Exhibit 10.3
AGREEMENT
By and Between
MASTECH CORPORATION
and
XXXXXX XXXXXXXX
THIS AGREEMENT, made by and between MASTECH CORPORATION, a Pennsylvania
corporation ("Mastech"), and XXXXXX XXXXXXXX, an individual currently residing
at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter "Xxxxxxxx")
(collectively, Mastech and Xxxxxxxx shall sometimes be referred to herein as the
"Parties"), is dated as of October 14, 1996.
BACKGROUND
Mastech is contemplating an initial public offering of its shares of common
stock, par value $.01 per share ("Common Stock") on or before January 31, 1997
(the "IPO").
Mastech desires to reward Xxxxxxxx for his past performance and to provide
an incentive to Xxxxxxxx to continue to contribute to the long-term growth and
financial prosperity of Mastech.
If the IPO does not close by January 31, 1997, this Agreement shall be null
and void and the Parties shall make alternative arrangements as contemplated by
the last draft of Phantom Stock Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth in this Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Compensation and Incentive.
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1.1 Compensation. Xxxxxxxx shall receive from Mastech promptly
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following the closing date of the IPO (the "IPO Date"), and Mastech shall pay or
issue to Xxxxxxxx in cash and/or shares of Common Stock, an amount equal to the
value of 750 shares of Mastech Common Stock (subject to adjustment for the
contemplated stock split prior to the IPO and based on the per share price to
the public of the Common Stock as reflected on the final Prospectus on the IPO
Date). The choice as between cash, shares or a combination thereof shall be made
by Xxxxxxxx. Any shares received by Xxxxxxxx pursuant to this Paragraph 1.1
shall be free of any restrictions on transfer except for any restrictions
imposed by applicable Federal and state securities laws and any lock-up
arrangements requested by the underwriters (which Xxxxxxxx will agree to in
writing).
1.2 Incentive. So long as Xxxxxxxx is still employed by Mastech on the
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IPO Date, Mastech shall also issue to Xxxxxxxx promptly following the IPO Date,
in addition to any shares issued pursuant to Paragraph 1.1 above, 750 shares of
"Restricted" Common Stock (as adjusted for the contemplated stock split prior to
the IPO) (the "Restricted Shares"). Stock certificate(s) representing the
Restricted Shares shall be issued to Xxxxxxxx and his beneficial
ownership thereof shall be recorded in the appropriate books and records of the
Company. Such certificate(s) shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) contained in an Agreement entered into
between the registered owner and Mastech Corporation. Copies of
such Agreement are on file in the offices of Mastech Corporation,
0000 XxXxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx, 00000.
Upon expiration of the Restricted Period (as defined in Paragraph 1.3 below) or
the earlier lapse of the restrictions on Restricted Shares as otherwise provided
in this Agreement, Mastech shall deliver or cause to be delivered to Xxxxxxxx
substitute certificate(s) without the foregoing legend for those Restricted
Shares which have not been forfeited.
Xxxxxxxx shall have all rights and privileges of a shareholder as to the
Restricted Shares, including the right to vote and receive dividends or other
distributions with respect to the Restricted Shares, except that the following
restrictions shall apply:
(i) none of the Restricted Shares may be sold,
transferred, assigned, pledged or otherwise encumbered or
disposed of during the Restricted Period unless otherwise
provided in this Agreement; and
(ii) all of the Restricted Shares shall remain subject to
forfeiture during the Restricted Period in accordance with
other provisions in this Agreement.
1.3 Total Forfeiture. During the period beginning on the IPO Date and
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ending June 30, 1998 (the "Restricted Period"), the Restricted Shares will be
subject to forfeiture. If Shangold's employment with Mastech shall terminate
during the Restricted Period for any reason other than as set forth in
Paragraphs 2.1 or 2.3, all of Shangold's rights to the Restricted Shares shall
terminate, all the Restricted Shares shall be forfeited and Xxxxxxxx shall
endorse the Restricted Share certificates over, and return them, to Mastech.
1.4 Transferability of Shares After the Restricted Period. On July 1,
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1998, so long as Xxxxxxxx shall still be employed by Mastech, all of the
Restricted Shares shall automatically become transferable subject only to any
restrictions imposed by applicable Federal and State securities laws, and shall
no longer be subject to risk of forfeiture.
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2. Partial Forfeiture.
