<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1999
--------------------
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ___________
Commission File Number 000-21755
iGATE CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1802235
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1004 McKee Road
Oakdale, Pennsylvania 15071
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 787-2100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days:
YES [ X ] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 20, 2000 (based on the closing price of such stock as
reported by THE NASDAQ STOCK MARKET on such date) was $634,608,023 (calculated
by excluding shares owned beneficially by directors and executive officers as a
group from total outstanding shares solely for the purpose of this response).
The number of shares of the registrant's Common Stock outstanding as of April
20, 2000 was 49,469,167.
DOCUMENTS INCORPORATED BY REFERENCE
<PAGE>
None.
This Form 10-K/A amends the Form 10-K previously filed by the registrant with
the Securities and Exchange Commission on March 30, 2000 (the "Original
Report"). Part III of the Original Report was incorporated by reference to the
registrant's definitive Proxy Statement for its 2000 Annual Meeting of
Shareholders. The definitive Proxy Statement will not be filed with the
Securities and Exchange Commission within the 120-day period following the end
of the Company's fiscal year covered by the Original Report. Accordingly, the
registrant is filing this amendment to timely provide the information required
by Part III of Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
DIRECTORS
The Board of Directors is presently composed of five members.
Michel Berty, age 60, was appointed as a director of the Company effective
immediately after the Company's initial public offering in December 1996, and
was elected as a Class A director by the shareholders in 1997 to serve a three
year term expiring in 2000. Mr. Berty served in various executive and management
positions with the Cap Gemini Group, a provider of management consulting and
information technology services, from 1972 through April 1997, and most
recently, from 1992 through April 1997, as Chairman and Chief Executive Officer
of the U.S. subsidiary of Cap Gemini. Mr. Berty serves as a member of the board
of directors of DataRaid, Elligent Consulting, Level 8 Systems, Merant, NetGain,
Sapiens International and Tek21. He is also the President of PAC U.S., the U.S.
subsidiary of PAC, a foreign information technology strategy consulting firm.
J. Gordon Garrett, age 60, was appointed as a director of the Company
effective immediately after the Company's initial public offering in December
1996, and was elected as a Class A director by the shareholders in 1997 to serve
a three year term expiring in 2000. From 1996 to 2000, Mr. Garrett was Senior
Vice President of Ricoh Corp. located in Caldwell, New Jersey, a manufacturer
and distributor of digital imaging systems, printers, cameras and related
supplies, and Chief Executive Officer of Ricoh Canada. From 1991 to 1995, Mr.
Garrett was Chairman of the Board, Chief Executive Officer and President of
Information Systems Management Corporation. He held the position of President of
Gestetner USA from 1989 to 1991.
Sunil Wadhwani, age 47, has served as Co-Chairman and Chief Executive Officer
of the Company since October 1996, and as a director since 1986. He was elected
as a Class C director by the shareholders in 1999 to serve a three year term
expiring in 2002. From 1986 through September 1996, he served as Chairman of the
Company and held several other offices, including Vice President, Secretary and
Treasurer. From 1981 to 1986, Mr. Wadhwani served as President of Uro-Valve,
Inc., a start-up manufacturer of specialized medical devices that he founded in
1981. Prior to 1981, Mr. Wadhwani worked as a management consultant assisting
companies in strategic planning, operations, marketing and sales.
Ashok Trivedi, age 51, has served as Co-Chairman and President of the Company
since October 1996, and as a director since 1988. He was elected as a Class B
director by the shareholders in 1998 to serve a three year term expiring in
2001. From 1988 through September 1996, Mr. Trivedi served as President of the
Company and held other offices, including Secretary and Treasurer. From 1976 to
1988, he held various marketing and management positions with Unisys
Corporation.
Ed Yourdon, age 56, was appointed as a director of the Company effective
immediately after the Company's
<PAGE>
initial public offering in December 1996, and was elected as a Class B
director by the shareholders in 1998 to serve a three year term expiring in
2001. Mr. Yourdon has served as a consultant to the information technology
industry for the past thirty-five years, most currently focusing on the
Internet, business re-engineering, object technology and the design of
Internet/intranet software applications.
EXECUTIVE OFFICERS
In addition to Messrs. Wadhwani and Trivedi, whose positions and background
are discussed above, the following persons served in 1999 or serve as of the
date hereof as executive officers of the Company:
Murali Balasubamanyam, age 44, was appointed Director of the Scott Systems
division of Mascot Systems, a wholly owned subsidiary of the Company, on January
8, 2000. He served as Director of Scott Systems, which was a wholly owned
subsidiary of the Company, from July 1998 until substantially all of the assets
of Scott Systems were sold to Mascot Systems effective January 8, 2000. From
October 1995 to June 1998, he served as the Company's Vice President--Human
Resources and from September 1994 to September 1995, he served as the Company's
Director--Human Resources. Prior to joining the Company, he served as Deputy
General Manager (Human Resources) with HCL Group of Companies, a provider of
marketing services in the Asia/Pacific region, from November 1992 to September
1994. Mr. Balasubamanyam earned a Bachelor's degree in Business Administration
from Madurai University. As a result of the sale of the assets of Scott Systems
and the reorganization of the Company effected in 2000, Mr. Balasubamanyam is no
longer an executive officer of the Company.
Bruce Haney, age 44, was appointed Managing Director and Chief Financial
Officer of the Company on March 1, 2000. Mr. Haney served as Chief Financial
Officer of FORE Systems, Inc., a provider of high performance local area network
products, from June 1998 through December 1999, and from June 1986 to June 1998
he served as President and Co-Founder of the Gustine Company. Mr. Haney worked
for Arthur Andersen LLP for six years, most recently as a tax manager, prior to
his founding of the Gustine Company. Mr. Haney serves on the Board of Directors
of Infosage, Inc., and CTR Systems, Inc. He has a Master's degree in Taxation
from DePaul University and a Bachelor's degree in Economics from the University
of Pennsylvania's Wharton School and is a certified public accountant in the
State of Pennsylvania.
Lisa Kustra, age 40, was appointed Chief Executive Officer of eJIVA Inc., on
September 15, 1999. eJIVA Inc. is a majority owned operating subsidiary of
iGate Capital Corporation. Ms. Kustra served as Senior Vice President--
Enterprise Package Solutions Division of the Company from August 1998 through
September 15, 1999. From September 1997 to July 1998, she served as the Vice
President--Enterprise Package Solutions Division and from January 1996 to August
1997, she served as the Director of the Company's Enterprise Package Solutions
Division. From August 1992 to December 1995, Ms. Kustra held various managerial
positions with the Company including National Sales Manager--Strategic Alliance
Division. Ms. Kustra earned Bachelors' degrees in Business Management and
Psychology from the University of Pittsburgh. As a result of her appointment as
Chief Executive Officer of eJIVA, Inc. and the reorganization of the Company in
2000, Ms. Kustra is no longer an executive officer of the Company.
Jeffrey McCandless, age 41, served as Vice President--Finance and Chief
Financial Officer of the Company from November 1997 until his resignation from
the Company effective March 17, 2000. Prior to joining the Company, he was
employed by Winner International, a manufacturer of anti-theft and other
security products, as Chief Financial Officer from November 1991 through October
1997. Mr. McCandless is a certified public accountant with over 19 years of
financial and operational experience. Mr. McCandless earned a Bachelor's degree
in Business Administration from Westminster College.
Ajmal Noorani, age 38, was appointed Chief Executive Officer of Ex-tra-Net
Applications on January 18, 2000. Ex-tra-Net Applications is a majority owned
operating subsidiary of iGate Capital Corporation. Mr. Noorani served as Vice
President--E-Business Solutions Division of the Company from March 1999 through
January 18, 2000. From June 1996 to February 1999 he was the Company's Vice
President--International Operations. From
<PAGE>
June 1994 to May 1996, he was employed by Mellon Bank as an Assistant Vice
President--Corporate Finance. From 1990 to May 1994, Mr. Noorani held a number
of positions with the Company, including Director--Government Division. Mr.
Noorani earned a Master's degree in Industrial Administration from Carnegie-
Mellon University and a Bachelor's degree in Engineering from Maharaja
Sayajrao University. As a result of his appointment as Chief Executive Officer
of Ex-tra-Net Applications and the reorganization of the Company in 2000, Mr.
Noorani is no longer an executive officer of the Company.
Sushma Rajagopalan, age 36, served as Vice President--Enterprise Network
Solutions of the Company from June 1999 until April 1, 2000, when she became
President of Enterprise Network Solutions, Inc., a wholly owned subsidiary of
the Company formed for the purpose of entering into a joint venture with
Planning Technologies, Inc. ("PTI"). Enterprise Network Solutions was merged
with and into PTI in conjunction with the joint venture, and Ms. Rajagopalan is
currently the President of Operations of PTI. From October 1995 to June 1999,
she served as Vice President - Global Resourcing and Recruiting of the Company.
From June 1993 to October 1995, she served as the Company's Director--Federal
Division, and between November 1992 and June 1993, she held various managerial
positions with the Company. Ms. Rajagopalan earned a Master's degree in
Personnel Management from the Tata Institute of Social Sciences. As a result
of the merger of Enterprise Network Solutions Inc. with and into PTI, Ms.
Rajagopalan is no longer an executive officer of the Company.
Steven Shangold, age 39, was appointed Chief Executive Officer of Emplifi Inc.
on April 6, 2000. Emplifi Inc. is a wholly owned operating subsidiary of iGate
Capital Corporation. Mr. Shangold served as Senior Vice President--U. S. Client
Services of the Company from August 1998 through April 6, 2000. From September
1995 through July 1998, he served as the Company's Vice President of U.S. Sales
and Marketing. From February 1992 through September 1995, he served as the
Company's Sales Director--Commercial Division. Mr. Shangold earned a Bachelor's
degree in Management from Syracuse University and a Bachelor's degree in
Advertising from the S.I. Newhouse School.
Michael Zugay, age 48, was appointed Managing Director - Mergers and
Acquisitions on April 6, 2000. He served as Vice President--Corporate
Development of the Company from November 1997 until his appointment as Managing
Director. From March 1995 through October 1997, he served as the Company's Vice
President--Finance. From March 1994 to March 1995, he served as an independent
consultant to the steel industry. From 1990 through February 1994, he served as
President and CEO of Bliss-Salem, Inc., a provider of products to the steel
industry. Mr. Zugay is a certified public accountant with over 26 years of
financial and operational experience. Mr. Zugay earned a Bachelor's degree in
Business Management from Indiana University of Pennsylvania. As a result of his
appointment as Managing Director - Mergers and Acquisitions and the
reorganization of the Company in 2000, Mr. Zugay is no longer an executive
officer of the Company.
The Company's executive officers are appointed and serve as such at the
discretion of the Board of Directors. Each executive officer is a full-time
employee of the Company. There are no family relationships between any director
or executive officer of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10 percent of a registered class of the Company's
equity securities, to file reports of ownership and change in ownership with the
Securities and Exchange Commission (the "Commission") and NASDAQ. Directors,
executive officers and other 10 percent shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) reports that
they file.
