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December 30, 2004
Mail Stop 4-9
Vikram Talwar
Chief Executive Officer
ExlService Holdings, Inc.
350 Park Avenue
New York, NY 10022
Re: ExlService Holdings, Inc.
Registration Statement on Form S-1 Filed December 3,
2004
Registration No. 333-121001
Dear Mr. Talwar:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. We note your disclosures that you sold options to purchase
Class
A and Class B common stock to directors, officers, employees,
former
employees and consultants from June 2003 to July 2004. We also
note
your stated belief that these issuances were all exempt from
registration under the Securities Act pursuant to Section 3(a)(9),
Section 4(2) and Regulation D, Rule 701, and a "no-sale" theory
under
Section 5. Please tell us the aggregate number of purchasers
involved in the private placement and when the options became
exercisable. For each issuance, please tell us the identity of
the
purchasers or class of purchasers and their relationship to the
issuer, if any, the number of options granted to each such
purchaser
and the date of issuance. For each such issuance please tell us
which exemption was relied upon and the basis for such reliance.
Please provide us with your analysis of the availability of each
exemption relied upon. Your analysis should include, among other
things, a discussion of the facts relied upon and a discussion of
the
precautions that were taken to avoid having the manner in which
the
offering was conducted constitute a general solicitation. Also
include a discussion of the facts that you relied upon in making
your
determination that each of these issuances was exempt under the
exemption relied upon. For example, for issuances upon which you
relied on Section 4(2), were investors provided with information
similar to the information that would have been contained in a
registration statement? Was an inquiry undertaken as to the
purchasers` sophistication and ability to bear the economic risks
of
the investment? Please tell us how each person or entity
qualified
as a "sophisticated investor" and if you believe an entity was a
sophisticated investor because all of its equity owners were
sophisticated investors, please identify all of those equity
owners
and how you determined their sophistication.
2. Supplementally, please tell us what consideration you gave to
the potential integration of the issuances of shares and options
in
connection with the share conversion that will take place
immediately
prior to the completion of the offering. Please file, or provide
us
supplementally, with a copy of your Certificate of Incorporation
that
governs the conversion of the shares and options.
Cover Page
3. Confirm that you will not circulate a preliminary prospectus
until such time as you include an estimated price range and fill
in
blanks throughout the filing. We may have further comments when
your
filing includes complete disclosure.
Outside Back Cover Page
4. We note the text under the "Industry and Market Data" heading.
You may not disclaim responsibility for information contained in
your
prospectus. If you intend to use the data throughout your
prospectus, you should delete the disclaimer. In addition,
supplementally provide supporting material, including the report
from
the Gartner Group, for any data used, marking the relevant
sections
for our review. Note also that if such information was prepared
for
the company in connection with the proposed offering, you must
file a
consent from the provider for the use of its name and the
information
attributed to it.
Summary
General
5. Revise your summary to provide a brief overview of your
offering, and a more succinct description of your business, which
is
more completely discussed in the business section of your
document.
6. In a table or other similar readily identifiable manner,
state
the percentage of shares that will be held by the executive
officers,
directors, and/or affiliate stockholders after this offering.
7. Eliminate or reduce the use of acronyms like BPO, BFSI, and
CAGR
in the summary and forepart of the filing; and revise the
disclosure
so that when they are used, their meaning is clear and their use
enhances investor understanding. See updated Staff Legal Bulletin
No. 7 (June 7, 1999) sample comments 1, 3 and 5.
8. Please limit the use of defined terms and industry jargon in
the
forepart of the filing so that it is clear to investors who may
not
be familiar with your industry. See Rule 421(b). We note the
last
sentence of the second paragraph under the "Our Business" heading
and
the following non-exhaustive list of industry terms throughout the
summary:
* value-added
* business process outsourcing
* domain expertise
* global delivery model
* broad-based expertise
* integrated front-middle and back-office process outsourcing
solutions
* migration
* end-to-end outsourcing reconciliation
* integrated global delivery platforms
* scaleable infrastructure
* six Sigma methodology
* Kaizen initiatives
* offshore delivery capabilities
9. Some of your risk factors are too general and could apply to
any
issuer or offering. For example, the risks described under the
general caption, "Risks Related to India and the International
Nature
of our Business," beginning on page 14, should be revised to
Disclose
how each risk has specifically impacted your operations to date.
