VIRTUSA CORPORATION (NASDAQ:VRTU) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Investment Agreement
  On May3, 2017, Virtusa Corporation (the Company)
  and Orogen Viper LLC (the Purchaser), entered
  into an Investment Agreement (the Investment
  Agreement), to which the Company issued and sold to the
  Purchaser, and the Purchaser purchased from the Company, an
  aggregate of 70,000 shares of voting convertible preferred stock
  of the Company, designated as the Companys 3.875% SeriesA
  Convertible Preferred Stock, par value $0.01 per share (the
  SeriesA Preferred Stock), and 38,000 shares of a
  separate class of non-voting convertible preferred stock of the
  Company, designated as the Companys 3.875% SeriesA-1 Convertible
  Preferred Stock, par value $0.01 per share (the SeriesA-1
  Preferred Stock and, together with the SeriesA Preferred
  Stock, the Preferred Stock), in each case for a
  purchase price of $1,000 per share, representing $108.0 million
  of gross proceeds to the Company.
Board Representation
  The Investment Agreement provides the Purchaser the right, to the
  terms of the SeriesA Preferred Stock, to appoint a director to
  serve on our Board. to the Investment Agreement, in connection
  with the closing of the transactions contemplated by the
  Investment Agreement (the Closing), our Board of
  Directors (the Board) increased the size of the
  Board from nine directors to ten directors and elected Vikram S.
  Pandit, the initial nominee designated by the Purchaser, to the
  Board, subject to replacement to the procedures described in the
  Investment Agreement. Such appointment right will terminate if
  the Purchaser and its affiliates fail to retain beneficial
  ownership of at least 50% of the number of shares of our common
  stock underlying the Preferred Stock held by the Purchaser
  immediately following the Closing.
  Following the conversion of the Preferred Stock into shares of
  our common stock, so long as the Purchaser retains beneficial
  ownership of at least 50% of the number of shares of our common
  stock underlying the Preferred Stock held by the Purchaser
  immediately following the Closing, we have agreed to include one
  nominee of the Purchaser for election as a director of the same
  class (whether ClassI, ClassII or ClassIII) as the other
  directors nominated by us for election at our next meeting of
  stockholders following such conversion, and to renominate such
  individual thereafter at each meeting of stockholders electing
  such class of directors. We are required to use our reasonable
  efforts to cause the election of such person.
Standstill
  to the Investment Agreement, the Purchaser has agreed, subject to
  certain exceptions, that until the later of (1)the first date on
  which there is no Purchaser-affiliated director serving on our
  Board, and (2)May3, 2019 (the Standstill
  Period), the Purchaser will not, among other things,
  subject to certain exceptions described in the Investment
  Agreement: (i)acquire any securities of the Company if,
  immediately after such acquisition, the Purchaser would
  collectively own in the aggregate more than 20.0% of the then
  outstanding common stock of the Company, (ii)propose or
    seek to effect any tender or exchange offer, merger or other
    business combination involving the Company or its securities,
    or make any public statement with respect to such transaction,
    (iii)make, or in any way participate in any proxy contest or
    other solicitation of proxies, (iv)seek election or appointment
    to, or representation on, our Board other than as set forth in
    the Investment Agreement or the SeriesA Certificate of
    Designations (as defined below), or seek the removal of any of
    our directors, or (v)conduct any referendum of stockholders of
    the Company or make or be the proponent of any stockholder
    proposal.
  
Transfer Restrictions and Registration Rights
    The Investment Agreement restricts the Purchasers ability to
    transfer the Preferred Stock or shares of our common stock
    issued or issuable upon conversion of the Preferred Stock,
    subject to certain exceptions specified in the Investment
    Agreement. In particular, prior to the earliest of (i)May3,
    2019, (ii)a change of control of the Company or entry into a
    definitive agreement for a transaction that, if consummated,
    would result in a change of control of the Company, and
    (iii)the later of May3, 2018 and the first date on which there
    is no Purchaser-affiliated director serving on our Board, the
    Purchaser will be restricted from selling, offering,
    transferring, assigning, pledging, mortgaging, hypothecating,
    gifting or disposing the Preferred Stock or shares of common
    stock issued or issuable upon conversion of the Preferred
    Stock. Such restrictions also prohibit the Purchaser from
    entering into or engaging in any hedge, swap, short sale,
    derivative transaction or other agreement or arrangement that
    transfers any ownership of, or interests in, the shares of
    Preferred Stock or shares of common stock issued or issuable
    upon conversion of the Preferred Stock. These restrictions do
    not apply to, among others, transfers to affiliates or in
    connection with certain third-party tender offers.
  
