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Exhibit 10.2
EMPLOYMENT
AGREEMENT
THER EMPLOYMENT AGREEMENT
(the “Agreement”), made as of the 16 th day of July, 2008, is entered into by
GLOBAL BPO SERVICES CORP., a Delaware corporation, with its
headquarters at 125 High Street, Boston, Massachusetts (the
“Company”), and Sheila M. Flaherty (the
“Executive”).
The Company desires to employ
the Executive, and the Executive desires to be employed by the
Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties hereto, the parties agree as follows:
1. Term of Employment . The
Company hereby agrees to employ the Executive, and the Executive
hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for an initial term (the “Initial
Term”) commencing on the date of the closing of the
acquisition of Stream Holdings Corporation by the Company (the
“Commencement Date”) and ending on the first
anniversary of such date, which such term shall be extended for
successive terms of one year each unless either party terminates
this Agreement by written notice to the other at least 30 days
prior to the expiration of the initial or any extended term as
applicable, or unless sooner terminated in accordance with the
provisions of Section 4 (such term, as it may be so extended
or terminated, the “Employment Period”).
2. Title and Capacity . The
Executive shall serve as Executive Vice President and General
Counsel of the Company. The Executive shall be based at the
Company’s headquarters in Boston, Massachusetts, or such
place or places within a radius of 35 miles from such headquarters
in Massachusetts.
The Executive hereby accepts
such employment and agrees to undertake the duties and
responsibilities inherent in such positions and such other duties
and responsibilities as are commensurate with the titles of
Executive Vice President and General Counsel and or other such
responsibilities as determined by the Chief Executive Officer. The
Executive agrees to devote
her entire business time, attention and
energies to the business and interests of the Company during the
Employment Period; provided , however , that the
Executive may participate in other business ventures and
charitable, civic or educational activities from time to time which
do not substantially interfere with her duties and responsibilities
hereunder. The Executive shall report directly to the Chief
Executive Officer. The Executive agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the
Company and any changes therein which may be adopted from time to
time by the Company.
3. Compensation and Benefits
.
3.1 Salary . The
Company shall pay the Executive, in twice-monthly installments, a
base salary at the rate of $300,000 per annum (“Base
Salary”) during the Employment Period. Such Base Salary may
be increased in the sole discretion of the Chief Executive Officer
and shall be reviewed at least annually.
3.2 Bonus . Within 90
days following the end of each fiscal year during the Employment
Period, commencing with fiscal 2008, the Company shall pay the
Executive a bonus, consistent with the bonus targets set for the
other senior executives of the Company and based on and subject to
the Company’s achievement of targeted operating results for
such year as established under the Company’s Management
Incentive Plan (“MIP”). The annual bonus target
(“bonus target”) will be at least 60% of the
Executive’s Base Salary, based on achievement of the annual
budgeted earnings before interest, taxes, depreciation and
amortization, adjusted for any acquisitions or divestitures, one
time charges such as non-ordinary course litigation settlements and
gains (including legal costs related thereto), non-cash foreign
currency gains and losses, transaction related costs or
amortization of intangibles related to the transaction,
restructuring charges for items such as site closure costs or
employee severance, stock compensation charges (including charges
recorded under FAS 123 or other similar provisions related to stock
compensation charges) or write-downs in assets) (hereafter referred
to “Adjusted EBITDA”) and up to 120% of the
Executive’s Base Salary based on over-performance of Adjusted
EBITDA (after taking into account the effects of the additional
bonus earned). The amount of the bonus earned for the achievement
of Adjusted EBITDA greater than the target
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Adjusted EBITDA for payment of the bonus
at the full target level shall be determined by multiplying the
amount of the annual bonus available for over-performance by the
percentage by which the actual annual Adjusted EBITDA exceeded the
target for payment of the bonus at the 100% achievement level,
provided the total bonus shall not exceed 200% achievement
of the target bonus amount. No bonus shall be paid if the Company
achieves less than 90% of its target Adjusted EBITDA for the
applicable period. If the Company achieves 90% of its target
Adjusted EBITDA for the applicable period, the Executive shall
receive 50% of the target bonus. If the Company achieves more than
90% but less than 100% of the target Adjusted EBITDA for the
applicable period, the Executive shall receive a pro rata amount of
the bonus target (determined by extrapolating the percentages in
the preceding sentence so that, for example, 75% of the target
bonus shall be paid if 95% of the targeted Adjusted EBITDA is
achieved. The Executive and the Company hereby agree that the
target for earning a bonus at the full target level for the fiscal
