Exhibit 10.10
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT
AND NON-COMPETITION
AGREEMENT
AMENDED AND RESTATED EMPLOYMENT
AND NON-COMPETITION AGREEMENT (this “ Agreement ”) dated as
of December 16, 2008 (the “ Effective Date
”), by and among EXLSERVICE HOLDINGS, INC ., a
Delaware corporation (“ Holdings ” or the
“ Company ”, and together with any subsidiaries
of Holdings, the “ Companies ”), and Vikram
Talwar (the “ Executive ”).
W I T N E S S E T
H :
A. The Companies and Executive are
currently parties to an Employment and Non-Competition Agreement
dated as of September 30, 2006 (the “ Current
Employment Agreement ”).
B. The Company desires to continue
to employ Executive, and Executive is willing to continue to be
employed by the Company, on the terms and conditions set forth in
this Agreement, which amends and restates the Current Employment
Agreement to reflect Executive’s new title and
responsibilities, effective as of the Effective Date.
C. Executive acknowledges that
(i) Executive’s continued employment with the Company
will provide Executive with trade secrets of and confidential
information concerning the Companies and (ii) the covenants
contained in this Agreement are essential to protect the business
and goodwill of the Companies.
Accordingly, in consideration of the
premises and the respective covenants and agreements of the parties
set forth below, and intending to be legally bound hereby, the
parties agree as follows:
Section 1. Employment . The
Company hereby continues to employ Executive, and Executive hereby
accepts such continued employment, on the terms and conditions set
forth in this Agreement. Executive represents that Executive is not
a party to any agreement that restricts Executive’s right or
ability to freely carry out Executive’s duties
hereunder.
Section 2. Employment Term .
Subject to the provisions of Section 7 of this Agreement, this
Agreement shall be effective for a period commencing on the
Effective Date and ending on December 31, 2009 (the “
Initial Employment Term ”); provided, however, that
the Initial Employment Term shall be automatically extended for
successive twelve (12) month periods unless, no later than 120
days prior to the expiration of the Initial Employment Term or any
extension thereof, either party hereto shall provide written notice
to the other party hereto of its or his desire not to extend the
Employment Term hereof (the Initial Employment Term together with
any extension shall be referred to hereinafter as the “
Employment Term ”).
Section 3. Duties, Authority,
Status and Responsibilities .
(a) Executive shall serve as
Executive Chairman of the Company, and in such other position as
the Board of Directors of the Company (the “ Board
”) may from time to time reasonably determine, subject at all
times to the direction, supervision and authority of the Board.
Executive’s duties shall include such duties as the Board may
from time to time reasonably assign, including (i) acting as a
strategic advisor to the Company’s Chief Executive Officer
(including for matters related to mergers and acquisitions),
(ii) providing senior leadership for the sales and marketing
and strategic account management initiatives of the Company (for
the avoidance of doubt, it is understood that these sales and
marketing and strategic account management functions report to the
Company’s Chief Executive Officer), and (iii) performing
the other duties of the Executive Chairman set forth in the
Company’s By-laws. The Company agrees to provide Executive
such assistance and work accommodations as are suitable to the
character of his positions with the Company and adequate for the
performance of his duties. The Executive shall be based at the
Company’s executive offices in India.
(b) During the Employment Term and
except as otherwise agreed by the Company, Executive shall devote
Executive’s full employable time, attention and best efforts
to the business affairs of the Companies (except during vacations
or illness) and will not actively engage in outside activities,
whether or not such activity is pursued for gain, profit or other
pecuniary advantage unless such activity (and the amount thereof)
is approved by the Board. Executive’s list of approved
outside activities with a description of the nature, scope and time
commitment for each of such outside activities is attached hereto
as Schedule 3(b) (the “ Outside Activities
”) (it being understood that such approval is based on the
descriptions set forth in Schedule 3(b) and the level of
activity and the nature of the activities remains consistent with
the description set forth therein). The Board may request Executive
to take reasonable steps to terminate an affiliation with any
entity listed on Schedule 3(b) as promptly as practicable,
but, in any event, no later than three (3) months after such
request (provided, however, if Executive is required to divest any
equity securities, Executive shall have six (6) months from
the date of such request to dispose of such securities), if, in the
Board’s reasonable determination, Executive’s
affiliation with any such entity listed on Schedule 3(b)
presents, or would present, a material harm to the reputation,
business or prospects of the Company. Subject to Executive’s
election or appointment as such, Executive further agrees to serve
(without additional compensation) if so designated by the
stockholders of the Companies, as applicable, during the Employment
Term as a director and a member of any committee of the board of
directors of any of the Companies. In addition to the other titles
and responsibilities described in this Section 3, if requested
by the Board, Executive shall serve (without additional
compensation) during the Employment Term as an officer of any of
the subsidiaries of the Company.