    Subject to certain limitations, the Investment Agreement
    provides the Purchaser with certain registration rights for the
    shares of common stock underlying the Preferred Stock
    (including any shares issued or issuable as dividends on the
    Preferred Stock) held by the Purchaser.
  
    The Investment Agreement contains other customary terms for
    private investments in public companies, including
    representations, warranties and covenants.
  
    The foregoing description of the Investment Agreement is
    qualified in its entirety by reference to the Investment
    Agreement, which is attached hereto as Exhibit10.1 and
    incorporated herein by reference. The Investment Agreement is
    attached hereto as an exhibit to provide investors and security
    holders with information regarding its terms. It is not
    intended to provide any other factual information about the
    Company. The representations, warranties and covenants
    contained in the Investment Agreement were made only for
    purposes of the Investment Agreement and as of specific dates,
    were solely for the benefit of the parties to the Investment
    Agreement, and may be subject to limitations agreed upon by the
    contracting parties, including being qualified by confidential
    disclosures exchanged between the parties in connection with
    the execution of the Investment Agreement.
  
Amendment to Credit Agreement
    On May3, 2017, we entered into Amendment No.1 to Credit
    Agreement with JPMorgan Chase Bank, N.A. (the
    Administrative Agent) and the lenders party
    thereto (the Credit Agreement Amendment),
    amending our Credit Agreement, dated as of February25, 2016,
    with such parties (as so amended, the Amended Credit
    Agreement). to the Amended Credit Agreement Amendment,
    we are permitted, among other things, to issue the Preferred
    Stock and pay certain dividends with respect to the Preferred
    Stock. The Credit Agreement Amendment contains other customary
    terms for amendments of this type, including representations,
    warranties and covenants. The foregoing description of the
    Credit Agreement Amendment is qualified in its entirety by
    reference to the Credit Agreement Amendment, which is attached
    hereto as Exhibit10.2 and incorporated herein by reference.
  
    Item 2.03. Creation of a Direct Financial Obligation or
    an Obligation under an Off-Balance Sheet Arrangement of a
    Registrant.
  
    The disclosures concerning the Investment Agreement and the
    terms of the Preferred Stock contained in Item 1.01 above or
    Item 5.03 below (as applicable), are hereby incorporated into
    this Item 2.03 by reference.
  
    Item 3.02. Unregistered Sales of Equity
    Securities.
  
    The disclosures concerning the Investment Agreement contained
    in Item 1.01 above and the Preferred Stock contained in 5.03
    below are hereby incorporated into this Item 3.02 by reference.
    The offer and sale of the Preferred Stock to the Investment
    Agreement is exempt from registration under the Securities Act
    of 1933, as amended (the Securities Act), to
    Section4(a)(2)of the Securities Act. The Purchaser has
    represented to the Company that it is an accredited investor as
    defined in Rule501 under the Securities Act and that the
    Preferred Stock is being acquired for investment purposes and
    not with a view to or for sale in connection with any
    distribution thereof in violation of any federal or state
    securities laws.
  
    Item 5.02. Departure of Directors or Certain Officers;
    Election of Directors; Appointment of Certain Officers;
    Compensatory Arrangements of Certain Officers.
  
    On May3, 2017, the Board elected Vikram S. Pandit as a director
    of the Company, as a Purchaser Designee as defined in the
    Investment Agreement and as the Preferred Director as defined
    in the SeriesA Certificate of Designations, to serve until his
    successor is duly elected and qualified, or until his sooner
    death, resignation or removal.
  
