<PAGE>
As filed with the Securities and Exchange Commission on November 5, 1996
Registration No. 333-14169
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1 To
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
MASTECH CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 7371 25-1529755
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
1004 MCKEE ROAD
OAKDALE, PA 15071
(412) 787-2100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
SUNIL WADHWANI, CO-CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MASTECH CORPORATION
1004 MCKEE ROAD
OAKDALE, PA 15071
(412) 787-2100
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
---------------
COPIES TO:
CARL A. COHEN DOUGLAS R. NEWKIRK
BUCHANAN INGERSOLL PROFESSIONAL SACHNOFF & WEAVER, LTD.
CORPORATION 30 S. WACKER, 29TH FLOOR
ONE OXFORD CENTRE CHICAGO, IL 60606
301 GRANT STREET, 20TH FLOOR (312) 207-1000
PITTSBURGH, PA 15219
(412) 562-8854
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the offering
described in this Registration Statement are:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................. $34,569
NASD filing fee..................................................... 11,908
Nasdaq listing fee..................................................
Printing and engraving expenses.....................................
Legal fees and expenses.............................................
Accounting fees and expenses........................................
Blue Sky fees and expenses (including legal fees)...................
Transfer agent and rights agent and registrar fees and expenses.....
Miscellaneous.......................................................
-------
Total.............................................................
=======
</TABLE>
All of the above expenses will be paid by the Company.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law (the
"BCL") provides that a business corporation shall have the power to indemnify
any person who was or is a party, or is threatened to be made a party, to any
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
director, officer, employee or agent of another corporation or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. In the case of an action by or in the right of the corporation, such
indemnification is limited to expenses (including attorneys' fees) actually,
and reasonably incurred by such person in connection with the defense or
settlement of such action, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person has been adjudged
to be liable to the corporation unless, and only to the extent that, a court
determines upon application that, despite the adjudication of liability, but in
view of all the circumstances, such person is fairly and reasonably entitled to
indemnity for the expenses that the court deems proper.
Article 8 of the Company's By-laws, as amended, provides that the Company
shall indemnify any person who was or is made a party to, or threatened to be
made a party to, or is involved in, any action, suit, or proceeding (including
actions by or in the right of the Company) by reason of the fact that he or she
is or was a director or officer of the Company (or is or was serving at the
request of the Company as a director, officer, trustee, employee, or agent of a
related enterprise including service with respect to an employee benefit plan,
or is or was serving at the specific written request of the Company as a
director, officer, trustee, employee, or agent of an unrelated enterprise)
against all expenses and liability he or she actually incurs, including,
without limitation, judgments and amounts paid or to be paid in settlement of,
or in actions brought by, or in the right of the Company, to the fullest extent
not prohibited by law. Article 8 also provides that directors and officers
shall be entitled to payment in advance of expenses incurred in defending any
such action, suit, or proceeding, upon receipt of an undertaking to repay all
amounts so advanced if it is ultimately determined that they are not entitled
to be indemnified or, in the case of criminal action, a majority of the Board
of Directors so determines. In addition, the Company has entered into
indemnification agreements with each of its directors which entitle the
director to indemnification for certain expenses to the fullest extent not
prohibited by law.
II-1
<PAGE>
The Bylaws of the Company also provide pursuant to Section 1713 of the PBCL
that a director of Mastech shall not be personally liable for monetary damages
as such for any action taken, or any failure to take any action, unless: (1)
the director has breached or failed to perform the duties of his/her office
under Section 1712 of the PBCL (relating to standard of conduct and
justifiable reliance); and (2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. This limitation on the
personal liability of directors of Company does not apply to: (1) the
responsibility or liability of a director pursuant to any criminal statute; or
(2) the liability of a director for the payment of taxes pursuant to local,
state or Federal law.
The Company and its subsidiaries also carry insurance insuring their
officers and directors against certain liabilities which they might incur as
directors or officers of the Company or of any other organization which they
serve at the its request, including certain liabilities under the Securities
Act of 1933.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Act:
1. In October 1996 the Company entered into an agreement pursuant to which
it agreed to compensate one of its executive officers in the form of an
issuance restricted stock which vest over a period of two years. In addition,
pursuant to this agreement the executive may elect to receive certain
compensation for past services in the form of cash or shares, the payment of
which shall be made promptly following the closing of this offering.
2. A 100-for-1 stock split of the Common Stock to be effective prior to the
closing of the offering.
The sale and issuance of the shares were exempt from registration by virtue
of Sections 3(a), 3(b) and 4(2) of the Securities Act and in reliance upon
Rule 701 promulgated thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS: UNLESS OTHERWISE INDICATED, ALL EXHIBITS WERE FILED WITH THE
REGISTRATION STATEMENT ON FORM S-1 DATED OCTOBER 15, 1996.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
3.1* -- Articles of Incorporation of the Company.
3.2* -- Bylaws of the Company.
4.1** -- Specimen stock certificate representing the Common Stock.
5.1** -- Opinion of Buchanan Ingersoll Professional Corporation.
10.1* -- Form of Employment Agreement by and between the Company and
Sunil Wadhwani and Ashok Trivedi.
10.2* -- 1996 Stock Incentive Plan.
Agreement dated October 14, 1996 between the Company and
10.3** -- Steven Shanghold.
10.4** -- Form of Employment Agreement between the Company and the
executive officers named on the schedule attached thereto.
Operating Agreement between the Company and Mascot Systems
10.5** -- Private Limited.
10.6** -- Operating Agreement between the Company and SWAT Systems.
10.7** -- Lease Agreement by and between Mascot Systems Private Limited
and Messrs. Wadhwani and Trivedi for real estate in Bangalore,
India.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <C> <S>
10.8** -- Lease Agreement by and between Mascot Systems Private Limited
and Messrs. Wadhwani and Trivedi for real estate in Pune,
India.
10.9** -- Lease Agreement by and between Mascot Systems Private Limited
and Messrs. Wadhwani and Trivedi for real estate in Madras,
India.
10.10** -- Stock Purchase Agreement by and between the Company and Mascot
Systems
10.11** -- Merger Agreement by and between the Company and SWAT Systems.
10.12** -- Form of S Corporation Termination, Tax Allocation and
Indemnification Agreement.
10.13** -- Revolving Credit Facility between the Company and PNC Bank.
10.14* -- Sublease Agreement by and between Westinghouse Electric
Corporation and the Company for Oakdale, PA facility;
10.15* -- First Amendment of Sublease; and
10.16* -- Shareholders Agreement.
23.1 -- Consent of Arthur Andersen LLP
23.2** -- Consent of Buchanan Ingersoll Professional Corporation
(included in Exhibit 5.1)
24.1 -- Form of Power of Attorney executed by the persons named
therein.
27 -- Financial Data Schedule
</TABLE>
- ---------------------
*Filed herewith.
**To be filed by amendment.
(B) FINANCIAL STATEMENTS SCHEDULES:
The following financial statement schedule is included in Part II of this
Registration Statement and should be read in conjunction with the Financial
Statements and Notes thereto included elsewhere herein.
II. VALUATION AND QUALIFYING ACCOUNTS
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser; (2) that for
purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective; and (3) that for the
purpose of determining any liability under the Securities Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Pittsburgh,
Pennsylvania on November 5, 1996.
MASTECH CORPORATION
/s/ Sunil Wadhwani
By:----------------------------------
Sunil Wadhwani
Co-Chairman and Chief Executive
Officer
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE(S)
Co-Chairman, Chief Executive Officer
* and Director
- ------------------------- (Principal Executive Officer)
Sunil Wadhwani
* Co-Chairman, President
- ------------------------- and Director /s/ Sunil Wadhwani
Ashok Trivedi ---------------------
*Sunil Wadhwani
For himself and as
Vice President--Finance attorney-in-fact.
* (Principal Accounting Officer November 5, 1996
- ------------------------- and Principal Financial Officer)
Michael Zugay
II-4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULES
We have audited in accordance with generally accepted auditing standards, the
Financial Statements of Mastech Corporation and have issued our report thereon
dated March 14, 1996. Our audits were made for the purpose of forming an
opinion on the basic Financial Statements taken as a whole. The schedule listed
in the accompanying index is presented for purposes of complying with the
Securities and Exchange Commission's rules and regulations and is not part of
the basic Financial Statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic Financial Statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic Financial Statements
taken as a whole.
Arthur Andersen LLP
Pittsburgh, Pennsylvania
March 14, 1996
S-1
<PAGE>
SCHEDULE II
MASTECH CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DEDUCTIONS--
AMOUNTS
BALANCE AT CHARGED TO DEEMED BALANCE AT
BEGINNING COSTS AND TO BE END OF
PERIOD ENDED DESCRIPTION OF PERIOD EXPENSES UNCOLLECTIBLE PERIOD
<S> <C> <C> <C> <C> <C>
December 31, 1993....... Allowance for uncollectible accounts $283 $ -- $(133) $150
December 31, 1994....... Allowance for uncollectible accounts 150 150 -- 300
December 31, 1995....... Allowance for uncollectible accounts 300 302 (102) 500
June 30, 1996........... Allowance for uncollectible accounts 500 316 (124) 692
</TABLE>
S-2
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MASTECH CORPORATION
1. Name
----
The name of the corporation shall be Mastech Corporation (herein
called the "Corporation").
2. Registered Office.
-----------------
The location and post office address of the Corporation's registered
office in the Commonwealth of Pennsylvania is 1004 McKee Road, Oakdale,
Pennsylvania 15071.
3. Purpose and Powers.
------------------
The Corporation was incorporated under the Business Corporation Law of
1933 and is currently subject to the Business Corporation Law of 1988, as
amended (hereinafter, the "BCL"), and shall have unlimited power to engage in
and to do any lawful act concerning any or all lawful business for which
corporations may be incorporated under the BCL.
4. Term of Existence.
-----------------
The term for which the Corporation shall exist is perpetual.
5. Capital Stock.
-------------
5.1 Authorized Shares.
-----------------
The aggregate number of shares which the Corporation shall have
authority to issue is:
(a) 20,000,000 shares of Preferred Stock without par value; and
<PAGE>
(b) 100,000,000 shares of Common Stock, $.01 par value.
5.2 Preferred Stock.
---------------
The Board of Directors is authorized to divide the Preferred Stock
into series and, as to each series, to determine the designation and number of
shares of such series and the voting rights, preferences, limitations and
special rights, if any, of the shares of such series. Such divisions and
determinations shall be set forth in one or more amendments to these Articles
adopted by the Board of Directors.
5.3 Common Stock.
------------
Except for and subject to those rights expressly granted to holders of
the Preferred Stock, or any series thereof, by one or more amendments to these
Articles adopted by the Board of Directors, and except as provided by the laws
of the Commonwealth of Pennsylvania, holders of the Common Stock shall have
exclusively all other rights of shareholders. All shares of Common Stock issued
or to be issued shall be alike in every particular.
5.4 Uncertificated Shares.
---------------------
The Corporation may utilize uncertificated shares of Common Stock and
Preferred Stock to represent stock interests of its shareholders.
Notwithstanding any provision of law or any bylaw to the contrary, the rights
and obligations of the holders of shares represented by certificates and the
rights and obligations of the holders of uncertificated shares of the same class
and series shall be identical.
5.5 Cumulative Voting.
-----------------
The holders of Common Stock shall not be entitled to cumulate their
votes in the election of directors.
-2-
<PAGE>
6. Board of Directors.
------------------
6.1 Number, Election, etc.
---------------------
The Board of Directors shall be comprised as follows:
(a) Number.
------
The Board of Directors shall consist of five (5) persons plus
such number of additional directors as the holders of any class or series of
stock having a preference over the Common Stock as to dividends or assets,
voting separately as a class or series, shall have the right from time to time
to elect.
(b) Classes, Election and Terms.
---------------------------
The directors elected by the holders of voting stock shall be
classified in respect to the time for which they shall severally serve on the
Board of Directors by dividing them into three classes, each of whose members
shall serve for staggered three-year terms. At each annual meeting of the
shareholders, the shareholders shall elect directors of the class whose term
then expires, to serve until the third succeeding annual meeting. Except as
otherwise expressly provided in these Articles, each director shall serve for
the term for which elected and until his or her successor shall be elected and
shall qualify.
(c) Quorum and Board Action.
-----------------------
Notwithstanding any provision of law or any bylaw to the
contrary, 80% of the directors then serving shall constitute a quorum for the
transaction of business, and any actions of the Board of Directors shall
require the affirmative vote of at least 80% of directors then serving.
-3-
<PAGE>
(d) Removal of Directors.
--------------------
Notwithstanding any provision of law or any bylaw to the
contrary, shareholders may remove a director or directors from the Board of
Directors at any time without cause by the affirmative vote of at least 66 2/3%
of the votes cast by shareholders of the Corporation, voting together as a
single class.
(e) Vacancies.
---------
Vacancies on the Board of Directors shall be filled only by a
majority vote of the remaining directors. All such directors elected to fill
vacancies shall serve on the Board for a term expiring at the annual meeting of
shareholders at which the term of the class to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
7. Shareholders Meetings
--------------------
7.1 Nominations of Director Candidates.
-----------------------------------
Nominations for the election of directors may be made only by the
Board of Directors or a committee appointed by the Board of Directors, or by any
record holder of stock entitled to vote in the election of the directors;
provided, however, that a nomination may be made by a shareholder only if
written notice of such nomination has been received by the Secretary of the
Corporation not later than 120 days in advance of the meeting at which the
election is to be held; provided further, however, that in the event that less
than 130 days' notice or prior public disclosure of the date of the annual
meeting is given, notice from the shareholders to be timely must be received not
later than the tenth day following the date on which such notice of the date of
the annual meeting was mailed or such public disclosure was made, whichever
first
-4-
<PAGE>
occurs. Each such notice shall set forth: (a) the name and address of
the shareholder who intends to make the nomination, and of the person or persons
to be nominated; (b) a representation that the shareholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or understandings
between the shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the shareholder; (d) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated by the Board of Directors; and (e)
the consent of each nominee to serve as a director of the Corporation if so
elected. If the Corporation receives notice from a shareholder pursuant to this
Article 7.1 and such notice, in the judgment of the Board of Directors, fails
to comply with the requirements set forth in this Article 7.1 in any respect,
then the Corporation shall notify the shareholder of the deficiencies with such
notice within ten days of the Corporation's receipt of such notice. Commencing
on the day of receipt of the deficiency notification from the Corporation, the
shareholder shall have ten days to cure all deficiencies and provide the
Corporation with notice which conforms to the requirements of this Article 7.1.
A shareholder shall be entitled to re-submit a notice as provided in this
Article 7.1 only once for each annual meeting of the shareholders. Only
candidates who have been nominated in accordance with this Article 7.1 shall be
eligible for election by the shareholders as directors of the Corporation.
-5-
<PAGE>
7.2 Business to be Transacted.
-------------------------
At any annual meeting or special meeting of shareholders, only such
business as is properly brought before the meeting in accordance with this
Article 7.2 may be transacted. To be properly brought before any meeting, any
proposed business must be either (i) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(ii) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) if brought before the meeting by a shareholder,
then (x) the shareholder must have been a shareholder of record on the record
date for the determination of shareholders entitled to vote at the annual
meeting, and (y) only if written notice of such proposed business has been
received by the Secretary of the Corporation not later than 120 days in advance
of the meeting at which the business is proposed to be transacted; provided,
however, that in the event that less than 130 days' notice or prior public
disclosure of the date of the annual meeting is given, notice from the
shareholder to be timely must be received not later than the tenth day following
the date on which such notice of the date of the annual meeting was mailed or
such public disclosure was made, whichever first occurs. There will be no
opportunity to cure any deficiencies within any notice given pursuant to this
Article 7.2.
7.3 Vote Required for Fundamental Changes.
-------------------------------------
In addition to any vote required by law, the affirmative vote of
holders of at least 66 2/3% of the votes cast by shareholders eligible to vote
thereon, voting together as a single class, shall be necessary to approve any
action for which shareholder approval is required under Subchapters B, C, D, E
and F of Chapter 19 (Fundamental Changes) of the BCL (the "Fundamental Change"),
and any successors thereto; provided, however, that the additional
-6-
<PAGE>
affirmative vote required by this Article 2.3 shall not apply to any
Fundamental Change if such Fundamental Change is approved, recommended and
submitted to the shareholders for their consideration by the unanimous vote of
the directors of the Corporation then serving.
7.4 Partial Written Consents.
------------------------
Any action required or permitted to be taken at a meeting of the
shareholders, or of a class of shareholders, may be taken without a meeting upon
the written consent of shareholders who would have been entitled to cast the
minimum number of votes that would be necessary to authorize the action at a
meeting at which all shareholders entitled to vote therein were present and
voting. The consents shall be filed with the secretary of the Corporation. The
action shall become effective immediately upon its authorization, or at such
later time as shall be specified in the said written consent, but prompt notice
of the action shall be given to those shareholders entitled to vote thereon who
have not consented thereto.
8. Inapplicability of Certain Provisions.
-------------------------------------
Notwithstanding any law or bylaw of the Corporation to the contrary,
the provisions of Subchapters E, F, G and H of Chapter 25 (Registered
Corporations) of the BCL, and any successors thereto, shall not be applicable to
the Corporation.
9. Personal Liability of Directors.
-------------------------------
9.1 Personal Liability of Directors.
-------------------------------
A director of the Corporation shall not be personally liable for
monetary damages for any action taken, or any failure to take any action, unless
the director has breached or failed to perform the duties of his or her office
under Subchapter B of Chapter 17 of the BCL and such breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness;
-7-
<PAGE>
provided, however, that the foregoing provision shall not eliminate or limit (i)
the responsibility or liability of such director pursuant to any criminal
statute, or (ii) the liability of a director for the payment of taxes pursuant
to local, state or federal law. Any repeal, modification or adoption of any
provision inconsistent with Article 9.1 shall be prospective only, and neither
the repeal or modification of this provision nor the adoption of any provision
inconsistent with this provision shall adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification or the adoption of such inconsistent provision.
9.2 Mandatory Indemnification of Directors and Certain Other Persons.
----------------------------------------------------------------
(a) The Corporation shall indemnify and hold harmless to the full
extent not prohibited by law, as the same exists or may hereinafter be amended,
interpreted or implemented (but, in the case of any amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than the Corporation is permitted to provide prior to
such amendment), each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in (as a witness or otherwise) any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative and whether or not by or in the right
of the Corporation or otherwise (hereinafter, a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the heir, executor or
administrator, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer or trustee of
another corporation or of a partnership, joint venture, trust or other
enterprise (including without limitation service with respect to employee
benefit plans), or where the basis of such proceeding is any alleged action or
failure to take any action by such person while acting in an official capacity
as a director or officer of the
-8-
<PAGE>
Corporation, or in any other capacity on behalf of the Corporation while such
person is or was serving as a director or officer of the Corporation, against
all expenses, liability and loss, including but not limited to attorneys' fees,
judgments, fines, excise taxes or penalties and amounts paid or to be paid in
settlement (whether with or without court approval), actually and reasonably
incurred or paid by such person in connection therewith.
(b) Notwithstanding the foregoing, except as provided in Article 9.3
below, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
(c) Subject to the limitation set forth above concerning proceedings
initiated by the person seeking indemnification, the right to indemnification
conferred in this Article 9.2 shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred in defending any such
proceeding (or part thereof) or in enforcing his or her rights under this
Article 9.2 in advance of the final disposition thereof promptly after receipt
by the Corporation of a request therefor stating in reasonable detail the
expenses incurred; provided, however, that to the extent required by law, the
payment of such expenses incurred by a director or officer of the Corporation in
advance of the final disposition of a proceeding shall be made only upon receipt
of an undertaking, by or on behalf of such person, to repay all amounts so
advanced if and to the extent it shall ultimately be determined by a court that
he or she is not entitled to be indemnified by the Corporation under this
Article 9.2 or otherwise.
(d) The right to indemnification and advancement of expenses
provided herein shall continue as to a person who has ceased to be a director or
officer of the Corporation or to
-9-
<PAGE>
serve in any of the other capacities described herein, and shall inure to the
benefit of the heirs, executors and administrators of such person.
9.3 Payment of Indemnification.
--------------------------
If a claim for indemnification under Article 9.2 hereof is not paid
in full by the Corporation within thirty (30) days after a written claim
therefor has been received by the Corporation, the claimant may, at any time
thereafter, bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part on the merits or otherwise in
establishing his or her right to indemnification or to the advancement of
expenses, the claimant shall be entitled to be paid also the expense of
prosecuting such claim.
9.4 Non-Exclusivity of Rights.
-------------------------
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of a final disposition conferred in Article
9.2 and the right to payment of expenses conferred in Article 9.3 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses hereunder may be entitled under any bylaw, agreement,
vote of shareholders, vote of directors or otherwise, both as to actions in his
or her official capacity and as to actions in any other capacity while holding
that office, the Corporation having the express authority to enter into such
agreements or arrangements as the Board of Directors deems appropriate for the
indemnification of and advancement of expenses to present or future directors
and officers as well as employees, representatives or agents of the Corporation
in connection with their status with or services to or on behalf of the
Corporation or any other corporation, partnership, joint venture, trust or other
enterprise, including any employee benefit plan, for which such person is
serving at the request of the Corporation.
