SYNTEL INC (Form: 8-K, Received: 07/07/2006 16:06:55)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) February 7, 2006

Syntel, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Michigan
(State or Other Jurisdiction of Incorporation)

         0-22903                                   38-2312018
(Commission File Number)               (IRS Employer Identification No.)

         525 E. Big Beaver Road,
        Suite 300, Troy, Michigan                            48083
(Address of Principal Executive Offices)                   (Zip Code)

(248) 619-2800
(Registrant's Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Effective July 1, 2006, the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of Syntel, Inc. (the "Company") granted restricted stock awards under the Company's Amended and Restated Stock Option and Incentive Plan (the "Incentive Plan"). The Plan was approved by the Company's shareholders on June 1, 2006. The Committee also approved performance measures for the restricted stock awards. The awards vest in equal installments over five years based upon the achievement of the performance measures each year. The performance measures for the restricted stock awards are based in part upon annual earnings per share targets and in part upon five-year (2006-2010) earnings per share targets. The portion of the award based upon annual earnings per share targets will lapse if the annual target is not met. The portion of the award based upon five-year earnings per share targets rolls over each year if the five year earning per share target for the year is not met. The deferred award will vest based on achievement of a target earning per share before 2012, and will lapse if the target is not met at the end of that period.

On February 19, 2006, the Committee approved 2006 base salaries for the following executive officers of the Company's (collectively, the "Named Executive Officers"), as follows:

      Name        Base Salary
      ----        -----------
Bharat Desai        $300,000
Daniel M. Moore     $215,000
Keshav Murugesh     $169,626
Vinod Swami         $160,000

On February 19, 2006, the Committee also approved the 2006 annual performance incentive program for the Named Executive Officers pursuant to the Company's Leadership Compensation Plan. The 2006 annual performance incentive bonuses are based upon the achievement of one or more of the following: qualitative factors such as leadership, teamwork, strategic initiatives, and value creation; revenue targets; and earnings per share targets. Revenue targets are tailored to the executive officer's responsibilities and are based on revenue for the Company as a whole and/or revenue related to certain specified accounts. Under this plan each executive officer is assigned a target bonus amount based upon the level of job responsibility, individual performance, and published compensation data for comparable companies. The tentative bonus payable will be a percentage of the executive officer's target bonus amount based upon the extent to which the applicable revenue and earnings per share targets and/or the qualitative factors are achieved.

On June 13, 2005, the Board approved the annual compensation package, which has not been modified for 2006, for directors of the Company. Directors who are not employees of the Company are paid a $25,000 annual retainer as well as $2,500 for attending in person each meeting of the Board and committees held in the United States and $7,500 for attending in person an informational meeting of the collective board members held in India. The chairperson of the Audit Committee of the Board receives an additional annual retainer of $10,000 and all other committee chairpersons receive an additional annual retainer of $5,000. Upon being elected at an annual shareholder meeting, each non-employee director also receives, under the Incentive Plan, shares of restricted stock valued at $55,000. The number of shares issued to each such director is

determined by dividing $55,000 by the closing price of the Company's common stock on the day of the annual shareholder meeting. These restricted shares vest on the one year anniversary of their issuance. Each new director is also entitled to receive a share of restricted stock for each share of Company stock purchased within 60 days of the first time they are appointed or elected to the Board, up to a maximum of 5,000 shares. One-third of these restricted shares vest on each of the first three anniversaries of the close of the 60-day period following the director's appointment or election, provided the director has retained all the shares purchased as part of the plan.

As disclosed in the Company's Proxy Statement dated May 8, 2006, on February 7, 2006, the Committee approved 2005 cash performance incentive bonus awards to the Named Executive Officers, as follows:

      Name        Bonus Amount
      ----        ------------
Bharat Desai        $    -0-
Daniel M. Moore     $138,750
Keshav Murugesh     $218,588
Vinod Swami         $225,000

The 2005 performance incentive bonus awards were based upon the achievement of specified individual and corporate goals for 2005, as well as a review of personal performance. With regard to corporate goals for the 2005 bonuses, the Committee evaluated the Company's financial performance with regard to earnings per share and total revenue and the extent to which its strategic and business goals were met. With regard to personal performance for the 2005 bonuses, the Committee evaluated a set of subjective personal targets unique to each executive officer.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit
 Number   Description
-------   -----------
10.1      Form of Annual Performance Award under the Leadership Compensation
          Plan.

