<PAGE>
Exhibit 10.4
VIRTUSA CORPORATION
2000 STOCK OPTION PLAN
AMENDED & RESTATED AS OF APRIL 17, 2002
1. PURPOSES OF
THE PLAN.
The
purposes of this 2000 Stock Option Plan of Virtusa Corporation,
a
Delaware corporation (the "Company"), are to promote the interests
of the
Company and its stockholders by strengthening the Company's ability
and that of
its Subsidiaries to attract, motivate, and retain employees,
directors,
Consultants and advisors of exceptional ability and to provide a
means to
encourage stock ownership and a proprietary interest in the Company
to selected
employees, directors, Consultants and advisors of the Company upon
whose
judgment, initiative, and efforts the financial success and growth
of the
business of the Company largely depend.
2.
DEFINITIONS.
(a) "Acquisition " means
(i) a merger, reorganization or consolidation between the
Company
and another person or entity (other than a holding company or
Parent
or Subsidiary of the Company) as a result of which the holders of
the
Company's outstanding voting stock immediately prior to the
transaction hold less than a majority of the outstanding voting
stock
of the surviving entity immediately after the transaction,
(ii) the sale, transfer, or other disposition of all or
substantially all of the Company's assets to one or more
persons
(other than any wholly owned Subsidiary) in a single transaction
or
series of related transactions, or
(iii) the direct or indirect sale or exchange in a single or
series of
related transactions by the stockholders of the Company of
more than 50% of all of the Common Stock of the Company to an
unrelated person or entity as a result of which the holders of
the
Company's outstanding voting stock immediately prior to the
transaction hold less than a majority of the outstanding voting
stock
of the surviving entity immediately after the transaction.
(b) "Act" means the Securities Act of 1933, as amended.
(c) "Award" or "Awards" shall include Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock, and Unrestricted
Stock, or
any
combination of the forgoing.
(d) "Board" means the Board of Directors of the Company or its
successor entity.
<PAGE>
-2-
(e) "Code" means the Internal Revenue Code of 1986, as amended,
and
related rules, regulations and interpretations.
(f) "Committee" means the Compensation Committee of the Board;
provided, that the Board by resolution duly adopted may at any time
or from
time
to time determine to assume any or all of the functions of the
Committee under the Plan, and during the period of effectiveness of
any
such
resolution, references herein to the "Committee" shall mean the
Board
acting in such capacity.
(g) "Common Stock" means the common stock of the Company, par
value
$.01
per share.
(h) "Company has the meaning specified in Section 1.
(i) "Consultant" means a person engaged to provide consulting
or
advisory services (other than as an employee or director) to the
Company or
its
Subsidiaries, provided that the identity of such person, the nature
of
such
services or the entity to which such services are provided would
not
preclude the Company from offering or selling securities to such
person
pursuant to the Plan in reliance on either the exemption from
registration
provided by Rule 701 under the Act or, if the Company is required
to file
reports pursuant to Section 13 or 15(d) of the Exchange Act,
registration
on a
Form S-8 Registration Statement under the Act.
(j) "Covered Employee " has the meaning specified in Section
4(b).
(k) "Eligible Person" means any person who is an employee
(including
officers and employee directors), director, Consultant or advisor
of the
Company or any Subsidiary.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as
amended and in effect from time to time.
(m) "Fair Market Value" means the value of a share of Common Stock
as
of
the relevant time of reference, as determined in good faith by
the
Committee without regard to any restriction other than a
restriction which,
by
its terms, will never lapse; provided, however: (i) if the Common
Stock
is
then traded on a national securities exchange, the Fair Market
Value on
any
given date shall not be less than the last reported closing price
of a
share of Common Stock on such securities exchange; (ii) if the
Common Stock
is
then traded on the Nasdaq National Market System, the Fair Market
Value
on
any given date shall not be less than the last reported closing
price of
the
Common Stock as reported on such system; or (iii) if the Common
Stock
is
admitted to quotation on the Nasdaq National Market System, the
Fair
Market Value on any given date shall not be less than the average
of the
highest bid and lowest asked prices for the Common Stock reported
for such
date
or, if no bid and asked prices were reported for such date, for
the
last
day preceding such date for which such prices were reported;
provided
further that, if the date for which the Fair Market Value is
determined is
the
first
<PAGE>
-3-
day
when trading prices for the Common Stock are reported on the
Nasdaq
National Market System or trading on a national securities
exchange, the
Fair
Market Value shall be the "Price to the Public" (or its
equivalent)
set
forth on the cover page for the final prospectus relating to
the
Company's Initial Public Offering. After the Initial Public
Offering, if
the
relevant date does not fall on a day on which the Common Stock
has
traded on the Nasdaq National Market System or on a national
securities
exchange or market, the date on which the Fair Market Value shall
be
established shall be the last day on which the Common Stock was so
traded
prior to the relevant Date, or such other appropriate day as shall
be
determined by the Committee, in its discretion.
(n) "Incentive Stock Option" means an option designated and
intended
to
qualify as an "incentive stock option" under Section 422(b) of the
Code.