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<PAGE>
9.5 Funding.
-------
The Corporation may create a fund of any nature, which may, but need
not be, under the control of a trustee, or otherwise secure or insure in any
manner its indemnification obligations, including its obligation to advance
expenses, whether arising under or pursuant to this Article 9 or otherwise.
9.6 Insurance.
---------
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director or officer or representative of the Corporation,
or is or was serving at the request of the Corporation as a representative of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of his or her status as such, whether or
not the Corporation has the power to indemnify such person against such
liability under the laws of this or any other state.
9.7 Modification or Repeal.
----------------------
Neither the modification, amendment, alteration or repeal of this
Article 9 or any of its provisions nor the adoption of any provision
inconsistent with this Article 9 or any of its provisions shall adversely
affect the rights of any person to indemnification and advancement of expenses
existing at the time of such modification, amendment, alteration or repeal or
the adoption of such inconsistent provision.
10. Bylaw Amendments.
----------------
The Board of Directors may adopt, amend or repeal the Bylaws with
respect to those matters which under the BCL are not reserved exclusively to the
shareholders. No Bylaw
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may be adopted, amended or repealed by the shareholders unless, in addition to
any other vote required by law, these Articles or otherwise, such action is
approved by the vote of holders of at least 66 2/3% of the votes cast by
shareholders eligible to vote thereon, voting together as a single class;
provided, however, that the additional affirmative vote required by this Article
shall not apply to any shareholder adoption, amendment or repeal of any Bylaw
provision if such action is approved, recommended and submitted to the
shareholders for their consideration by the unanimous vote of the directors of
the Corporation then serving.
11. Reservation of Right to Amend Articles.
--------------------------------------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles in the manner now or hereafter
prescribed by law and these Articles, and all rights conferred upon shareholders
herein are granted subject to this reservation.
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<PAGE>
Exhibit 3.2
Bylaws
Of
Mastech
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. SHAREHOLDERS...................................................... 1
1.1 Annual Meeting............................................... 1
1.2 Special Meetings............................................. 1
1.3 Place of Meeting............................................. 1
1.4 Notice....................................................... 1
1.5 Quorum....................................................... 2
1.6 Adjournments................................................. 2
1.7 Action by Shareholders....................................... 2
1.8 Voting Rights of Shareholders................................ 3
1.9 Proxies...................................................... 3
1.10 Voting List.................................................. 3
1.11 Determination of Shareholders of Record...................... 4
1.12 Certification by Nominee..................................... 4
1.13 Presiding Officer............................................ 4
1.14 Voting by Fiduciaries and Pledgees........................... 4
1.15 Voting by Joint Holders of Shares............................ 4
1.16 Voting by Corporations....................................... 5
1.17 Election of Directors........................................ 5
1.18 Judges of Election........................................... 5
2. BOARD OF DIRECTORS................................................ 6
2.1 General...................................................... 6
2.2 Regular Meetings............................................. 6
2.3 Special Meetings............................................. 6
2.4 Notice of Meetings........................................... 6
2.5 Interested Directors or Officers; Quorum..................... 7
2.6 Compensation................................................. 7
2.7 Presumption of Assent........................................ 7
2.8 Presiding Officer............................................ 8
3. COMMITTEES OF THE BOARD........................................... 8
3.1 Committees of the Board...................................... 8
3.2 Committee Rules.............................................. 8
4. OFFICERS.......................................................... 9
4.1 Officers and Qualifications.................................. 9
4.2 Election, Term, and Vacancies................................ 9
4.3 Removal; Resignation; Bond................................... 9
4.4 Co-Chairman and Chief Executive Officer...................... 9
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TABLE OF CONTENTS
SECTION PAGE
4.5 Co-Chairman and President.................................... 10
4.6 Vice Presidents.............................................. 10
4.7 Secretary.................................................... 10
4.8 Assistant Secretary.......................................... 10
4.9 Treasurer.................................................... 11
4.10 Other Management Officers.................................... 11
5. SHARE CERTIFICATES AND TRANSFERS.................................. 11
5.1 Certificates................................................. 11
5.2 Transfer of Shares........................................... 11
5.3 Registrar, Transfer Agent, Authenticating Trustee............ 12
5.4 Lost, Destroyed or Stolen Certificates....................... 12
6. MANNER OF GIVING NOTICE, WAIVER OF NOTICE, ACTION WITHOUT
MEETING, MEETINGS BY CONFERENCE TELEPHONE AND MODIFICATION OF
PROPOSALS......................................................... 12
6.1 Manner of Giving Notice...................................... 12
6.2 Waiver of Notice............................................. 13
6.3 Board Action by Unanimous Written Consent.................... 13
6.4 Meetings by Means of Conference Telephone.................... 13
6.5 Modification of Proposals.................................... 13
7. CERTAIN SHAREHOLDER RIGHTS........................................ 13
7.1 Inspection of Corporate Records.............................. 13
8. GENERAL PROVISIONS................................................ 14
8.1 Registered Office............................................ 14
8.2 Other Offices................................................ 14
8.3 Corporate Seal............................................... 14
8.4 Fiscal Year.................................................. 14
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<PAGE>
BYLAWS
of
Mastech Corporation
1. SHAREHOLDERS
1.1 Annual Meeting.
An annual meeting of the shareholders shall be held in each calendar
year, on such date as may be fixed by the board of directors, for the purpose of
electing directors and for the transaction of such other business as may
properly come before the meeting. If the day fixed for the annual meeting shall
be a legal holiday in the state where the meeting is to be held, such meeting
shall be held on the next succeeding business day.
1.2 Special Meetings.
Special meetings of the shareholders may be called at any time by (i)
the board of directors or (ii) by the Co-Chairman and Chief Executive Officer or
Co-Chairman and President. Upon written request of any person who has duly
called a special meeting, the secretary shall fix the time of the meeting which
shall be held not more than sixty (60) days after the receipt of the request.
If the secretary neglects or refuses to fix the time of the meeting, the person
or persons calling the meeting may do so.
1.3 Place of Meeting.
All meetings of the shareholders shall be held at the registered
office of the Corporation or at such other place, within or without the
Commonwealth of Pennsylvania, as may be designated by the board of directors
from time to time.
1.4 Notice.
Except as provided in Section 1.6 of these bylaws, written notice of
every meeting of the shareholders shall be given by, or at the direction of, the
secretary or president or, if he or she neglects or refuses to do so, may be
given by the person or persons calling the meeting, to each shareholder of
record entitled to vote at the meeting, at least ten (10) days prior to the day
named for the meeting, unless a greater period of notice is required by law in
the particular case. The notice of meeting shall specify the place, day and
hour of the meeting and, in the case of a special meeting, the general nature of
the business to be transacted, and, if applicable, the notice shall state that
the purpose, or one of the purposes, of the meeting is to consider the adoption,
amendment or repeal of the bylaws in which case the notice shall include, or be
accompanied by, a copy of the proposed amendment or a summary of the changes to
be effected thereby.
<PAGE>
1.5 Quorum.
A shareholders meeting duly called shall not be organized for the
transaction of business unless a quorum is present. The presence in person or
by proxy of shareholders entitled to cast at least a majority of the votes that
all shareholders are entitled to cast on a particular matter to be acted upon at
the meeting shall constitute a quorum for the purposes of consideration and
action on such matter. The shareholders present at a duly organized meeting can
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum. If a meeting cannot be
organized because a quorum has not attended, those present may adjourn the
meeting to such time and place as they may determine. Those shareholders
entitled to vote who attend a meeting called for the election of directors that
has previously been adjourned for lack of a quorum, although less than a quorum
as fixed herein, shall nevertheless constitute a quorum for the purpose of
electing directors. In other cases, those shareholders entitled to vote who
attend a meeting of shareholders that has been previously adjourned for one or
more periods aggregating at least fifteen (15) days because of absence of a
quorum, although less than a quorum as fixed herein, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
notice of the meeting, provided that the notice of the meeting states that those
shareholders who attend such adjourned meeting shall nevertheless constitute a
quorum for the purpose of acting upon the matter set forth in the notice.
1.6 Adjournments.
Adjournment or adjournments of any annual or special meeting of
shareholders, including one at which directors are to be elected, shall be taken
for such period or periods as the presiding officer of the meeting or the
shareholders present in person or by proxy and entitled to vote shall direct.
When a meeting of shareholders is adjourned, it shall not be necessary to give
any notice of the adjourned meeting or of the business to be transacted at the
adjourned meeting other than by announcement at the meeting at which the
adjournment is taken, unless the board of directors fixes a new record date for
the adjourned meeting or unless notice of the business to be transacted was
required by the Pennsylvania Business Corporation Law of 1988, as it may be
amended, to be set forth in the original notice of the meeting and such notice
had not been previously given. Subject to quorum requirements, at any such
adjourned meeting any business may be transacted which might have been
transacted at the meeting as originally noticed.
1.7 Action by Shareholders.
Whenever any corporate action is to be taken by vote of the
shareholders, it shall be authorized upon receiving the affirmative vote of a
majority of the votes cast by all shareholders entitled to vote thereon, and if
any shareholders are entitled to vote thereon as a class, upon receiving the
affirmative vote of a majority of the votes cast by the shareholders entitled to
vote as a class thereon, except where a different vote is required by law or the
articles or these bylaws.
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<PAGE>
1.8 Voting Rights of Shareholders.
Unless otherwise provided in the articles, every shareholder shall be
entitled to one vote for every share outstanding in such shareholder's name on
the books of the Corporation.
1.9 Proxies.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such shareholder by proxy. The
presence of, or vote or other action at a meeting of shareholders, or the
expression of consent or dissent to corporate action in writing, by a proxy of a
shareholder shall constitute the presence of, or vote or action by, or written
consent or dissent of the shareholder. Every proxy shall be executed in writing
by the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the Corporation. A telegram, telex, cablegram,
datagram or similar transmission from a shareholder or attorney-in-fact, or a
photographic, facsimile or similar reproduction of a writing executed by a
shareholder or attorney-in-fact shall be treated as properly executed if it sets
forth a confidential and unique identification number or other mark furnished by
the Corporation to the shareholder for purposes of a particular meeting or
transaction. Notwithstanding any other agreement or any provision in the proxy
to the contrary, a proxy shall be revocable at will unless coupled with an
interest, but the revocation of a proxy shall not be effective until written
notice of the revocation has been given to the secretary of the Corporation. An
unrevoked proxy shall not be valid after three years from the date of its
execution unless a longer time is expressly provided therein. A proxy shall not
be revoked by the death or incapacity of the maker unless, before the vote is
counted or the authority is exercised, written notice of such death or
incapacity is given to the secretary of the Corporation. Where two or more
proxies of a shareholder are present, the Corporation shall, unless otherwise
expressly provided in the proxy, accept as the vote of all shares represented
thereby the vote cast by a majority of them and, if a majority of the proxies
cannot agree whether the shares represented shall be voted or upon the manner of
voting the shares, the voting of the shares shall be divided equally among those
persons.
1.10 Voting List.
The officer or agent having charge of the transfer books for shares of
the Corporation shall make a complete list of the shareholders entitled to vote
at any meeting of shareholders, arranged in alphabetical order, with the address
of and the number of shares held by each. The list shall be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any shareholder during the whole time of the meeting for the purposes thereof
except that, if the Corporation has 5,000 or more shareholders, in lieu of the
making of the list the Corporation may make the information available at the
meeting by any other means. Failure to comply with the requirements of this
bylaw shall not affect the validity of any action taken at a meeting prior to a
demand at the meeting by any shareholder entitled to vote there at to examine
the list.
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<PAGE>
1.11 Determination of Shareholders of Record.
The board of directors may fix a time prior to the date of any meeting
of shareholders as a record date for the determination of the shareholders
entitled to notice of, or to vote at, the meeting, which time, except in the
case of an adjourned meeting, shall be not more than ninety (90) days prior to
the date of the meeting of shareholders. In such case, only shareholders of
record on the date so fixed shall be entitled to notice of, or to vote at, such
meeting, notwithstanding any transfer of shares on the books of the Corporation
after the record date so fixed. The board of directors may similarly fix a
record date for the determination of shareholders of record for payment of
dividends or for any other purpose. When a determination of shareholders of
record has been made as provided in this bylaw for purposes of a meeting, the
determination shall apply to any adjournment thereof unless the board fixes a
new record date for the adjourned meeting.
1.12 Certification by Nominee.
The board of directors may from time to time adopt a procedure whereby
a shareholder of the Corporation may certify in writing to the Corporation that
all or a portion of the shares registered in the name of the shareholder are
held for the account of a specified person or persons. Upon receipt by the
Corporation of a certification complying with said procedure, the persons
specified in the certification shall be deemed, for the purposes set forth in
said certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
1.13 Presiding Officer.
All meetings of the shareholders shall be called to order and presided
over by the Co-Chairman and Chief Executive Officer, if any, or, in his absence,
by the Co-Chairman and President, or, in his absence, by an officer or director
of the Corporation appointed by the chief executive officer, or, if none of
those persons is present, by a chairperson of the meeting elected by the
shareholders.
1.14 Voting by Fiduciaries and Pledgees.
Shares of this Corporation standing in the name of a trustee or other
fiduciary and shares held by an assignee for the benefit of creditors or by a
receiver may be voted either in person or by proxy by the trustee, fiduciary,
assignee or receiver. A shareholder whose shares are pledged shall be entitled
to vote the shares, in person or by proxy, until the shares have been
transferred into the name of the pledgee or a nominee of the pledgee.
1.15 Voting by Joint Holders of Shares.
Where shares of the Corporation are held jointly or as tenants in
common by two or more persons, as fiduciaries or otherwise: (a) if only one or
more of such persons is present in person or by proxy, all of the shares
standing in the names of such persons shall be deemed to be
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<PAGE>
represented for the purpose of determining a quorum and the Corporation shall
accept as the vote of all such shares the vote cast by such person or a majority
of such persons who are present; and (b) if the persons present are equally
divided upon whether the shares held by them shall be voted or upon the manner
of voting the shares, the voting of such shares shall be divided equally among
the persons present without prejudice to the rights of the joint owners or the
beneficial owners thereof among themselves. Notwithstanding the foregoing, if
there has been filed with the secretary of the Corporation a copy, certified by
an attorney-at-law to be correct, of the relevant portions of the agreement
under which such shares are held or the instrument by which the trust or estate
was created or the order of court appointing them or of an order of court
directing the voting of such shares, the persons specified as having such voting
power in the latest document so filed, and only those persons, shall be entitled
to vote such shares but only in accordance therewith.
1.16 Voting by Corporations.
Any other domestic or foreign corporation for profit or not-for-profit
that is a shareholder of this Corporation may vote by any of its officers or
agents, or by proxy appointed by any such officer or agent, unless some other
person, by resolution of its board of directors or pursuant to a provision of
its articles or bylaws, a copy of which resolution or provision certified to be
correct by one of its officers has been filed with the secretary of this
Corporation, is appointed its general or special proxy, in which case such
person shall be entitled to vote the shares. Shares of this Corporation owned,
directly or indirectly, by this Corporation and controlled, directly or
indirectly, by the board of directors of this Corporation, as such, shall not be
voted at any meeting and shall not be counted in determining the total number of
outstanding shares for voting purposes at any given time.
1.17 Election of Directors.
In election of directors, voting need not be by ballot, unless
required by vote of the shareholders before the voting for election of directors
begins. The duly nominated candidates receiving the highest number of votes
from each class or group of classes, if any, entitled to elect directors
separately up to the number of directors to be elected by the class or group of
classes shall be elected. If at any meeting of shareholders, directors of more
than one class are to be elected, each class of directors shall be elected in a
separate election.
1.18 Judges of Election.
In advance of any meeting of shareholders, the board of directors may
appoint judges of election, who need not be shareholders, to act at such meeting
or any adjournment thereof. If judges of election are not so appointed, the
presiding officer of any such meeting may, and on the request of any shareholder
or of any shareholder's proxy shall, make such appointment at the meeting. The
number of judges shall be one or three. No person who is a candidate for office
to be filled at the meeting shall act as a judge. In case any person appointed
as a judge fails to appear or fails or refuses to act, the vacancy may be filled
by appointment made by the board of directors in advance of the convening of the
meeting or at the meeting by
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<PAGE>
the presiding officer thereof. The judge or judges of election shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies, shall receive votes or ballots, shall hear and
determine all challenges and questions in any way arising in connection with the
right to vote, shall count and tabulate all votes and determine the result and
shall do such acts as may be proper to conduct the election or vote with
fairness to all shareholders. The judge or judges of election shall perform
their duties impartially, in good faith, to the best of their ability, and as
expeditiously as is practical. If there are three judges of election, the
decision, act or certificate of a majority shall be effective in all respects as
the decision, act or certificate of all. On request of the presiding officer of
the meeting, or of any shareholder or proxy of any shareholder, the judge or
judges shall make a report in writing of any challenge or question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated therein.
2. BOARD OF DIRECTORS
2.1 General.
All powers vested by law in the Corporation shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the board of directors.
2.2 Regular Meetings.
The board of directors shall hold an annual meeting for the election
of officers and the transaction of other proper business either as soon as
practical after, and at the same place as, the annual meeting of shareholders or
at such other day, hour and place as may be fixed by the board. The board of
directors may designate by resolution the time and place, within or without the
Commonwealth of Pennsylvania, of other regular meetings.
2.3 Special Meetings.
Special meetings of the board may be called by the Co-Chairman and
Chief Executive Officer, Co-Chairman and President or any two (2) directors.
The person or persons calling the special meeting may fix the day, hour and
place, within or without the Commonwealth of Pennsylvania, of the meeting.
2.4 Notice of Meetings.
No further notice of any annual or regular meeting of the board of
directors need be given other than transmitting to the directors a copy of the
resolution fixing the times and places thereof. Written notice, or oral notice
with written confirmation no later than the date of the meeting, of each special
meeting of the board of directors, specifying the place, day and hour of the
meeting, shall be given to each director at least 48 hours before the time set
for the
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<PAGE>
meeting. When a meeting of directors is adjourned, notice need not be given of
the adjourned meeting other than by announcement at the meeting at which the
adjournment is made. Notwithstanding the above notice requirements, if any
meeting of directors cannot be organized because a quorum is not present, a
majority of the directors present may adjourn the meeting to such time and place
as they may determine, subject to the bylaws of the Corporation. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the board need be specified in the notice of the meeting.
2.5 Interested Directors or Officers; Quorum.
A contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise in which one or more of this Corporation's directors
or officers are directors or officers or have a financial or other interest,
shall not be void or voidable solely for that reason, or solely because the
common or interested director or officer is present at or participates in the
meeting of the board that authorizes the contract or transaction, or solely
because the common or interested director's or officer's vote is counted for
such purpose, if: (1) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the board of
directors and the board authorizes the contract or transaction by the
affirmative votes of 80% of the directors then serving; or (2) the material
facts as to the director's or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of those shareholders; or (3) the contract or transaction is
fair as to this Corporation as of the time it is authorized, approved or
ratified by the board of directors or the shareholders.
2.6 Compensation.
By resolution of the board of directors, each director may be paid his
or her expenses, if any, of attendance at each meeting of the board of directors
or committee thereof, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the board of directors or committee thereof or
both. No such payment shall preclude any director from serving the Corporation
in any other capacity and receiving compensation therefor and a director may be
a salaried officer or employee of the Corporation.
2.7 Presumption of Assent.
A director of the Corporation who is present at a meeting of the board
of directors, or of a committee of the board, at which action on any corporate
matter is taken on which the director is generally competent to act, shall be
presumed to have assented to the action taken unless his or her dissent is
entered in the minutes of the meeting or unless such director files his or her
written dissent to the action with the secretary of the meeting before the
adjournment thereof or transmits the dissent in writing to the secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of the action. Nothing
in this section shall bar a director from asserting that minutes of a
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<PAGE>
meeting incorrectly omitted said director's dissent if, promptly upon receipt of
a copy of such minutes, said director notified the secretary, in writing, of the
asserted omission or inaccuracy.
2.8 Presiding Officer.
All meetings of the board of directors shall be called to order and
presided over by the Co-Chairman and Chief Executive Officer, or, in his
absence, by the Co-Chairman and President or, in both their absences, by a
director appointed by the Co-Chairman or, if none of those persons is present,
by a chairperson of the meeting elected at such meeting by the board of
directors.
3. COMMITTEES OF THE BOARD
3.1 Committees of the Board.
The board of directors may, by resolution adopted by a majority of the
directors in office, establish one or more committees, each committee to consist
of one or more of the directors of the Corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee or for purposes of
any written action of the committee. Except in the case of the Audit and
Compensation Committees, if any, or other similar committees, in the absence or
disqualification of any member or alternate member or members of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, though less than a quorum, may unanimously appoint another director to
act at the meeting in the place of the absent or disqualified member. A
committee, to the extent provided in the resolution of the board of directors
creating it, shall have and may exercise all of the powers and authority of the
board of directors except that a committee shall not have any power or authority
as to: (i) the submission to shareholders of any action requiring the approval
of shareholders pursuant to the Business Corporation Law, as it may hereafter be
amended, (ii) the creation or filling of vacancies in the board of directors,
(iii) the adoption, amendment or repeal of the bylaws, (iv) the amendment,
adoption or repeal of any resolution of the board that by its terms is amendable
or repealable only by the board, or (v) action on matters committed by the
bylaws or resolution of the board to another committee of the board. Each
committee of the board shall serve at the pleasure of the board.
