Change in Control Severance Pay Agreement - Intelligroup Inc. and Matthew Shocklee
INTELLIGROUP, INC.
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CHANGE IN CONTROL SEVERANCE PAY AGREEMENT
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THIS CHANGE IN CONTROL SEVERANCE PAY AGREEMENT (the "Agreement") is made
as of the 22nd day of June, 1999, by and between Intelligroup, Inc., a New
Jersey corporation (the "Company"), and Matthew Shocklee, an employee of the
Company (the "Employee").
Recitals:
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1. The Company is a New Jersey corporation that provides a wide range of
information technology services, including enterprise-wide business
process solutions, internet applications services, systems integration and
custom software development based on leading technologies. The Employee is
currently employed by the Company as Managing Director - International
Operations.
2. The Company and the Employee desire to provide for the payment, in certain
instances, of severance pay to the Employee in the event of the
termination of his or her employment following a change of control of the
Company, on the terms and conditions set forth in this Agreement:
Agreement:
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In consideration of the premises and the mutual covenants and conditions
set forth herein, the Company and the Employee agree as follows:
Section 1. Operation of Agreement. This Agreement shall be effective
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immediately upon its execution, but the provisions hereof shall not be operative
unless and until a "Change in Control" (as such term is defined in Section 2
hereof) has occurred. The provisions of this Agreement shall not be operative
and shall not apply to any termination of employment, for any reason, which
occurs before the period beginning three months and one day prior to a Change in
Control or which occurs after the period beginning one year and one day after a
Change in Control.
Section 2. Change in Control. The term "Change in Control" as used in
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this Agreement shall mean the first to occur of any of the following:
(a) The effective date or date of consummation of any transaction or
series of transactions (other than a transaction to which only the Company
and one or more of its subsidiaries are parties) pursuant to which the
Company:
(i) becomes a subsidiary of another corporation; (ii) is merged or
consolidated with or into another corporation; (iii) engages in an
exchange of shares with another corporation; or (iv) transfers,
sells or otherwise disposes of all or substantially all of its
assets to a single purchaser (other than the Employee) or a group of
purchasers (none of whom is the Employee);
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provided, however, that this Subsection (a) shall not be applicable to a
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transaction or series of transactions in which a majority of the capital
stock of the other corporation, following such transaction or series of
transactions, is owned or controlled by the holders of a majority of the
Company's outstanding capital stock immediately before such sale, transfer
or disposition; or
(b) The date upon which any person (other than the Employee), group of
associated persons acting in concert (none of whom is the Employee) or
corporation becomes a direct or indirect beneficial owner of shares of
stock of the Company representing an aggregate of more than fifty percent
(50%) of the votes then entitled to be cast at an election of directors of
the Company; provided, however, that this Subsection (b) shall not be
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applicable to a transaction or series of transactions in which the entity
acquiring such ownership in excess of fifty percent (50%) is a person or
entity who is eligible, pursuant to Rule 13d-1(b) under the Securities
Exchange Act of 1934, as amended, to file a statement on Schedule 13G with
respect to its beneficial ownership of the Company's capital stock,
whether or not such person or entity shall have filed a Schedule 13G,
unless such person or entity shall have filed a Schedule 13D with respect
to beneficial ownership of fifteen (15%) or more of the Company's capital
stock; and provided, further, that the acquisition of shares in a bona
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fide public offering or private placement of securities by an investor who
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is acquiring such shares for passive investment purposes only shall not
constitute a "Change in Control;" or
(c) The date upon which the persons who were members of the Board of
Directors of the Company as of the date of execution of this Agreement
(the "Current Directors") cease to constitute a majority of the Board of
Directors; provided, however, that any new director whose nomination or
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selection has been approved by the affirmative vote of at least four of
the Current Directors then in office shall also be deemed a Current
Director.
Section 3. Severance Pay Upon Termination by Company Without Cause or By
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Employee for Cause. If, during the three-month period immediately preceding a
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Change in Control or during the one-year period immediately following a Change
in Control, the Employee's employment with the Company is terminated:
(a) By the Company for no reason or for any reason other than:
(i) death; (ii) disability (in the event that the Employee shall be
unable to perform his or her duties for a period of ninety (90)
consecutive calendar days by reason of disability as a result of
illness, accident or other physical or mental incapacity or
disability); or (iii) the dishonest or willful misconduct of the
Employee, including but not limited to: misappropriating any funds
or property of the Company; attempting to willfully obtain any
personal profit from any transaction in which the Employee has an
interest which is adverse to the interests of the Company; any act
or omission which substantially impairs the Company's ability to
conduct its ordinary business in its usual manner; unreasonable
neglect or refusal to perform the duties assigned to the
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Employee; a material breach of any provision of the Employee's
employment agreement with the Company, if any; conviction of a
felony; or any other act or omission which subjects the Company or
any of its subsidiaries to substantial public disrespect, scandal or
ridicule; or
(b) By the Employee as a result of, or within 30 days of, the
following:
(i) a reduction in the Employee's rate of regular compensation from
the Company to an amount below the rate of the Employee's regular
compensation as in effect immediately prior to the Employee's
termination or immediately prior to the Change in Control, as
applicable; (ii) a requirement that the Employee relocate to a
location more than thirty-five (35) miles from the Employee's office
location with the Company immediately prior to the Employee's
termination or immediately prior to the Change in Control, as
applicable; or (iii) a change in duties or job responsibilities from
those in effect immediately prior to the Employee's termination or
immediately prior to the Change in Control, as applicable, which
change results in the diminution of the Employee's status, authority
and duties, except for such subordination in duties or job
responsibilities as may normally be required due to the Company's
change from an independent business entity to being a subsidiary or
division of another corporate entity;
then, in the event (A) such termination occurred during the three-month period
immediately preceding such Change in Control, the Company shall pay the Employee
the Severance Amount (hereinafter defined) within 30 days of the occurrence of
the Change in Control or (B) such termination occurred during the one-year
period following the occurrence of the Change in Control, the Company shall pay
the Employee the Severance Amount, within thirty (30) days after the effective
date of the Employee's termination. For purposes of this Agreement, Severance
Amount shall mean an amount equal to the sum of: (x) either (i) the rate of the
Employee's monthly regular compensation as in effect immediately prior to the
Employee's termination or immediately prior to the Change in Control, as
applicable, times twelve minus the number of months since the change of control
or else (ii) if the employee has been employed by the Company for less than six
months at the time of such termination, the rate of the Employee's monthly
regular compensation as in effect immediately prior to the Employee's
termination or immediately prior to the Change in Control, as applicable, times
a factor of six minus the number of months since the change of control, but
whether under the preceding clause (i) or (ii) in no event shall the factor
times the applicable monthly compensation rate be less than three; and (y) the
Company's cost of then available health insurance benefits, as are customarily
provided to employees of the Company, for a period of twenty-four (24) months.