(o) "Initial Public Offering" means the consummation of the
first
fully underwritten, firm commitment public offering pursuant to
an
effective registration statement under the Act, other than on Forms
S-4 or
S-8
or their then equivalents, covering the offer and sale by the
Company
of
its equity securities or such other event as a result of or
following
which the stock shall be publicly held.
(p) "Nonqualified Stock Option" means an Option that is not
designated
as
an Incentive Stock Option or which does not qualify as an
Incentive
Stock Option.
(q) "Option" means an Incentive Stock Option or a Nonqualified
Stock
Option.
(r) "Option Agreement" means a written agreement between the
Company
and
a Participant setting forth the terms, conditions and restrictions
of
the
Option granted to the Participant and any shares of Common
Stock
acquired upon the exercise thereof. An Option Agreement may consist
of a
"Notice of Grant of Stock Option" and a form of "Stock Option
Agreement"
incorporated therein by reference, or such other form or forms as
the
Committee may approve from time to time.
(s) "Outside Director" has the meaning specified in Section
4(b).
(t) "Parent" means any parent of the Company as defined in
Section
424(e) of the Code.
(u) "Participant" means any Eligible Person selected to receive
an
Option pursuant to Section 5 or any Permitted Transferee.
(v) "Permitted Transferee" means any member of a Participant's
immediate family, a trust for the benefit of such family members,
a
partnership in which such family members are the only partners, or
a
limited liability company in which such family members are the
only
members.
(w) "Plan" means this 2000 Stock Option Plan as set forth herein
and
as
amended and/or restated from time to time.
<PAGE>
-4-
(x) "Restricted Stock" has the meaning specified in Section
7(a).
(y) "Restricted Stock Agreement" means a written agreement between
the
Company and a Participant setting forth the terms, conditions
and
restrictions of an award of Restricted Stock granted to the
Participant and
any
shares of Common Stock subject thereto.
(z) "Section 260.140.45" has the meaning specified in Section
3(d).
(aa)
"Service Relationship" means a Participant's employment or
service with the Company or its Subsidiary, whether in the capacity
of an
employee, director or a Consultant. Unless otherwise determined by
the
Committee, a Participant's Service Relationship shall not be deemed
to have
terminated merely because of a change in the capacity in which
the
Participant renders service to the Company or a transfer between
locations
of
the Company or its Subsidiaries or a transfer between the Company
and
any
Subsidiary, provided that there is no interruption or other
termination
of
the Service Relationship. Subject to the foregoing and Section 10
below,
the
Company, in its discretion, shall determine whether the
Participant's
Service Relationship has terminated and the effective date of
such
termination.
(bb) "Subsidiary" means any subsidiary of the Company as defined
in
Section 424(f)of the Code.
(cc) "Unrestricted Stock" has the meaning specified in Section
8(a).
(dd) "10% Owner Optionee" means an individual who owns or is deemed
to
own
(by reason of the attribution rules of Section 424(b) of the Code)
more
than
10% of the combined voting power of all classes of stock of the
Company or any Parent or Subsidiary.
3. SHARES OF
COMMON STOCK SUBJECT TO THE PLAN.
(a) Subject to adjustment in accordance with the provisions of
Section
11
below, the maximum aggregate number of shares of Common Stock
reserved
and
available for issuance under the Plan shall be 6,000,000
shares.
(b) The shares of Common Stock to be delivered under the Plan will
be
made
available, at the discretion of the Committee, from authorized
but
unissued shares of Common Stock and/or from previously issued
shares of
Common Stock reacquired by the Company.
(c) For purposes of the limitation set forth in Section 3(a)
above,
the
shares of Common Stock underlying any Award which is forfeited,
canceled, reacquired by the Company, satisfied without the issuance
of
Common Stock or otherwise terminated (other than by exercise) shall
be
added back to the shares of Common Stock available for issuance
under the
Plan.
<PAGE>
-5-
(d) Notwithstanding the foregoing, at any time that the offer and
sale
of
securities pursuant to the Plan is subject to the compliance
with
Section 260.140.45 of Title 10 of the California Code of
Regulations
("Section 260.140.45"), the total number of shares of Common Stock
issuable
upon
the exercise of all outstanding Awards (together with options,
restricted stock or unrestricted stock outstanding under any other
stock
option plan of the Company) and the total number of shares of
Common Stock
provided for under any stock bonus or similar plan of the Company
shall not
exceed thirty percent (30%) (or such higher percentage limitation
as may be
approved by the stockholders of the Company pursuant to Section
260.140.45)
of
the then outstanding shares of the Company as calculated in
accordance
with
the conditions and exclusions of Section 260.140.45.
4.
ADMINISTRATION OF THE PLAN.
(a) The Plan will be governed by and interpreted and construed
in
accordance with the internal laws of the State of Delaware
(without
reference to principles of conflicts or choice of law). The
captions of
sections of the Plan are for reference only and will not affect
the
interpretation or construction of the Plan.
