Document:

EXHIBIT 10.4

 

SECOND
AMENDMENT TO

THIRD
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT (this “Agreement”) is dated as of January 31,
2006, and is entered into by and among BEACON
SALES ACQUISITION, INC. (“Borrower”) and the Domestic Subsidiary
Guarantors which are signatories hereto (together with Borrower, “Obligors”); GENERAL ELECTRIC CAPITAL CORPORATION (“GE Capital”), for itself as a
Lender, as L/C Issuer and as Agent; and the Lenders and Canadian Facility
Lenders which are signatories hereto.

 

WHEREAS,
Agent, Lenders and Obligors are parties to a certain Third Amended and Restated
Loan and Security Agreement dated as of October 14, 2005 (as such
agreement has been or may hereafter be from time to time amended, supplemented
or otherwise modified, the “Loan Agreement”); and

 

WHEREAS,
Borrower has requested that each of the Term Loan A Commitment and Term Loan B
Commitment be increased by $5,000,000 and that such increases be funded on the
effective date of this Agreement; and

 

WHEREAS,
the parties desire to amend the Loan Agreement to provide for such increases in
the Term Loan A Commitment and Term Loan B Commitment on the terms set forth.

 

NOW
THEREFORE, in consideration of the mutual conditions and
agreements set forth in the Loan Agreement and this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

1.             Definitions.  Capitalized terms used in this Agreement,
unless otherwise defined herein, shall have the meaning ascribed to such terms
in the Loan Agreement.

 

2.             Amendments to Loan
Agreement.

 

2.1           On
the effective date of this Agreement (the “Second Amendment Date”), the Term
Loan A Commitment and/or Term Loan B Commitment, as applicable, of each Lender
designated as an “Increasing Lender” on the signature pages hereto (each
such Lender an “Increasing Lender”) shall be increased by the amount set forth
below such Lender’s signature (such amount being referred to as such Increasing
Lender’s “Incremental Term Loan A Commitment” or “Incremental Term Loan B
Commitment, as applicable).  Advances
under the Incremental Term Loan A Commitments shall be funded in one drawing on
the Second Amendment Date and shall constitute part of Term Loan A.  Advances under the Incremental Term Loan B
Commitments shall be funded in one drawing on the Second Amendment Date and
shall constitute part of Term Loan B.

 

 

2.2           The
definition of “Scheduled Installment” set forth in Section 2.1(A)(1) of
the Loan Agreement is hereby amended to read as follows:

 

“Scheduled Installment”
of the Term Loan A means, for each date set forth below, the amount set forth
opposite such date.

 

	
  Date

  	
   

  	
  Scheduled Installment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  750,000

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  904,639

  	
   

  
	
  October 14, 2010

  	
   

  	
  $

  	
  12,966,498

  	
   

  

 

2.3           The
definition of “Scheduled Installment” set forth in Section 2.1(A)(2) of
the Loan Agreement is hereby amended to read as follows:

 

“Scheduled Installment”
of Term Loan B means, for each date set forth below, the amount set forth
opposite such date.

 

	
  Date

  	
   

  	
  Scheduled Installment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  4,583,333

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  5,037,879

  	
   

  

 

2

 

	
  Date

  	
   

  	
  Scheduled Installment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  5,037,879

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  5,037,877

  	
   

  

 

3.             Conditions. 
The effectiveness of this Agreement is subject to the following
conditions precedent (unless specifically waived in writing by Agent, Lenders
and Canadian Facility Lenders):

 

(a)           Obligors, Agent, Lenders and Canadian Facility Lenders
shall have executed and delivered this Agreement;

 

(b)           Borrower shall have executed and delivered to Agent
replacement Notes in favor of each Increasing Lender to reflect its Incremental
Term Loan A Commitment and/or Incremental Term Loan B Commitment, as
applicable;

 

(c)           Borrower shall have delivered such other documents as
Agent may have reasonably requested;

 

(d)           Borrower shall have paid to Agent the fees set forth
in that supplemental fee letter of even date herewith; and

 

(e)           No Default or Event of Default shall have occurred and
be continuing.

 

4.             Representations and
Warranties.  To induce Agent, Lenders and Canadian
Facility Lenders to enter into this Agreement, Obligors represent and warrant
to Agent, Lenders and Canadian Facility Lenders:

 

(a)           that the Loan Parties have all requisite
organizational power and authority to enter into, and carry out the
transactions contemplated by, this Agreement and all other agreement and
documents executed in connection therewith to which such Loan Parties are
parties.

 

(b)           that the execution, delivery and performance of this
Agreement and all other agreements and documents executed in connection
therewith have been duly authorized by all requisite action on the part of the
Loan Parties which are parties thereto and that this Agreement has been duly
executed and delivered by Borrower;

 

(c)           that each of the representations and warranties set
forth in Section 4 of the Loan Agreement (other than those which,
by their terms, specifically are made as of certain date prior to the date
hereof) are true and correct in all material respects as of the date hereof;
and

 

(d)           that, after giving effect to this Agreement, no
Default or Event of Default has occurred and is continuing.