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2.1 Termination Without Cause. If Xxxxxxxx is actually or
constructively terminated by Mastech during the Restricted Period without cause
(as defined below), a pro rata portion of the Restricted Shares shall become
freely transferable by Xxxxxxxx and no longer subject to forfeiture, determined
by dividing the number of days employed during the Restricted Period by the
total number of days in the Restricted Period, multiplied by the total number of
Restricted Shares. Any remaining Restricted Shares shall be forfeited and
Xxxxxxxx shall endorse the certificates therefor over, and return them, to
Mastech.
2.2 Sale of Mastech. In the event of the sale of the Mastech business
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to an independent third party buyer ("Buyer") during the Restricted Period
(whether such sale is effected by a sale of all or substantially all of the
assets of Mastech, or by the merger of Mastech with or into a third party, or by
the sale of shares of Mastech), a pro rata portion of the Restricted Shares
shall become freely transferable by Xxxxxxxx and no longer subject to
forfeiture, determined by dividing the number of days during the Restricted
Period prior to the closing of the sale transaction by the total number of days
in the Restricted Period, multiplied by the total number of Restricted Shares.
The remaining Restricted Shares shall be forfeited and Xxxxxxxx shall endorse
the certificates therefor over, and return them, to Mastech, unless Xxxxxxxx
reaches an agreement with the Buyer that allows him to retain such remaining
Restricted Shares.
2.3 Death of Xxxxxxxx. In the event Xxxxxxxx dies during the
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Restricted Period, a pro rata portion of the Restricted Shares shall no longer
be subject to forfeiture and shall be freely transferable by Xxxxxxxx, by will
or otherwise, determined by dividing the number of days employed during the
Restricted Period by the total number of days in the Restricted Period,
multiplied by the total number of Restricted Shares. The remaining Restricted
Shares shall be forfeited and Shangold's legal representatives shall endorse the
certificates therefor over, and return them, to Mastech.
3. Miscellaneous.
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3.1 Registration. The Parties hereby agree that all of the Common
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Stock granted to Xxxxxxxx under this Agreement shall not be part of the
Registration Statement on Form S-1 filed as part of the IPO. Mastech will use
its best efforts to effect a filing of a Registration Statement on Form S-8
which pursuant to General Instruction C of Form S-8, will register for resale by
Xxxxxxxx the shares of Common Stock granted under this Agreement.
3.2 Taxes. The Parties agree to be responsible for their own tax
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liabilities (if any) which result from this Agreement. To the extent required by
law, Mastech may deduct any applicable federal and state withholding and payroll
taxes from any payments due under this Agreement. Both parties hereby agree and
acknowledge that neither Party has made any representations or warranties
regarding the tax consequences of this Agreement and each of them have consulted
with their own tax advisors and have not entered into this Agreement relying
upon any tax representations which have been made as between them. Mastech
hereby confirms its intention not to treat Xxxxxxxx as having taxable income
with respect to the Restricted Shares at the
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time of issuance thereof, but rather that such taxable income shall occur if and
when and to the extent the Restricted Shares are no longer subject to
forfeiture, except if Xxxxxxxx files an election under Section 83 (b) of the
Internal Revenue Code.
3.3 Valuation. The Parties agree that it is not their intent that this
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Agreement guarantee the value of the stock grants contained herein nor is there
contemplated a guarantee of a per share value. The Parties acknowledge that the
price of the Common Stock may fluctuate once it is publicly traded and listed on
a national exchange or with NASDAQ/NMS.
3.4 Definition of Cause. Solely for purposes of this Agreement, the
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term "cause" shall mean:
(a) The deliberate and intentional engaging by Xxxxxxxx in xxxxx
misconduct that is materially and demonstrably inimical to
the best interests, monetary or otherwise, of Mastech;
(b) Conviction of a felony or conviction of any crime involving
moral turpitude, fraud or deceit; or
(c) Breach of any noncompetition, nonsolicitation or
confidentiality provisions agreed to by Xxxxxxxx in writing
for the benefit of Mastech.
Xxxxxxxx hereby agrees that any such noncompetition or nonsolicitation
provisions shall not be limited to the United States, but shall cover any
country in the world where Mastech now or hereafter does business.
3.5 Non-Transferability. Except as provided in Paragraph 2.3, the
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rights of Xxxxxxxx under this Agreement, including the right to any amounts
payable to him hereunder, shall not be transferable or assignable to any other
party, under any circumstances, without the express written consent of Mastech,
and any attempted transfer or assignment shall void and of no effect.