Based solely on its review of the copies of such reports, and written
representations from the reporting persons, the Company believes that during
1999, all filing requirements under Section 16(a) applicable to its directors
and executive officers were met.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
----------------------
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the annual
and long-term compensation of the Company's Chief Executive Officer and each of
the four other most highly compensated individuals who were executive officers
of the Company at the end of 1999 (such executive officers are sometimes
collectively referred to herein as the "Named Executive Officers"). The
information in this table is presented for the three years ended December 31,
1999, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------- ---------------------------
Securities
Other Annual Restricted Underlying All Other
Name and Compensation Stock Awards Options/SARs Compensation
Principal Position Year Salary ($) Bonus ($)(1) ($)(2)(3) ($) (#) ($)
- ------------------ ---- --------- ----------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sunil Wadhwani 1999 292,000 218,000 17,416 -- -- --
Co-Chairman and Chief 1998 303,846 288,879 20,540 -- -- --
Executive Officer 1997 300,000 158,473 20,334 -- -- --
Ashok Trivedi 1999 292,000 218,000 17,859 -- -- --
Co-Chairman 1998 303,846 288,879 20,414 -- -- --
And President 1997 300,000 158,473 20,306 -- -- --
Steven Shangold (4) 1999 226,000 201,000 -- -- -- --
Senior Vice President - 1998 219,871 206,577 -- -- 150,000 --
U.S. Client Services 1997 150,000 186,365 -- -- -- --
Lisa Kustra (5) 1999 217,000 176,400 2,668 -- -- --
Senior Vice President - 1998 164,564 210,708 -- -- 90,000 --
Enterprise Package Solutions 1997 80,000 170,240 -- -- -- --
Division
Ajmal Noorani (6) 1999 183,000 145,184 -- -- -- --
Vice President - E-Business 1998 179,808 105,421 -- -- -- --
Solutions Division 1997 150,000 73,672 -- -- -- --
</TABLE>
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(1) Bonuses were paid in 1999, 1998 and 1997 for performance in 1998, 1997 and
1996, respectively.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted when such perquisites and other personal benefits
constituted less than 10% of the total annual salary and bonus for each of
the named executive officers for such year.
(3) During 1999, 1998 and 1997, the Company leased automobiles for Messrs.
Wadhwani and Trivedi. The incremental costs to the Company in 1999, 1998
and 1997 for the automobiles leased was $17,417, $20,540 and $20,334,
respectively for Mr. Wadhwani and $17,859, $20,414 and $20,306,
respectively for Mr. Trivedi. Ms. Kustra received a car allowance for a
portion of 1999.
(4) On April 6, 2000, Steven Shangold was appointed Chief Executive Officer of
Emplifi Inc., a wholly owned operating subsidiary of iGate Capital
Corporation.
(5) On September 15, 1999, Lisa Kustra was appointed Chief Executive Officer of
eJIVA Inc., a majority owned operating subsidiary of iGate Capital
Corporation.
(6) On January 18, 2000, Ajmal Noorani was appointed Chief Executive Officer of
Ex-tra-Net Applications, a majority owned operating subsidiary of iGate
Capital Corporation.
<PAGE>
OPTION GRANTS DURING 1999
The following table sets forth the number of shares of the Company's Common
Stock underlying options granted, the exercise price per share and the
expiration date of all options granted to each of the Named Executive Officers
during 1999.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs Exercise or
Underlying Granted to Base Price
Options/SARs Employees in Per Share Expiration Grant Date
Granted (1) Fiscal Year ($) Date Value ($)(2)
------------ ---------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Executive Officer
- -----------------
Sunil Wadhwani............................... -- -- -- -- --
Ashok Trivedi................................ -- -- -- -- --
Steven Shangold.............................. 35,000 1.3% 11.75 10/12/2009 268,849
Lisa Kustra.................................. -- -- -- -- --
Ajmal Noorani................................ 20,000 0.8% 28.63 1/1/2009 374,262
15,000 0.6% 11.75 10/12/2009 115,221
</TABLE>
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(1) The options granted during 1999 vest as follows: (i) of the 35,000 options
awarded to Mr. Shangold on October 13, 1999, 11,664 vest on October 13,
2000, and 5,834 vest on each of March 13, 2001, October 13, 2001, March 13,
2002, and October 13, 2002, respectively; (ii) the 20,000 options awarded
to Mr. Noorani on January 1, 1999 vest in equal annual installments over
four years, commencing on July 1, 1999; (iii) of the 15,000 options awarded
to Mr. Noorani on October 13, 1999, 5,000 shares vest on October 13, 2000,
and 2,500 vest on each of March 13, 2001, October 13, 2001, March 13, 2001,
and October 13, 2002, respectively.
(2) The fair market value of each option granted is estimated on the date of
grant using the Black-Scholes option pricing model with the following
weighted average assumptions for grants in 1999: (i) risk free interest
rate of 6.5%; (ii) expected dividend yield of 0.0%; (iii) expected life of
options of five (5) years; and (iv) an expected volatility rate of 73.9%.
OPTION EXERCISES DURING 1999 AND YEAR END OPTION VALUES
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1999, by each of the Named Executive Officers:
<TABLE>
<CAPTION>
Number of Securities Value of In-The-Money
Underlying Options/SARs Options/SARs
Shares Acquired Value at Fiscal Year End (#) at Fiscal Year End ($)
Executive Officer on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---------------------------------- ---------------- ------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sunil Wadhwani.................... -- -- --/-- --/--
Ashok Trivedi..................... -- -- --/-- --/--
Steven Shangold................... -- -- 101,666/133,334 $809,014/$1,374,037
Lisa Kustra....................... -- -- 73,333/63,333 $892,690/$589,870
Ajmal Noorani..................... 10,000 $124,690 35,000/70,000 $517,500/$885,000
</TABLE>
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(1) The closing price for the Company's Common Stock as reported by THE NASDAQ
NATIONAL MARKET tier of THE NASDAQ STOCK MARKET on December 31, 1999 was
$24.75. Value is calculated on the basis of the difference between the
option exercise price and $24.75, multiplied by the number of shares of
Common
<PAGE>
Stock underlying the option.
EMPLOYMENT AGREEMENTS
The Company and each of Messrs. Wadhwani and Trivedi are parties to
substantially identical employment agreements ("Executive Employment
Agreements") that were negotiated at arms-length and entered into prior to the
Company's initial public offering and became effective upon consummation of the
offering. Each Executive Employment Agreement is in effect for a rolling two-
year term that is automatically restarted at the conclusion of each month during
which neither party gives notice of his or its intention to terminate the
agreement. Once either the executive or the Company gives such termination
notice to the other party, the term of such Executive Employment Agreement will
terminate on the date that is two years after the last day of the month in which
such written notice is received. Each Executive Employment Agreement provides
for a base salary of $300,000 (subject to increase at the discretion of the
Board of Directors) and the right to receive an annual discretionary performance
bonus of not less than $200,000 upon approval by the Board of Directors and
payable no later than April 15 of each calendar year. Each Executive Employment
Agreement provides that upon termination of employment other than as a result of
death, retirement or termination by the Company for cause or disability (as such
terms are defined in the agreements), the Company shall pay the executive (i) a
lump sum severance payment equal to the amount, discounted to present value, the
executive would have been paid, based upon his base salary at the time of
termination, if such executive had remained an employee for the remaining term
of his respective Executive Employment Agreement, (ii) shares of Common Stock
having a value equal to the value of the executive's vested and unvested stock
options and stock appreciation rights, and (iii) health insurance for the
executive for the remainder of his life at the level in effect for such
executive immediately prior to the termination of his employment. In the event
the executive is terminated due to a disability (as defined in the Executive
Employment Agreement), the Company will pay the executive's base salary for
three years, reduced by any benefits to which the executive may be entitled
under any Company-sponsored disability income or income protection plan, policy
or arrangement, and, for each of the three years after the date of his
termination, an amount equal to the highest annual bonus that he received in the
three years prior to his termination, payable each year in a lump sum. In the
event that the employment of an executive is terminated as a result of such
executive's death, the Company will pay to the executive's legal representatives
(x) a one-time payment of $100,000, (y) the executive's then current base salary
for a twelve (12) month period, and (z) any benefits to which the executive's
legal representatives are entitled under any of the Company's insurance policies
or benefit plans or programs. In addition, the Company will arrange to provide
the executive's surviving spouse and eligible dependents with health and
accident insurance benefits substantially similar to those that the executive
was receiving immediately prior to his death. Under the Executive Employment
Agreements, the Company agrees to indemnify the executives to the full extent
not prohibited by law for liabilities they incur in their capacity as directors,
officers or controlling persons of the Company. Under the Executive Employment
Agreements, the executives agree to a noncompetition covenant during the term of
the agreement and for one year after the termination of their employment for
cause and to nonsolicitation and nondisclosure covenants during the term of the
agreement and for one year after the termination of their employment for any
reason.
The other Named Executive Officers are parties to employment agreements that
outline their responsibilities and provide generally for base salary plus annual
incentive bonuses. Under the agreements, the Named Executive Officers are
entitled to three months' salary continuation if they are terminated by the
Company without cause generally, and to six months' salary continuation if they
are terminated by the Company without cause during the 90 days following the
sale of the Company to a third party. The employment agreements also contain
confidentiality provisions and noncompetition and nonsolicitation covenants.
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid an annual retainer of
$20,000 and all directors are reimbursed for travel expenses incurred in
connection with attending Board and committee meetings. Directors are not
entitled to additional fees for serving on committees of the Board of Directors.
Pursuant to the terms of the
<PAGE>
Company's 1996 Stock Incentive Plan, as amended, each of Messrs. Berty, Garrett
and Yourdon, the non-employee directors of the Company, were granted (i) options
to purchase 30,000 shares of Common Stock in December of 1996 (the "1996
Options") and (ii) options to purchase 15,000 shares of Common Stock in
September of 1999 (the "1999 Options"). The options vest in equal annual
installments over three years and expire ten years after grant, subject to
earlier termination if the optionee ceases to serve as a director prior to
vesting. All of the 1996 Options had vested as of December 16, 1999. The first
of three annual installments of the 1999 Options will qualify for vesting as of
September 13, 2000. The exercise price for the 1996 Options was $7.50 per share,
which was the price per share for the Common Stock in the Company's initial
public offering as adjusted pursuant to a subsequent two-for-one stock split.
The exercise price for the 1999 Options is $14.31.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1999 the Compensation Committee consisted
of Messrs. Berty, Garrett and Trivedi. Mr. Trivedi served as a director and as
Co-Chairman and President of the Company, and he is the co-owner of certain
properties located in India that are leased to a subsidiary of the Company.
These relationships are described in more detail below.
Mascot Systems, a wholly owned subsidiary of the Company, leases office space
located in Bangalore and Chennai, India that is owned in part by Mr. Trivedi.
Specifically, Mascot System leases approximately 4,500 square feet in an office
building located in Bangalore. The acquisition of the real estate and the
construction of this office building (but not the buildout of office space) were
financed entirely by Messrs. Trivedi and Wadhwani out of their personal
funds. The lease has a ten-year term expiring in February 2008, with a rent
revision clause every March, and the rent is approximately $29,000 per year.
Mascot Systems also leases a 32,500-square-foot office building located in
Bangalore that is owned in part by Mr. Trivedi. This lease has a ten-year term
expiring in October 2006, and the rent is approximately $95,000 per year.
Mascot Systems also rents office space in Chennai that is owned in part by Mr.
Trivedi for The Offshore Development Center. The lease agreement is in effect
for a ten-year period beginning March 1998 and expiring February 2008, and the
annual rent is $449,000. The rental agreement may be revised each March.
Mascot Systems has also rented approximately 9,000 square feet of additional
space owned that is in part by Mr. Trivedi for its facilities located in
Bangalore and Chennai for which rent in the amount of $5,500 was paid during
1999.
On January 8, 2000, substantially all of the assets of Scott Systems, a wholly
owned subsidiary of the Company were sold to Mascot Systems. Scott Systems was
party to three leases for office space owned in part by Mr. Trivedi, and those
leases were assigned to Mascot Systems in conjunction with the sale. One lease,
for training facilities, covers approximately 2,100 square feet of office space
on one floor of an office building located in Mumbai (Bombay, India). The lease
expires in March 2003, and the aggregate rent is approximately $20,000 per year.