 

5.             New
Lenders.  Each Increasing Lender that is not an
existing Lender:

 

3

 

(a)           agrees that, upon the effectiveness of this Agreement,
it shall be a party to the Loan Agreement and shall have all of the rights and
obligations under the Loan Documents, and shall be deemed to have made all of
the covenants and agreements contained in the Loan Documents, arising out of or
otherwise related to its Loans and Commitments. 
Without limiting the generality of the foregoing, such Increasing Lender
acknowledges and agrees that, upon the effectiveness of this Agreement, it
shall be deemed a Lender under, and bound by, the Canadian Facility
Intercreditor Agreement;

 

(b)           represents and warrants that it satisfies any
eligibility requirements to be a Lender under the Loan Agreement; that it is
not a foreign person (i.e., a person other than a United States person for
United States Federal income tax purposes) or, if it is a foreign person, that
it has delivered to Agent the documentation required by Section 2.10 of
the Loan Agreement; that it has experience and expertise in the making or the
purchasing of loans such as the Loans; and that it has received, reviewed and
approved a copy of the Loan Agreement (including all Exhibits and Schedules
thereto) and copies of all other Loan Documents which it has requested; and

 

(c)           represents and warrants that it has received such
financial information regarding Borrower and the other Loan Parties as it has
requested, that it has made its own independent investigation of the financial
condition and affairs of Borrower and the other Loan Parties in connection with
this Agreement, and that it has made and shall continue to make its own
appraisal of the creditworthiness of Borrower and the other Loan Parties.

 

6.             Mortgage
Modifications.  Upon the request of Agent, Borrower shall
deliver to Agent modifications to the Mortgages to reflect the increase in the
Term Loans provided for herein and the increase in the Revolving Loan
Commitment provided for under that certain Increased Commitment Agreement to be
entered into on or about the Second Amendment Date.

 

7.             Severability. 
Any provision of this Agreement held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the
remainder of this Agreement and the effect thereof shall be confined to the
provision so held to be invalid or unenforceable.

 

8.             Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original, but all of which taken together shall be
one and the same instrument.

 

9.             Ratification. 
Except as expressly set forth herein, the terms and provisions set forth
in this Agreement shall not be deemed to be a modification or waiver of any
term or condition of the Loan Agreement. 
The terms and provisions of the Loan Agreement, as amended hereby, and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect and shall
continue to guarantee or secure, as the case may be, to the fullest extent
possible, the payment and performance of all Obligations under or in respect of
the Loan Agreement or any of the other Loan Documents and all Collateral encumbered by any of the Loan Documents will continue
to secure, to the fullest extent possible, the payment and performance of all
Obligations under or in respect of the Loan Agreement or any of the other Loan
Documents.

 

4

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed under seal and
delivered by their respective duly authorized officers on the date first
written above.

 

	
   

  	
  BEACON SALES ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUALITY
  ROOFING SUPPLY

  
	
   

  	
  COMPANY,
  INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEACON
  CANADA, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEST
  DISTRIBUTING CO.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  ROOF CENTER, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEST
  END LUMBER COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  J.G.A.
  BEACON, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
				

 

 

	
   

  	
  SDI
  HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SDI
  ACQUISITION GUARANTOR, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHELTER
  DISTRIBUTION, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEACON PACIFIC, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
				

 

 

	
   

  	
  GENERAL
  ELECTRIC CAPITAL

  CORPORATION, as Agent, an L/C Issuer, a

  Lender and an Increasing Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ John M.
  Steidle

  	
   

  
	
   

  	
  Its Authorized
  Signatory

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $191,665.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $191,665.00

  
				

 

 

	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ Jason
  Riley

  	
   

  
	
   

  	
  Title: Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $941,666.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $941,668.00

  
				

 

 

	
   

  	
  THE
  CIT GROUP/BUSINESS CREDIT, INC.,

  as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ Chad
  Ramsey

  	
   

  
	
   

  	
  Title: Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $1,225,000.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $1,225,000.00

  
				

 

 

	
   

  	
  LASALLE BANK NATIONAL ASSOCIATION,

  a national banking association, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ Andrew
  Heinz

  	
   

  
	
   

  	
  Title: Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $416,666.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $416,666.00

  
				

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ Stephen
  Christ

  	
   

  
	
   

  	
  Title: Account
  Executive

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $658,333.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $658,334.00

  
				

 

 

	
   

  	
  WACHOVIA CAPITAL FINANCE

  CORPORATION (CENTRAL), as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ Vicky
  Geist

  	
   

  
	
   

  	
  Title: Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $750,000.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $750,000.00

  
				

 

 

	
   

