Exhibit 10.14
EXECUTIVE AGREEMENT
AGREEMENT made as of this 5th day of April, 2007 by and between Virtusa
(India) Private Limited (the "Subsidiary"), a subsidiary of Virtusa Corporation
(the "Company"), and T.N. Hari (the "Executive").
1. Purpose. The Company considers it essential to the best interests of its
stockholders to promote and preserve the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") and the
Subsidiary recognize that, as is the case with many corporations, the
possibility of a Change in Control (as defined in Section 2 hereof) exists and
that such possibility, and the uncertainty and questions that it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company, its subsidiaries and its
stockholders. Therefore, the Board (and, if, and to the extent, applicable, the
boards of the subsidiaries thereof) have determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's and the Subsidiary's key management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control. Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Subsidiary, the Executive shall not have
any right to be retained in the employ of the Subsidiary (or any affiliated
company thereof).
2. Change in Control. A "Change in Control" shall be deemed to have
occurred upon the occurrence of any one of the following events:
(a) any "Person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Act") (other than the
Company, any of its subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or trust of the
Company or any of its subsidiaries), together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Act) of such
person, shall become the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company
representing 50 percent or more of the combined voting power of the Company's
then outstanding securities having the right to vote in an election of the
Company's Board of Directors ("Voting Securities") (in such case other than as a
result of an acquisition of securities directly from the Company); or
(b) persons who, as of the date hereof, constitute the Company's Board
of Directors (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board, provided
that any person becoming a director of the Company subsequent to the date hereof
shall be considered an Incumbent Director if such person's election was approved
by or such person was nominated for election by either (A) a vote of at least a
majority of the Incumbent Directors or (B) a vote of at least a majority of the
Incumbent Directors who are members of a nominating committee comprised, in the
majority, of Incumbent Directors; but provided further, that any such person
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of members of the Board of Directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board, including by reason of agreement
intended to avoid or settle any such actual or threatened contest or
solicitation, shall not be considered an Incumbent Director; or
(c) the consummation of (A) any consolidation or merger of the Company
where the stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger, beneficially
own (as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate more than 50 percent of the
voting shares of the Company issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company; or
(d) the approval by the Company's stockholders of any plan or proposal
for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred for purposes of the foregoing clause (a) solely as the result of
an acquisition of securities by the Company that, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
shares of Voting Securities beneficially owned by any person to 50 percent or
more of the combined voting power of all then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 50 percent or more of the
combined voting power of all then outstanding Voting Securities, then a "Change
in Control" shall be deemed to have occurred for purposes of the foregoing
clause (a).
3. Terminating Event. A "Terminating Event" shall mean any of the events
provided in this Section 3:
(a) Termination by the Subsidiary . Termination by the Subsidiary of
the employment of the Executive with the Subsidiary for any reason other than
for Cause, death or Disability. For purposes of this Agreement, "Cause" shall
mean:
(i) conduct by the Executive constituting a material act of
willful misconduct in connection with the performance of his duties,
including, without limitation, misappropriation of funds or property of the
Subsidiary, or any of its subsidiaries or affiliates, including the
Company, other than the occasional, customary and de minimis use of
Subsidiary property for personal purposes; or
(ii) the commission by the Executive of any felony or a
misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any
conduct by the Executive that would reasonably be expected to result in
material injury to the Subsidiary or any of its subsidiaries and
affiliates, including the Company, if he were retained in his position; or
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(iii) continued, willful and deliberate non-performance by the
Executive of his duties to the Subsidiary (other than by reason of the
Executive's physical or mental illness, incapacity or disability) which has
continued for more than 30 days following written notice of such
non-performance from the Board of Directors of the Subsidiary; or
(iv) a violation by the Executive of the Subsidiary (or the
applicable Company's) employment policies which has continued following
written notice of such violation from the Chief Executive Officer; or
(v) willful failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement
authorities, after being instructed by the Subsidiary (or the Company) to
cooperate, or the willful destruction or failure to preserve documents or
other materials known to be relevant to such investigation or the willful
inducement of others to fail to cooperate or to produce documents or other
materials.
A Terminating Event shall not be deemed to have occurred pursuant to this
Section 3(a) solely as a result of the Executive being an employee of any direct
or indirect successor to the business or assets of the Company or the
Subsidiary, as the case may be, rather than continuing as an employee of the
Subsidiary, following a Change in Control. For purposes of clauses (i), (iii)
and (v) hereof, no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive without
reasonable belief that the Executive's act, or failure to act, was in the best
interests of the Subsidiary, the Company and its subsidiaries and affiliates.
