AGREEMENT
This Agreement is made this 7th day of August, 2003, by and between
Intelligroup, Inc., a New Jersey corporation, ("Intelligroup" or the "Company")
and Xxxxx Xxxxxx ("Pandey").
W I T N E SS E T H:
WHEREAS, Pandey, a shareholder and former officer and director of the
Company, commenced a solicitation to elect his slate of nominees to the
Company's Board of Directors (the "Board") in connection with the Company's 2002
Annual Meeting of Shareholders (the "2002 Annual Meeting");
WHEREAS, Pandey has commenced two actions, naming the Company and
certain of its directors as defendants, relating to the 2002 Annual Meeting,
captioned Xxxxx Xxxxxx v. Intelligroup, Inc., Xxxxxxxx Xxxxxxxxxxxx, Xxxxx
Xxxxxx, Xxxxxx XxXxxxxx, Xxxxxxxxx Xxxxxx Xxxxxx, and Prabhas Panigrahi filed in
the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket
No. C-189-02, and Xxxxx Xxxxxx v. Xxxxx Xxxx, Xxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx
Xxxxx, Rainfir Associates, A. Xxxxxxx Xxxxxx, Intelligroup, Inc. and Xxxx Does
1-2 filed in the United States District Court for the District of New Jersey,
Civil Action No. 02-3066 (JAG) (the "Pandey Actions");
WHEREAS, the Company has commenced two actions naming Pandey as a
defendant, one relating to the 2002 Annual Meeting and the other relating to the
Agreement and General Release dated December 15, 2000 by and between the Company
and Pandey, captioned, respectively, Intelligroup, Inc. v. Xxxxx Xxxxxx, TAIB
Securities, Inc., Braydon Holdings Limited and Beechrock Holdings Limited filed
in the United States District Court for the District of New Jersey, Civil Action
No. 02-CV-3196 (JAG) and Intelligroup, Inc. v. Xxxxx Xxxxxx filed in the
Superior Court of New Jersey, Law Division, Xxxxxx County, Docket No. L-1987-02,
(the "Intelligroup Actions") (together with the Pandey Actions, the "Litigation
Matters");
WHEREAS, each of Pandey and the Company desire to fully, finally and
forever resolve, settle, discharge and release all of the claims, causes of
action, and issues relating to or arising out of the Pandey Actions and
Intelligroup Actions on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Reimbursement Of Pandey Legal Fees.
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(a) The Company shall pay to Pandey an aggregate amount of $750,000
(the "Settlement Amount") as reimbursement and/or payment to Pandey for a
portion of legal fees incurred by Pandey in connection with the Litigation
Matters. Pandey acknowledges and agrees that he will not seek any further
payments from Intelligroup or any of the other defendants in the Litigation
Matters in excess of the Settlement Amount for any purpose including for legal
fees he has incurred in connection with the Litigation Matters.
(b) The Settlement Amount shall be paid to Pandey by the Company
as follows: (i) $250,000 on the earlier of the day following the Company's next
annual meeting of shareholders (the "2003 Annual Meeting"), and October 15,
2003; and (ii) $250,000 on each of the first two anniversaries of the date
payment is made pursuant to Section 1(b)(i) above. Payments hereunder shall be
sent by the Company and made payable to Cadwalader, Xxxxxxxxxx & Xxxx LLP at the
address and to the attention of the persons listed in Section 11(d).
(c) In the event that a Change in Control (as such term is defined
below) occurs at any time in which any portion of the Settlement Amount remains
unpaid, such unpaid amount shall be accelerated and shall be paid by the Company
in full to Pandey upon the consummation of such Change in Control.
2. Waiver Of Amounts Due By Pandey To The Company. The Company shall waive
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any and all amounts due by Pandey to the Company pursuant to the award granted
by the Court in the action captioned Intelligroup, Inc. v. Xxxxx Xxxxxx filed in
the Superior Court of New Jersey, Law Division, Xxxxxx County, Docket No.
l-1987-02. The Company shall not object to and will provide any required
assistance to Pandey, in vacating the judgment obtained in this action.
