As filed with the Securities and Exchange Commission on April 3, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYNTEL, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2312018
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2800 Livernois, Suite 400, Troy, Michigan 48083
(Address of principal executive offices) (zip code)
1997 STOCK OPTION AND INCENTIVE PLAN
1997 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plan)
DANIEL M. MOORE, ESQ.
Vice President-Secretary and General Counsel
Syntel, Inc.
2800 Livernois, Suite 400
Troy, Michigan 48083
(Name and address of agent for service)
Telephone number, including area code, of agent for service:(248) 619-2800
Copies to:
D. RICHARD MCDONALD
Dykema Gossett PLLC
1577 North Woodward Avenue, Suite 300
Bloomfield Hills, Michigan 48304
CALCULATION OF REGISTRATION FEE
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<TABLE>
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Aggregate Registration
to be Registered Registered Price per Share* Offering Price* Fee
Common Stock,
No par value 1,000,000 $41.00 $41,000,000 $12,095
</TABLE>
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* Estimated solely for purposes of computing the Registration Fee, at
$41.00 per share, the last sale price for shares of the Common Stock on
March 31, 1998, as reported on the NASDAQ National Market, pursuant to
Rule 457(h).
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<PAGE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation by Reference.
The following documents filed by Syntel, Inc. (the "Company") with the
Securities and Exchange Commission (the "Commission") are incorporated in this
Registration Statement by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997; and
(b) Description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A under the Securities
Exchange Act of 1934, Number 0-22903.
All documents filed by the Company with the Commission pursuant to Sec-
tions 13, 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
subsequent to the date of this Registration Statement and prior to the termin-
ation of the offering of the common stock covered by this Registration State-
ment shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of each such
document.
Item 4. Description of Securities.
Not required.
Item 5. Interests of Named Experts and Counsel.
No material interests.
Item 6. Indemnification of Directors and Officers.
Michigan Business Corporation Act
The Company is organized under the Michigan Business Corporation Act
(the "Michigan Act") which, in general, empowers Michigan corporations to
indemnify a person who was or is a party or is threatened to be made a party
to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and whether formal or
informal, other than an action by or in the right of the corporation, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another enterprise, against expenses, including attorney's fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred in connection therewith if the person acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of
the corporation or its shareholders and, with respect to a criminal action or
proceeding, if the person had no reasonable cause to believe his or her
conduct was unlawful.
The Michigan Act also empowers Michigan corporations to provide similar
indemnity to such a person for expenses, including attorney's fees, and
amounts paid in settlement actually and reasonably incurred by the person in
connection with actions or suits by or in the right of the corporation if the
person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the interests of the corporation or its shareholders,
except in respect of any claim, issue or matter in which the person has been
found liable to the corporation, unless the court determines that the person
is fairly and reasonably entitled to indemnification in view of all relevant
circumstances, in which case indemnification is limited to reasonable expenses
incurred.
The Michigan Act also permits a Michigan corporation to purchase and
maintain on behalf of such a person insurance against liabilities incurred in
such capacities. The Company has obtained a policy of directors' and
officers' liability insurance.
Bylaws of the Registrant
The Company's Bylaws generally require the Registrant to indemnify
officers and directors to the fullest extent legally possible under the
Michigan Act and provide that similar indemnification may be afforded
employees and agents.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed with this Registration Statement:
5 Opinion of Dykema Gossett PLLC with respect to the legality
of the Common Stock to be registered hereunder.
10.1 Syntel, Inc. 1997 Stock Option and Incentive Plan.
10.2 Syntel, Inc. 1997 Employee Stock Purchase Plan.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Dykema Gossett PLLC (contained in Exhibit 5).
24 Power of Attorney (see "Signatures").
Item 9. Undertakings.
(1) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement: (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date of this
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this registration statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in this registration statement or any material change to such
information in this registration statement; provided, however, that paragraphs
(1)(i) and (1)(ii) do not apply if this registration statement is on Form S-3
or Form S-8 and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) The undersigned registrant hereby undertakes that, for the purpose
of determining any liability under the Securities Act of 1933, each post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) The undersigned registrant hereby undertakes to remove from
registration by means of a post effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(4) The undersigned registrant hereby undertakes that, for the purpose
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) or the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Troy, State of Michigan on March 23,
1998.
SYNTEL, INC.
By: /s/ BHARAT DESAI
Bharat Desai
President and Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned whose signature appears below hereby constitutes
and appoints Bharat Desai, Neerja Sethi and Daniel M. Moore and each of them
acting alone, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on March 23, 1998.
Title
/s/ BHARAT DESAI
Bharat Desai Director and President and
Chief Executive Officer
/s/ JOHN ANDARY
John Andary Chief Financial Officer
(principal financial and accounting officer)
/s/ NEERJA SETHI
Neerja Sethi Director and Vice President, Corporate Affairs
/s/ PARITOSH K. CHOKSI
Paritosh K. Choksi Director
/s/ DOUGLAS VAN HOUWELING
Douglas Van Houweling Director
/s/ GEORGE R. MRKONIC
George R. Mrkonic Director
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibits
5 Opinion of Dykema Gossett PLLC with respect to the legality
of the Common Stock to be registered hereunder
10.1 Syntel, Inc. 1997 Stock Option and Incentive Plan.
10.2 Syntel, Inc. 1997 Employee Stock Purchase Plan.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Dykema Gossett PLLC (contained in Exhibit 5)
24 Power of Attorney (see "Signatures")
April 3, 1998
Syntel, Inc.
2800 Livernois, Suite 400
Troy, Michigan 48083
Ladies and Gentlemen:
We have served as counsel to Syntel, Inc. (the "Company") in connection
with the preparation of the Registration Statement (Form S-8) to be filed by
the Company on April 3, 1998 with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, representing the issuance in the
manner described in the Registration Statement of 1,000,000 shares of the
Company's Common Stock, no par value (the "Common Stock"), pursuant to the
Syntel, Inc. 1997 Stock Option and Incentive Plan and the Syntel, Inc. 1997
Employee Stock Purchase Plan.
We have examined and relied upon the originals, or copies certified or
otherwise identified to our satisfaction, of such corporate records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below.
Based upon such examination and our participation in the preparation of
the Registration Statement, it is our opinion that (1) the Company is duly
incorporated and validly existing as a corporation in good standing under the
laws of Michigan and (2) the Common Stock, when issued in the manner described
in the Registration Statement, will be validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
DYKEMA GOSSETT PLLC
/S/ D. RICHARD MCDONALD
D. Richard McDonald
(248) 203-0859
SYNTEL, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
(Amended and Restated)
I. GENERAL PROVISIONS
1.1 Establishment. On April 1, 1997, the Board of Directors ("Board")
of Syntel, Inc. ("Corporation") adopted the 1997 Stock Option and Incentive
Plan ("Plan"), which was approved by the shareholders of the Corporation on
April 1, 1997. This Plan is further amended and restated as of August 11,
1997.
1.2 Purpose. The purpose of the Plan is (i) to promote the best
interests of the Corporation and its shareholders by encouraging Employees and
non-employee directors of the Corporation and its Subsidiaries to acquire an
ownership interest in the Corporation through Options, Stock Appreciation
Rights, Restricted Stock, Performance Share Awards and Annual Incentive
Awards, thus identifying their interests with those of shareholders, and (ii)
to enhance the ability of the Corporation to attract and retain qualified
Employees and non-employee directors. It is the further purpose of the Plan
to permit the granting of Nonqualified Stock Options, Stock Appreciation
Rights and Annual Incentive Awards that will constitute performance based
compensation, as described in Section 162(m) of the Code, and regulations
promulgated thereunder.
1.3 Definitions. As used in this Plan, the following terms have the
meaning described below:
(a) "Agreement" means the written agreement that sets forth the
terms of a Participant's Option, Stock Appreciation Right, Restricted Stock
Grant, Performance Share Award or Annual Incentive Award.
(b) "Annual Incentive Award" means an award that is granted in
accordance with Article VI of the Plan.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Change in Control" means the occurrence of any of the
following events: (i) the acquisition of ownership by a person, firm or
corporation, or a group acting in concert, of fifty-one percent, or more, of
the outstanding Common Stock of the Corporation in a single transaction or a
series of related transactions within a one-year period; (ii) a sale of all or
substantially all of the assets of the Corporation to any person, firm or
corporation; or (iii) a merger or similar transaction between the Corporation
and another entity if shareholders of the Corporation do not own a majority of
the voting stock of the corporation surviving the transaction and a majority
in value of the total outstanding stock of such surviving corporation after
the transaction; provided, however, that any such event involving any of the
current shareholders of the Corporation as of the date of adoption of this
Plan by the Board (or any entity at any time controlled by any such
shareholder or shareholders) shall not be included within the meaning of
"Change in Control."