  	
  UPS CAPITAL CORPORATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ John P.
  Holloway

  	
   

  
	
   

  	
  Title: Director
  of Portfolio Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $233,333.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $233,333.00

  
				

 

 

	
   

  	
  FIFTH THIRD BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ John T.
  Penny

  	
   

  
	
   

  	
  Title: Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Incremental Term
  Loan A Commitment:

  $583,333.00

  
	
   

  	
  Incremental Term
  Loan B Commitment:

  $583,333.00

  
				

 

 

	
   

  	
  ANTARES CAPITAL CORPORATION,

  
	
   

  	
  as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ John M.
  Seidle

  	
   

  
	
   

  	
  Title: Duly
  Authorized Signatory

  	
   

  
				

 

 

	
   

  	
  GE
  CANADA FINANCE HOLDING

  COMPANY, as
  the sole Canadian Facility Lender

  
	
   

  	
   

  
	
   

  	
  By: /s/ Jack
  Morrone

  	
   

  
	
   

  	
  Title: Senior
  Vice President

  	
   

  
				

 

 

CONSENT
AND REAFFIRMATION (HOLDINGS)

 

The undersigned hereby (i) acknowledges
receipt of a copy of each of the Second Amendment to Third Amended and Restated
Loan and Security Agreement and the Increased Commitment Agreement (together,
the “Agreements”); (ii) consents to Obligors’ execution and delivery
thereof; and (iii) affirms that nothing contained therein shall modify in
any respect whatsoever its guaranty of the obligations of the undersigned to
Agent and Lenders pursuant to the terms of that certain Guaranty dated as of March 12,
2004 (the “Holdings Guaranty”) and reaffirms that the Holdings Guaranty is and
shall continue to remain in full force and effect and that each Loan Document to which it is a party or otherwise bound
and all Collateral encumbered thereby will continue to guaranty or secure, as
the case may be, to the fullest extent possible, the payment and performance of
all obligations under or in respect of the Holdings Guaranty and such other
Loan Documents.  Although the
undersigned has been informed of the matters set forth herein and has
acknowledged and consented to same, the undersigned understands that Agent and
Lenders have no obligation to inform it of such matters in the future or to
seek its acknowledgment or consent to future agreements or waivers, and nothing
herein shall create such a duty.

 

IN WITNESS WHEREOF, the
undersigned has executed this Consent and Reaffirmation on and as of the date
of the Agreements.

 

	
   

  	
  BEACON
  ROOFING SUPPLY, INC.

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
				

 

 

CONSENT AND REAFFIRMATION (BEACON CANADA)

 

The undersigned hereby (i) acknowledges
receipt of a copy of each of the Second Amendment to Third Amended and Restated
Loan and Security Agreement and the Increased Commitment Agreement (together,
the “Agreements”); (ii) consents
to the terms and conditions of the Agreements and the execution and delivery of
the Agreements by the Obligors; and (iii) confirms and ratifies the terms
of the Amended and Restated Guarantee dated as of June 8, 2001 given by
the undersigned in favour of Agent, as acknowledged, confirmed and amended
pursuant to the Acknowledgement and Confirmation dated October 14, 2005
between the undersigned, Beacon Canada, Inc. and Agent (as further
amended, restated, supplemented or otherwise modified from time to time, the “Beacon Canada Guarantee”) and
reaffirms that the Beacon Canada Guarantee is not released or discharged by the
execution and delivery of the Agreements and is and shall continue to remain in
full force and effect and that each Loan Document to which the undersigned is a
party or otherwise bound and all Collateral encumbered thereby will continue to
guarantee or secure, as the case may be, to the fullest extent possible, the
payment and performance of all obligations under or in respect of the Beacon
Canada Guarantee and such other Loan Documents. 
Although the undersigned has been informed of the matters set forth
herein and has acknowledged and consented to same, the undersigned understands
that Agent and Lenders have no obligation to inform it of such matters in the
future or to seek its acknowledgement or consent to future agreements or
waivers, and nothing herein shall create such a duty.

 

Capitalized
terms used in this Consent and Reaffirmation, unless otherwise defined herein,
shall have the meanings given to them in that certain Third Amended and
Restated Loan and Security Agreement dated as of October 14, 2005 among
Beacon Sales Acquisition, Inc., Quality Roofing Supply Company, Inc.,
Beacon Canada, Inc., Best Distributing Co., The Roof Center, Inc.,
West End Lumber Company, Inc., J.G.A. Beacon, Inc., SDI Holding, Inc.,
SDI Acquisition Guarantor, Inc., Shelter Distribution, Inc., and
Beacon Pacific, Inc., the financial institutions party thereto, and
General Electric Capital Corporation.

 

IN WITNESS WHEREOF, the
undersigned has executed this Consent and Reaffirmation on and as of the date
of the Agreements.