(b) The Plan will be administered by the Committee, which shall
consist of not less than two directors; provided, however, that if
each
member of the Committee is not a "Non-Employee Director" within the
meaning
of
Rule 16b-3(a)(3) of the Exchange Act, then any Awards granted
to
individuals subject to the reporting requirements of Section 16 of
the
Exchange Act shall be approved by the Board. Notwithstanding the
foregoing,
after the end of the reliance period as defined in Treasury
Regulation
1.162-27(f) following the Company's Initial Public Offering, Awards
granted
to
"Covered Employees" which might reasonably be anticipated to result
in
the
payment of employee remuneration that would otherwise exceed the
limit
on
employee remuneration deductible for income tax purposes pursuant
to
Section 162(m) of the Code shall be approved by a Committee
composed solely
of
two or more "Outside Directors" (each within the meaning of
Section
162(m) of the Code).
(c) The Committee has and may exercise such powers and authority
as
may
be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. The Committee shall make
all
determinations required under the Plan, including the Eligible
Persons to
whom, and the time or times at which, Awards may be granted, the
exercise
price or purchase price (if any) of each Award, whether each Option
is
intended to qualify as an Incentive Stock Option or a Nonqualified
Stock
Option, and the number of shares subject to each Award. The
Committee also
has
authority (i) to interpret the Plan, (ii) to determine the terms
and
provisions of the Awards, (iii) to determine and modify from time
to time
the
terms and conditions, including restrictions, not inconsistent with
the
terms of the Plan, of any Award, which terms and conditions may
differ
among individual Awards and Participants, (iv) to approve the form
of
written agreements evidencing the Awards, and (v) to make all
other
determinations necessary or advisable for Plan administration.
The
Committee has authority to prescribe, amend, and
<PAGE>
-6-
rescind rules and regulations relating to the Plan. All
interpretations,
determinations, and actions by the Committee will be final,
conclusive, and
binding upon all parties.
(d) No member of the Committee will be liable for any action taken
or
determination made in good faith by the Committee with respect to
the Plan
or
any Awards granted under it.
(e) The Committee, in its discretion, may delegate to the Chief
Executive Officer, President and/or the Chief Financial Officer of
the
Company all or part of the Committee's authority and duties with
respect to
the
granting of Awards at Fair Market Value to individuals who are
not
subject to the reporting and other provisions of Section 16 of the
Exchange
Act
or Covered Employees. The Committee may revoke or amend the terms
of a
delegation at any time but such action shall not invalidate any
prior
actions of the Committee's delegate or delegates that were
consistent with
the
terms of the Plan.
5. GRANTS.
(a) The Committee shall determine and designate from time to
time
those Eligible Persons who are to be granted Awards, the type of
Award to
be
granted and the number of shares covered thereby or issuable
upon
exercise thereof. Each Award will be evidenced by a written
agreement which
shall be in such form as the Committee may from time to time
approve;
provided that, agreements issued to Eligible Persons need not be
identical.
(b) Awards may be granted to employees, directors, Consultants
and
advisors of the Company and its Subsidiaries (including
prospective
employees, directors, Consultants and advisors to whom Awards are
granted
in
connection with written offers of employment or other service with
the
Company or its Subsidiaries) who are responsible for, or contribute
to, the
management, growth or profitability of the Company and its
Subsidiaries as
are
selected from time to time by the Committee, in its sole
discretion.
(c) No 10% Owner Optionee will be eligible for the grant of an
Incentive Stock Option; provided that, if at the time such
Incentive Stock
Option is granted, its exercise price is at least 110% of the Fair
Market
Value of the Common Stock and, by its terms, it is not exercisable
after
the
expiration of five years from the date of grant, then such 10%
Owner
Optionee may be granted an Incentive Stock Option.
(d) Incentive Stock Options may be granted only to employees of
the
Company or any Subsidiary; provided, however, an Incentive Stock
Option may
be
granted to a prospective employee upon the condition that such
person
becomes an employee and such grant shall be deemed granted
effective on the
date
that such person commences service with the Company or its
Subsidiaries, with an exercise price determined as of such date
in
accordance with Sections 5(c) and 6(a).
(e) No Incentive Stock Options shall be granted under the Plan
after
May
4, 2010.
<PAGE>
-7-
6. TERMS AND
CONDITIONS OF OPTIONS.
(a) Subject to Section 5(c) and 5(d) above, the price at which
Common
Stock may be purchased by a Participant under an Option shall be
determined
by
the Committee; provided, however, that the exercise price under
an
Incentive Stock Option shall not be less than 100% of the Fair
Market Value
of
the Common Stock on the date of grant of such Option.
Notwithstanding
the
foregoing, an Incentive Stock Option may be granted with an
exercise
price lower than the minimum exercise price per share set forth
herein and
in
Sections 5(c) and 5(d) above if the Incentive Stock Option is
granted
pursuant to an assumption or substitution for another option in a
manner
qualifying under Section 424(a) of the Code.