10.2      Employment Agreement, dated October 18, 2001, between the Company and
          Bharat Desai.

10.3      Employment Agreement, dated October 18, 2001, between the Company and
          Daniel M. Moore.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Syntel, Inc.
(Registrant)

Date July 7, 2006                       By /s/ Bharat Desai
                                           -------------------------------------
                                           Bharat Desai,
                                           Chief Executive Officer

EXHIBIT INDEX

Exhibit
 Number   Description
-------   -----------
10.1      Form of Annual Performance Award under the Leadership Compensation
          Plan.

10.2      Employment Agreement, dated October 18, 2001, between the Company and
          Bharat Desai.

10.3      Employment Agreement, dated October 18, 2001, between the Company and
          Daniel M. Moore.

EXHIBIT 10.1

Dated: ________, 200_

Mr. ______________________

Dear ______,

We are pleased to inform you the details of your Leadership Compensation Plan effective January 1, 200_.

This letter is to confirm that effective January 1, 200_, you are eligible for an annualized salary of US$__________ and an annualized performance based target incentive of US$__________.

As a part of Syntel's Leadership Team, your incentive plan is designed to help achieve the overall corporate objectives. The incentive will be payable on achievement of Company and Individual Targets, as detailed in Annex 1. All the targets are on annualized basis unless otherwise indicated.

All other terms and condition of your employment will remain the same. Any communication regarding your terms of employment, benefits, or compensation must be in writing and signed by the Head of Human Resources of the Company. No other communication will be binding or effective.

Please sign and return a copy of this letter at the earliest.

As a key member of Syntel's Leadership Team, your contributions will be critical to our success this year. Here's wishing you the very best for a successful 200_.

Sincerely,

Bharat Desai
Chief Executive Officer

I acknowledge that I have received, read and understood the Leadership Compensation Plan for 200_.

Signature:                              Date:
           --------------------------         ----------------------------------
Name:
      -------------------------------

Annex 1(attached)

ANNEXURE - 1

[ ] YOUR TARGET INCENTIVE AMOUNT (TIA) COMPRISES OF THE FOLLOWING COMPONENTS:

[Company Revenue]
[Earnings Per Share]
[Qualitative Parameters]
[Revenue for Assigned Accounts]

PERFORMANCE MULTIPLIERS:

[For each component, multipliers are identified pursuant to which the amount of the bonus will increase or decrease depending on the level achieved during the year.]

MODIFICATIONS AND ADJUSTMENTS

This plan cannot be amended retroactively, but if extenuating circumstances or unforeseen events occur within the corporation which results in the plan not achieving the desired impact, management reserves the right to modify, suspend or discontinue any incentive plans without prior notice to ensure that the "Leadership Compensation Plan" respond to the needs of the business. These changes, if any, will be communicated in writing. Any change to your plan will be effective only after you receive written notification signed by the Head of Human Resources.

Nothing in your plan shall be construed as a guarantee of employment for anyone for any fixed time.

TIA PAYMENT DATES

The incentive will be payable not later than March 200_. To be eligible for the incentive payment, you must be on the payroll of the company on the date of disbursement of incentive. All payments are subject to taxation.

SETTLEMENT OF DISPUTES

If a person feels that he/she is not being fairly treated with regard to incentive payments, he/she should notify the same in writing to their immediate manager within 2 weeks of the initial incentive payout. Failure to so notify your manager constitutes full and final acceptance of the incentive payment and waiver of any alleged defects concerning that payment.

The CEO will review the issue and make a final determination. Such determination will be final and you will receive a written confirmation of that decision signed by the Head of the Human Resources Department for the company.

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") is made as of October 18, 2001 by and between Syntel, Inc., 2800 Livernois Road, Suite 400, Troy, MI 48083 ("SYNTEL") and Bharat Desai ("EMPLOYEE"). In consideration of the mutual promises and covenants herein contained, SYNTEL and EMPLOYEE agree as follows:

1. Duties. EMPLOYEE agrees to use EMPLOYEE's best efforts in the performance of employment duties assigned to EMPLOYEE from time to time and to, at all times, act in good faith and in the best interests of SYNTEL. EMPLOYEE agrees to comply with all rules, regulations and procedures established by SYNTEL.