For
example:
* Has your business suffered any disruptions from the economic,
political, social, and military uncertainties described on page
15?
* Have you suffered any disruptions on your operations or any
decrease in client confidence in your business as a result of any
terrorist activities in India to date (page 15)?
* Have your employees had difficulty obtaining entry visas in
recent
times (page 16)?
Our Business, page 1
10. Provide supplemental support for your statements of
leadership
here and throughout your document, marking the relevant portions
of
any material provided for our review.
11. In the first paragraph, provide greater disclosure regarding
when the majority of your long term business contracts are set to
expire, including the portion of your revenues tied to contracts
that
are set to expire during the next twelve months.
12. If you choose to highlight your increase in revenues in the
opening paragraph, please also disclose that, prior to the current
period, you have experienced net losses.
13. In the second paragraph, explain the significance of the "140
processes" (which we assume are types of jobs within an
organization/business). For example, of the "140 processes" you
have
transferred to your operations centers, how many of them were
transferred on behalf of the same client? You should revise to
discuss the number in context so that investors can understand how
it
relates to your business success/failure.
14. Clarify whether the increase in the number of employees
mentioned in the third paragraph includes employees from India and
disclose the relative number of those Indian employees. Also,
balance the disclosure by stating, if true, that some of the
increase
in employee numbers is a function of the high turnover rate you
experience as described on page 11.
15. We note the last sentence in paragraph three. Revise to
describe the significance of these awards to your business, and
provide copies of the certificates for our review.
EXL`s Competitive Strengths, page 2
16. If you choose to discuss your strengths in the summary,
balance
that disclosure by briefly discussing your competitive weaknesses.
For example, when discussing experience with banking, financial
services, and insurance, clarify that you rely on a few
industries;
and when discussing long-term client relationships, clarify that
you
depend primarily on two clients.
17. We note your statement here and throughout the prospectus
that
you have relatively predictable and recurring revenues as a result
of
the long-term contracts you have entered into with your clients.
We
further note your disclosure on page 26 of the prospectus that
contracts representing a majority of your revenues are terminable
at
will by the client, with or without cause. This would appear to
greatly impact the predictability and recurring nature of your
revenues. In light of this, please revise to clearly indicate
that,
even though you have long-term contracts, a majority of them may
be
terminated for any reason at any time by the client.
18. Please refrain from making statements that cannot be easily
proved such as a reference to your "reputation for superior
service."
Information About the Company, page 3
19. In future amendments please use a more recent date to
determine
the exchange rate between U.S. dollars and Indian rupees.
Share Conversion, page 4
20. When known, please disclose the number of common stock
outstanding after the share conversion and the number of shares
issuable upon exercise of the options to purchase Class A shares.
Disclose also the number of freely tradable shares after the
offering, including the number of shares subject to registration
rights upon commencement of this offering.
Summary Consolidated Financial and Other Data, page 8
21. The usefulness of EBITDA adjusted for non-recurring items to
derive Adjusted EBITDA is not evident. Please expand your
disclosure
to demonstrate the usefulness of adjusting EBITDA for goodwill
impairment and extraordinary items. Refer to Questions 8, 9 and
10
of Frequently Asked Questions Regarding the Use of Non-GAAP
Financial
Measures ("FAQ"). In addition, please revise your disclosure to
characterize the measure as something other than EBITDA as
discussed
in Question 14 of the FAQ.
Risk Factors-Beginnings on Page 9
General
22. We refer to the introductory paragraph on page 9 where you
indicate that you may face other risks or uncertainties which may
adversely affect your business. You must disclose all risks that
you
believe are material at this time. Please delete language related
to
other risks or unknown risks from your disclosure.
23. Please add a risk factor discussing the high regulatory
nature
of your business as described on page 55, and discuss the risks
associated with failing to adhere to the regulations, or failing
to
obtain or renew any required licenses.
24. Please add a risk factor describing an investor`s ability to
bring an original action in India to enforce liabilities based
upon
the U.S. federal securities laws against you, your operating
subsidiaries in India, and the executive officers that reside
there.
Discuss also the limitations in effecting service of process as
described on page 89.
25. Add a risk factor disclosing the number of potentially free
trading shares resulting from the registration rights agreement
you
describe on page 73 and 74 and the impact those free trading
shares
would have on the value of your stock.