(b) Each Option shall be exercisable at such time or times,
during
such
periods, and for such numbers of shares as shall be determined by
the
Committee and set forth in the applicable Option Agreement
evidencing the
Option. A Participant shall have no rights of a stockholder with
respect to
any shares covered by
an Option until the date of the issuance of a
certificate for the shares for which the Option has been exercised
(as
evidenced by an appropriate entry on the books of the Company or of
a duly
authorized transfer agent of the Company). No adjustment shall be
made for
dividends, distributions or other rights which the record date is
prior to
the
date such certificate is issued, except as provided in Section
11
below. Subject to Section 5(c) above, the term of each Option shall
expire
no
later than the 10th anniversary of its date of grant.
(c) Options may be exercised in whole or in part, by giving
written
notice of exercise to the Company, specifying the number of shares
of
Common Stock to be purchased. Payment of the exercise price may be
made by
one
or more of the following methods to the extent provided in the
Option
Agreement:
(A) in cash, by certified or bank check, or other instrument
acceptable to the Committee in U.S. funds payable to the order
of
the Company;
(B) if permitted by the Committee in its sole and absolute
discretion (x) at the time of grant if the Option is an
Incentive
Stock Option or (y) at any time if the Option is a Nonqualified
Stock Option, by the Participant delivering to the Company a
promissory note (which may be recourse or partially recourse to
the Participant) in a form approved by the Committee; provided
that at least so much of the exercise price as represents the
par
value of the Common Stock shall be paid other than with a
promissory note if otherwise required by state law;
(C) after the closing of the Company's Initial Public
Offering, if permitted by the Committee, (x) through the
delivery
(or attestation to ownership) of shares of Common Stock held by
the Participant for the requisite period necessary to avoid a
charge to the Company's earnings for financial reporting
purposes
and valued at Fair Market Value on the
<PAGE>
-8-
exercise date, or (y) by the Participant delivering to the
Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company
to
pay the exercise price; provided that, in the event the
Participant chooses such payment procedure, the Participant and
the broker shall comply with such procedures and enter into
such
agreements of indemnity and other agreements as the Committee
shall prescribe as a condition of such payment procedure; or
(D) any combination of the payment methods set forth in
clauses (A), (B), and (C) above.
Payment instruments will be received subject to collection. No
certificates for shares of Common Stock so purchased will be issued
to the
Participant until the Company has completed all steps required by
law to be
taken in connection with the issuance and sale of such shares,
including,
without limitation, obtaining from Participant payment or provision
for all
withholding taxes due as a result of the exercise of the Option.
The
delivery of certificates representing the shares of Common Stock to
be
purchased pursuant to the exercise of an Option will be contingent
upon
receipt from the Participant (or a purchaser acting in his or her
stead in
accordance with the provisions of the Option) by the Company of the
full
exercise price for such shares and the fulfillment of any other
requirements contained in the Option Agreement or applicable
provisions of
law.
If the Participant chooses to pay the exercise price by delivery
of
previously owned shares of Common Stock by the attestation method
set forth
in
clause (C)(x) above, the shares of Common Stock transferred to
the
Participant upon the exercise of the Option shall be net of the
number of
the
shares of Common Stock delivered.
(d) To the extent that the aggregate Fair Market Value (determined
as
of
the date the Incentive Stock Option is granted) of the number of
shares
of
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant in any calendar
year (under
all
option plans of the Company, its Parent and/or its
Subsidiaries)
exceeds $100,000 (or such other limit as may be required by the
Code) such
Incentive Stock Options shall constitute Nonqualified Stock
Options. For
purposes of this Section 6(d), Incentive Stock Options shall be
taken into
account in the order in which they were granted. If pursuant to the
above,
an
Incentive Stock Option is treated as an Incentive Stock Option in
part
and
a Nonqualified Stock Option in part, the Participant may
designate
which portion of the Option the Participant is exercising. In the
absence
of
such designation, the Participant shall be deemed to have exercised
the
Incentive Stock Option portion of the Option first.
(e) No Option shall be transferable by a Participant otherwise than
by
will
or by the laws of descent and distribution and all Options shall
be
exercisable, during a Participant's lifetime, only by the
Participant, or,
in
the event of the Participant's incapacity, by the Participant's
legal
representative or guardian. Notwithstanding the foregoing, the
Committee,
in
its sole discretion, may provide in the Option Agreement
<PAGE>
-9-
regarding a given Nonqualified Option that a Participant may
transfer,
without consideration for the transfer, his or her Nonqualified
Stock
Option to any Permitted Transferee; provided that such Permitted
Transferee
agrees in writing with the Company to be bound by all of the terms
and
conditions of this Plan and the applicable Option Agreement.
(f) Shares of Common Stock issued pursuant to Options may be
subject
to a
right of first refusal, one or more repurchase options, or
other
conditions and restrictions as determined by the Committee and set
forth in
the
applicable Option Agreement. The Company shall have the right to
assign
to
any person at any time any repurchase right it may have, whether or
not
such
rights is then exercisable.
7. RESTRICTED
STOCK AWARDS.