3.6 Governing Law. This Agreement shall be interpreted and its
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provisions enforced in accordance with the laws of the Commonwealth of
Pennsylvania.
3.7 Notices. All notices or other communications required or permitted
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hereunder shall be in writing and shall be deemed given or delivered when
delivered personally, by registered or certified mail, by legible facsimile
transmission or by overnight courier addressed as follows:
If to Mastech, to:
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Xxxxx Xxxxxxxx, Chairman
Mastech Systems Corporation
0000 XxXxx Xxxx
Xxxxxxx, XX 00000
Fax No: (000) 000-0000
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If to Xxxxxxxx, to:
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Xx. Xxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
3.8 No Right of Employment. This Agreement does not create any right
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to continued employment of Xxxxxxxx by Mastech or any of its affiliates.
3.9 Unconditional Obligations. This Agreement establishes and vests in
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Xxxxxxxx a contractual right to the benefits to which he is entitled hereunder.
Except as otherwise provided in the Agreement, Mastech's obligations under this
Agreement shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which Mastech or its affiliates may have
against Xxxxxxxx or any other party. Each and every payment made hereunder by
Mastech shall be final, except for forfeiture of Restricted Shares as provided
herein, and Mastech shall not seek to recover all or any part of a final and
non-forfeitable payment from Xxxxxxxx, or from whomsoever may be entitled
thereto, for any reasons whatsoever.
3.10 Arbitration. Any controversy or claim arising out of or relating
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to this Agreement or the breach thereof (including the arbitrability of any
controversy or claim), shall be settled by arbitration in the City of Pittsburgh
in accordance with the laws of the Commonwealth of Pennsylvania by three (3)
arbitrators, one of whom shall be appointed by Mastech, one by Xxxxxxxx, and the
third of whom shall be appointed by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this paragraph. The cost of any arbitration
proceeding hereunder shall be borne equally by Mastech and Xxxxxxxx, although
the arbitrators shall have authority to decide that one party shall reimburse
the other for its costs. The award of the arbitrators shall be binding upon the
parties. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
3.11 Entire Agreement. This Agreement represents the entire agreement
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by and between the parties with respect to the matters contained herein. In the
event the IPO closes on or prior to January 31, 1997, this Agreement shall
supersede any and all prior discussions or writings regarding the equity
participation by Xxxxxxxx in Mastech including, but not limited to, the original
offer of employment letter dated February 2, 1992, the revised stock incentive
agreement dated September 23, 1993, the 1996 Compensation Plan dated April 30,
1996 and the letter dated August 2, 1996 from Xxxxx Xxxxxxxx. No change,
modification, extension, termination, discharge, abandonment or waiver of this
Agreement or any of its provisions, nor any representation, promise or condition
relating to this Agreement, will be binding upon any party unless made in
writing and signed by such party.
3.12 Null and Void. In the event the IPO fails to close by January 31,
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1997, for any reason whatsoever, this Agreement shall be considered null and
void and the terms and
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conditions contained herein shall have no effect on either Party, and the
Parties shall make alternative arrangements as contemplated by the last draft of
Phantom Stock Agreement.
3.13 New Employment Agreement. If requested by Mastech, Xxxxxxxx shall
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enter into a new employment agreement with Mastech in a form substantially the
same as the form of employment agreement entered into by other executive
officers of Mastech in connection with the IPO, provided that such agreement
shall not reduce or limit Shangold's rights under this Agreement.
The undersigned have executed this Agreement as of the date first above
written.
EXECUTED IN DUPLICATE
MASTECH CORPORATION
/s/ Xxxxx Xxxxxxxx
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Co-Chairman
XXXXXX XXXXXXXX
/s/ Xxxxxx Xxxxxxxx
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ADDENDUM TO AGREEMENT
BY AND BETWEEN
MASTECH SYSTEMS CORPORATION AND XXXXXX XXXXXXXX
THIS ADDENDUM is made this ____ day of November, 1996 by and between
MASTECH SYSTEMS CORPORATION (f/k/a Mastech Corporation) ("Mastech Systems") and
XXXXXX XXXXXXXX, an individual currently residing at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter "Xxxxxxxx") (collectively, Mastech and
Xxxxxxxx shall sometimes be referred to herein as the "Parties").
