Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made as of the 14th day of October,
2008, is entered into by STREAM GLOBAL SERVICES, INC., a Delaware corporation,
with its headquarters at 125 High Street, Boston, Massachusetts (the “Company”),
and Stephen C. Farrell (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
October 28, 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 and
Chief Financial Officer. The Executive e based initially 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
and Chief Financial Officer or other duties as determined by the Chief Executive
Officer from time to time. The Executive agrees to devote his entire business
time, attention and energies to the business and interests of the

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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 his
duties and responsibilities hereunder. The Company recognizes that the Executive
currently serves on the Board of Directors of Questcor and the Board of
Directors of Parenting Resources Associates. 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 $350,000 per annum (“Base Salary”) during the
Employment Period. Such Base Salary may be increased in the sole discretion of
the Compensation Committee of the Board of Directors 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 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

 

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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 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 he 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 Stock Options. The Executive shall be granted 275,000 stock options under
the Company’s 2008 Stock Incentive Plan, subject to Board approval. The stock
options shall have a strike price of the greater of (i) $6.00 per share and
(ii) the stock price as quoted on the American Stock Exchange (“OOO”) at market
close on the first day of your employment with

 

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the Company. The stock options, among other things, shall vest over a five
(5) year period, a portion vesting every six months, with provisions for
acceleration should the Company meet or achieve certain performance targets as
described in the Stock Option Agreement.

3.4 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 and evidenced by actual invoices presented
to the Company) of (i) a tax consultant to assist the Executive or his 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.

3.5 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 (pro rated for any part year of employment). 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.

 

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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;

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 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 and Chief Financial Officer as specified
in written directions of the Chief Executive Officer, shall constitute “Cause”
for purposes hereof, (b) the Executive’s willful engagement in illegal conduct
or gross misconduct that is 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; (d) fraud upon
the Company including, without limitation, falsification of Company records or
financial information; and (e) the Executive’s breach of any of the non-compete,
non-solicitation, and proprietary information provisions of his Agreement.

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

 

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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 sixty (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;

(b) a material change in titles or a substantial diminution in the status,
responsibilities, duties or powers of the Executive, only if the new role is a
substantial diminution in title , status or responsibilities(ie an increase in
title or responsibilities would not apply);

(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;

 

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(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.

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

 

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under Section 3 through the last day of his actual employment by the Company,
(ii) unless the Executive is terminated for Cause, at the time the Company pays
its executives bonuses in accordance with its normal processes, a pro rata
portion of any MIP Bonus earned but not previously paid for the year in which
termination occurs, based upon the targets established under that year’s MIP
Bonus Plan (such pro rata portion to be based on the portion of the year in
which the Executive was employed by the Company), and (iii) the value of any
accrued but unused vacation entitlement. In addition, the Executive shall be
entitled to retain any computer, printer, mobile telephone, email device or
similar portable equipment located in his office or home at the time of his
termination, however, the Company shall have the right to erase any Company
related information or data on the computer or other electronic device prior to
receipt by the Executive.

5.2 Additional Benefits.

(a)(i) If the employment of the Executive terminates (i) pursuant to Section 4.1
by reason of an election by the Company not to extend the Employment Period,
(ii) by the Executive for Good Reason pursuant to Section 4.3, (iii) by the
Company without Cause pursuant to Section 4.5 or (iv) by reason of the death or
Disability of the Executive, the Company shall: (A) pay to the Executive (or his
estate), in equal bi-monthly (twice a month) installments in accordance with its
normal payroll practices, over a one year period (the “One Year Continuation
Period”), as compensation for the Executive’s loss of employment, an aggregate
amount equal to the total of one times the Base Salary in effect at the time of
termination; (B) provide twelve months’ accelerated vesting with respect to
Executive’s then outstanding unvested equity awards and then vested equity
awards (including those subject to accelerated vesting) shall remain exercisable
by the Executive for a one year period following termination (or if earlier,
until the expiration of the option); (C) continue health and dental benefits
through COBRA for the Executive and his family at a level commensurate with such
benefits at the time of termination for a period of one year following such
termination, and the Company shall pay the COBRA premiums for such benefits
until the earlier of one year after termination or such time as the Executive
becomes eligible for substantially similar benefits from another employer, after
which time the Executive will be eligible to receive the maximum benefits
permitted under COBRA less the number of months paid by the Company to be paid
by the Executive.