In addition, upon such termination: (i) the next portion under the stock option
vesting schedule of any outstanding stock options granted to the Employee that
would not otherwise have been vested until some time after such termination
occurred shall thereupon vest immediately and be exercisable by the Employee and
(ii) fifty percent of the remainder of any other outstanding but unvested stock
options, shall thereupon vest immediately and be exercisable by the Employee.
The Company may withhold from any such severance compensation any federal,
state, city, county or other taxes.
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Section 4. No Severance Pay Upon Any Other Termination. Upon any
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termination of the Employee's employment with the Company other than as set
forth in Section 3, the sole obligation hereunder of the Company shall be to pay
the Employee's regular compensation up to the effective date of termination. The
severance pay provisions hereunder do not, however, impact in any way the rights
of the Employee or the obligations of the Company under any employment agreement
or any other agreement for the payment of employment compensation between the
Employee and the Company, whether such agreement(s) are in existence now or come
into existence hereafter; except, however, (i) that if such employment agreement
provides for severance pay which would be applicable under circumstances that
would also obligate the Company to make similar payments under this Agreement,
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then this Agreement shall not be deemed as additive but shall be construed so
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that the obligations hereunder when applied in conjunction with the employment
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agreement, do not require the Company to make such payments in excess of the
amount or time set forth herein, and (ii) with regard to the acceleration of
options the employee may elect to substitute the acceleration provision of this
Agreement in place of any provision dealing specifically with acceleration in
the employment agreement. By way of illustration, if the severance pay
provisions of this Agreement were activated by a termination that also would be
deemed to activate a then-existing employment agreement with a termination
provision which provided for six months of severance at the same regular
compensation rate, then this Agreement would be construed to provide only an
additional six months severance pay (plus the cost of the health benefits in
this Agreement's Severance Amount) rather than twelve months, keeping the
monthly factor between the two agreements as twelve months, rather than eighteen
months for the calculation of the Employee's severance pay. If the basis of the
severance amount were calculated differently in the employment agreement, then
the Employee would receive the greater of the amount(s) due either under the
employment agreement or the Severance Amount under this Agreement. By way of
further illustration if the severance pay provisions relating to the
acceleration of the vesting of options specified that only a fraction would vest
that was less than half of those options granted, then the Employee could elect
to accept the 50% acceleration provision of this Agreement.
Section 5. Entire Obligation. Payment to the Employee pursuant to
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Sections 3 or 4 of this Agreement shall constitute the entire obligation of the
Company to the Employee and full settlement of any claim under law or equity
that the Employee might otherwise assert against the Company, or any of its
employees, officers or directors on account of the Employee's termination.
Section 6. No Obligation to Continue Employment. This Agreement does not
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create any obligation on the part of the Company to continue to employ the
Employee following a Change in Control or in the absence of a Change in Control.
Section 7. Term of Agreement. This Agreement shall terminate and no
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longer be in effect on the earlier of: (i) the termination date of employment
agreement, if any; (ii) the date upon which the Employee ceases to be an
employee of the Company, unless a Change in Control occurs within three months
after such termination date; or (iii) if a Change in Control occurs while the
Employee is employed by the Company, until the date one year following the
Change in Control.
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Section 8. Severability. Should any clause, portion or section of this
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Agreement be unenforceable or invalid for any reason, such unenforceability or
invalidity shall not affect the enforceability or validity of the remainder of
the Agreement.
Section 9. Assignment: Successors in Interest. This Agreement, being
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personal to the Employee, may not be assigned by the Employee. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, and the heirs, executors and personal
representatives of the Employee.
Section 10. Waiver. Failure to insist upon strict compliance with any of
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the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 11. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of New Jersey applicable in
the case of agreements made and to be performed entirely within such State.
Section 12. Arbitration. Any controversy or claim arising out of or in
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connection with this Agreement shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect in the
State of New Jersey and judgment upon such award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The arbitration shall be
held in the State of New Jersey. The arbitration award shall include attorneys'
fees and costs to the prevailing party.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as of
the date first above written.
Intelligroup, Inc.
By: /s/ Ashok Pandey
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Ashok Pandey
Co-Chief Executive Officer
The Employee
/s/ Matthew Shocklee
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Matthew Shocklee