 

	
   

  	
  BEACON ROOFING SUPPLY CANADA

  COMPANY

  
	
   

  	
   

  
	
   

  	
  By: /s/ David R.
  Grace

  	
   

  
	
   

  	
  Title: Chief
  Financial OfficerExhibit 10.1

 

 

 

APAC
Customer Services, Inc.

Management
Incentive Plan

 

 

 

As Amended
and Restated

Effective
January 3, 2005

 

 

	
   

  	
   

  	
  TABLE OF
  CONTENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1

  	
  ESTABLISHMENT OF THE PLAN

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Purpose

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  Term

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Annual Incentive Award

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Award

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Award Agreement

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Base Salary

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Board

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Change in Control

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.7

  	
   

  	
  Code

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.8

  	
   

  	
  Committee

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.9

  	
   

  	
  Company

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.10

  	
   

  	
  Eligible Individual

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.11

  	
   

  	
  Fair Market Value

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.12

  	
   

  	
  Long-Term Incentive Award

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.13

  	
   

  	
  Participant

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.14

  	
   

  	
  Performance Goals

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.15

  	
   

  	
  Performance Period

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.16

  	
   

  	
  Plan

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.17

  	
   

  	
  Plan Year

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.18

  	
   

  	
  Stock

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.19

  	
   

  	
  Stock Plan

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3

  	
  ELIGIBILITY AND PARTICIPATION

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  General

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Partial Year Participation

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  No Right to Participate

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4

  	
  INCENTIVE AWARD OPPORTUNITY

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Performance Goals

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Awards

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Maximum Award

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5

  	
  PAYMENT OF INCENTIVE AWARDS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Form and Timing of Payment

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Payment of Partial Awards

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Termination of Employment

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  Change in Control Termination

  	
   

  	
  5

  
							

 

 

 

	
  SECTION 6

  	
  RIGHTS OF PARTICIPANTS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  No Employment Rights

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Nontransferability

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7

  	
  ADMINISTRATION, LIABILITY, INDEMNIFICATION

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Administration

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Liability; Indemnification

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8

  	
  AMENDMENT, MODIFICATION AND TERMINATION

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9

  	
  MISCELLANEOUS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Governing Law

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Withholding Taxes

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Shareholder Approval

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Costs of the Plan

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Unsecured General Creditor

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.6

  	
   

  	
  Entire Agreement

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.7

  	
   

  	
  Limitations of Liability

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.8

  	
   

  	
  Successors

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.9

  	
   

  	
  Captions, Gender and Number

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.10

  	
   

  	
  Headings

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.11

  	
   

  	
  Severability

  	
   

  	
  8

  

 

ii

 

 

APAC
Customer Services, Inc. 

Management
Incentive Plan

(As Amended
and Restated Effective January 3, 2005)

 

Section 1

ESTABLISHMENT
OF THE PLAN

 

1.1
          Purpose.  APAC Customer
Services, Inc. established the APAC Customer Services, Inc. Management
Incentive Plan effective as of January 3, 2000, and amends the Plan by this
restatement, to reward certain eligible employees of the Company who help
achieve annual and long-term performance goals of the Company and, in some
cases, specified individual such goals.

 

1.2
          Term.  The Company
hereby amends and restates the Plan, as set forth herein, effective January 3,
2005.  The Plan shall terminate on the 10th
anniversary of the effective date (unless sooner terminated by the Board
pursuant to Section 9).

 

Section 2

DEFINITIONS

 

2.1
          Annual Incentive Award. 
“Annual Incentive
Award” means the actual bonus earned during a Plan Year by a
Participant, payable to the Participant in cash or Stock having a Fair Market
Value equal to such earned bonus amount, as determined by the Committee at or
after the end of a Performance Period of one Plan Year.  A Participant’s Annual Incentive Award may,
in the discretion of the Committee, be stated as a percentage of the
Participant’s Base Salary, a dollar amount or other measurement.

 

2.2
          Award.  “Award” means an
Annual Incentive Award or a Long-Term Incentive Award.  “Awards” means two or more Annual Awards,
Long-Term Incentive Awards or a combination thereof.

 

2.3
          Award Agreement.  “Award Agreement”
means a written agreement between the Company and the Participant that
establishes the terms, conditions and restrictions applicable to an Award in
addition to those established by the Plan and by the Committee’s exercise of
its administrative powers.