(e) "Change in Position" means, with respect to any Participant:
(i) such Participant's involuntary termination of employment; or (ii) a
significant reduction in such Participant's duties, responsibilities,
compensation and/or fringe benefits, or the assignment to such Participant of
duties inconsistent with his position (all as in effect immediately prior to a
Change in Control), whether or not such Participant voluntarily terminates
employment as a result thereof.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the
Corporation, which shall be comprised of two or more members of the Board.
(h) "Common Stock" means shares of the Corporation's authorized
common stock.
(i) "Corporation" means Syntel, Inc., a Michigan corporation.
(j) "Disability" means total and permanent disability, as
defined in Code Section 22(e).
(k) "Employee" means an individual who has an "employment
relationship" with the Corporation or a Subsidiary, as defined in Treasury
Regulation 1.421-7(h), and the term "employment" means employment with the
Corporation, or a Subsidiary of the Corporation.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time and any successor thereto.
(m) "Fair Market Value" means for purposes of determining the
value of Common Stock on the Grant Date, the Stock Exchange closing price of
the Corporation's Common Stock as reported in The Wall Street Journal (or as
otherwise reported by such Stock Exchange) for the Grant Date. In the event
that there were no Common Stock transactions on such date, the Fair Market
Value shall be determined as of the immediately preceding date on which there
were Common Stock transactions.
Unless otherwise specified in the Plan, "Fair Market Value" for purposes of
determining the value of Common Stock on the date of exercise means, the Stock
Exchange closing price of the Corporation's Common Stock on the last date
preceding the exercise on which there were Common Stock transactions.
(n) "Grant Date" means the date on which the Committee
authorizes an individual Option, Stock Appreciation Right, Restricted Stock
grant, Performance Share Award or Annual Incentive Award, or such later date
as shall be designated by the Committee.
(o) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code.
(p) "Nonqualified Stock Option" means an Option that is not
intended to constitute an Incentive Stock Option.
(q) "Option" means either an Incentive Stock Option or a
Nonqualified Stock Option.
(r) "Participant" means an Employee or non-employee director
designated by the Committee to participate in the Plan.
(s) "Performance Share Award" means a performance share award
that is granted in accordance with Article V of the plan.
(t) "Plan" means the Syntel, Inc. 1997 Stock Option and
Incentive Plan, the terms of which are set forth herein, and amendments
thereto.
(u) "Restriction Period" means the period of time during which a
Participant's Restricted Stock grant is subject to restrictions and is
nontransferable.
(v) "Restricted Stock" means Common Stock that is subject to
restrictions.
(w) "Retirement" means termination of employment on or after the
attainment of age 65.
(x) "Stock Appreciation Right" means the right to receive a cash
or Common Stock payment from the Corporation upon the surrender of a tandem
Option, in accordance with Article III of the Plan.
(y) "Stock Exchange" means the principal national securities
exchange on which the Common Stock is listed for trading or, if the Common
Stock is not listed for trading on a national securities exchange, such other
recognized trading market or quotation system upon which the largest number of
shares of Common Stock has been traded in the aggregate during the last 20
days before a Grant Date or date on which an Option is exercised, whichever is
applicable.
(z) "Subsidiary" means a corporation defined in Code Section
424(f).
(aa) "Vested" means the extent to which an Option or Stock
Appreciation Right granted hereunder has become exercisable in accordance with
this Plan and the terms of the respective Agreement pursuant to which such
Option or Stock Appreciation Right was granted.
1.4 Administration.
(a) The Plan shall be administered by the Committee. At all
times it is intended that the directors appointed to serve on the Committee
shall be "disinterested persons" (within the meaning of Rule 16b-3 promulgated
under the Exchange Act) and "outside directors" (within the meaning of Code
Section 162(m)); however, the mere fact that a Committee member shall fail to
qualify under either of these requirements shall not invalidate any award made
by the Committee if the award is otherwise validly made under the Plan. The
members of the Committee shall be appointed by, and may be changed at any time
and from time to time, at the discretion of the Board.
(b) The Committee shall interpret the Plan, prescribe, amend,
and rescind rules and regulations relating to the Plan, and make all other
determinations necessary or advisable for its administration. The decision of
the Committee on any question concerning the interpretation of the Plan or its
administration with respect to any Option, Stock Appreciation Right,
Restricted Stock grant, Performance Share Award or Annual Incentive Award
granted under the Plan shall be final and binding upon all Participants. No
member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any grant or award hereunder.
1.5 Participants. Participants in the Plan shall be such Employees
(including Employees who are directors) and non-employee directors of the
Corporation and its Subsidiaries as the Committee in its sole discretion may
select from time to time. The Committee may grant Options, Stock Appreciation
Rights, Restricted Stock, Performance Share Awards and Annual Incentive Awards
to an individual upon the condition that the individual become an Employee of
the Corporation or of a Subsidiary, provided that the Option, Stock
Appreciation Right, Restricted Stock, Performance Share Award or Annual
Incentive Award shall be deemed to be granted only on the date that the
individual becomes an Employee.
1.6 Stock. The Corporation has reserved 2,000,000 shares of the
Corporation's Common Stock for issuance under the Plan. Shares subject to any
unexercised portion of a terminated, cancelled or expired Option, Stock
Appreciation Right, Restricted Stock grant or Performance Share Award granted
hereunder, and pursuant to which a Participant never acquired benefits of
ownership, including payment of a stock dividend (but excluding voting
rights), may again be subjected to grants and awards under the Plan, but
shares surrendered pursuant to the exercise of a Stock Appreciation Right are
not available for future grants and awards. All provisions in this Section
1.6 shall be adjusted, as applicable, in accordance with Article VIII.
II. STOCK OPTIONS
2.1 Grant of Options. The Committee, at any time and from time to
time, subject to Section 9.8, may grant Options to such Employees and for such
number of shares of Common Stock (whole or fractional) as it shall designate.
Provided, however, that no Employee may be granted Options and Stock
Appreciation Rights during any one fiscal year to purchase more than 100,000
shares of Common Stock. Any Participant may hold more than one Option under
the Plan and any other Plan of the Corporation or Subsidiary. The Committee
shall determine the general terms and conditions of exercise, including any
applicable vesting requirements, which shall be set forth in a Participant's
Option Agreement. No Option granted hereunder may be exercised after the
tenth anniversary of the Grant Date. The Committee may designate any Option
granted as either an Incentive Stock Option or a Nonqualified Stock Option, or
the Committee may designate a portion of an Option as an Incentive Stock
Option or a Nonqualified Stock Option. At the discretion of the Committee, an
Option may be granted in tandem with a Stock Appreciation Right. Nonqualified
Stock Options are intended to satisfy the requirements of Code Section 162(m)
and the regulations promulgated hereunder.
2.2 Incentive Stock Options. Any Option intended to constitute an
Incentive Stock Option shall comply with the requirements of this Section 2.2
No Incentive Stock Option shall be granted with an exercise price below the
Fair Market Value of Common Stock on the Grant Date or with an exercise term
that extends beyond 10 years from the Grant Date. An Incentive Stock Option
shall not be granted to any Participant who owns (within the meaning of Code
Section 424(d)) stock of the Corporation or any Subsidiary possessing more
than 10% of the total combined voting power of all classes of stock of the
Corporation or a Subsidiary unless, at the Grant Date, the exercise price for
the Option is at least 110% of the Fair Market Value of the shares subject to
the Option and the Option, by its terms, is not exercisable more than 5 years
after the Grant Date. The aggregate Fair Market Value of the underlying
Common Stock (determined at the Grant Date) as to which Incentive Stock
Options granted under the Plan (including a plan of a Subsidiary) may first be
exercised by a Participant in any one calendar year shall not exceed $100,000.
To the extent that an Option intended to constitute an Incentive Stock Option
shall violate the foregoing $100,000 limitation (or any other limitation set
forth in Code Section 422), the portion of the Option that exceeds the
$100,000 limitation (or violates any other Code Section 422 limitation) shall
be deemed to constitute a Nonqualified Stock Option.
2.3 Option Price. The Committee shall determine the per share
exercise price for each Option granted under the Plan. The Committee, at its
discretion, may grant Nonqualified Stock Options with an exercise price below
100% of the Fair Market Value of Common Stock on the Grant Date. The
foregoing notwithstanding, no Incentive Stock Option shall be granted with an
exercise price below the Fair Market Value of Common Stock on the Grant Date.
