Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
The board of directors of Exela Technologies, Inc. (the “Company”) appointed Par Chadha as Executive Chairman of the
Company, effective September 14, 2021.
Par Chadha, age 66, is
the founder, Chief Executive Officer and Chief Investment Officer of HGM, a family office, formed in 2001. Mr. Chadha brings over 40
years of experience in building businesses in the Americas, Europe and Asia, including execution of mergers and acquisitions,
integration of businesses and public offerings. Mr. Chadha as Chairman of Exela Technologies, Inc. from July 2017 until
March 27, 2020 when he became the Company’s Executive Chairman. On March 17, 2021, Mr. Chadha stepped down as Executive
Chairman and returned to being Chairman. He also served as Chairman of SourceHOV Holdings, Inc. from 2011 to July 2017 when it was acquired
by Exela, and was Chairman of Lason Inc. from 2007 to 2011 until its merger with SourceCorp, a predecessor company of SourceHOV.
Mr. Chadha as a Director of HOV Services Limited (NSE:HOVS) , a company listed on the National Stock exchange
of India, since 2005, and as its Chairman from 2009 to 2011. Mr. Chadha is co-founder of Rule 14, LLC, an artificial intelligence led
automation company formed in 2011. During his career, Mr. Chadha has been a cofounder of technology companies in the fields of metro optical
networks, systems-on-silicon, and communications. Mr. Chadha previously participated in director and executive roles in portfolio companies
of HGM, and currently holds and manages investments in evolving financial technology, health technology and AI industries. Mr. Chadha
holds a B.S. degree in Electrical Engineering from the Punjab Engineering College, India.
In
connection with Mr. Chadha’s appointment, the Company entered into a letter agreement with Mr. Chadha, which provides
for a term expiring on December 31, 2023. While employed, Mr. Chadha will be paid a base salary at an annual rate of $1 million.
During the term, Mr. Chadha is also eligible to earn an annual bonus equal to up to 200% of his base salary (pro-rated for 2021),
subject to the achievement of applicable performance objectives, payable no later than March 15th of the year following
the calendar year to which the bonus relates, and subject to his continued employment with the Company through the last day of the calendar
year to which bonus relates. Mr. Chadha’s annual bonus may be payable in cash, common stock of the Company or a mix of cash
and common stock. If Mr. Chadha’s employment is terminated at any time by the Company without “cause” (as defined
in the agreement), he will remain eligible to receive an unprorated bonus for the year in which such qualifying termination occurs, determined
based on actual performance. The agreement also subjects Mr. Chadha to an indefinite confidentiality provision and covenant not to
solicit the Company’s employees or customers during the term of his employment. As Executive Chairman, Mr. Chadha will no longer
be eligible to earn any cash fees under the Company’s non-employee director compensation policy, and will remain eligible to earn
any equity award he would have received as non-employee director in respect of service during 2021 while engaged as the Executive Chairman.
Upon
his appointment, Mr. Chadha also received 8,500,000 “performance units”, which are notional units representing
the right to receive one share of common stock of the Company (or the cash value of one share of common stock) which may be earned upon
the achievement of the performance metrics described below. The acquisition of the performance units was unanimously approved by the Board
of Directors of the Company other than Mr. Chadha, who recused himself from the discussion, including each of the independent directors.
Until such time that the Company obtains the approval of the stockholders of the Company regarding an increase to the number of shares
authorized for issuance under its 2018 Stock Incentive Plan (the “Equity Plan”) in accordance with NASDAQ Listing Rule 5635(a),
Mr. Chadha’s performance units will be settled in cash, and following such shareholder approval, at the election of the compensation
committee of the Company, may be settled in cash or in shares of common stock of the Company. In addition, until such time that the increase
to the share reserve is approved, the performance units will be subject to the terms and conditions of the Equity Plan as though granted
thereunder, but will not be considered an award that is outstanding under the plan, and following such time that the plan amendment is
approved, will constitute an award under the Equity Plan. Mr. Chadha is also entitled to dividend equivalents in respect of any dividends
paid, which will be subject to the same vesting and settlement terms as the performance units to which they relate.
Mr. Chadha will vest
in one-half of the performance units (the “Tranche 1 PSUs”) if at any time following the appointment date and prior to June 30,
2024, the volume weighted average of the reported closing prices of the Company’s common stock is $10 per share of common stock
or greater on (x) sixty (60) consecutive trading days or (y) ninety (90) non-consecutive trading days in any period of one hundred
and eighty (180) days. In addition, Mr. Chadha will vest in the remaining one-half of the performance units (the “Tranche 2
PSUs”) if at any time following the appointment date and prior to June 30, 2025, the volume weighted average of the reported
closing prices of the Company’s common stock is $20 per share of common stock or greater on (x) sixty (60) consecutive trading
days or (y) ninety (90) non-consecutive trading days in any period of one hundred and eighty (180) days. Mr. Chadha will remain
eligible to earn his performance units so long as he remains employed with the Company as Executive Chairman through December 31,
2023 and following such date he remains engaged with the Company in any capacity, including as a non-employee director. Any Tranche 1
Performance Units and Tranche 2 Performance Units that are not earned by June 30, 2024 and June 30, 2025, respectively, will
be forfeited for no consideration and will no longer be eligible to vest.
Mr. Chadha’s performance
units will remain eligible to vest based on the stock price criteria above if his employment is terminated by the Company without “cause”
prior to December 31, 2023, or his employment is terminated due to death or disability, in which case the requirement of continued
service will be deemed met. In addition, if a “change in control” (as defined in the Equity Plan) occurs prior to the applicable
expiration date, if the performance units are assumed by the acquiror, the units will remain outstanding and eligible to vest based solely
on Mr. Chadha’s continued service to the Company. If in connection with such change in control the performance units are not
assumed by an acquiror, a number of performance units will vest based on the per share price paid in the transaction, with 0% vesting
if the per share price is equal to or less than $2.00 per share, and 100% of the Tranche 1 PSUs vesting if the per share price is equal
to or greater than $10 and 100% of the Tranche 2 PSUs vesting if the per share price is equal to or greater than $20, and a number of
Tranche 1 PSUs and Tranche 2 PSUs vesting determined based on a straight line interpolation if the share price is between $2.00 and $10.00
or $20.00, respectively. In addition, if there is a change in control that is principally negotiated and approved by, and recommended
to the Company’s shareholders by, a special committee of independent directors which committee does not include Mr. Chadha,
and neither Mr. Chadha or any of its affiliates is directly or indirectly an equity holder of the acquiring Company, and the Tranche
1 PSUs are not assumed by an acquiror in connection with such transaction, all of his then unvested Tranche 1 PSUs will vest, and the
Tranche 2 PSUs would be eligible for the pro rata vesting described above.
The Company is party to certain
transactions with Mr. Chadha and affiliates of Mr. Chadha that are described more fully in the Company’s Quarterly Report
on Form 10-Q for the period ended June 30, 2021, under the heading “Related-Party Transactions” and the subheading
“Relationship with HandsOn Global Management.”
The foregoing description
of Mr. Chadha’s letter agreement is qualified in its entirety by reference to the full text of the letter agreement, a copy
of which is attached hereto as Exhibit 10.1 and incorporated by reference in this Item 5.02.