WHEREAS, the Parties entered into an Agreement dated October 14, 1996,
providing for the payment by Mastech Systems of certain compensation in
connection with an Initial Public Offering of Common Stock being contemplated by
Mastech Systems; and
WHEREAS, subsequent to the execution of the Agreement, the Board of
Directors of Mastech Systems decided to reorganize so that, in connection with
and immediately prior to the contemplated IPO, Mastech Systems will become a
wholly-owned subsidiary of MSC Holding Company, a Delaware corporation, which
itself will be a wholly-owned subsidiary of a new entity known as Mastech
Corporation, a Pennsylvania corporation("Mastech"), which will be the issuer in
the contemplated IPO.
THEREFORE, the Parties hereby agree as follows:
1. Compensation and Incentive. Shangold's right to receive
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compensation and incentive under Section 1 of the Agreement in the form of
Common Stock of Mastech Systems shall instead entitle him to now receive
compensation and incentive in the form of Common Stock of Mastech.
2. Substitution. All rights, duties and obligations of Mastech
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Systems shall hereafter be the rights, duties and obligations of Mastech. All
rights, duties and obligations that Xxxxxxxx currently has under the Agreement
to Mastech Systems, other than those related to his employment with Mastech
Systems, including but not limited to those set forth in the Agreement as a term
or condition to receiving any compensation and incentive, shall hereafter be
rights, duties and obligations to Mastech.
3. Surviving Terms and Conditions. All other terms and conditions
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of the Agreement shall survive and remain unaffected by this Addendum.
IN WITNESS WHEREOF, the undersigned have signed this Addendum as of
the date first written above.
MASTECH CORPORATION
By:
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Title:
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Date:
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MASTECH SYSTEMS CORPORATION
By:
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Title:
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Date:
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XXXXXX XXXXXXXX
Date:
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ADDENDUM TO AGREEMENT
BY AND BETWEEN
MASTECH SYSTEMS CORPORATION AND XXXXXX XXXXXXXX
THIS ADDENDUM is made this ____ day of November, 1996 by and between
MASTECH SYSTEMS CORPORATION (f/k/a Mastech Corporation) ("Mastech Systems") and
XXXXXX XXXXXXXX, an individual currently residing at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter "Xxxxxxxx") (collectively, Mastech and
Xxxxxxxx shall sometimes be referred to herein as the "Parties").
WHEREAS, the Parties entered into an Agreement dated October 14, 1996,
providing for the payment by Mastech Systems of certain compensation in
connection with an Initial Public Offering of Common Stock being contemplated by
Mastech Systems; and
WHEREAS, subsequent to the execution of the Agreement, the Board of
Directors of Mastech Systems decided to reorganize so that, in connection with
and immediately prior to the contemplated IPO, Mastech Systems will become a
wholly-owned subsidiary of MSC Holding Company, a Delaware corporation, which
itself will be a wholly-owned subsidiary of a new entity known as Mastech
Corporation, a Pennsylvania corporation("Mastech"), which will be the issuer in
the contemplated IPO.
THEREFORE, the Parties hereby agree as follows:
1. Compensation and Incentive. Shangold's right to receive
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compensation and incentive under Section 1 of the Agreement in the form of
Common Stock of Mastech Systems shall instead entitle him to now receive
compensation and incentive in the form of Common Stock of Mastech.
2. Substitution. All rights, duties and obligations that Xxxxxxxx
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currently has under the Agreement to Mastech Systems, other than those related
to his employment with Mastech Systems, including but not limited to those set
forth in the Agreement as a term or condition to receiving any compensation or
incentive payments, shall hereafter be rights, duties and obligations to
Mastech. Notwithstanding the preceding sentence, and in the event Mastech does
not meet its payment obligations (if any) under the Agreement, Mastech Systems
shall be liable for the payment obligations thereunder (if any) except that
Mastech Systems shall not be obligated to issue stock to meet said obligations
but instead shall have a right to pay to Xxxxxxxx the cash value of any stock
due under the Agreement.
3. Surviving Terms and Conditions. All other terms and conditions
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of the Agreement shall survive and remain unaffected by this Addendum.
IN WITNESS WHEREOF, the undersigned have signed this Addendum as of
the date first written above.
MASTECH CORPORATION
By:
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Title:
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Date:
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MASTECH SYSTEMS CORPORATION
By:
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Title:
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Date:
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XXXXXX XXXXXXXX
Date:
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