2.4 Payment for Option Shares.
(a) The purchase price for shares of Common Stock to be acquired
upon exercise of an Option granted hereunder shall be paid in full in cash or
by personal check, bank draft or money order at the time of exercise;
provided, however, that in lieu of such form of payment a Participant may pay
such purchase price in whole or in part by tendering shares of Common Stock,
which are freely owned and held by the Participant independent of any
restrictions, hypothecations or other encumbrances, duly endorsed for transfer
(or with duly executed stock powers attached), or in any combination of the
above. Shares of Common Stock surrendered upon exercise shall be valued at
the Stock Exchange closing price for the Corporation's Common Stock on the day
prior to exercise, as reported in The Wall Street Journal (or as otherwise
reported by such Stock Exchange), and the certificate(s) for such shares, duly
endorsed for transfer or accompanied by appropriate stock powers, shall be
surrendered to the Corporation. Participants who are subject to short swing
profit restrictions under the Exchange Act and who exercise an Option by
tendering previously-acquired shares shall do so only in accordance with the
provisions of Rule 16b-3 of the Exchange Act.
(b) At the discretion of the Committee, as set forth in a
Participant's Option Agreement, any Option granted hereunder may be deemed
exercised by delivery to the Corporation of a properly executed exercise
notice, acceptable to the Corporation, together with irrevocable instructions
to the Participant's broker to deliver to the Corporation sufficient cash to
pay the exercise price and any applicable income and employment withholding
taxes, in accordance with a written agreement between the Corporation and the
brokerage firm ("cashless exercise procedure").
III. STOCK APPRECIATION RIGHTS
3.1 Grant of Stock Appreciation Rights. Stock Appreciation Rights may
be granted, held and exercised in such form as set by the Committee on an
individual basis. A Stock Appreciation Right may be granted to a Participant
with respect to such number of shares of Common Stock of the Corporation as
the Committee may determine. The number of shares covered by the Stock
Appreciation Right shall not exceed the number of shares of stock which the
Participant could purchase upon the exercise of the related Option. Stock
Appreciation Rights are intended to satisfy the requirements of Code Section
162(m) and the regulations promulgated thereunder.
3.2 Exercise of Stock Appreciation Rights. A Stock Appreciation Right
shall be deemed exercised upon receipt by the Corporation of written notice of
exercise from the Participant. Except as permitted under Rule 16b-3, notice
of exercise of a Stock Appreciation Right by a participant subject to the
insider trading restrictions of Section 16(b) of the Securities Exchange Act
of 1934, shall be limited to the period beginning on the third day following
the release of the Corporation's quarterly or annual summary of earnings and
ending on the 12th business day after such release. The exercise term of each
Stock Appreciation Right shall be limited to 10 years from its Grant Date or
such earlier period as set by the related Option. A Stock Appreciation Right
shall be exercisable only at such times and in such amounts as the related
Option may be exercised. A Stock Appreciation Right granted to a Participant
subject to the insider trading restrictions shall not be exercisable in whole
or part during the first six months of its term, unless the Participant dies
or becomes disabled during such six-month period.
3.3 Stock Appreciation Right Entitlement.
(a) Upon exercise of a Stock Appreciation Right, a Participant
shall be entitled to payment from the Corporation, in cash, shares, or partly
in each (as determined by the Committee in accordance with any applicable
terms of the Agreement), of an amount equal to the difference between--
(1) the Fair Market Value of the number of shares subject to the
Stock Appreciation Right on the exercise date, and
(2) the Option price of the associated Option multiplied by the
number of shares available under the Option.
(b) Notwithstanding paragraph (a) of this Section, upon exercise
of a Stock Appreciation Right the Participant shall be required to surrender
the associated Option.
3.4 Maximum Stock Appreciation Right Amount Per Share. The Committee
may, at its sole discretion, establish (at the time of grant) a maximum amount
per share which shall be payable upon the exercise of a Stock Appreciation
Right, expressed as a dollar amount or as a percentage or multiple of the
Option price of a related Option.
IV. RESTRICTED STOCK
4.1 Grant of Restricted Stock. Subject to the terms and conditions of
the Plan, the Committee, at any time and from time to time, may grant shares
of Restricted Stock under this Plan to such Employees and in such amounts as
it shall determine.
4.2 Restricted Stock Agreement. Each grant of Restricted Stock shall
be evidenced by a Restricted Stock Agreement that shall specify the terms of
the restrictions, including the restriction period, or periods, the number of
Restricted Stock shares subject to the grant, and such other provisions,
including performance goals, as the Committee shall determine.
4.3 Transferability. Except as provided in this Article IV of the
Plan, the shares of Restricted Stock granted hereunder may not be transferred,
pledged, assigned, or otherwise alienated or hypothecated until the
termination of the applicable Restriction Period or for such period of time as
shall be established by the Committee and as shall be specified in the
Restricted Stock Agreement, or upon the earlier satisfaction of other
conditions as specified by the Committee in its sole discretion and as set
forth in the Restricted Stock Agreement. All rights with respect to the
Restricted Stock granted to an Employee shall be exercisable during a
Participant's lifetime only by the Participant or the Participant's legal
representative.
4.4 Other Restrictions. The Committee shall impose such other
restrictions on any shares of Restricted Stock granted under the Plan as it
may deem advisable including, without limitation, restrictions under
applicable Federal or State securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.
4.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Sections 4.3 and 4.4, each certificate representing
shares of Restricted Stock shall bear the following legend:
The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer set forth in the Syntel,
Inc. 1997 Stock Option and Incentive Plan ("Plan"), rules and
administrative guidelines adopted pursuant to such Plan and a Restricted
Stock Agreement dated . A copy of the
Plan, such rules and such Restricted Stock Agreement may be obtained
from the General Counsel of Syntel, Inc.
4.6 Removal of Restrictions. Except as otherwise provided in this
Article IV of the Plan, and subject to applicable federal and state securities
laws, shares covered by each Restricted Stock grant made under the Plan shall
become freely transferable by the Participant after the last day of the
Restriction Period. Once the shares are released from the restrictions, the
Participant shall be entitled to have the legend required by Section 4.5 of
the Plan removed from the applicable Common Stock certificate. Provided
further, the Committee shall have the discretion to waive the applicable
Restriction Period with respect to all or any part of a Restricted Stock
grant.
4.7 Voting Rights. During the Restriction Period, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to the Restricted Stock.
4.8 Dividends and Other Distributions. During the Restriction Period,
a Participant shall be entitled to receive all dividends and other
distributions paid with respect to shares of Restricted Stock. If any
dividends or distributions are paid in shares of Common Stock during the
Restriction Period, the dividend or other distribution shares shall be subject
to the same restrictions on transferability as the shares of Restricted Stock
with respect to which they were paid.
4.9 Restricted Stock Awards Granted Under Code Section 162(m). The
Committee, at its discretion, may designate certain Restricted Stock Awards as
granted pursuant to Code Section 162(m). Such Restricted Stock Awards must
comply with the following additional requirements, which override any other
provision set forth in this Article IV:
(a) Each Code Section 162(m) Restricted Stock Award shall be
based upon pre-established, objective performance goals that are intended to
satisfy the performance-based compensation requirements of Code Section 162(m)
and the regulations promulgated thereunder. Further, at the discretion of the
Committee, a Restricted Stock Award also may be subject to goals and
restrictions in addition to the performance requirements.
(b) Each Code Section 162(m) Restricted Stock Award shall be
based upon the attainment of specified levels of Corporation or Subsidiary
performance during a specified performance period, as measured by any or all
of the following: earnings (as measured by net income, net income per share,
operating income or operating income per share), sales growth and market
capitalization.
(c) For each designated performance period, the Committee shall
(i) select those Employees who shall be eligible to receive a Restricted Stock
Award, (ii) determine the performance period, which may be a one to three
fiscal year period, (iii) determine the target levels of Corporation or
Subsidiary performance, and (iv) determine the number of shares subject to a
Restricted Stock Award to be paid to each selected Employee. The Committee
shall make the foregoing determinations prior to the commencement of services
to which a Restricted Stock Award relates (or within the permissible
time-period established under Code Section 162(m)) and while the outcome of
the performance goals and targets is uncertain.
