douglas
Mellinger and Gregory Mellinger are entering into separate agreements (the
"Office Resignation Agreements") with the Company on the date hereof
(hereinafter referred to as the "Effective Date");
WHEREAS, pursuant to the Office Resignation Agreement with
Douglas Mellinger, as of the Effective Date Douglas Mellinger shall
continue as a director of the Company and shall be appointed as
Non-Executive Chairman of the Company Board of Directors (the "Company
Board");
WHEREAS, pursuant to the Office Resignation Agreement with
Gregory Mellinger, as of the Effective Date Gregory Mellinger is resigning
as an officer and a director of the Company; and
WHEREAS, the Mellinger Family is a significant stockholder of
the Company.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agreed as follows:
1. Nominations to Company Board; Vote.
(a) It is hereby agreed that
(i) for so long as the Mellinger Family collectively shall continue
to hold in excess of thirty percent (30%) of the outstanding equity
securities of the Company on a fully-diluted basis, the Mellinger
Family shall be entitled to nominate up to two (2) persons acceptable
to the Company Board, in addition to Douglas Mellinger, to stand for
election to the Company Board (each, a "Nominee") and the Company
Board shall use reasonable efforts to have Douglas Mellinger and the
Nominees elected to the Company Board;
(ii) for so long as the Mellinger Family collectively shall continue
to hold in excess of twenty percent (20%) of the outstanding equity
securities of the Company on a fully-diluted basis, the Mellinger
Family shall be entitled to nominate one (1) Nominee acceptable to
the Company Board, in addition to Douglas Mellinger, to stand for
election to the Company Board and the Company Board shall use
reasonable efforts to have Douglas Mellinger and the Nominee elected
to the Company Board;
(iii) for so long as the Mellinger Family collectively shall continue
to hold in excess of ten percent (10%) of the outstanding equity
securities of the Company on a fully-diluted basis, the Mellinger
Family shall be entitled to nominate Douglas Mellinger to stand for
election to the Company Board and the Company Board shall use
reasonable efforts to have Douglas Mellinger elected to the Company
Board.
If Douglas Mellinger shall be incapacitated or die, the Mellinger Family
shall be entitled to nominate another person acceptable to the Company
Board in his place. The Mellinger Family hereby nominates Ronald Weinberg
as a Nominee. The Company Board shall appoint Mr. Weinberg to serve on the
class of directors on the Company Board to be elected at the 2000 Annual
Meeting of Company Stockholders and the Company Board shall appoint the
second of such Nominees to serve on the class of directors on the Company
Board to be elected at the 2002 Annual Meeting of Company Stockholders;
provided, that Douglas Mellinger and the Nominees shall not in any case
serve on the same class of directors. Thereafter during the term of this
Agreement, Douglas Mellinger and the Nominee(s) or their replacements shall
be nominated to be elected to serve with the respective classes of
directors on which they or their predecessors had served as such classes
come up for election pursuant to Article FIFTH of the Company's Amended and
Restated Certificate of Incorporation. Douglas Mellinger and each of the
Nominees, if any, shall promptly resign as directors of the Company at such
time as the Mellinger Family shall no longer collectively hold in excess of
ten percent (10%) of the outstanding equity securities of the Company on a
fully-diluted basis.
(b) For so long as the Mellinger Family has the right to
nominate Douglas Mellinger or any Nominee(s) pursuant to the provisions of
paragraph 1(a) hereof, each of the members of the Mellinger Family will
vote for the slate of directors nominated by the Company.
2. Appointment. Each member of the Mellinger Family hereby
appoints Douglas Mellinger, or another member of the Mellinger Family if
Douglas Mellinger shall become incapacitated or shall die, as his or her
sole agent and representative in connection with the subject matter of this
Agreement, including any nomination of Nominees pursuant to Section 1
hereof and exercise of preemptive rights pursuant to Section 3 hereof. In
connection with the foregoing, the Company shall have no obligation to
notify, confer with or otherwise respond to any member of the Mellinger
Family other than Douglas Mellinger, and may rely solely upon the
statements of Douglas Mellinger as those of the members of the Mellinger
Family.
3. Preemptive Rights. Until such time as the Mellinger Family
collectively holds less than twenty percent (20%) of the outstanding equity
securities of the Company on a fully-diluted basis, and subject to the
terms and conditions specified in this Section 3, each time the Company
proposes to offer any shares, or securities convertible into, or
exchangeable or exercisable for shares, of its capital stock in a private
placement (a "Private Placement") to any or all of the original purchasers
of the Company's former Series A Convertible Preferred Stock issued on
November 21, 1996 or their respective affiliates (the "Institutional
Holders"), which preferred stock was converted into shares of Company
common stock (the "Common Stock") at the time of the Company's initial
public offering, the Company shall make an offering of such securities to
the Mellinger Family in accordance with the following provisions:
(a) The Company shall deliver a notice ("Notice") to
Douglas Mellinger, as representative of the Mellinger Family, stating (i)
the Company's bona fide intention to offer such securities, (ii) the number
of such securities to be offered, and (iii) the price and terms, if any,
upon which it proposes to offer such securities.
(b) By written notification received by the Company
within fifteen (15) calendar days after receipt of the Notice, the
Mellinger Family may elect to collectively purchase or obtain, at the price
and on the terms specified in the Notice, up to that portion of the
securities to be purchased collectively by the Institutional Investors
which equals the proportion that the number of shares of Common Stock then
held by the Mellinger Family bears to the total number of shares of Common
Stock then collectively held by those Institutional Investors purchasing
securities in the Private Placement and the Mellinger Family.