    In connection with Mr.Pandits election to the Board, under the
    Companys Amended and Restated Director Compensation Policy, on
    May3, 2017, Mr.Pandit will receive a restricted stock unit
    (RSU) in the amount of $50,000 issuable for
    1,636 shares of the Companys common stock for his initial, one
    time grant, with a vesting period of 33.3% on each of June1,
    2018, 2019 and 2020, as well as a prorated grant of RSUs in the
    amount of $33,333 (based on a $100,000 annual grant) issuable
    for 1,091 shares of the Companys common stock as part of annual
    board compensation, with a vesting period of 33.3% on each of
    September1, 2017, 2018 and 2019. Each RSU will have an issuance
    price of $30.55 and accelerates by 12 months upon a change of
    control of the Company. In addition, the Company will pay to
    Mr.Pandit a director fee of $50,000, payable in equal
    installments quarterly.
  
    Vikram S. Pandit, age 60, since July1, 2016 has served as
    Chairman and Chief Executive Officer of The Orogen Group LLC,
    an operating company he created with Atairos Group,Inc. that
    makes control and other strategic investments in financial
    services companies and related businesses. Mr.Pandit has more
    than 35 years of professional experience and previously was
    Chief Executive Officer and a member of the Board of Directors
    of Citigroup Inc. from December2007 until October2012. In
    July2007, when Citigroup acquired Old Lane LLC, a hedge fund of
    which he was a founding member and Chairman of the members
    committee since 2006, Mr.Pandit became Chairman and CEO of Citi
    Alternative Investments and later led Citis Institutional
    Clients Group prior to being appointed CEO of Citigroup. Prior
    to Old Lane, Mr.Pandit served as the Chief Operating Officer of
    Institutional Securities and Investment Banking businesses, a
    Division of Morgan Stanley, from September2000 to March2005. He
    served as the President of Institutional Securities at Morgan
    Stanley from December2003 to March2005 and Co-President since
    September2000. Mr.Pandit began his career at Morgan Stanley in
    1983.
  
    Mr.Pandit currently serves as an Independent Director of
    Bombardier Inc. since 2014. He serves as a Member of Advisory
    Board of NerdWallet,Inc. since 2015. Mr.Pandit serves as a
    Member of the Board of Overseers of Columbia Business School.
    He serves as a Member of the Governing Board of The Indian
    School of Business. Mr.Pandit previously served as a Director
    of The Nasdaq OMX Group,Inc. [Nasdaq: NDAQ] from 2000 to 2003.
    Mr.Pandit also served as a Director of the
  
    Institute of International Finance,Inc. He holds an MS degree
    and a BS degree in Electrical Engineering from Columbia
    University and received his PhD in Finance from Columbia.
  
    Item 5.03. Amendments to Articles of Incorporation or
    Bylaws; Change in Fiscal Year
  
Certificates of Designation
    On May3, 2017, we filed with the Secretary of State of the
    State of Delaware (i)a Certificate of the Powers, Designations,
    Preferences and Rights of the 3.875% SeriesA Convertible
    Preferred Stock (the SeriesA Certificate of
    Designations) and (ii)a Certificate of the Powers,
    Designations, Preferences and Rights of the 3.875% SeriesA-1
    Convertible Preferred Stock (the SeriesA-1 Certificate
    of Designations and, together with the SeriesA
    Certificate of Designations, the Certificates of
    Designations). Generally, except with respect to
    certain voting rights, and a conversion trigger applicable to
    the SeriesA-1 Preferred Stock described below as the HSR
    Conversion, the rights, preferences and privileges of the
    SeriesA Preferred Stock and the SeriesA-1 Preferred Stock are
    substantially identical.
  
    The Preferred Stock has a liquidation preference of $1,000 per
    share. In addition, cumulative preferred dividends accumulate
    on the Preferred Stock at a rate of 3.875% per annum, and are
    payable quarterly in arrears. The payments on such dividends
    may be paid in cash or, at our option, in shares of our common
    stock. We may only pay such dividends in shares of common stock
    on or after August1, 2018, subject to an aggregate share cap
    and so long as we have paid full cumulative dividends on the
    Preferred Stock for all past dividend periods, and there is
    adequate current public information with respect to the Company
    and no volume limitations would apply to the resale of such
    shares, in each case under Rule144 under the Securities Act.
  