 

2.4
          Base Salary.  “Base
Salary” means the annual base pay rate in effect at the
end of the Performance Period.

 

2.5
          Board.  “Board” means the Board
of Directors of the Company.

 

2.6
          Change in Control.  “Change in Control”
means any of the following events:

 

(a)
          A tender offer shall be made and
consummated for the ownership of more than 50% of the outstanding voting
securities of the Employer;

 

(b)
          The Employer shall be merged or
consolidated with another corporation and as a result of such merger or
consolidation less than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the
former shareholders of the Employer, as the same shall have existed immediately
prior to such merger or consolidation;

 

(c)
          The Employer shall sell all or
substantially all of its assets to another corporation which is not a
wholly-owned subsidiary or affiliate;

 

 

(d)
          As the result of, or in
connection with, any contested election for the Board of Directors of the
Employer, or any tender or exchange offer, merger or business combination or
sale of assets, or any combination of the foregoing (a “Transaction”), the
persons who were Directors of the Employer before the Transaction shall cease
to constitute a majority of the Board of Directors of the Employer, or any
successor thereto; or

 

(e)
          A person, within the meaning of
Section 3(a)(9) or of Section 13(d)(3) (as in effect on the date hereof) of the
Securities and Exchange Act of 1934 (“Exchange Act”), other than any employee
benefit plan then maintained by the Employer, shall acquire more than 50% of
the outstanding voting securities of the Employer (whether, directly,
indirectly, beneficially or of record). For purposes hereof, ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in effect on
the date hereof) pursuant to the Exchange Act.

 

Notwithstanding
the foregoing, (i) a Change in Control will not occur for purposes of this
Agreement merely due to the death of Theodore G. Schwartz, or as a result of
the acquisition by Theodore G. Schwartz, alone or with one or more affiliates
or associates, as defined in the Exchange Act, of securities of the Employer, as
part of a going-private transaction or otherwise, unless Mr. Schwartz or his
affiliates, associates, family members or trusts for the benefit of family
members (collectively, the “Schwartz
Entities”) do not control, directly or indirectly, at least
twenty-seven percent (27%) of the resulting entity, and (ii) if the Schwartz
Entities control, directly or indirectly, less than twenty-seven (27%) percent
of the Employer’s voting securities while it is a public company, then “331/3%”
shall be substituted for “50%” in clauses (a) and (e) of this Section 2.5, and
“662/3%” shall be substituted for “50%” in clause (b) of
this Section 2.5.

 

2.7
          Code.  “Code” means the
Internal Revenue Code of 1986, as amended. References to a Section of the Code
shall include references to any temporary or final regulation related to such
Section or any successor to such Section or regulation.

 

2.8
          Committee.  “Committee” means the
Compensation Committee of the Board designated to administer the Plan in
accordance with Section 8.  Unless the
Board determines otherwise, and such determination is reduced to a writing
articulating the reasons for such determination, the Committee shall be
comprised solely of not less than 2 members, each of whom shall qualify as: (a)
a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) (or any
successor rule) under the Exchange Act, (b) an “outside director” within the
meaning of Section 162(m) of the Code (or any successor law or regulation), and
(c) an “independent director” as such term is defined or used by the rules of
the exchange or system on which the Company’s Stock is listed.

 

2.9
          Company.  “Company” means APAC Customer
Services, Inc., a Delaware corporation, and any successor thereto.

 

2.10         Eligible
Individual.  “Eligible Individual”
means one of the employees of the Company designated as such by the Committee.

 

2.11         Fair
Market Value.  “Fair Market Value” means (a) if Stock is readily
tradeable on a national securities exchange or other market system, the closing
price of Stock on the date of calculation (or on the last preceding trading
date if Stock was not traded on such date), or (b) if Stock is not then readily
tradeable on a national securities exchange or other market system (i) the book
value of a share of Stock as of the last day of the last completed fiscal
quarter preceding the date of calculation; or (ii) any other value as otherwise
determined in good faith by the Board.

 

2.12         Long-Term
Incentive Award.  “Long-Term Incentive Award”
means the actual long-term incentive award earned during a Performance Period
of two or more Plan Years by a Participant, payable in cash or Stock having a
Fair Market Value equal to such earned award amount, as determined by the
Committee at or after the end of the Performance Period. may, in

 

2

 

the discretion of the Committee, be stated as
a percentage of the Participant’s Base Salary, a dollar amount or other
measurement.

 

2.13         Participant.  “Participant”
means an Eligible Individual who has been designated as eligible to participate
under Section 3.

 

2.14         Performance
Goals.  “Performance
Goals” means the criteria established by the Committee
pursuant to Section 4, which shall be used to determine whether a Participant
is entitled to an Annual Incentive Award or a Long-Term Incentive Award and the
amount of such Award.

 

2.15         Performance
Period.  “Performance
Period” means one or more Plan Years establishing the
period for measuring the achievement of Performance Goals under an Annual Award
or Long-Term Incentive Award.

 

2.16         Plan.  “Plan”
means this APAC Customer Services, Inc. Management Incentive Plan, as set forth
herein, and amended from time to time.

 

2.17         Plan
Year.  “Plan
Year” means the Company’s fiscal year.

 

2.18         Stock.  “Stock”
means one or more shares of the common stock, $0.01 par value per share, of the
Company.

 

2.19         Stock
Plan.  “Stock
Incentive Plan” means the Amended and Restated 1995
Incentive Stock Plan of the Company, as may be in effect from time to time, and
any successor plan thereto.