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Section 4. Cash Compensation
.
(a) Subject to paragraph (b)
below, during the Employment Term, Executive shall receive an
annual base salary (the “ Base Salary ”) of FOUR
HUNDRED TWENTY THOUSAND AND 00/100 DOLLARS ($420,000) (the “
Initial Base Salary ”). Notwithstanding the provisions
of Section 4(b), the Base Salary shall be reviewed no less
frequently than annually during the Employment Term for increase,
if any, in the sole discretion of the compensation committee of the
Board (“ Compensation Committee ”). The Base
Salary shall not be decreased at any time, or for any purpose,
during the Employment Term, unless a Company-wide decrease in pay
is implemented. In such case, any decrease in the Base Salary shall
be no greater, as a percentage of the Base Salary, than the lowest
percentage decrease in the base salary of any other member of the
Company’s senior management. The Base Salary shall not be
less than the base salary of any other employee of the Company
subject to section 16 of the Securities Exchange Act of 1934 (the
“ Exchange Act ”), other than those who become
employed by the Company by means of an acquisition of a corporation
or business and become employees of the Company subject to a
preexisting employment arrangement. The Base Salary shall be
payable in accordance with the customary payroll practices of the
Company for salaried employees.
(b) Executive shall have an
opportunity to receive an annual cash bonus equal to 75% of Base
Salary at target, with a maximum payment of no greater than 150% of
Base Salary. The Compensation Committee shall determine the
criteria and thresholds at which the target and maximum bonus shall
be earned, as well as the level of attainment of the bonus criteria
below which no bonus shall be earned, and the level of attainment
at which a bonus of other than 75% or 150% of Base Salary shall be
earned. To the extent there are extraordinary events such as
acquisitions or dispositions, targets will be amended by the Board
to reflect those events. Executive shall be paid Executive’s
annual cash bonus (if any) when bonuses are paid generally to
senior officers of the Company following completion of the audited
financial statements of the Company. Such bonus shall be paid no
later than December 31 of the calendar year following the year
in which such bonus is earned. In the event the Company becomes
subject to Section 162(m) of the Internal Revenue Code of
1986, as amended, and the Treasury Regulations promulgated
thereunder (the “ Code ”), the Committee may
determine to take such action as shall be necessary to preserve the
tax deductibility of the bonus. In that event, this
Section 4(b) shall construed as necessary to do so.
Section 5. Reimbursement of
Expenses . During the Employment Term, Executive shall be
entitled to receive prompt reimbursement for all travel and
business expenses reasonably incurred by Executive (in accordance
with the policies and procedures established from time to time by
the Company) in performing services hereunder; provided that
Executive shall promptly and properly account therefor in
accordance with the Company’s expense policy.
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Section 6. Other
Benefits.
(a) Benefit Plans, etc.
During the Employment Term, Executive shall (i) be able to
participate in all employee benefit plans and programs that are
currently made available to the Company’s senior executives
generally or to its employees generally, including, without
limitation, pension, profit-sharing, savings and other retirement
plans or programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans or programs,
accidental death and dismemberment protection, travel accident
insurance, and any other employee welfare benefit plan or program
that may be sponsored by the Company from time to time, whether
funded or unfunded, and (ii) receive such additional fringe
benefits and perquisites as the Board may, in its sole discretion,
from time to time determine; provided , however ,
that with the exception of the restricted stock award described in
Section 6(h) hereunder, such benefits for Executive shall not
include any equity compensation awards during the Initial
Employment Term, except as may hereafter be awarded at the
discretion of the Compensation Committee. Nothing in this Agreement
shall be construed to require the Company to establish or maintain
any such plans, programs, benefits or perquisites.
(b) Tax Planning Assistance .
The Company shall reimburse Executive up to $12,000 for expenses
incurred during the Employment Term in connection with personal tax
and estate planning.
(c) Vacations . Executive
shall be entitled to four (4) weeks vacation with pay during
each year of the Employment Term. Vacations shall not be taken in a
manner which will unreasonably interfere with Executive’s
duties hereunder. Executive shall also be entitled to all paid
holidays and personal days given by the Company to its senior
executives.
(d) Travel . See Schedule
6 attached hereto.
(e) Transportation . See
Schedule 6 attached hereto.