(d) For each performance period, the Committee shall certify, in
writing: (i) if the Corporation has attained the performance targets, and
(ii) the number of shares pursuant to the Restricted Stock Award that are to
become freely transferable. The Committee shall have no discretion to waive
all or part of the conditions, goals and restrictions applicable to the
receipt of full or partial payment of a Restricted Stock Award.
(e) Any dividends paid during the Restriction Period
automatically shall be reinvested on behalf of the Employee in additional
shares of Restricted Stock under the Plan, and such additional shares shall be
subject to the same performance goals and restrictions as the other shares
under the Restricted Stock Award. No shares under a Code Section 162(m)
Restricted Stock Award shall become transferable until the Committee certifies
in writing that the performance goals and restrictions have been satisfied.
(f) No Employee, in any one fiscal year of the Company, shall be
granted a Code Section 162(m) Restricted Stock Award for more than 25,000
shares of Common Stock.
(g) Except as provided in this Article IV of the Plan, the
shares pursuant to a Restricted Stock Award granted hereunder may not be
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the applicable performance targets and other restrictions are satisfied, as
shall be certified in writing by the Committee. All rights with respect to a
Performance Share Award granted hereunder shall apply only to such Employee or
the Employee's legal representative.
(h) Except as otherwise provided in this Article IV of the Plan,
and subject to applicable federal and state securities laws, shares covered by
each Restricted Stock Award made under the Plan shall become freely
transferable by the Employee after the Committee has certified that the
applicable performance targets and restrictions have been satisfied. Once the
shares are released from the restrictions, the Employee shall be entitled to
have the legend required by Section 4.5 of the Plan removed from the
applicable Common Stock certificate.
V. PERFORMANCE SHARE AWARDS
5.1 Grant of Performance Share Awards. The Committee, at its
discretion, may grant Performance Share Awards to Employees of the Corporation
and its Subsidiaries and may determine, on an individual or group basis, the
performance goals to be attained pursuant to each Performance Share Award.
5.2 Terms of Performance Share Awards. In general, Performance Share
Awards shall consist of rights to receive cash, Common Stock or a combination
of each, if designated performance goals are achieved. The terms of a
Participant's Performance Share Award shall be set forth in his individual
Performance Share Agreement. Each Agreement shall specify the performance
goals applicable to a particular Employee or group of Employees, the period
over which the targeted goals are to be attained, the payment schedule if the
goals are attained, and any other terms, conditions and restrictions
applicable to an individual Performance Share Award and not inconsistent with
the provisions of the Plan. The Committee, at its discretion, may waive all
or part of the conditions, goals and restrictions applicable to the receipt of
full or partial payment of a Performance Share Award.
5.3 Performance Share Awards Granted Under Code Section 162(m). The
Committee, at its discretion, may designate certain Performance Share Awards
as granted pursuant to Code Section 162(m). Such Performance Share Awards
must comply with the following additional requirements, which override any
other provision set forth in this Article V:
(a) The Committee, at its discretion, may grant Code Section
162(m) Performance Share Awards based upon pre-established, objective
performance goals that are intended to satisfy the performance-based
compensation requirements of Code Section 162(m) and the regulations
promulgated thereunder. Further, at the discretion of the Committee, a
Performance Share Award also may be subject to goals and restrictions in
addition to the performance requirements.
(b) Each Code Section 162(m) Performance Share Award shall be
based upon the attainment of specified levels of Corporation or Subsidiary
performance during a specified performance period, as measured by any or all
of the following: earnings (as measured by net income, net income per share,
operating income or operating income per share), sales growth and market
capitalization.
(c) For each designated performance period, the Committee shall
(i) select those Employees who shall be eligible to receive a Code Section
162(m) Performance Share Award, (ii) determine the performance period, which
may be a one to three fiscal year period, (iii) determine the target levels of
Corporation or Subsidiary performance, and (iv) determine the Performance
Share Award to be paid to each selected Employee. The Committee shall make
the foregoing determinations prior to the commencement of services to which a
Performance Share Award relates (or within the permissible time-period
established under Code Section 162(m)) and while the outcome of the
performance goals and targets is uncertain.
(d) For each performance period, the Committee shall certify, in
writing: (i) if the Corporation has attained the performance targets, and
(ii) the cash or number of shares (or combination thereof) pursuant to the
Performance Share Award that shall be paid to each selected Employee (or the
number of shares that are to become freely transferable, if a Performance
Share Award is granted subject to attainment of the designated performance
goals). The Committee, may not waive all or part of the conditions, goals
and restrictions applicable to the receipt of full or partial payment of a
Performance Share Award.
(e) Code Section 162(m) Performance Share Awards may be granted
in two different forms, at the discretion of the Committee. Under one form,
the Employee shall receive a Performance Share Award that consists of a
legended certificate of Common Stock, restricted from transfer prior to the
satisfaction of the designated performance goals and restrictions, as
determined by the Committee and specified in the Employee's Performance Share
Agreement. Prior to satisfaction of the performance goals and restrictions,
the Employee shall be entitled to vote the Performance Shares. Further, any
dividends paid on such shares during the performance/restriction period
automatically shall be reinvested on behalf of the Employee in additional
Performance Shares under the Plan, and such additional shares shall be subject
to the same performance goals and restrictions as the other shares under the
Performance Share Award. No shares under a Performance Share Award shall
become transferable until the Committee certifies in writing that the
performance goals and restrictions have been satisfied.
(f) Under the second form, the Employee shall receive a
Performance Share Agreement from the Committee that specifies the performance
goals and restrictions that must be satisfied before the Company shall issue
the payment, which may be cash, a designated number of shares of Common Stock
or a combination of the two. Any certificate for shares under such form of
Performance Share Award shall be issued only after the Committee certifies in
writing that the performance goals and restrictions have been satisfied.
(g) No Employee, in any one fiscal year of the Company, shall be
granted a Performance Share Award to receive more than 25,000 shares of Common
Stock.
(h) Except as provided in this Article V of the Plan, the shares
pursuant to a Performance Share Award granted hereunder may not be
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the applicable performance targets and other restrictions are satisfied, as
shall be certified in writing by the Committee. All rights with respect to a
Performance Share Award granted hereunder shall apply only to such Employee or
the Employee's legal representative.
(i) In addition to any legends placed on certificates pursuant
to paragraph (h), each certificate representing shares under a Performance
Share Award shall bear the following legend:
The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary or by operation
of law, is subject to certain restrictions on transfer set forth
in the Syntel, Inc. 1997 Stock Option and Incentive Plan ("Plan"),
rules and administrative guidelines adopted pursuant to such Plan
and a Performance Share Agreement dated . A copy of
the Plan, such rules and such Performance Share Agreement may be
obtained from the General Counsel of Syntel, Inc.
(j) Except as otherwise provided in this Article V of the Plan,
and subject to applicable federal and state securities laws, shares covered by
each Performance Share Award made under the Plan shall become freely
transferable by the Employee after the Committee has certified that the
applicable performance targets and restrictions have been satisfied. Once the
shares are released from the restrictions, the Employee shall be entitled to
have the legend required by paragraph (i) removed from the applicable Common
Stock certificate.
VI. ANNUAL INCENTIVE AWARDS
6.1 Grant of Annual Incentive Awards.
(a) The Committee, at its discretion, may grant Annual Incentive
Awards to such Employees as it may designate from time to time. Annual
Incentive Awards shall be based upon pre-established, objective performance
goals that are intended to satisfy the performance-based compensation
requirements of Code Section 162(m) and the regulations promulgated
thereunder.
(b) The determination of Annual Incentive Awards for a given
year shall be based upon the attainment of specified levels of Corporation or
Subsidiary performance as measured by any or all of the following: earnings
(as measured by net income, net income per share, operating income or
operating income per share), sales growth and market capitalization.
(c) For each fiscal year of the Corporation, the Committee shall
(i) select those Employees who shall be eligible to receive an Annual
Incentive Award, (ii) determine the performance period, which may be a one to
three fiscal year period, (iii) determine target levels of Corporation
performance, and (iv) determine the level of Annual Incentive Award to be paid
to each selected Employee upon the achievement of each performance level as
provided below. The Committee shall make the foregoing determinations prior
to the commencement of services to which an Annual Incentive Award relates (or
within the permissible time-period established under Code Section 162(m)) and
while the outcome of the performance goals and targets is uncertain.
6.2 Attainment of Performance Targets.
(a) For each fiscal year, the Committee shall certify, in
writing: (i) the degree to which the Corporation has attained the performance
targets, and (ii) the amount of the Annual Incentive Award to be paid to each
selected Employee.