 

Section 3

ELIGIBILITY
AND PARTICIPATION

 

3.1           General.  The Committee, in its discretion, shall
designate the Eligible Individuals who are eligible to participate in the Plan
for each Performance Period. Eligible Individuals who are eligible to
participate in the Plan shall be so notified in writing, and shall be apprised
of the Performance Goals and related Award opportunities for the applicable
Performance Period.

 

3.2
          Partial Year Participation. 
In the event that an Eligible Individual becomes eligible to participate
in the Plan subsequent to the commencement of a Performance Period (either
because he or she first becomes an Eligible Individual or because he or she is
designated as eligible to participate after the commencement of the Performance
Period), then such individual’s Award shall be determined using the amount of
the Award that would be payable for the full Performance Period (but for the
Participant’s participation for a partial year) multiplied by a fraction, the
numerator of which is the number of days in such Performance Period that the
Participant was eligible to participate in the Plan and the denominator of
which is the total number of days comprising the Performance Period.

 

3.3
          No Right to Participate. 
No Participant, Eligible Individual or other employee of the Company
shall at any time have the right to be selected for participation in the Plan
for any Performance Period, despite having previously participated in this Plan
or another incentive plan of the Company.

 

3

 

Section 4

INCENTIVE
AWARD OPPORTUNITY

 

4.1
          Performance Goals.

 

(a)
          Performance Goals. Prior to the beginning of a Performance
Period, or as soon as practicable thereafter but not later than 90 days after
commencement of the Performance Period, the Committee, in its discretion, and
subject to the approval of the Board, shall in writing establish objective
Performance Goals for Eligible Individuals. For the Performance Goals so
established, the Committee shall establish individual or aggregate threshold,
target and maximum levels of performance necessary to achieve and to earn all
or a portion of an Award. The Performance Goals may be based upon both
financial and non-financial goals, including (i) earnings before interest,
taxes, depreciation and amortization, (ii) revenue, (iii) sales, (iv) earnings
per share, (v) funds from operations, (vi) pretax income before allocation of
corporate overhead and bonus, (vii) budget, (viii) cash flow, (ix) net income,
(x) division, group or corporate financial goals, (xi) appreciation in or
maintenance of the price of the Stock or any other publicly traded securities
of the Company, (xii) dividends, (xiii) total shareholder return, (xiv) return
on shareholders’ equity, (xv) return on assets, (xvi) return on investment,
(xvii) internal rate of return, (xviii) attainment of strategic and operational
initiatives, (xix) market share, (xx) operating margin, (xxi) profit margin,
(xxii) gross profits, (xxiii) earnings before interest and taxes, (xxiv)
economic value-added models, (xxv)comparisons with various stock market
indices, (xxvi) increase in number of customers, and (xxvii) reductions in
costs, as determined by the Committee.

 

(b)
          Individual Performance Goals. If the Committee determines that the
Award shall be attributable, in part, to a Participant’s achievement of
individual Performance Goals, such achievement shall be determined by the
Committee after consulting the person to whom the Participant directly reports.

 

(c)
          Adjustment of Performance Goals. For any Award subject to Section 162(m)
of the Code, the Committee shall not have the authority to increase the Award
opportunities during a Performance Period, but shall have authority to exercise
negative discretion provided that such exercise does not result in an increase
in the Award of another Participant.  For
any other Award, the Committee shall have the right to increase or to decrease
the Performance Goals and the Award opportunities if it determines that
external changes or other unanticipated business conditions have materially
affected the fairness of the Performance Goals and have unduly influenced the
ability to achieve the Performance Goals. Further, in the event of a
Performance Period of less than twelve (12) months, the Committee shall have
the authority to equitably adjust the Performance Goals and the Incentive Award
opportunities, in its sole discretion accordingly.

 

4.2
          Awards.  The Committee
shall have the authority, in its sole discretion, to grant Annual Incentive
Awards and Long-Term Incentive Awards to Participants, and to establish the
terms and conditions of such Awards, including payout, tax withholding and
restrictive covenants, and, in the case of any payout in Stock, vesting and
other restrictions, the effects of the termination of a Participant’s
employment or service and transferability, in each case in accordance with the
terms of the Stock Plan.  Each Award
granted under the Plan shall be evidenced by an Award Agreement which shall be
signed by the Committee and the Participant; provided, however, that in the
event of any conflict between a provision of the Plan and any provision of an
Award Agreement, the provision of the Plan shall prevail.  Annual Incentive Awards or Long-Term
Incentive Awards based on percentage achievement of Performance Goals between
the threshold, target and maximum levels shall be determined by interpolation
in accordance with procedures established by the Committee.