(f) Relocation . If Executive
relocates his residence at the request of the Company during the
Employment Term, the Company shall, consistent with its relocation
policies, as in effect from time to time, reimburse Executive for
the cost of relocating himself and his immediate family. Executive
also shall be reimbursed for the after-tax costs of maintaining his
residence at the Effective Date subsequent to any such relocation
so as to permit Executive to have the same after-tax value as
though he were not maintaining said residence; provided that
Executive shall use his best efforts to mitigate such costs by
either renting his existing residence for a market rent (in which
case the Company’s obligation shall be limited to the costs
of maintaining such residence in excess of such rent) or selling
such residence at a prevailing market price (in which case the
Company’s obligation shall cease as of and following the
closing of such sale).
(g) Additional Fringe
Benefits . During the Employment Term, Executive shall be
entitled to additional benefits listed on Schedule 6
hereto.
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(h) Equity Awards . Executive
shall be eligible to receive stock option and/or restricted stock
awards annually during the Employment Term. The Compensation
Committee shall have the sole discretion to determine the amount
and form of any such subsequent award; provided that in making such
determination it shall take into account (i) the grant date
value of the 37,500 restricted shares of Series B common stock of
Holdings (“ Common Stock ”) granted to Executive
on July 27, 2006 as the “baseline” value for
subsequent awards, (ii) the Company’s performance
against budget since the grant date of the immediately preceding
equity compensation award to Executive and (iii) any changes
in market compensation of similarly situated executives since the
grant date of the immediately preceding equity compensation award
to Executive. The definitive terms of each such subsequent equity
compensation award shall be set forth in a restricted stock or
stock option agreement, as applicable, between Executive and the
Company substantially in the form of Exhibit A or Exhibit
B attached hereto, as applicable, except that (i) the
vesting shall be on an annual ratable basis over four years
commencing on the date of grant of the award, (ii) the
exercise price of a stock option shall be the fair market value of
the stock subject to such option on the date of grant and
(iii) such terms may be changed by the mutual agreement of
Executive and the Company.
(i) Timing of Certain
Payments . To the extent that any reimbursements pursuant to
Sections 5 or 6 are taxable to Executive, any such reimbursement
payment due to Executive shall be paid to Executive as promptly as
practicable, and in all events on or before the last day of
Executive’s taxable year following the taxable year in which
the related expense was incurred. The reimbursements pursuant to
Sections 5 or 6 are not subject to liquidation or exchange for
another benefit and the amount of such benefits and reimbursements
that Executive receives in one taxable year shall not affect the
amount of such benefits or reimbursements that Executive receives
in any other taxable year.
Section 7. Termination . The
Employment Term and Executive’s employment hereunder may be
terminated under the following circumstances:
(a) Death . The Employment
Term and Executive’s employment hereunder shall terminate
upon Executive’s death. In that event, Executive’s
estate shall be entitled to a lump sum payment in cash equal to the
sum of all accrued cash obligations owing to Executive, plus an
amount equal to a pro-rata portion of the projected bonus amount
for the year during which the death occurs, as reasonably
determined by the Compensation Committee. Following any termination
of Executive’s employment hereunder pursuant to this
Section 7(a), other than as set forth in Section 7(g) the
Company shall have no further obligation to pay any compensation or
provide any benefits, except as expressly set forth
herein.
(b) Disability . Either Party
may terminate Executive’s employment hereunder for
Disability. “ Disability ” shall mean
Executive’s inability, due to physical or mental incapacity,
to substantially perform Executive’s duties and
responsibilities under this Agreement for a period of
180 consecutive days. In conjunction with determining
Disability for purposes of this Agreement, Executive
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hereby (i) consents to any such
examinations which are relevant to a determination of whether
Executive is mentally and/or physically disabled and
(ii) agrees to furnish such medical information as may be
reasonably requested, and to waive any applicable physician-patient
privilege that may arise because of such examination. Not more than
30 days following any termination of Executive’s employment
hereunder pursuant to this Section 7(b), the Company shall
make a lump sum payment in cash to Executive equal to the sum of
all accrued cash obligations owing to Executive, plus an amount
equal to a pro-rata portion of the projected bonus amount for the
year during which the Disability occurs.
In the event of Executive’s
physical or mental incapacity which the Board reasonably determines
is likely to result in a Disability, the Company may temporarily
remove Executive’s job title and relieve him of his
responsibilities until the time when Executive returns to his
employment in the same capacity as prior to such incapacity or is
terminated in accordance with this Section 7(b), and such
removal of title shall not constitute the removal of title (as
contemplated by clause (B) of Section 7(d)) for the
purpose of determining “Good Reason’ (as defined
below). Notwithstanding the foregoing, if Executive resumes his
duties within 180 days of such incapacity, his title and position
shall be reinstated.