2. Confidential Information. Simultaneous with the execution of this Agreement EMPLOYEE will execute and deliver to SYNTEL the confidentiality letter agreement attached hereto as Exhibit A, which confidentiality letter agreement is incorporated herein by reference.

3. Works of Authorship. Any work of authorship created by EMPLOYEE and all improvements, discoveries, or inventions made or conceived by EMPLOYEE, either solely or jointly with others, during employment with SYNTEL in any way related to EMPLOYEE's employment with SYNTEL, the performance of services to any SYNTEL customer, or created, in whole or in part, during working hours or with information or resources obtained from or through SYNTEL or any SYNTEL customer, shall be promptly reported to SYNTEL and shall be and remain the sole and exclusive property of SYNTEL, without further consideration. Upon request by SYNTEL, all documents and papers shall be executed, and all reasonable assistance shall be furnished (1) to establish in SYNTEL title to such work of authorship, improvements, discoveries, and inventions and (2) to enable SYNTEL to apply for United States and foreign patents thereon. EMPLOYEE agrees and warrants that any deliverable or service delivered to SYNTEL and SYNTEL's use of such deliverable or service will neither infringe any copyrights, nor knowingly infringe any other intellectual property rights of any entity.

4. Effective Date. This Agreement becomes effective upon, if applicable, the approval of your H-1B visa and upon the commencement of your employment at the job site within the United States of America.

5. Compensation/Benefits. SYNTEL shall provide compensation/benefits to EMPLOYEE as set forth in the letter accompanying this Agreement.

6. Non-diversion of Employees. During the term of this Agreement and for a period of two (2) years subsequent to the termination of this Agreement, EMPLOYEE shall not, without the prior written consent of SYNTEL, directly, indirectly, or through any other party solicit, offer to, or accept the employment of, or assist others to solicit, offer to, or accept the employment of, persons who are then, or were during the previous six (6) months, employees of SYNTEL or any SYNTEL subsidiary.

7. Non-solicitation/Non-compete. During the term of this Agreement and for a period of two (2) years subsequent to the termination of this Agreement, EMPLOYEE shall not, without the prior written consent of SYNTEL, directly, indirectly, or through any other party solicit business from or perform services for any direct or indirect SYNTEL customer or any prospective SYNTEL customer whom EMPLOYEE had any contact with or exposure to at any time during the term of this Agreement.

8. Former Employer. In the event EMPLOYEE becomes a party to any proceeding brought by any former employer of EMPLOYEE at any time during or after EMPLOYEE's employment with SYNTEL, EMPLOYEE recognizes and agrees that EMPLOYEE shall have full and sole responsibility for responding to such action and that SYNTEL has no responsibility to participate in EMPLOYEE's response nor in EMPLOYEE's cost of such response. EMPLOYEE agrees that EMPLOYEE shall not, at any time, disclose to SYNTEL or its directors, officers, employees, or agents the trade secrets or any other confidential information of the EMPLOYEE's former employer.

9. Compliance with Laws/Hold Harmless. EMPLOYEE agrees to comply with all provisions of this Agreement and with all laws and to indemnify, defend and hold harmless SYNTEL, its employees, agents, officers, and directors, from and against any and all claims, liabilities, damages, costs, and/or expenses of whatever kind or nature, including without limit court costs and attorney fees, arising out of or related to the failure to so comply other than those claims, liabilities, damages, costs, and/or expenses arising solely from the gross negligence or willful misconduct of SYNTEL.

10. Remedies. Notwithstanding paragraph 11 below, EMPLOYEE agrees that EMPLOYEE's failure or neglect to perform, keep, or observe any term, provision, condition, covenant, warranty, or representation contained in this Agreement, Exhibit A - "Confidential Information", or any other agreement between EMPLOYEE and SYNTEL will cause SYNTEL immediate and irreparable harm and that SYNTEL is, in addition to all other remedies available to it, entitled to immediate injunctive and equitable relief from a court having jurisdiction, as set forth in Paragraph 13, to prevent any breach and to secure the enforcement of its rights hereunder.