Mascot Systems also leases approximately 900 square feet on another floor in the
same office building. This lease has a term that expires in August 2007, and the
rent is $6,000 per year. Mascot Systems also leases a portion of a facility in
Pune, India that is owned in part by Mr. Trivedi. This lease covers 7,500 square
feet and expires in August 2007. The rent is approximately $18,000 per year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 29, 2000 of: (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock; (ii) each executive officer named in the Summary
Compensation Table under the caption "Executive Compensation"; and (iii) all
directors and executive officers of the Company as a group. As of February 29,
2000, there were 50,688,015 shares of Common Stock outstanding. Except as noted
all persons listed below have sole voting and investment power with respect to
their shares of Common Stock, subject to community property laws where
applicable.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
-----------------------------------------
Percentage of
Name and Address of Shares of Common Stock
Beneficial Owner Common Stock Outstanding
------------------- ------------ -------------
<S> <C> <C>
Sunil Wadhwani (1)(2)....................................................... 14,880,000 30 %
Ramesh Thadani, as co-trustee of a Wadhwani family trust (2)(3)............. 2,398,315 4.8
Ashok Trivedi (2)(4)........................................................ 14,880,000 30
Arun Nayar, as co-trustee of certain Trivedi family trusts (2)(5)........... 4,370,597 8.8
Mohan Phanse, as co-trustee of certain Trivedi family trusts (2)(5)......... 2,395,034 4.8
Michel Berty................................................................ 20,000 *
J. Gordon Garrett........................................................... 35,600 *
Ed Yourdon.................................................................. 30,000 *
Steven Shangold (6)......................................................... 111,668 *
Lisa Kustra ................................................................ 0 *
Ajmal Noorani............................................................... 35,000 *
All directors and executive officers as a group 13 persons (7).............. 30,347,268 61.3
</TABLE>
- -------------------
* Less than 1%
(1) Includes 4,372,261 shares held by three family trusts, for which Mr.
Wadhwani is a co-trustee with sole investment power and no voting power over
such shares.
(2) The address of Messrs. Wadhwani, Trivedi, Thadani, Nayar and Phanse is c/o
iGate Capital Corporation, 1004 McKee Road, Oakdale, Pennsylvania 15071.
(3) Mr. Thadani is a co-trustee of two of the Wadhwani family trusts referred
to in note 1, above, with no investment power and sole voting power over
such shares.
(4) Includes 4,370,597 shares held by three family trusts, for which Mr.
Trivedi is a co-trustee with sole investment power and no voting power over
such shares.
(5) Mr. Nayar is co-trustee of the three Trivedi family trusts and Mr. Phanse
is co-trustee of two of the Trivedi family trusts, in each case, referred to
in note 4 above, with no investment power and shared voting power over such
shares.
(6) Includes 10,000 shares of Common Stock underlying options that are
exercisable on or before February 29, 2000 or within 60 days after such
date.
(7) Includes 40,000 shares of Common Stock underlying options, which are
exercisable on or before February 29, 2000 or within 60 days after such
date.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Mascot Systems, a wholly owned subsidiary of the Company, leases office space
located in Bangalore and Chennai, India from the controlling shareholders
Messrs. Wadhwani and Trivedi. Specifically, Mascot System leases approximately
4,500 square feet in an office building located in Bangalore. The acquisition
of the real estate and the construction of this office building (but not the
buildout of office space) were financed entirely by Messrs. Wadhwani and Trivedi
out of personal funds. The lease has a ten-year term expiring in February 2008,
with a rent revision clause every March, and the rent is approximately $29,000
per year. Mascot Systems also leases a 32,500-square-foot office building
located in Bangalore owned by Messrs. Wadhwani and Trivedi. This lease has a
ten-year term expiring in October 2006, and the rent is approximately $95,000
per year. Mascot Systems also rents office space in Chennai from Messrs.
Wadhwani and Trivedi for The Offshore Development Center. The lease agreement
is in effect for a ten-year period beginning March 1998 and expiring February
2008, and the annual rent is $449,000. The rental agreement may be revised each
March. Mascot Systems has also rented approximately 9,000 square feet of
additional space for its facilities located in Bangalore and Chennai from
Messrs. Wadhwani and Trivedi for which rent in the amount of $5,500 was paid
during 1999.
On January 8, 2000, substantially all of the assets of Scott Systems, a wholly
owned subsidiary of the Company were sold to Mascot Systems. Scott Systems was
party to three leases for office space owned by Messrs. Wadhwani and Trivedi and
those leases were assigned to Mascot Systems in conjunction with the sale. One
lease, for training facilities, covers approximately 2,100 square feet of office
space on one floor of an office building located in Mumbai (Bombay, India). The
lease expires in March 2003, and the aggregate rent is approximately $20,000 per
year. Mascot Systems also leases approximately 900 square feet on another floor
in the same office building. This lease has a term that expires in August 2007,
and the rent is $6,000 per year. Mascot Systems also leases a portion of a
facility in Pune, India from Messrs. Wadhwani and Trivedi. This lease covers
7,500 square feet and expires in August 2007. The rent is approximately $18,000
per year.
Ajmal Noorani, Chief Executive Officer of Ex-tra-Net Applications,
participates as a limited partner in iGate Ventures I L.P. (the "Fund"), a
venture fund in which the Company has a majority ownership interest. Pursuant to
the Fund's limited partnership agreement, he is entitled to allocated earnings
and profits of the Fund based upon his percentage ownership. In addition, Mr.
Noorani is subject to a capital call in the amount of $60,000, the proceeds of
which will be used for the Fund's investment objectives. As of the date hereof,
the Fund has not made a capital call to its limited partners.
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ---------------------------------------------------------------------
3.1 Amended and Restated Articles of Incorporation of the Company. (1)
3.2 Bylaws of the Company are incorporated by reference from Exhibit 3.2
to iGate Capital Corporation's Registration Statement on Form S-1,
Commission File No. 333-14169, filed on November 19,1996.
4.1 Credit Agreement dated December 3, 1998 between the Company and PNC
Bank, National Association incorporated by reference to Exhibit 10.23
to Annual Report on Form 10-K for the year ended December 31, 1998.
4.2 Note Purchase Agreement dated as of July 22, 1999 between iGate
Capital Corporation and GE Capital Equity Investments, Inc. is
incorporated by reference from Exhibit 4.1 to the Quarterly Report on
Form 10-Q, File No. 000-21755 filed on November 15, 1999.
4.3 Registration Rights Agreement dated as of July 22, 1999 between iGate
<PAGE>
Capital Corporation and GE Capital Equity Investments, Inc. is
incorporated by reference from Exhibit 4.2 to the Quarterly Report on
Form 10-Q No.000-21755 filed on November 15, 1999.
10.1(a) Employment Agreement dated December 16, 1996 by and between the
Company and Sunil Wadhwani.*+
10.1(b) Employment Agreement dated December 16, 1996 by and between the
Company and Ashok Trivedi.*+
10.2 1996 Stock Incentive Plan is incorporated by reference from Exhibit
10.2 to iGate Capital Corporation's Registration Statement on Form S-
1, Commission File No. 333-14169, filed on November 19,1996.*
10.3 Amended and Restated 1996 Stock Incentive Plan is incorporated by
reference from the Quarterly Report on Form 10-Q, File No. 000-21755
filed on November 16, 1998.*
10.4 Second Amended and Restated 1996 Stock Incentive Plan is incorporated
by reference from Exhibit 99.1 to iGate Capital Corporation's
Definitive Proxy Statement, File No. 000-21755 filed on December 30,
1998.*
10.5 Agreement dated October 14, 1996 between iGate Capital Systems
Corporation (f/k/a Mastech Corporation) and Steven Shangold, as
amended by Addendum dated as of November 18, 1996, is incorporated by
reference from Exhibit 10.3 to iGate Capital Corporation's
Registration Statement on Form S-1, Commission File No. 333-14169,
filed on November 19, 1996.*
10.6(a) Employment Agreement dated December 8, 1996 by and between the
Company and Steven Shangold.*+
10.6(b) Employment Agreement dated December 8, 1996 by and between the
Company and Ajmal Noorani.*+
10.6(c) Employment Agreement dated August 21, 1999 by and between the Company
and Lisa Kustra.*+
10.7 Shareholders Agreement by and among the Company, Sunil Wadhwani and
Ashok Trivedi and the Joinder Agreement by Grantor Retained Annuity
Trusts established by Messrs. Wadhwani and Trivedi are incorporated
by reference from Exhibit 10.5 to iGate Capital Corporation's
Registration Statement on Form S-1, Commission File No. 333-14169,
filed on December 16, 1996.
10.10 Lease Agreement dated January 15, 1995 by and between Mascot Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Bangalore, India is incorporated by reference from Exhibit 10.10 to
iGate Capital Corporation's Registration Statement on Form S-1,
Commission File No. 333-14169, filed on November 19, 1996.
10.11 Lease Agreement dated November 6, 1996 by and between Mascot Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Bangalore, India is incorporated by reference from Exhibit 10.11 to
iGate Capital Corporation's Registration Statement on Form S-1,
Commission File No. 333-14169, filed on November 19, 1996.
<PAGE>
10.12 Lease Agreement dated January 15, 1998 by and between Mascot Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Bangalore, India incorporated by reference to Exhibit 10.12 to Annual
Report on Form 10-K for the year ended December 31, 1998.
10.13 Lease Agreement dated March 26, 1997 by and between Mascot Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Bangalore, India incorporated by reference to Exhibit 10.13 to Annual
Report on Form 10-K for the year ended December 31, 1998.
10.14 Lease Agreement dated January 13, 1998 by and between Mascot Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Chennai, India incorporated by reference to Exhibit 10.14 to Annual
Report on Form 10-K for the year ended December 31, 1998.
10.15 Lease Agreement dated April 1, 1996 by and between Scott Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Bombay, India is incorporated by reference from Exhibit 10.12 to
iGate Capital Corporation's Registration Statement on Form S-1,
Commission File No. 333-4169, filed on November 19, 1996.
10.16 Lease Agreement dated April 1, 1996 by and between Scott Systems
Private Limited and Sunil Wadhwani for real estate in Bombay, India
is incorporated by reference from Exhibit 10.13 to iGate Capital
Corporation's Registration Statement on Form S-1, Commission File No.
333-14169, filed on November 19, 1996.
10.17 Lease Agreement dated April 1, 1996 by and between Scott Systems
Private Limited and Ashok Trivedi for real estate in Bombay, India is
incorporated by reference from Exhibit 10.14 to Mastech Corporation's
Registration Statement on Form S-1, Commission File No. 333-14169,
filed on November 19, 1996.
10.18 Lease Agreement dated April 18, 1998 by and between Scott Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Mumbai, India incorporated by reference to Exhibit 10.18 to Annual
Report on Form 10-K for the year ended December 31, 1998.
10.19 Lease Agreement dated April 18, 1998 by and between Scott Systems
Private Limited and Messrs. Wadhwani and Trivedi for real estate in
Mumbai, India incorporated by reference to Exhibit 10.19 to Annual
Report on Form 10-K for the year ended December 31, 1998.
10.20 Stock Purchase Agreement by and between the Company and Messrs.
Wadhwani and Trivedi for Their shares of Mascot Systems Private
Limited (incorporated by reference to Exhibit 10.20 on Form S-1 of
iGate Capital Corporation, Commission File No. 333-14169, filed on
November 19, 1996).
10.21 Agreement and Plan of Merger by and between the Company and SWAT
Systems is incorporated by reference from Exhibit 10.15 to iGate
Capital Corporation's Registration Statement on Form S-1, Commission
File No. 333-14169, filed on November 19, 1996.
10.22 Form of S-corporation Revocation, Tax Allocation and Indemnification
Agreement is incorporated by reference from Exhibit 10.17 to iGate
Capital Corporation's Registration Statement on Form S-1, Commission
File No. 333-14169, filed on November 19, 1996.
10.23 Sublease Agreement dated February 10, 1995 by and between
Westinghouse Electric Corporation and the Company for the Company's
Oakdale, PA headquarters, as amended by amendment dated March 20,
1996 is incorporated by reference from Exhibit 10.19 to iGate Capital
Corporation's Registration Statement on
<PAGE>
Form S-1, Commission File No. 333-14169, filed on November 19, 1996.
10.24 Lease Agreement dated October 14, 1998 by and between Park Ridge One
Associates and the Company for office space located in Park Ridge
Office Center near Pittsburgh, Pennsylvania incorporated by reference
to Exhibit 10.25 to Annual Report on Form 10-K for the year ended
December 31, 1998.
10.25 Form of Capital Contribution Agreement by and among the Company,
Sunil Wadhwani, Ashok Trivedi and their respective family trusts is
incorporated by reference from Exhibit 10.21 to iGate Capital
Corporation's Registration Statement on Form S-1, Commission File No.