(c) Termination for Cause;
Voluntary Termination; Expiration of the Employment Term . The
Employment Term and Executive’s employment hereunder may be
terminated (i) by the Company for “Cause” (as
defined below) by written notice, specifying the grounds for Cause
in reasonable detail, and (ii) by Executive
“voluntarily” (that is, other than for Disability or
Good Reason in accordance with Section 7(b) or 7(d)).
Executive’s employment shall be terminated at the end of the
Employment Term following either party hereto giving the other a
notice of its or his desire not to extend the Employment Term in
accordance with Section 2. “Cause” shall
mean:
(A) a final non-appealable
conviction of, or a pleading of no contest to, (i) a crime of
moral turpitude which causes serious economic injury or serious
injury to the Company’s reputation or (ii) a felony;
or
(B) fraud, embezzlement, gross
negligence, self-dealing, dishonesty or other gross and willful
misconduct which has caused serious and demonstrable injury to the
Company;
(C) material violation by Executive
of any material Company policy;
(D) willful and continuing failure
to substantially perform Executive’s duties (other than for
reason of physical or mental incapacity) which failure to perform
continues beyond fifteen (15) days after a written demand for
substantial improvement in Executive’s performance,
identifying specifically and in detail the manner in which
improvement is sought, is delivered to Executive by the Company;
provided that a failure to achieve performance objectives shall not
by itself constitute Cause and no act or failure to act by
Executive shall be considered “willful” unless done or
failed to be done by Executive in bad faith and without a
reasonable belief that Executive’s actions or omission was in
the best interest of the Company;
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(E) Executive’s failure to
reasonably cooperate in an investigation involving the Company by
any governmental authority;
(F) Executive’s material,
knowing and intentional failure to comply with applicable laws with
respect to the execution of the Company’s business
operations, including, without limitation, a knowing and
intentional failure to comply with the Prevention of Corruption Act
of India, 1988, or the United States Foreign Corrupt Practices Act
of 1977, as amended; provided, that, if all of the following
conditions exist, there will be a presumption that Executive has
acted in accordance with such applicable laws: Executive is
following, in good faith, the written advice of counsel, such
counsel having been approved by the Board as outside counsel to the
Company for regulatory and compliance matters, in the form of a
legal memorandum or a written legal opinion, and Executive has, in
good faith, provided to such counsel all accurate and truthful
facts necessary for such counsel to render such legal memorandum or
written legal opinion;
(G) Executive’s failure to
follow the lawful directives of the Board which is not remedied
within fifteen (15) days after Executive’s receipt of
written notice from the Company specifying such failure;
(H) Executive’s use of alcohol
or drugs which materially interferes with the performance of his
duties; or
(I) Executive’s failure to
take the reasonable steps necessary to terminate his affiliation
with any entity listed on Schedule 3(b) within six
months after being requested by the Board, pursuant to
Section 3(b) hereof, to take such action.
Following any termination or
expiration of the Employment Term and Executive’s employment
hereunder pursuant to this Section 7(c), other than as set
forth in Section 7(g) Executive shall not be entitled to
receive any further compensation or payments under the Agreement
(except for Base Salary relating to Executive’s services
prior to the termination date).
(d) Termination for Good Reason
or Without Cause . The Employment Term and Executive’s
employment hereunder may be terminated (i) by Executive for
Good Reason and (ii) by the Company “Without
Cause” (that is, other than for Disability or Cause in
accordance with Section 7(b) or 7(c)). “ Good
Reason ” shall mean the occurrence, without
Executive’s prior written consent, of any of the following
events:
(A) a substantial reduction of
Executive’s duties or responsibilities, or Executive being
required to report to any person other than the Board, provided
that, if there is a “Change of Control” (as defined
below) and Executive retains similar title and similar authority
with the Company or any entity that acquires the Company (or any
affiliate or subsidiary of such entity) following such Change of
Control, the parties agree that any change in the title of
Executive shall not constitute a significant reduction of
Executive’s duties and authorities hereunder;
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(B) Executive’s job title as
an officer of the Company is adversely changed, provided that if
there is a Change of Control and Executive retains similar title
and similar authority with the Company or any entity that acquires
the Company (or any affiliate or subsidiary of such entity)
following such Change of Control, the parties agree that any change
in the title of Executive shall not constitute a significant
reduction of Executive’s duties and authorities
hereunder;
(C) a reduction of Executive’s
then Base Salary or annual cash bonus opportunity to below 75% of
Base Salary at target other than that described in
Section 4(a);
(D) a change in the office or
location where Executive is based on the Effective Date of more
than thirty (30) miles, which new location is more than thirty
(30) miles from Executive’s primary residence;
or
(E) a breach by the Company of any
material term of the Employment Agreement;
provided that, a termination by
Executive with Good Reason shall be effective only if, within 30
days following Executive’s first becoming aware of the
circumstances giving rise to Good Reason, Executive delivers a
“Notice of Termination” (as defined in
Section 7(i)) for Good Reason by Executive to the Company, and
the Company within 15 days following its receipt of such
notification has failed to cure the circumstances giving rise to
Good Reason.