(a) The Company may, pursuant to an Award of Restricted Stock,
sell,
at
par value or such greater purchase price as determined by the
Committee,
in
its sole discretion, shares of Common Stock subject to such
restrictions
and
conditions as the Committee may determine at the time of grant,
which
purchase price shall be payable in cash or, if permitted by the
Committee
at
the time of grant of such Award, by promissory note (which may
be
recourse or partially recourse to the Participant), in a form
approved by
the
Committee; provided that, at least so much of the purchase price
as
represents the par value of the Stock shall be paid other than with
a
promissory note if required by state law. Conditions may be based
on
continuation of a Service Relationship and/or achievement of
pre-established performance goals and objectives or such other
terms as may
be
determined by the Committee in its sole discretion. The grant
of
Restricted Stock is contingent on the Participant executing a
Restricted
Stock Agreement. The terms and conditions of each such Restricted
Stock
Agreement shall be determined by the Committee and such terms
and
conditions may differ among individual Awards and Participants.
(b) Upon execution of the Restricted Stock Agreement and payment
of
any
applicable purchase price, a Participant shall have the rights of
a
stockholder with respect to the voting of the Restricted Stock,
subject to
any
conditions contained in the Restricted Stock Agreement. Unless
the
Committee shall otherwise determine, certificates evidencing the
Restricted
Stock shall remain in the possession of the Company until such
Restricted
Stock is vested as provided in Section 7(d) below, and the
Participant
shall be required, as a condition of the grant, to deliver to the
Company a
stock power endorsed in blank.
(c) Restricted Stock may not be sold, assigned, transferred,
pledged
or
otherwise encumbered or disposed of except as specifically
provided
herein or in the Restricted Stock Agreement. Shares of Common Stock
issued
pursuant to an award of Restricted Stock may be subject to a right
of first
refusal, one or more repurchase options, or other conditions
and
restrictions as determined by the Committee and set forth in the
applicable
Restricted Stock Agreement. The Company shall have the right to
assign to
<PAGE>
-10-
any
person at any time any repurchase right it may have, whether or
not
such
right is then exercisable.
(d) The Committee at the time of grant shall specify the date or
dates
and/or the attainment of pre-established performance goals,
objectives and
other conditions on which Restricted Stock shall become vested,
subject to
such
further rights of the Company or its assigns as may be specified
in
the
Restricted Stock Agreement.
(e) The Restricted Stock Agreement may require or permit the
immediate
payment, waiver, deferral or investment of dividends paid on the
Restricted
Stock..
8. UNRESTRICTED
STOCK AWARDS.
(a) The Committee may, in its sole discretion, grant or sell an
Unrestricted Stock Award to any Participant, pursuant to which
such
Participant may receive
shares of Common Stock free of any vesting
restrictions ("Unrestricted Stock") under the Plan. Unrestricted
Stock
Awards may be granted or sold as described in the preceding
sentence in
respect of past services or other valid consideration.
(b) The right to receive shares of Unrestricted Stock on a
deferred
basis may not be sold, assigned, transferred, pledged or
otherwise
encumbered, other than by will or the laws of descent and
distribution.
9. TAX
WITHOLDING.
(a) Each Participant shall, no later than the date as of which
the
value of an Award or of any Common Stock or other amounts
received
thereunder first becomes includable in the gross income of the
Participant
for
federal income tax purposes, pay to the Company, or make
arrangements
satisfactory to the Committee regarding payment of, any federal,
state,
foreign, or local taxes of any kind required by law to be withheld
with
respect to such income. The Company and its Subsidiaries shall, to
the
extent permitted by law, have the right to deduct any such taxes
from any
payment of any kind otherwise due to the Participant.
(b) Subject to approval by the Committee, a Participant may elect
to
have
the minimum required tax withholding obligation satisfied, in whole
or
in
part, by (i) authorizing the Company to withhold from shares of
Common
Stock to be issued pursuant to any Award a number of shares with
an
aggregate Fair Market Value (as of the date the withholding is
effected)
that
would satisfy the withholding amount due, or (ii) transferring to
the
Company shares of Common Stock owned by the Participant with an
aggregate
Fair
Market Value (as of the date the withholding is effected) that
would
satisfy the withholding amount due. The Fair Market Value of any
shares of
Common Stock withheld or tendered to satisfy any such tax
withholding
obligation shall not exceed the amount determined by the applicable
minimum
statutory withholding rates.
10. LEAVE OF
ABSENCE.
<PAGE>
-11-
For purposes of the vesting and exercisability of Awards under
the
Plan
an approved leave of absence for military service or sickness, or
for
any
other purpose approved by the Company shall not be deemed a
termination
of
the Service Relationship; provided, however, that if any such
leave
exceeds ninety (90) days, on the ninety-first (91st) day of such
leave, the
Participant's Service Relationship shall be deemed to have
terminated
unless the Participant's right to return to service is guaranteed
either by
a
statute or by contract. Further, an approved leave of absence
for
maternity or, in the Company's sole discretion, a medical reason,
shall be
treated as service for purposes of determining vesting under
the
Participant's Option Agreement or Restricted Stock Agreement;
provided
that, if any such leave exceeds 12 weeks, then beginning on the
first day
of
the 13th week, such leave shall not be treated as service for
purposes
of
vesting (i.e., the vesting schedule shall be tolled for the period
of
the
leave of absence beyond 12 weeks). Notwithstanding anything
stated
herein, unless otherwise designated by the Company or required by
law, any
other leave of absence shall not be treated as service for purposes
of
vesting.