3. Settlement Of Litigation Matters/Release.
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(a) Intelligroup hereby fully, finally and forever dismisses with
prejudice, discharges, settles and releases any and all claims, rights, causes
of action, suits, matters and issues, known or unknown, liquidated or
unliquidated, contingent or absolute, state or federal (including, without
limitation, claims arising under the federal securities laws and the rules and
regulations thereunder), in law or equity, that have been, could have been, or
in the future could be asserted against Pandey and/or his subsidiaries,
affiliates, officers, directors, employees, agents, representatives, attorneys,
predecessors, successors, assigns and any other person or entity acting on the
behalf of Pandey in the Litigation Matters, either directly, indirectly, or in
any other capacity, in any court of competent jurisdiction or other forum, in
connection with, arising out of, concerning or relating to, directly or
indirectly, the Litigation Matters, or any of the acts, facts, decisions,
events, transactions or occurrences alleged in any pleading filed by any party
in any of the Litigation Matters, or which could have been asserted against
Pandey in connection with the Litigation Matters, whether arising under any
state or federal, statutory, regulatory or common law or otherwise that was
brought or could have been brought in the Litigation Matters or otherwise up to
and including the date of this Agreement; provided, however that neither the
Company nor Pandey releases or waives a claim for non-compliance with or any
breach of this Agreement.
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(b) Pandey hereby fully, finally and forever dismisses with prejudice,
discharges, settles and releases any and all claims, rights, causes of action,
suits, matters and issues, known or unknown, liquidated or unliquidated,
contingent or absolute, state or federal (including, without limitation, claims
arising under the federal securities laws and the rules and regulations
thereunder), in law or equity, that have been, could have been, or in the future
could be asserted against Intelligroup and/or its subsidiaries, affiliates,
officers, directors, employees, agents, representatives, attorneys,
predecessors, successors, assigns, any other person or entity acting on the
behalf of the Company and its directors in the Litigation Matters, either
directly, indirectly, or in any other capacity, in any court of competent
jurisdiction or other forum, in connection with, arising out of, concerning or
relating to, directly or indirectly, the Litigation Matters, or any of the acts,
facts, decisions, events, transactions or occurrences alleged in any pleading
filed by any party in any of the Litigation Matters, or which could have been
asserted against the Company in connection with the Litigation Matters, whether
arising under any state or federal, statutory, regulatory or common law or
otherwise that was brought or could have been brought in the Litigation Matters
or otherwise up to and including the date of this Agreement; provided, however
that neither the Company nor Pandey releases or waives a claim for
non-compliance with or any breach of this Agreement.
(c) Pandey shall use his reasonable efforts to obtain mutual releases
from all other defendants in the Pandey Actions. Upon receipt of such releases
Pandey and the Company shall execute and the Company shall cause to be filed
with the appropriate Courts as set forth therein, Stipulations of Voluntary
Dismissal with Prejudice.
4. Board Representation.
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(a) The Company shall include either Pandey or an individual named by
Pandey who is acceptable to the Company (the "Pandey-Named Director"), which
acceptance shall not be unreasonably withheld, as the case may be, in its slate
of nominees for election to the Board at its 2003 Annual Meeting and the annual
meetings of the Company to be held in 2004 and 2005.
(b) Pandey or the Pandey-Named Director, as the case may be, shall be
entitled to director compensation, including equity compensation, in accordance
with the Company's director compensation policies, as amended from time to time.
Such compensation shall be the same as other non-employee directors.
(c) Each of the Directors of the newly constituted Board shall hold
such office until the next annual meeting of shareholders and until his
successor shall have been duly elected and qualified or until earlier removal or
resignation in accordance with New Jersey law and the Company's By-laws or
Certificate of Incorporation.