year ended December 31, 2009 shall be $60 million of
Adjusted EBITDA. For fiscal 2008, the Executive will be eligible to
receive a pro rata portion of the target bonus of the period of
time in which she is employed by the Company following the closing
of the acquisition of Stream. The target Adjusted EBITDA for fiscal
2008 shall be the current budget of Stream, as existing for each
full month subsequent to the commencement of the Executive’s
employment. For subsequent year’s MIP Bonus calculation
purposes, the Executive’s targeted Adjusted EBITDA shall be
based on that year’s annual budget as approved by the Board
of Directors. To the extent that the MIP provides for any quarterly
payments and such targets are achieved, the Executive shall receive
such payments quarterly. Any bonus earned due to the
Company’s achievement of such Adjusted EBITDA targets shall
be paid on pro rata basis to the Executive for any period of less
than a full calendar year that the Executive is employed by the
Company at such time as regular MIP Bonus payments are made to
other employees.
3.3 Tax Preparation and
Insurance . During the Employment Period, the Company shall
reimburse the Executive for the reasonable costs (not to exceed
$10,000 per year, pro rated for partial years) of (i) a tax
consultant to assist the Executive or her estate in the preparation
of tax returns and tax planning and for other estate planning
related costs incurred and (ii) premiums on life insurance
policies obtained by the Executive. Any amounts so reimbursed shall
not be refundable to the Company once paid in the event that the
Executive’s employment is subsequently terminated for any
reason.
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3.4 Other Benefits .
The Executive shall be entitled to participate in all benefit
programs that the Company establishes and makes available to its
executives and/or other employees, if any, to the extent that the
Executive’s position, tenure, salary, age, health and other
qualifications make him eligible to participate. The Executive
shall also be eligible for such supplemental disability benefit
coverage as may be made available by the Company to the extent that
the Company’s plans do not adequately cover a similar amount
of coverage provided to other employees due to Executive’s
salary level. Such participation shall be subject to (i) the
terms of the applicable plan documents, (ii) generally
applicable Company policies and (iii) the discretion of the
Board or any administrative or other committee provided for in or
contemplated by such plan. The Executive shall be entitled to four
(4) weeks paid vacation per year. Any unused vacation time
accrued by the Executive at the end of any fiscal year shall be
carried over in full to the next year.
3.6 Reimbursement of
Expenses . The Company shall reimburse the Executive for all
reasonable travel, entertainment, mobile telephone and PDA expenses
and other expenses incurred or paid by the Executive in connection
with, or related to, the performance of her duties,
responsibilities or services under her Agreement, upon presentation
by the Executive of documentation, expense statements, vouchers
and/or such other supporting information as the Company may
request.
3.7 Indemnification .
The Company hereby agrees to hold harmless and indemnify the
Executive to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as it may be amended
after the date hereof. The obligation of the Company under this
Section 3 shall survive any termination of this
Agreement.
4. Employment Termination . The
employment of the Executive by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the
following:
4.1 Non-Renewal . The
election of either the Company or the Executive not to extend the
Employment Period pursuant to Section 1 upon the expiration of
the initial or any renewal term;
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4.2 Cause . At the
election of the Company, for Cause, immediately upon written notice
by the Company to the Executive. For the purposes of her
Section 4.2, “Cause” shall mean (a) any
material failure, other than due to disability, of the Executive to
take or refrain from taking any corporate action consistent with
her duties as Executive Vice President and General Counsel as
specified in written directions of the Chief Executive Officer,
which such failure is not cured within 30 days after written
notice that failure to take or refrain from taking such action
shall constitute “Cause” for purposes hereof,
(b) the Executive’s willful engagement in illegal
conduct or gross misconduct that is materially and demonstrably
injurious to the Company , (c) the conviction of the Executive
of, or the entry of a pleading of guilty or nolo contendere by the
Executive to, any crime involving moral turpitude or any felony
(for purposes hereof, no act or failure to act by the Executive
shall be considered “willful” unless it is done, or
omitted to be done, in bad faith and without reasonable belief that
the Executive’s action or omission was in the best interests
of the Company); (d) fraud upon the Company including, without
limitation, falsification of Company records or financial
information in any material respect; and (e) the
Executive’s breach in any material respect of any of the
non-compete, non-solicitation, and proprietary information
provisions of her Agreement, which is not cured within 30 days
after written notice thereof to the Executive.