3.2 Committee Rules.
In the absence of a resolution of the board to the contrary, a
majority of the entire authorized number of members of such committee shall be
necessary to constitute a quorum for the transaction of business.
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<PAGE>
4. OFFICERS
4.1 Officers and Qualifications.
The Corporation shall have a Co-Chairman who is also Chief Executive
Officer, a Co-Chairman who is also President, a secretary, and a treasurer, each
of whom shall be elected or appointed by the board of directors. The board may
also elect or provide for the appointment of one or more vice presidents, a
controller, and such other officers and assistant officers as the board deems
necessary or advisable. Officers of the Corporation, as between themselves and
the Corporation, shall have such authority and perform such duties in the
management of the Corporation or as is determined by or pursuant to resolutions
or orders of the board of directors.
4.2 Election, Term, and Vacancies.
The officers and assistant officers of the Corporation shall be
elected by the board of directors at the annual meeting of the board or from
time to time as the board shall determine. Each officer shall hold office for
one (1) year and until his or her successor has been duly elected and qualified
or until said officer's earlier death, resignation or removal. A vacancy in any
office occurring in any manner may be filled by the board of directors and, if
the office is one for which these bylaws prescribe a term, shall be filled for
the unexpired portion of the term.
4.3 Removal; Resignation; Bond.
(a) Removal. Any officer or agent of the Corporation may be removed
by the board of directors with or without cause, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
(b) Resignation. Any officer may resign at any time upon written
notice to the Corporation. The resignation shall be effective upon receipt
thereof by the Corporation or at such subsequent time as may be specified in the
notice of resignation.
(c) Bond. The Corporation may secure the fidelity of any or all of
its officers by bond or otherwise.
4.4 Co-Chairman and Chief Executive Officer.
The Co-Chairman and Chief Executive Officer shall preside at all
meetings of the shareholders and of the directors at which he or she is present,
and shall have such authority and perform such duties as the board of directors
may from time to time designate. Subject to the control of the board of
directors and, within the scope of their authority, any committees thereof, the
chief executive officer shall (a) have general and active management of all the
business, property and affairs of the Corporation, (b) see that all orders and
resolutions of the board of directors and the committees thereof are carried
into effect, (c) appoint and remove subordinate officers and agents, other than
those appointed or elected by the board of directors, as the
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business of the Corporation may require, (d) have custody of the corporate seal,
or entrust the same to the secretary, (e) act as the duly authorized
representative of the board in all matters, except where the board has formally
designated some other person or group to act, and (f) in general perform all the
usual duties incident to the office of chief executive officer and such other
duties as may be assigned to such person by the board of directors.
4.5 Co-Chairman and President.
The Co-Chairman and President shall, in the absence of the Co-Chairman
and Chief Executive Officer, if any, preside at all meetings of the shareholders
and of the board of directors at which he or she is present, and shall have such
authority and perform such duties as the board of directors may from time to
time designate including, but not limited to, those described in Section 4.4
above.
4.6 Vice Presidents.
Each vice president, if any, shall perform such duties as may be
assigned to him or her by the board of directors or the chief executive officer.
In the absence or disability of either Co-Chairman, the most senior in rank of
the vice presidents shall perform the duties of the president.
4.7 Secretary.
The secretary shall (a) keep or cause to be kept the minutes of all
meetings of the shareholders, the board of directors, and any committees of the
board of directors in one or more books kept for that purpose, (b) have custody
of the corporate records, stock books and stock ledgers of the Corporation, (c)
keep or cause to be kept a register of the address of each shareholder, which
address has been furnished to the secretary by such shareholder, (d) see that
all notices are duly given in accordance with law, the articles, and these
bylaws, and (e) in general perform all the usual duties incident to the office
of secretary and such other duties as may be assigned to him or her by the board
of directors or the chief executive officer. The secretary may delegate any of
his or her duties to any management officer or to any duly elected or appointed
assistant secretary and may delegate custody of the Corporation's stock books,
stock ledgers, shareholder lists and the like to a duly appointed stock transfer
agent and/or registrar or, in the case of records regarding debt instruments, to
an indenture or bond trustee, registrar or similar entity.
4.8 Assistant Secretary.
The assistant secretary, if any or assistant secretaries if more than
one, shall perform the duties of the secretary in his or her absence and shall
perform such other duties as the board of directors, the chief executive officer
or the secretary may from time to time designate.
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<PAGE>
4.9 Treasurer.
The treasurer shall have general supervision of the fiscal affairs of
the Corporation. The treasurer shall, with the assistance of the chief
executive officer and managerial staff of the Corporation: (a) see that a full
and accurate accounting of all financial transactions is made; (b) invest and
reinvest the capital funds of the Corporation in such manner as may be directed
by the board, unless such function shall have been delegated to a nominee or
agent; (c) deposit or cause to be deposited in the name and to the credit of the
Corporation, in such depositories as the board of directors shall designate, all
monies and other valuable effects of the Corporation not otherwise employed; (d)
prepare such financial reports as may be requested from time to time by the
board; (e) cooperate in the conduct of the annual audit of the Corporation's
financial records by certified public accountants duly appointed by the board;
and (f) in general perform all the usual duties incident to the office of
treasurer and such other duties as may be assigned to him or her by the board of
directors or the president.
4.10 Other Management Officers.
The chief executive officer may, subject to ratification by the board,
select and appoint such other management officers as he deems advisable, who
shall have such authority and perform such duties as may from time to time be
prescribed by the board or assigned by the president.
5. SHARE CERTIFICATES AND TRANSFERS
5.1 Certificates.
Share certificates shall be in such form as shall be approved by the
board of directors and shall state: (i) that the Corporation is incorporated
under the laws of the Commonwealth of Pennsylvania, (ii) the name of the person
to whom issued, and (iii) the number and class of shares and the designation of
the series, if any, which the share certificate represents.
In the event that the Corporation is authorized to issue shares of
more than one class or series, each share certificate shall also state, on the
face or back of the certificate, that the Corporation will furnish to any
shareholder upon request and without charge a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the Corporation.
5.2 Transfer of Shares.
Transfer of shares of the Corporation shall be made only on the stock
transfer records of the Corporation (which may be kept in written or computer
form). Transfers shall be
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made by the Corporation or its duly authorized agent as required by law. Except
as otherwise set forth in Section 1.14 above (Certification by Nominee), the
Corporation shall be entitled to treat the person in whose name shares stand on
the books of the Corporation as the owner thereof for all purposes.
5.3 Registrar, Transfer Agent, Authenticating Trustee.
The Corporation may, but need not, designate another organization to
act as authenticating trustee, transfer agent, registrar or other agent for the
Corporation in the registration of transfers of its securities, the issuance of
new securities or the cancellation of surrendered securities, and to perform
such other functions as agent for the Corporation as the Corporation may deem
appropriate.
5.4 Lost, Destroyed or Stolen Certificates.
If the registered owner of a share certificate claims that the
security has been lost, destroyed or wrongfully taken, another may be issued in
lieu thereof in such manner and upon such terms as the board of directors may
authorize and shall be issued in place of the original security, in accordance
with 13 Pa. C.S. (S) 8405(2), if the owner: (a) so requests before the
Corporation has notice that the security has been acquired by a bona fide
purchaser; (b) files with the Corporation an indemnity bond in such amount as
the Corporation may determine; and (c) satisfies any other reasonable
requirements imposed by the Corporation.
6. MANNER OF GIVING NOTICE,
WAIVER OF NOTICE, ACTION WITHOUT MEETING,
MEETINGS BY CONFERENCE TELEPHONE AND
MODIFICATION OF PROPOSALS
6.1 Manner of Giving Notice.
Whenever written notice is required to be given to any person under
the provisions of the Business Corporation Law or by the articles or these
bylaws, it may be given to the person either personally or by sending a copy
thereof by first class or express mail, postage prepaid, or by telegram (with
messenger service specified), telex or TWX (with answerback received) or courier
service, charges prepaid, or by facsimile transmission, to the shareholder's
address (or to the shareholder's telex, TWX, or facsimile number) appearing on
the books of the Corporation or, in the case of directors, supplied by the
director to the Corporation for the purpose of notice. Notice sent by mail, by
telegraph or by courier service shall be deemed to have been given when
deposited in the United States mail or with a telegraph office or courier
service for delivery except that, in the case of directors, notice sent by
regular mail shall be deemed to have been given forty-eight (48) hours after
being deposited in the United States mail or, in the case of telex, TWX or
facsimile, when dispatched.
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<PAGE>
6.2 Waiver of Notice.
Whenever any written notice is required to be given by statute or the
articles or these bylaws, a waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of the notice. Neither the business to
be transacted at, nor the purpose of, a meeting need be specified in the waiver
of notice of such meeting. Attendance of a person, either in person or by
proxy, at any meeting shall constitute a waiver of notice of the meeting, except
where the person attends the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting was not lawfully called or convened.
6.3 Board Action by Unanimous Written Consent.
Any action required or permitted to be taken at a meeting of the
directors or of any committee of directors may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto in writing
setting forth the action so taken is signed by all of the directors in office,
or by all of the members of such committee in office, as the case may be, and is
filed with the secretary of the Corporation.
6.4 Meetings by Means of Conference Telephone.
One or more persons may participate in a meeting of the directors, or
of any committee of directors, but not a meeting of the shareholders, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person at the meeting.
6.5 Modification of Proposals.
Whenever the language of a proposed resolution is included in a
written notice of a meeting required to be given by statute or by the articles
or bylaws, the meeting considering the resolution may without further notice
adopt it with such clarifying or other amendments as do not enlarge its original
purpose.
7. CERTAIN SHAREHOLDER RIGHTS
7.1 Inspection of Corporate Records.
Every shareholder shall, upon written verified demand stating the
purpose thereof, have a right to examine, in person or by agent or attorney,
during the usual hours for business for any proper purpose, the share register,
books and records of account, and records of the proceedings of the
incorporators, shareholders and directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the shareholder. The
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demand shall be directed to the Corporation at its registered office in
Pennsylvania or at its principal place of business wherever situated.
8. GENERAL PROVISIONS
8.1 Registered Office.
The registered office of the Corporation, required by law to be
maintained in the Commonwealth of Pennsylvania, shall be located at 1004 McKee
Road, Oakdale, PA 15017. The principal place of business of the Corporation may
be, but need not be, the same as the registered office. The address of the
registered office may be changed from time to time by the board of directors.
8.2 Other Offices.
The Corporation may have additional offices and places of business in
such places, within or without the Commonwealth of Pennsylvania, as the board of
directors may designate or as the business of the Corporation may require.
8.3 Corporate Seal.
The Corporation may have a corporate seal which shall have inscribed
thereon the name of the Corporation, the year of organization, and the words
"Corporate Seal - Pennsylvania" or such inscription as the board of directors
may determine. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed, or in any manner reproduced.
8.4 Fiscal Year.
The fiscal year of the Corporation shall end on the 31st day of
----
December in each year.
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Exhibit 10.1
FORM OF
-------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as of __________ 1996, between
Mastech corporation, a Pennsylvania corporation, with its principal executive
offices at 1004 McKee Road, Oakdale, Pennsylvania 15071 (the "Company"),
and_________________, an individual and resident of Allegheny County,
Pennsylvania (the "Executive").
WHEREAS, the Executive is and has been employed by the Company and is
currently Co-Chairman and Chief Executive Officer of the Company;
WHEREAS, the Company and the Executive desire to set forth in this
Agreement the terms on which the Company will continue to employ the Executive
and the Executive agrees to be employed by the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound hereby, the Company and the
Executive hereby agree as follows:
1. Position and Duties.
-------------------
a. The Company agrees to, and hereby does, continue to employ the
Executive for the term of this Agreement to render services to the Company as
Co-Chairman and Chief Executive Officer of the Company, and in connection
therewith, to perform such duties as the Executive is now performing and such
other duties commensurate with such positions as the Executive may reasonably be
directed to perform by the Board of Directors. The Executive shall have the
right to devote a reasonable amount of time to (i) industry, community or
charitable organizations, and (ii) the management of personal investments, so
long as such activities do not
<PAGE>
interfere or conflict with the performance by the Executive of his obligations
hereunder. Subject to the provisions of Section 8, Section 9 and Section 10
hereof, the Executive may serve as a director of other companies with the
consent of the Board of Directors of the Company, which consent shall not be
unreasonably withheld.
b. The Executive hereby accepts such employment and agrees
faithfully to perform to the best of his ability the duties described in Section
l(a).
2. Term. Subject to Section 4 hereof, the term of employment of the
----
Executive under this Agreement shall commence on the closing date of the
initial public offering of the Company's Common Stock (the "Effective Date") (at
which time this Agreement shall become effective) and shall terminate on the
last day of the calendar month which is 24 calendar months after the Effective
Date. Commencing on the last day of the first full calendar month after the
Effective Date and on the last day of each succeeding calendar month, the term
of this Agreement shall be automatically extended without further action by
either party for one additional calendar month unless one party notifies the
other in writing that such party does not wish to extend the term of this
Agreement. In the event that such notice shall have been delivered, the term
hereof shall no longer be subject to automatic extension and the term hereof
shall expire on the date which is 24 calendar months after the last day of the
month in which such written notice is received. (The last day of the calendar
month in which the term hereof, as extended from time to time, shall end is
hereinafter referred to as the "Expiration Date").
2
<PAGE>
3. Compensation. In consideration for the Executive's agreements
------------
contained herein, and as compensation to the Executive for the performance of
the services required hereunder, the Company shall pay or grant to him the
following salary and other compensation and benefits:
a. a base salary, payable in equal installments not less
frequently than monthly, at an annual rate of not less than $400,000 per year,
such amount to be determined from time to time by the Board of Directors or an
appropriate committee thereof, provided, however, that the Executive's base
salary shall be periodically reviewed by the Board of Directors and shall be
increased if the Board of Directors determines that an increase is appropriate
on the basis of the types of factors it generally takes into account in
increasing the salaries of executive officers of the Company;
b. an annual incentive compensation payment (bonus) of not less
than $200,000, the precise amount to be determined by the Board of Directors and
payable to the Executive no later than April 15 of each calendar year for the
prior year; provided that payment of all or a portion of such bonus may be made
subject to the attainment of reasonable Company, business unit or individual
performance goals;
c. such other awards under the Company's 1996 Stock Incentive
Plan (the "Plan") or under any other stock option, incentive compensation or
other compensation plan, program or arrangement now existing, or hereafter
adopted and applicable to executive officers of the Company, as the Board of
Directors, or an appropriate committee thereof administering such plan, program
or arrangement, may determine appropriate in light of the duties and
responsibilities of the Executive in respect to other executive officers;
3
<PAGE>
d. participation on the same terms and conditions as all other
employees in all employee benefit plans, whether or not qualified within the
meaning of Section 401(a) of the Internal Revenue Code of 1986, as may be
amended from time to time (the "Code"), as may be now or hereafter sponsored or
maintained for all employees of the Company, and participation on the same terms
and conditions as other executive officers in such other plan, program or
arrangement as may be now or hereafter sponsored or maintained for executive
officers of the Company;
e. reimbursement for reasonable travel and other expenses incurred
by Executive in performing his obligations hereunder pursuant to the terms and
conditions of the Company's policy in respect thereto; and
f. reasonable vacations, absences on account of temporary illness
and fringe benefits customarily enjoyed by employees or officers of the Company
under the terms and conditions of the Company's policy in respect thereto.
Nothing contained in this Agreement shall prevent the Board of
Directors from amending or otherwise altering the Plan, or any other plan,
program or arrangement so long as such amendment or alteration (i) is
accomplished pursuant to the terms thereof as in effect on the Effective Date or
on the date such is adopted, if later, and (ii) equitably affects all employees,
executive or otherwise, previously covered thereunder.
4. Termination of Employment. This Agreement shall terminate upon the
-------------------------
Expiration Date or upon the death of the Executive. The Company may terminate
this Agreement prior to the Expiration Date (and the Executive's employment
hereunder shall terminate) for "Disability"
4
<PAGE>
or "Cause". Termination of this Agreement by the Company for any reason not set
forth in the two preceding sentences shall not be deemed a permitted termination
and shall be deemed a breach of this Agreement. In the event of any termination
of this Agreement prior to the Expiration Date, whether a permitted termination
or otherwise, the provisions of Section 5 of this Agreement shall determine the
amount, if any, of any compensation thereafter due the Executive in respect to
such termination.
As used in this Agreement, the following terms shall have the meanings
set forth:
a. Disability. If, as a result of the Executive's incapacity due
----------
to physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for six consecutive months, and
within thirty days after written notice of termination is given by the Company,
the Executive shall not have returned to the full-time daily performance of his
duties, the Executive shall be deemed to have experienced a Disability and the
Company may terminate the Executive's employment. The Executive shall be
entitled to leaves of absence from the Company in accordance with the Company's
policy generally applicable to executives for illness or other temporary
disabilities for a period or periods not exceeding an aggregate of six months in
any calendar year, and his compensation and status as an employee hereunder
shall continue during any such period or periods.
b. Cause. Termination by the Company of employment for "Cause"
-----
shall mean termination upon:
(i) the willful and continued failure by the Executive to
substantially perform his duties with the Company (other than any such
failure resulting from his incapacity due to physical or mental illness),
after a written demand for
5
<PAGE>
substantial performance is delivered to the Executive by the Board of
Directors which specifically identifies the manner in which the Board of
Directors believes that the Executive has not substantially performed his
duties, and which failure has not been cured within thirty days after such
written demand; or
(ii) the willful and continued engaging by the Executive in conduct
which is demonstrably and materially injurious to the Company, monetarily
or otherwise; or
(iii) the breach by the Executive of the Non-Competition clause in
Section 8, the Confidentiality clause in Section 9, or the Non-Solicitation
clause in Section 10 hereof.
For purposes of this Subsection (b), no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that such
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of at least 80% of the directors then
serving (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board of
Directors), finding that in the good faith opinion of the Board of Directors the
Executive was guilty of conduct set forth above in clauses (i), (ii) or (iii) of
the first sentence of this Subsection (b) and specifying the particulars thereof
in detail.
c. Notice of Termination. Any purported termination by the Company
---------------------
shall be communicated by written Notice of Termination to the Executive in
accordance with Section
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13 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination, resignation or
retirement provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination, resignation or retirement under the provision so indicated.
d. Date of Termination, Etc. "Date of Termination" shall mean (i)
------------------------
if the Executive's employment is terminated for Disability, thirty days after
Notice of Termination is given (provided that the Executive shall not have
returned to the performance of the Executive's duties on a full-time daily basis
during such thirty-day period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of Termination
(which shall not be less than thirty days nor more than sixty days, from the
date such Notice of Termination is given) and provided that if within thirty
days after any Notice of Termination is given the Executive and the Executive
has notified the Company that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally determined
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected).
Any party giving notice of a dispute shall pursue the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Executive will be entitled to indemnification under Section 7 hereof and the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
base salary) and continue the Executive as a participant in all compensation,
employee benefit and insurance plans, programs
7
<PAGE>
and arrangements in which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in
accordance with this Subsection (d).