26. Consider adding a risk factor discussing the increase in
costs
of becoming a public company and complying with requirements under
the Sarbanes-Oxley Act.
Risks Related to Our Business
We have a limited independent operating history...Page 9
27. Quantify the portion of your revenues derived from Conseco in
recent periods, for example, since November 2002.
We have a limited number of clients...Page 9
28. State the total percentage of revenues derived from the two
major clients in the heading of this risk factor.
29. Disclose the termination dates for your contracts with
Norwich
and Dell and briefly explain their rights to terminate the
contracts.
30. State that Norwich is a United Kingdom based company.
We have a long selling cycle...Page 10
31. It appears that the discussion in the first and second
paragraph
represents a separate risk factor from that discussed in the third
paragraph. Consider separating these two risk factors. In the
selling cycle discussion, disclose your success rate with closing
a
sale of your services to potential clients given that you have
only
two major customers.
Our operating results may experience significant
variability...Page
10
32. Discuss the extent to which the factors listed in this risk
factor have impacted your operations in the past.
Our inability to effectively manage...page 11
33. Discuss more specifically the impact of the rapid pace of
your
growth on your business to date. For example, disclose any
disruptions to your business caused by recruiting, training, and
retaining so many employees in the span of four years.
34. Disclose the destination of the facility you plan to invest
in
outside of India. We note also your belief that the new facility
will provide higher value to your customers through "risk
diversification." Discuss more specifically what "risks" need to
be
diversified and how opening a new facility will address that goal.
Also, how are you "committed" to opening the new facility? Have
you
entered into a lease or a contractual agreement? If so, any such
commitment should be discussed more fully in the business or MD&A
section of your prospectus.
We may fail to attract and retain....page 11
35. Quantify the impact of the high turnover rate on your
operations
in recent periods. For example, disclose the cost of revenues for
recent periods.
36. How has the high turnover rate impacted your ability to
service
your current clients and obtain new clients? We note that you
have
serviced few clients since the company was founded.
Wage increases in India...page 11
37. Discuss the basis for your belief that wages in India are
increasing at a faster pace than those in the United States. For
example, are wages in India increasing as a result of recent
legislation, or other political factors? If so, disclose. Also,
discuss the impact of the declining U.S. dollar on U.S. wages as
compared to Indian wages.
The BPO industry may not develop in ways that we...page 12
38. Clarify whether your discussion on restricting federally
funded
US private companies from outsourcing jobs is based on currently
proposed legislation, or just a matter of concern more generally.
In
that regard, do your clients rely on federal and state contracts
for
their operations?
We face significant competition...page 13
39. Revise the heading of this risk factor to identify the
sources
of your competition specifically rather than stating that they
originate from a "variety of sources." Also, it should be clear
in
the heading that your major source of competition derives from
your
own clients who can perform their own jobs in-house or make their
own
arrangements to outsource jobs abroad. We note, for example, the
agreement you have with Norwich that allows for Norwich to assume
operations in Pune.
Our client contracts contain certain termination and other
provisions...page 13
40. Revise to discuss the specific termination provisions that
apply
to your major clients such as Norwich Union and Dell. For
example,
what are the terms under which those clients can terminate your
agreement with cause versus without cause? Also, define "little
advance notice" (six months?). In this risk factor you should
also
quantify the revenues derived from those clients that materially
contribute to your revenue so that investors can better evaluate
the
risk of loss of those clients.
41. Clarify also that certain of your contracts with your major
clients can be terminated without cause after the initial
termination
date as described on page 51, and disclose the initial termination
dates.
42. Please limit the use of cross-references here and in the risk
factor section in general and revise to include the information
necessary to convey the material risk. For example, disclose the
effective date of the Pune and Noida agreements and the three and
five year term minimums. Discuss also the Pune Agreement non-
competition clause mentioned on page 75.
Oakhill Capital Partners, FTVentures, certain of their respective
affiliates...page 14
43. Disclose the amount and percentage of shares that each of the
persons/entities named in this risk factor hold after the
offering.
44. Please describe the affiliation, if any, among the entities
listed under this risk factor. For example, would the entities be
considered a "group" that would have the ability to exercise
control
over matters that come to a vote? In addition, to the extent that
the aggregate ownership percentage exceeds 50 percent following
the
offering, please revise the risk factor heading and discussion to
clarify that they would be able to "control" most matters that
come
before the board, not merely "exercise significant influence" over
them.