(d) In the event Pandey or a Pandey Named Director declines to serve on
the Company's Board of Directors, resigns for any reason, is removed for cause
pursuant to New Jersey law or is nominated by the Board of Directors but not
elected by the shareholders of the Company, Pandey and the Company shall remain
obligated to perform their respective obligations under this Agreement.
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5. Standstill And Voting Agreements.
---------------------------------
(a) For a period of three (3) years from the date hereof, Pandey
agrees that he will not, nor will any of his Affiliates (as such term is defined
below) directly or indirectly:
(i) participate in the formation of any Person (as such term is
defined below) or Group (as such term is defined below), or join with any Person
or Group, which owns or seeks to acquire beneficial ownership of shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), or any
other securities convertible into, exchangeable for, or exercisable for Common
Stock, or any other securities of the Company that entitle the holders thereof
to voting rights (the Common Stock, together with any such other securities, are
referred to hereafter as "Voting Securities"), for the purpose of acquiring
Voting Securities;
(ii) solicit or participate in any "solicitation" of "proxies"
(as such terms are defined or used in Regulation 14A under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), these terms to have such
meaning throughout this Agreement) with respect to the Company other than to
solicit or participate in a solicitation of proxies in support of the nominees
to the Board proposed by the Company;
(iii) oppose the election to the Board of the nominees nominated,
recommended or supported by the Company;
(iv) wage a proxy contest or tender offer relating to the
Company's Voting Securities;
(v) initiate or support any shareholder proposal (as such term is
defined or used in Regulation 14A under the Exchange Act), except as Pandey in
good xxxxx xxxxx necessary as a member of the Board in the discharge of his
fiduciary duties;
(vi) provide any non-public information to any Person without the
consent of the Company;
(vii) deposit any Voting Securities in a voting trust or subject
them to a voting agreement or other agreement or arrangement with respect to the
voting of such Voting Securities other than in accordance with this Agreement;
(viii) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors, or policies of the
Company except when acting solely in his capacity as a member of the Board; and
(ix) enter into any discussion or arrangement with any third
party with respect to any of the foregoing, or otherwise assist, participate in,
facilitate, or solicit any effort or attempt by any Person to do so or seek to
do any of the foregoing, or in any way assist or encourage any Person to do or
seek to do any of the foregoing; or to publicly disclose an intent, purpose,
plan, or proposal with respect to any of the foregoing.
(b) Each Pandey-Named Director, if any, shall agree to the provisions
of Section 5(a) above during the tenure of his or her directorship on the Board.
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(c) For a period of three (3) years from the date hereof, each of
Pandey and his Affiliates shall vote all Voting Securities beneficially owned or
controlled by them for the slate of directors nominated, recommended or
supported by the Company's Board of Directors for election to the Company's
Board of Directors at any meetings of the Company's shareholders at which
directors are to be elected, and any adjournments thereof. In all other matters
on which shareholders vote, Pandey is under no restriction or obligation as to
the voting of his Voting Securities. Pandey shall not be obligated to vote his
Voting Securities pursuant to this Section 5(c) (i) in the event that he is
removed as a director of the Company without Cause (as such term is defined
below) or (ii) with respect to his vote for any particular director or
directors, in the event that Pandey has resigned from the Board of Directors as
a direct result of such director or directors having committed an act or
omission constituting Cause.
(d) In addition to any other public filings that Pandey may be
required to file under state and federal securities laws as a result of this
Agreement, Pandey agrees to file in a timely manner an amendment to his Schedule
13D with the Securities and Exchange Commission accurately reflecting his
agreements hereunder.