5. Compensation Upon Termination.
-----------------------------
a. Death. If the Executive's employment hereunder terminates by
-----
reason of his death, the Company shall be obligated to pay to his surviving
widow, or to his legal representatives if he leaves no surviving widow or if his
surviving widow dies prior to fulfillment of the Company's obligations, (i) the
Executive's then current base salary for a twelve (12) month period commencing
on the first day of the month following the Executive's death, or until the
Expiration Date, whichever shall be the first to occur, and (ii) any benefits to
which the Executive is entitled under any insurance policies on the life of the
Executive, under the Company's insurance programs and other employee benefit
plans, programs and arrangements then in effect and under the Company's pension
plan for salaried employees, if any.
b. Disability. If the Executive's employment hereunder terminates
----------
by reason of his Disability, the Company shall (i) continue to pay to the
Executive, in accordance with the payroll practices of the Company in effect
prior to the Date of Termination, the Executive's then current base salary for
thirty-six (36) months after the Date of Termination, reduced by any benefits to
which the Executive may be entitled under any Company sponsored disability
income or income protection plan, policy or arrangement, the premiums for which
are paid by the Company, and (ii) for each of the three years after the Date of
Termination an amount equal to the highest annual bonus that the Executive
received in the three years prior to the Date of Termination, payable each year
in a lump sum at approximately the same time as annual bonuses
8
<PAGE>
were paid by the Company in the year prior to the Date of Termination. If the
Executive dies prior to the date on which such additional amounts would have
ceased to be payable under this Subsection (b), the amount that would have been
payable by the Company had he lived shall continue to be paid by the Company to
his surviving widow, for a period of 12 months following the Executive's death,
at the same times and rates as it would have been payable to him.
c. Cause. If the Executive's employment hereunder is terminated by
-----
the Company for Cause, the Company shall pay to the Executive his full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given and the Company shall have no further obligations to the
Executive under this Agreement.
d. Voluntary Resignation or Retirement. In the event the Executive
-----------------------------------
retires or resigns other than because of a material breach of this Agreement by
the Company, the Company shall pay to the Executive his full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given and, except as provided in Section 6, the Company shall have no further
obligations to the Executive under this Agreement.
e. Other. If the Executive's employment hereunder is terminated
-----
(1) by the Company other than for Cause or Disability, or (2) by the Executive
because of a material breach by the Company of this Agreement, then the
Executive shall be entitled to the benefits provided below:
(i) the Company shall pay the Executive his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given;
(ii) in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay as
severance pay to
9
<PAGE>
the Executive, not later than the fifteenth day following the Date of
Termination, a lump sum severance payment equal to the Executive's full
base salary for the then remaining term of this Agreement (without regard
to the date of such Notice of Termination) at the rate then in effect,
discounted to present value at a discount rate of 7% per annum applied to
each future payment from the time it would have become payable;
(iii) in lieu of shares of common stock issuable upon exercise of out-
standing stock options ("Options"), if any, or any stock appreciation
rights ("SAR"), if any, whether or not such Options or SARs are vested
pursuant to their respective terms, granted to the Executive under the Plan
or another of the Company's stock option or stock appreciation rights
plans, or otherwise (which Options and SARs shall be canceled upon the
making of the payment referred to below), the Executive shall receive, not
later than the fifteenth day following the Date of Termination, an amount
in cash equal to the product of (i) the difference (to the extent that such
difference is a positive number) obtained by subtracting the per share
exercise price of each (1) Option and (2) SAR held by the Executive,
whether or not then fully exercisable, from the closing price of the Common
Stock (the "Closing Price") as reported on the National Association of
Securities Dealers Automatic Quotation/National Market System, or such
similar national quotation system or stock exchange on the Date of
Termination (or if not traded on the Date of Termination, the closing price
on the preceding business day on
10
<PAGE>
which the Common Stock traded), and (ii) the total number of shares of
Common Stock held by the Executive and covered the Options and SARs;
(iv) the Company shall also pay directly as incurred or reimburse the
Executive, upon demand, all legal fees and expenses incurred by the
Executive in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Internal Revenue Code (the "Code")
to any payment or benefit provided hereunder;
(v) for the remainder of the Executive's life, the Company shall
arrange to provide the Executive with and shall pay the cost or premiums
when due for disability and health-and-accident insurance benefits
substantially similar to those which the Executive is receiving immediately
prior to the Notice of Termination;
(vi) the payments under this Subsection (e) are intended by the
parties to be due and payable under the circumstances of a termination for
the reasons set forth above whether or not such circumstances are preceded
by a change in control of the Company. If, notwithstanding the intentions
of the parties, it is asserted by any governmental agency, in any tax
audit, administrative proceeding or otherwise, that any payments provided
under this Section 5(e) (the "Severance Payments") are or will be subject
to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or any
successor provision thereto) and/or that a federal income tax deduction for
amounts paid as Severance Payments will not be
11
<PAGE>
allowed to the Company for any year by reason of Section 28OG of the Code
(or any successor provision thereto), the Executive may contest or refute
such assertion with respect to the Excise Tax in any appropriate forum (the
"Executive's Contest") and the Company shall diligently and vigorously
contest or refute such assertion with respect to the disallowance of such
deduction in all administrative proceedings and in the federal district
court or the Tax Court, whichever shall have jurisdiction (the "Company's
Contest"). The Executive's Contest and the Company's Contest shall be
conducted and presented separately unless the Executive, in his discretion
but with the consent of the Company, joins in the Company's Contest. In any
event, the Executive shall be entitled to retain attorneys and other
experts deemed necessary or appropriate by the Executive to the proper
presentation of the Executive's Contest and shall not be compelled by the
Company to compromise, settle or otherwise terminate the Executive's
Contest without his written consent thereto. The Company and the Executive
shall cooperate one with the other and each shall provide to the other
copies of all documents relevant to or useful in connection with either the
Executive's Contest or the Company's Contest as may reasonably be requested
by the other. The Executive shall attend any hearing, deposition or other
proceeding at which his attendance in person is material to the Company's
Contest. The Company shall cause the appropriate authorized officer or
officers of the Company to attend any hearing, deposition or other matter
at which the Company's appearance is requested by any party; and
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(vii) The payments provided for in this Subsection (e), shall be
made not later than the thirtieth day following the Date of Termination,
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the Executive on
such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the sixtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive payable on the fifth day after demand
by the Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
f. The Executive shall not be required to mitigate the amount of
any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by the Executive as the result of employment
by another employer, or otherwise. Notwithstanding the preceding sentence,
benefits otherwise receivable by the Executive pursuant to Section 5(e)(v) above
shall be reduced to the extent comparable benefits are actually received by the
Executive from the plan or plans of any subsequent employer or from any program
maintained by any governmental body not requiring contribution by the Executive,
and any such benefits actually received by the Executive shall be reported to
the Company.
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<PAGE>
g. The Executive hereby acknowledges and agrees that neither the
Company nor any of its representatives or agents will be obligated to pay any
compensation or benefit which the Executive has a right to be paid or provided
to him or his dependents pursuant to this Section 5, unless the Executive, if
requested by the Company in its sole discretion, executes a release in a form
reasonably acceptable to the Company, which releases any and all claims the
Executive or his estate has or may have against the Company or its subsidiaries,
agents, officers, directors, successors or assigns by reason of this Agreement
or his employment by the Company or the termination of that employment.
6. Retirement
----------
Nothing contained in this Agreement shall be deemed to limit the
Executive's ability to retire for any reason and to receive benefits under the
Company's retirement policies and pension plan for salaried employees, if any,
and to thereby receive all benefits for which he is eligible under such plans
and any other plan, program or arrangement relating to retirement.
7. Indemnification
---------------
a. The Company shall indemnify and hold harmless to the full extent
not prohibited by law, as the same exists or may hereinafter be amended,
interpreted or implemented (but, in the case of any amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than the Company is permitted to provide prior to such
amendment), the Executive or his estate if made a party to, or threatened to be
made a party to, or is otherwise involved in (as a witness or otherwise) any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative and whether or not by
14
<PAGE>
or in the right of the Company or otherwise (hereinafter, a "proceeding"), by
reason of the fact that he, or a person of whom he is the heir, executor, or
administrator, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer or trustee of
another Company or of a partnership, joint venture, trust or other enterprise
(including, without limitation, service with respect to employee benefit plans),
or where the basis of such proceeding is any alleged action or failure to take
any action by the Executive while acting in an official capacity as a director
or officer of the Company or in any other capacity on behalf of the Company,
against all expenses, liability and loss, including but not limited to
attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or
to be paid in settlement whether with or without court approval, actually
incurred or paid by the Executive in connection therewith.
b. Notwithstanding the foregoing, and except as provided in Section
7(e) below, the Company shall indemnify the Executive seeking indemnification in
connection with a proceeding (or part thereof) initiated by the Executive only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Company.
c. Subject to the limitation set forth above concerning proceedings
initiated by the Executive, the right to indemnification conferred in this
Section 7 shall be a contract right and shall include the right to be paid by
the Company the expenses incurred in defending any such proceeding (or part
thereof) or in enforcing his rights under this Section 7 in advance of the
final disposition thereof promptly after receipt by the Company of a request
therefor stating in reasonable detail the expenses incurred; provided, however,
that to the extent required by law, the payment of such expenses incurred by the
Executive in advance of the final disposition of a
15
<PAGE>
proceeding shall be made only upon receipt of an undertaking, by or on behalf of
the Executive, to repay all amounts so advanced if and to the extent it shall
ultimately be determined by a court that he is not entitled to be indemnified by
the Company under this Section 7, or in the case of a criminal action, the
majority of the Board of Directors so determines that he is not entitled to be
indemnified by the Company, or otherwise.
d. The right to indemnification and advancement of expenses provided
herein shall continue as to the Executive after he has ceased to be employed by
the Company or to serve in any of the other capacities described herein, and
shall inure to the benefit of his heirs, executors and administrators.
e. Any dispute related to the right to indemnification, contribution
or advancement of expenses as provided under this Section 7, that the Company
has undertaken to submit to a court for adjudication, shall be decided only by
arbitration in the metropolitan area in which the principal executive offices of
the Company are located at the time, in accordance with the commercial
arbitration rules, then in effect, of the American Arbitration Association,
before a panel of three (3) arbitrators, one of whom shall be selected by the
Company, the second of whom shall be selected by the Executive and the third of
whom shall be selected by the other two (2) arbitrators. In the absence of the
American Arbitration Association, or if for any reason arbitration under the
arbitration rules of the American Arbitration Association cannot be initiated,
or if one of the parties fails or refuses to select an arbitrator or if the
arbitrators selected by the Company and the Executive cannot agree on the
selection of the third arbitrator within thirty (30) days after such time as the
Company and the Executive have each been notified of the selection of
16
<PAGE>
the other's arbitrator, the necessary arbitrator(s) shall be selected by the
presiding judge of the court of general jurisdiction in such metropolitan area.
f. The Company shall reimburse the Executive for the expenses
(including attorneys' fees and disbursements) incurred in successfully
prosecuting or defending such arbitration.
g. Any award entered by the arbitrators shall be final, binding and
non-appealable and judgment may be entered thereon by any party in accordance
with applicable law in any court of competent jurisdiction. The right to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of a final disposition conferred in this Section 7 shall not be
deemed exclusive of any other rights to which the Executive may be entitled
under the articles of incorporation, any bylaw, agreement, vote of shareholders,
vote of directors or otherwise, both as to actions in his official capacity and
as to actions in any other capacity while holding that office.
8. Non-Competition. During the term of this Agreement and for two years
---------------
after the Date of Termination, including without limitation termination by the
Company for cause or without cause, the Executive shall refrain from competing
with the Company or any subsidiary of the Company except with the Company's
prior written consent. The phrase "refrain from competing with the Company or
any subsidiary of the Company" shall mean that the Executive will not engage,
directly or indirectly (including, by way of example only, as a principal,
partner, venturer, employee or agent) nor have any direct or indirect interest
in any enterprise (a "Competing Enterprise") which competes with the Company or
any subsidiary thereof by
17
<PAGE>
providing information technology consultants to clients on an independent
contractor basis. It is agreed that the foregoing provisions shall not restrict
the Executive from either (i) being a director of or having any investments or
other interests in an enterprise which is not a competing enterprise, or (ii)
having any investments in any competing enterprise the stock of which is listed
on a national securities exchange or traded publicly over-the-counter so long as
such investment does not give the Executive more than five percent (5%) of the
voting stock of such enterprise.
9. Non-Solicitation of Customers and Suppliers. Executive agrees that
-------------------------------------------
during his employment with the Company he shall not, directly or indirectly,
solicit the trade of, or trade with, any customer, prospective customer,
supplier, or prospective supplier of the Company for any business purpose other
than for the benefit of the Company. Executive further agrees that for two (2)
years following termination of his employment with the Company, including
without limitation termination by the Company for cause or without cause,
Executive shall not, directly or indirectly, solicit the trade of, or trade
with, any customers or suppliers, or prospective customers or suppliers, of the
Company except in instances where the Company has not solicited the potential
client in the past or where the services proposed to be offered by the Executive
are not then offered by the Company.
10. Non-Solicitation of Employees. Executive agrees that, during his
-----------------------------
employment with the Company and for two (2) years following termination of
Executive's employment with the Company, including without limitation
termination by the Company for cause or without cause, Executive shall not,
directly or indirectly, solicit or induce, or attempt to solicit or induce,
18
<PAGE>
any employee of the Company to leave the Company for any reason whatsoever, or
hire any employee of the Company.
11. Confidentiality. The Executive agrees:
---------------
a. To keep secret all confidential matters of the Company and its
subsidiaries and affiliates and not to disclose them to anyone outside the
Company or its subsidiaries and affiliates, either during or after his
employment with the Company, except with the Company's prior written consent or
as required by law; and
b. To deliver promptly to the Company on termination of Executive's
employment with the Company all memoranda, notes, records, reports and other
documents (and all copies thereof) with respect to any such confidential matters
and other proprietary information (such as customers lists, suppliers lists,
etc.) which the Executive may then possess or have under his control.
For purposes of this Section 11, all information which is not publicly
available shall be deemed to be confidential and covered by the foregoing
provisions.
12. Arbitration. Any disputes hereunder shall be settled by arbitration
-----------
in Pittsburgh, Pennsylvania under the auspices of, and in accordance with the
rules of, the American Arbitration Association, and the decision in such
arbitration shall be final and conclusive on the parties and judgment upon such
decision may be entered in any court having jurisdiction thereof.
19
<PAGE>
13. Notices. All notices and other communications which are required or
-------
may be given under this Agreement shall be in writing and shall be delivered
personally or by registered or certified mail addressed to the party concerned
at the following addresses:
If to the Company:
Mastech Corporation
1004 McKee Road
Oakdale, PA 15071
If to the Executive:
or to such other address as shall be designated by notice in writing to the
other party in accordance herewith. Notices and other communications hereunder
shall be deemed effectively given when personally delivered, or, if sent by
overnight courier, upon receipt, or, if mailed, 48 hours after deposit in the
United States first class mail, postage prepaid.
14. Miscellaneous.
-------------
a. This Agreement supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof.
b. (i) This Arrangement shall inure to the benefit of the
Executive's heirs, representatives or estate to the extent stated herein.
(ii) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
20
<PAGE>
Company would be required to perform if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as defined in the
preamble to this Agreement and any successor to its business or assets which
executes and delivers the agreement provided for in this Subsection 14 (b) (ii)
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
c. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any
time or times to require performance of any provisions hereof shall in no manner
affect the right at a later time to enforce such provisions thereafter. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach or a waiver of the breach of any other term or covenant contained in this
Agreement.
d. In the event any one or more of the covenants, terms or
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity of the remaining covenants, terms and
provisions contained herein shall be in no way affected, prejudiced or disturbed
thereby.
e. This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Subsection 14(b) above. Without limiting the foregoing, the Executive's right
to receive payments hereunder shall not be assignable or
21
<PAGE>
transferable, whether by pledge, creation of a security interest or otherwise,
other than a transfer by his will or by the laws of descent or distribution, and
in the event of any attempted assignment or transfer contrary to this Subsection
14(e) the Company shall have no liability to pay any amount so attempted to be
assigned or transferred.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
ATTEST: MASTECH CORPORATION:
By:________________________ By:_________________________
Secretary Ashok Trivedi
Co-Chairman and President
WITNESS: EXECUTIVE:
___________________________ ____________________________
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<PAGE>
Exhibit 10.2
Mastech Corporation
1996 STOCK INCENTIVE PLAN
Section 1. General Purpose of the Plan; Definitions. The name of the
plan is the Mastech Corporation 1996 Stock Incentive Plan (the "Plan"). The
purpose of the Plan is to encourage and enable the officers, employees,
directors and consultants of Mastech Corporation (the "Company") and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Stock Awards, Performance Share Awards and
Stock Appreciation Rights.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Effective Date" means the date on which the Plan is approved by the
stockholders as set forth in Section 19.
"Fair Market Value" of the Stock on any given date means (i) if the Stock
is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the Fair Market Value on any given date
shall be the average of the highest bid and lowest asked prices of the Stock
reported for such date or, if no bid and asked prices were reported for such
date, for the last day preceding such date for which such prices were reported,
or (ii) if the Stock is admitted to trading on a United States securities
exchange or the NASDAQ National Market System, the Fair Market Value on any date
shall be the closing price reported for the Stock on such exchange or system for
such date or, if no sales were reported for such date, for the last day
preceding such date for which a sale was reported; (iii) notwithstanding the
foregoing, the Fair Market Value of the Stock on the effective date of the
Initial Public Offering shall be the offering price to the public of the Stock
on such date; and (iv) if the Fair Market Value cannot be determined on the
basis previously set forth in this definition on the date that
<PAGE>
Fair Market Value is to be determined, The Board shall in good faith determine
the Fair Market Value of the Stock on such date.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not an employee
or officer of the Company or any Subsidiary.
"Initial Public Offering" means the first underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Stock to the public.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any Option to purchase shares of Stock
granted pursuant to Section 6.
"Performance Share Award" means any Award granted pursuant to Section 12.
"Restricted Stock Award" means any Award granted pursuant to Section 10.
"Stock" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 14.
"Stock Appreciation Right" or "SAR" means any Award granted pursuant to
Section 7.
"Stock Award" means any award granted pursuant to Section 11.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
Section 2. Administration. The Plan shall be administered by the full
Board of Directors of the Company or a committee of such Board of Directors
comprised of two or more "Non-Employee Directors" within the meaning of Rule
16b-3(a)(3) promulgated under the Act (the "Plan Administrator"). Subject to the
provisions of the Plan, the Plan Administrator is authorized to:
(a) construe the Plan and any Award under the Plan;
(b) select the directors, officers, employees and consultants of the
Company and its Subsidiaries to whom Awards may be granted;
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<PAGE>
(c) determine the number of shares of Stock to be covered by any Award;
(d) determine and modify from time to time the terms and conditions,
including restrictions, of any Award and to approve the form of
written instrument evidencing Awards;
(e) accelerate at any time the exercisability or vesting of all or any
portion of any Award and/or to include provisions in awards providing
for such acceleration;
(f) impose limitations on Awards, including limitations on transfer and
repurchase provisions;
(g) extend the exercise period within which Stock Options may be
exercised; and
(h) determine at any time whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or
credit amounts constituting interest (at rates determined by the Plan
Administrator) or dividends or deemed dividends on such deferrals.
The determination of the Plan Administrator on any such matters shall be
conclusive.
Section 3. Delegation of Authority to Grant Awards. The Plan
Administrator, in its discretion, may delegate to the Co-Chairmen of the Company
all or part of the Plan Administrator's authority and duties with respect to
granting Awards to individuals who are not subject to the reporting provisions
of Section 16 of the Act or "covered employees" within the meaning of Section
162(m) of the Code. The Plan Administrator may revoke or amend the terms of such
a delegation at any time, but such revocation shall not invalidate prior actions
of the Co-Chairmen that were consistent with the terms of the Plan.
Section 4. Eligibility. Directors, officers, employees and consultants of
the Company or its Subsidiaries who, in the opinion of the Plan Administrator,
are mainly responsible for the continued growth and development and future
financial success of the business shall be eligible to participate in the Plan.
In addition, Independent Directors are eligible to receive an automatic grant of
Stock Options pursuant to Section 9 hereof.
Section 5. Shares Subject to the Plan. The initial number of shares of
Stock which may be issued pursuant to the Plan shall be 2,850,000. For purposes
of the foregoing limitation, the shares of Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the number of shares of Stock available for issuance under the Plan.
Notwithstanding the foregoing, on and after the date that the Plan is subject to
Section 162(m) of the Code, Stock Options with respect to no more than 200,000
shares of Stock may be
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<PAGE>
granted to any one individual participant during any one calendar year period.
To the extent that an SAR is granted in conjunction with an Option, the shares
covered by such SAR and Option shall be counted only once. Common Stock to be
issued under the Plan may be either authorized and unissued shares or shares
held in treasury by the Company.
Section 6. Stock Options. Options granted pursuant to the Plan may be
either Options which are Incentive Stock Options or Non-Qualified Stock Options.
Incentive Stock Options and Non-Qualified Stock Options shall be granted
separately hereunder. The Plan Administrator, shall determine whether and to
what extent Options shall be granted under the Plan and whether such Options
granted shall be Incentive Stock Options or Non-Qualified Stock Options;
provide, however, that: (a) Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code; and (b) No Incentive Stock
Option may be granted following the tenth anniversary of the effective date of
the Plan. The provisions of the Plan and any stock Option agreement pursuant to
which Incentive Stock Options shall be issued shall be construed in a manner
consistent with Section 422 of the Code (or any successor provision) and rules
and regulations promulgated thereunder.
Section 7. Stock Appreciation Rights. The Plan Administrator may, from
time to time, subject to the provisions of the Plan, grant SARs to eligible
participants. Such SARs may be granted (i) alone, (ii) simultaneously with the
grant of an Option (either an Incentive Stock Option or Non-Qualified Stock
Option) and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of a Non-Qualified Stock Option and in conjunction
therewith or in the alternative thereto.
(a) An SAR shall entitle the holder upon exercise thereof to receive
from the Company, upon a written request filed with the Secretary
of the Company at its principal offices (the "Request"), (i) a
number of shares of Stock (with or without restrictions as to
substantial risk of forfeiture and transferability, as determined
by the Plan Administrator in its sole discretion), (ii) an amount
of cash, or (iii) any combination of shares of Stock and cash, as
specified in the Request (but subject to the approval of the Plan
Administrator in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash
payment), having an aggregate Fair Market Value equal to the
product of (i) the excess of the Fair Market Value, on the day of
such Request, of one share of Stock over the exercise price per
share specified in such SAR or its related Option, multiplied by
(ii) the number of shares of Stock for which such SAR shall be
exercised.
(b) The exercise price of an SAR granted alone shall be determined
by the Plan Administrator, but may not be less than the Fair
Market Value of the underlying Stock on the date of grant. An SAR
granted simultaneously with or subsequent to the grant of an
Option and in conjunction therewith or in the alternative thereto
shall have the same exercise price as the
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<PAGE>
related Option, shall be transferable only upon the same terms
and conditions as the related Option, and shall be exercisable
only to the same extent as the related Option; provided, however,
-------- -------
that an SAR, by its terms, shall be exercisable only when the
Fair Market Value of the Stock subject to the SAR and related
Option exceeds the exercise price thereof.