11. ADJUSTMENT
PROVISIONS.
(a) Subject to Section 11(b), if the outstanding shares of
Common
Stock of the Company are increased, decreased, or exchanged for a
different
number or kind of shares or other securities, or if additional
shares or
new
or different shares or other securities are distributed with
respect to
such
shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all the property of
the
Company, reorganization, recapitalization, reclassification,
stock
dividend, stock split, reverse stock split, or other distribution
with
respect to such shares of Common Stock, or other securities, an
appropriate
and
proportionate adjustment shall be made in (i) the maximum number
of
shares reserved for issuance under the Plan, (ii) the numbers and
kinds of
shares or other securities subject to the then outstanding Awards,
(iii)
the
exercise price and/or repurchase price for each share subject to
then
outstanding Options (without change in the aggregate exercise price
and/or
repurchase price as to which such Options remain exercisable), and
(iv) the
repurchase price per share for each outstanding Restricted Stock
Award);
provided that, such exercise and/or repurchase price may not be
less than
the
par value of the Common Stock.
(b) Upon the effectiveness of an Acquisition:
(i) except with respect to specific Awards as the Committee
otherwise determines at the time of grant and as set forth
therein,
all shares subject to outstanding Awards not otherwise accelerated
and
vested under the terms of the original grant, to the extent not
assumed by the acquiring entity or replaced by comparable options
to
purchase shares of the capital stock of the successor or
acquiring
entity or parent thereof (the determination of comparability to
be
made by the Committee, which determination shall be final,
binding,
and conclusive) (an "Assumption") shall, subject to and
conditioned
upon the effectiveness of the Acquisition, become vested and
exercisable in full 10 days prior to the anticipated effective date
of
the Acquisition as determined by the Committee, except with
<PAGE>
-12-
respect to specific Awards as the Committee otherwise determines
at
the time of grant; and
(ii) unless there is an Assumption, the Plan and all
outstanding
Options shall terminate upon the effectiveness of the
Acquisition.
(c) In the event that Options are terminated pursuant to Section
1
l(b)(ii) above, each Participant shall be permitted to exercise for
a
period of at least 10 days prior to the anticipated effective date
of such
Acquisition all outstanding Options held by such Participant which
are then
vested and exercisable (after giving effect to the acceleration of
vesting
provided for in connection with the Acquisition); provided,
however: (i)
the
exercise of the portion of such Options that became vested and
exercisable in connection with the Acquisition shall be subject to
and
conditioned upon the effectiveness of the Acquisition, and (ii)
the
Participant may, but will not be required to, condition the
exercise of any
portion of an Option not described in (i) above upon the
effectiveness of
the
Acquisition.
(d) Following the effectiveness of an Assumption, the unvested
portion
of all outstanding Awards,
if any, shall continue to vest in accordance
with
the vesting schedule set forth in such Awards, in the same
proportions
and
on the same dates as the shares of Common Stock would have vested
had
there been no acceleration of vesting (i.e. if 25% of the original
shares
of
Common Stock subject to the Award would have vested on a specified
date,
then
25% of the original shares of Common Stock subject to the Award,
less
the
number of shares of Common Stock that would have vested on that
date
but
which accelerated in connection with the Acquisition, shall vest
on
such
specified date) and all such Awards shall otherwise be adjusted
as
provided in Section 11(a) above.
(e) Adjustments under this Section 11 will be made by the
Committee,
whose determination as to what adjustments will be made and the
extent
thereof so as to effectuate the intent of this Section 11 will be
final,
binding, and conclusive. No fractional shares will be issued under
the Plan
on
account of any such adjustments, but the Committee, in its
discretion,
may
either make a cash payment in lieu of fractional shares or round
any
resulting fractional share down to the nearest whole number.
(f) In the event of a dissolution or liquidation of the Company,
any
outstanding Options issued under the Plan shall be terminated if
not
exercised prior to such event.
(g) The Committee may grant Awards under the Plan in substitution
for
stock and stock based awards held by employees, directors or
consultants of
another company in connection with a merger or consolidation of
such
company with the Company (or its Parent or any Subsidiary) or
the
acquisition by the Company (or its Parent or any Subsidiary) of
property or
stock of such company. The Committee may direct that the substitute
Awards
be
granted on such terms and conditions as the Committee considers
appropriate in the circumstances. Any substitute Awards granted
under the
Plan
shall not count against the share limitation set forth in Section
3
(a)
above.
<PAGE>
-13-
12. ADDENDUM A:
CALIFORNIA GRANTEES.
Addendum A attached hereto shall be incorporated by reference in
its
entirety and shall only be applicable to the grant of Awards under
the Plan
to
Participants who are located in or providing services to the
Company or
one
of its Subsidiaries in the State of California.
13. GENERAL
PROVISIONS.