(b) Notwithstanding anything to the contrary herein, the
Committee may, in its discretion, reduce any Annual Incentive Award based on
such factors as may be determined by the Committee, including, without
limitation, a determination by the Committee that such a reduction is
appropriate: (i) in light of pay practices of competitors; or (ii) in light of
the Corporation's, a subsidiary's, or an selected Employee's performance
relative to competitors and/or performance with respect to the Corporation's
strategic business goals.
6.3 Payment of Annual Incentive Awards. An Annual Incentive Award
shall be paid only if (i) the Corporation achieves at least the threshold
performance level; and (ii) the Committee makes the certification described in
Section 6.2.
6.4 Annual Incentive Award Payment Forms.
(a) Annual Incentive Awards shall be paid in cash and/or shares
of Common Stock of the Corporation, at the discretion of the Committee.
Payments shall be made within 30 days following (i) a certification by the
Committee that the performance targets were attained, and (ii) a determination
by the Committee that the amount of an Annual Incentive Award shall not be
decreased in accordance with Section 6.2. The aggregate maximum Annual
Incentive Award that may be earned by any Participant on behalf of any one
fiscal year (calculated as of the last day of the fiscal year for which the
Annual Incentive Award is earned) may not exceed the lesser of two (2) times
the Participant's base salary for the fiscal year or $1,000,000.
(b) The amount of an Annual Incentive Award to be paid upon the
attainment of each targeted level of performance shall equal a percentage of
each Participant's base salary for the fiscal year, as determined by the
Committee.
VIII. TERMINATION OF EMPLOYMENT
7.1. Options and Stock Appreciation Rights.
(a) If, prior to the date that an Option or Stock Appreciation
Right first becomes Vested, a Participant's employment is terminated for any
reason (other than as provided in Section 8.2, after a Change in Control), the
Participant's right to exercise the Option or Stock Appreciation Right shall
terminate and all rights thereunder shall cease.
(b) If, on or after the date that an Option or Stock
Appreciation Right first becomes Vested, a Participant's employment is
terminated for any reason other than death or Disability, the Participant
shall have the right, within the earlier of (i) the expiration of the Option
or Stock Appreciation Right, and (ii) three months after termination of
employment, to exercise the Option or Stock Appreciation Right to the extent
that it was exercisable and unexercised on the date of the Participant's
termination of employment, subject to any other limitation on the exercise of
the Option or Stock Appreciation Right in effect on the date of exercise. The
Committee may designate in a Participant's Agreement that an Option or Stock
Appreciation Right shall terminate at an earlier time than set forth above.
(c) If, on or after the date that an Option or Stock
Appreciation Right first becomes Vested, a Participant dies while an Option or
Stock Appreciation Right is still exercisable, the person or persons to whom
the Option or Stock Appreciation Right shall have been transferred by will or
by the laws of descent and distribution, shall have the right within the
exercise period specified in the Participant's Agreement to exercise the
Option or Stock Appreciation Right to the extent that it was exercisable and
unexercised on the Participant's date of death, subject to any other
limitation on exercise in effect on the date of exercise. Provided, however,
that the beneficial tax treatment of an Incentive Stock Option may be
forfeited if the Option is exercised more than one year after a Participant's
date of death.
(d) If, on or after the date that an Option or Stock
Appreciation Right first becomes Vested, a Participant terminates employment
due to Disability, the Participant shall have the right, within the exercise
period specified in the Participant's Agreement to exercise the Option or
Stock Appreciation Right to the extent that it was exercisable and unexercised
on the date of the Participant's termination of employment, subject to any
other limitation on the exercise of the Option or Stock Appreciation Right in
effect on the date of exercise. If the Participant dies after termination of
employment while the Option or Stock Appreciation Right is still exercisable,
the Option or Stock Appreciation Right shall be exercisable in accordance with
the terms of paragraph (c) above.
(e) The Committee, at the time of a Participant's termination of
employment, may accelerate a Participant's right to exercise an Option or
extend the exercise period of an Option or Stock Appreciation Right; provided,
however that the extension of the exercise period for an Incentive Stock
Option may cause such Option to forfeit its preferential tax treatment.
(f) Shares subject to Options and Stock Appreciation Rights that
are not exercised in accordance with the provisions of (a) through (e) above
shall expire and be forfeited by the Participant as of their expiration date
and shall become available for new grants and awards under the Plan as of such
date.
7.2 Restricted Stock. If a Participant terminates employment for any
reason (other than as provided in Section 8.2, after a Change in Control), the
Participant's shares of Restricted Stock still subject to the Restriction
Period automatically shall expire and be forfeited by the Participant and,
subject to Section 1.6, shall be available for new grants and awards under the
Plan as of such termination date; provided, however, that the Committee, in
its sole discretion, may waive the restrictions remaining on any or all shares
of Restricted Stock and add such new restrictions to such shares of Restricted
Stock as it deems appropriate. Notwithstanding the foregoing, the Committee
shall not waive any restrictions on a Code Section 162(m) Restricted Stock
Award, but the Committee may include a provision in an Employee's Code Section
162(m) Restricted Stock Agreement stating that upon the Employee's termination
of employment due to (i) death, (ii) Disability, or (iii) involuntary
termination by the Company without cause prior to the attainment of the
associated performance goals and the termination of the Restriction Period,
that the performance goals and restrictions shall be deemed to have been
satisfied on a pro rata basis, so that the number of shares that become freely
transferable shall be based on the Employee's full number of months of
employment during the Restriction Period, and the Employee shall forfeit the
remaining shares and his rights to such forfeited shares shall terminate in
full.
7.3 Performance Shares. Performance Share Awards shall expire and be
forfeited by a Participant upon the Participant's termination of employment
for any reason (other than as provided in Section 8.2, after a Change in
Control), and such shares shall be available for new grants and awards under
the Plan as of such termination date; provided, however, that the Committee,
in its discretion, may waive all or part of the conditions, goals and
restrictions applicable to the receipt of full or partial payment of a
Performance Share Award. Notwithstanding the foregoing, the Committee shall
not waive any restrictions on a Code Section 162(m) Performance Share Award,
but the Committee may include a provision in an Employee's Code Section 162(m)
Performance Share Agreement stating that upon the Employee's termination of
employment due to (i) death, (ii) Disability, or (iii) involuntary termination
by the Company without cause prior to the attainment of the associated
performance goals and restrictions, that the performance goals and
restrictions shall be deemed to have been satisfied on a pro rata basis, so
that the number of shares that become freely transferable shall be based on
the Employee's full number of months of employment during the employment
period, and the Employee shall forfeit the remaining shares and his rights to
such forfeited shares shall terminate in full.
7.4 Annual Incentive Awards.
(a) A Participant who has been granted an Annual Incentive Award
and terminates employment due to Retirement, Disability or death prior to the
end of the Corporation's fiscal year shall be entitled to a prorated payment
of the Annual Incentive Award, based on the number of full months of
employment during the fiscal year. Any such prorated Annual Incentive Award
shall be paid at the same time as regular Annual Incentive Awards or, in the
event of the Participant's death, to the beneficiary designated by the
Participant.
(b) A Participant who has been granted an Annual Incentive Award
and resigns or is terminated for any reason (other than Retirement, Disability
or death), before the end of the Corporation's fiscal year for which the
Annual Incentive Award is to be paid, shall forfeit the right to an Annual
Incentive Award payment for that fiscal year.
7.5 Other Provisions. The transfer of an Employee from one
corporation to another among the Corporation and any of its Subsidiaries, or a
leave of absence under the leave policy of the Corporation or any of its
Subsidiaries shall not be a termination of employment for purposes of the
Plan, unless a provision to the contrary is expressly stated by the Committee
in a Participant's Agreement issued under the Plan.
VIII. ADJUSTMENTS AND CHANGE IN CONTROL
8.1 Adjustments.
(a) The total amount of Common Stock for which Options, Stock
Appreciation Rights, Restricted Stock, Performance Share Awards and Annual
Incentive Awards may be issued under the Plan, and the number of shares
subject to any such grants or awards (both as to the number of shares of
Common Stock and the Option price), shall be adjusted pro rata for any
increase or decrease in the number of outstanding shares of Common Stock
resulting from payment of a stock dividend on Common Stock, a subdivision or
combination of shares of Common Stock, or a reclassification of Common Stock.
(b) The foregoing adjustments shall be made by the Committee.
Any such adjustment may provide for the elimination of any fractional share
which might otherwise become subject to an Option, Stock Appreciation Right,
Restricted Stock grant, Performance Share Award or Annual Incentive Award.