(e) Severance . If
Executive’s employment hereunder is terminated pursuant to
Section 7(d) hereof, Executive will be entitled to:
(i) 24 months of Base Salary plus
payment of Executive’s actual bonus earned for year of
termination as determined in accordance with the Company’s
annual incentive plan as if Executive had been employed for the
full year in which Executive terminates, such Base Salary to be
paid ratably for 24 months in accordance with Company’s
existing payroll practices (such payment to begin as soon as
practicable, and in all events within 30 days following termination
of employment) and such actual bonus, if any, to be paid ratably
over the remaining period and number of Base Salary payments
hereunder, commencing after the Compensation Committee has
determined such bonus amount (such payment to begin as soon as
practicable, and in all events within 30 days following the
determination of the bonus amount), provided that if amounts paid
under this Section 7(e) are determined to be “deferred
compensation” within the meaning of Section 409A of the
Code (“ Section 409A ”)and Executive is deemed
to be a “specified employee” as defined
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in Section 409A(a)(2)(B)(i) of
the Code and the regulations issued thereunder relating to deferred
compensation, then any payments due hereunder in respect of the six
months immediately following Executive’s termination of
employment shall be paid in a single lump sum on the
Company’s first regularly scheduled pay date occurring more
than six months following Executive’s termination of
employment;
(ii) continuation of life insurance
coverage provided pursuant to Section 6(a) for the eighteen
(18) month period following termination of employment so long
as such continuation of coverage is permitted under the
Company’s benefit plans and applicable law; provided ,
that , such coverage shall terminate if Executive commences
employment with a subsequent employer within the applicable period;
and
(iii) the benefits set forth in
Section 7(g).
(f) Termination Following a
Change of Control . Notwithstanding anything in this
Section 7 to the contrary, if Executive’s employment is
involuntarily terminated by the Company without Cause or Executive
terminates employment for Good Reason within 12 months following a
Change of Control, then Executive shall receive, in complete
satisfaction of all payments (including severance) due under this
Agreement, (i) Base Salary relating to Executive’s
services prior to the termination date and (ii) a lump sum
payment of $999,000. The payments referred to in subclauses
(i) and (ii) of this Section 7(f) shall be paid as
soon as practicable, and in all events within thirty (30) days
following termination of employment; provided that if the Change of
Control does not satisfy the definition of a change in the
ownership or effective control of a corporation, or a change in the
ownership of a substantial portion of the assets of a corporation
pursuant to Section 409A, then the payment referred to in
subclause (ii) of this Section 7(f) will be paid ratably
for 24 months in accordance with Company’s existing payroll
practices, such payment to begin as soon as practicable, and in all
events within 30 days following termination of employment;
provided, further, that if amounts paid under this
Section 7(f) are determined to be “deferred
compensation” within the meaning of Section 409A and
Executive is deemed to be a “specified employee” as
defined in Section 409A(a)(2)(B)(i) of the Code and the
regulations issued thereunder relating to deferred compensation,
then the payment referred to in subclause (i) of this
Section 7(f) and the first of the ratable payments referred to
in subclause (ii) of this Section 7(f) shall be paid on
the Company’s first regularly scheduled pay date occurring
more than six months following Executive’s termination of
employment (the remainder of the ratable payments referred to in
subclause (ii) to continue to be paid ratably in accordance
with such subclause). In addition, upon a termination of employment
described in this Section 7(f), (iii) Executive shall
receive the benefits set forth in Section 7(g) and
(iv) all unvested equity awards granted on or after the
Effective Date and held by Executive shall become fully vested and,
in the case of stock options, exercisable.
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(g) Post-Termination Health
Insurance . Upon the cessation of Executive’s employment
hereunder for any reason other than termination by the Company for
Cause or a voluntary termination by Executive (in each case under
Section 7(c)), the Company shall pay on behalf of Executive and his
eligible dependents the cost of continued coverage under the
Company’s group health plan for eighteen (18) months
following such cessation in accordance with the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“ COBRA
”), subject to such persons making ti