 

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(a)(ii) If, (A) within 24 months after a Change in Control or (B) within six
months prior to a Change in Control and after the execution by the Company of an
agreement providing for such Change in Control, the employment of the Executive
terminates (i) pursuant to Section 4.1 by reason of an election by the Company
not to extend the Employment Period, (ii) by the Executive for Good Reason
pursuant to Section 4.3, (iii) by the Company without Cause pursuant to
Section 4.5, or (iv) by reason of the death or Disability of the Executive, the
Company shall, in lieu of the payments and benefits otherwise to be provided
under Section 5.2(a)(i): (A) pay to the Executive (or his estate), in equal
bi-monthly (twice a month) installments in accordance with its normal payroll
practices, over a eighteen month period (the “Continuation Period”), as
compensation for the Executive’s loss of employment, an aggregate amount equal
to 1.5 times the Base Salary in effect at the time of termination (B) provide
full vesting with respect to Executive’s then outstanding unvested equity awards
and such equity awards or instruments shall remain exercisable by the Executive
for the eighteen month period following termination (or if earlier, until the
expiration of the option); (C) continue health and dental benefits through COBRA
for the Executive and his family at a level commensurate with such benefits at
the time of termination for a eighteen month period following such termination
and the Company shall pay the COBRA premiums for such benefits during until the
earlier of eighteen months after termination or such time as the Executive
becomes eligible for substantially similar benefits from another employer, after
which time the Executive will be eligible to receive the maximum benefits
permitted under COBRA less the number of months paid by the Company to be paid
by the Executive.

(b) If the Executive terminates his employment without Good Reason, this
employment is terminated for Cause the Company will, at the request of the
Executive (or his estate), continue the Executive’s and his family’s health and
dental benefits commensurate with those in effect upon such termination for up
to eighteen (18) months or such longer period as may be allowed by law or the
applicable plan following such termination, and the Executive (or his estate)
shall pay the premiums therefore in accordance with COBRA.

 

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5.3 No Mitigation. Following any termination of the Executive’s employment
hereunder, the Executive shall not be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of his Agreement, and such amounts shall not be
reduced whether or not the Executive obtains other employment.

5.4 Entire Benefits, Etc. The obligation of the Company to make payments to the
Executive under this Section 5 of his Agreement is expressly conditioned upon
the Executive’s continued full performance of his obligations under Sections 6
and 8 of his Agreement. The Executive recognizes that, except as expressly
provided in his Agreement, the Executive shall not be entitled to any other
compensation or benefits from the Company following termination of his
employment.

6. Non-Compete.

(a) For a period of twelve (12) months after the termination of the Executive’s
employment with the Company and provided that as the Executive receives
severance related payments as required to be provided under Section 5 of this
Agreement, the Executive will not:

(i) as an individual proprietor, partner, stockholder, officer, director,
executive, director, investor, lender, or in any other capacity whatsoever
(other than as the holder of not more than one percent (2%) of the total
outstanding stock of any publicly traded company or five percent (5%) of any
privately held company) and not in any other capacity), engage in any business
throughout the world that directly competes with the business engaged in by the
Company or any of its subsidiaries at the time of the Executive’s termination;
or

(ii) directly recruit, solicit or hire any person who is then an employee of the
Company, other than an employee who on an unsolicited basis responds to an
advertisement or to an executive recruiter that is not directed by the Executive
to target that particular employee or the Company or any of its subsidiaries.

 

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(b) Executive acknowledges and agrees that the Company’s business is global in
nature due to the types of products and services it provides and that it is
reasonable for the Company to define the geographic location this Section 6 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.