For purposes hereof, the Executive will be considered "Disabled" if, as a result
of the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from his duties to the Subsidiary on a full-time basis
for 180 calendar days in the aggregate in any 12-month period.
(b) Termination by the Executive for Good Reason. Termination by the
Executive of the Executive's employment with the Subsidiary for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean the occurrence of any of
the following events:
(i) a substantial diminution or other substantial adverse change,
not consented to by the Executive, in the nature or scope of the
Executive's responsibilities, authorities, powers, functions or duties from
the responsibilities, authorities, powers, functions or duties exercised by
the Executive immediately prior to the Terminating Event; or
(ii) a material reduction in the Executive's annual base salary
or targeted total annual cash compensation (i.e., base salary and targeted
bonus) as in effect on the date hereof or as the same may be increased from
time to time hereafter except for across-the-board reductions similarly
affecting all or substantially all management employees; or
(iii) the relocation of the Subsidiary's offices at which the
Executive is principally employed immediately prior to the date of a
Terminating Event (the "Current
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Offices") to any other location more than 50 miles from the Current
Offices, or the requirement by the Subsidiary for the Executive to be based
anywhere other than the Current Offices, except for required travel on the
Subsidiary's business to an extent substantially consistent with the
Executive's business travel obligations immediately prior to the
Terminating Event; or
(iv) the failure by the Subsidiary to obtain an effective
agreement from any successor to assume and agree to perform this Agreement,
as required by Section 20.
4. Severance and Change in Control Payments.
(a) In the event a Terminating Event occurs within 12 months after a
Change in Control, the following shall occur:
(i) the Subsidiary shall pay to the Executive an amount equal to
the sum of (x) one-half of the Executive's annual base salary in effect
immediately prior to the Terminating Event (or the Executive's annual base
salary in effect immediately prior to the Change in Control, if higher) and
(y) provided that the Company achieves its corporate performance targets
for the period, a pro rated portion of the Executive's targeted annual
bonus for the period in which the Change in Control occurred, payable in
one lump-sum payment no later than three days following the Date of
Termination (provided that any pro rated bonus amount shall be payable no
later then three days following the date on which such bonus is payable to
other management employees);
(ii) subject to the Executive's copayment of premium amounts at
the active employees' rate, the Executive shall continue to participate in
the Subsidiary's group health, dental and vision program for six months;
provided, however, that the continuation of health benefits under this
Section shall reduce and count against the Executive's rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"); and
(iii) all stock options and other stock-based awards granted to
the Executive by the Company shall immediately accelerate and become
exercisable or non-forfeitable as of the effective date of such Change in
Control.
(b) In the event a Terminating Event occurs prior to a Change in Control,
the following shall occur:
(i) the Subsidiary shall pay to the Executive an amount equal to
the sum of (x) one-half of the Executive's annual base salary in effect
immediately prior to the Terminating Event and (y) provided that the
Company achieves its corporate performance targets for the period, a pro
rated portion of the Executive's targeted annual bonus for the period in
which the Terminating Event occurred, payable in one lump-sum payment no
later than three days following the Date of Termination (provided that any
pro rated bonus amount shall be payable no later then three days following
the date on which such bonus is payable to other management employees); and
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(ii) subject to the Executive's copayment of premium amounts at
the active employees' rate, the Executive shall continue to participate in
the Subsidiary's s group health, dental and vision program for six months;
provided, however, that the continuation of health benefits under this
Section shall reduce and count against the Executive's rights under COBRA.
(c) Notwithstanding anything to the contrary in any applicable option
agreement or stock-based award agreement, upon a Change in Control, all stock
options and other stock-based awards granted to the Executive after the date of
this Agreement by the Company shall immediately accelerate twelve (12) months so
that the shares that would have vested in the one-year period following such
Change in Control would become immediately vested and the remaining unvested
shares would continue to vest in accordance with their terms but on a schedule
that would be twelve (12) months earlier than had the Change in Control not
transpired. The Executive shall also be entitled to any other rights and
benefits with respect to stock-related awards, to the extent and upon the terms
provided in the employee stock option or incentive plan or any agreement or
other instrument attendant thereto pursuant to which such options or awards were
granted.