333-14169, filed on December 16, 1996.
21.1 Subsidiaries.+
23.0 Report of Independent Public Accountants on Financial Statement
Schedule
23.1 Consent of Independent Public Accountants+
24.1 Power of Attorney (included on signature pages of the Original
Report)
27.1 Financial Data Schedule
- ----------------------
* Management contract or compensatory plan or arrangement.
+ Filed herewith.
(1) Filed as Exhibit 3.3 to the Original Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to the
Original Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
iGATE CAPITAL CORPORATION
(Registrant)
Dated: May 1, 2000
By: /s/ Bruce Haney
---------------------------------------------
Bruce Haney
Managing Director, Chief Financial Officer,
Treasurer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to the Original Report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------- --------------- ------------
<S> <C> <C>
* Co-Chairman, Chief Executive May 1, 2000
- ------------------------ and Director (principal
Sunil Wadhwani executive officer)
* Co-Chairman, President and May 1, 2000
- ------------------------ Director
Ashok Trivedi
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- ------------------- --------------- ------------
<S> <C> <C>
/s/ Bruce Haney Managing Director, Chief Financial May 1, 2000
- ------------------------ Officer, Treasurer and Secretary
Bruce Haney (principal financial officer)
* Corporate Controller (principal May 1, 2000
- ------------------------ accounting officer)
Neil M. Ebner
* Director May 1, 2000
- ------------------------
Ed Yourdon
* Director May 1, 2000
- ------------------------
J. Gordon Garrett
* Director May 1, 2000
- ------------------------
Michel Berty
</TABLE>
*By: /s/ Bruce Haney
---------------
Bruce Haney, Attorney-in-fact pursuant to Powers of Attorney previously
filed as part of the Company's annual report on Form 10-K filed with the
Commission on March 30, 2000.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of December 16, 1996, between
Mastech Systems Corporation, a Pennsylvania corporation, with its principal
executive offices at 1004 McKee Road, Oakdale, Pennsylvania 15071 (the
"Company"), and Sunil Wadhwani, 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 the Executive
shall be elected to the same office and shall serve concurrently as such as an
officer of the Company's ultimate corporate parent, Mastech Corporation), 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 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 1(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
<PAGE>
delivered, the term hereof shall no longer be subject to automatic extension
and the term hereof shaft 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").
3. Consummation. 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 $300,000 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;
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.
-2-
<PAGE>
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" 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:
(1) 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 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 demonstrated and materially injurious to the Company, monetarily or
otherwise; or
(iii) the willful breach by the Executive of the Non-Competition
clause in Section 8, the Non-Solicitation clauses in Sections 9 and 10 or the
Confidentiality clause in Section 11 hereof.
-3-
<PAGE>
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 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 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
-4-
<PAGE>
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,
(ii) within 30 days after the Executive's death, a one time payment of
$100,000, and (iii) 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. In
addition to the foregoing, the Company shall arrange to provide the
Executive's spouse and eligible dependents with and shall pay the cost or
premiums when due for health and accident insurance benefits substantially
similar to those which the Executive is receiving immediately prior to his
death.
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 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 the Executive,
-5-
<PAGE>
not later than the thirtieth 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) the Executive shall receive, not later than the thirtieth day
following the Date of Termination, that number of shares of the Corporation's
common stock with a value 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 which the Common Stock traded), and ii) the total number of
Options and SARs held by the Executive provided, however, that the Executive
may elect to receive in lieu of stock an amount of cash equal to his federal
and state income tax liability with respect to amounts received pursuant to
this subsection (iii);
(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 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
-6-
<PAGE>
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
(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(c)(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.
6. Retirement.
----------
Nothing contained in this Agreement shall be deemed to limit the
Executive's right to receive vested 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 of the Company, all subject to and in accordance
with the terms of those plans.
-7-
<PAGE>
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 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, officer or controlling person (within the
meaning of the Securities Exchange Act of 1934, as amended) 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, officer or controlling person 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 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.
-8-
<PAGE>
e. Company shall reimburse the Executive for the expenses
(including attorneys' fees and disbursements) incurred in successfully
prosecuting or defending any dispute related to his right to indemnification
hereunder.
f. 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, if and only
---------------
if the Executive's employment has been terminated by the Company for Cause,
and in no other case, for one (1) year after the Date of Termination, 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 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
one (1) year 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 one (1) year 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,
any employee of the Company to leave the Company for any reason whatsoever, or
hire any employee of the Company.
-9-
<PAGE>
11. Confidentiality. The Executive agrees:
---------------
a. To keep secret all trade secret and proprietary information 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 for one year 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 trade
secret and proprietary information (such as customers lists, suppliers lists,
etc.) which the Executive may then possess or have under his control.
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.
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, by overnight courier, 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:
Sunil Wadhwani
930 Osage Road
Pittsburgh, PA 15243
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 or by mail, upon receipt.
14. Miscellaneous.
-------------
a. This Agreement supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof
b. (i) This Agreement shall inure to the benefit of the Executive's
heirs, representatives or estate to the extent stated herein.
-10-
<PAGE>
(ii) This Agreement shall be binding on the successors and assigns
of the Company, and the Company shall require any successor (whether direct or
(iii) 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 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 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; provided, however, that the Executive may ask the
Company to consent to any assignment of any payments due after the termination
of his employment and the Company shall not unreasonably withhold such
consent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
-11-
<PAGE>
ATTEST: MASTECH SYSTEMS CORPORATION:
By: /s/ Michael J. Zugay By: /s/ Ashok Trivedi
---------------------------- ------------------------------
Secretary Ashok Trivedi
Co-Chairman and President
WITNESS: EXECUTIVE:
/s/ [Illegible] /s/ Sunil Wadhwani
- ------------------------------- ---------------------------------
-12-
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as of December 16, 1996, between
Mastech Systems Corporation, a Pennsylvania corporation, with its principal
executive offices at 1004 McKee Road, Oakdale, Pennsylvania 15071 (the
"Company"), and Ashok K. Trivedi, 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 President 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 President of the Company, (and the Executive shall be elected to
the same office and shall serve concurrently as such as an officer of the
Company's ultimate corporate parent, Mastech Corporation), 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 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
1(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
<PAGE>
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").
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 $300,000 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;
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.
-2-
<PAGE>
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" 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 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 willful breach by the Executive of the Non-
Competition clause in Section 8, the Non-Solicitation clauses in Sections 9 and
10 or the Confidentiality clause in Section 11 hereof.
-3-
<PAGE>
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 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 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
-4-
<PAGE>
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, (ii) within
30 days after the Executive's death, a one time payment of $100,000, and (iii)
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. In addition to the
foregoing, the Company shall arrange to provide the Executive's spouse and
eligible dependents with and shall pay the cost or premiums when due for health
and accident insurance benefits substantially similar to those which the
Executive is receiving immediately prior to his death.
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 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 the Executive,
-5-
<PAGE>
not later than the thirtieth 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) the Executive shall receive, not later than the
thirtieth day following the Date of Termination, that number of shares of the
Corporation's common stock with a value 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 which the Common Stock traded), and (ii) the total number of
Options and SARs held by the Executive provided, however, that the Executive may
elect to receive in lieu of stock an amount of cash equal to his federal and
state income tax liability with respect to amounts received pursuant to this
subsection (iii);
(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 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
-6-
<PAGE>
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
(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.
6. Retirement.
----------
Nothing contained in this Agreement shall be deemed to limit the
Executive's right to receive vested 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 of the Company, all subject to and in accordance with the
terms of those plans.
-7-
<PAGE>
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 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, officer or controlling person (within the meaning of the
Securities Exchange Act of 1934, as amended) 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,
officer or controlling person 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 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.
-8-
<PAGE>
e. The Company shall reimburse the Executive for the expenses
(including attorneys' fees and disbursements) incurred in successfully
prosecuting or defending any dispute related to his right to indemnification
hereunder.
f. 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, if and
---------------
only if the Executive's employment has been terminated by the Company for Cause,
and in no other case, for one (1) year after the Date of Termination, 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 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 one (1)
year 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 one (1) year 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, any
employee of the Company to leave the Company for any reason whatsoever, or hire
any employee of the Company.
-9-
<PAGE>
11. Confidentiality. The Executive agrees:
---------------
a. To keep secret all trade secret and proprietary information
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
for one year 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 trade
secret and proprietary information (such as customers lists, suppliers lists,
etc.) which the Executive may then possess or have under his control.
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.
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, by overnight courier, 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:
Ashok Trivedi
1446 Peterson Place
Pittsburgh, PA 15241
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 or by mail, upon receipt.
14. Miscelleneous.
-------------
a. This Agreement supersedes all prior agreements, arrangements
and understandings, written or oral, relating to the subject matter hereof.
b. (i) This Agreement shall inure to the benefit of the
Executive's heirs, representatives or estate to the extent stated herein.
-10-
<PAGE>
(ii) This Agreement shall be binding on the successors and
assigns of the Company, and the Company shall require any successor (whether
direct or
(iii) 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 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 transferable, whether by
pledge, creation of a security interest or otherwise, other 1han 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; provided, however, that the Executive may ask the Company to
consent to any assignment of any payments due after the termination of his
employment and the Company shall not unreasonably withhold such consent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
-11-
<PAGE>
ATTEST: MASTECH SYSTEMS CORPORATION:
By: /s/ Michael J. Zugay By: /s/ Sunil Wadhwani
----------------------------- -----------------------------
Secretary Sunil Wadhwani
Co-Chairman and Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ [Illegible] /s/ Ashok Trivedi
- -------------------------------- -------------------------------------
-12-
<PAGE>
Steven Shangold
AGREEMENT
This Agreement is made as of the latest date indicated below between
Mastech Systems Corporation, a Pennsylvania corporation (hereinafter called the
"Company") and the undersigned employee (hereinafter called the "Employee").
This Agreement is entered into contemporaneously with Employee's receipt of
certain stock options offered by Company which were not previously made
available to Employee.
WHEREAS, Employee is employed by the Company as an at-will employee
whose employment may be terminated by either party with or without reason or
cause and without any liability for such termination;
WHEREAS, this Agreement is necessary for the protection of Company's
legitimate and protectible business interests in its customers, prospective
customers, accounts and confidential, proprietary and trade secret information;
and
WHEREAS, this Agreement is a term and condition of Employee's
employment and is made in consideration for certain stock options offered to
Employee contemporaneously with this Agreement as well as Employee's continued
employment and access to Company's customers, prospective customers, accounts,
and confidential, proprietary and trade secret information.
NOW THEREFORE, for the consideration set forth herein, the receipt and
sufficiency of which is acknowledged by the parties, Company and Employee
agree as follows:
1. DEFINITIONS. As used herein:
-----------
(a) "Company" shall mean Mastech Systems Corporation and any
affiliate of Mastech Systems Corporation, including any direct or indirect
parent or subsidiary of Mastech Systems Corporation, as well as their respective
operating divisions.
(b) "Confidential Information" shall include, but is not
necessarily limited to, any information which may include, in whole or part,
information concerning the Company's accounts, sales, sales volume, sales
methods, sales proposals, customers and prospective customers, prospect lists,
identity of purchasing personnel in the employ of customers and prospective
customers, amount or kind of customer's purchases from the Company, the
Company's source of supply of products and/or personnel, sources of consultants,
Company manuals, formulae, products, processes, methods, machines, compositions,
ideas, improvements, inventions, research, computer programs, system
documentation, software products, patented products, copyrighted information,
know how and operating methods and any other trade secret or proprietary
information belonging to the Company or relating to the Company's affairs that
is not public information.
(c) "Customer(s)" shall mean any individual, corporation,
partnership, business or other entity (i) whose existence and business is known
to Employee as a result of Employee's access to the Company's customer lists or
Customer account information; or (ii) that
<PAGE>
is an entity with whom the Company has contracted or negotiated during the two
(2) year period preceding the termination of Employee's employment.
