Exhibit 10.2
EXECUTION COPY
EXLSERVICE HOLDINGS,
INC.
SEPARATION
AGREEMENT
This Separation Agreement (this
“ Agreement ”) is entered into by and between
ExlService Holdings, Inc. (the “ Company ”) and
Matthew Appel (the “ Executive ”) and dated as
of October 10, 2008 (the “ Effective Date
”).
In consideration of the promises set
forth in this Agreement, the Executive and the Company (the “
Parties ”) hereby agree as follows:
1. Termination of
Employment.
The Executive and the Company hereby
agree that Executive’s employment and any and all
appointments he holds with the Company and any of its affiliates or
subsidiaries (collectively, the “ Company Group
”), whether as officer, director, employee, consultant, agent
or otherwise, shall cease as of March 16, 2009 (the “
Termination Date ”); provided, however, that if the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 (the “ Annual Report
”) is not filed with the Securities and Exchange Commission
(“ SEC ”) on or prior to March 16, 2009,
(a) the parties may extend the Termination Date by mutual
agreement or (b) if so required pursuant to Section 2B
hereof, the Company shall extend the Termination Date to the
earlier of the date the Annual Report is filed with the SEC and
April 15, 2009. Effective as of the Termination Date, the
Executive shall have no authority to act on behalf of the Company
or any other member of the Company Group, and shall not hold
himself out as having such authority or otherwise act in an
executive or other decision-making capacity.
The Company agrees that prior to the
Termination Date the Executive’s employment with the Company
Group shall not be terminated by the Company for any reason other
than for “Cause”, as defined in the Employee Offer
Letter dated February 22, 2007 from the Company to the
Executive (the “ Offer Letter ”). The Executive
agrees not to voluntarily terminate his employment with the Company
Group prior to the Termination Date. Both the Company and the
Executive agree that the Executive’s termination under this
Agreement is not to be regarded as a termination of the
Executive’s employment by the Company without Cause or a
termination of the Executive’s employment by the Executive
for “Good Reason”, as defined in the Offer
Letter.
The Executive acknowledges that from
the Effective Date through the Termination Date the Executive will
continue (without regard to the existence of this Agreement or the
Executive’s departure from the Company as contemplated
hereby) to devote his entire business time and best efforts to the
performance of his duties hereunder as the Chief Financial Officer
of the Company including, without limitation, timely filing the
Annual Report with the SEC, and will continue to follow the lawful
instructions of the Board.
2. Entitlements.
A. As of and after the Termination
Date, the Executive shall no longer participate in, accrue service
credit or have contributions made on his behalf under any employee
benefit plan sponsored by any member of the Company Group in
respect of periods commencing on and
following the Termination Date, including,
without limitation, any plan which is intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as
amended. The Executive shall be entitled to all benefits accrued up
to the Termination Date, under all employee benefit plans of any
member of the Company Group, in accordance with the terms of such
plans. The Executive may maintain his employee medical benefits
under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“ COBRA ”) at his own
expense.
B. In consideration for the
Executive’s entering into this Agreement, subject to
(i) Executive’s achievement of a performance rating of
at least 3 on the 5 point scale of the Company’s appraisal
process (provided that for this purpose such performance shall be
measured against performance goals to be mutually agreed between
the Company and the Executive for the remaining period of
employment through the Termination Date) and
(ii) Section 6 below, the Company will provide the
Executive with a lump sum cash payment of $150,000 (the “
Payment ”), payable on the business day after the day
on which the Company has filed the Annual Report with the SEC;
provided , however , that the Annual Report is filed
on or before March 16, 2009; provided , further
, that (1) if the Company is unable to file its Annual Report
with the SEC on or before March 16, 2009 due to events or
matters which are both (x) not within the scope of
Executive’s duties as Chief Financial Officer of the Company
(which duties, for the avoidance of doubt, include, without
limitation, the management of the financial and accounting
functions and personnel within the Company and its subsidiaries)
and (y) otherwise beyond the reasonable control of the
Executive, the Company shall extend the Termination Date to a date
on or before April 15, 2009, and the Executive shall be
entitled to receive the Payment if the Company files the Annual
Report with the SEC prior to the Termination Date (as so extended)
and (2) if the parties agree to extend the Termination Date as
contemplated by Section 1 hereof, then the Executive shall
still be entitled to receive the Payment if the Company files the
Annual Report with the SEC prior to the Termination Date (as so
extended). In addition, subject to Section 6 below, the
Company will provide the Executive with an additional lump sum cash
payment of $25,000 in the event (I) the Executive certifies
the Annual Report for purposes of Sections 302 and 906 of the
Sarbanes-Oxley Act, and (II) the Executive assists in the
production of an internal control report pursuant to
Section 404 of the Sarbanes-Oxley Act which affirms the
responsibility of the Company’s management for establishing
and maintaining an adequate internal control structure and
procedures for financial reporting and which contains an
assessment, as of December 31, 2008, of the effectiveness of,
and the absence of a material weakness in, the internal control
structure and procedures of the Company for financial reporting,
and (III) the Company’s auditors confirm in their opinion (as
part of the Annual Report) that the Company maintained, in all
material respects, internal control over financial reporting as of
December 31, 2008.