(d) Anything in this Agreement to the contrary notwithstanding, if at
the time of the Executive's termination of employment, the Executive is
considered a "specified employee" within the meaning of Section 409A(a)(2)(B)(i)
of the Internal Revenue Code of 1986, as amended (the "Code"), and if any
payment that the Executive becomes entitled to under this Agreement is
considered deferred compensation subject to interest and additional tax imposed
pursuant to Section 409A(a) of the Code as a result of the application of
Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable
prior to the date that is the earliest of (i) six months after the Executive's
Date of Termination, (ii) the Executive's death, or (iii) such other date as
will cause such payment not to be subject to such interest and additional tax,
and the initial payment shall include a catch-up amount covering amounts that
would otherwise have been paid during the first six-month period but for the
application of this Section 4(e).
5. ADDITIONAL LIMITATION.
(a) Additional Limitation. Anything in this Agreement to the contrary
notwithstanding, in the event that any compensation, payment or distribution by
the Subsidiary (or the Company, to the extent applicable)to or for the benefit
of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (the "Severance Payments"),
would be subject to the excise tax imposed by Section 4999 of the Code, then the
benefits payable under this Agreement shall be reduced (but not below zero) to
the extent necessary so that the maximum Severance Payments shall not exceed the
Threshold Amount. To the extent that there is more than one method of reducing
the payments to bring them within the Threshold Amount, the Executive shall
determine which method shall be followed; provided that if the Executive fails
to make such determination within 15 business days after the Subsidiary (or the
Company, as the case may be) has sent the Executive written notice of the need
for such reduction, the Subsidiary (or the Company, as the case may be) may
determine the amount of such reduction in its sole discretion.
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For the purposes of this Section 5(a), "Threshold Amount" shall mean three
times the Executive's "base amount" within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00); and
"Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, and
any interest or penalties incurred by the Executive with respect to such excise
tax.
6. Term. This Agreement shall take effect on the date first set forth above
and shall terminate upon the earlier of (a) the termination of the Executive's
employment with the Subsidiary for any reason other than the occurrence of a
Terminating Event, or (b) the date which is 12 months after a Change in Control
if the Executive is still employed by the Subsidiary.
7. Withholding. All payments made by the Subsidiary (or Company, to the
extent applicable) under this Agreement shall be net of any tax or other amounts
required to be withheld by the Subsidiary (or the Company, to the extent
applicable) under applicable law.
8. Notice and Date of Termination.
(a) Notice of Termination. During the term of this Agreement, any
purported termination of the Executive's employment (other than by reason of
death) shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with this Section 8. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
the Date of Termination.
(b) Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment during the term of this
Agreement, shall mean the date specified in the Notice of Termination. In the
case of a termination by the Subsidiary following a Change in Control other than
a termination for Cause (which may be effective immediately), the Date of
Termination shall not be less than 30 days after the Notice of Termination is
given. In the case of a termination by the Executive, the Date of Termination
shall not be less than 30 days from the date such Notice of Termination is
given. Notwithstanding the foregoing, in the event that the Executive gives a
Notice of Termination to the Subsidiary, the Subsidiary may unilaterally
accelerate the Date of Termination and such acceleration shall not result in a
termination by the Subsidiary for purposes of this Agreement.
9. No Mitigation. The Subsidiary agrees that, if the Executive's employment
by the Subsidiary is terminated during the term of this Agreement, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Subsidiary (and the Company, to the
extent applicable) pursuant to Section 4 hereof. Further, the amount of any
payment provided for in this Agreement shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Subsidiary (or the Company, to the extent applicable)or
otherwise.
10. Disputes. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof or otherwise arising out of the Executive's
employment or the termination of
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that employment (including, without limitation, any claims of unlawful
employment discrimination whether based on age or otherwise) shall, to the
fullest extent permitted by law of India. Notwithstanding the foregoing, this
Section 10 shall not preclude either party from pursuing a court action for the
purpose of obtaining a temporary restraining order or a preliminary injunction
in circumstances in which such relief is appropriate.
11. Consent to Jurisdiction. To the extent that any court action is
permitted consistent with or to enforce Section 10 of this Agreement, the
parties hereby consent to the jurisdiction of the laws and venue of the courts
and laws of India, in Hyderabad, India. 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.