 

4

 

4.3
          Maximum Award.  The
maximum dollar amount of any Annual Incentive Award and of any Long-Term
Incentive Award that may be paid to any single Participant in any calendar year
with respect to Awards the compensation of which is determined by a formula
that calculates a dollar amount (whether payable in cash or property) is (a)
the greater of $1,000,000 or 250% of the Participant’s Base Salary for Annual
Incentive Awards and (b) the greater of $2,000,000 or 500% of the Participant’s
Base Salary for Long-Term Incentive Awards. 
The maximum aggregate number of shares of Stock that may be granted to
any single Participant in any calendar year with respect to Awards the
compensation of which is determined by the number of shares of Stock actually
awarded or subject to vesting shall be 300,000 shares, subject to adjustment as
provided in Section 11 of the Stock Plan; provided, however, that with respect
to Awards that may be subject to Section 162(m) of the Code, such modifications
and/or changes do not disqualify compensation attributable to such Awards as
“performance-based compensation” under Section 162(m) of the Code.

 

Section 5

PAYMENT OF
INCENTIVE AWARDS

 

5.1
          Form and Timing of Payment. 
As soon as practicable after the end of the applicable Performance Period,
the Company shall pay to each Participant the amount due under the
Participant’s Annual Incentive Award or Long-Term Incentive Award for the
applicable Performance Period, in cash or Stock, in accordance with the terms
and conditions of the Award and the procedures established by the
Committee.  All Awards payable in Stock
shall be issued pursuant to the Stock Plan to the extent of shares of Stock
available for issuance thereunder.

 

5.2
          Payment of Partial Awards. 
In the event a Participant no longer meets the eligibility criteria set
forth in the Plan during the course of a particular Performance Period (other
than due to termination of employment), the Committee may, in its discretion,
pay a partial award for the portion of the Plan Year the individual was a
Participant.

 

5.3
          Termination of Employment. 
It is a condition to the payment of an Annual Incentive Award and a
Long-Term Incentive Award under the Plan that the Participant be employed on
the date of payment, unless the Award Agreement providing for such Award
specifically provides otherwise.

 

5.4
          Change in Control Termination. 
Unless an Annual Incentive Award or any Long-Term Incentive Award
specifically provides otherwise, if the Company terminates a Participant’s
employment coincident with or after a Change in Control, the Participant shall
be entitled to receive an amount of such Award for such Performance Period
equal to the product of (a) a target level Award multiplied by (b) a fraction,
the numerator of which is the number of days that the Participant was
participating during the applicable Performance Period through the day of
termination and the denominator of which is the total number of days comprising
such Performance Period. Payment under this Section 5.4 may be made in
accordance with Section 5.1 or sooner, as determined by the Committee in its
discretion.

 

Section 6

RIGHTS OF
PARTICIPANTS

 

6.1
          No Employment Rights. 
Nothing in the Plan shall interfere with or limit in any way the right
of the Company to terminate any Eligible Individual’s employment at any time,
nor confer upon any Eligible Individual any right to continue in the employ of
the Company.

 

6.2
          Nontransferability.  No
Participant or any other person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt of the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be unassignable

 

5

 

and non-transferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure or sequestration
for the payment of any debts, judgment, alimony or separate maintenance owed by
a Participant or any other person, nor be transferable by operation of law in
the event of a Participant’s or any other person’s bankruptcy or insolvency.

 

Section 7

ADMINISTRATION,
LIABILITY, INDEMNIFICATION

 

7.1
          Administration.  The
Committee shall administer the Plan in accordance with its terms, and shall
have the sole discretion and authority necessary to carry out the
administration of the Plan. With respect to Participants whose position is
below the Senior Vice President level, the Committee may delegate, to one or
more individuals, some or all of its authority to administer the Plan and to
permit such individuals to have the discretion necessary to carry out the
administration of the Plan to the extent that award and payment of Awards to
such Participants are not subject to Section 162(m) of the Code.  Such authority shall include the authority
to:

 

(a)
          Select the Eligible Individuals
eligible to participate in the Plan for each Performance Period or portion
thereof;

 

(b)
          To determine eligibility for and
the type and size of an Award granted under the Plan;

 

(c)
          To grant Awards to, and to enter
into Award Agreements with, Participants;

 

(d)
          Determine the Performance Goals
applicable to the payment of Annual Incentive Awards and Long-Term Incentive
Awards, and the amount of the Annual Incentive Awards and Long-Term Incentive
Awards payable upon the Participants’ achievement of the applicable Performance
Goals;

 

(e)
          To the extent consistent with
the Plan, to impose such terms, limitations, restrictions, and conditions upon
the receipt of Annual Incentive Awards and Long-Term Incentive Awards as it
deems appropriate, and, to the extent consistent with the Plan, to grant
waivers of Plan terms, conditions, restrictions, and limitations;

 

(f)
           To accelerate the vesting
conditions of any Award payable in Stock when such action would be in the best
interests of the Company;

 

(g)
          Interpret the Plan, make any
necessary factual determinations under the Plan, adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan;

 

(h)
          Correct any defect or omission
or reconcile any inconsistency in this Plan or any award of payment hereunder,
and

 

(i)
           Make all other necessary
determinations and take all other actions necessary or advisable for the
implementation and administration of the Plan.