(c) The restrictions contained in this Section 6 and in Section 8 are necessary
for the protection of the business and goodwill of the Company and are
considered by the Executive to be reasonable for such purpose. The Executive
agrees that any breach of this Section 6 or Section 8 will cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the Company
shall have the right to seek specific performance and injunctive relief.

7. Change in Control means an event or occurrence set forth in any one or more
of subsections (a) through (d) below, however a Change in Control shall be
deemed not to occur for the purposes of this Agreement if there would otherwise
be a Change of Control, but the transaction triggering such Change of Control
results in the current Chairman and Chief Executive Officer of the Company being
appointed as the Chairman and Chief Executive Officer of the surviving company
and remaining in that role for at least twelve months following such
appointment:

(a) the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or more of
either (x) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this

 

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subsection (a) or (d), the following acquisitions shall not constitute a Change
in Control: (i) any acquisition directly from the Company (excluding an
acquisition pursuant to the exercise, conversion or exchange of any security
exercisable for, convertible into or exchangeable for common stock or voting
securities of the Company, unless the Person exercising, converting or
exchanging such security acquired such security directly from the Company or an
underwriter or agent of the Company), (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or
(iv) any acquisition of securities of the Company by Ares Corporate
Opportunities Fund II, L.P. (“ACOF II”); or any affiliate thereof, including,
without limitation, any investment fund, investment partnership, investment
account or other investment person whose investment manager, investment advisor,
managing member or general partner, is ACOF II or an affiliate of ACOF II or any
member, partner, director, officer or employee of such investment manager,
investment advisor, managing member or general partner of ACOF II or any
affiliate of ACOF II; or

(b) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company in
one or a series of transactions (a “Business Combination”), unless, immediately
following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 40% of
the then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, respectively; or

 

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(c) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

8. Proprietary Information.

(a) Executive agrees that all information and know-how, whether or not in
writing, of a private, secret or confidential nature concerning the Company’s
business or financial affairs (collectively, “Proprietary Information”) is and
shall be the exclusive property of the Company. By way of illustration, but not
limitation, Proprietary Information may include inventions, products,
technologies, web based portals or internet algorithms, processes, methods,
techniques, formulas, compositions, compounds, projects, developments, plans,
research data, financial data, personnel data, computer programs, and customer
and supplier lists. Executive will not disclose any Proprietary Information to
others outside the Company or use the same for any unauthorized purposes without
written approval by the Chief Executive Officer of the Company, either during or
after his employment, unless and until such Proprietary Information has become
public knowledge without fault by the Executive, provided, however, that nothing
herein shall prevent the Executive from disclosing Proprietary Information to
another party, in the ordinary course of business, pursuant to a non-disclosure
agreement between the Company and such other party.

(b) Executive agrees that all files, letters, memoranda, reports, articles,
books, records, data, web-based analyses or reports, sketches, drawings,
laboratory notebooks, program listings, or other written, photographic, or other
tangible material containing Proprietary Information, whether created by the
Executive or others, which shall come into his custody or possession, shall be
and are the exclusive property of the Company to be used by the Executive only
in the performance of his duties for the Company.

(c) Executive agrees that his obligation not to disclose or use information,
know-how and records of the types set forth in paragraphs (a) and (b) above,
also extends to such types of information, know-how, records and tangible
property of customers of the Company, customers or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the Executive in the course of the Company’s business.

 

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9. Legal Expenses. The Company shall pay the reasonable attorney’s fees and
related legal expenses incurred by the Executive in connection with this
Agreement (such fees subject to reimbursement shall not exceed $10,000 and be
based upon presentation of actual invoices).

10. Section 409A.

(a) Subject to this Section 10, payments or benefits under Section 5 shall begin
only upon the date of a “separation from service” of the Executive (determined
as set forth below) which occurs on or after the termination of the Executive’s
employment. The following rules shall apply with respect to distribution of the
payments and benefits, if any, to be provided to the Executive under Section 5,
as applicable:

(i) It is intended that each installment of the payments and benefits provided
under Section 5 shall be treated as a separate “payment” for purposes of
Section 409A of the Code and the guidance issued thereunder (“Section 409A”).
Neither the Company nor the Executive shall have the right to accelerate or
defer the delivery of any such payments or benefits except to the extent
specifically permitted or required by Section 409A.