(d) "Competing Business" shall mean any individual, corporation,
partnership, business or other entity which provides or attempts to provide any
products or services that directly compete with products or services offered by
the Company, i.e., information technology services, including software
applications solutions and services, and which were sold by the Company at any
time and from time to time during the last two (2) years prior to Employee's
termination of employment. Notwithstanding the foregoing, the term Competing
Business does not include a corporation that derives at least $500 million of
its revenues from the sale of information technology services.
2. DUTIES. Employee, who is employed in the position set forth on
------
Schedule A hereof as of the date of this Agreement, agrees to be responsible for
such duties as are commensurate with and required by such position and any other
duties as may be assigned to Employee by Company from time to time. Employee
further agrees to perform his or her duties in a diligent, trustworthy, loyal,
businesslike, productive, and efficient manner and to use Employee's best
efforts to advance the business and goodwill of Company. Employee further agrees
to devote all of his or her business time, skill, energy and attention
exclusively to the business of the Company and to comply with all rules,
regulations and procedures of the Company. During the term of this Agreement,
Employee will not engage in any other business for Employee's own account or
accept any employment from any other business entity, or render any services,
give any advice or serve in a consulting capacity, whether gratuitously or
otherwise, to or for any other person, firm or corporation, other than as a
volunteer for charitable organizations, without the prior written approval of
the Company.
3. COMPENSATION. Employee's annual base salary as of the date of this
------------
Agreement is as set forth on Schedule A hereto. As compensation for Employee's
employment by the Company, the Company will pay the Employee during the period
of employment hereunder such remuneration as is determined to be appropriate by
the Company from time to time in its discretion.
4. BENEFITS. Employee will receive the standard Company benefits
--------
described in the Company Handbook which is incorporated as though fully set
forth in this Agreement and which may be modified at any time by the Company.
5. STOCK OPTIONS. Upon the initial public offering of the Company's
-------------
common stock, Employee shall receive that number of stock options covering the
Company's shares as is set forth on Schedule A hereto. Such options shall be
granted under the Company's Stock Incentive Plan as then in effect and shall be
subject to the Stock Option Agreement evidencing such stock options.
6. POLICIES AND PRACTICES. Employee agrees to abide by all rules,
----------------------
regulations and instruments established by the Company including the policies,
practices and procedures contained in the Company Employee Handbook which
Employee has received and which is incorporated by reference as though fully set
forth herein. The Company reserves the
2
<PAGE>
right to disregard the Company Employee Handbook in the event that a particular
portion of the Company Employee Handbook conflicts with this Agreement or is
deemed by the Company to be incompatible with Employee's position in the
Company, and the Company may amend the Handbook from time to time in its sole
discretion.
7. AGREEMENT NOT TO COMPETE. In order to protect the business interest
------------------------
and good will of the Company in respect to customers and accounts, and to
protect Confidential Information, Employee covenants and agrees that for the
entire period of time that this Agreement remains in effect, and for a period of
two (2) years after termination of Employee's employment for any reason he or
she will not:
(a) directly or indirectly contact any Customer of the Company for
the purpose of soliciting such Customer to purchase, lease or license a product
or service that is the same as, similar to, or in competition with those
products and/or services made, rendered, offered or under development by the
Company;
(b) engage in any activity or business as a consultant, independent
contractor, agent, employee, employer, officer, partner, director or otherwise,
alone or in association with any other person, corporation or other entity, in
any Competing Business operating in the United States of America or any other
country where the Company has conducted business within the two (2) year period
prior to the termination of Employee's employment; provided, however, that this
subsection (b) shall not apply if the Employee is terminated by the Company
without cause after the sale of substantially all of the business or assets of
Mastech Systems Corporation to an unaffiliated third party for fair value;
(c) directly or indirectly employ, or knowingly permit any company
or business directly or indirectly controlled by Employee to employ, any person
who is employed by the Company at any time during the term of this Agreement, or
in any manner to seek to induce any such person to leave his or her employment
with the Company; or
(d) directly or indirectly interfere with or attempt to disrupt the
relationship, contractual or otherwise, between the Company and any of its
employees or solicit, induce, or attempt to induce employees of the Company to
terminate employment with the Company and become self-employed or employed with
others in the same or similar business or any product line or service provided
by Company.
Employee acknowledges that the Company is engaged in business
throughout the United States as well as in other countries and that the
marketplace for the Company's products and services is worldwide. Employee
further covenants and agrees that the geographic, length of term and types of
activities restrictions (non-competition restrictions) contained in this
Agreement are reasonable and necessary to protect the legitimate business
interests of the Company because of the scope of the Company's business.
3
<PAGE>
In the event that a court of competent jurisdiction shall determine
that one or more of the provisions of this Section 7 is so broad as to be
unenforceable, then such provision shall be deemed to be reduced in scope or
length, as the case may be, to the extent required to make this Paragraph
enforceable. If the Employee violates the provisions of this Section 7, the
periods described therein shall be extended by that number of days which equals
the aggregate of all days during which at any time any such violations occurred.
8. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. The Employee
----------------------------------------------------
covenants and agrees during Employee's employment or any time after the
Termination of such employment, not to communicate or divulge to any person,
firm or corporation, either directly or indirectly, and to hold in strict
confidence for the benefit of the Company, all Confidential Information except
that employee may disclose such Information to persons, firms or corporations
who need to know such Information during the course and within the scope of
Employee's employment. Employee will not use any Confidential Information for
any purpose or for his or her personal benefit other than in the course and
within the scope of Employee's employment.
(a) Work Made For Hire. Employee recognizes and understands that his or
------------------
her duties at Company have included and may continue to include the preparation
of materials, including computer software and other written or graphic
materials, and that any such materials conceived or written by him or her were
done and shall continue to be done as "work made for hire" as defined and used
in the Copyright Act of 1976, 17 USC 1 et seq. In the event of publication of
such materials, Employee understands that since the work is a "work made for
hire," the Company will solely retain and own all rights in all such materials,
including the right to copyright.
(b) Disclosure of Discoveries, Ideas and Inventions. Employee
-----------------------------------------------
represents that he does not have any right, title or interest in, nor has he
made or conceived wholly or in part prior to the commencement of his employment
by the Company any discovery, idea and invention.
(c) Disclosure of Other Discoveries, Ideas and Inventions/Assignment
----------------------------------------------------------------
of Patents. Employee shall disclose promptly to the Company, any and all
- ----------
works, inventions. discoveries and improvements authored, conceived or made by
Employee during the period of employment and related to the business or
activities of the Company, solely or jointly with others, which is related to
the lines of business, work or investigation of the Company at the time of such
discovery, idea or invention or which results from, or is suggested by, any work
which the Employee may do for or on behalf of the Company, and hereby assigns
and agrees to assign all his interest therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and all
applications, assignments or other instruments which the Company shall deem
necessary to apply for and obtain Letters Patent or Copyrights of the United
States or any foreign country or to otherwise protect the interest therein and
shall assist the Company in every proper way (entirely at the Company's expense,
including reimbursement to him for all expense and loss of income) to obtain
such patents and copyrights and to enforce them. Such obligations shall continue
beyond the termination of employment
4
<PAGE>
with respect to works, inventions, discoveries and improvements authored,
conceived or made by Employee during the period of employment, and shall be
binding upon Employee's assigns, executors, administrators and other legal
representatives. All such works, inventions, discoveries and improvements shall
remain the sole and exclusive property of the Company, whether patentable or
not.
9. RETURN OF MATERIALS. Upon termination of employment with Company
-------------------
for any reason, Employee shall promptly deliver to Company the originals and
copies of all correspondence, drawings, manuals, computerized information,
letters, notes, notebooks, reports, prospect lists, flow charts, programs,
proposals, and any documents concerning Company's customers or suppliers and,
without limiting the foregoing, will promptly deliver to Company any and all
other documents or materials containing or constituting Confidential
Information.
10. TERMINATION. This Agreement may be terminated with or without
-----------
cause by either party without any liability for such termination by giving to
the other party at least fifteen (15) days prior written notice, except that the
covenants of Sections 6, 7, 8, 9, 11, 12, 13, 14, 15, 16 and 18 hereof shall
survive the termination of this Agreement. All payments due as of the date of
termination shall be paid in full within thirty (30) days of this date.
11. SEVERANCE. If the Employee's employment is at any time terminated
---------
by the Company without cause, then the Company shall pay the Employee a
severance payment equal to three (3) times the monthly base salary of the
Employee then in effect, payable in the form of salary continuation in
accordance with the Company's then existing payroll practices; provided,
however, if the Employee's employment is terminated by the Company without cause
within 90 days after the sale of substantially all of the business or assets of
Mastech Systems Corporation to an unaffiliated third party for fair value, then
the Company (or its successor) shall pay the Employee a severance payment equal
to six (6) times the monthly base salary of the Employee then in effect in
accordance with the Company's then existing payroll practices.
12. ENTIRE AGREEMENTS. This Agreement supersedes all prior agreements,
-----------------
written or oral, between the parties hereto concerning the subject matter
hereof.*
13. CHOICE OF LAW, JURISDICTION AND VENUE. The parties agree that this
--------------------------------------
Agreement shall be deemed to have been made and entered into in Pennsylvania and
that the Law of the Commonwealth of Pennsylvania shall govern this Agreement.
Jurisdiction and venue is proper in any proceeding by the Company to enforce its
rights hereunder filed in any court geographically located in Allegheny County,
Pennsylvania.
14. ACKNOWLEDGMENTS OF EMPLOYEE. Employee hereby acknowledges and
agrees that:
(a) This Agreement is necessary for the protection of the
legitimate business interests of the Company;
5
<PAGE>
(b) the restrictions contained in this Agreement may be enforced
in a court of law whether or not Employee is terminated with or without cause or
for performance related reasons;
(c) The execution and delivery of this Agreement is a mandatory
condition precedent to the Employee's receipt of the consideration provided
herein.
(d) Employee has no intention of competing with the Company within
the limitations set forth above;
(e) Employee has received adequate and valuable consideration for
entering into this Agreement;
(f) Employee's covenants shall be construed as independent of any
other provision in this Agreement and the existence of any claim or cause of
action Employee may have against the Company, whether predicated on this
Agreement or not, shall not constitute a defense to the enforcement by Company
of these covenants;
(g) this Agreement does not prevent Employee from earning a
livelihood after termination of employment; and
(h) Employee further acknowledges that his or her education and
experience enables Employee to work for different types of employers, so that it
not be necessary for Employee to violate the provisions of this covenant not to
compete in order to remain economically viable.
15. FULL UNDERSTANDING. Employee acknowledges that Employee has
------------------
carefully read and fully understands all of the provisions of this Agreement and
that Employee, in consideration for the compensation set forth herein, is
voluntarily entering into this Agreement.
16. EQUITABLE RELIEF; FEES AND EXPENSES. Employee stipulates and
-----------------------------------
agrees that any breach of this Agreement by Employee will result in immediate
and irreparable harm to the Company, the amount of which will be extremely
difficult to ascertain, and that the Company could not be reasonably or
adequately compensated by damages in an action at law. For these reasons, the
Company shall have the right, without objection from Employee, to obtain such
preliminary, temporary or permanent injunctions or restraining orders or decrees
as may be necessary to protect the Company against, or on account of, any
breach by Employee of the provisions of this Agreement. Such right to
equitable relief is in addition to all other legal remedies the Company may have
to protect its rights. In the event the Company obtains any such injunction,
order, decree or other relief, in law or in equity, Employee shall be
responsible for reimbursing the Company for all costs associated with obtaining
the relief, including reasonable attorneys' fees, and expenses and costs of
suit. Employee further covenants and agrees that any order of court or judgment
obtained by the Company which enforces the Company's rights under this Agreement
may be transferred, without objection or opposition by
6
<PAGE>
Employee, to any court of law or other appropriate law enforcement body located
in any other country in the world where Company does business, and that said
court or body will give full force and effect to said order and or judgment.
17. AMENDMENTS. No Supplement, modification, amendment or waiver of the
----------
terms of this Agreement shall be binding on the parties hereto unless executed
in writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided. Any failure to insist
upon strict compliance with any of the terms and conditions of this Agreement
shall not be deemed a waiver of any such terms or conditions.
