EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made as of September 30, 1998, by and
between Logica Inc., a Delaware corporation with its headquarters located in
Lexington, Massachusetts (the "Employer"), and Dennis Yablonsky (the
"Executive"), but it shall become effective only in accordance with Section 16
below. In consideration of the mutual covenants contained in this Agreement,
the Employer and the Executive agree as follows:
1. Employment. The Employer agrees to employ the Executive and the Executive
agrees to be employed by the Employer on the terms and conditions set forth in
this Agreement.
2. Capacity. The Executive shall initially serve the Employer as the
Executive Vice President of the Carnegie Group division of the Employer (the
"Carnegie Group"). The Executive shall be responsible for overseeing the
operations of the Carnegie Group and shall report to the President and Chief
Executive Officer of the Employer (the "President and Chief Executive
Officer"). From and after July 1, 1999, the Executive shall also serve the
Employer in such other and additional offices as the Executive may be
requested to serve by the President and the Chief Executive Officer. The
Executive acknowledges and agrees that the Executive's employment by the
Employer is at will and nothing contained in this Agreement shall be construed
as creating any term of employment of the Executive with the Employer. Subject
to the provisions of Section 5(c), the Executive agrees that while he is
employed by the Employer, he may be required to perform the Employer's
business in, or relocate for short term or long term to, geographic locations
other than the location to which he is originally assigned.
3. Compensation and Benefits. The regular compensation and benefits payable
to the Executive under this Agreement shall be as follows:
(a) Salary. For all services rendered by the Executive under this
Agreement, the Employer shall pay the Executive a salary (the "Salary") at
the annual rate of Two Hundred Forty Thousand Dollars ($240,000). The
Salary shall be payable twice per month and, initially, shall be payable at
the rate of $10,000 per payment. The Executive's Salary shall be reviewed
annually beginning on July 1, 1999 in accordance with the Employer's normal
compensation review policies. The Executive's Salary shall not be reduced
below $240,000 in the period up to November 1, 1999 and any increase in the
Executive's Salary effected as a result of the July 1, 1999 annual
compensation review shall be implemented retroactively to April 1, 1999.
(b) Bonus. The Executive shall be entitled to receive such bonus to which
the Executive would otherwise have been entitled under the Carnegie Group,
Inc. Short-Term Incentive Compensation/Bonus Pool (the "Carnegie Bonus
Plan") for the fiscal year ending December 31, 1998 had the Merger (as
defined in the Agreement and Plan of Merger, dated September 30, 1998 (the
"Merger Agreement"), among the Employer, Logica Acquisition Corp. and
Carnegie Group, Inc.) not been consummated. The financial objectives of the
Carnegie Bonus Plan applicable to the Executive shall be based upon the
financial objectives previously provided to the Employer in writing;
provided, however, that all legal, accounting and financial advisors fees
and expenses in connection with the negotiation and execution of the Merger
Agreement and the transactions contemplated thereby incurred by Carnegie
Group, Inc. ("Carnegie") and all severance costs incurred by Carnegie as a
result of the transaction contemplated by the Merger Agreement up to and
including December 31, 1998, as determined in accordance with generally
accepted accounting principles consistently applied, shall be excluded from
the determination of whether such financial objectives have been achieved.
In addition, the Executive shall be eligible to receive a transition bonus
contingent upon the Executive achieving certain objectives that are more
fully described on Exhibit A hereto. If Executive shall be employed by
Employer after July 1, 1999, then from and after such date Executive shall
be entitled to participate in the Logica Management Bonus Scheme pursuant
to the terms then in effect. A general description of the terms of the
Logica Management Bonus Scheme is set forth on Exhibit A hereto.
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(c) Regular Benefits. The Executive shall also be entitled to participate
in employee benefit plans to the extent provided in Section 7.11 of the
Merger Agreement. Such participation shall be subject to the terms of the
applicable plan documents, generally applicable policies of the Employer
and applicable law. Nothing contained in this Agreement shall be construed
to create any obligation on the part of the Employer to establish any such
plan or to maintain the effectiveness of any such plan which may be in
effect from time to time.
(d) Taxation of Payments and Benefits. The Employer shall undertake to
make deductions, withholdings and tax reports with respect to payments and
benefits under this Agreement to the extent that it reasonably and in good
faith believes that it is required to make such deductions, withholdings
and tax reports. Payments under this Agreement shall be in amounts net of
any such deductions or withholdings. Nothing in this Agreement shall be
construed to require the Employer to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or
benefits or for any deduction or withholding from any payment or benefit.