(ii) If, as of the date of the “separation from service” of the Executive from
the Company, the Executive is not a “specified employee” (within the meaning of
Section 409A), then each installment of the payments and benefits shall be made
on the dates and terms set forth in Section 5.

(iii) If, as of the date of the “separation from service” of the Executive from
the Company, the Executive is a “specified employee” (within the meaning of
Section 409A), then:

(1) Each installment of the payments and benefits due under Section 5 that, in
accordance with the dates and terms set forth herein, will in all circumstances,
regardless of when the separation from service occurs, be paid within the
Short-Term Deferral Period (as

 

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hereinafter defined) shall be treated as a short-term deferral within the
meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent
permissible under Section 409A. For purposes of his Agreement, the “Short-Term
Deferral Period” means the period ending on the later of the 15th day of the
third month following the end of the Executive’s tax year in which the
separation from service occurs and the 15th day of the third month following the
end of the Company’s tax year in which the separation from service occurs; and

(2) Each installment of the payments and benefits due under Section 5 that is
not described in Section 10(a)(iii)(1) and that would, absent his subsection, be
paid within the six-month period following the “separation from service” of the
Executive from the Company shall not be paid until the date that is six months
and one day after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following the Executive’s separation from service and
any subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein; provided, however, that the preceding provisions of his
sentence shall not apply to any installment of payments and benefits if and to
the maximum extent that such installment is deemed to be paid under a separation
pay plan that does not provide for a deferral of compensation by reason of the
application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation
pay upon an involuntary separation from service). Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be
paid no later than the last day of the Executive’s second taxable year following
the taxable year in which the separation from service occurs.

(b) The determination of whether and when a separation from service of the
Executive from the Company has occurred shall be made and in a manner consistent
with, and based on the presumptions set forth in, Treasury Regulation
Section 1.409A-1(h). Solely for purposes of his Section 10, “Company” shall
include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.

(c) All reimbursements and in-kind benefits provided under this Agreement shall
be made or provided in accordance with the requirements of Section 409A to the
extent that such reimbursements or in-kind benefits are subject to Section 409A.

 

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(d) The parties agree that if any provision of his Agreement would subject
Executive to any additional tax or interest under Section 409A, the parties will
cooperate to reform such provision and that the Company may reform any such
provision unilaterally, provided, that in the event of any such unilateral
reform by the Company, the Company shall (x) maintain, to the maximum extent
practicable, the original intent of the applicable provision without subjecting
Executive to such additional tax or interest and (y) not incur any additional
compensation expense as a result of such reformation.

11. Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed, in the case of the Company, to the address shown above or its most
current corporate headquarters address to the attention of the Chief Executive
Officer, or, in the case of the Executive, his most recent known address as
disclosed to the Company or other such address as he so discloses to the
Company, or at such other address or addresses as either party shall designate
to the other in accordance with this Section 11.

12. Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.

13. Entire Agreement. This Agreement, together with any other agreement and
instruments referred to herein, constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement.

14. Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

 

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15. Governing Law. This Agreement shall be construed, interpreted and enforced
in accordance with the laws of the Commonwealth of Massachusetts.

16. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and assigns,
including any Company with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the
obligations of the Executive are personal and shall not be assigned by him.

17. Miscellaneous.

17.1 No delay or omission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.

17.2 The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.

17.3 In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.

[Remainder of the Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.

 

STREAM GLOBAL SERVICES, INC. By:  

/s/ R. Scott Murray

Name:   R. Scott Murray Title:   CHAIRMAN AND CHIEF EXECUTIVE OFFICER EXECUTIVE:

/s/ Steve Farrell

STEVE FARRELL

 

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