    The Preferred Stock is convertible at the option of the holders
    at any time into shares of the Companys common stock at an
    initial conversion rate of 27.77778 shares of the Companys
    common stock per share of Preferred Stock (which is equal to an
    initial conversion price of approximately $36.00 per share of
    the Companys common stock), subject to certain customary
    anti-dilution adjustments. If at any time after May3, 2020, the
    closing sale price of our common stock exceeds 150% of the then
    applicable conversion price of the Preferred Stock for at least
    20 trading days during a period of 30 consecutive trading days,
    the Company may cause some or all of the Preferred Stock to be
    converted into shares of common stock at the then applicable
    conversion rate. Upon the conversion of the Preferred Stock
    into common stock, we are required to pay all accumulated but
    unpaid dividends in additional shares of common stock valued at
    the then applicable conversion price on the date of such
    conversion.
  
    Holders of SeriesA Preferred Stock (but not the SeriesA-1
    Preferred Stock) are entitled to vote generally with the
    holders of common stock on an as-converted basis (including
    with respect to election of the members of our Board). Holders
    of SeriesA Preferred Stock are also entitled to certain limited
    special approval rights, including with respect to amendments
    to the Companys organizational documents that have an adverse
    effect on the SeriesA Preferred Stock, certain issuances of
    senior or pari passu securities, certain purchases, redemptions
    or other acquisitions of junior securities or payments,
    dividends or distributions thereon. In addition, so long as any
    shares of SeriesA Preferred Stock (but not the SeriesA-1
    Preferred Stock) are outstanding and the Purchaser and its
    affiliates collectively beneficially own at least a majority of
    the shares of Preferred Stock beneficially owned by such
    holders immediately following the Closing, the holders of
    SeriesA Preferred Stock, voting as a separate class by majority
    vote, are entitled to elect one director to serve on our Board.
  
    Holders of SeriesA-1 Preferred Stock generally have no voting
    rights except as required by law and with respect to amendments
    to the Companys organizational documents that have an adverse
    effect on the SeriesA-1 Preferred Stock. At such time as any
    waiting period under the Hart-Scott-Rodino Antitrust
    Improvements Act of 1976 applicable to the acquisition of
    shares of Preferred Stock expires or is terminated, all shares
    of the SeriesA-1 Preferred Stock then issued and outstanding
  
    shall immediately and automatically convert on a one for one
    basis to shares of SeriesA Preferred Stock (the HSR
    Conversion). Upon such HSR Conversion, all accumulated
    but unpaid dividends on such shares of SeriesA-1 Preferred
    Stock immediately prior to such HSR Conversion will be
    converted into an equivalent amount of accumulated but unpaid
    dividends on shares of SeriesA Preferred Stock immediately
    following such HSR Conversion.
  
    With certain exceptions, upon a Fundamental Change (as defined
    in the Certificates of Designations), the holders of the
    Preferred Stock may require that the Company repurchase for
    cash all or any whole number of shares of Preferred Stock at a
    per-share repurchase price equal to 50% of the liquidation
    preference of such shares, plus accumulated and unpaid
    dividends. If we fail to effect such repurchase, the dividend
    rate on the Preferred Stock will increase by 1% per annum and
    an additional 1% per annum on each anniversary of the date that
    the Company is required to effect such repurchase, during the
    period in which such failure to effect the repurchase is
    continuing, except that the dividend rate will not increase to
    more than 6.875% per annum. The definition of Fundamental
    Change includes a sale of substantially all the Companys
    assets, a change of control of the Company by way of a tender
    offer, merger or similar event, the adoption of a plan relating
    to the Companys liquidation or dissolution and certain
    delistings of our common stock, except in certain cases
    described in the Certificates of Designations in which the
    consideration received or to be received by the Companys common
    stockholders in a sale or change of control transaction
    consists primarily of publicly listed and traded securities.
  
    Holders of Preferred Stock that are converted in connection
    with a Make-Whole Fundamental Change, as defined in the
    Certificates of Designations, are, under certain circumstances,
    entitled to an increase in the conversion rate for such shares
    of Preferred Stock based on the effective date of such event
    and the applicable price attributable to the event as set forth
    in a table contained in the Certificates of Designations. The
    definition of Make-Whole Fundamental Change includes a sale of
    substantially all the Companys assets, a change of control of
    the Company by way of a tender offer, merger or similar event,
    the adoption of a plan relating to the Companys liquidation or
    dissolution and certain delistings of our common stock.
  