8.2 Change in Control. Notwithstanding anything contained herein to
the contrary, in the event of a Participant's Change in Position subsequent to
a Change in Control, (i) any outstanding Option or Stock Appreciation Right
granted to such Participant hereunder immediately shall become fully Vested
and exercisable in full, regardless of any installment provision applicable to
such Option or Stock Appreciation Right; (ii) the remaining Restriction Period
on any Restricted Stock granted to such Participant hereunder immediately
shall lapse and the shares shall become fully transferable, subject to any
applicable federal or state securities laws; (iii) all performance goals and
conditions shall be deemed to have been satisfied and all restrictions shall
lapse on any outstanding Performance Share Awards granted to such Participant
hereunder, and such Awards shall become payable in full; and (iv) for purposes
of any Annual Incentive Awards granted to such Participant hereunder, the
determination of whether the performance targets have been achieved shall be
made as of the date of the Change in Control and payments due should become
immediately payable.
IX. MISCELLANEOUS
9.1 Partial Exercise/Fractional Shares. The Committee may permit, and
shall establish procedures for, the partial exercise of Options and Stock
Appreciation Rights granted under the Plan. No fractional shares shall be
issued in connection with the exercise of a Stock Appreciation Right or
payment of a Performance Share Award or Annual Incentive Award; instead, the
Fair Market Value of the fractional shares shall be paid in cash, or at the
discretion of the Committee, the number of shares shall be rounded down to the
nearest whole number of shares and any fractional shares shall be disregarded.
9.2 Rule 16b-3 Requirements. Notwithstanding any other provision of
the Plan, the Committee may impose such conditions on the exercise of an
Option or Stock Appreciation Right (including, without limitation, the right
of the Committee to limit the time of exercise to specified periods), or the
grant of Restricted Stock or the payment of a Performance Share Award or
Annual Incentive Award, as may be required to satisfy the requirements of Rule
16b-3 of the Exchange Act.
9.3 Rights Prior to Issuance of Shares. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option, Stock
Appreciation Right, Restricted Stock grant, Performance Share Award or Annual
Incentive Award until the issuance of a stock certificate for such shares. No
adjustment shall be made for dividends or other rights with respect to such
shares for which the record date is prior to the date the certificate is
issued.
9.4 Non-Assignability. No Option, Stock Appreciation Right,
Restricted Stock grant, Performance Share Award or Annual Incentive Award
shall be transferable by a Participant except by will or the laws of descent
and distribution. During the lifetime of a Participant, an Option or Stock
Appreciation Right shall be exercised only by the Participant, except in the
event of the Participant's Disability, in which case the Participant's legal
guardian or the individual designated in the Participant's durable power of
attorney may exercise the Option or Stock Appreciation Right. Any transferee
of the Option or Stock Appreciation Right shall take the same subject to the
terms and conditions of this Plan. No transfer of an Option, Stock
Appreciation Right, Restricted Stock grant, Performance Share Award or Annual
Incentive Award by will or the laws of descent and distribution shall be
effective to bind the Corporation unless the Corporation shall have been
furnished with written notice thereof and a copy of the will and/or such
evidence as the Corporation may deem necessary to establish the validity of
the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option, Stock Appreciation Right, Restricted Stock
grant, Performance Share Award or Annual Incentive Award.
9.5. Securities Laws.
(a) Anything to the contrary herein notwithstanding, the
Corporation's obligation to sell and deliver Common Stock pursuant to the
exercise of an Option or Stock Appreciation Right or deliver Common Stock
pursuant to a Restricted Stock grant, Performance Share Award or Annual
Incentive Award is subject to such compliance with federal and state laws,
rules and regulations applying to the authorization, issuance or sale of
securities as the Corporation deems necessary or advisable. The Corporation
shall not be required to sell and deliver or issue Common Stock unless and
until it receives satisfactory assurance that the issuance or transfer of such
shares shall not violate any of the provisions of the Securities Act of 1933
or the Securities Exchange Act of 1934, or the rules and regulations of the
Securities Exchange Commission promulgated thereunder or those of the Stock
Exchange or any stock exchange on which the Common Stock may be listed, the
provisions of any state laws governing the sale of securities, or that there
has been compliance with the provisions of such acts, rules, regulations and
laws.
(b) The Committee may impose such restrictions on any shares of
Common Stock acquired pursuant to the exercise of an Option or Stock
Appreciation Right or the grant of Restricted Stock or the payment of a
Performance Share Award or Annual Incentive Award under the Plan as it may
deem advisable, including, without limitation, restrictions (i) under
applicable federal securities laws, (ii) under the requirements of the Stock
Exchange or any other securities exchange, recognized trading market or
quotation system upon which such shares of Common Stock are then listed or
traded, and (iii) under any blue sky or state securities laws applicable to
such shares. No shares shall be issued until counsel for the Corporation has
determined that the Corporation has complied with all requirements under
appropriate securities laws.
9.6 Foreign Law Restrictions. Anything to the contrary herein
notwithstanding, the Corporation's obligation to sell and deliver Common Stock
pursuant to the exercise of an Option or Stock Appreciation Right or deliver
Common Stock pursuant to a Restricted Stock grant, Performance Share Award or
Annual Incentive Award is subject to compliance with the laws, rules and
regulations of any foreign nation applying to the authorization, issuance or
sale of securities, providing of compensation, transfer of currencies and
other matters, as may apply to any Participant hereunder who is a resident of
such foreign nation. To the extent that it shall be impermissible under such
foreign laws for such a Participant to pay the exercise price for any Option
granted under the Plan (to the extent Vested), the Committee may treat such
Participant as being entitled instead to exercise additional Stock
Appreciation Rights (to the extent not previously granted in tandem with such
Option) which are of equivalent value to the Participant, as determined by
comparing the Fair Market Value upon exercise of the number of shares subject
to the Option (to the extent Vested), less the Option price of such shares.
Further, to the extent that it shall be impermissible under such foreign laws
for the Corporation to deliver Common Stock to any such Participant pursuant
to any Option, Stock Appreciation Right, Restricted Stock grant, Performance
Share Award or Annual Incentive Award granted under the Plan (to the extent
Vested), the Committee may arrange for payment to the Participant of an
equivalent amount of cash in lieu of such shares (less any amount otherwise
payable by the Participant), in accordance with all applicable United States
and foreign currency restrictions and regulations. To the extent that the
Corporation is restricted in accordance with such foreign laws from delivering
shares of Common Stock to Participants as would otherwise be provided for in
this Plan, the Corporation shall be released from such obligation and shall
not be subject to the claims of any Participant hereunder with respect
thereto.
9.7 Withholding Taxes.
(a) The Corporation shall have the right to withhold from a
Participant's compensation or require a Participant to remit sufficient funds
to satisfy applicable withholding for income and employment taxes upon the
exercise of an Option or Stock Appreciation Right or the lapse of the
Restriction Period on a Restricted Stock grant or the payment of a Performance
Share Award or Annual Incentive Award. A Participant may make a written
election to tender previously-acquired shares of Common Stock or have shares
of stock withheld from the exercise, provided that the shares have an
aggregate Fair Market Value sufficient to satisfy in whole or in part the
applicable withholding taxes. The cashless exercise procedure of Section 2.4
may be utilized to satisfy the withholding requirements related to the
exercise of an Option. At no point shall the Corporation withhold from the
exercise of an Option more shares than are necessary to meet the established
tax withholding requirements of federal, state and local obligations.
(b) A Participant subject to the insider trading restrictions of
Section 16(b) of the Exchange Act may use Common Stock to satisfy the
applicable withholding requirements only if such disposition is approved in
accordance with Rule 16b-3 of the Exchange Act. Any election by a
Participant to utilize Common Stock for withholding purposes is further
subject to the discretion of the Committee.
9.8 Termination and Amendment.
(a) The Board may terminate the Plan, or the granting of
Options, Stock Appreciation Rights, Restricted Stock, Performance Share Awards
or Annual Incentive Awards under the Plan, at any time. No new grants or
awards shall be made under the Plan after the tenth anniversary of the
adoption of this Plan by the Board, or approval by the shareholders, whichever
is earlier, as noted in Section 1.1.
(b) The Board may amend or modify the Plan at any time and from
time to time, but no amendment or modification, without the approval of the
shareholders of the Corporation, shall (i) materially increase the benefits
accruing to Participants under the Plan; (ii) increase the amount of Common
Stock for which grants and awards may be made under the Plan, except as
permitted under Sections 1.6 and 8.1; or (iii) change the provisions relating
to the eligibility of individuals to whom grants and awards may be made under
the Plan.