 

(j)
           The Committee’s determinations
on matters within its authority shall be conclusive and binding upon all
parties (including Participants’ heirs, successors and legal representatives).

 

7.2
          Liability; Indemnification. 
No member of the Board, no member of the Committee and no employee of
the Company shall be liable for any act or failure to act hereunder, except in
circumstances involving his or her bad faith, gross negligence or willful

 

6

 

misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties in
connection with the administration of the Plan have been delegated.  The Company shall indemnify members of the
Committee and any agent of the Committee who is an employee of the Company,
against any and all liabilities or expenses to which they may be subjected by
reason of any act or failure to act with respect to their duties on behalf of the
Plan, except in circumstances involving such person’s bad faith, gross
negligence or willful misconduct.

 

Section 8

AMENDMENT,
MODIFICATION AND TERMINATION

 

The
Committee, in its sole discretion, without notice, at any time and from time to
time, may in writing modify or amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely; provided, however,
that no such modification, amendment, suspension, or termination may, without
the consent of a Participant (or his or her beneficiary in the case of the
death of the Participant), reduce the right of a Participant (or his or her
beneficiary, as the case may be) to a payment or distribution hereunder to
which he or she is otherwise entitled.

 

Section 9

MISCELLANEOUS

 

9.1
          Governing Law.  The
Plan, and all agreements hereunder, shall be governed by and construed in
accordance with the laws of the State of Illinois (without regard for its
conflict of laws rules).

 

9.2
          Withholding Taxes.  The
Company shall have the right to deduct from all payments under the Plan any
Federal, state, or local taxes required by law to be withheld with respect to
such payments.

 

9.3
          Shareholder Approval. 
Any Awards hereunder to be granted after the annual meeting of
shareholders immediately succeeding the date that this Plan adopted by the
Board, and this Plan respecting such Awards, are made subject to the condition
that the Plan be approved by the shareholders of the Company.  If the Plan is not so approved, it and such
Awards shall be null and void and without effect.  Shareholder approval shall not be required
for Awards granted prior to such annual meeting.  If required by Section 162(m) of the Code or
any successor regulation or rule, the material terms of performance goals as
described in Section 4.1 shall be disclosed to and reapproved by the
shareholders of the Company no later than the first shareholder meeting that
occurs in the 5th year following the year in which the Company’s shareholders
previously approved such performance goals.

 

9.4
          Costs of the Plan.  All
costs of implementing and administering the Plan shall be borne by the Company.

 

9.5
          Unsecured General Creditor. 
Participants and their heirs, successors and assigns shall have no legal
or equitable rights, interest or claims in any property or assets of the
Company by virtue of participation in the Plan. The Company’s obligation under
the Plan shall be that of an unfunded and unsecured promise of the Company to
pay money in the future.

 

9.6
          Entire Agreement. 
Except to the extent an Employment Agreement expressly provides for
additional or other terms pertaining to a Participant’s or beneficiary’s annual
or long-term incentive compensation, this Plan (as may be amended from time to
time) and Award Agreements thereunder are the entire agreement between the
Company and the Participants and beneficiaries regarding the Plan. No oral
statement regarding the Plan may be relied upon by any Participant or
beneficiary.

 

7

 

9.7
          Limitations of Liability. 
The liability of the Company under this Plan is limited to the
obligations expressly set forth in the Plan, and no term or provision of the
Plan may be construed to impose any further or additional duties, obligations
or costs on the Company or the Committee not expressly set forth in the Plan.

 

9.8
          Successors.  All
obligations of the Company under the Plan shall be binding upon and inure to
the benefit of any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.

 

9.9
          Captions, Gender and Number. 
The descriptive headings in this Plan are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of the Plan.  The use of
the word “including” in this Plan shall be by way of example rather than by
limitation.  Except where otherwise
indicated by the context, any masculine term used herein also shall include the
feminine, the plural shall include the singular, and the singular shall include
the plural.

 

9.10         Headings.  The headings and captions contained herein
are provided for convenience only, and are not to be used to in the
interpretation or construction of any provision contained in the Plan.

 

9.11         Severability.  In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

 

IN WITNESS
WHEREOF, the Company has executed this Plan by its duly authorized officers as
of this 9th day of February, 2005, effective the effective date set
forth in Section 1.2.

 

 

	
   

  	
  APAC CUSTOMER SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/

  	
   

  	
  Linda
  R. Witte

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
  Senior
  Vice President

  

 

8

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