C. Except as otherwise provided in
Section 2H below, the Executive agrees that other than the
payments enumerated in Section 2B above, the Executive shall
not be entitled to receive any other severance payments from the
Company Group, whether under the terms of the Offer Letter or any
other separation pay plan maintained by the Company Group. The
Executive shall also not receive a bonus in respect of the
Company’s 2008 fiscal year.
D. Notwithstanding anything to the
contrary in this Agreement: (i) nothing in this Agreement
shall affect the ability of the Company under the Offer Letter to
terminate the Executive’s employment for “Cause”
(as defined in the Offer Letter) and the Company
reserves
2
is rights under the Offer Letter and applicable
law to take appropriate action if it determines (whether before, on
or after the Termination Date) that it has (or had) grounds to
terminate the Executive’s employment for Cause; and
(ii) if the Executive’s employment is terminated for
Cause, the Executive shall have no entitlement to any of the
payments or benefits provided under this Agreement.
E. Except as otherwise provided in
Section 2H below, any equity compensation award held by the
Executive on the Termination Date shall be treated in accordance
with its terms. For the avoidance of doubt, upon the
Executive’s termination of employment on the Termination
Date, the Executive shall not be required to repay any amounts
pursuant to the last sentence of the last paragraph of the
“Relocation” section of the Offer Letter.
F. All restrictions and obligations
set forth in the Offer Letter (including, without limitation, those
governing noncompetition, nonsolicitation, nondisparagement
(including the Company’s obligations under the Offer Letter
in respect thereof) and confidentiality) shall continue in full
force and effect in accordance with their terms and shall survive
the termination of the Executive’s employment to the extent
necessary to preserve the intended rights and benefits
thereunder.
G. The Company shall not object to
any application for Unemployment Insurance Benefits made by or on
the behalf of the Executive and shall cooperate with any
application, inquiry or investigation necessary to establish
benefits.
H. Nothing in this Agreement shall
affect the change in control provisions of any equity compensation
awards granted to the Executive or the change in control provisions
of the Offer Letter.
3. Return of Company
Property.
A. No later than the Termination
Date, the Executive shall return to the Company all originals and
copies of papers, notes and documents (in any medium, including
computer disks), prepared, received or obtained by the Executive or
his counsel during the course of, and in connection with, his
employment with the Company or any member of the Company Group, and
all equipment and property of any member of the Company Group which
may be in the Executive’s possession or under his control,
whether at the Company’s offices, the Executive’s home
or elsewhere, including all such papers, work papers, notes,
documents and equipment in the possession of the Executive and his
counsel. The Executive agrees that he and his family and counsel
shall not retain copies of any such papers, work papers, notes and
documents.
B. Notwithstanding the foregoing,
the Executive may retain copies of any agreements between the
Executive and the Company relating to the Executive’s
employment and compensation for services, this Agreement and any
employee benefit plan materials distributed generally to
participants in any such plan by the Company.
4. Reconciliation.
A. On the Termination Date, all
telephone, credit card and other accounts being paid by any member
of the Company Group on the Executive’s behalf shall be
terminated and all
3
related telephone cards, credit cards and other
similar instruments shall be returned to the Company and canceled.
To the extent any charges are made by the Executive using such
company accounts, telephone cards, credit cards and other similar
instruments after the Termination Date, such charges will be solely
the Executive’s responsibility.
B. The Executive shall have 30 days
following the Termination Date to submit to the Company all
receipts, invoices, statements or other documents supporting his
entitlement to reimbursement for any properly incurred business
expenses, consistent with the terms of the Executive’s
employment and the policies of the Company Group. Where such
receipts, invoices, statements or other documents are not yet
available, for example, including but not limited to, credit card
statements for a billing cycle that has not yet closed, the
Executive shall have no more than 90 days from the Termination Date
to submit such documentation in support of a request for
reimbursement.
5. Communications and
Cooperation.
A. The Company shall have discretion
(after consultation with the Executive) regarding the timing,
content and any and all aspects of its internal, external and media
communication concerning the termination of the Executive’s
employment by the Company, so long as such communications accord
with the terms of this Agreement. The Executive shall not
participate in any such communication without the advance consent
of the Company’s General Counsel or his designee.
B. The Executive shall cooperate in
the orderly transition of Executive’s responsibilities and
duties to Executive’s successor who shall be appointed by the
Company Group. In addition, the Executive shall continue to make
himself available at reasonable times, so as not to unreasonably
interfere with his ongoing business activities, to answer questions
relating to the historic operation and administration of the
Company Group. In addition, the Executive agrees to cooperate fully
with the Company Group in connection with litigation, arbitration
and similar proceedings (collectively “ Dispute
Proceedings ”) and to provide truthful testimony with
respect to the Executive’s knowledge in any such Dispute
Proceedings involving the Company and or any member of the Company
Group, without additional compensation or consideration from the
Company, provided that if the Executive is requested by the
Company or the Company Group to cooperate as provided in this
Section after the one year anniversary of the Termination Date,
then the Executive shall be compensated on an hourly basis at the
rate of $250 per hour, subject to a daily maximum of $2,000, for
such cooperation. In the event that the Executive is requested by
the Company or the Company Group to cooperate as required in this
Section, the Company shall reimburse the Executive for all his
reasonable and documented out-of-p