We may not succeed in identifying suitable acquisitions...page 14
45. Supplementally advise us whether you have identified an
acquisition target and/or are in discussions regarding an
acquisition. We note on page 11 your statement that you are
committed to investing in an operations center outside of India.
We
may have further comment.
Substantial future sales of shares of our common stock...page 17
46. Disclose any conditions under which the parties may waive the
lock-up provisions. We note on page 86 that Citigroup and Goldman
Sachs may release any of the securities subject to the lock-up
agreements at any time without notice in their sole discretion.
Delaware law and our amended and restated...page 17
47. Briefly describe the provisions that could delay or prevent a
change in control rather than to provide a cross-reference in this
risk factor.
Use of Proceeds-Page 19
48. Disclose the amount of accrued dividends in the first bullet
point and the amount of accrued interest in the second bullet
point
as of September 30, 2004.
49. Please revise this section to provide investors with more
details regarding your intended uses for the majority of the net
proceeds to be received in this offering. Specifically, we note
your
plans for hiring up to an additional 350 employees, opening a new
facility in India and investing in an operations facility outside
of
India during 2005. Based on your existing cash position, it
appears
that proceeds may be used for some or all of these specific
purposes.
Please revise or advise.
Selected Consolidated Financial Data, page 23
50. Please provide this tabular financial information in a left
to
right format beginning with the most recent fiscal period for
consistency with the audited financial statements included in this
registration statement. Refer to SAB Topic 11:E.
Managements Discussion and Analysis of Financial Condition and
Results of Operations
Critical Accounting Policies, page 29
51. Please include a discussion of your accounting policy as it
relates to your pension plan liability. Specifically, explain your
assumptions in calculating the liability for each period and
methodology for determining those assumptions. In addition,
please
provide readers with a quantitative analysis of the impact those
assumptions have on your earnings and financial condition. Please
supplementally provide us with your basis for the discount rate
and
rate of compensation increase assumptions for the year ended
December
31, 2003.
Results of Operations, page 31
52. Please include a disclosure of the primary reasons for the
increase in the income tax provision between the combined year
ended
December 31, 2002 and the year ended December 31, 2003, as well as
the reasons for the effective tax rate of approximately 262% for
the
year ended December 31, 2003.
53. For purposes of clarity, please consider including a
discussion
of the results of operations of the Company, its predecessor and
pre-
predecessor for only the following periods:
a. Nine-months ended September 30, 2004 compared to the nine-
months
ended September 30, 2003
b. Year ended December 31, 2003 compared to the combined year
ended
December 31, 2002
c. Combined year Ended December 31, 2002 compared to the combined
nine-month period ended December 31, 2001.
54. We note that the portion and amount of your revenues relating
to
new clients decreased significantly during the nine months ended
September 30, 2004 as compared to the nine months ended September
30,
2003. Please discuss the reasons for this and consider whether
this
represents a trend in your results of operations.
Liquidity-Beginning on page 36
55. Please revise your disclosure to specifically explain what
"improvements in working capital management" were made in 2003.
In
addition, please further explain all underlying drivers
contributing
to changes in working capital and in cash flows from operations
for
each period. Finally, note that changes in non-cash items, such
as
depreciation and amortization should have no impact on any changes
in
cash flows. Refer to SEC Release 33-8350 for additional guidance.
56. Discuss liquidity on a long-term (greater than 12 months)
basis.
Also, in the fourth paragraph on page 37 tell us how you expect to
incur $12 million in capital expenditure in 2005 to open two new
facilities (Noida, India and another facility "outside of India")
when you incurred $10 million in the nine-months ended September
2004
to open only one new facility. Disclose the location of the
facility
you intend to open outside of India.
57. Does your liquidity analysis include the anticipated
expenditure
for your compliance with Sarbanes-Oxley given your status as a
future
public company?
Contractual Obligations, page 38
58. Please expand your disclosure with respect to the incentives
received by EXL India, including the amounts and when the
incentives
are set to expire.
Board Structure and Compensation-Beginning on page 59
59. Clarify whether the public offering is conditioned on your
amending and restating your by-laws to implement the board
structure
you have identified here. If not, consider adding a risk factor
that
alerts investors to the impact on your company if the board
structure
you have proposed is not implemented.
