EXHIBIT 10.5
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”), made as of the 7th day of August, 2008,
is entered into by STREAM GLOBAL SERVICES, INC., a Delaware
corporation, with its headquarters at 125 High Street, Boston,
Massachusetts (the “Company”), and Robert Dechant (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 August 11, 2008 (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 Global Sales and
Marketing. The Executive shall be based at the Company’s
headquarters in the metro Boston area in Massachusetts, or such
place or places within a radius of 35 miles from Wellesley 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 Global Sales and Marketing and or other such
responsibilities as determined by the Chief Executive Officer. The
Executive agrees to devote his 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
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do not substantially interfere with his 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 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
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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.
In addition, the Executive shall
receive a commission of 40% of his Base Salary determined by
achievement of the Company’s budgeted revenues and gross
margin percentage (75% based upon revenues and 25% based on gross
margin percentage) to be paid quarterly, with annual catch up
provisions. The Executive shall be eligible for over performance
payments of targets and minimum achievement threshold levels in
connection with the commission plan.
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 his estate in the preparation
of
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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.
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 his duties, responsibilities or
services under his 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.
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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;
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 his 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 his duties as Executive
Vice President Global Sales and Marketing 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 his Agreement, which is not
cured within 30 days after written notice thereof to the
Executive.
4.3 Good Reason . The
Executive may terminate his 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
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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;
(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 Wellesley, 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 his
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 his 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 his employment at any time, without Good
Reason, upon 30 days’ prior written notice to the Company. If
the Executive terminates his employment pursuant to his
Section 4.6 of his 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 him under Section 3
through the last day of