(a) Nothing contained in this Plan shall prevent the Committee
from
adopting other or additional compensation arrangements and such
arrangements as may be either generally applicable or applicable
only in
specific cases. Nothing in the Plan or in any instrument executed
pursuant
to
the Plan will confer upon any Participant any right to
continued
employment or service with the Company or any of its Subsidiaries
or affect
the
right of the Company or any Subsidiary to terminate the
employment,
directorship or consulting or advising relationship of any
Participant at
any
time, with or without cause.
(b) The grant of Awards and the issuance of shares of Common
Stock
upon
exercise of Awards shall be subject to compliance with all
applicable
requirements of federal, state and foreign law with respect to
such
securities. Options may not be exercised if the issuance of shares
of
Common Stock upon exercise would constitute a violation of any
applicable
federal, state or foreign securities laws or other law or
regulations or
the
requirements of any stock exchange or market system upon which
the
Common Stock may then be listed. In addition, no Option may be
exercised
unless: (a) a registration statement under the Act shall at the
time of
exercise of the Option be in effect with respect to the shares of
Common
Stock issuable upon exercise of the Award, or (b) in the opinion of
legal
counsel to the Company, the shares of Common Stock issuable upon
exercise
of
the Award may be issued in accordance with the terms of an
applicable
exemption from the registration requirements of the Act. The
inability of
the
Company to obtain from any regulatory body that has jurisdiction,
the
authority, if any, deemed by Company's legal counsel to be
necessary to the
lawful issuance and sale of any shares hereunder shall relieve the
Company
of
any liability in respect of the failure to issue or sell such
shares as
to
which such requisite authority shall not have been obtained. As
a
condition to the exercise of any Award, the Company may require
the
Participant to satisfy any qualifications that may be necessary
or
appropriate, to evidence compliance with any applicable law or
regulation
and
to make any representation or warranty with respect thereto as may
be
requested by the Company.
(c) Stock certificates issued under this Plan shall be deemed
delivered for all purposes when the Company or a stock transfer
agent of
the
Company shall have mailed such certificates in the United States
mail,
addressed to the Participant, at the Participant's last known
address on
file
with the Company.
(d) Sale of Common Stock received pursuant to this Plan or upon
exercise of an Award under the Plan shall be subject to any
insider-trading-policy-related restrictions,
<PAGE>
-14-
terms and conditions as may be established by the Committee, or
in
accordance with policies set by the Committee, from time to
time.
(e) In the event of a conflict between the terms and provisions
of
this
Plan and the terms and provisions of any Restricted Stock Agreement
or
Option Agreement, the terms and provisions of this Plan shall
govern.
14. AMENDMENT AND
TERMINATION.
(a) The Board shall have the power, in its discretion, to
amend,
modify, suspend, or terminate the Plan at any time, subject to
applicable
law
and the rights of holders of outstanding Options on the date of
such
action. No amendment, modification, suspension or termination of
the Plan
shall affect any outstanding Award unless expressly provided
hereunder or
as
determined by the Board. Further, no such amendment,
modification,
suspension or termination of the Plan, unless taken with the
approval of
the
stockholders of the Company, may: (a) increase the maximum number
of
shares of Common Stock for which Awards granted under this Plan may
be
issued (except by operation of Section 11(a)); (b) alter the class
of
employees eligible to receive Incentive Stock Options under the
Plan; or
(c)
amend the Plan in any other manner which the Board, in its
discretion,
determines would require approval of the stockholders under any
applicable
law,
rule or regulation to become effective even though such
stockholder
approval is not expressly required by this Plan. Nothing in this
Section
14(a) shall limit the Board's or Committee's authority to take any
action
permitted pursuant to Section 11(b).
(b) No amendment, suspension or termination of the Plan will,
without
the
consent of the Participant, adversely affect any right or
obligation
under any Award previously granted to such Participant under the
Plan
unless (i) required to ensure that an Option is treated as an
Incentive
Stock Option or (ii) to comply with applicable law.
15. EFFECTIVE DATE OF
PLAN AND DURATION OF PLAN.
The
Plan became effective upon its adoption by the Board and by the
Company's stockholders on May 5, 2000. The Plan shall continue in
effect until
the earlier of: (i) its termination by the Board, (ii) the date on
which all of
the shares of Common Stock available for issuance under the Plan
have been
issued and all restrictions on such shares under the terms of the
Plan and the
applicable Option Agreements and Restricted Stock Agreements have
lapsed, or
(iii) May 4, 2010.
<PAGE>
FORM--US EMPLOYEE VERSION
STOCK OPTION AGREEMENT
UNDER THE
VIRTUSA CORPORATION 2000 STOCK OPTION PLAN
Pursuant to the Virtusa Corporation 2000 Stock Option Plan (the
"Plan"),
Virtusa Corporation, a Delaware corporation (together with its
successors, the
"Company"), hereby grants to the person (the "Grantee") named in
the Notice of
Grant of Stock Option attached hereto (the "Notice") to which this
Stock Option
Agreement (the "Option Agreement") is attached, an option (together
with the
Notice, referred to herein as the "Option") to purchase on or prior
to the
expiration date specified in the Notice (the "Expiration Date"), or
such earlier
date as is specified herein, all or any part of the number of
shares of Common
Stock of the Company indicated in the Notice (the "Option Shares"
and such
shares once issued shall be referred to as the "Issued Shares"), at
the exercise
price per share specified in the Notice (the "Exercise Price") and
subject to
the terms and conditions set forth in this Option Agreement, the
Notice and the
Plan, including the adjustment provision thereof. All capitalized
terms used
herein and not otherwise defined shall have the respective meanings
set forth in
the Notice and the Plan (as applicable).