(c) Upon exercise of an SAR granted simultaneously with or
subsequent to an Option and in the alternative thereto, the
number of shares of Stock for which the related Option shall be
exercisable shall be reduced by the number of shares of Stock for
which the SAR shall have been exercised. The number of shares of
Stock for which an SAR shall be exercisable shall be reduced upon
any exercise of a related Option by the number of shares of Stock
for which such Option shall have been exercised.
(d) Any SAR shall be exercisable upon such additional terms and
conditions as may be prescribed by the Plan Administrator.
Section 8. Terms of Options and SARs. Each Option or SAR granted under
the Plan shall be evidenced by an agreement between the Company and the person
to whom such Option or SAR is granted and shall be subject to the following
terms and conditions:
(a) Subject to adjustment as provided in Section 14 of this Plan,
the price at which each share covered by an Option may be
purchased shall be determined in each case by the Plan
Administrator; provided, however, that such price shall not, in
the case of an Incentive Stock Option, be less than the Fair
Market Value of the underlying Stock at the time the Option is
granted. If an optionee owns (or is deemed to own under
applicable provisions of the Code and rules and regulations
promulgated thereunder) more than ten percent (10%) of the
combined voting power of all classes of the stock of the Company
and an Option granted to such optionee is intended to qualify as
an Incentive Stock Option, the Option price shall be no less than
110% of the Fair Market Value of the Common Stock covered by the
Option on the date the Option is granted.
(b) The aggregate Fair Market Value of shares of Stock with respect
to which Incentive Stock Options are first exercisable by the
optionee in any calendar year (under all plans of the Company)
shall not exceed the limitations, if any, imposed by Section
422(d) of the Code (or any successor provision). If any Option
designated as an Incentive Stock Option, either alone or in
conjunction with any other Option or Options, exceeds the
foregoing limitation, the portion of such Option in excess of
such limitation shall automatically be reclassified (in whole
share increments and without fractional share portions) as a Non-
Qualified Stock Option, with later granted Options being so
reclassified first.
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<PAGE>
(c) Neither an Option nor an SAR shall be transferable by the
participant otherwise than by will or by the laws of descent and
distribution or pursuant to a domestic relations order. After the
death of the participant, the Option or SAR may be transferred to
the Company upon such terms and conditions, if any, as the Plan
Administrator and the personal representative or other person
entitled to exercise the Option or SAR may agree within the
period specified in subsection 8(d)(iii) hereof.
(d) An Option or SAR may be exercised in whole at any time, or in
part from time to time, within such period or periods (not to
exceed ten years from the granting of the Option in the case of
an Incentive Stock Option) as may be determined by the Plan
Administrator and set forth in the agreement (such period or
periods being hereinafter referred to as the "Option Period"),
provided that, unless the agreement provides otherwise:
(i) If a participant who is an employee of the Company shall
cease to be employed by the Company, all Options and SARs to
which the employee is then entitled to exercise may be
exercised only within three months after the termination of
employment and within the Option Period or, if such
termination was due to disability or retirement (as
hereinafter defined), within one year after termination of
employment and within the Option Period. Notwithstanding the
foregoing: (a) in the event that any termination of
employment shall be for Cause (as defined herein) or the
participant becomes an officer or director of, a consultant
to or employed by a Competing Business (as defined herein),
during the Option Period, then any and all Options and SARs
held by such participant shall forthwith terminate; and(b)
the Plan Administrator may, in its sole discretion, extend
the Option Period of any Option or SAR for up to three years
from the date of termination of employment regardless of the
original Option Period. For purposes of the Plan, retirement
shall mean the termination of employment with the Company,
other than for Cause, at any time after the age 65.
For purposes of this Plan, the term "Cause" shall mean (a)
with respect to an individual who is party to a written
agreement with the Company which contains a definition of
"cause" or "for cause" or words of similar import for
purposes of termination of employment thereunder by the
Company, "cause" or "for cause" as defined in such
agreement; (b) in all other cases (I) the willful commission
by an employee of a criminal or other act that causes
substantial economic damage to the Company or substantial
injury to the business reputation of the Company; (II) the
commission of an act of fraud in the performance of such
person's duties to or on
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<PAGE>
behalf of the Company; or (III) the continuing willful
failure of a person to perform the duties of such person to
the Company (other than a failure to perform duties
resulting from such person's incapacity due to illness)
after written notice thereof (specifying the particulars
thereof in reasonable detail) and a reasonable opportunity
to cure such failure are given to the person by the Board of
Directors of the Company or the Plan Administrator. For
purposes of the Plan, no act, or failure to act, on the part
of any person shall be considered "willful" unless done or
omitted to be done by the person other than in good faith
and without reasonable belief that the person's action or
omission was in the best interest of the Company.
For purposes of this Plan, the term "Competing Business"
shall mean: any person, corporation or other entity engaged
in the business of (a) providing information technology
services or (b) selling or attempting to sell any product or
service which is the same as or similar to products or
services sold by the Company within the last year prior to
termination of such person's employment, consultant
relationship or directorship, as the case may be, hereunder.
(ii) If a participant who is a director of the Company shall
cease to serve as a director of the Company, any Options or
SARs then exercisable by such director may be exercised only
within three months after the cessation of service and
within the Option Period unless such cessation was due to
disability, in which case such optionee may exercise such
Option or SAR within one year after cessation of service and
within the Option Period. Notwithstanding the foregoing: (a)
if any cessation of service as a director was the result of
removal for Cause or the participant becomes an officer or
director of, a consultant to or employed by a Competing
Business during the Option Period, any Options and SARs held
by such participant shall forthwith terminate; and (b) the
Plan Administrator may in its sole discretion extend the
Option Period of any Option or SAR for up to three years
from the date of cessation of service regardless of the
original Option Period;
(iii) If the participant shall die during the Option Period, any
Options or SARs then exercisable may be exercised only
within one year after the participant's death and within the
Option Period and only by the participant's personal
representative or persons entitled thereto under the
participant's will or the laws of descent and distribution;
-7-
<PAGE>
(iv) The Option or SAR may not be exercised for more shares
(subject to adjustment as provided in Section 14) after the
termination of the participant's employment, cessation of
service as a director or the participant's death, as the
case may be, than the participant was entitled to purchase
thereunder at the time of the termination of the
participant's employment or the participant's death; and
(v) If a participant owns (or is deemed to own under applicable
provisions of the Code and regulations promulgated
thereunder) more than 10% of the combined voting power of
all classes of stock of the Company (or any parent or
subsidiary corporation of the Company) and an Option granted
to such participant is intended to qualify as an Incentive
Stock Option, the Option by its terms may not be exercisable
after the expiration of five years from the date such Option
is granted.
(e) The Option exercise price of each share purchased pursuant to
an Option shall be paid in full at the time of each exercise (the
"Payment Date") of the Option (i) in cash; (ii) by delivering to
the Company a notice of exercise with an irrevocable direction to
a broker-dealer registered under the Act to sell a sufficient
portion of the shares and deliver the sale proceeds directly to
the Company to pay the exercise price; (iii) in the discretion of
the Plan Administrator, through the delivery to the Company of
previously-owned shares of Common Stock having an aggregate Fair
Market Value equal to the Option exercise price of the shares
being purchased pursuant to the exercise of the Option; provided,
however, that shares of Common Stock delivered in payment of the
Option price must have been held by the participant for at least
six (6) months in order to be utilized to pay the Option price;
(iv) in the discretion of the Plan Administrator, through an
election to have shares of Common Stock otherwise issuable to the
optionee withheld to pay the exercise price of such Option; or
(v) in the discretion of the Plan Administrator, through any
combination of the payment procedures set forth in subsections
(i)-(iv) of this Section 8(e).
(f) The Plan Administrator, in its discretion, may authorize "stock
retention Options" which provide, upon the exercise of an Option
previously granted under this Plan (a "prior Option"), using
previously owned shares, for the automatic issuance of a new
Option under this Plan with an exercise price equal to the
current Fair Market Value and for up to the number of shares
equal to the number of previously-owned shares delivered in
payment of the exercise price of the prior Option. Such stock
retention Option shall have the same Option Period as the prior
Option.
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<PAGE>
(g) Nothing contained in the Plan nor in any Award agreement shall
confer upon any participant any right with respect to the
continuance of employment by the Company nor interfere in any way
with the right of the Company to terminate his employment or
change his compensation at any time.
(h) The Plan Administrator may include such other terms and
conditions not inconsistent with the foregoing as the Plan
Administrator shall approve. Without limiting the generality of
the foregoing sentence, the Plan Administrator shall be
authorized to determine that Options or SARs shall be exercisable
in one or more installments during the term of the Option,
subject to the attainment of performance goals and objectives and
the right to exercise may be cumulative as determined by the Plan
Administrator.
Section 9. Independent Director Options. Anything to the contrary
notwithstanding, each Independent Director who is first elected or appointed to
serve as a director commencing after the effective time of the Initial Public
Offering shall automatically be granted Non-Qualified Stock Options to purchase
15,000 shares of Stock. The Option exercise price for Options granted to
Independent Directors under the Plan will be equal the Fair Market Value of the
Stock on the date of grant. Options granted to Independent Directors under the
foregoing provisions will be granted on the date that such Independent Director
is first elected or appointed to serve as a director and will vest in equal
annual installments over three years commencing on the anniversary of the date
of grant and will expire ten years after grant, subject to earlier termination
if the optionee ceases to serve as a director.
Section 10. Restricted Stock Awards.
(a) The Plan Administrator may grant Restricted Stock Awards to any
officer, employee or consultant of the Company and its
Subsidiaries. A Restricted Stock Award entitles the recipient to
acquire shares of Stock subject to such restrictions and
conditions as the Plan Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) Upon execution of a written instrument setting forth the
Restricted Stock Award and paying any applicable purchase price,
a participant shall have the rights of a shareholder with respect
to the Stock subject to the Restricted Stock Award, including,
but not limited to the right to vote and receive dividends with
respect thereto; provided, however, that shares of Stock subject
to Restricted Stock Awards that have not vested shall be subject
to the restrictions on transferability described in Section 10(d)
below. Unless the Plan Administrator shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the
possession
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of the Company until such Restricted Stock is vested
as provided in Section 10(c) below.
(c) The Plan Administrator at the time of grant shall specify the
date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which
Restricted Stock shall become vested, subject to such further
rights of the Company or its assigns as may be specified in the
instrument evidencing the Restricted Stock Award. If the grantee
or the Company, as the case may be, fails to achieve the
designated goals or the grantee's relationship with the Company
is terminated prior to the expiration of the vesting period, the
grantee shall forfeit all shares of Stock subject to the
Restricted Stock Award which have not then vested.
(d) Unvested Restricted Stock may not be sold, assigned transferred,
pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument
evidencing the Restricted Stock Award.
Section 11. Stock Awards. The Plan Administrator may, in its sole
discretion, grant (or sell at a purchase price determined by the Plan
Administrator) a Stock Award to any officer, employee or consultant of the
Company or its Subsidiaries, pursuant to which such individual may receive
shares of Stock free of any vesting restrictions (a "Stock Award") under the
Plan. Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such individual.
Section 12. Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Plan Administrator may make Performance Share
Awards independent of or in connection with the granting of any other Award
under the Plan. Performance Share Awards may be granted under the Plan to any
officer, employee or consultant of the Company or its Subsidiaries, including
those who qualify for awards under other performance plans of the Company. The
Plan Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Plan Administrator may rely on the performance goals
and other standards applicable to other performance plans of the Company in
setting the standards for Performance Share Awards under the Plan.
Section 13. Tax Withholding.
(a) Whenever shares are to be issued or cash is to be paid under the
Plan, the Company shall have the right to require the participant
to remit to the Company an amount sufficient to satisfy federal,
state and local tax withholding requirements prior to the
delivery of any certificate for shares or any proceeds; provided,
however, that in the case of a participant who receives an Award
of shares under the Plan which is not fully vested, the
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participant shall remit such amount on the first business day
following the Tax Date. The "Tax Date" for purposes of this
Section 13 shall be the date on which the amount of tax to be
withheld is determined. If a participant makes a disposition of
shares acquired upon the exercise of an Incentive Stock Option
within either two years after the Option was granted or one year
after its exercise by the participant, the participant shall
promptly notify the Company and the Company shall have the right
to require the participant to pay to the Company an amount
sufficient to satisfy federal, state and local tax withholding
requirements.
(b) A participant who is obligated to pay the Company an amount
required to be withheld under applicable tax withholding
requirements may pay such amount (i) in cash; (ii) in the
discretion of the Plan Administrator, through the delivery to the
Company of previously-owned shares of Common Stock having an
aggregate Fair Market Value on the Tax Date equal to the tax
obligation provided that the previously owned shares delivered in
satisfaction of the withholding obligations must have been held
by the participant for at least six (6) months; or (iii) in the
discretion of the Plan Administrator, through a combination of
the procedures set forth in subsections (i) and (ii) of this
Section 13(b).
(c) A participant who is obligated to pay to the Company an amount
required to be withheld under applicable tax withholding
requirements in connection with either the exercise of a Non-
Qualified Stock Option, or the receipt of a Restricted Stock
Award, Stock Award or Performance Share Award under the Plan may,
in the discretion of the Plan Administrator, elect to satisfy
this withholding obligation, in whole or in part, by requesting
that the Company withhold shares of stock otherwise issuable to
the participant having a Fair Market Value on the Tax Date equal
to the amount of the tax required to be withheld; provided,
however, that shares may be withheld by the Company only if such
withheld shares have vested. Any fractional amount shall be paid
to the Company by the participant in cash or shall be withheld
from the participant's next regular paycheck.
(d) An election by a participant to have shares of stock withheld to
satisfy federal, state and local tax withholding requirements
pursuant to Section 13(c) must be in writing and delivered to the
Company prior to the Tax Date.
Section 14. Adjustment of Number and Price of Shares.
Any other provision of the Plan notwithstanding:
(a) If, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company,
reorganization,
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recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding
shares of Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other
securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other
securities, the Plan Administrator shall make an appropriate or
proportionate adjustment in (i) the number of Stock Options that
can be granted to any one individual participant, (ii) the number
and kind of shares or other securities subject to any then
outstanding Awards under the Plan, and (iii) the price for each
share subject to any then outstanding Stock Options under the
Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of shares) as to which
such Stock Options remain exercisable. The adjustment by the Plan
Administrator shall be final, binding and conclusive.
(b) In the event that, by reason of a corporate merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board of Directors shall
authorize the issuance or assumption of a stock Option or stock
Options in a transaction to which Section 424(a) of the Code
applies, then, notwithstanding any other provision of the Plan,
the Plan Administrator may grant an Option or Options upon such
terms and conditions as it may deem appropriate for the purpose
of assumption of the old Option, or substitution of a new Option
for the old Option, in conformity with the provisions of Code
Section 424(a) and the rules and regulations thereunder, as they
may be amended from time to time.
(c) No adjustment or substitution provided for in this Section 14
shall require the Company to issue or to sell a fractional share
under any stock Option agreement or share award agreement and the
total adjustment or substitution with respect to each stock
Option and share award agreement shall be limited accordingly.
(d) In the case of (i) the dissolution or liquidation of the
Company, (ii) a merger, reorganization or consolidation in which
the Company is acquired by another person or entity (other than a
holding company formed by the Company), (iii) the sale of all or
substantially all of the assets of the Company to an unrelated
person or entity, or (iv) the sale of all of the stock of the
Company to a unrelated person or entity (in each case, a
"Fundamental Transaction"), the Plan and all Awards granted
hereunder shall terminate, unless provision is made in connection
with the Fundamental Transaction for the assumption of the Awards
heretofore granted, or the substitution of such Awards with new
awards of the successor entity, with appropriate adjustment as to
the number and kind of shares and, if appropriate, the per share
exercise price as provided in
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Subsections (a) and (b) of this Section 14. In the event of such
termination each participant shall be notified of such proposed
termination and permitted to exercise for a period of at least 15
days prior to the date of such termination all Options and SARs
held by such participant which are then exercisable.
Section 15. Amendment and Discontinuance. The Board of Directors may
alter, amend, suspend or discontinue the Plan, provided that no such action
shall deprive any person without such person's consent of any rights theretofore
granted pursuant hereto.
Section 16. Compliance with Governmental Regulations. Notwithstanding any
provision of the Plan or the terms of any agreement entered into pursuant to the
Plan, the Company shall not be required to issue any shares hereunder prior to
registration of the shares subject to the Plan under the Securities Act of 1933
or the Act, if such registration shall be necessary, or before compliance by the
Company or any participant with any other provisions of either of those acts or
of regulations or rulings of the Securities and Exchange Commission thereunder,
or before compliance with other federal and state laws and regulations and
rulings thereunder, including the rules any applicable exchange or of the Nasdaq
Stock Market. The Company shall use its best efforts to effect such
registrations and to comply with such laws, regulations and rulings forthwith
upon advice by its counsel that any such registration or compliance is
necessary.
Section 17. Compliance with Section 16. With respect to persons subject
to Section 16 of the Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 (or its successor rule and shall be
construed to the fullest extent possible in a manner consistent with this intent
). To the extent that any Award fails to so comply, it shall be deemed to be
modified to the extent permitted by law and to the extent deemed advisable by
the Plan Administrator in order to comply with Rule 16b-3. .
Section 18. Participation by Foreign Nationals. The Plan Administrator
may, in order to fulfill the purposes of the Plan and without amending the Plan,
modify grants to foreign nationals or United States citizens employed abroad in
order to recognize differences in local law, tax policy or custom.
Section 19. Effective Date of Plan. The Plan became effective on November
__, 1996, the date of approval and adoption of the Plan by requisite vote of the
holders of the outstanding shares of Stock.
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<PAGE>
Exhibit 10.14
SUBLEASE
THIS SUBLEASE is made this ___________ day of February, 1995, between
WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania corporation with its principal
office at Westinghouse Building, Gateway Center, Pittsburgh, Pennsylvania 15222
(hereinafter called "Sublessor"), and MASTECH CORPORATION, a Pennsylvania
corporation with its principal office at 2090 Greentree Road, Pittsburgh,
Pennsylvania 15220 (hereinafter called "Sublessee") and
WITNESSETH:
-----------
WHEREAS Greyhound Leasing & Financial Corporation (hereinafter called
"Lessor") and Sublessor entered into a Lease Agreement dated November 15, 1985
(hereinafter called "Lease") for certain land and improvements located in North
Fayette Township, Allegheny County, Pennsylvania, known as 1000 McKee Road,
Oakdale, Pennsylvania, as more fully described in Exhibit A attached hereto and
made a part hereof (hereinafter called "Premises"), and
WHEREAS, Sublessor desires to sublease a portion of the leased premises to
Sublessee.
NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND, THE PARTIES HEREBY AGREE AS
FOLLOWS:
1. PREMISES:
That for and in consideration of the payment by Sublessee of the rent
hereinafter reserved and the performance by Sublessee of the covenants and
agreements hereinafter agreed to be performed by it, and in accordance with all
of the provisions hereinafter set forth, Sublessor does hereby let and demise
unto Sublessee and Sublessee does hereby take and hire from Sublessor,
<PAGE>
an amount agreed to be 21,996 rentable square feet in the Premises as more fully
set forth and outlined in yellow on Exhibit B attached hereto and made a part
hereof (hereinafter called the "Subleased Premises") together with the
furnishings, fixtures and equipment, located thereon (including, without
limitation, those items of furnishings and equipment which are listed on Exhibit
C attached hereto and made a part hereof) and with all the rights, easements and
appurtenances thereto or therewith usually held and enjoyed, and use of the
Common Areas as more fully described in Section 7(d) below, for a term beginning
on the later of (1) the first day that Sublessee takes possession of any portion
of the Subleased Premises, or (2) January 15, 1995 (but in no event later than
June 1, 1995) and ending on May 31, 2000, and subject to renewal and extension
by Sublessee as hereinafter provided. Notwithstanding the foregoing, Sublessee
has the right to take possession of the Subleased Premises in increments of
useable square feet at its reasonable discretion. No rent shall be payable by
Sublessee from the commencement of the lease term until June 1, 1995.
2. RENT:
(a) Sublessee shall pay Sublessor rent, in advance, without notice or
demand in equal monthly payments, on or before the first day of each month,
during the period of time indicated below at the following rates:
Lease Term Rental Rate
June 1, 1995 - May 31, 1997 $14.00 per rentable square foot per year
June 1, 1997 - May 31, 1999 $15.00 per rentable square foot per year
June 1, 1999 - May 31, 2000 $16.00 per rentable square foot per year
The total rentable square feet of 21,996 shall be multiplied by
Fourteen Dollars ($14.00) to produce the annual base rent for the initial two
years of the term of the Sublease and
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thereafter the total rentable square feet shall be multiplied by the rental rate
indicated in the schedule above to determine the annual base rental payable by
Sublessee. The applicable annual rent shall be divided by 12 to determine the
monthly rent payable by Sublessee.
(b) Any additional sum Sublessee is required to pay Sublessor under the
terms of this Sublease is designated as Additional Rent.
(c) The obligation to pay rent including Additional Rent hereunder is an
independent covenant of the Sublessee and such payment shall be net of any other
obligation Sublessee may have and shall be made without demand, offset or
counterclaim.