(c) No amendment, modification, or termination of the Plan shall
in any manner affect any Option, Stock Appreciation Right, Restricted Stock
grant, Performance Share Award or Annual Incentive Award granted under the
Plan without the consent of the Participant holding the Option, Stock
Appreciation Right, Restricted Stock grant, Performance Share Award or Annual
Incentive Award.
9.9 Effect on Employment. Neither the adoption of the Plan nor the
granting of any Option, Stock Appreciation Right, Restricted Stock,
Performance Share Award or Annual Incentive Award pursuant to the Plan shall
be deemed to create any right in any individual to be retained or continued in
the employment of the Corporation or a Subsidiary.
9.10 Use of Proceeds. The proceeds received from the sale of Common
Stock pursuant to the Plan will be used for general corporate purposes of the
Corporation.
9.11 Approval of Plan. As noted in Section 1.1, the Plan has been
approved by the shareholders of the Corporation within 12 months of adoption
of the Plan by the Board, as required by Section 422 of the Code.
IN WITNESS WHEREOF, this Amended and Restated 1997 Stock Option and
Incentive Plan has been executed on behalf of the Corporation on the 11th day
of August, 1997.
SYNTEL, INC.
By:/s/ BHARAT DESAI
Bharat Desai, President
SYNTEL, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Establishment. On April 1, 1997, the Board of Directors ("Board")
of Syntel, Inc. ("Corporation") adopted the Employee Stock Purchase Plan
("Plan"), which was approved by the shareholders of the Corporation on April
1, 1997, effective as provided in Section 23 below.
2. Purpose. The purpose of this Plan is (i) to promote the best
interests of the Corporation and its shareholders by encouraging Employees of
the Corporation and its Subsidiaries to acquire an ownership interest in the
Corporation through the purchase of stock in the Corporation, thus identifying
their interests with those of shareholders, and (ii) to enhance the ability of
the Corporation to attract and retain qualified Employees. The Plan is
intended to constitute an "employee stock purchase plan" under Section 423 of
the Code.
3. Definitions. As used in this Plan, the following terms have the
meaning described below:
(a) "Code" means the Internal Revenue Code of 1986, as amended.
(b) "Committee" means the Compensation Committee of the
Corporation, which shall be comprised of two or more members of the Board of
Directors of the Corporation.
(c) "Common Stock" means shares of the Corporation's authorized
common stock.
(d) "Corporation" means Syntel, Inc., a Michigan corporation.
(e) "Election Period" has the meaning described in Section 10(a)
below.
(f) "Employee" means an individual who has an "employment
relationship" with the Corporation or a Subsidiary, as defined in Treasury
Regulation 1.421-7(h), and the term "employment" means employment with the
Corporation, or a Subsidiary of the Corporation.
(g) "Fair Market Value" means for purposes of determining the
value of Common Stock the Stock Exchange closing price of the Corporation's
Common Stock as reported in The Wall Street Journal (or as otherwise reported
by such Stock Exchange) for the Grant Date or the date of exercise of an
option, as is applicable. In the event that there were no Common Stock
transactions on such date, the Fair Market Value shall be determined as of the
immediately preceding date on which there were Common Stock transactions.
(h) "Grant Date" means the first day of any Purchase Period
hereunder, which shall be the first date upon which payroll deductions may be
made with respect to any offering of options under the Plan.
(i) "Initial Public Offering" means a firm commitment
underwritten initial public offering of at least 2,000,000 shares of the
Corporation's Common Stock registered under the Securities Act of 1933, as
amended.
(j) "Plan" means the Syntel, Inc. Employee Stock Purchase Plan,
the terms of which are set forth herein, and amendments thereto.
(k) "Purchase Period" has the meaning described in Section 10(b)
below.
(l) "Stock Exchange" means the principal national securities
exchange on which the Common Stock is listed for trading or, if the Common
Stock is not listed for trading on a national securities exchange, such other
recognized trading market or quotation system upon which the largest number of
shares of Common Stock has been traded in the aggregate during the last 20
days before the date on which an Option is exercised.
(m) "Subsidiary" means a corporation defined in Code Section
424(f).
4 Stock. The stock subject to option and purchase under the Plan
shall be the Common Stock of the Corporation (the "Common Stock"), and may be
either authorized and unissued shares or shares that have been reacquired by
the Corporation. The total amount of Common Stock on which options may be
granted under the Plan shall not exceed 1,000,000 shares, subject to
adjustment in accordance with Section 14. Shares of Common Stock subject to
any unexercised portion of a terminated, canceled or expired option granted
under the Plan may again be subjected to options under the Plan.
5. Administration. The Plan shall be administered by the Committee.
The Committee may prescribe rules and regulations from time to time for the
administration of the Plan and may decide questions which may arise with
respect to its interpretation or application. The decisions of the Committee
in interpreting the Plan shall be final, conclusive and binding on all
persons, including the Corporation, its subsidiaries, Employees and optionees.
The Committee, from time to time via the offering of options to all eligible
Employees, shall grant to eligible Employees options to purchase Common Stock
pursuant to the terms and conditions of the Plan. The total number of options
to purchase Common Stock to be offered at any time hereunder shall be
determined by the Committee in its sole discretion.
6. Participants. Except as provided in Section 7 below, any Employee
who has completed six full months of service with the Corporation, or any
subsidiary of the Corporation, and whose customary employment is more than 20
hours per week and five or more months per calendar year on the various
offering dates of options granted under this Plan is eligible to participate
in the Plan in accordance with its terms.
7. Ownership and Purchase Limitations. Notwithstanding anything
herein to the contrary, no Employee shall be entitled to participate in an
offering under the Plan if such Employee, immediately after a grant under this
Plan, would, in the aggregate, own or hold options to purchase shares of
Common Stock equal to or exceeding five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or
of its Subsidiaries. For the foregoing purposes the rules of Section 424(d)
of the Code shall apply in determining stock ownership. With respect to
individual Employees, Section 424(d) provides that an Employee shall be
considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants. No Employee shall be granted an option under the Plan
which, together with options granted under all stock purchase plans (qualified
under Section 423 of the Code) of the Corporation and its Subsidiaries permits
the employee to accrue option rights in excess of $25,000 of Fair Market Value
of such shares (determined at the Grant Date) for each calendar year in which
an option is outstanding at any time.
8. Option Price. The option price of the shares shall be determined
at the discretion of the Committee for each grant; provided, however, that the
option price shall not be lower than the lesser of (i) 85% of the Fair Market
Value of shares of the Corporation's Common Stock on the Grant Date, or (ii)
85% of the Fair Market Value of the shares of the Corporation's Common Stock
on the date of exercise of the option. For purposes of this Plan, the date of
exercise shall be the last day of the Purchase Period.
9. Number of Shares Offered. The maximum number of shares of Common
Stock which each eligible Employee shall be entitled to purchase in a
particular offering of options shall be determined by the Committee and also
shall bear a uniform relationship to the Employee's cash compensation, as
defined below, subject to rounding down for fractional shares, as determined
from time to time by the Committee; provided, however, that the aggregate
option price for the number of shares of Common Stock that each eligible
Employee shall be entitled to purchase in a particular offering shall not
exceed a maximum of thirty percent (30%) of such Employee's cash compensation
during the Purchase Period. For purposes of this Plan, cash compensation
shall mean an Employee's total cash compensation during the Purchase Period,
excluding performance, hire-on and non-compete bonuses and any other
non-recurring special pay as determined by the Committee.
10. Payment for Option Shares.
(a) Shares Under Option. An eligible Employee may elect to
participate in an offering of options by delivering to the Corporation an
election to participate and a payroll deduction form within a certain period
of time after the offering date, which period shall be designated by the
Committee prior to each offering date (the "Election Period"). An Employee
who elects to participate may not authorize payroll deductions which, in the
aggregate, are less than one percent (1%) of the Employee's cash compensation.
Only whole shares of Common Stock may be purchased under the Plan.
(b) A participating Employee must authorize payroll deductions
over a period of six months next succeeding the Election Period or such other
period of time as designated by the Committee (the "Purchase Period");
provided, however, that no such Purchase Period shall extend beyond 27 months
from the Grant Date of the particular offering of options under the Plan to
which it relates. An Employee may suspend payroll deductions during a
Purchase Period only at the discretion of the Committee in the event of an
unforeseen hardship; provided, however, that payroll deductions made prior to
approval of the suspension by the Committee shall still be used to purchase
Common Stock for the Employee at the end of the Purchase Period.