11. Arbitration. Any dispute, controversy, or claim arising out of or related to this Agreement which has not been mutually resolved by the parties shall be determined and settled according to the Commercial Arbitration Rules of the American Arbitration Association except for those disputes, controversies, or claims arising out of EMPLOYEE'S failure to abide by Paragraphs 6, 7, and/or Exhibit A "Confidential Information" of this Agreement. EMPLOYEE or SYNTEL may demand arbitration by giving written notice to the other party stating the nature of the controversy. An arbitration panel or an individual arbitrator shall be selected in accordance with the rules of the American Arbitration Association and the arbitration shall be held in Oakland County, Michigan. The arbitration panel or individual arbitrator shall allow such discovery as is appropriate for the purposes of the arbitration in accomplishing fair, speedy, and cost-effective resolution of disputes. Any award rendered by the arbitration panel or individual arbitrator shall be final, conclusive, and binding upon the parties and a judgment may be enforced in any court having jurisdiction.

12. Reimbursement Obligation. In the event EMPLOYEE resigns employment with or is terminated for Cause by SYNTEL within twelve (12) months of the later of relocating to or starting work at a new job site for which SYNTEL provided any relocation expense reimbursement to EMPLOYEE or paid any relocation expense on behalf of EMPLOYEE, EMPLOYEE recognizes and agrees that EMPLOYEE shall pay to SYNTEL the amount of any such relocation expense reimbursement and/or any relocation expense paid by SYNTEL on behalf of EMPLOYEE. Cause includes, but is not limited to, breach of this Agreement, neglect of duties, failure to act in the best interests of SYNTEL, and violation of rules, regulations, and procedures established by SYNTEL.

13. Miscellaneous. This Agreement contains the entire agreement of the parties and SYNTEL shall not be bound by any other different, additional, or further agreements or understandings except as consented to in writing by the Chief Administrative Officer or Director, Human Resources of SYNTEL. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. No amendment hereof shall be effective unless contained in a written instrument signed by the parties hereto. No delay or omission by either party to exercise any right or power under this Agreement shall impair such right or power or be construed to be a waiver thereof. A waiver by either party of any of the covenants to be performed by the other party or of any breach shall not be construed to be a waiver of any succeeding breach or of any other covenant. If any provision of the Agreement is declared invalid, such provision shall be deemed severable from the remaining provisions of the Agreement which shall remain in full force and effect. EMPLOYEE shall not assign or transfer this Agreement without the prior written consent of SYNTEL. EMPLOYEE's employment with SYNTEL is at will and may be terminated by SYNTEL at any time with or without cause, and with or without notice. All rights and remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other rights or remedies available to either party at law, in equity, or otherwise. Paragraphs 2, 3, 6, 7, 8, 9, 10, 11, 12, and 13 of this Agreement shall survive termination of this Agreement and EMPLOYEE's employment with SYNTEL. The parties submit to the jurisdiction and venue of the circuit court for the County of Oakland, State of Michigan or, if original jurisdiction can be established, the United States District Court for the Eastern District of Michigan with respect to: a) disputes, controversies, or claims arising out of EMPLOYEE'S failure to abide by Paragraphs 6, 7, and/or Exhibit A - "Confidential Information" of this Agreement, b) claims initiated by SYNTEL pursuant to Paragraph 10 of this Agreement, and c) the enforcement of any awards or relief granted pursuant to the dispute resolution procedures set forth in Paragraph 11 of this Agreement. The parties stipulate that the venues referenced in this Agreement are convenient. This Agreement shall be construed under and in accordance with the laws of the State of Michigan.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

SYNTEL, INC.