Employment Agreements, page 62
60. We note that Messrs. Talwar and Kapoor are each eligible for
annual bonuses of up to $100,000; however, it appears that each
was
paid a bonus of $237,500 during 2003. Please advise as to whether
a
portion of this bonus relates to the initial bonus each received
upon
entering into the employment agreements in 2002. If not, please
explain why the bonuses exceeded the amounts included in the
employment agreements.
Principal Stockholders-beginning on page 72
61. Clarify in simple terms what you mean by "gross up." Also,
disclose whether the termination of the agreement between Mr.
Talwar
and TCV is conditioned on completion of the public offering. In
addition, please provide greater disclosure as to what you mean by
"approval rights and additional equity sales" as referenced in the
last sentence under this heading. Finally, please file the
agreement
as an exhibit to the registration statement.
Termination of Stockholder`s Agreement
62. Expand to briefly describe the terms of the Stockholder`s
agreement and how termination of that agreement upon consummation
of
the offering will impact other shareholders. How many shares
does
the agreement involve? Clarify whether the termination of the
agreement is conditioned on the public offering going forward and
add
any risk factors highlighting the impact on shareholders in any
event.
Management Agreement, page 77
63. Please describe the nature of the services performed by Oak
Hill
and FTVentures under this agreement.
Other Related Party Transactions-Page 77
64. Tell us why you have not disclosed the relationships between
Steven Gruber, Bradford Bernstein, and certain of your beneficial
holders/affiliates.
Underwriting-Beginning on Page 86
65. We note your disclosure on page 87 that an unspecified number
of
shares have been reserved for sale to directors, officers, or
employees, or persons "who are otherwise associated with you" at
the
discretion of your management. Please revise to further describe
the
persons "who are otherwise associated with you" that may
participate
in the directed share program. Further, please revise the cover
page
to disclose the number of shares reserved and the summary to
describe
the directed share program. Please supplementally describe the
mechanics of how and when these shares are offered and sold to
investors in the directed share program. For example, tell us how
the prospective recipients and number of reserved shares are
determined. Tell us how and when you and the underwriters have
notified or will notify the directed share investors, including
the
types of communications used or to be used. Discuss the
procedures
these investors must follow in order to purchase the offered
securities. Are directed share purchasers required to establish
accounts before the effective time, and, if so, what if any funds
are
put in newly established brokerage accounts before the effective
date? How do the procedures for the directed share program differ
from the procedures for the general offering to the public? In
addition, if any of the recipients of the shares or their
associates,
employees or affiliates are broker-dealers registered with the
NASD,
please tell us how you will comply with the NASD`s rules relating
to
"hot" IPOs, if applicable. Please also supplementally provide us
with copies of all materials to be used in connection with the
directed share program. We may have further comment.
66. We note your discussion regarding the marketing of this
offering
online on page 88. Please identify any members of the
underwriting
syndicate that will make copies of the preliminary prospectus
available over the internet or will engage in the electronic
offer,
sale or distribution of the shares. Supplementally confirm that
their procedures for electronic postings or links to the
prospectus
or for electronic distributions have been reviewed and cleared by
the
Division`s Office of Chief Counsel, and that the procedures have
not
changed since such clearance. If you become aware of any
additional
members of the underwriting syndicate that may engage in
electronic
offers, sales, or distributions after you respond to this comment,
please promptly supplement your response to identify those
members.
We may have further comment.
67. Tell us whether you or the underwriters have any arrangements
with a third party to host or access your preliminary prospectus
on
the Internet. If so, identify the party and the web site,
describe
the material terms of your agreement and provide us with a copy of
any written agreement. Also, provide us with copies of all
information concerning your company or prospectus that has
appeared
on their web site. If you subsequently enter into any such
arrangements, promptly supplement your response. We may have
further
comment.
Enforceability of Judgments, page 89
68. We note your statement regarding advice you have received
from
Indian counsel and the fact that Indian counsel is named in the
"Legal Matters" section of the prospectus. Please tell us why you
have not included a consent from Indian counsel regarding this
advice.
Notes to Consolidated Financial Statements: December 31, 2003
Note 1- Organization, Basis of Presentation and Business
Combinations
Acquisition by Conseco on July 31, 2001, page F-9
69. Please disclose how Conseco`s acquisition of Exl Inc. created
a
new basis of accounting for Exl Inc. Refer to SAB Topic 5.J.
