Employment Agreement - Intelligroup Inc. and Nagarjun Valluripalli
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), made this
20th day of September, 2002 (the "Effective Date") is entered into by
Intelligroup, Inc., a New Jersey corporation with its principal place of
business at 499 Thornall Street, Edison, NJ 08837 (the "Company"), and NAGARJUN
VALLURIPALLI, residing at 702 Mohican Court, Morganville, NJ, 07751 (the
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"Employee").
WHEREAS, the Company desires to continue to employ the Employee, and the
Employee desires to continue to be employed by the Company.
WHEREAS, the Company desires to provide the Employee with proper incentives
for him to continue performing as the Company's President and Chief Executive
Officer.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Agreement. The Company hereby agrees to continue to employ the
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Employee, and the Employee hereby accepts continued employment with the Company,
upon the terms set forth in this Agreement, for the period commencing on the
Effective Date and ending on the second anniversary of the Effective Date (such
period, as it may be extended in a writing signed by the parties, the "Term"),
unless sooner terminated in accordance with the provisions of Section 6.
2. Title; Capacity. The Employee shall serve as President and Chief
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Executive Officer or in such other position as the Company or its Board of
Directors (the "Board") may determine from time to time. As President and Chief
Executive Officer, the Employee will be responsible for all day to day
operations, as well as long range plans of the Company, plus such
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other or alternate duties as may from time to time be assigned to the Employee
by the Board. The Employee shall be based at the Company's headquarters in
Edison, New Jersey, or such place or places in the continental United States as
the Company or its Board shall determine. The Employee shall be subject to the
supervision of, and shall have such authority as is delegated to him by, the
Board.
3. Exclusive Services and Best Efforts. The Employee hereby accepts such
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continued employment and agrees to undertake the duties and responsibilities
outlined in Section 2. The Employee agrees to devote his entire business time,
attention and energies to the business and interests of the Company. The
Employee agrees to abide by the rules, regulations, instructions, personnel
practices and policies of the Company and any changes therein that may be
adopted from time to time by the Company. The Employee acknowledges receipt of
copies of all such rules and policies committed to writing as of the date of
this Agreement.
4. Compensation and Benefits.
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(a) Salary. The Company shall pay the Employee a base salary at the
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annualized rate of $350,000.00 (the "Base Salary"), payable in installments in
accordance with the Company's normal payroll schedule but no less often than
monthly. Such salary shall be subject to adjustment thereafter as determined by
the Board in its sole discretion.
(b) Bonus. Each calendar year, the Employee will be eligible to receive
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a bonus based upon meeting and exceeding the annual budget approved by the Board
(the "Budget") for Pre-tax income ("PTI").
(i) The Employee shall receive a bonus in the amount of
$200,000.00 upon the Company's successfully attaining a consolidated PTI in
excess of the PTI budgeted for the fiscal year;
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(ii) The Employee shall receive an additional bonus in the amount
of $75,000.00 for each complete $1,000,000.00 of consolidated PTI in excess of
the PTI budgeted for the fiscal year;
(iii) In determining PTI, all elements of income and expense
properly recognized under U.S. Generally Accepted Accounting Principles will be
taken into account, with the exception of (x) provision for income taxes, (y)
extraordinary items, and (z) special, unusual or non-recurring charges
(including, but not limited to, costs of downsizing or closing operations,
income statement charges related to non-operating assets of the Company such as
the SeraNova note, and costs of non-operating activities such as a proxy
contest). All exclusions of expense items for the purpose of determining PTI for
a given period must be presented in detail to, then reviewed and approved by,
the Board or the Compensation Committee thereof (the "Compensation Committee").
The Board, or if the Board chooses, the Compensation Committee, shall have sole
discretion to accept or modify such recommended exclusions from the PTI
calculation.
(iv) The bonus, if any, shall be paid within ten (10) business
days after the Board or the Compensation Committee makes an informed final
determination of PTI for the preceding fiscal year. The bonus, if any, shall
only be earned and payable if you (y) meet the above criteria, and (z) remain
actively employed through the end of the fiscal year for which a bonus is to be
paid.