By: /s/ Daniel M. Moore                 By: /s/ Bharat Desai
    ---------------------------------       ------------------------------------
    Daniel M. Moore                         Bharat Desai
    Chief Administrative Officer

    October 18, 2001                        October 18, 2001

EXHIBIT A

CONFIDENTIAL INFORMATION

In connection with your providing certain products and/or services to SYNTEL, Inc. ("SYNTEL") and/or on behalf of SYNTEL, you will have access to information concerning SYNTEL and SYNTEL's clients. As a condition to your being given access to such information, you agree to treat any information concerning SYNTEL and/or SYNTEL's clients (whether prepared by SYNTEL, its advisors or otherwise) which is furnished to you by or on behalf of SYNTEL and/or SYNTEL's clients (herein collectively referred to as the "Confidential Information") in accordance with the provisions of this letter and to take or abstain from taking certain other actions herein set forth. The term "Confidential Information" does not include information which (i) is already in your possession, or (ii) becomes generally available to the public other than as a result of a disclosure by you or your directors, officers, employees, agents or advisors, or (iii) becomes available to you on a non-confidential basis from a source other than SYNTEL and/or SYNTEL's clients.

You hereby agree that the Confidential Information will be used solely for the purpose of providing certain products and/or services to and/or on behalf of SYNTEL, and that such information will be kept confidential by you and your advisors; provided, however, that (i) any of such information may be disclosed to your directors, officers and employees and representatives of your advisors who need to know such information for the purpose of providing such services to and/or on behalf of SYNTEL (it being understood that such directors, officers, employees and representatives shall be informed by you of the confidential nature of such information and shall be directed by you to treat such information confidentially), and (ii) any disclosure of such information may be made to which SYNTEL consents in writing.

Notwithstanding the foregoing, if you or any of your representatives are required (by oral question or request for information or documents in legal proceedings or similar process) to disclose any Confidential Information, you will promptly notify SYNTEL of such requirement so that SYNTEL may seek an appropriate protective order and/or waive your compliance with the provisions of this Agreement. If, in the absence of a protective order or the receipt of a waiver hereunder, you or any of your representatives is nonetheless, in the reasonable written opinion of counsel, compelled to disclose Confidential Information to any tribunal or else stand liable for contempt or suffer other censure or penalty, you or your representatives, after notice to SYNTEL, may disclose such Confidential Information to such tribunal. You or your representatives shall not be liable for the disclosure of Confidential Information hereunder to such tribunal compelling such disclosure unless such disclosure to such tribunal was caused by or resulted from a previous disclosure by you or your representatives not permitted by this Agreement.

You agree that the furnishing of Confidential Information neither grants nor implies any license under any trademark, patent, copyright, methodology, intellectual property or process right, or any other property right nor does the furnishing of Confidential Information constitute an inducement of any kind, or any representation, warranty, assurance, or guarantee with respect to the noninfringement of trademarks, patents, copyrights, methodologies, intellectual property rights or processes, or any other property rights of third persons or of SYNTEL. You agree to promptly redeliver to SYNTEL, upon request, all Confidential Information on any tangible media and that you will not retain any copies, extracts or other reproductions in whole or in part of such material. You further agree that breach of this confidentiality letter agreement could cause irreparable harm to SYNTEL and that SYNTEL shall be entitled to any and all injunctive relief, as well as monetary damages, including reasonable attorney fees, for such breach.

You agree that this confidentiality letter agreement contains the entire agreement between you and SYNTEL regarding Confidential Information and SYNTEL shall not be bound by any other different, additional, or further agreements or understandings except as consented to in writing by SYNTEL. This confidentiality letter agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. No amendment hereof shall be effective unless contained in a written instrument signed by the parties hereto. No delay or omission by either party to exercise any right or power under this Agreement shall impair such right or power or be construed to be a waiver thereof. A waiver by either party of any of the covenants to be performed by the other party or of any breach shall not be construed to be a waiver of any succeeding breach or of any other covenant. If any provision of this confidentiality letter agreement is declared invalid, such provision shall be deemed severable from the remaining provisions of the confidentiality letter agreement, which shall remain in full force and effect. All rights and remedies provided for in this confidentiality letter agreement shall be cumulative and in addition to and not in lieu of any other rights or remedies available to either party at law, in equity, or otherwise. This letter shall be governed by, and construed in accordance with, the laws of the State of Michigan.

Very truly yours,

SYNTEL, INC.                            CONFIRMED AND AGREED TO:


By: /s/ Daniel M. Moore                 By: /s/ Bharat Desai
    ---------------------------------       ------------------------------------
    Daniel M. Moore                         Bharat Desai
    Chief Administrative Officer

    October 18, 2001                        October 18, 2001

EXHIBIT 10.3