12. Integration. This Agreement shall constitute the sole and entire
agreement among the parties with respect to the subject matter hereof, and
supersedes and cancels all prior, concurrent and/or contemporaneous
arrangements, understandings, promises, programs, policies, plans, practices,
offers, agreements and/or discussions, whether written or oral, by or among the
parties regarding the subject matter hereof, including, but not limited to, any
offer letters or other arrangement with the Subsidiary with the Executive (and
any amendments thereto) and those constituting or concerning employment
agreements, change in control benefits and/or severance benefits, except to the
extent of any provisions in any prior written agreement which are required to
remain in full force and effect under applicable law and such other terms which
are not by their nature conflicting with, or otherwise covered under, the terms
of this Agreement; provided, however, that this Agreement is not intended to,
and shall not, supersede, affect, limit, modify or terminate any of the
following, all of which shall remain in full force and effect in accordance with
their respective terms: (i) any written agreements, programs, policies, plans,
arrangements or practices of the Subsidiary that do not relate to the subject
matter hereof; (ii) any written stock or stock option agreements between the
Executive and the Subsidiary (except as expressly modified hereby); and (iii)
any written agreements between Executive and the Subsidiary concerning
noncompetition, nonsolicitation, inventions and/or nondisclosure obligations.
13. Successor to the Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal representatives, executors,
administrators, heirs, distributees, devisees and legatees. In the event of the
Executive's death after a Terminating Event but prior to the completion by the
Subsidiary (and, to the extent applicable, the Company) of all payments due him
under Section 4 of this Agreement, the Subsidiary shall continue such payments
to the Executive's beneficiary designated in writing to the Subsidiary prior to
his death (or to his estate, if the Executive fails to make such designation).
14. Enforceability. If any portion or provision 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.
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15. 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.
16. 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 registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Subsidiary, or to the Subsidiary at its main office, attention of the Board of
Directors.
17. 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 Subsidiary. .
18. Effect on Other Plans. An election by the Executive to resign for Good
Reason under the provisions of this Agreement shall not be deemed a voluntary
termination of employment by the Executive for the purpose of interpreting the
provisions of any of the Subsidiary (and Company's, to the extent applicable)
benefit plans, programs or policies. Nothing in this Agreement shall be
construed to limit the rights of the Executive under the Subsidiary (and the
Company's to the extent applicable) benefit plans, programs or policies except
as otherwise provided in Section 5 hereof, and except that the Executive shall
have no rights to any severance benefits under any Subsidiary severance pay
plan.
19. Governing Law. This is a contract under Indian law, and shall be
construed under and be governed in all respects by the laws of India , without
giving effect to the conflict of laws principles.
20. Successors to Company. The Subsidiary shall request that the Company
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Subsidiary (and to the extent
applicable, the Company) would be required to perform if no such succession had
taken place. Failure of the Subsidiary to cause the Company to obtain an
assumption of this Agreement at or prior to the effectiveness of any succession
shall be a breach of this Agreement and shall constitute Good Reason if the
Executive elects to terminate employment.
21. Gender Neutral. Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise.
22. Confidential Information. The Executive shall never use, publish or
disclose in a manner adverse to the Subsidiary (or Company's) interests, any
proprietary or confidential information relating to (a) the business, operations
or properties of the Subsidiary or any subsidiary or other affiliate of the
Subsidiary (including the Company), or (b) any materials, processes, business
practices, technology, know-how, research, programs, customer lists, customer
requirements or other information used in the manufacture, sale or marketing of
any of the respective products or services of the Subsidiary (including the
Company) or any subsidiary
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or other affiliate of the Subsidiary (including the Company); provided, however,
that no breach or alleged breach of this Section 22 shall entitle the Subsidiary
to fail to comply fully and in a timely manner with any other provision hereof.
Nothing in this Agreement shall preclude the Subsidiary (including the Company)
from seeking money damages, or equitable relief by injunction or otherwise
without the necessity of proving actual damage to the Subsidiary , for any
breach by the Executive hereunder.
23. Conditions of Benefits. The amounts payable to the Executive by the
Subsidiary (and to the extent applicable, the Company) pursuant to Section 4
hereof shall be condition upon, and payable only if, the Executive: (a) executes
a general release in a form and of a scope reasonably acceptable to the
Subsidiary ; (b) returns all property, equipment, confidential information and
documentation of the Subsidiary; (c) has complied and continues to comply in all
material respects with any noncompetition, inventions and/or nondisclosure
obligations that the Executive may owe to the Subsidiary (and, if applicable,
the Company), whether pursuant to an agreement or applicable law; and (d)
provides a signed, written resignation of Executive's status as an officer and
director (if applicable) of the Subsidiary and, if applicable, its subsidiaries.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Subsidiary by its duly authorized officer, and by the Executive, as of
the date first above written.
VIRTUSA (INDIA) PRIVATE LIMITED
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title: Vice President Finance
/s/ T.N. Hari
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T.N. HARI
SENIOR VICE PRESIDENT, GLOBAL HEAD OF
HUMAN RESOURCES
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