(c) Fringe Benefits. The Employee shall be entitled to participate in
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all benefit programs that the Company establishes and makes available to its
employees, if any, to the extent that Employee's position, tenure, salary, age,
health and other qualifications make him eligible to participate. The Company
may alter, modify, add to or delete its benefit plans at any
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time as the Company or its Board may determine, in its sole judgment, to be
appropriate. Nothing herein shall be construed as requiring the Company to
establish or continue any particular benefit plan in discharge of its
obligations under this Agreement.
(d) Paid Time Off. The Employee shall be eligible to accrue paid time
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off pursuant to the Company's normal policies and procedures governing vacation
time or other paid time off.
(e) Reimbursement of Expenses. The Company shall reimburse the Employee
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for all reasonable and necessary travel, entertainment and other business
expenses incurred or paid by the Employee in connection with, or related to, the
performance of his duties, responsibilities or services under this Agreement,
upon presentation by the Employee of documentation, expense statements, vouchers
and/or such other supporting information as the Company may request, provided,
however, that the amount available for such travel, entertainment and other
expenses may be fixed in advance by the Board.
(f) Deductions. The Company shall deduct from any pay to the Employee
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all taxes or other withholdings required by law or otherwise properly authorized
by the Employee.
5. Termination. The Term of this Agreement shall terminate upon the
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occurrence of any of the following:
(a) Expiration of the Term in accordance with Section 1;
(b) At the election of the Company, for Cause, immediately upon written
notice by the Company to the Employee. For the purposes of this Agreement,
"Cause" for termination shall be deemed to exist upon: (i) a finding by the
Company of failure of the Employee to perform his assigned duties for the
Company, to adhere to the terms of this Agreement, or to follow Company policies
and procedures; (ii) the Employee's commission of
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dishonesty, gross negligence or misconduct, in connection with the Employee's
responsibilities in his position with the Company; (iii) the Employee's
commission of any act or conduct that subjects the Company to public disrespect
or ridicule or injures the reputation of the Company; or (iv) the conviction of
the Employee of, or the entry of a pleading of guilty or nolo contendere by the
Employee to, any crime involving moral turpitude or any felony;
(c) Upon the death or disability of the Employee. As used in this
Agreement, the term "disability" shall mean the inability of the Employee with
reasonable accommodation as may be required by State or Federal law, due to a
physical or mental disability, for a period of one hundred twenty (120) days,
whether or not consecutive, during any 360-day period to perform the services
contemplated under this Agreement. A determination of disability shall be made
by a physician satisfactory to both the Employee and the Company, provided that
if the Employee and the Company do not agree on a physician, the Employee and
the Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on all
parties;
(d) At the election of the Employee without Good Reason, upon not less
than sixty (60) days' prior written notice of termination; and
(e) At the Election of the Employee for Good Reason, after the Employee
has given the Company at least fifteen (15) days written notice and an
opportunity to cure such Good Reason. For the purposes of this Agreement, "Good
Reason" for termination shall mean the following: (i) failure to maintain the
Employee in a position commensurate with that referred to in Section 2 of this
Agreement; (ii) failure to pay the salary as stated in section 4(a) of this
Agreement; or (iii) required relocation of the Employee's main office
(reasonable travel excluded) more than seventy-five (75) miles from Edison, New
Jersey; and
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(f) At the election of the Company, without cause, immediately upon
written notice by the Company to the Employee.
6. Effect of Termination. Upon termination of the Agreement, the only
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remuneration to which the Employee will be entitled shall be as follows:
(a) Termination after the Expiration of the Term, for Cause or at
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Election of the Employee without Good Reason. In the event the Employee's
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employment is terminated after the expiration of the Term pursuant to Section
5(a), for Cause pursuant to Section 5(b), or at the election of the Employee
without Good Reason pursuant to Section 5(d), the Company shall pay to the
Employee the compensation and benefits otherwise payable to him/her under
Section 3 through the last day of his actual employment by the Company.