(d) Except as specifically set forth herein, Sublessor's only obligations
are as set forth in this Sublease and Sublessee indemnifies Sublessor of all
costs and liabilities incurred by Sublessor on account of Sublessee's tenancy of
the Subleased Premises or failure of Sublessee to perform any of its obligations
hereunder.
(e) Any rent and/or additional rent shall be paid to Sublessor at 11
Stanwix Street, Pittsburgh, Pennsylvania 15222, Attention: G. Segner.
3. SECURITY DEPOSIT:
Sublessor acknowledges receipt from Sublessee of the sum of $30,000.00 to
be held as security for the payment of any rent and all other sums of money
payable by Sublessee under this Sublease and for the faithful performance of all
covenants of Sublessee hereunder. The amount of such security deposit, without
interest, shall be refunded to Sublessee after termination of this Sublease
provided that Sublessee shall have made all such payments and performed such
covenants. Upon default by Sublessee hereunder, all or part of such security
deposit may, at Sublessor's sole option, be applied on account of such default
and thereafter Sublessee shall
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restore the resulting deficiency in such security deposit upon demand. Sublessee
hereby waives the benefit of any provision of law requiring such security
deposit to be held in escrow, in trust, or in an interest-bearing account and
such security deposit shall be deemed to be the property of Sublessor and may be
commingled with Sublessor's other funds.
4. SUBLESSEE IMPROVEMENTS:
(a) Sublessor shall provide construction of the tenant improvements in
accord with specifications set forth in Exhibit D attached hereto and made a
part hereof, the cost to Sublessor of which shall not exceed $240,000.00, which
sum shall be used for architectural drawings, office design services, working
drawings (including mechanical engineering and plumbing) and furniture work
station relocation and installation. Prior to the full execution of this
Sublease all plans and specifications to be incorporated into this Sublease as
Exhibit D shall be approved in writing by Sublessor. The cost of any work in
Exhibit D in excess of $240,000 as well as for work outside of the scope of work
set forth on Exhibit D shall be to Sublessee's account. Upon Sublessor's
completion of the tenant improvements, Sublessor and Sublessee shall agree on a
punch list of areas of work which were not done to Sublessee's reasonable
satisfaction and Sublessor shall within fifteen (15) days thereafter cause such
punch list items to be corrected and completed. Sublessor agrees to transfer to
Sublessee any warranties it may receive for tenant improvements constructed for
Sublessee.
(b) Sublessor agrees to grant Sublessee a moving allowance of up to
Twenty One Thousand Three Hundred Eighteen and 00/100 ($21,318.00) Dollars.
Sublessor may use such allowance to cover any cost for tenant improvements for
which Sublessee is responsible. The balance of the moving allowance set forth
herein shall be credited to Sublessee against the rentals
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due under the terms of this Sublease in the order that such rentals become due.
To the extent that Sublessee's actual moving expenses do not equal Twenty One
Thousand Three Hundred Eighteen and 00/100 ($21,318.00) Dollars, Sublessor shall
have the right to use the balance of the unused moving allowance toward the
Sublessee Improvements set forth in Section 4 herein.
(c) Sublessor shall provide Sublessee with up to eighty (80) furniture
workstations and all other furnishings which are located on the Subleased
Premises at the time of execution of this Sublease. Sublessee shall have the
right, at the end of the initial term or any renewal term of this Sublease, to
remove and retain the original eighty workstations identified on Exhibit C,
provided that, upon removal, Sublessee shall restore the Subleased Premises as
required in Section 24 hereunder. Title to such work stations shall pass at the
end of the initial term, and Sublessor shall upon request of Sublessee deliver
such bills of sale or other instruments (warranting title and otherwise
disclaiming all warranties whatsoever) as Sublessee may require in order to more
effectively transfer title to Sublessee.
(d) Sublessee, at Sublessee's sole cost and expense, shall have the right
to install a satellite dish either on the property surrounding the building on
the Premises or on the roof of the building, at Sublessor's sole option. In the
event Sublessee desires to install a satellite dish on the Premises, Sublessee
shall advise Sublessor in writing of the proposed placement of the satellite
dish and Sublessor shall notify Sublessee of its approval or disapproval of
Sublessee's request within ten (10) days of Sublessee's request. If Sublessor
approves Sublessee's request, Sublessee shall comply with all of Sublessor's
requirements for the placement, maintenance, repair and restoration of any area
to which the satellite dish is affixed. Sublessee, at its cost and expense will
secure all necessary government approvals and comply with all applicable
government codes and regulations related to the satellite dish.
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5. COMPLIANCE WITH LAWS; USE OF SUBLEASED PREMISES:
Sublessee will use and occupy the Subleased Premises for general office
purposes. Sublessor warrants that the Subleased Premises, after completion of
improvements set forth in Section 4 hereof shall comply with all laws,
ordinances, rules, orders or regulations of any governmental authority excluding
the Americans with Disabilities Act. Thereafter, Sublessee will use the
Subleased Premises in compliance with any and all laws, ordinances, rules,
orders and regulations of any governmental authority (including but not limited
to any mandated repairs or alterations) which are applicable to or arise from
the conduct of Sublessee's business on the Subleased Premises. Nothing herein
shall be interpreted to require Sublessee to make repairs or improvements which
are the responsibility of Sublessor pursuant to the terms of this Sublease.
6. TAXES AND ASSESSMENTS:
(a) During the term of this Sublease, Sublessee shall pay as Additional
Rental its pro rata share of any real estate tax or assessment (allocable to the
land and building of which the Subleased Premises are a part) which is in excess
of the real estate tax or assessment imposed or assessed on the same land and
building for the base tax year. The base tax year shall be the calendar year of
1995.
With respect to any general or special assessments which may be levied
upon or against the Premises, and which may be paid in annual or semi-annual
installments, only the current amount of such installment, prorated for any
partial year, and statutory interest, shall be included within the computation
of taxes for which Sublessee is responsible herein.
(b) Sublessee's share of any increased real estate tax shall be due and
payable thirty (30) days after receipt of billing by Sublessor.
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(c) The Sublessee's proportionate share of any increase or decrease in
real estate tax shall be that percentage derived by dividing the number of
square feet of rentable space subleased by Sublessee (21,996 square feet) by the
total number of square feet of rentable space in the Premises (151,800 square
feet), which percentage is 14.49%.
(d) Sublessor may, in its reasonable discretion, estimate the amount of
taxes next due and collect from Sublessee on a monthly or quarterly basis, at
Sublessor's option, the amount of Sublessee's estimated tax obligation;
provided, however, that such estimate shall reasonably related to the prior tax
year estimate as adjusted for any rate increase announced or publicly considered
by taxing bodies and assessments with respect to the Premises. In the event that
Sublessee has not paid sufficient amount in estimated tax payments to cover its
pro rata share for the year in question, Sublessee shall pay to Sublessor the
full amount of any such shortage within thirty (30) days of date of billing. If
it is established that Sublessee has made an overpayment of its tax obligation
upon such reconciliation, Sublessee shall receive, at Sublessor's option, either
a credit applicable to the next ensuing estimated tax payments, or, a direct
payment of such overpaid amount to Sublessee within thirty (30) days of such
determination. At the end of the Sublease term, Sublessor shall refund any
overpayment to Sublessee attributable to the final lease year.
(e) Sublessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Sublessee contained in the Subleased Premises or elsewhere. When
possible, Sublessee shall cause such trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the real
property of Sublessor. If any of Sublessee's said personal property shall be
assessed with Sublessor's real property, Sublessee shall pay Sublessor taxes
attributable to
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Sublessee within thirty (30) days after receipt of a written statement setting
forth the taxes applicable to Sublessee's property.
(f) In the event it shall not be lawful for Sublessee to reimburse
Sublessor for any of the taxes covered by this Section, the monthly rent payable
to Sublessor under the terms of this Sublease shall be increased by the amount
of the portion allocable to Sublessee so as to net to Sublessor the amount which
would have been receivable by Sublessor if such tax had not been imposed.
7. OPERATING EXPENSE
(a) Tenant shall pay as Additional Rental its proportionate share of any
increase in operating expenses for the Premises of which the Subleased Premises
are a part which may be sustained by Sublessor during the term of this lease
which exceed the sum of the operating expenses of the calendar year 1995 (base
year). Sublessee's proportionate share of any increase shall be that percentage
determined by dividing the rentable number of square feet hereby subleased by
Sublessee (21,996 square feet) by the total number of rentable square feet in
the Premises (151,800 square feet), which percentage is 14.49%. Notwithstanding
the foregoing, for any period of this Sublease not constituting a full calendar
year, Sublessee shall pay only a fractional part of its proportionate share of
any applicable increase in the operating expenses based upon the number of days
of its occupancy of the Sublease Premises for such year divided by 365.
(b) The term "operating expenses" shall mean all expenses, costs and
disbursements of every kind and nature (including but not limited to "Capital
Costs" as hereinafter defined and to the extent stated herein and reasonable
management fees, which fees shall be included in base
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year 1995), excluding however, taxes, expense of alternations of premises for
the accommodation of a specific tenant, brokers fees, and expenditures made for
capital investment or improvements, which the Sublessor shall pay or become
obligated to pay in connection with the operation of the Common Areas (as
hereinafter defined) and the Premises which, in accordance with generally
accepted principles of sound accounting practice, apply to the operation and
maintenance of comparable buildings.
(c) Capital Costs are defined as those expenditures which do not normally
recur more frequently than at five (5) year intervals in the normal course of
operation and maintenance of the Premises. Notwithstanding anything above which
may be to the contrary, operating expenses shall include a portion of all
Capital Costs, representing any costs of capital improvements made by Sublessor
to the Premises for the purpose of reducing recurring expenses or utility costs
and from which Sublease can expect a reasonable benefit, or that are required by
governmental law, ordinance, regulation or mandate, not applicable to the
Premises at the time of the original construction. The portion thereof to be
included each year in operating expenses shall be that fraction allocable to the
calendar year in question calculated by amortizing the cost over the reasonably
useful life of such improvement, as reasonably determined by the Sublessor, with
interest on the unamortized balance at ten percent (10%) per annum or such
higher rate as may have been paid by Sublessor for funds borrowed for the
purpose of constructing such improvements, but in no event to exceed the highest
rate permissible by law.
(d) The term "Common Areas" as used herein means all areas and facilities
outside the Subleased Premises, that are provided and designated by Sublessor
from time to time for the general use and convenience of Sublessee, Sublessor,
and of other tenants of Sublessor having the common use of such areas, and their
respective authorized representatives and invitees.
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Common Areas include, without limitation, driveways, parking areas, sidewalks,
landscaped areas, the reception area, the large conference rooms as designated
by Sublessor located on the first and second floors and highlighted in green on
Exhibit B, the cafeteria, the fitness center and specific corridors designated
by Sublessor which lead from the Subleased Premises to the internal common areas
set forth above. Notwithstanding the foregoing, Sublessor may, at its sole
option, and at any time, discontinue the operation of the cafeteria, if the
cafeteria operates at a loss. In the event Sublessor elects to reduce, limit,
change or discontinue the operation of the cafeteria, Sublessor shall make
reasonable efforts to substitute an alternative food service. Sublessee hereby
agrees that the use of the Common Areas by it or any of its employees, agents or
invitees will not interfere with the conduct of business of any of the other
occupants of the Building or the Premises.
(e) Notwithstanding anything to the contrary contained in the above
subparagraph (d), the fitness center will only be included in the Common Areas
if Sublessee provides insurance coverage and limits applicable to the use of the
fitness center by Sublessee or Sublessee's employees, which is acceptable to
Sublessor in its sole discretion. As a further condition to inclusion of the
fitness center in the common Areas, Sublessee agrees, on behalf of itself, and
its employees, to indemnify and hold harmless Sublessor from any and all
liabilities, claims, demands, actions, costs and expenses which may be sustained
by Sublessor by reason of any injury to or death of persons and for any loss of
or damage to property caused in any manner or to any degree by the use of the
fitness center by Sublessee or its employees. Sublessee, and its employees shall
faithfully observe and comply with the rules and regulations established by
Sublessor (and conveyed by written notice to Sublessee) regarding use and
operation of the fitness center. Sublessor reserves the unconditional right to
discontinue the operation of the
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fitness center at any time during the term of this lease or any renewal thereof.
In the event that Sublessor elects to discontinue the operation of the fitness
center, Sublessee shall have the option to sublease the area presently known as
the fitness center on the basis of the terms and conditions herein for the sole
purpose of using that area as a fitness center exclusively for the use of
Sublessee's employees. Sublessor shall give Sublessee written notice that
Sublessor intends to discontinue the operation of the fitness center and
Sublessee shall have fifteen (15) days within which to give Sublessor written
notice that Sublessee will sublet the area known as the fitness center for the
use of its employees. Effective on the date of Sublessee's notice to Sublessor
electing to sublease the fitness center, that area will be added to the
Subleased Premises at the prevailing rental rate then in effect for the
Subleased Premises and all of the other terms and conditions of this Sublease
shall apply to the fitness center area added to the Subleased Premises except
the use shall be described in this Section 7(e).
(f) Sublessor shall, in a reasonable manner maintain the Common Areas in a
condition representative of a well-maintained commercial office building, and in
doing so, Sublessor may establish and enforce reasonable rules and regulations
concerning such areas which are enforced in a non-discriminating manner as to
all occupants of the Premises. Sublessor may also close any of the Common Areas
to whatever necessary extent required in the opinion of Sublessor's counsel to
prevent a dedication of any of the Common Areas or the accrual of any rights of
any person (other than Sublessee) or of the public to the Common Areas, close
temporarily any of the Common Areas for maintenance purposes, and make changes
to the Common Areas including, without limitation, changes in the location of
driveways, entrances, exits, vehicular parking spaces, parking area, the
designation of areas for the exclusive use of others, the direction of the flow
of traffic or construction of additional buildings thereupon.
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(g) If, during the base year less than 95% of the building rentable area
shall be occupied by tenants and fully used by them, operating expenses of the
Premises for the base year for purposes of the determination of Sublessee's
proportionate share of operating expense shall be deemed to be increased to an
amount equal to the like operating expense which would normally be expected to
be incurred if the building had been 95% occupied and fully utilized during the
base year.
(h) Sublessee agrees to pay its proportionate share of any increase in
operating expenses as set forth in subparagraph (a) above to the Sublessor
within thirty (30) days after receipt of the Sublessor's statement. Sublessor
shall have the right, in its reasonable discretion, to estimate Sublessee's pro
rata share of operating expenses due within the following twelve (12) months
from Sublessee and to collect from Sublessee on a monthly or quarterly basis, as
Sublessor may elect, the amount of Sublessee's estimated pro rata share of such
costs; provided, however, that such estimate shall reasonably reflect actual
operating expenses for which Sublessee is proportionately responsible and which
Sublessor may reasonably expect to incur and pay within such period. Sublessor
shall provide Sublessee with a reconciliation of Sublessee's account at least
annually, and if such reconciliation shall indicate that Sublessee's account is
insufficient to satisfy Sublessee's pro rata share of operating expenses for the
period estimated, Sublessee shall pay to Sublessor any deficiency within thirty
(30) days of Sublessor's billing. Any excess in such account indicated by the
reconciliation shall be credited to Sublessee's account to reduce the estimated
payments for the next ensuing period or paid to Sublessee within thirty (30)
days if occurring in the final year of the Sublease term.
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8. PARKING:
Sublessee shall direct its employees to use the employee parking area
located in the back of the Premises. Sublessor shall preserve 110 non-reserved
parking spaces for use by Sublessee's employees and invitees in such parking
area. Notwithstanding the foregoing, Sublessor shall designate sixteen (16)
reserved parking stalls within the front parking area for Sublessee's exclusive
use. Apart from the reserved spaces, Sublessee's employees shall not park in
the visitors parking area. The remaining parking spaces within the front
parking area shall be reserved by Sublessor for visitors.
9. INSURANCE:
(a) Sublessee shall, at its sole cost and expense, procure and maintain
throughout the term of this Sublease or any renewal or extension thereof, a
policy of public liability insurance (which shall include inter alia an
endorsement or rider for contractual liability coverage) secured from an
insurance company licensed and qualified to do business in the State of
Pennsylvania, acceptable to Sublessor, and naming Sublessor as an additional
insured, with limits not less than $3,000,000.00 with respect to any one
occurrence, and said policy shall contain a clause that the insurer will not
cancel or change said policy without first giving Sublessor at least thirty (30)
days' prior written notice. Sublessee shall provide Sublessor a copy of such
insurance policy or certificate of insurance evidencing such coverage upon the
execution of this Sublease and subsequently on the renewal or extension date of
such policy.
(b) Sublessee shall procure and maintain throughout the term of this
Sublease or any renewal thereof, at Sublessee's expense, policies of casualty
insurance covering all tenant improvements, trade fixtures, equipment,
merchandise and other personal property from time to
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time in the Subleased premises in an amount not less than one hundred percent
(100%) of their actual replacement cost, providing protection against any peril
included within the classification "Fire and Extended Coverage". The proceeds of
such insurance shall be used for the repair and replacement of the property so
insured. Such insurance shall name Sublessor as an additional insured and shall
contain a clause that the insurer will not cancel or change said policy without
first giving Sublessor at least thirty (30) days' prior written notice.
Sublessee shall provide Sublessor a certificate of said insurance upon the
execution of this Sublease and subsequently on the renewal or extension date of
such policy.
(c) Nothing contained in this Sublease shall be construed to require
either party to repair, replace, reconstruct, or pay for any property of the
other party which may be damaged or destroyed by fire, flood, windstorm,
earthquake, strikes, riots, civil commotions, acts of public enemy, acts of God,
or other casualty, and each party hereby waives, on behalf of itself and its
insurer, all rights of subrogation and claims against the other for all loss or
damage arising out of perils normally insured against by standard fire and
extended coverage insurance.
10. MAINTENANCE AND REPAIRS:
(a) Subject to Sublessor's maintenance and repair obligations set forth in
subparagraph (b) below, Sublessee shall maintain the interior of the Subleased
Premises in a neat and orderly condition and shall not commit waste therein, and
shall perform all maintenance and repairs of damage caused by the negligence of
Sublessee, its servants, agents, or employees or which is otherwise required
pursuant to the terms of this Sublease.
(b) Sublessor shall maintain and keep in good condition, at Sublessor's
expense the Common Areas as well as all structural elements of Subleased
Premises, including without
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limitation, heating, ventilation and air conditioning systems, roof, plumbing,
electrical systems, fire and sprinkler systems (to the extent there are fire and
sprinkler systems in the Premises, it being understood and acknowledged that
Sublessor shall have no obligation to install additional such systems unless
required by law) alarm systems, sewage systems, except for such maintenance,
repairs, and replacements necessitated by the negligence of Sublessee, its
servants, agents, or employees or as a result of legal requirements arising from
Sublessee's use or occupancy of the Subleased Premises.
(c) Sublessor shall have the right to enter upon the Subleased Premises
from time to time upon reasonable notice in order to inspect the same and to
perform any maintenance, repairs, and replacements which it is required to make
under the provisions of this Sublease. Such entry shall in no event be
considered a constructive eviction of Sublessee. Sublessor shall use reasonable
efforts not to disrupt Sublessee's business activities in the performance of
such maintenance.
11. BUILDING SERVICES:
(a) During the hours of 7:00 a.m. and 7:00 p.m. on weekdays and 9:00 a.m.
to 2:00 p.m. on Saturdays ("Business Hours") except for public holidays
("Business Days"), Sublessor shall furnish to the Subleased Premises as part of
the operating expense of the Premises, reasonable amounts of electricity, water,
heat and air conditioning typical of a commercial office building. In the event
of an interruption in, or failure or inability to provide any of the utilities
described herein, such interruption or failure shall not, regardless of its
duration, constitute an eviction of Sublessee, constructive or otherwise, or
impose upon Sublessor any liability whatsoever, including, but not limited to,
liability for consequential
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damages or loss of business by Sublessee or entitle Sublessee to an abatement of
rent or to terminate this Sublease. Notwithstanding the foregoing, in the event
that Sublessor is unable to provide any of the utilities (i.e., electricity,
heat, water or air conditioning) for five (5) consecutive business days and
Sublessee is unable to conduct business in the Subleased Premises as a result of
such failure to provide utilities, and further provided that such failure is not
due to force majeure as hereinafter defined, then Sublessee shall be entitled to
abate rent on a daily basis until such utility is restored. In no event is
Sublessee authorized to terminate this Sublease as a result of such failure of
utilities.
(b) The term "force majeure" as used herein shall mean any circumstance
beyond the reasonable control of Sublessor which shall prevent or delay
Sublessor from performing any obligation outlined herein including, but not
limited to, acts of nature, acts of God, labor strikes, material shortages and
other acts causing delays. Any delay resulting from a force majeure shall excuse
Sublessor's performance of its obligations under this Sublease for a period
equal to the period of such delay.
(c) On Business Days, Sublessor shall furnish to the Subleased Premises
and its attendant restrooms and other common areas, janitorial service, window
washing, fluorescent tube replacement and toilet room supplies.