7
<PAGE>
18. SUCCESSORS INTEREST. This Agreement shall be binding upon and shall
-------------------
inure to the benefit of the successors, assigns, heirs and legal representatives
of the parties hereto. The Company shall have the right to assign this Agreement
in connection with a merger involving the Company or a sale or transfer of
substantially all of the business and assets of the Company, and Employee agrees
to be obligated by this Agreement to any successor, assign or surviving entity.
19. HEADINGS. The headings used in this Agreement are for convenience
--------
only and are not to be considered in construing or interpreting this Agreement.
MASTECH SYSTEMS
CORPORATION (COMPANY)
By /s/ Sunil Wadhwani /s/ Steven Shangold
---------------------------- -------------------------------
Steven Shangold (Employee)
Date: 12/8/96 Date: 12/8/96
-------------------------- -------------------------------
*Notwithstanding the foregoing, this Agreement shall not in any way affect
that certain Agreement dated as of October 14, 1996 between Mastech Systems
corporation (f/k/a Mastech Corporation) and Steven Shangold, as amended,
which Agreement shall remain in full force and effect.
8
<PAGE>
Steven Shangold
Attachment A
1. Position: Vice President--U.S. Sales and Marketing
--------
2. Base Salary (for fiscal 1997): $150,000, subject to the appropriate
-----------------------------
federal, state and local taxes and withholdings.
3. Target Bonus (for fiscal 1997): $150,000, subject to individual,
------------------------------
business unit/function and/or corporate performance goals to be
established by the Company's Board of Directors by January 1, 1997.
4. Stock Options: As consideration for this Agreement, Employee is entitled
-------------
to the stock options set forth on Schedule A hereto, subject to the
terms of the Stock Option Agreement evidencing the same.
9
<PAGE>
Ajmal Noorani
AGREEMENT
This Agreement is made as of the latest date indicated below between
Mastech Systems Corporation, a Pennsylvania corporation (hereinafter called the
"Company") and the undersigned employee (hereinafter called the "Employee").
This Agreement is entered into contemporaneously with Employee's receipt of
certain stock options offered by Company which were not previously made
available to Employee.
WHEREAS, Employee is employed by the Company as an at-will employee
whose employment may be terminated by either party with or without reason or
cause and without any liability for such termination;
WHEREAS, this Agreement is necessary for the protection of Company's
legitimate and protectible business interests in its customers, prospective
customers, accounts and confidential, proprietary and trade secret information;
and
WHEREAS, this Agreement is a term and condition of Employee's
employment and is made in consideration for certain stock options offered to
Employee contemporaneously with this Agreement as well as Employee's continued
employment and access to Company's customers, prospective customers, accounts,
and confidential, proprietary and trade secret information.
NOW THEREFORE, for the consideration set forth herein, the receipt and
sufficiency of which is acknowledged by the parties, Company and Employee agree
as follows:
1. DEFINITIONS. As used herein:
-----------
(a) "Company" shall mean Mastech Systems Corporation and any affiliate
of Mastech Systems Corporation, including any direct or indirect parent or
subsidiary of Mastech Systems Corporation, as well as their respective
operating divisions.
(b) "Confidential Information" shall include, but is not necessarily
limited to, any information which may include, in whole or part, information
concerning the Company's accounts, sales, sales volume, sales methods, sales
proposals, customers and prospective customers, prospect lists, identity of
purchasing personnel in the employ of customers and prospective customers,
amount or kind of customer's purchases from the Company, the Company's source
of supply of products and/or personnel, sources of consultants, Company
manuals, formulae, products, processes, methods, machines, compositions,
ideas, improvements, inventions, research, computer programs, system
documentation, software products, patented products, copyrighted information,
know how and operating methods and any other trade secret or proprietary
information belonging to the Company or relating to the Company's affairs that
is not public information.
(c) "Customer(s)" shall mean any individual, corporation, partnership,
business or other entity (i) whose existence and business is known to Employee
as a result of Employee's access to the Company's customer lists or Customer
account information; or (ii) that
<PAGE>
is an entity with whom the Company has contracted or negotiated during the two
(2) year period preceding the termination of Employee's employment.
(d) "Competing Business" shall mean any individual, corporation,
partnership, business or other entity which provides or attempts to provide any
products or services that directly compete with products or services offered
by the Company, i.e., information technology services, including software
applications solutions and services, and which were sold by the Company at any
time and from time to time during the last two (2) years prior to Employee's
termination of employment. Notwithstanding the foregoing, the term Competing
Business does not include a corporation that derives at least $500 million of
its revenues from the sale of information technology services.
2. DUTIES. Employee, who is employed in the position set forth on
------
Schedule A hereof as of the date of this Agreement, agrees to be responsible
for such duties as are commensurate with and required by such position and any
other duties as may be assigned to Employee by Company from time to time.
Employee further agrees to perform his or her duties in a diligent,
trustworthy, loyal, businesslike, productive, and efficient manner and to use
Employee's best efforts to advance the business and goodwill of Company.
Employee further agrees to devote all of his or her business time, skill,
energy and attention exclusively to the business of the Company and to comply
with all rules, regulations and procedures of the Company. During the term of
this Agreement, Employee will not engage in any other business for Employee's
own account or accept any employment from any other business entity, or render
any services, give any advice or serve in a consulting capacity, whether
gratuitously or otherwise, to or for any other person, firm or corporation,
other than as a volunteer for charitable organizations, without the prior
written approval of the Company.
3. COMPENSATION. Employee's annual base salary as of the date of this
------------
Agreement is as set forth on Schedule A hereto. As compensation for Employee's
employment by the Company, the Company will pay the Employee during the period
of employment hereunder such remuneration as is determined to be appropriate
by the Company from time to time in its discretion.
4. BENEFITS. Employee will receive the standard Company benefits
--------
described in the Company Handbook which is incorporated as though fully set
forth in this Agreement and which may be modified at any time by the Company.
5. STOCK OPTIONS. Upon the initial public offering of the Company's
-------------
common stock, Employee shall receive that number of stock options covering the
Company's shares as is set forth on Schedule A hereto. Such options shall be
granted under the Company's Stock Incentive Plan as then in effect and shall
be subject to the Stock Option Agreement evidencing such stock options.
6. POLICIES AND PRACTICES. Employee agrees to abide by all rules,
----------------------
regulations and instruments established by the Company including the policies,
practices and procedures contained in the Company Employee Handbook which
Employee has received and which is incorporated by reference as though fully
set forth herein. The Company reserves the
2
<PAGE>
right to disregard the Company Employee Handbook in the event that a
particular portion of the Company Employee Handbook conflicts with this
Agreement or is deemed by the Company to be incompatible with Employee's
position in the Company, and the Company may amend the Handbook from time to
time in its sole discretion.
7. AGREEMENT NOT TO COMPETE. In order to protect the business interest
------------------------
and good will of the Company in respect to customers and accounts, and to
protect Confidential Information, Employee covenants and agrees that for the
entire period of time that this Agreement remains in effect, and for a period
of two (2) years after termination of Employee's employment for any reason he
or she will not:
(a) directly or indirectly contact any Customer of the Company for the
purpose of soliciting such Customer to purchase, lease or license a product or
service that is the same as, similar to, or in competition with those products
and/or services made, rendered, offered or under development by the Company;
(b) engage in any activity or business as a consultant, independent
contractor, agent, employee, employer, officer, partner, director or otherwise,
alone or in association with any other person, corporation or other entity, in
any Competing Business operating in the United States of America or any other
country where the Company has conducted business within the two (2) year period
prior to the termination of Employee's employment; provided, however, that this
subsection (b) shall not apply if the Employee is terminated by the Company
without cause after the sale of substantially all of the business or assets of
Mastech Systems Corporation to an unaffiliated third party for fair value;
(c) directly or indirectly employ, or knowingly permit any company or
business directly or indirectly controlled by Employee to employ, any person
who is employed by the Company at any time during the term of this Agreement,
or in any manner to seek to induce any such person to leave his or her
employment with the Company; or
(d) directly or indirectly interfere with or attempt to disrupt the
relationship, contractual or otherwise, between the Company and any of its
employees or solicit, induce, or attempt to induce employees of the Company to
terminate employment with the Company and become self-employed or employed with
others in the same or similar business or any product line or service provided
by Company.
Employee acknowledges that the Company is engaged in business
throughout the United States as well as in other countries and that the
marketplace for the Company's products and services is worldwide. Employee
further covenants and agrees that the geographic, length of term and types of
activities restrictions (non-competition restrictions) contained in this
Agreement are reasonable and necessary to protect the legitimate business
interests of the Company because of the scope of the Company's business
3
<PAGE>
In the event that a court of competent jurisdiction shall determine
that one or more of the provisions of this Section 7 is so broad as to be
unenforceable, then such provision shall be deemed to be reduced in scope or
length, as the case may be, to the extent required to make this Paragraph
enforceable. If the Employee violates the provisions of this Section 7, the
periods described therein shall be extended by that number of days which equals
the aggregate of all days during which at any time any such violations
occurred.
8. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. The Employee
----------------------------------------------------
covenants and agrees during Employee's employment or any time after the
Termination of such employment, not to communicate or divulge to any person,
firm or corporation, either directly or indirectly, and to hold in strict
confidence for the benefit of the Company, all Confidential Information except
that employee may disclose such Information to persons, firms or corporations
who need to know such Information during the course and within the scope of
Employee's employment. Employee will not use any Confidential Information for
any purpose or for his or her personal benefit other than in the course and
within the scope of Employee's employment,
(a) Work Made For Hire. Employee recognizes and understands that his or
------------------
her duties at Company have included and may continue to include the
preparation of materials, including computer software and other written or
graphic materials, and that any such materials conceived or written by him or
her were done and shall continue to be done as "work made for hire" as defined
and used in the Copyright Act of 1976, 17 USC 1 et seq. In the event of
publication of such materials, Employee understands that since the work is a
"work made for hire," the Company will solely retain and own all rights in all
such materials, including the right to copyright.
(b) Disclosure of Discoveries, Ideas and Inventions. Employee represents
----------------------------------------------
that he does not have any right, title or interest in, nor has he made or
conceived wholly or in part prior to the commencement of his employment by the
Company any discovery, idea and invention.
(c) Disclosure of Other Discoveries, Ideas and Inventions/Assignment of
-------------------------------------------------------------------
Patents. Employee shall disclose promptly to the Company, any and all works,
- -------
inventions, discoveries and improvements authored, conceived or made by
Employee during the period of employment and related to the business or
activities of the Company, solely or jointly with others, which is related to
the lines of business, work or investigation of the Company at the time of
such discovery, idea or invention or which results from, or is suggested by,
any work which the Employee may do for or on behalf of the Company, and hereby
assigns and agrees to assign all his interest therein to the Company or its
nominee. Whenever requested to do so by the Company, Employee shall execute
any and all applications, assignments or other instruments which the Company
shall deem necessary to apply for and obtain Letters Patent or Copyrights of
the United States or any foreign country or to otherwise protect the interest
therein and shall assist the Company in every proper way (entirely at the
Company's expense, including reimbursement to him for all expense and loss of
income) to obtain such patents and copyrights and to enforce them. Such
obligations shall continue beyond the termination of employment
4
<PAGE>
with respect to works, inventions, discoveries and improvements authored,
conceived or made by Employee during the period of employment, and shall be
binding upon Employee's assigns, executors, administrators and other legal
representatives. All such works, inventions, discoveries and improvements
shall remain the sole and exclusive property of the Company, whether
patentable or not.
9. RETURN OF MATERIALS. Upon termination of employment with Company for
-------------------
any reason, Employee shall promptly deliver to Company the originals and
copies of all correspondence, drawings, manuals, computerized information,
letters, notes, notebooks, reports, prospect lists, flow charts, programs,
proposals, and any documents concerning Company's customers or suppliers and,
without limiting the foregoing, will promptly deliver to Company any and all
other documents or materials containing or constituting Confidential
Information.