(b) Termination for Death or Disability. If the Employee's employment
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is terminated by death or because of disability pursuant to Section 5(c), the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, the compensation that would otherwise be payable to the Employee up to
the end of the month in which the termination of his employment because of death
or disability occurs.
(c) Termination Without Cause or Termination for Good Reason by the
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Employee. If the Employee's employment is terminated without Cause pursuant to
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Section 5(f), or for Good Reason pursuant to Section 5(e), the Company shall pay
or provide the Employee for a period of fifteen (15) months: (i) in accordance
with the Company's regular payroll practices, the Employee's base salary; and,
(ii) reimbursement (or direct payment, at the Company's option) for medical
benefits pursuant to an election by the Employee under COBRA. The Company's
obligation to pay or provide the benefits discussed in this paragraph 6(c) shall
be expressly conditioned upon the Employee's first executing a valid general
release and waiver,
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releasing the Company, its directors, officers and employees from any and all
claims under this agreement or pursuant to your employment, in a form reasonably
acceptable to the Company.
(d) Termination in Connection with a Change in Control. If the
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Employee's employment is terminated, without Cause, within the period extending
from the one (1) month before to the twelve (12) months after a Change in
Control, as such is defined herein: (i) the Employee shall receive all benefits
provided in Section 6(c); (ii) the restrictions in Section 7 shall immediately
lapse and thereafter be null and void; and (iii) the unvested portion of any
stock options granted by the Company to the Employee shall vest in full and
become exercisable. For purposes of this Agreement, a "Change in Control" shall
mean:
(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership of any capital stock of the Company if, after such
acquisition, such Person beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) 50% or more of either (x) the
then-outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control Event: (A) any
acquisition directly from the Company (excluding an acquisition pursuant to
the exercise, conversion or exchange of any security exercisable for,
convertible into or exchangeable for common stock or voting securities of
the Company, unless the Person exercising, converting or exchanging such
security acquired such security directly from the Company or an underwriter
or agent of the Company), (B)
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any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company,
or (C) any acquisition by any corporation pursuant to a Business
Combination (as defined below) which complies with clauses (x) and (y) of
subsection (iii) of this definition; or
(ii) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term
"Continuing Director" means at any date a member of the Board (x) who was a
member of the Board on the date of the initial adoption of this Agreement
by the Board or (y) who was nominated or elected subsequent to such date by
at least a majority of the directors who were Continuing Directors at the
time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; or
(iii) the consummation of a merger, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of
the then-outstanding securities entitled to vote generally in the election
of directors, respectively, of the resulting or acquiring
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corporation or other form of entity in such Business Combination (which
shall include, without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company's assets
either directly or through one or more subsidiaries) (such resulting or
acquiring corporation or entity is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively, immediately prior to such Business Combination
and (y) no Person (excluding the Acquiring Corporation or any employee
benefit plan (or related trust) maintained or sponsored by the Company or
by the Acquiring Corporation) beneficially owns, directly or indirectly,
30% or more of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the election
of directors (except to the extent that such ownership existed prior to the
Business Combination).
(iv) Notwithstanding the foregoing, a Change of Control will not
be deemed to have occurred in the case of a Management Buy Out. A
"Management Buy Out" is any event which would otherwise be deemed a "Change
in Control", in which the Chief Executive Officer of the Company or any two
other officers (vice president level employees or above) of the Company,
directly or indirectly (as a beneficial owner): (i) acquire equity
securities, including any securities convertible into or exchangeable for
equity securities, of the Company or the Acquiring Corporation in
connection with any Change in Control; or (ii) receive any substantial
financial gain as a result of the Change
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in Control as determined by the Board, other than such gain as is
specifically authorized by the Board.
(e) Survival. The provisions of Sections 7, 8 and 9 shall survive the
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termination of this Agreement.