6. Non-disparagement. In the event that Pandey or a Pandey-Named Director
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is not a member of the Board of Directors of the Company due to an event other
than: (i) Pandey or a Pandey-Named Director, having been nominated by the
Company on the Company-supported slate and having sought election on that slate,
is not elected to the Board of the Company; or (ii) voluntarily resigns from the
Board, in circumstances that would permit Pandey not to vote his Voting
Securities for the slate of directors nominated by the Company, then: (A)
Pandey, for a period of three years from the date hereof, covenants and agrees
not to knowingly do or say anything to any (x) existing or potential customers
or clients of the Company or (y) shareholders of the Company known to Pandey
with the intent to harm the business or personal interests and relationships,
reputation or goodwill of the Company with respect to such customers, clients or
shareholders; and (B) the Company, and its directors and officers, for a period
of three years from the date hereof, covenants and agrees not to knowingly do or
say anything with the intent to harm the business or personal interests and
relationships, reputation or goodwill of Pandey, provided that if Pandey is no
longer subject to his obligations of non-disparagement pursuant to this Section
6, the Company shall likewise no longer be subject to its obligations of
non-disparagement pursuant to this Section 6.
7. Enforcement.
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(a) Each of these parties acknowledges and agrees that irreparable
damage would occur if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached and that
monetary damages would be an inadequate remedy therefor. Accordingly, each of
the parties will be entitled to seek an injunction or injunctions to prevent or
in response to breaches of this Agreement and to enforce specifically its
provisions in any court of the United States or any state having jurisdiction,
this being in addition to any other remedy to which the parties may be entitled
at law or in equity.
(b) No failure or delay on the part of the Company or Pandey in the
exercise of any respective power, right, or privilege hereunder shall operate as
a waiver thereof, nor shall
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any single or partial exercise of any such power, right, or privilege preclude
other or further exercise thereof or of any other right, power, or privilege.
(c) In the event that either party is required to commence an action,
in law or equity, to enforce its rights hereunder or as a result of any breach
of any provision set forth in this Agreement, and is successful on the merits in
such action, such party shall be entitled to reasonable attorneys' fees and
litigation costs.
8. Entire Agreement. This Agreement constitutes the entire understanding
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of the parties with respect to the transactions contemplated hereby and no
representations, warranties or inducements have been made to anyone concerning
this Agreement other than the representations, warranties and covenants
contained herein. This Agreement may be amended only by an agreement in writing
executed by all the parties.
9. Headings. Descriptive headings are for convenience only and will not
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control or affect the meaning or construction of any provision of this
Agreement.
10. Counterparts. This Agreement may be executed in one or more
------------
counterparts and each executed counterpart shall be deemed to be one and the
same instrument.
11. Notices. All notices, requests, consents, and other communications
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hereunder shall be in writing, shall be addressed to the receiving party's
address and the address of its counsel as set forth below or to such other
address as a party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) made by facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) if to the Company:
Intelligroup, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
Attention: President and Chief Executive Officer
(b) with a copy to:
Xxxx and Xxxx LLP
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 609-750-7700
Attention: Xxxxx X. Xxxxx, Esq.
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(c) if to Pandey:
Xxxxx Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
(d) with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Block & Xxxxx X. Xxxxxx
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice by telecopy shall
be deemed delivered at the time that receipt thereof has been acknowledged by
electronic confirmation or otherwise.
12. Successors and Assigns. This Agreement shall bind the successors and
----------------------
assigns of the parties hereto, and inure to the benefit of any successor or
assign of any of the parties; provided, however, that no party may assign this
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Agreement without the consent of each of the other parties.
13. Governing Law. This Agreement will be governed by and construed and
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enforced in accordance with the laws of the State of New Jersey, without giving
effect to the conflict of laws principles thereof.
14. No Admission. This Agreement shall not be deemed or used as an
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admission, presumption or concession of, or evidence of, the validity of any
claims in the Litigation Matters, or of any fault, wrongdoing or liability of
the Company or Pandey in connection with the Litigation Matters, or of any
infirmity in the defenses that the Company or Pandey had intended to, could have
or did assert in the Litigation Matters, nor are such defenses waived; Provided,
however that, Pandey or the Company may file and use this Agreement in any
action or proceeding in order to support a defense, claim or counter-claim based
on principles of res judicata, collateral estoppel, release, good faith
settlement or any other theory of claim preclusion or issue preclusion or
similar defense, claim or counter-claim.