(d) Sublessee shall give Sublessor reasonable prior written notice of its
request of Sublessor to supply utilities or services to the Subleased Premises
during non-Business Hours which are in excess of the standard of such utilities
or services normally provided during non-Business Hours in buildings used for
office purposes. Any additional utilities or services Sublessee requests during
non-Business Hours shall be at Sublessee's sole expense. In the event the
Sublessee's usage of electricity, water or any other utility exceeds the
reasonable use of such
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utility, Sublessor may determine the amount of such excess use by any reasonable
means (including, but not limited to, the installation at Sublessor's request
but at Sublessee's expense of a separate meter or other measuring device) and
charge Sublessee for the cost thereof. In addition, Sublessor may impose a
reasonable charge for the use of any additional or unusual janitorial services
required by Sublessee because of the carelessness of Sublessee or the nature of
Sublessee's business (including hours of operation).
(e) All sums payable hereunder by Sublessee for additional services or for
excess utility usage or other services shall be payable within thirty (30) days
after notice from Sublessor of the amounts due; except that Sublessor may
require Sublessee to pay monthly for the estimated cost of Sublessee's excess
utility usage if such usage occurs on a regular basis, and such estimated
amounts shall be payable in advance on the first day of each month.
(f) Sublessor shall provide Sublessee's employees and visitors with
limited access to the building during non-Business Hours, provided, however,
that Sublessor shall be entitled to impose upon Sublessee reasonable security
precautions related to such access.
(g) At the time this Sublease is fully executed by both parties, the
Premises will be supplied by Sublessor with (a) security guard services sixteen
(16) hours per day during Business Days and twenty-four (24) hours per day
during non-Business Days, and (b) a Simplex fire system. Sublessor reserves the
right, at its sole discretion, to replace the type of security service at the
Premises. Notwithstanding anything to the contrary set forth herein, Sublessee
shall be totally responsible for the security of the Subleased Premises and
Sublessor shall not have any liability whatsoever as a result of any failure of
Sublessor's security services for any injuries to persons or loss or theft
incurred by Sublessor, its employees and invitees, in, on or about the Subleased
Premises or the Premises.
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12. DAMAGE TO OR DESTRUCTION OF PREMISES:
If, during the term of this Sublease, the Subleased Premises are damaged by
fire, flood, windstorm, strikes, riots, civil commotions, acts of public enemy,
acts of God, or other casualty so that the same are rendered wholly or
substantially unfit for occupancy, Sublessor shall promptly notify Sublessee
whether the Subleased Premises can be repaired to be fully fit for Sublessee's
occupancy. If pursuant to said notice said Subleased Premises cannot be
repaired within sixty (60) days from the time of such damage, then this
Sublease, at the option of the Sublessor or Sublessee, may be terminated as of
the date of such damage and any insurance proceeds under Section 9(a) of this
Sublease agreement shall be paid to Sublessor. Likewise if a substantial
portion of the Premises (but not a substantial portion of the Subleased
Premises) are so damaged such that Sublessor determines that it will not repair
such damages, and/or restore the premises, then Sublessor at its sole option may
terminate this Sublease as of the date of last occupancy by Sublessee and any
insurance proceeds under Section 9(a) shall be payable to Sublessor. In the
event that Sublessor or Sublessee elects to terminate the Sublease, the
Sublessee shall pay the rent apportioned to the time of damage and shall
immediately surrender the Subleased Premises to Sublessor who may enter upon and
repossess the same. If neither the Sublessor or the Sublessee elects to
terminate the Sublease, Sublessor agrees to repair or replace as required such
damage to the Premises and the Subleased Premises (but not to any Sublessee
improvements made by Sublessee to the extent it receives insurance proceeds),
and this Sublease shall not be affected in any manner except that the rent shall
be suspended and shall not accrue from the date of such damage until such
repairs have been completed.
If said Subleased Premises shall be so slightly damaged by any of the above
casualties as not to be rendered unfit for occupancy to any substantial extent
and the same shall be repairable
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within sixty (60) days from the time of such damage, Sublessor shall repair the
Subleased Premises (but not Sublessee improvements made by Sublessee) to the
extent it receives insurance proceeds, and during the period from the date of
such damage until the repairs are completed the rent shall be apportioned so
that Sublessee shall pay as rent an amount which bears the same ratio to the
entire monthly rent as the portion of the Subleased Premises which Sublessee is
able to occupy without disturbance during such period bears to the entire
Premises. If the damage by any of the above casualties is so slight that
Sublessee is not disturbed in its possession and enjoyment of the Subleased
Premises, then Sublessor shall repair the same promptly and in that case the
rent accrued or accruing shall not abate.
13. ACTIONS OF PUBLIC AUTHORITIES:
In the event that any exercise of the power of eminent domain by any
governmental authority, Federal, State, County or Municipal, or by any other
party vested by law with such power shall at any time prevent the full use and
enjoyment of the Subleased Premises by Sublessee, Sublessor or Sublessee shall
have the right thereupon to terminate this Sublease. In the event of any such
action, Sublessor shall have the right to claim, recover, and retain from the
governmental authority or other party taking such action any award for the value
of the Premises and Sublessee hereby waives any claim for the leasehold value of
the Subleased Premises. Notwithstanding the foregoing, Sublessee may make a
separate claim for the value of its fixtures or its moving expenses to the
extent it does not diminish any award payable to Sublessor.
14. IMPROVEMENTS BY SUBLESSEE:
Sublessee shall not have the right to make any alterations, additions, or
improvements in or to the Subleased Premises without the written consent of
Sublessor, which consent shall not be
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unreasonably withheld. Should Sublessee desire to perform alterations or
improvements upon the Subleased Premises, it shall, prior to commencing the
work, transmit a reasonably detailed description of the work to Sublessor,
including drawings or plans. Within thirty (30) days of the receipt of the same,
Sublessor shall notify Sublessee as to its approval or disapproval of the
proposed alteration, addition or improvement. Upon thirty (30) days of the
request of Sublessor, Sublessee shall also deliver to Sublessor a bond in an
amount equal to at least 150% of the potential lien or claim to secure Sublessor
against any and all potential liens or claims. If Sublessor approves such
alteration, addition or improvement, all such work shall be done in a good and
workmanlike manner, the structural integrity of the building shall not be
impaired, and any liens attaching to the Subleased Premises shall be released
within thirty (30) days or appropriately bonded to protect Sublessor. Upon the
termination of this Sublease, such alterations, additions, or improvements
shall, at the option of Sublessor, (1) become the property of Sublessor, or (2)
be removed by the Sublessee provided that any part of the Subleased Premises
affected by such removal shall be restored to its original condition.
15. FIXTURES AND SIGNS:
(a) Sublessee shall have the right to install in or place on the Subleased
Premises trade or moveable fixtures, or other equipment as it may choose and
which fixtures or equipment do not exceed the weight permitted by the floor
structure. Such fixtures, machines, tools, or other equipment shall at all times
remain the personal property of Sublessee regardless of the manner or degree of
attachment thereof to the Subleased Premises and may be removed at any time by
Sublessee whether at the termination of this Sublease or otherwise, provided,
however,
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that Sublessee shall make restoration of the Subleased Premises in the event
that any damage is done thereto in the removal of such property.
(b) Sublessee shall initially have the right to install a sign in
accordance with the Sign Plan to be attached hereto as Exhibit E. Thereafter,
Sublessee shall have the right, with Sublessor's written consent, which consent
shall not be unreasonably withheld, to install or erect on the Premises such
signs as it may deem necessary or appropriate to advertise its name and
business; provided, however, that such signs comply with all applicable laws or
ordinances. Sublessee shall have the right, subject to the restrictions of
subsection (a) above, to install and affix signs within the Subleased Premises,
subject to Sublessor's prior written consent, which consent shall not be
unreasonably withheld.
16. LIABILITY; INDEMNITY:
(a) Sublessee shall be liable for any injury to or death of persons and
for any loss of or damage to property caused by the negligent or willful acts or
omissions of its agents, employees, or invitees, or caused by Sublessee's
failure to perform the maintenance, repairs, and replacements required to be
performed by it under the provisions of Section 10 (Maintenance and Repairs) or
any other obligations it has under this Sublease or otherwise arising from its
use or occupancy of the Subleased Premises or from any injury or damage or any
other claim arising from or relating to the presence in any Common Areas by any
of Sublessee's employees, agents, or invitees. Sublessee shall indemnify and
save Sublessor harmless against any and all liabilities, claims, demands,
actions, costs, and expenses which may be sustained by Sublessor by reason of
any of the causes for which Sublessee is liable pursuant to this subsection (a).
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(b) Sublessor shall be liable for any injury to or death of persons and
for any loss of or damage to property caused by the negligent or willful acts or
omissions of its agents, employees, or invitees, or caused by Sublessor's
failure to perform the maintenance, repairs, and replacements required to be
performed by it under the provisions of Section 10 (Maintenance and Repairs) or
any other obligation it has under this Sublease. Sublessor shall indemnify and
save Sublessee harmless against any and all liabilities, claims, demands,
actions, costs, and expenses which may be sustained by Sublessee by reason of
any of the causes for which Sublessor is liable pursuant to this subsection (b).
(c) The obligations of this Section 16 shall survive termination of this
Sublease for any reason whatsoever with regard to events occurring during the
term of this Sublease (or any extension thereof) arising from acts or omissions
during the term of this Sublease (or any extension thereof).
17. DEFAULT:
(a) If Sublessee shall fail to pay any rent or Additional Rent to
Sublessor within ten (10) days after the same is due and payable under the terms
of this Sublease and following the passage of ten (10) days notice of such
failure by Sublessor, or if the Sublessee shall fail to perform any other duty
or obligation imposed upon it by this Sublease and such default shall continue
for a period of thirty (30) days after written notice thereof has been given to
Sublessee by Sublessor (except where Sublessee has diligently begun to correct
such other duties or obligations within such period and continues to cure such
default on a diligent basis), or if the Sublessee shall be adjudged bankrupt, or
shall make a general assignment for the benefit of its creditors, or if a
receiver of any property of Sublessee in or upon the Subleased premises be
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appointed in any actions, suit, or proceeding by or against Sublessee, or if the
interest of Sublessee in the Subleased Premises shall be sold under execution or
other legal process, then and in any such event Sublessor shall have the right
to enter upon the Subleased Premises and again have, repossess, and enjoy the
same as if this Sublease had not been made, and thereupon this Sublease shall
terminate without prejudice, however, to the right of Sublessor to recover from
Sublessee all rent due and unpaid up to the time of such re-entry. In the event
of any such default and re-entry, Sublessor shall have the right to relet the
Subleased Premises for the remainder of the then existing term whether such term
be the initial term of this Sublease or any renewed or extended term, and to
recover from Sublessee the difference between the rent reserved by this Sublease
and the amount obtained through such reletting less the costs and expenses
reasonably incurred by Sublessor in such reletting. Sublessor hereby expressly
reserves all other rights and remedies available to it, whether at law or
equity.
(b) If any rent (including Additional Rent) shall not be paid within ten
(10) days after due, in addition to, and without waiving or releasing any other
rights and remedies of Sublessor, a late charge of one and one-half percent
(1.5%) per month on the amount of such rent shall become immediately due and
payable to Sublessor, as liquidated damages for Sublessee's failure to make
prompt payment, and the same shall be considered as additional rent.
18. ASSIGNMENT; SUBLETTING:
Sublessee shall not have the right to assign this Sublease or to sublet the
Subleased Premises or any part thereof, without the prior written consent of
Sublessor; which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, no assignment or subletting shall
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relieve Sublessee from its duty to perform fully all of the agreements,
covenants, and conditions set forth in this Sublease.
19. HAZARDOUS MATERIALS:
(a) "Hazardous Materials" shall mean any material or substance (i) which
is defined as a "hazardous substance", "hazardous waste", oil, petroleum, or oil
or petroleum products or byproducts, asbestos, Polychlorinated Byphenyls
("PCBs"), or "extremely hazardous substance", "hazardous chemical", "toxic
substance", "pollutant", "contaminant" or the like under any federal, state, or
local environmental, or occupational health and safety statute, law, regulation,
rule or ordinance ("Environmental Laws", as specifically defined below), (ii)
which contains Polychlorinated Byphenyls (PCBs), (iii) which contains asbestos,
(iv) which is radioactive or (v) the presence of which requires investigation or
remediation under any Environmental Law, as well as any toxic or otherwise
hazardous substance, material or waste which is or becomes regulated as such by
any Environmental Law.
(b) Sublessee shall not introduce, permit the introduction, storage or
use of Hazardous Materials onto the Subleased Premises, or cause or permit the
discharge, emission or release of Hazardous Materials other than in the normal
course of its business and only then in accordance with all applicable
Environmental Laws, including without limitation any consents, orders, licenses,
permits or approvals of any governmental authority.
(c) Sublessee shall conduct all of its operations at the Subleased
Premises in compliance with all applicable federal, state, and local statutes,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as amended,
(CERCLA); the Resource Conservation and Recovery Act, 42 U.S.C.
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Section 6901 et seq., as amended (RCRA); the Clean Air Act, 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act, 33 U.S.C. 1251 et seq., as amended, the
Occupational Health and Safety Act, 29 U.S.C. Section 651 et seq., as amended,
and all applicable federal, state and local statutes related to health and
safety and the environment now or hereafter enacted and any additions and
amendments thereto and regulations enacted thereunder, ordinances, orders and
requirements of common law, regarding, but not limited to (i) discharges to the
air, soil, surface or ground water; and (ii) handling, utilizing, storage,
treatment, or disposal of any Hazardous Materials as defined therein
("Environmental Laws").
(d) If Sublessor suspects that there has been a release of Hazardous
Materials in violation of applicable Environmental Laws, or a governmental
authority requires testing to ascertain whether there has been a release of
Hazardous Materials by Sublessee, its agents, servants, employees or invitees,
from, on, in or around the Subleased Premises, and if the costs of such testing
are payable by, charged to or assessed against Sublessor, such costs shall be
reimbursed by Sublessee to Sublessor as additional rent. Sublessee shall execute
affidavits or representations, at Sublessor's request, stating that, to the best
of Sublessee's knowledge and belief after due inquiry, since the time that
Sublessee took possession of the Subleased Premises, there have been no and
there presently are no Hazardous Materials present in the Subleased Premises in
violation by Sublessee, its agents, employees, contractors, subcontractors,
invitees, officers, directors, successors and assigns of this Sublease.
(e) Sublessee hereby agrees to indemnify Sublessor and to hold Sublessor
harmless from and against any and all expense, loss, cost, damages, fines,
penalties, or liability, but excluding consequential damages, suffered (i) by
reason of Sublessee's breach of any of the provisions of this Sublease, (ii) or
arising or resulting from the introduction, handling, use,
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treatment, storage, disposal, dumping, spilling, leaking, emitting, release or
discharge of Hazardous Materials onto, on, in, around or from the Subleased
Premises by Sublessee or its suppliers, contractors, subcontractors, invitees or
any of its or their respective officers, agents, or employees, and irrespective
of whether any consent or approval has been given with respect thereto.
(f) The provisions of Section 16.(e) shall survive the termination of this
Sublease.
(g) Sublessor shall conduct all of its operations at the Premises in
compliance with all applicable Environmental Laws.
20. QUIET ENJOYMENT:
Sublessor covenants and warrants that it has lawful title and right to make
this Sublease, and that, if Sublessee shall pay the rent and perform all of the
agreements, covenants, and conditions required by this Sublease to be performed
by it, Sublessee may freely, peaceably and quietly occupy and enjoy the
Subleased Premises free from any molestation from Sublessor or anyone acting by,
through or under Sublessor.
21. RENEWAL OR EXTENSION:
(a) Sublessee shall have the option to renew and extend the term of the
Sublease for two (2) periods of five (5) years each. The first renewal shall
begin upon the expiration of the initial term and the second renewal term shall
begin upon the expiration of the first renewal term. Sublessee, at least one
hundred eighty (180) days prior to the expiration of the initial term and the
first renewal term, respectively, shall give Sublessor written notice of its
intention to exercise such option.
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(b) Upon receipt of Sublessee's notice of its exercise of option to
extend the term of the Sublease, Sublessor shall, within twenty (20) days of
receipt of Sublessee's notice, give Sublessee written notice of the rental rate
for such renewal term. The renewal rate for such renewed and extended terms
shall not exceed ninety five (95%) percent of the then prevailing rental rate
for comparable office space in the suburban Pittsburgh, Pennsylvania area but in
no event will the rent during such option period be greater than 110% of the sum
of the base rent plus Sublessee's pro rata share of increases in real estate
taxes and operating expenses set for in Sections 6 and 7 in effect at the time
the option to renew is exercised by Sublessee. Notwithstanding the foregoing, in
no event shall the renewal rate during either renewal term be less than the base
rent being paid by Sublessee to Sublessor during the last month of the preceding
lease term. Sublessee shall have twenty (20) days from the receipt of
Sublessor's notice setting forth the renewal rental rate for the renewal term to
give Sublessor written notice that Sublessee will either (1) confirm its
exercise of the option to renew the Sublease for the renewal term at the rental
rate set forth in Sublessor's notice or (2) rescind the exercise of option to
renew the Sublease term.
22. OPTION TO EXPAND:
Sublessee shall have a one-time option exercisable between December 1, 1996
and June 1, 1997 inclusive (the "Option Period") upon written notice to
Sublessor to lease approximately 15,000 additional rentable square feet which
shall be comprised of approximately 6,200 additional rentable square feet as
highlighted in red on Exhibit B and 8,800 additional rentable square feet
located in areas of the Premises to be designated by Sublessor and accessible by
Sublessee through Common Areas. Any additional square feet which Sublessee
shall elect to
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<PAGE>
sublease shall be subleased at the same rental rate per square foot then in
effect for the initial Subleased Premises, and shall otherwise be subject to the
same terms and conditions as are set forth herein. Once Sublessee exercises such
option within the Option Period, Sublessor and Sublessee shall attempt to agree
on the exact location of the additional subleased area which shall be more fully
set forth in an amendment to this Sublease. Sublessor shall make the additional
space available to Sublessee at any time between the date of receipt by
Sublessor of Sublessee's exercise of option and six (6) months after receipt of
Sublessee's exercise of option.
23. SURRENDER:
When this Sublease shall terminate in accordance with the terms hereof,
Sublessee shall quietly and peaceably deliver up possession to Sublessor without
notice from Sublessor other than as may be specifically required by any
provision of this Sublease. Sublessee expressly waives the benefit of all laws
now or hereafter in force requiring notice from Sublessor with respect to
termination. Sublessee shall deliver up possession of the Subleased Premises in
as good order, repair, and condition as the same are in at the beginning of the
term of this Sublease except for reasonable wear and tear.
24. BASE LEASE:
All of the agreements, covenants and conditions contained in Sections 2,
6(b), 7, 19(a), 21, 22, 23, 29, 30, 32, and 35 of the Lease, attached hereto as
Exhibit F, are hereby made a part of this agreement and such rights and
obligations as are contained in the aforesaid Sections of the Lease are hereby
imposed upon the respective parties hereto, as they pertain to the Subleased
Premises, the Sublessor being substituted for the Lessor, the Sublessee being
substituted for the Lessee and the Subleased Premises being substituted for the
Premises. Notwithstanding anything
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<PAGE>
to the contrary herein, Sublessor herein shall not be responsible for the
performance of any obligations of or any defaults by Lessor under the Lease.
Sublessor covenants and agrees to perform all of its obligations under the Lease
(except to the extent required to be performed by Sublessee hereunder). In the
event there is a default by Lessor under the Lease, Sublessor will use
reasonable efforts to protect the interests of Sublessor and Sublessee under
this Sublease and the Lease. In the event that the Lessor's consent is required
for any action contemplated by Sublessee under the terms of this Sublease,
Sublessee shall obtain such consent directly from the Lessor.
25. NOTICE:
(a) Any notice or demand required by the provisions of this Sublease to be
given to Sublessor shall be deemed to have been given adequately if sent by
Certified Mail, return receipt requested, to Sublessor at 11 Stanwix Street,
Pittsburgh, Pennsylvania 15222, Attention: Real Estate Department.
(b) Any notice or demand required by the provisions of this Sublease to be
given to Sublessee shall be deemed to have been given adequately if sent by
Certified Mail, return receipt requested, to Sublessee at 2090 Greentree Road,
Pittsburgh, PA 15220, Attention: Sunil Wadhwani, Chairman (if prior to March 1,
1995) and to Sublessee's address at the Subleased Premises (if on or after March
1, 1995), with a copy to John W. Lewis, Esq., Dickie, McCamey & Chilcote, P.C.,
Suite 400, Two PPG Place, Pittsburgh, PA 15222-5402.
(c) Either party shall have the right to change its address as above
designated by giving to the other party fifteen (15) days' notice of its
intention to make such change and of the substituted address at which any notice
or demand may be directed to it.
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<PAGE>
26. SUBORDINATION:
Sublessee agrees that this Sublease shall be subordinate to any mortgage or
trust deed that is now on or may hereafter be placed upon the demised premises
and to any and all advances to be made thereunder, and to the interest thereon,
and all renewals, replacements and extensions thereof.
27. ENTIRE AGREEMENT:
The whole and entire agreement of the parties is set forth in this
Agreement and the parties are not bound by any agreements, understandings or
conditions otherwise than as expressly set forth and stipulated hereunder.
28. CHANGES, MODIFICATIONS OR AMENDMENTS:
This agreement may not be changed, modified, discharged or terminated
orally or in any other manner than by an agreement mutually signed by the
parties hereto or their respective successors and assigns.
29. COVENANTS TO BIND RESPECTIVE PARTIES:
This Sublease, and all of the agreements, covenants, and conditions
contained herein shall be binding upon Sublessor and Sublessee and upon their
respective heirs, executors, administrators, successors, and assigns.