7. Non-Compete.
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(a) During the term of the Employee's employment with the Company
(whether or not such employment extends passed the expiration of the Term) and
for a period of fifteen (15) months after the termination thereof, the Employee
will not directly or indirectly:
(i) as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than one percent
(1%) of the total outstanding stock of a publicly held company), engage in
the business of developing, producing, marketing or selling products and/or
services of the kind or type developed or being developed, produced,
marketed, sold or provided by the Company while the Employee was employed
by the Company; or
(ii) hire, recruit, solicit or induce, or attempt to induce, any
employee or contractor of the Company to terminate their employment with,
or otherwise cease their business relationship with, the Company;
(iii) solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the Company
which were actively contacted, solicited or served by the Company during
the term of the Employee's employment with the Company; or
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(iv) work with or for any individual who is an officer (Vice
President or higher) of the Company or was an officer within the twelve
month period prior to the termination of the Employee's employment with the
Company; except that this paragraph 7(a)(iv) shall not apply to any work
done for the sole benefit of the Company, during the Employee's employment.
(b) If any restriction set forth in this Section 7 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
(c) The restrictions contained in this Section 7 are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Section 7 will cause the Company substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies
which may be available, the Company shall have the right to seek specific
performance and injunctive relief.
8. Proprietary Information.
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(a) The Employee agrees that all information and know-how, whether or
not in writing, of a private, secret or confidential nature concerning the
Company's business or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data,
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computer programs, and customer and supplier lists. Employee will not disclose
any Proprietary Information to others outside the Company or use the same for
any unauthorized purposes without written approval by an officer of the Company,
either during or after his employment, unless and until such Proprietary
Information has become public knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company.
(c) The Employee agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in paragraphs (a) and
(b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the Employee in the course of the Company's business.
9. Developments.
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(a) The Employee will make full and prompt disclosure to the Company of
all inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by the Employee or under his direction or
jointly with others during his employment by the Company, whether or not during
normal working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments").
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(b) The Employee agrees to assign and does hereby assign to the Company
(or any person or entity designated by the Company) all his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this Section 9(b)
shall not apply to Developments which meet each of the following criteria: (i)
they do not in any way relate to the present or planned business or research and
development of the Company; and (ii) they are made and conceived by the Employee
not during normal working hours, not on the Company's premises and not using the
Company's tools, devices, equipment or Proprietary Information.
(c) The Employee agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. Employee shall
sign all papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignment of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
10. Other Agreements. The employee hereby represents that he/she is not
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bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. The employee further represents that his performance of all
the terms of this Agreement and as an employee of the Company does not and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him/her in confidence or in trust prior to his
employment with the Company.
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11. Notices. All notices required or permitted under this Agreement shall
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be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 11.
12. Pronouns. Whenever the context may require, any pronouns used in this
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Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
13. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement. This
Agreement shall not alter any of the Employee's rights under any equity grant
which had been memorialized in an agreement with the Company and authorized by
the Board prior to the Effective Date.
14. Amendment. This Agreement may be amended or modified only by a written
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instrument executed by both a properly authorized executive officer or director
of the Company and the Employee.
15. Governing Law and Jurisdiction. This Agreement shall be construed,
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interpreted and enforced in accordance with the laws of the State of New Jersey.
The parties agree that any disputes arising under this Agreement or otherwise
related to the employment of the Employee by the Company shall be brought
exclusively in the state and federal courts located in the State of New Jersey
and the parties hereby waive the defense of lack of personal jurisdiction in any
such action.
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16. Successors and Assigns. This Agreement shall be binding upon and inure
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to the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business, provided, however, that the
obligations of the Employee are personal and shall not be assigned by him.
17. Acknowledgment. The Employee states and represents that he has had an
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opportunity to fully discuss and review the terms of this agreement with an
attorney. The Employee further states and represents that he has carefully read
this Agreement, fully understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs his name of his own
free act.
18. No Waiver. No delay or omission by the Company in exercising any right
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under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
19. Captions. The captions of the sections of this Agreement are for
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convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
20. Severability. In case any provision of this Agreement shall be invalid,
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illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
21. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
INTELLIGROUP, INC. EMPLOYEE
By: /s/ Nick Visco /s/ Nagarjun Valluripalli
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Nick Visco Nagarjun Valluripalli
Officer-CFO
Dated: Sept. 20, 2002 Dated: 9/20/02
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