Acquisition by Exl Holdings on November 14, 2002, page F-9
70. Please disclose in further detail the nature and business
reasons for the purchase transaction between the Company and
Conseco
and how the Company was able to purchase Exl Inc. for a purchase
price ($1) considerably below the fair value of the net assets
acquired.
71. Please explain to us your purchase price conclusions with
respect to Conseco`s waiver of $11,000,000 in advances to Exl
Inc.,
as well as the capital contribution of $1,000,000, and whether
these
amounts were factored into your purchase price calculation.
72. Please explain in further detail the types of costs included
in
the $1,446,179 in costs capitalized as part of the November 14,
2002
acquisition, as well as your capitalization conclusions, and refer
to
paragraph 24 of SFAS No. 141.
Note 2-Summary of Significant Accounting Policies
Revenue Recognition, page F-11
73. We note your disclosure here that you derive revenues from
not
only business process outsourcing (BPO) but also from voice and
internet services. Please disclose in further detail the nature of
the voice and internet services you provide, whether the voice and
internet services comprise a significant portion of your total
revenues and how you determined these services did not represent a
separate reportable segment as outlined under SFAS No. 131.
74. Please tell us how you have applied the provision of EITF 99-
19
with respect to your "gross" presentation of revenues and expenses
associated with your BPO services provided to customers in the
context of the "indicators of gross revenue reporting" outlined in
paragraphs 7 through 14.
Note 3-Restatement, page F-16
75. Please revise your disclosure to identify the related party,
explain the nature of the professional fess and explain why the
fee
was renegotiated. Please tell us how you evaluated APB 20 in
concluding that the renegotiated fee should be restatement of
expense. In addition, please tell us how you considered footnote
1
of APB 26.
Note 7-Capital Structure
76. Please disclose in further detail the mandatory redemption
events that can cause the holders of the Company`s preferred stock
to
be able to redeem and why these mandatory redemption events did
not
cause the preferred stock to be classified as a liability in
accordance with paragraphs 9 and 10 of SFAS No. 150.
Note 8-Employee Benefit Plans, page F-18
77. Please disclose the amount of contributions the Company has
made
to the Government Provident Fund for each period. In addition,
please clarify if assets held by the Government Provident Fund are
reported on the Company`s balance sheet.
Note 11-Stock Based Compensation
Pre-predecessor Stock Option
78. Please confirm that the number of shares and the weighted-
average exercise prices appearing in this table are properly
stated.
79. Please supplementally explain your basis for reversing the
unamortized deferred compensation related to Conseco stock options
to
additional paid-in capital. Tell us how you considered Issue 44
of
EITF 00-23 and cite any other accounting literature you applied.
Notes to Consolidated Financial Statements: September 30, 2004
Note 3-Stock Based Compensation
Stock Option Plan
80. For each stock option grant within the most recent 12 months,
please revise to disclose the number of options granted, the
exercise
price, the fair value of the common stock, and the intrinsic value
per option, and the methodology used to determine the fair value
and
whether that valuation was contemporaneous or retrospective.
Client Options
81. We note that in July 2004 you issued options for 115,100
shares
of Class A common stock with an exercise price of $12.50 to a
significant client and fair valued those options, using Black
Scholes, at $1,792,000 or approximately $15.56 per share. However,
we
also note that you also issued 526,316 shares of Class A common
stock
at the same time (July 2004) for approximately $23.75 per share.
As
such, please explain the assumptions used when calculating the
fair
value of the options issued.
Part II
Exhibits
82. Please provide us with copies of the exhibits, including your
underwriting agreement, legal and tax opinions, or drafts of such
opinions, that you intend to file with the Form S-1. We may have
further comment upon our review of these documents.
* * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Jay Spinella at 202-942-7323 or Steven
Jacobs,
Senior Accountant, at 202-942-5222 if you have questions regarding
comments on the financial statements and related matters. Please
contact Charito A. Mittelman at 202-942-2946 or me at 202-942-1971
with any other questions.
Sincerely,
Owen Pinkerton
Senior Counsel
cc: John C. Kennedy, Esq. (via facsimile)
Valerie DeMont, Esq. (via facsimile)
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ExlService Holdings, Inc.
December 30, 2004
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