    If any shares of Preferred Stock have not been converted into
    common stock prior to May3, 2024 (the Maturity
    Date), the Company will be required to repurchase such
    shares at a repurchase price equal to the liquidation
    preference of the repurchased shares plus the amount of
    accumulated and unpaid dividends thereon. If we fail to effect
    such repurchase, the dividend rate on the Preferred Stock will
    increase by 1% per annum and an additional 1% per annum on each
    anniversary of the Maturity Date during the period in which
    such failure to effect the repurchase is continuing, except
    that the dividend rate will not increase to more than 6.875%
    per annum.
  
    to the Certificates of Designations and the Investment
    Agreement, we have, to the fullest extent permitted by the
    Delaware General Corporation Law, renounced any interest or
    expectancy in, or right to be offered an opportunity to
    participate in, any business opportunity or classes or
    categories of business opportunities that may be a corporate
    opportunity for the Purchaser, its director designees or their
    respective affiliates, as well as their respective principals,
    directors, general partners, officers, employees, agents and
    representatives acting on their behalf, except to the extent
    any such opportunity which is expressly offered to, or comes to
    the knowledge of, any of such persons solely in his or her
    capacity as a member of the Board.
  
    The foregoing description of the Certificates of Designations
    is qualified in its entirety by reference to the Certificates
    of Designations, which are attached hereto as Exhibits 3.1 and
    3.2 and incorporated herein by reference.
  
Item 8.01. Other Events
    On April30, 2017, the Board authorized a share repurchase
    program of up to $30 million of the Companys common stock over
    the next 12 months. Share repurchases under the program may be
    made through open market purchases or privately negotiated
    transactions in accordance with
  
    applicable federal securities laws, including Rule10b-18 of the
    Exchange Act. While the Board has approved the share purchasing
    guidelines, the timing of repurchases and the exact number of
    shares of common stock to be purchased will be determined by
    the Companys management, at its discretion, and will depend
    upon market conditions and other factors. The program will be
    funded using the Companys cash on hand and cash generated from
    operations. The program may be extended, suspended or
    discontinued at any time.
  
    On May3, 2017, the Company issued a press release announcing
    its entry into the Investment Agreement, the closing of the
    transactions contemplated thereby and the Companys share
    repurchase program. A copy of the press release is attached
    hereto as Exhibit99.1 and is incorporated herein by reference.
  
Item9.01. Financial Statements and Exhibits
(d) Exhibits
| ExhibitNo. | 
 | Description | 
| 3.1 | 
          Certificate of the Powers, Designations, Preferences and | |
| 3.2 | 
          Certificate of the Powers, Designations, Preferences and | |
| 10.1 | 
          Investment Agreement, dated as of May3, 2017, between the | |
| 10.2 | 
          Amendment No.1 to Credit Agreement with JPMorgan Chase | |
| 99.1 | Press Release issued by Virtusa Corporation on May3, 2017 | 
 About VIRTUSA CORPORATION (NASDAQ:VRTU) 
Virtusa Corporation (Virtusa) is an information technology services company. The Company’s services include information technology (IT) and business consulting, digital enablement services, user experience (UX) design, development of IT applications, maintenance and support services, systems integration, infrastructure and managed services. Its services enable its clients to accelerate business outcomes by consolidating, rationalizing and modernizing the clients’ core customer-facing processes into one or more core systems. It delivers solutions through a global delivery model, applying advanced methods, such as Agile, a technique designed to accelerate application development. The Company uses its consulting methodology, Accelerated Solution Design (ASD). It supports the Chief Information Officers (CIOs) of its client organizations in solving their critical issues, including managing total cost of ownership, accelerating time-to-market and increasing productivity.	VIRTUSA CORPORATION (NASDAQ:VRTU) Recent Trading Information 
VIRTUSA CORPORATION (NASDAQ:VRTU) closed its last trading session down -0.29 at 30.55 with 633,681 shares trading hands.
 
                