(e) Exclusivity of Salary and Benefits. The Executive shall not be
entitled to any payments or benefits other than those provided under this
Agreement, the Exhibits attached hereto and the Loan Termination Agreement
of even date herewith between the Executive and Carnegie (the "Loan
Termination Agreement").
(f) Stock Options. In exchange for the cancellation of all options to
acquire shares of common stock of Carnegie held by the Executive
immediately prior to the Effective Time (as defined in the Merger
Agreement), the Executive shall be entitled to receive the consideration
set forth on Exhibit B hereto.
4. Extent of Service. During the Executive's employment under this
Agreement, the Executive shall, subject to the direction and supervision of
the President and Chief Executive Officer of the Employer, devote the
Executive's full business time, best efforts and business judgment, skill and
knowledge to the advancement of the Employer's interests and to the discharge
of the Executive's duties and responsibilities under this Agreement. The
Executive shall not engage in any other business activity.
5. Termination and Severance.
(a) Termination by the Executive. Subject to the payment of severance
pursuant to Section 5(d), the Executive's employment under this Agreement
may be terminated by the Executive by written notice to the Board of
Directors at least thirty (30) days prior to such termination.
(b) Termination by the Employer. Subject to the payment of severance
pursuant to Section 5(d), the Executive's employment under this Agreement
may be terminated by the Employer upon thirty (30) days' written notice to
the Executive.
(c) Constructive Termination. The Executive's employment hereunder shall
be deemed to have been terminated by the Employer if at any time prior to
the Anniversary Date (as hereinafter defined), the Executive resigns due to
(a) a material diminution by the Employer of the Executive's title or
responsibilities, as that title and those responsibilities existed on the
day prior to the date of resignation by the Executive, (b) any diminution
by the Employer in the Executive's salary, except as specified in this
Agreement, (c) any material diminution by the Employer in the Executive's
benefits or incentives or other forms of compensation except as specified
in this Agreement, or (d) any reassignment of the Executive or relocation
of the Executive outside of the greater Pittsburgh area effected without
the Executive's written consent at the time of reassignement.
(d) Severance Pay. Unless otherwise specifically provided in this
Agreement or otherwise required by law, all compensation and benefits
payable to the Executive under this Agreement shall terminate on the date
of termination of the Executive's employment under this Agreement.
Notwithstanding the foregoing, (A) in the event that the Executive
terminates his employment with the Employer in accordance with Section 5(a)
with an effective date, (i) between the Closing Date and the first
anniversary of the Closing Date (the "Anniversary Date"), the Executive
will not be entitled to receive any compensation or other payments from the
Employer, (ii) on the date which is the Anniversary Date, the Employer
shall continue
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to pay the Executive's Salary at the rate in effect as of the Closing Date
and the Executive's Benefits (as hereinafter defined) for a period of
twelve (12) months from the termination date, or (iii) on any date after
the Anniversary Date, the Executive will not be entitled to receive any
compensation or other payments from the Employer, and (B) in the event that
the Employer terminates the Executive's employment in accordance with
Section 5(b) or by virtue of Section 5(c) at any time with an effective
date (i) after the Closing Date but on or prior to the date that is twelve
(12) months after the Closing Date, the Employer shall continue to pay the
Executive's Salary at the rate in effect as of the Closing Date until the
second anniversary of the Closing Date and the Executive's Benefits for a
period of twelve (12) months after the termination date, (ii) after the
date that is twelve (12) months after the Closing Date and before the date
which is eighteen (18) months after the Closing Date, the Employer shall
continue to pay the Executive's Salary at the rate in effect as of the
Closing Date and the Executive's Benefits until the second anniversary of
the Closing Date, or (iii) after the date which is eighteen months after
the Closing Date, the Employer shall continue to pay the Executive's Salary
at the rate in effect as of the Closing Date and the Executive's Benefits
for a period of six (6) months after the termination date. For purposes of
this Section 5(d), "Benefits" shall mean the benefits received by the
Executive by virtue of his participation in the Employer's medical and
dental benefit plans. Notwithstanding anything to the contrary provided
herein, upon any termination of the Executive hereunder, the Executive
shall be entitled to the payment of all salary earned and unpaid, and all
accrued but unpaid vacation pay, as of the termination date, and any
unreimbursed business expenses incurred by the Executive up to the
termination date.