10. TERMINATION. This Agreement may be terminated with or without
-----------
cause by either party without any liability for such termination by giving to
the other party at least fifteen (15) days prior written notice, except that
the covenants of Sections 6, 7, 8, 9, 11, 12, 13, 14, 15, 16 and 18 hereof
shall survive the termination of this Agreement. All payments due as of the
date of termination shall be paid in full within thirty (30) days of this
date.
11. SEVERANCE. If the Employee's employment is at any time terminated
---------
by the Company without cause, then the Company shall pay the Employee a
severance payment equal to three (3) times the monthly base salary of the
Employee then in effect, payable in the form of salary continuation in
accordance with the Company's then existing payroll practices; provided,
however, if the Employee's employment is terminated by the Company without
cause within 90 days after the sale of substantially all of the business or
assets of Mastech Systems Corporation to an unaffiliated third party for fair
value, then the Company (or its successor) shall pay the Employee a severance
payment equal to six (6) times the monthly base salary of the Employee then in
effect in accordance with the Company's then existing payroll practices.
12. ENTIRE AGREEMENTS. This Agreement supersedes all prior agreements,
-----------------
written or oral, between the parties hereto concerning the subject matter
hereof.
13. CHOICE OF LAW, JURISDICTION AND VENUE. The parties agree that this
-------------------------------------
Agreement shall be deemed to have been made and entered into in Pennsylvania
and that the Law of the Commonwealth of Pennsylvania shall govern this
Agreement. Jurisdiction and venue is proper in any proceeding by the Company
to enforce its rights hereunder filed in any court geographically located in
Allegheny County, Pennsylvania.
14. ACKNOWLEDGMENTS OF EMPLOYEE. Employee hereby acknowledges and
---------------------------
agrees that:
(a) This Agreement is necessary for the protection of the legitimate
business interests of the Company.
5
<PAGE>
(b) the restrictions contained in this Agreement may be enforced in
a court of law whether or not Employee is terminated with or
without cause or for performance related reasons;
(c) The execution and delivery of this Agreement is a mandatory
condition precedent to the Employee's receipt of the consideration
provided herein;
(d) Employee has no intention of competing with the Company within the
limitations set forth above;
(e) Employee has received adequate and valuable consideration for
entering into this Agreement;
(f) Employee's covenants shall be construed as independent of any other
provision in this Agreement and the existence of any claim or cause
of action Employee may have against the Company, whether predicated
on this Agreement or not, shall not constitute a defense to the
enforcement by Company of these covenants;
(g) this Agreement does not prevent Employee from earning a livelihood
after termination of employment; and
(h) Employee further acknowledges that his or her education and
experience enables Employee to work for different types of
employers, so that it will not be necessary for Employee to violate
the provisions of this covenant not to compete in order to remain
economically viable.
15. FULL UNDERSTANDING. Employee acknowledges that Employee has
------------------
carefully read and fully understands all of the provisions of this Agreement
and that Employee, in consideration for the compensation set forth herein, is
voluntarily entering into this Agreement.
16. EQUITABLE RELIEF; FEES AND EXPENSES. Employee stipulates and agrees
-----------------------------------
that any breach of this Agreement by Employee will result in immediate and
irreparable harm to the Company, the amount of which will be extremely
difficult to ascertain, and that the Company could not be reasonably or
adequately compensated by damages in an action at law. For these reasons, the
Company shall have the right, without objection from Employee, to obtain such
preliminary, temporary or permanent injunctions or restraining orders or
decrees as may be necessary to protect the Company against, or on account of,
any breach by Employee of the provisions of this Agreement. Such right to
equitable relief is in addition to all other legal remedies the Company may
have to protect its rights. In the event the Company obtains any such
injunction, order, decree or other relief, in law or in equity, Employee shall
be responsible for reimbursing the Company for all costs associated with
obtaining the relief, including reasonable attorneys' fees, and expenses and
costs of suit. Employee further covenants and agrees that any order of court
or judgment obtained by the Company which enforces the Company's rights under
this Agreement may be transferred, without objection or opposition by
6
<PAGE>
Employee, to any court of law or other appropriate law enforcement body located
in any other country in the world where Company does business, and that said
court or body will give full force and effect to said order and or judgment.
17. AMENDMENTS. No supplement, modification, amendment or waiver of the
----------
terms of this Agreement shall be binding on the parties hereto unless executed
in writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided. Any failure to insist
upon strict compliance with any of the terms and conditions of this Agreement
shall not be deemed a waiver of any such terms or conditions.
7
<PAGE>
18. SUCCESSORS IN INTEREST. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the successors, assigns, heirs and legal
representatives of the parties hereto. The Company shall have the right to
assign this Agreement in connection with a merger involving the Company or a
sale or transfer of substantially all of the business and assets of the
Company, and Employee agrees to be obligated by this Agreement to any
successor, assign or surviving entity,
19. HEADINGS. The headings used in this Agreement are for convenience
--------
only and are not to be considered in construing or interpreting this
Agreement.
MASTECH SYSTEMS
CORPORATION (COMPANY)
By: /s/ Ajmal Noorani
----------------------------------- -------------------------------
Ajmal Noorani (Employee)
Date: 12/8/96 Date: 12/8/96
----------------------------------- -------------------------------
8
<PAGE>
Ajmal Noorani
Attachment A
1. Position: Vice President--International Operations
--------
2. Base Salary (for fiscal 1997): $150,000, subject to the appropriate
-----------------------------
federal, state and local taxes and withholdings.
3. Target Bonus (for fiscal 1997): $100,000, subject to individual, business
------------------------------
unit/function and/or corporate performance goals to be established
by the Company's Board of Directors by January 1, 1997.
4. Stock Options: As consideration for this Agreement, Employee is entitled
-------------
to the stock options set forth on Schedule A hereto, subject to the terms
of the Stock Option Agreement evidencing the same.
<PAGE>
Lisa Kustra
AGREEMENT
This Agreement is made as of the latest date indicated below between
Mastech Systems Corporation, a Pennsylvania corporation (hereinafter called the
"Company") and the undersigned employee (hereinafter called the "Employee").
This Agreement is entered into contemporaneously with Employee's receipt of
certain stock options offered by Company which were not previously made
available to Employee.
WHEREAS, Employee is employed by the Company as an at-will employee
whose employment may be terminated by either party with or without reason or
cause and without any liability for such termination;
WHEREAS, this Agreement is necessary for the protection of Company's
legitimate and protectible business interests in its customers, prospective
customers, accounts and confidential, proprietary and trade secret information;
and
WHEREAS, this Agreement is a term and condition of Employee's employment
and is made in consideration for certain stock options offered to Employee
contemporaneously with this Agreement as well as Employee's continued employment
and access to Company's customers, prospective customers, accounts, and
confidential, proprietary and trade secret information.
NOW THEREFORE, for the consideration set forth herein, the receipt and
sufficiency of which is acknowledged by the parties, Company and Employee agree
as follows:
1. DEFINITIONS. As used herein:
-----------
(a) "Company" shall mean Mastech Systems Corporation and any
affiliate of Mastech Systems Corporation, including any direct or indirect
parent or subsidiary of Mastech Systems Corporation, as well as their respective
operating divisions.
(b) "Confidential Information" shall include, but is not
necessarily limited to, any information which may include, in whole or part,
information concerning the Company's accounts, sales, sales volume, sales
methods, sales proposals, customers and prospective customers, prospect lists,
identity of purchasing personnel in the employ of customers and prospective
customers, amount or kind of customer's purchases from the Company, the
Company's source of supply of products and/or personnel, sources of consultants,
Company manuals, formulae, products, processes, methods, machines, compositions,
ideas, improvements, inventions, research, computer programs, system
documentation, software products, patented products, copyrighted information,
know how and operating methods and any other trade secret or proprietary
information belonging to the Company or relating to the Company's affairs that
is not public information.
(c) "Customer(s)" shall mean any individual, corporation,
partnership, business or other entity with whom the Company has contracted
during the two (2) year period preceding the termination of Employee's
employment.
-1-
<PAGE>
(d) "Competing Business" shall mean any individual, corporation,
partnership, business or other entity which provides or attempts to provide any
products or services that directly compete with products or services offered by
the Company, i.e., information technology services, including software
applications solutions and services, and which were sold by the Company at any
time and from time to time during the one (1) year prior to Employee's
termination of employment. Notwithstanding the foregoing, the term Competing
Business does not include a corporation that derives at least $200 million of
its revenues from the sale of information technology services.
2. DUTIES. Employee, who is employed in the position set forth on
------
Schedule A hereof as of the date of this Agreement, agrees to be responsible for
such duties as are commensurate with and required by such position and any other
duties as may be assigned to Employee by Company from time to time. Employee
further agrees to perform his or her duties in a diligent, trustworthy, loyal,
businesslike, productive, and efficient manner and to use Employee's best
efforts to advance the business and goodwill of Company. Employee further agrees
to devote all of his or her business time, skill, energy and attention
exclusively to the business of the Company and to comply with all rules,
regulations and procedures of the Company. During the term of this Agreement,
Employee will not engage in any other business for Employee's own account or
accept any employment from any other business entity, or render any services,
give any advice or serve in a consulting capacity, whether gratuitously or
otherwise, to or for any other person, firm or corporation, other than as a
volunteer for charitable organizations, without the prior written approval of
the Company.
3. COMPENSATION. Employee's annual base salary as of the date of this
------------
Agreement is as set forth on Schedule A hereto. As compensation for Employee's
employment by the Company, the Company will pay the Employee during the period
of employment hereunder such remuneration as is determined to be appropriate by
the Company from time to time in its discretion.
4. BENEFITS. Employee will receive the standard Company benefits
--------
described in the Company Handbook which is incorporated as though fully set
forth in this Agreement and which may be modified at any time by the Company.
5. STOCK OPTIONS. Upon the initial public offering of the Company's
-------------
common stock, Employee shall receive that number of stock options covering the
Company's shares as is set forth on Schedule A hereto. Such options shall be
granted under the Company's Stock Incentive Plan as then in effect and shall be
subject to the Stock Option Agreement evidencing such stock options.
6. POLICIES AND PRACTICES. Employee agrees to abide by all rules,
----------------------
regulations and instruments established by the Company including the policies,
practices and procedures contained in the Company Employee Handbook which
Employee has received and which is incorporated by reference as though fully set
forth herein. The Company reserves the right to disregard the Company Employee
Handbook in the event that a particular portion of the Company Employee Handbook
conflicts with this Agreement or is deemed by the Company to
-2-
<PAGE>
be incompatible with Employee's position in the Company, and the Company may
amend the Handbook from time to time in its sole discretion.
7. AGREEMENT NOT TO COMPETE. In order to protect the business interest
------------------------
and good will of the Company in respect to customers and accounts, and to
protect Confidential Information, Employee covenants and agrees that for the
entire period of time that this Agreement remains in effect, and for a period of
one (1) year after termination of Employee's employment for any reason he or she
will not:
(a) directly or indirectly contact any Customer of the Company for the
purpose of soliciting such Customer to purchase, lease or license a
product or service that is the same as, similar to, or in
competition with those products and/or services made, rendered,
offered or under development by the Company;
(b) engage in any activity or business as a consultant, independent
contractor, agent, employee, employer, officer, partner, director
or otherwise, alone or in association with any other person,
corporation or other entity, in any Competing Business operating in
the United States of America or any other country where the Company
has conducted business within the one (1) year period prior to the
termination of Employee's employment; provided, however, that this
subsection (b) shall not apply if the Employee is terminated by the
Company without cause after the sale of substantially all of the
business or assets of Mastech Systems Corporation to an
unaffiliated third party for fair value;
(c) directly or indirectly employ, or knowingly permit any company or
business directly or indirectly controlled by Employee to employ,
any person who is employed by the Company at any time during the
one (1) year prior to termination of the Employee's employment, or
in any manner to seek to induce any such person to leave his or her
employment with the Company; or
(d) directly or indirectly interfere with or attempt to disrupt the
relationship, contractual or otherwise, between the Company and any
of its employees or solicit, induce, or attempt to induce employees
of the Company to terminate employment with the Company and become
self-employed or employed with others in the same or similar
business or any product line or service provided by Company.