(c) Payroll deductions shall commence on the first payroll date
in the Purchase Period and shall continue until the last payroll date in the
Purchase Period.
(d) A participating Employee's option shall be deemed to have
been exercised on the last business day of the Purchase Period.
(e) As soon as practicable after the end of the Purchase Period,
the Corporation shall deliver to each Employee or a designated brokerage
account, through a certificate or electronic transfer, the shares of Common
Stock that he has purchased. Any amount that has been deducted and withheld
in excess of the option price automatically shall be applied toward the
purchase of option shares in the next Purchase Period. An Employee who does
not elect to participate in the following Purchase Period shall receive a
check from the Corporation for any amount that has been deducted and withheld
in excess of the option price.
11. No Interest. No interest shall accrue or be paid on any amounts
paid by payroll deduction by any participating Employee.
12. Termination of Employment. If a participating Employee ceases to
be employed by the Corporation for any reason, including but not limited to,
voluntary or forced resignation, retirement, death, disability or lay-off, the
Corporation, within a reasonable time after notice of the termination, shall
issue a check to the former Employee (or executor, administrator or legal
representative, if applicable) in the aggregate amount of the Employee's
payroll deductions that had not been applied towards the purchase of option
shares as of the date of termination.
13. Non-Assignability. No option shall be transferable by a
participating Employee, and an option may be exercised during a participating
Employee's lifetime only by the Employee. Upon the death of a participating
Employee, his or her executor, administrator or other legal representative
shall receive a check from the Corporation representing the aggregate amount
of the deceased Employee's payroll deductions that had not been applied
towards the purchase of option shares as of the date of death.
14. Adjustments. The total amount of Common Stock for which options
may be issued under the Plan (both as to the number of shares of Common Stock
and the option price), shall be adjusted pro rata for any increase or decrease
in the number of outstanding shares of Common Stock resulting from payment of
a stock dividend on Common Stock, a subdivision or combination of shares of
Common Stock, or a reclassification of Common Stock, and, pursuant to the
paragraph below, in the event of a merger in which the Corporation shall be
the surviving corporation.
After any merger of one or more corporations into the Corporation, or
after any consolidation of the Corporation and one or more corporations in
which the Corporation shall be the surviving corporation, each participating
Employee shall, at no additional cost, be entitled upon the exercise of an
option, to receive (subject to any required action by shareholders), in lieu
of the number of shares of Common Stock to which such option shall then be
exercised, the number and class of shares of stock or other securities to
which such participating Employee would have been entitled to receive pursuant
to the terms of the agreement of merger or consolidation if at the time of
such merger or consolidation such participating Employee had been a holder of
record of a number of shares of Common Stock equal to the number of shares to
which such option shall then be so exercised. Comparable rights shall accrue
to each participating Employee in the event of successive mergers or
consolidations of the character described above.
Anything contained herein to the contrary, upon the dissolution or
liquidation of the Corporation or upon any merger or consolidation in which
the Corporation is not the surviving corporation, the Purchase Period for any
option granted under this Plan shall terminate as of the date of the
aforementioned event, but each participating Employee who is then an Employee
of the Corporation or a subsidiary shall have the right, immediately prior to
such dissolution, liquidation, merger or consolidation, to exercise his option
for such Purchase Period in full as of the last day of the Purchase Period.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion. Any
such adjustment may provide for the elimination of any fractional share which
might otherwise become subject to an option.
15. Termination and Amendment. The Board may terminate the Plan, or
the granting of options under the Plan, at any time. No option shall be
granted under the Plan after the tenth anniversary of the adoption of this
Plan by the Board, or approval by the shareholders, whichever is earlier, as
noted in Section 1.
The Board may amend or modify the Plan at any time and from time to
time, but no amendment or modification shall disqualify the Plan under Section
423 of the Code or under Securities and Exchange Commission Rule 16b-3 without
the approval of the shareholders of the Corporation.
No amendment, modification, or termination of the Plan shall in any
manner affect any option granted under the Plan without the consent of the
Employee holding the option.
16. Rule 16b-3 Requirements. Notwithstanding any other provision of
the Plan, the Committee may impose such conditions on the exercise of an
option as may be required to satisfy the requirements of Rule 16b-3, of the
Securities Exchange Act of 1934, as amended from time to time and any
successor thereto.
17. Rights Prior to Issuance of Shares. No participating Employee
shall have any rights as a shareholder with respect to shares covered by an
option until the issuance of a stock certificate or electronic transfer to the
Employee or his brokerage account of such shares. No adjustment shall be made
for dividends or other rights with respect to such shares for which the record
date is prior to the date the certificate is issued or the shares
electronically delivered to a brokerage account.
18. Securities Laws.
(a) Anything to the contrary herein notwithstanding, the
Corporation's obligation to sell and deliver Common Stock pursuant to the
exercise of an option is subject to such compliance with federal and state
laws, rules and regulations applying to the authorization, issuance or sale of
securities as the Corporation deems necessary or advisable. The Corporation
shall not be required to sell and deliver or issue Common Stock unless and
until it receives satisfactory assurance that the issuance or transfer of such
shares shall not violate any of the provisions of the Securities Act of 1933
or the Securities Exchange Act of 1934, or the rules and regulations of the
Securities Exchange Commission promulgated thereunder or those of the Stock
Exchange or any other securities exchange on which the Common Stock may be
listed, the provisions of any state laws governing the sale of securities, or
that there has been compliance with the provisions of such acts, rules,
regulations and laws.
(b) The Committee may impose such restrictions on any shares of
Common Stock acquired pursuant to the exercise of an option under the Plan as
it may deem advisable, including, without limitation, restrictions (i) under
applicable federal securities laws, (ii) under the requirements of the Stock
Exchange or any other securities exchange, recognized trading market, or
quotation system upon which such shares of Common Stock are then listed or
traded, and (iii) under any blue sky or state securities laws applicable to
such shares. No shares shall be issued until counsel for the Corporation has
determined that the Corporation has complied with all requirements under
appropriate securities laws.
19. Foreign Law Restrictions. Anything to the contrary herein
notwithstanding, the Corporation's obligation to sell and deliver Common Stock
pursuant to the exercise of an option is subject to compliance with the laws,
rules and regulations of any foreign nation applying to the authorization,
issuance or sale of securities, providing of compensation, transfer of
currencies and other matters, as may apply to any participating Employee
hereunder who is a resident of such foreign nation. To the extent that it
shall be impermissible under such foreign laws for such a Participant to pay
the exercise price for any option granted under the Plan or for the
Corporation to deliver Common Stock to any such Participant pursuant to any
option granted under the Plan, the Committee shall refund to such Employee the
aggregate amount of the payroll deductions made pursuant to this Plan (to the
extent such amounts have not previously been applied towards the purchase of
option shares, in accordance with all applicable United States and foreign
currency restrictions and regulations. To the extent that the Corporation is
restricted in accordance with such foreign laws from delivering shares of
Common Stock to participating Employees as would otherwise be provided for in
this Plan, the Corporation shall be released from such obligation and shall
not be subject to the claims of any Employee hereunder with respect thereto.
20. Approval of Plan. As noted in Section 1, the Plan has been
approved by the shareholders of the Corporation within 12 months of adoption
of the Plan by the Board, as required by Section 423 of the Code.
21. Effect on Employment. Neither the adoption of the Plan nor the
granting of an option pursuant to it shall be deemed to create any right in
any individual to be retained or continued in the employment of the
Corporation or a Subsidiary.
22. Use of Proceeds. The proceeds received from the sale of Common
Stock pursuant to the Plan will be used for general corporate purposes of the
Corporation.
23. Effective Date. This Plan shall automatically become effective on
the date upon which an Initial Public Offering of the Corporation's Common
Stock becomes effective, and no option shall be granted pursuant to this Plan
prior to such date.
IN WITNESS WHEREOF, this Syntel, Inc. Employee Stock Purchase Plan has
been executed on behalf of the Corporation on this the 1st day of April, 1997.
SYNTEL, INC.
By: /s/ BHARAT DESAI
Bharat Desai, President
We hereby consent to the incorporation by reference in the Registration
Statement of Syntel, Inc. on Form S-8 of our report dated February 18, 1998,
on our audits of the consolidated financial statements of Syntel, Inc. as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996
and 1995, which appears on page F-2 of the Annual Report on Form 10-K of
Syntel, Inc. for the year ended December 31, 1997.
/S/ COOPERS & LYBRAND L.L.P.
Detroit, Michigan
April 2, 1998