4.3 Good Reason . The
Executive may terminate her employment for Good Reason. “Good
Reason” shall mean the occurrence, without the
Executive’s prior written consent, of any of the events or
circumstances set forth in clauses (a) through (g) below;
provided, however, that a termination for Good Reason by the
Executive can only occur if (i) the Executive has given the
Company a written notice of termination indicating the existence of
a condition giving rise to Good Reason and the Company has not
cured the condition giving rise to Good Reason within thirty
(30) days after receipt of such notice of termination, and
(ii) such notice of termination is given within ninety
(90) days after the initial occurrence of the condition giving
rise to Good Reason and termination for Good Reason occurs within
180 days after such initial occurrence of the condition giving
rise to Good Reason:
(a) the Company breaches, in
any material respect, its obligations under this
Agreement;
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(b) a change in titles or a
substantial diminution in the status, responsibilities, duties or
powers of the Executive;
(c) any reduction by the
Company in the annual base salary or bonus opportunity of the
Executive, other than pursuant to a reduction that also is applied
to substantially all other executive officers of the Company and
reduces the level of employee salary and bonus opportunity by a
percentage not greater than 10%;
(d) the failure by the
Company to continue in effect any material compensation or benefit
plan or program (including without limitation any life insurance,
medical, health and accident or disability plan) in which the
Executive participates or which is applicable to the Executive,
unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan or
program, and continue the Executive’s participation therein
(or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive’s participation
relative to other participants, than the basis that exists on
December 31, 2008;
(e) if, following a Change in
Control, the Company fails to obtain agreement from any successor
to assume and agree to perform this Agreement and agree that the
Executive retains the same titles, role, position, authority and
responsibilities in the merged or surviving parent company as he
had prior to the merger under Section 2 of this
Agreement;
(f) the relocation by the
Company of the Executive’s principal work place to a site
more than 35 miles from Boston, Massachusetts, or
(g) any amendment following
the date hereof to the indemnification provisions in the
Company’s Certificate of Incorporation that materially
reduces the indemnification benefits to the Executive.
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4.4 Disability . The
Executive’s employment may be terminated by reason of her
Disability or death. As used in this Agreement, the term
“Disability” shall mean the inability of the Executive,
due to a physical or mental disability, for a period of 120 days,
whether or not consecutive, during any 365-day period to perform
the services contemplated under her Agreement. A determination of
Disability shall be made by a physician satisfactory to both the
Executive and the Company; provided that if the
Executive and the Company do not agree on a physician, the
Executive and the Company shall each select a physician and the two
physicians together shall select a third physician, whose
determination as to Disability shall be binding on all
parties.
4.5 Without Cause .
The Company may terminate the employment of the Executive at any
time, without Cause, upon 30 days’ prior written notice
to the Executive or may pay the Executive compensation for such 30
day period in lieu of notice and the Executive will be due the
applicable benefits described in Section 5 of this
Agreement.
4.6 Without Good
Reason. The Executive may terminate her employment at any time,
without Good Reason, upon 30 days’ prior written notice to
the Company. If the Executive terminates her employment pursuant to
Section 4.6 of her Agreement, he shall not be eligible to
receive any of the benefits described in Section 5.2 of this
Agreement.
5. Effect of Termination
.
5.1 Base Salary, Etc.
Upon the termination of the Executive’s employment pursuant
to Section 4 hereof, the Company shall pay the Executive
(i) the Base Salary payable to her under Section 3
through the last day of her actual employment by the Company,
(ii) unless the Executive is terminated for Cause, at the
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