15. Consent To Jurisdiction; Waiver Of Jury Trial. Each of the parties
------------------------------------------------
hereto (a) accepts, generally and unconditionally, the nonexclusive jurisdiction
of the courts of the State of New Jersey and any related appellate court and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with any claim arising under or related to this Agreement or the breach or
enforcement thereof (an "Agreement-Related Claim") and (b) irrevocably waives
any objection it may now or hereafter have as to the venue of any such
proceeding brought in such a court or that such a court is an inconvenient
forum. Each of the parties hereto waives personal service of process and
consents that service of process upon it may be made by certified or registered
mail, return receipt requested, at its address and the
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address of its counsel as specified or determined in accordance with the
provisions of Section 11, and service so made shall be deemed completed on the
third business day after such service is deposited in the mail. Nothing herein
shall affect the right of any Person to serve process in any other manner
permitted by law or shall limit the right of any Person to bring proceedings in
the courts of any other jurisdiction. Each of the parties hereby waives trial by
jury in any judicial proceeding involving any Agreement-Related Claim.
16. Termination. This Agreement shall terminate upon the consummation of a
-----------
Change in Control (as such term is defined below), subject to the satisfaction
of the payment obligations set forth in Section 1(c).
17. Definitions. When used in this agreement, the following terms shall
-----------
have the meanings specified:
(a) "Affiliate" has the meaning specified in Rule 12b-2 under the
Exchange Act as in effect on the date hereof, and for the purposes of such
definition, and without limitation, "control" shall mean ownership of more than
10% of the stock entitled to vote for directors of any corporation, or the
authority to act as general partner of a partnership or managing member or
manager of a limited liability company, or any other relationship which
constitutes actual control to the extent necessary to prevent any action
prohibited hereunder.
(b) "Cause" means:
(i) breach of fiduciary duty to the Company or its shareholders
as determined by final adjudication of a court of competent jurisdiction; or
(ii) the conviction of, or the entry of a pleading of nolo
contendre to, any crime involving moral turpitude or any felony.
(c) "Change in Control" means the 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:
(i) a required percentage of the Company's shareholders necessary
for approval of a merger or consolidation or a majority of the Company's
directors approves a merger or consolidation of the Company with or into another
corporation or other legal entity and such transaction is consummated; or
(ii) any acquisition or series of acquisitions, other than from
the Company, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) in excess of 50% or more of either
the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or the combined voting power of the then outstanding
Voting Securities, provided, however, that (A) any such acquisition by the
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Company or any of its subsidiaries, or (B) any such acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of
its subsidiaries, shall not constitute a Change of Control; or
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(iii) there is approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company, or of the sale or other
disposition of all or substantially all of the assets of the Company, or of a
reorganization, merger or consolidation of the Company, in each case, with
respect to which all or substantially all of the individuals and entities who
were the respective beneficial owners of the Voting Securities immediately prior
to such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation beneficially own, directly or
indirectly, more than 60% of the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation.
(iv) there is a change in the composition of the Company's Board
such that individuals who, as of August 7, 2003, constitute the Board of the
Company (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board of the Company, provided that any individual who becomes a
director subsequent to August 7, 2003, whose election, or nomination for
election, by the Company's stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the Incumbent Board;
provided, further, however, that any such individual whose initial assumption of
office occurs as a result of or in connection with either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an entity other than the
Board shall not be considered a member of the Incumbent Board;
provided, however, that this definition shall not mean a transaction or series
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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.
(d) "Group" means a group, as such term is used in Section 13(d)(3) of
the Exchange Act.
(e) "Person" means any natural person, corporation, partnership, joint
venture, limited liability company, association, joint stock company, trust,
unincorporated organization, governmental body, or any other entity whatsoever.
* * * * * * * *
Remainder of Page Intentionally Blank
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first referred to above.
INTELLIGROUP, INC.
By: /s/ Xxxxxxxx Xxxxxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxxxxx
Title: President and Chief Executive
Officer
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx