Document:

Exhibit 10.12

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (the
“Agreement”) is entered into this August 17, 2001, and made effective as of
August 27, 2001 (the “Effective Date”), by and between APAC Customer Services,
Inc., an Illinois corporation (the “Company”), and Marc T. Tanenberg (the
“Executive”).

In
consideration of the mutual covenants contained in this Agreement, the parties
hereby agree as follows:

SECTION I

EMPLOYMENT

A.            Employment

Subject
to the terms and conditions provided in this Agreement, the Company agrees to
employ the Executive, and the Executive agrees to be employed by the
Company.  Such employment hereunder
shall commence as of the Effective Date and shall terminate on August 27, 2006,
unless terminated earlier as provided below in Section III or extended as
provided below (the “Period of Employment”).

B.            Position,
Responsibilities and Duties

While
the Executive is employed with the Company, the Executive shall devote all of
his business time, attention and skill to the business and affairs of the
Company and its subsidiaries.  The
Executive shall report to the Chief Executive Officer of the Company and shall
perform such duties on behalf of the Company as are customarily performed by
the Chief Financial Officer or as may be directed by the Chief Executive
Officer of the Company. The Executive shall serve as Senior Vice President and
Chief Financial Officer. The Executive may serve on corporate, civic or
charitable boards or committees so long as, in the judgment of the Chief Executive
Officer, such activities do not interfere with the Executive’s responsibilities
hereunder.

SECTION II

COMPENSATION AND BENEFITS

A.            Base
Salary

During
the Period of Employment, the Company agrees to pay the Executive a base salary
(“Base Salary”) of Two Hundred Fifty Thousand Dollars ($250,000) payable
periodically on the same basis as other senior executives of the Company.  The Executive’s Base Salary will be reviewed
at the same time as other senior executives who report directly to the Chief
Executive Officer during the Period of Employment by the Compensation Committee
of the Board of Directors (the “Compensation Committee”), and may be increased
or decreased as it deems appropriate. 
In no event shall the base salary for any 12 month period be less than
$250,000, except if the Executive’s Base Salary is decreased in connection with
a reduction of senior executives’ salaries generally, and all senior executives
of the Company are subject to an equivalent percentage reduction in their base
salaries.

 

 

B.            Incentive
Bonus

(a)           For each fiscal year of the Executive’s employment with
the Company, the Executive shall be eligible for an annual incentive bonus
(“Annual Incentive Bonus”) under the Company’s Management Incentive Plan, as in
effect from time to time or under a successor annual incentive plan (“Incentive
Plan”), with a threshold award of 20%, a target award of 40%, and a stretch or
maximum award of 60%, payable to the Executive in accordance with the Company’s
Incentive Plan.  The Compensation Committee
shall establish the goals for each fiscal year (with corresponding goals
established for the payment of threshold, target and maximum or stretch
awards).

(b)           For the balance of 2001, Executive will be a participant
in the Company’s semi-annual incentive compensation plan with threshold, target
and maximum or stretch awards as provided in such plan; provided, however, that
the Company guarantees that Executive’s bonus for the period starting on the
Effective Date and ending on December 31, 2001 shall be equal to at least
$62,630.  Executive’s bonus amount for
the balance of 2001 shall be paid at the same time bonuses are paid under the
Company’s semi-annual incentive compensation plan, presently expected to occur
in April of 2002.

C.            Equity
Incentives

(a)           As of the Effective Date, the Company shall grant to the
Executive a nonstatutory stock option (one that is not intended to be an
incentive stock option under Section 422 of the Code) under the APAC Customer
Services, Inc. Second Amended and Restated 1995 Incentive Stock Plan (the
“Stock Plan”) covering two hundred thousand (200,000) shares of the Common
Stock of the Company (“Shares”) at an exercise price equal to the mean between
the high and low prices at which the Company’s Common Stock trades on August
27, 2001, as reported by Bloomberg Financial Markets.  As a condition to the receipt of this grant made as of the
Effective Date, the Executive shall execute a Stock Option Agreement, in the
form appended hereto as Attachment I.

(b)           If the Executive is employed hereunder on the date in 2002
and each subsequent year of the Period of Employment that option grants are
made to executives of the Company generally, the Executive shall be eligible to
receive additional stock option grants under the Stock Plan based on the
Compensation Committee’s assessment of his performance.  The number of Shares covered by such option
grants shall be determined by the Compensation Committee based on the
Executive’s achievement of the performance goals established by the Compensation
Committee under the Incentive Plan for each fiscal year.  Each such option granted to the Executive
pursuant to this paragraph shall be on such terms and conditions as the
Compensation Committee shall determine and as evidenced by a written and executed
Stock Option Agreement, consistent with other similarly situated senior
executives of the Company with respect to options granted from and after the
date of this Agreement.

 

2

 

D.            Employee Benefits

During
the Period of Employment, the Executive shall be entitled to participate in all
employee benefit plans or programs provided to senior executives of the
Company.  The Executive will participate
to the extent permissible under the terms and provisions of such plans or
programs in accordance with plan or program provisions, subject in each case to
the conditions, limitations and restrictions imposed on the receipt of benefits
under such plan or program.  These plans
or programs may include group medical, life or other insurance, tax qualified
pension, savings, thrift and profit sharing plans, sick leave plans, travel or
accident insurance, and short and long term disability insurance.  Notwithstanding the foregoing, the Executive
shall not be eligible to participate in any severance or termination pay plan
or program.

Nothing
in this Agreement shall preclude the Company from amending or terminating any
of the plans or programs applicable to senior executive employees of the
Company.  Notwithstanding anything to
the contrary in this Section II.D., no amendment or termination of any employee
benefit or program shall reduce or otherwise adversely affect Executive’s
rights under Section II.C.(a) or III of this Agreement.

E.             Business
Expenses

The
Company shall reimburse the Executive for all reasonable travel and other
business expenses incurred by the Executive in connection with the performance
of his duties and responsibilities under this Agreement.  The Executive must support all expenditures
with customary receipts and expense reports subject to review in accordance
with the Company’s regular policy regarding expense reimbursement.

F.             Additional
Benefits

The
Executive shall be entitled to receive four (4) weeks paid vacation during each
calendar year, to be taken at such time or times that are mutually agreeable by
the Executive and the Company and not disruptive of the Company’s
business.  Such vacation shall be
prorated for partial calendar years and may be carried over or cashed out, if
at all, only in accordance with general Company policies as in effect from time
to time.  In addition, the Company shall
pay, on behalf of the Executive, reasonable attorney’s fees in an amount not to
exceed $7,500 incurred by him in connection with the negotiation and preparation
of this Agreement.

SECTION III

EFFECT OF TERMINATION OF EMPLOYMENT

A.            Termination
Other Than With Cause Other Than In Connection With Change in Control

If,
other than under circumstances described in Section III.B., the Company
terminates the Executive’s employment other than With Cause (defined below in
Section III.E.), the Executive terminates his employment for Good Reason (as
defined below in Section III.F.) prior to a Change in Control, or the Company
does not extend the term of this Agreement for another

 

3

 

year
at the end of the term hereof or any such extended term (i) the Executive shall
be entitled to receive payment of an aggregate amount equal to his Base Salary,
at the rate then in effect; payable in 26 bi-weekly installments over a 52 week
period; and (ii) the Employer shall reimburse Executive for the payments
Executive makes to exercise his rights under COBRA to continue the Executive,
the Executive’s spouse and/or beneficiary medical and dental coverages as such
may be in effect from time to time under the Company’s welfare plans for a
period of 12 months.  Such payments
shall be conditioned on the Executive’s execution and delivery of the Company’s
then standard form of Release.  In addition,
the Executive shall be entitled to payment for all accrued but unused vacation
and to his accrued benefits under the terms of the plans, policies and
procedures of the Company, including any plans or programs in which he
participates pursuant to Section II.D. 
Upon making the payments and providing the benefits required under this
Paragraph A, the Company shall have no further obligation to the Executive
under this Agreement.

B.            Termination Other Than With Cause
or for Good Reason In Connection With Change in Control

If
during the period of Employment and within twelve (12) months following a
Change in Control, as defined in Attachment II to this Agreement, the Company
terminates the Executive’s employment other than With Cause or the Executive
terminates his employment for Good Reason (as defined in Attachment II), the
Executive shall be entitled to those benefits set forth in the Employment
Security Agreement attached hereto as Attachment II.

C.            Termination With Cause, Voluntary
Termination, Termination by Death or Disability

If
the Executive’s employment is (i) terminated by the Company With Cause, (ii)
voluntarily terminated by the Executive other than for Good Reason, or (iii)
terminated by his death or Disability (as defined below), the Executive shall
be entitled to: (A) his Base Salary, at the rate then in effect, through the
date of termination, (B) his accrued benefits under the terms of the plans,
policies and procedures of the Company, including any plans or programs in
which he participates pursuant to Section II.D., and (C) payment for all
accrued but unused vacation.  Upon such
payment, the Company shall have no further obligation to the Executive under
this Agreement.

For
purposes of the foregoing, “Disability” shall mean disability as determined
under the Company’s long term disability benefit plan then in effect covering
the Executive.

D.            Duty
to Mitigate; Offset

The
Executive shall have no duty to mitigate by seeking other employment after his
termination of employment.  No amount to
which the Executive is entitled under this Section III shall be subject to
offset for any income that he derives from employment and/or consulting or from
any other source.

 

4

 

E.             Definition
of With Cause

Termination
“With Cause” means termination of the Executive’s employment by the Board of
Directors acting in good faith by written notice by the Company to Executive
specifying the event relied upon for such termination due to (i) gross
misconduct or gross negligence in the performance of Executive’s employment
duties, (ii) willful disobedience by the Executive of the lawful directions
received from or policies established by the Chief Executive Officer, which
continues for more than seven (7) days after the Company notifies Executive of
its intention to terminate his employment on account of such disobedience or
(iii) conviction of the Executive of a crime involving fraud or moral turpitude
that can reasonably be expected to have an adverse effect on the business,
reputation or financial situation of the Company.

F.             Definition
of Good Reason under Section III.A.

“Good
Reason” for purposes of Section III.A. above shall exist if, after notice by
the Executive to the Company and a fifteen (15) day opportunity by the Company
to cure (provided that with respect to matters (a) and (b) below the
opportunity to cure shall be thirty (30) days):

(a)           The Executive’s duties, responsibilities or authority as
an executive employee are materially reduced or diminished from those in effect
on the Executive’s commencement of Employment without the Executive’s written
consent or the Executive no longer reports to the CEO of the Company; provided,
however, that the Company’s ceasing to be a publicly traded entity shall not
constitute a diminution of duties herunder in the absence of a Change in
Control;

(b)           The Base Salary of the Executive and the incentive
compensation opportunity available to the Executive is reduced in the aggregate
and not in accordance with a compensation reduction specifically permitted
under Section II.A. of this Agreement; or

(c)           The Company violates the material terms of this Agreement.

SECTION IV

OTHER DUTIES OF THE EXECUTIVE DURING

AND AFTER THE PERIOD OF EMPLOYMENT

A.            Cooperation
During and After Employment

The
Executive will, with reasonable notice during or after the Period of
Employment, furnish information as may be in his possession and cooperate with
the Company as may reasonably be requested in connection with any claims or
legal actions in which the Company is or may become a party.  The Company shall be responsible for, and
shall advance to the Executive, any expenses incurred or to be incurred by
Executive in connection with his furnishing information or cooperation with the
Company under this Section.

 

5

 

B.            Restrictive
Covenant Agreement

The
Executive agrees that in order to protect the business interests of the
Company, he shall, contemporaneously with his execution of this Agreement,
execute the Restrictive Covenant Agreement, a copy of which is appended to this
Agreement as Attachment III. The Executive further agrees that he will execute
such modifications to the Restrictive Covenant Agreement as may be reasonably
requested by the Company in order to conform such Restrictive Covenant
Agreement to applicable law; provided that no such modification shall be more
restrictive on the Executive or lengthen the duation of the restrictions
thereunder.

SECTION V

INDEMNIFICATION

The
Company will indemnify the Executive to the fullest extent permitted by the
laws of the state of incorporation in effect at that time, or certificate of
incorporation and by-laws of the Company, whichever affords the greater
protection to the Executive. The Company will obtain and maintain customary
directors and officers liability insurance covering executive employees of the
Company.

SECTION VI

WITHHOLDING TAXES

The
Company may directly or indirectly withhold from any payments under this
Agreement all federal, state, city or other taxes that shall be required
pursuant to any law or governmental regulation.

SECTION VII

EFFECT OF PRIOR AGREEMENTS

This
Agreement contains the entire understanding between the Company and the
Executive with respect to the subject matter and supersedes any prior term
sheet, letter of understanding, employment, severance, or other similar
agreements, or oral agreement or understanding between the Company, its
predecessors and its affiliates, and the Executive, including without
limitation, the non-disclosure agreement previously executed by the Executive
in connection with his employment by the Company.

SECTION VIII

CONSOLIDATION, MERGER OR SALE OF ASSETS

Nothing
in this Agreement shall preclude the Company from consolidating or merging into
or with, or transferring all or substantially all of its assets to, another
corporation which assumes this Agreement and all obligations and undertakings
of the Company hereunder. Upon such a consolidation, merger or sale of assets,
the term “the Company” as used will mean the other corporation and this
Agreement shall continue in full force and effect. This Section VIII is not
intended to modify or limit the rights of the Executive hereunder, including
without limitation, the rights of the Executive under Section III.