6. Confidential Information, Noncompetition and Cooperation.
(a) Confidential Information. As used in this Agreement, "Confidential
Information" means information belonging to the Employer which is of value
to the Employer in the course of conducting its business and the disclosure
of which could result in a competitive or other disadvantage to the
Employer. Confidential Information includes, without limitation, financial
information, reports, and forecasts; inventions, improvements,
copyrightable materials and other intellectual property; working methods
and operations, methodologies, marketing plans and strategies and sales
reports; trade secrets; know-how and other information used in research,
development, marketing, sales and operational activities; programs;
processes; product ideas, models, techniques, designs and formulae;
software; data; customer lists; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses
or facilities) which have been discussed or considered by the management of
the Employer. Confidential Information also includes any commercial or
technical information, improvements, or things which may be communicated to
the Executive or of which the Executive may learn by virtue of his
employment by the Employer, or of which the Executive may have gained
knowledge, or discovered, invented, or perfected while employed by the
Employer, including without limitation, any ideas or processes relating to
the development, operation, or improvement of any software or other
program, product, tool, article, or process sold, licensed, distributed or
maintained by the Employer or its customers. Confidential Information also
includes the confidential information of others with which the Employer has
a business relationship. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain, unless due
to breach of the Executive's duties under Section 6(b).
(b) Confidentiality. The Executive understands and agrees that the
Executive's employment creates a relationship of confidence and trust
between the Executive and the Employer with respect to all Confidential
Information. At all times, both during the Executive's employment with the
Employer and after its termination, the Executive will keep in confidence
and trust all such Confidential Information, and will not use or disclose
any such Confidential Information without the written consent of the
Employer, except as may be necessary in the ordinary course of performing
the Executive's duties to the Employer.
(c) Documents, Records, etc. All documents, records, data, apparatus,
equipment and other physical property, whether or not pertaining to
Confidential Information, which are furnished to the Executive by the
Employer or are produced by the Executive in connection with the
Executive's employment will be and remain the sole property of the
Employer. The Executive will return to the Employer all such materials and
property as and when requested by the Employer. In any event, the Executive
will return all such
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materials and property immediately upon termination of the Executive's
employment for any reason. The Executive will not retain with the Executive
any such material or property or any copies thereof after such termination.
(d) Noncompetition and Nonsolicitation. At any time during the
Executive's employment with the Employer and (A) in the case of any
termination of the Executive's employment hereunder pursuant to Section
5(a), for one (1) year thereafter, and (B) in the case of any termination
of the Executive's employment hereunder pursuant to Section 5(b) or 5(c),
for six (6) months thereafter, the Executive (i) will not, directly or
indirectly, whether as owner, partner, shareholder, consultant, agent,
employee, co-venturer or otherwise, engage, participate, assist or invest
in any Competing Business (as hereinafter defined); (ii) offer to perform
or perform business or services of a kind carried on by the Employer now or
at any time during the Executive's employment by the Employer, or otherwise
solicit employment or business from, consult with or accept employment from
any of the Employer's customers, or any Competing Business; (iii) will
refrain from directly or indirectly employing, attempting to employ,
recruiting or otherwise soliciting, inducing or influencing any person to
leave employment with the Employer (other than terminations of employment
of subordinate employees undertaken in the course of the Executive's
employment with the Employer); and (iv) will refrain from soliciting or
encouraging any customer or supplier to terminate or otherwise modify
adversely its business relationship with the Employer. The Executive
understands that the restrictions set forth in this Section 6(d) are
intended to protect the Employer's interest in its Confidential Information
and established employee, customer and supplier relationships and goodwill,
and agrees that such restrictions are reasonable and appropriate for this
purpose. For purposes of this Agreement, the term "Competing Business"
shall mean (A) from and after July 1, 1999, a business that is competitive
with any business which the Employer or any of its affiliates conducts or
proposes to conduct at any time during the employment of the Executive, and
(B) up to July 1, 1999, a business that is competitive with any business
which Carnegie or any of its subsidiaries conducts or proposes to conduct
at any time during the employment of the Executive. Notwithstanding the
foregoing, the Executive may own up to one percent (1%) of the outstanding
stock of a publicly held corporation which constitutes or is affiliated
with a Competing Business.
(e) Third-Party Agreements and Rights. The Executive hereby confirms that
the Executive is not bound by the terms of any agreement with any previous
employer or other party which restricts in any way the Executive's use or
disclosure of information or the Executive's engagement in any business,
except as set forth on Exhibit C hereto. The Executive represents to the
Employer that the Executive's execution of this Agreement, the Executive's
employment with the Employer and the performance of the Executive's
proposed duties for the Employer will not violate any obligations the
Executive may have to any such previous employer or other party. In the
Executive's work for the Employer, the Executive will not disclose or make
use of any information in violation of any agreements with or rights of any
such previous employer or other party, and the Executive will not bring to
the premises of the Employer any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.
(f) The Executive agrees to disclose promptly to the Employer any and all
Developments (as defined below) which are made, invented, developed, or
discovered by the Executive, either singly or jointly with others, in the
course of his employment by the Employer and within six (6) months after
termination of such employment. The Executive also agrees that such
Developments are works made for hire and are or shall become the exclusive
property of the Employer, and that he relinquishes any and all intellectual
property rights and/or other rights in the Developments to the Employer,
including by way of example but without limitation, rights of
identification or authorship and rights of approval with respect to
modifications and limitations on subsequent modifications. In order to
effectuate ownership by the Employer when necessary, the Employee agrees,
without further consideration:
(i) to immediately upon the Employer's request execute all documents
and make all assignments necessary to vest title to such Developments
in the Employer; and
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(ii) to assist the Employer in any reasonable manner to obtain for
the benefit of the Employer any patents or copyrights on such
Developments, in any and all countries; and
(iii) to execute when requested any and all patent and copyright
applications and any other lawful documents deemed necessary by the
Employer to carry out the purposes of this Agreement.
If the Executive is called upon to render the assistance described
above to the Employer after termination of employment, he will be
entitled to a fair and reasonable per diem fee in addition to
reimbursement of expenses incurred at the Employer's request.
"Developments" include, by way of example but without limitation, the
following: any and all inventions, improvements, discoveries,
developments, results of research, or useful ideas, whether or not
patentable, which relate in any manner to any software or other
programs, products, work or other business of the Employer or any
customer of the Employer, or to any process, apparatus, equipment, or
article worked on in connection with the Executive's employment by the
Employer.
(g) Litigation and Regulatory Cooperation. During and after the
Executive's employment, the Executive shall cooperate fully with the
Employer in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Employer which relate to events or occurrences that transpired while the
Executive was employed by the Employer or by Carnegie Group, Inc. The
Executive's full cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel
to prepare for discovery or trial and to act as a witness on behalf of the
Employer at mutually convenient times. During and after the Executive's
employment, the Executive also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events
or occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any reasonable
out-of-pocket expenses incurred in connection with the Executive's
performance of obligations pursuant to this Section 6(g).
(h) Injunction. The Executive agrees that it would be difficult to
measure any damages caused to the Employer which might result from any
breach by the Executive of the promises set forth in this Section 6, and
that in any event money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Section 8 of this Agreement, the Executive
agrees that if the Executive breaches, or proposes to breach, any portion
of this Agreement, the Employer shall be entitled, in addition to all other
remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual
damage to the Employer.
7. Consent to Jurisdiction. The parties hereby consent to the jurisdiction
of the Superior Court of the Commonwealth of Massachusetts and the United
States District Court for the District of Massachusetts. Accordingly, with
respect to any such court action, the Executive (a) submits to the personal
jurisdiction of such courts; (b) consents to service of process; and (c)
waives any other requirement (whether imposed by statute, rule of court, or
otherwise) with respect to personal jurisdiction or service of process.
8. Integration. This Agreement, the Exhibits attached hereto and the Loan
Termination Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements
between the parties with respect to any related subject matter.
9. Assignment; Successors and Assigns, etc. Neither the Employer nor the
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that the Employer may assign its rights under this
Agreement without the consent of the Executive in the event that the Employer
shall effect a reorganization, consolidate with or merge into any other
corporation, partnership, organization or other entity, or transfer all or
substantially all of its properties or assets to any other corporation,
partnership, organization or other entity. This Agreement shall inure to the
benefit of and be binding upon the Employer and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
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10. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of
this Agreement) shall to any extent be declared illegal or unenforceable by a
court of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
11. Waiver. No waiver of any provision hereof shall be effective unless made
in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
12. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to
the Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of
the Chief Executive Officer, and shall be effective on the date of delivery in
person or by courier or three (3) days after the date mailed.
13. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Employer.
14. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth. With respect to any disputes concerning federal law, such
disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to
be an original; but such counterparts shall together constitute one and the
same document.
16. Effectiveness. This Agreement is conditioned and shall become effective
only upon consummation of the Merger, which shall be deemed to occur only upon
and as of the Closing Date.
In Witness Whereof, this Agreement has been executed as a sealed instrument
by the Employer, by its duly authorized officer, and by the Executive, as of
the Effective Date.
Logica Inc.
/s/ Corey Torrence
By: _________________________________
Name: Corey Torrence
Title:President and Chief
Executive Officer
/s/ Dennis Yablonsky
_____________________________________
Dennis Yablonsky
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EXHIBIT A
I. TRANSITION BONUS
For the transition period between November 1, 1998 through June 30, 1999,
upon achievement of 100% of certain financial objectives by the Carnegie Group
(the "Carnegie Group Objectives"), the Executive will be eligible to receive a
cash bonus of $56,250 (the "Objective Bonus"). The Carnegie Group Objectives
shall be based upon the financial objectives previously provided to the
Employer in writing; provided, however, that the severance costs relating to
the employment of the Dennis Yablonsky, John Manzetti, Bruce Russell and
Raymond Kalustyan (collectively, the "Carnegie Group Executive Team") with
Carnegie, and all legal, accounting and financial advisors fees and expenses
in connection with the negotiation and execution of the Merger Agreement and
the transactions contemplated thereby incurred by Carnegie up, as determined
in accordance with generally accepted accounting principles consistently
applied, shall be excluded from the determination of whether the Carnegie
Group Objectives have been achieved. If the Carnegie Group achieves a
percentage between 70% and 100% of the Carnegie Group Objectives, the
Executive will be eligible to receive a bonus equal to that same percentage of
the Objective Bonus, and at a percentage less than 70% of the Carnegie Group
Objectives no bonus will be paid; provided, however, that if between 70% and
100% of the Carnegie Group Objectives are achieved, the President and Chief
Executive Officer may, in his sole discretion, award a higher percentage of
the Objective Bonus but not greater than 100%. To receive more than 100% of
the Objective Bonus, the Executive must achieve at least 100% of the Carnegie
Group Objectives as well as additional quantitative objectives in the areas of
pull through of revenue for the Employer and net savings and efficiencies
generated by the Carnegie Group Executive Team.
II. LOGICA MANAGEMENT BONUS SCHEME
For the fiscal year between July 1, 1999 and June 30, 2000, the Executive
will be entitled to participate in the Logica Management Bonus Scheme as is
then in effect, a current copy of which is attached hereto.
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EXHIBIT B
STOCK OPTIONS
Each Option (as defined in the Merger Agreement) that is outstanding
(whether or not exercisable) as of immediately prior to the Effective Time (as
defined in the Merger Agreement) and which has not been exercised or canceled
prior thereto, shall, at the Effective Time, be canceled, and upon the
surrender and cancellation of the option agreement representing such Option
and delivery of an Option Termination (as defined in the Merger Agreement),
the Executive shall receive the following consideration therefor:
(i) With respect to each Option having an exercise price less than $5.00
per share, the Option Consideration (as defined in the Merger
Agreement); and
(ii) With respect to each Option having an exercise price greater than or
equal to $5.00 per share, an option to acquire such number of ordinary
shares of 10 pence each of Logica plc ("Ordinary Shares") as is
determined pursuant to the formula set forth below:
[(N X EP) / ER] / PLC Share Price
N=Number of shares of common stock of Carnegie represented by the
Option
EP=Exercise Price of the Option
ER= Exchange Rate ($/(Pounds)) (based on the exchange rate in U.S.
Dollars per British Pounds, as reported in the Financial Times on
the date on which the Effective Time occurs)
PLC Share Price= Middle market quotation from the London Stock Exchange
daily official list for an Ordinary Share as reported
on the date on which the Effective Time occurs
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EXHIBIT C
THIRD-PARTY AGREEMENTS
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