30. GOVERNING LAW:
This Sublease shall be governed by the laws of the Commonwealth of
Pennsylvania.
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<PAGE>
31. RECEPTION AREA:
With respect to the reception area which is outlined in blue on Exhibit B,
Sublessor and Sublessee agree as follows:
(a) Sublessor and Sublessee may each employ a receptionist to be located
in the reception area.
(b) With Sublessor's prior written consent, which consent shall not be
unreasonably withheld, Sublessee may install a sign of
identification in the reception area.
IN WITNESS WHEREOF, Sublessor and Sublessee have caused these presents to
be executed by their duly authorized officers and have caused their respective
corporate seals to be hereto affixed, all as of the day and year first above
written.
ATTEST: WESTINGHOUSE ELECTRIC CORPORATION
_________________________ By: ______________________________
Assistant Secretary Vice President
ATTEST: MASTECH CORPORATION
_________________________ By: ______________________________
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<PAGE>
Exhibit 10.15
FIRST AMENDMENT OF SUBLEASE
---------------------------
THIS LEASE AMENDMENT made the 20th day of March, 1996 by and between
WESTINGHOUSE ELECTRIC CORPORATION ("Sublessor") and MASTECH CORPORATION
("Sublessee").
WITNESSETH
----------
WHEREAS, Sublessor and Sublessee entered into a Sublease Agreement
dated February 10, 1995 ("Sublease") for approximately 21,996 rentable square
feet of office space at 1000 McKee Road, Oakdale, Pennsylvania ("subleased
premises"); and
WHEREAS, Sublessor and Sublessee executed a Letter Agreement dated
April 19, 1995 regarding additional equipment to be included in Exhibit C of the
Sublease and the amendment of Sublessee's expansion option set forth in Section
22 of the Sublease; and
WHEREAS, Sublessor and Sublessee desire to amend the Sublease to
increase the subleased premises.
NOW, THEREFORE, the parties hereto intending to be legally bound
hereby agree as follows:
1. Effective March 1, 1996, the subleased premises shall be increased by
approximately 2,815 rentable square feet as shown on Exhibit A attached hereto
and made a part hereof for the remainder of the term of the Sublease, and the
total square feet in the subleased premises, including the above 2,815 rentable
square feet, shall be 24,811 rentable square feet.
2. The total monthly base rental for all of the subleased premises,
including the above increased subleased area shall be as follows:
<PAGE>
Period of Time Annual Rent Monthly Rent
-------------- ----------- ------------
3/1/96 - 5/31/97 $347,354.00 $28,946.17
6/1/97 - 5/31/99 $372,165.00 $31,013.75
6/1/99 - 5/31/200 $396,976.00 $33,081.33
3. Effective March 1, 1996, Sublessee's proportionate share of any (a)
increase or decrease in real estate tax as set forth in Section 6(c) of the
Sublease and (b) increase in operating expenses as set forth in Section 7.(a) of
the Sublease shall be 16.34% which is determined by dividing the total number of
rentable square feet subleased by Sublessee (24,811) by the total number of
rentable square feet in the Premises (151,800).
4. Sublessee shall have the right to use the ten workstations and other
furnishings located in the additional space shown on Exhibit A at the time this
Lease is executed. Sublessee shall have the right, at the end of the initial
term or any renewal term of this Sublease, to remove and retain the ten
workstations in the additional space, provided that, upon removal, Sublessee
shall restore the additional space as required in Section 24 of the Lease.
Title to such workstations shall pass at the end of the initial term, and
Sublessor shall, upon request of Sublessee, deliver such bills of sale or other
instruments (warranting title and otherwise disclaiming all warranties
whatsoever) as Sublessee may require in order to more effectively transfer title
to Sublessee.
5. The following sentence shall be inserted in lieu of the first sentence
of Section 22 of the Sublease (Option to Expand):
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<PAGE>
"Sublessee shall have a one-time option exercisable between December
1, 1996 and June 1, 1997 inclusive (the "Option Period") upon written notice to
Sublessor to lease approximately 12,185 rentable square feet located in areas of
the Premises to be designated by Sublessor and accessible by Sublessee through
Common Areas."
6. Except as otherwise set forth herein, all of the terms and conditions
in the Sublease, as amended and modified, shall remain the same.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the date first above written.
ATTEST: WESTINGHOUSE ELECTRIC
CORPORATION
__________________________ By:______________________________
Assistant Secretary Vice President
ATTEST: MASTECH CORPORATION
__________________________ By:______________________________
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<PAGE>
Exhibit 10.16
MASTECH CORPORATION
SHAREHOLDERS AGREEMENT
THIS AGREEMENT, made as of December __, 1996, by and among Mastech
Corporation, a Pennsylvania corporation (the "Company"), Sunil Wadhwani, an
individual residing in Allegheny County, Pennsylvania ("Wadhwani"), and Ashok
Trivedi, an individual residing in Allegheny County, Pennsylvania ("Trivedi")
(Wadhwani and Trivedi are sometimes referred to herein as the "Shareholders").
WHEREAS, as of the date hereof, each of the Shareholders is the beneficial
owner of 250,000 shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), including 12,500 shares of Common Stock beneficially owned
by each of them in their respective Family Trusts, which constitutes all of the
outstanding Common Stock of the Company; and
WHEREAS, the Company and the Shareholders are contemplating an underwritten
public offering of Common Stock (the "Initial Public Offering"), and in
connection therewith will effect a stock dividend to permit the shares of Common
Stock to be issued in the Initial Public Offering at an appropriate price; and
WHEREAS, each Shareholder desires that after the Initial Public Offering,
the shares of Common Stock held by them will be voted in the election of
directors for the election of the other as a director; and
WHEREAS, in order to ensure, among other things, that the Shareholders will
have liquidity after the Initial Public Offering, the Company desires to grant
to the Shareholders certain registration rights with respect to the Common Stock
held by them on the terms provided herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. For purposes of this Agreement:
-----------
(a) The term "Act" means the Securities Act of 1933, as amended, or
any successor statute.
(b) The term "beneficial ownership" and like terms have the meaning
ascribed to the term "beneficial ownership" under Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, or any successor provision.
(c) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of
such registration statement.
<PAGE>
(d) The term "Registrable Securities" means (i) the Common Stock,
and (ii) any securities of the Company issued as a dividend or other
distribution with respect to, or in exchange or in replacement of, such Common
Stock, in either case, beneficially owned by a Holder. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale of such securities
shall have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement, or
(ii) such securities shall have been sold (other than in a privately negotiated
sale) pursuant to Rule 144 (or any successor provision) under the Act and in
compliance with the requirements of paragraphs (c), (e), (f) and (g) of Rule 144
(notwithstanding the provisions of paragraph (h) of such Rule).
(e) The term "Holder" means (i) Wadhwani, (ii) Trivedi, and (ii)
any Permitted Transferee.
(f) The term "Permitted Transferee" means (i) any spouse, issue, or
parents of Wadhwani or Trivedi, (ii) trusts for the benefit of any such persons,
(iii) entities controlled by Wadhwani or Trivedi or any such persons, (iv) in
the event of the death of Wadhwani or Trivedi or any such person, their heirs
and testamentary legatees, and (v) a transferee pursuant to Section 16 hereof,
in each case, to whom Wadhwani or Trivedi or any such person has transferred
their shares of Common Stock and who has agreed in writing to be bound by the
terms of this Agreement.
2. Voting of Common Stock
----------------------
(a) Each Holder agrees to vote all shares of Common Stock
beneficially owned by them, and to take all other necessary or desirable actions
within their control (including, without limitation, attendance at meetings in
person or by proxy for purposes of obtaining a quorum and execution of written
consents in lieu of meetings), to effectuate the provisions of this Section 2.
(b) The Company and its subsidiaries shall take all necessary or
desirable actions within their control (including, without limitation, calling
special board and shareholder meetings) to effectuate the provisions of this
Agreement.
(c) Each Holder shall vote, or cause to be voted, all shares of
Common Stock beneficially owned by them and shall take all necessary action
within their control, to elect to the Board of Directors of the Company,
Wadhwani and Trivedi, or the person designated by either of them in a written
notice sent to each Holder, or the person designated in a written notice sent to
each Holder by the person authorized by Wadhwani or Trivedi, as the case may be,
to make such designation, provided that such person's authority to make such
designation is set forth in a notarized writing, a copy of which is filed with
the Company and sent to each Holder, and provided, further, that Wadhwani and
Trivedi agree not to designate or permit to be designated their respective
spouses for election as a director pursuant to this Section 2(c).
3. Request for Registration.
------------------------
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<PAGE>
(a) If at any time the Company shall receive a written request
(specifying that it is being made pursuant to this Section 3(a)) from Holders
holding more than thirty percent (30%) of the Registrable Securities held by all
Holders at that time outstanding, that the Company file a registration statement
or similar document under the Act covering the registration of Registrable
Securities with a market value of not less than $10,000,000, then the Company
shall promptly notify all other Holders of such request and shall use its best
efforts to cause all Registrable Securities that Holders have requested be so
registered to be registered under the Act. Holders shall have fifteen (15) days
after such notice to make such request.
(b) The Company shall be obligated to effect two registrations after
the date of this Agreement pursuant to Section 3(a); provided that the Company
shall not be obligated to effect any registrations pursuant to Section 3(a)
during the period ending two years after the date of the Initial Public
Offering.
4. Piggyback Registration. Subject to Section 7 and Section 10, if at
----------------------
any time or from time to time the Company proposes to register any of its equity
securities under the Act in connection with a primary or secondary public
offering of such securities solely for cash on a form that would also permit the
registration of the Registrable Securities (not including Form S-8 or Form S-4,
or any successor form to those forms), the Company shall, each such time,
promptly give each Holder written notice of the proposed registration. Upon the
written request of any Holder given within twenty (20) days after mailing of any
such notice by the Company, the Company shall use its best efforts to cause to
be registered under the Act all of the Registrable Securities that each such
Holder has requested be registered.
5. Registrations on Form S-3. If (i) a Holder or Holders request in
-------------------------
writing (specifying that it is being made pursuant to this Section 5) that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3 regardless of its designation) for a public offering of shares of
Registrable Securities, and (ii) the Company is a registrant eligible to use
Form S-3 to register such shares (and the Company shall use its reasonable best
efforts to become and remain eligible to use Form S-3), then the Company shall
notify all other Holders of such request and shall use its best efforts to cause
to be registered on Form S-3 (or any successor form to Form S-3) all of the
Registrable Securities that each Holder requests to be so registered. Holders
shall have fifteen (15) days after such notice to make such request. Rights to
registration under this Section 5 are unlimited in number and are in addition
to, and not in lieu of, rights to registration under Sections 3 and 4 above,
provided that the Company shall not be obligated to effect more than one
registration on Form S-3 pursuant to this Section 5 in any six-month period, and
provided further that the Company shall not be obligated to effect any
registrations pursuant to this Section 5 during the period ending two years
after the date of the Initial Public Offering.
6. Obligations of the Company. Whenever required under Sections 3, 4 or
--------------------------
5 to use its best efforts to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
-3-
<PAGE>
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such Registrable Securities,
and use its best efforts to cause such registration statement to become and
remain effective until all Registrable Securities to be sold under such
registration statement shall have been sold by Holders pursuant to such
registration statement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish and deliver to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus in conformity with the
requirements of the Act, and such other documents as they may reasonably
request, in order to facilitate the disposition of Registrable Securities owned
by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and further provided that
(notwithstanding anything in this Agreement to the contrary with respect to the
bearing of expenses) if any jurisdiction in which the securities shall be
qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by selling
shareholders, then such expenses shall be payable by selling shareholders pro
rata, to the extent required by such jurisdiction.
(e) In the event that Holders propose to sell Registrable Securities
pursuant to an underwritten offering registered pursuant to Section 3 or 5, the
Company shall have the right to approve the managing underwriters for such
offering proposed by a majority in interest of the Holders participating in such
offering; provided, however, that such approval shall not be unreasonably
withheld. The Company shall select the underwriters, if any, for any other
public offering of securities by the Company, regardless of the Holders' right
to participate in such offering pursuant to Section 4 hereof.
7. Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Agreement that
the Holders shall furnish to the Company such information regarding them, the
Registrable Securities held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
8. Expenses of Demand Registration. All expenses incurred in connection
-------------------------------
with a registration pursuant to Section 3 (excluding underwriters' discounts and
commissions), including without limitation all registration and qualification
fees, printers' and accounting fees,
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<PAGE>
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 3 if the
registration request is subsequently withdrawn, unless the Holders agree to
forfeit their right to one demand registration pursuant to Section 3.
9. Company Registration Expenses. In the case of any registration
-----------------------------
effected pursuant to Sections 4 or 5, the Company shall bear all registration
and qualification fees and expenses (excluding underwriters' discounts and
commissions), including any additional cost and disbursements of counsel for the
Company that result from the inclusion of securities held by the Holders in such
registration; provided, however, that each selling Holder shall bear the fees
and costs of its own counsel.
10. Underwriting Requirements. In connection with any offering involving
-------------------------
an underwriting of shares being issued by the Company, such Registrable
Securities as are requested to be included in such offering pursuant to this
Agreement shall be included in such offering on the same terms as other
securities of the same class as the Registrable Securities included in such
offering; provided, however, that if in the written good faith opinion of the
managing underwriter or underwriters, the total amount of such securities to be
so registered, when added to such Registrable Securities, will exceed the
maximum amount of the Company's securities which can be marketed without
otherwise materially and adversely affecting the entire offering, then the
Company shall exclude from such offering (a) first, all securities other than
Registrable Securities held by the Holders, being sold for the account of
persons other than the Company, (b) next, the minimum number of Registrable
Securities held by the Holders, pro rata to the extent practicable on the basis
of the number of Registrable Securities requested to be registered among the
selling Holders as is necessary in the opinion of the managing underwriter or
underwriters to reduce the size of the offering, and (c) last, the minimum
number of securities for the account of the Company which in the opinion of the
managing underwriter or underwriters may be excluded.
11. Delay of Registration. No Holder shall take any action to restrain,
---------------------
enjoin, or otherwise delay any registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this
Agreement.
12. Indemnification and Contribution. Subject to Section 7, and in the
--------------------------------
event any Registrable Securities are included in a registration statement under
this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder requesting or joining in a registration, any
underwriter (as defined in the Act) for it, and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934 (the "1934 Act") against any losses, claims,
damages or liabilities, joint or several, to which they may become subject under
the Act, the 1934 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact
-5-
<PAGE>
contained in such registration statement, including any preliminary prospectus
or final prospectus, or any amendments or supplements thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading or arise out of any violation by the Company of any rule or
regulation promulgated under the Act or the 1934 Act applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration; and will reimburse each such Holder such underwriter, or
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this paragraph 12(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each Holder requesting or joining in a
registration will severally indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, any
underwriter (as defined in the Act) for the Company, and each person, if any,
who controls the Company or such underwriter (within the meaning of the Act or
the 1934 Act) against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer, controlling person,
agent or underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus, or any amendments or supplements
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in such registration statement, preliminary or
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, agent or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 12(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld). The amount payable by
any Holder pursuant to this Section 12(b) shall be such Holder's pro rata share
of the total amount payable, based on the number of Registrable Securities
registered by such Holder.
-6-
<PAGE>
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof
and (unless the interest of the indemnifying party conflicts with that of the
indemnified party) the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties. The failure to notify an indemnifying
party promptly of the commencement of any such action, if prejudicial to his
ability to defend such action, shall relieve such indemnifying party, to the
extent that he is prejudiced thereby, of any liability to the indemnified party
under this paragraph, but the omission to notify the indemnifying party will not
relieve him of any liability that he may have to any indemnified party otherwise
than under this paragraph.
(d) In order to provide for just and equitable contribution to joint
liability under the Act in any case in which either (i) any Holder exercising
rights under this Agreement, or any controlling person of any such Holder, makes
a claim for indemnification pursuant to this Section 12 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 12 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
such selling Holder or any such controlling person in circumstances for which
indemnification is provided under this Section 12; then, and in each such case,
the Company and such Holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price represented by the
Registrable Securities registered by such Holder bears to the public offering
price of all securities registered on such registration statement, and the
Company is responsible for the remaining portion; provided, however, that, in
any such case, (A) no such Holder will be required to contribute any amount in
excess of the public offering price of all such Registrable Securities offered
by it pursuant to such registration statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of paragraph 11(f) of
the Act) will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
13. Reports Under Securities Exchange Act of 1934. With a view to making
---------------------------------------------
available to the Holders the benefits of Rule 144, and any other rule or
regulation of the SEC promulgated under the Act, the Company agrees to use its
best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to ninety (90) days
after the effective date of the first registration statement covering an
underwritten public offering filed by the Company;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1934 Act;
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<PAGE>
(c) furnish to any Holder so long as such Holders own any of the
Registrable Securities forthwith upon request a written statement by the Company
that it has complied with the reporting requirements of Rule 144 (at any time
after ninety (90) days after the effective date of said first registration
statement filed by the Company), and of the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC permitting the selling of any such
securities without registration; and
(d) file with any national securities exchange or automatic
quotation system, any and all registered documents to keep and maintain the
shares of the Company listed for trading with said exchange or quotation system.
14. Lockup Agreement. In consideration for the Company agreeing to its
----------------
obligations under this Agreement, each Holder agrees in connection with any
registration of the Company's Common Stock for sale to the general public that,
upon the request of the Company or the underwriters managing any underwritten
offering of the Company's securities, not to sell, make short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Registrable
Securities (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180 days) from the
effective date of such registration as the Company or the underwriters may
specify; provided, however, that the Company may not discriminate among the
Holders with respect to any lockup arrangements pursuant to this Section 14.
15. Assignment of Registration Rights. The registration rights of the
---------------------------------
Holders under Sections 3, 4 and 5 may not be assigned except to the Permitted
Transferees specified in Sections 1(f)(i) through (iv) and except that each
Shareholder (and their respective estates) may assign the registration rights
under Sections 4 and 5 to a transferee who acquires at least 10% of the Common
Stock outstanding at the time of transfer. The Company shall be given written
notice by the Holder at the time of such transfer stating the name and address
of the transferee and identifying the securities with respect to which the
rights under this Agreement are being assigned.
16. Effectiveness and Termination. This Agreement shall become effective
-----------------------------
upon the closing of the Initial Public Offering. The rights of Holders under
Sections 3, 4 and 5 of this Agreement shall terminate as to any Holder that
beneficially owns Registrable Securities constituting less than five percent
(5%) of the outstanding Common Stock of the Company.
17. Entire Agreement. This Agreement and the documents referred to herein
----------------
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and negotiations relating
thereto.
18. Governing Law. This Agreement, together with the rights and
-------------
obligations of the parties hereunder shall be governed by and construed and
enforced in accordance with the laws
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<PAGE>
of the Commonwealth of Pennsylvania without regard to any jurisdiction's
conflicts of laws provisions.
19. Payment of Legal Fees. If a Holder is required to bring any action to
---------------------
enforce rights under this Agreement, the Company shall pay to the Holder the
fees and expenses incurred by him in bringing and pursuing such action if the
Holder is successful, in whole or in part, on the merits or otherwise (including
by way of a settlement involving a payment of money by the Company to the
Holder), in such action. The Company shall pay such fees and expenses in
advance of the final disposition of such action upon receipt of an undertaking
from the Holder to repay to the Company such advances if he is not ultimately
successful, in whole or in part, on the merits or otherwise, in such action.
20. 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.
21. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are for convenience only and are not to be considered in construing or
interpreting this Agreement.
22. Notices. Any notice, request or other communication required or
-------
permitted under this Agreement shall be given in writing and shall be deemed to
be effectively given upon (i) personal delivery, (ii) delivery by overnight
courier service which provides evidence of delivery, (iii) legible facsimile
transmission, or (iv) the expiration of three (3) days following deposit with
the United States Postal Service, by registered or certified mail, postage
prepaid, addressed, in each case, as follows:
If to the Company:
Mastech Corporation
1004 McKee Road
Oakdale, PA 15071
with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, Pennsylvania 15219
Attn: Carl A. Cohen, Esq.
Telephone: (412) 562-8854
Facsimile: (412) 562-1041
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<PAGE>
If to Wadhwani:
Mr. Sunil Wadhwani
930 Osage Road
Pittsburgh, PA 15243
If to Trivedi
Mr. Ashok Trivedi
1446 Peterson Place
Pittsburgh, PA 15241
or at such other address as any party, including any Holder, may designate by
ten (10) days advance written notice to the other party in accordance with the
provisions of this paragraph.
23. Amendments. This Agreement may not be amended and no rights of the
----------
Holders may be waived without the written consent of the Company and the Holders
of at least a majority in interest of the then outstanding Registrable
Securities. Any amendment or waiver so approved shall be binding on and
enforceable against all Holders.
[remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by a duly authorized representative as of the day first above written.
MASTECH CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
_____________________________________
SUNIL WADHWANI
_____________________________________
ASHOK TRIVEDI
The undersigned agree to be bound by the terms of this Agreement.
WADHWANI SUBCHAPTER S FAMILY TRUST
By:__________________________, Trustee
TRIVEDI SUBCHAPTER S FAMILY TRUST
By:__________________________, Trustee
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