(c) If all securities referred to in the Notice which the
Mellinger Family is entitled to obtain pursuant to Section 3(b) are not
elected to be purchased by the Mellinger Family, the Company may, during
the sixty (60) day period following the expiration of the notice provision
provided in Section 3(b) hereof, offer the remaining unsubscribed portion
of such securities to any person or persons at a price not less than, and
upon terms no more favorable to the offeree than those specified in the
Notice. If the Company does not enter into an agreement for the sale of
such securities within such period, or if such agreement is not consummated
within sixty (60) days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such securities shall not be
offered unless first re- offered to the Mellinger Family in accordance
herewith.
4. Non-disclosure; Non-disparagement.
(a) Each of the Company and the members of the Mellinger Family
agrees to keep the circumstances concerning this Agreement and its terms,
as well as any negotiations and correspondence relating thereto,
confidential and not to disclose the same to any person, except as may be
required by either party to enforce this Agreement or to obtain legal
advice, or except as may be required by law.
(b) Each of the members of the Mellinger Family agrees not
disparage, orally or in writing, the performance of the Company, the
Company Board, any director of the Company, any specific former or current
officer of the Company or the Company's management individually or as a
group to any person.
(c) Neither the Company, nor any of its directors or officers,
shall disparage, orally or in writing, any member of the Mellinger Family.
5. Legal Counsel. The Company has advised the members of the
Mellinger Family to consult with attorney(s) of their choosing prior to the
signing of this Agreement and the members of the Mellinger Family hereby
represent to the Company that they have consulted with their attorney(s)
prior to the execution of this Agreement.
6. Term. This Agreement shall terminate and be of no further
force or effect on or after June 30, 2005; provided, that the Mellinger
Family may terminate this Agreement at any time and this Agreement shall be
of
no further force or effect.
7. Miscellaneous.
(a) This Agreement shall be governed by and construed and
enforced under the laws of the State of New York, without regard to its
conflict of laws rules.
(b) In the event that any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
(c) Any notice to be given hereunder shall be in writing and
shall be deemed given when mailed by certified mail, return receipt
requested, addressed as follows:
To the Mellinger Family,
care of Douglas Mellinger, at:
==================
To the Company at:
PRT Group Inc.
7 Skyline Drive
Hawthorne, NY 10532
Attention: General Counsel
(e) This Agreement sets forth the entire agreement between the
parties hereto with respect to the subject matter hereof and may not be
amended or altered without the written consent of the parties. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof. The parties may execute
this Agreement in counterparts.
(f) This Agreement is intended to be binding upon and shall
inure to the benefit of the parties hereto and any successor in interest to
the Company. The provisions of this Agreement are for the sole benefit of
the parties hereto, and no provision hereof shall be deemed for the benefit
of any other person or entity. No party hereto may assign this Agreement or
any of their respective rights or obligations hereunder, including, without
limitation, to any purchaser or transferee of the securities of the Company
beneficially owned by the members of the Mellinger Family.
(g) This Agreement may be executed in one or more counterparts,
each of which when so executed and delivered will be an original, but all
of which will together constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
DOUGLAS K. MELLINGER PRT GROUP INC.
/S/ Douglas K. Mellinger By: /S/ Dan S. Woodward
- ------------------------ ---------------------
Name: Dan S. Woodward
Title: President
GREGORY S. MELLINGER
/S/ Gregory S. Mellinger
- ------------------------
PAUL L. MELLINGER
/S/ Paul L Mellinger
- ------------------------
JEROME MELLINGER
/S/ Jerome Mellinger
- ------------------------
BARBARA MELLINGER
/S/ Barbara Mellinger
- ------------------------
Resolution of the Board of Directors of the Registrant creating the
position of Non-Executive Chairman of the Board.
At a special meeting of the Board of Directors of the Company
held on June 26, 1999, on motion made and carried, the following
resolution, among others, was adopted:
RESOLVED, that a position of Non-Executive Chairman of the Board
of Directors of the Company shall be, and it hereby is, authorized and
created and that, in order to carry out this resolution, the Amended
and Restated Bylaws of the Company (the "Bylaws") be, and they hereby
are, amended in connection with the foregoing and that ARTICLE IV,
Section 1 of the Bylaws shall be amended and restated in its entirety
as follows:
"Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a
Secretary and a Treasurer. The Board of Directors, in its
discretion, may also choose a Chairman of the Board of Directors
(who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers.
Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or
these By-Laws. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the
Chairman of the Board of Directors, need such officers be
directors of the Corporation. The Board of Directors, in its
discretion, may also choose a Non-Executive Chairman of the Board
of Directors (who must be a director) who (i) shall not be an
officer, but may be an employee, of the Corporation, (ii) shall
have none of the powers of any officer of the Corporation granted
herein, by resolution of the Board of Directors, by statute,
common law, or otherwise, (iii), shall have none of the powers of
the Chairman of the Board of Directors granted herein, by
resolution of the Board of Directors, by statute, common law or
otherwise, (iv) shall not serve as the Chairman of any meeting of
the Board of Directors or the stockholders of the Corporation,
and (iv) shall not be authorized to incur any expenses,
obligations or liabilities on behalf of the Corporation or,
except in his capacity as a Director of the Corporation, to
otherwise direct the affairs or management or operations of the
Corporation in any manner whatsoever."