Employee acknowledges that the Company is engaged in business throughout
the United States as well as in other countries and that the marketplace for the
Company's products and services is worldwide. Employee further covenants and
agrees that the geographic, length of term and types of activities restrictions
(non-competition restrictions) contained in this Agreement are reasonable and
necessary to protect the legitimate business interests of the Company because of
the scope of the Company's business.
In the event that a court of competent jurisdiction shall determine that
one or more of the provisions of this Section 7 is so broad as to be
unenforceable, then such provision shall be
-3-
<PAGE>
deemed to be reduced in scope or length, as the case may be, to the extent
required to make this Paragraph enforceable. If the Employee violates the
provisions of this Section 7, the periods described therein shall be extended by
that number of days which equals the aggregate of all days during which at any
time any such violations occurred.
8. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. The
----------------------------------------------------
Employee covenants and agrees during Employee's employment or any time after the
Termination of such employment, not to communicate or divulge to any person,
firm or corporation, either directly or indirectly, and to hold in strict
confidence for the benefit of the Company, all Confidential Information except
that employee may disclose such Information to persons, firms or corporations
who need to know such Information during the course and within the scope of
Employee's employment. Employee will not use any Confidential Information for
any purpose or for his or her personal benefit other than in the course and
within the scope of Employee's employment.
(a) Work Made For Hire. Employee recognizes and understands that
------------------
his or her duties at Company have included and may continue to include the
preparation of materials, including computer software and other written or
graphic materials, and that any such materials conceived or written by him or
her were done and shall continue to be done as "work made for hire" as defined
and used in the Copyright Act of 1976, 17 USC I et seq. In the event of
publication of such materials, Employee understands that since the work is a
"work made for hire," the Company will solely retain and own all rights in all
such materials, including the right to copyright.
(b) Disclosure of Discoveries, Ideas and Inventions. Employee
-----------------------------------------------
represents that he does not have any right, title or interest in, nor has he
made or conceived wholly or in part prior to the commencement of his employment
by the Company any discovery, idea and invention.
(c) Disclosure of Other Discoveries, Ideas and
------------------------------------------
Inventions/Assignment of Patents. Employee shall disclose promptly to the
- --------------------------------
Company, any and all works, inventions, discoveries and improvements authored,
conceived or made by Employee during the period of employment and related to the
business or activities of the Company, solely or jointly with others, which is
related to the lines of business, work or investigation of the Company at the
time of such discovery, idea or invention or which results from, or is suggested
by, any work which the Employee may do for or on behalf of the Company, and
hereby assigns and agrees to assign all his interest therein to the Company or
its nominee. Whenever requested to do so by the Company, Employee shall execute
any and all applications, assignments or other instruments which the Company
shall deem necessary to apply for and obtain Letters Patent or Copyrights of
the United States or any foreign country or to otherwise protect the interest
therein and shall assist the Company in every proper way (entirely at the
Company's expense, including reimbursement to him for all expense and loss of
income) to obtain such patents and copyrights and to enforce them. Such
obligations shall continue beyond the termination of employment with respect to
works, inventions, discoveries and improvements authored, conceived or made by
Employee during the period of employment, and shall be binding upon Employee's
assigns,
-4-
<PAGE>
executors, administrators and other legal representatives. All such works,
inventions, discoveries and improvements shall remain the sole and exclusive
property of the Company, whether patentable or not.
9. RETURN OF MATERIALS. Upon termination of employment with Company
-------------------
for any reason, Employee shall promptly deliver to Company the originals and
copies of all correspondence, drawings, manuals, computerized information,
letters, notes, notebooks, reports, prospect lists, flow charts, programs,
proposals, and any documents concerning Company's customers or suppliers and,
without limiting the foregoing, will promptly deliver to Company any and all
other documents or materials containing or constituting Confidential
Information.
10. TERMINATION. This Agreement may be terminated with or without cause
-----------
by either party without any liability for such termination by giving to the
other party at least fifteen (15) days prior written notice, except that the
covenants of Sections 6, 7, 8, 9, 11, 12, 13, 14, 15, 16 and 18 hereof shall
survive the termination of this Agreement. All payments due as of the date of
termination shall be paid in full within thirty (30) days of this date.
11. SEVERANCE. If the Employee's employment is at any time terminated
---------
by the Company without cause, then the Company shall pay the Employee a
severance payment equal to three (3) times the monthly base salary of the
Employee then in effect, payable in the form of salary continuation in
accordance with the Company's then existing payroll practices; provided,
however, if the Employee's employment is terminated by the Company without cause
within 90 days after the sale of substantially all of the business or assets of
Mastech Systems Corporation to an unaffiliated third party for fair value, then
the Company (or its successor) shall pay the Employee a severance payment equal
to six (6) times the monthly base salary of the Employee then in effect in
accordance with the Company's then existing payroll practices.
12. ENTIRE AGREEMENTS. This Agreement supersedes all prior agreements,
-----------------
written or oral, between the parties hereto concerning the subject matter
hereof.
13. CHOICE OF LAW, JURISDICTION AND VENUE. The parties agree that this
-------------------------------------
Agreement shall be deemed to have been made and entered into in Pennsylvania and
that the Law of the Commonwealth of Pennsylvania shall govern this Agreement.
Jurisdiction and venue is proper in any proceeding by the Company to enforce its
rights hereunder filed in any court geographically located in Allegheny County,
Pennsylvania.
14. ACKNOWLEDGMENTS OF EMPLOYEE. Employee hereby acknowledges and
---------------------------
agrees that:
(a) This Agreement is necessary for the protection of the
legitimate business interests of the Company;
(b) the restrictions contained in this Agreement may be enforced
in a court of law whether or not Employee is terminated with
or without cause or for performance related reasons;
-5-
<PAGE>
(c) The execution and delivery of this Agreement is a mandatory
condition precedent to the Employee's receipt of the
consideration provided herein;
(d) Employee has no intention of competing with the Company within
the limitations set forth above;
(e) Employee has received adequate and valuable consideration for
entering into this Agreement;
(f) Employee's covenants shall be construed as independent of any
other provision in this Agreement and the existence of any
claim or cause of action Employee may have against the
Company, whether predicated on this Agreement or not, shall
not constitute a defense to the enforcement by Company of
these covenants;
(g) this Agreement does not prevent Employee from earning a
livelihood after termination of employment; and
(h) Employee further acknowledges that his or her education and
experience enables Employee to work for different types of
employers, so that it will not be necessary for Employee to
violate the provisions of this covenant not to compete in
order to remain economically viable.
15. FULL UNDERSTANDING. Employee acknowledges that Employee has
------------------
carefully read and fully understands all of the provisions of this Agreement and
that Employee, in consideration for the compensation set forth herein, is
voluntarily entering into this Agreement.
16. EQUITABLE RELIEF. Employee stipulates and agrees that any breach of
----------------
this Agreement by Employee will result in immediate and irreparable harm to the
Company, the amount of which will be extremely difficult to ascertain, and that
the Company could not be reasonably or adequately compensated by damages in an
action at law. For these reasons, the Company shall have the right, without
objection from Employee, to obtain such preliminary, temporary or permanent
injunctions or restraining orders or decrees as may be necessary to protect the
Company against, or on account of, any breach by Employee of the provisions of
this Agreement. Such right to equitable relief is in addition to all other
legal remedies the Company may have to protect its rights. Employee further
covenants and agrees that any order of court or judgment obtained by the Company
which enforces the Company's rights under this Agreement may be transferred,
without objection or opposition by Employee, to any court of law or other
appropriate law enforcement body located in any other country in the world where
Company does business, and that said court body will give full full force and
effect to said order and or judgment.
17. AMENDMENTS. No supplement, modification, amendment or waiver of the
----------
terms of this Agreement shall be binding on the parties hereto unless executed
in writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall be
-6-
<PAGE>
deemed to or shall constitute a waiver of any other provisions hereof (whether
or not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided. Any failure to insist upon strict compliance with
any of the terms and conditions of this Agreement shall not be deemed a waiver
of any such conditions.
18. SUCCESSORS IN INTEREST. This Agreement shall be binding upon and
----------------------
shall insure to the benefit of the successors, assigns, heirs and legal
representatives of the parties hereto. The Company shall have the right to
assign this Agreement in connection with a merger involving the Company or a
sale or transfer of substantially all of the business and assets of the Company,
and Employee agrees to be obligated by this Agreement to any successor, assign
or surviving entity.
19. HEADINGS. The headings used in this Agreement are for convenience
--------
only and are not to be considered in construing or interpreting this Agreement.
MASTECH SYSTEMS
CORPORATION (COMPANY)
By: /s/ Ashok Trivedi /s/ Lisa M. Kustra
------------------------------------ -----------------------------------
Lisa Kustra (Employee)
Dated as of: December 16, 1996 Dated as of: December 16, 1996
-7-
<PAGE>
Lisa Kustra
Attachment A
1. Position: Director
--------
2. Base Salary (for fiscal 1997): $80,000, subject to the appropriate
----------------------------
federal, state and local taxes and withholdings.
3. Target Bonus (for fiscal 1997): $120,000, subject to individual, business
-----------------------------
unit/function and/or corporate performance goals to be established by the
Company's Board of Directors.
4. Stock Options: As consideration for this Agreement, Employee is entitled to
-------------
the stock options set forth on Schedule A hereto, subject to the terms of
the Stock Option Agreement evidencing the same.
-8-
<PAGE>
Schedule A
Vesting Schedule for Option
The Option shall vest in accordance with the following schedule:
(i) 6,000 shares shall vest on June 30, 1997; provided that the Option for
such shares may not be exercised until the first anniversary of the
Effective Date;
(ii) 16,000 shares shall vest on the first anniversary of the Effective Date;
(iii) 10,000 shares shall vest on the second anniversary of the Effective
Date;
(iv) 10,000 shares shall vest on the third anniversary of the Effective
Date; and
(v) 10,000 shares shall vest on the fourth anniversary of the Effective Date.
-9-
<PAGE>
Exhibit 21.1
Subsidiaries of iGate Capital Corporation
<TABLE>
<CAPTION>
Subsidiary Jurisdiction of Incorporation/Formation
- ------------------------------------------------- -------------------------------------------------
<S> <C>
Air2Web, Inc. GA
Chen & McGinley, Inc. CA
Direct Resources Scotland, Ltd. Scotland
eJIVA, Inc. PA
Emplifi, Inc. PA
Planning Technologies, Inc. GA
Ex-Tra-Net Applications, Inc. PA
Global Financial Services of Nevada NV
Goldstar Computer Systems Inc. Ontario, Canada
iGate Capital Management, Inc. PA
iGate Europe, Inc. PA
iGate Holding Corporation DE
iGate Management, Inc. PA
iGate Venture Management LLC PA
iGate Ventures Holding Corporation DE
iGate Ventures, Inc. DE
Innovative Resource Group PA
Mascot Systems Private Limited India
Mastech Application Services, Inc. PA
Mastech Asia Pacific Pty. Ltd. Australia
Mastech Asia Pacific (NT) Pty. Ltd. Australia
Mastech Canada, Inc. Canada
Mastech MMBH Malaysia
Mastech Quantum Information Resources Ltd. Quebec, Canada
Mastech Systems (Germany) GmbH Germany
Mastech Systems Corporation PA
Mastech Trademark Corporation DE
Mastech Trademark Systems, Inc. DE
MC Computer Services Pty. Ltd. Australia
Quantum Group (U.S.), Inc. DE
Quantum Information Resources, Inc. NY
Scott Systems Private Limited India
Silverside Computer Systems, Inc. Canada
</TABLE>
<PAGE>
[LOGO OF ARTHUR ANDERSEN]
Consent of Independent Public Accountants
We hereby consent to the incorporation by reference of our report dated
January 27, 2000 filed as part of the annual report filed on Form 10-K,
as amended, of iGate Capital Corporation in the Registration Statements
on Forms S-3 (Nos. 333-58217, 333-73365 and 333-33604) and Forms S-8
(Nos. 333-20033 and 333-71057).
/s/ Arthur Andersen LLP
Pittsburgh, Pennsylvania
May 1, 2000