If
this Option is designated as an Incentive Stock Option in the
Notice,
this Option is intended to qualify as an "incentive stock option"
as defined in
Section 422(b) of the Code. To the extent that any portion of this
Option does
not so qualify as an Incentive Stock Option or, if this Option is
designated as
a Nonqualified Stock Option in the Notice, it shall be deemed a
Nonqualified
Stock Option. The Grantee should consult with the Grantee's own tax
advisor
regarding the tax effects of this Option (and any requirements
necessary to
obtain favorable income tax treatment under Section 422 of the
Code, including,
but not limited to, holding period requirements).
1.
Vesting and Exercisability.
(a) No portion of this Option may be exercised until such
portion
shall have vested.
(b) Except as set forth below and in Section 5 hereof, this
Option
shall be exercisable on and after the Initial Vesting Date and
prior to the
termination of the Option as provided herein, in an amount not to
exceed the
number of Vested Shares (as determined in the Notice) less the
number of shares
previously acquired upon exercise of this Option. In no event shall
this Option
be exercisable for more than the Number of Option Shares (as
designated in the
Notice).
(c) In the event that the Grantee's Service Relationship
terminates,
this Option may thereafter be exercised, to the extent it was
vested and
exercisable on the date of such termination, until the date
specified in Section
1(d) hereof. Any portion of this Option that is not exercisable on
the date of
termination of the Service Relationship shall immediately expire
and be null and
void.
<PAGE>
(d) Subject to the provisions of Section 5 hereof, once any portion
of
this Option becomes vested and exercisable, it shall continue to be
exercisable
by the Grantee or his or her representatives and legatees as
contemplated herein
at any time or times prior to the earliest of (i) the date which is
(A) twelve
(12) months following the date on which the Grantee's Service
Relationship
terminates due to death or disability, or (B) three (3) months
following the
date on which the Grantee's Service Relationship terminates if the
termination
is due to any other reason, or (ii) the Expiration Date set forth
in the Notice;
provided that, notwithstanding the foregoing, if the Grantee's
Service
Relationship is terminated for "Cause", this Option shall terminate
immediately
and be null and void upon the date of the Grantee's termination and
shall not
thereafter be exercisable. For purposes hereof, "Cause" means: (i)
any material
breach by the Grantee of any agreement to which the Grantee and the
Company are
parties, including breach of covenants not to compete and covenants
relating to
the protection of confidential information and proprietary rights
of the
Company, which breach is not cured pursuant to the terms of such
agreements,
(ii) any act (other than retirement) or omission to act by the
Grantee which
would reasonably be likely to have a material adverse effect on the
business of
the Company, as the case may be, or on the Grantee's ability to
perform services
for the Company, as the case may be, (iii) the Grantee's conviction
(including
any pleas of guilty or nolo contendre) of any crime (other than
ordinary traffic
violations) which impairs the Grantee's ability to perform his or
her duties,
(iv) any material misconduct or willful and deliberate
non-performance of duties
by the Grantee in connection with the business or affairs of the
Company, as the
case may be, (v) the Grantee's theft, dishonesty or falsification
of the
Company's documents or records, or (vi) the Grantee's improper use
or disclosure
of the Company's confidential or proprietary information. For
purposes of the
definition of "Cause" set forth herein, all references to the
Company shall be
deemed to include the Company's Parent or any Subsidiary.
(e) If designated as an Incentive Stock Option in the Notice,
the
Grantee understands that in order to obtain the benefits of an
incentive stock
option under Section 422 of the Code, subject to any amendments
thereof, no sale
or other disposition may be made of Issued Shares for which
incentive stock
option treatment is desired within the one (l)-year period after
the day of the
issuance of such Issued Shares to him or her (i.e., the exercise
date), nor
within the two (2)-year period after the grant of this Option and
further, that
this Option must be exercised, if and to the extent permitted
hereunder, within
three (3) months after termination of employment (or twelve (12)
months in the
case of death or disability to qualify as an incentive stock
option. If the
Grantee disposes (whether by sale, gift, transfer or otherwise) of
any such
Issued Shares within either of these periods, he or she agrees to
notify the
Company within thirty (30) days after such disposition. The Grantee
also agrees
to provide the Company with any information concerning any such
dispositions
required by the Company for tax purposes. Further, to the extent
that the
aggregate Fair Market Value (determined as of the time that the
applicable
option is granted) of the shares of Common Stock with respect to
which all
Incentive Stock Options held by the Grantee are exercisable for the
fir