 

6

 

SECTION IX

SECTION 280G

 

                Notwithstanding
any provision of this Agreement or any other agreement, including Attachments
II and III to this Agreement, to the contrary, in the event that:

 

(i)             the
aggregate payments or benefits to be made or afforded to the Executive under
any attachment hereto, or from the Company in any other manner (the
“Termination Benefits”) would be deemed to include an “excess parachute
payment” under Section 280G of the Code, or any successor thereto, and

 

(ii)            if
such Termination Benefits were reduced to an amount (the “Non-Triggering
Amount”), the

value
of which is one dollar ($1.00) less than an amount equal to three (3) times the
Executive’s “base amount,” as determined in accordance with said Section 280G,
and the Non-Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus the amount of tax required
to be paid by Executive thereon by Section 4999 of the Code, then the
Termination Benefits shall be reduced so that the Termination Benefits are not
more than the Non-Triggering Amount. 
The application of said Section 280G, and the allocation of the
reduction required by this Section, shall be determined by the Company’s auditors.

 

SECTION X

MODIFICATION

 

This
Agreement may not be modified or amended except in writing signed by the
parties.  No term or condition of this
Agreement will be deemed to have been waived, except in writing by the party
with waiver.  A waiver shall operate
only as to the specific term or condition waived and will not constitute a
waiver for future or act on anything other than that which is specifically
waived.

 

SECTION XI

GOVERNING LAW; ARBITRATION

 

This Agreement
has been executed and delivered in the State of Illinois and its validity and
interpretation shall be governed by the laws of that State, without giving
effect to its conflicts of law provisions. 
Any dispute among the parties hereto shall be settled by arbitration in
accordance with the then applicable rules of the American Arbitration
Association and judgment upon the award rendered may be entered in any court
having jurisdiction thereof.

SECTION XII

NOTICES

 

All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first-class postage prepaid by registered mail,
return receipt requested, or when delivered if by hand, overnight delivery
services or confirmed facsimile transmission, to the following:

 

7

 

(i)            If to the Company,
at:

 

APAC Customer Services, Inc.

Six Parkway North Center

Fourth Floor

Deerfield, IL 60015

Attn: Chief Executive
Officer

 

With a copy to:

 

APAC Customer Services, Inc.

Six Parkway North Center

Fourth Floor

Deerfield, IL 60015

Attn:  General Counsel

 

or at such other address as may have been
furnished to the Executive by the Company in writing; or

 

(ii)           If to the
Executive, at his home address as reflected on the Company’s records, or such
other address as may have been furnished to the Company by the Executive in
writing.

 

With a copy to:

 

                John R. Obiala

                Vedder Price

                222 N. LaSalle Street

                Chicago, IL 60601

 

SECTION XIII

BINDING AGREEMENT

 

This Agreement shall be binding on the parties’
successors, heirs and assigns, however this Agreement, and the rights and
obligations hereunder, may not (except as contemplated by Sections III.E.2 and
VIII) be assigned by either party without the prior express written consent of
the other party.

 

SECTION XIV

MISCELLANEOUS

 

A.            Multiple Counterparts; Facsimile
Signatures

 

                This
Agreement may be executed in multiple counterparts with the same force and
effect as if both parties had executed the same document.  The signature of a party furnished by facsimile
shall be as effective as the party’s original signature on the document.

 

8

 

B.            Severability

 

                If any
phrase, clause or provision of this Agreement is declared invalid or
unenforceable by a court of competent jurisdiction, such phrase, clause or
provision shall be deemed severed from this Agreement, but will not affect any
other provisions of this Agreement, which shall otherwise remain in full force
and effect.  In addition, there will be
automatically substituted herein for such severed phrase, clause or provision a
phrase, clause or provision as similar as possible which is valid and
enforceable.

 

C.            Headings

 

                The headings
and subheadings of this Agreement are inserted for convenience of reference
only and are not to be considered in construction of the provisions hereof.

 

D.            Construction

 

                The Company
and the Executive acknowledge that this Agreement was the result of
arm’s-length negotiations between sophisticated parties each afforded representation
by legal counsel.  Each and every
provision of this Agreement shall be construed as though both parties
participated equally in the drafting of same, and any rule of construction that
a document shall be construed against the drafting party shall not be
applicable to this Agreement.

 

*              *              *

 

                IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date first above written.

 

	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  APAC CUSTOMER SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [ILLEGIBLE]

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  /s/ Marc T. Tanenberg

  
	
   

  	
  Marc T. Tanenberg

  

 

 

9Exhibit 10.13

 

	
  

  	
  APAC Customer Services, Inc.

  	
   

  	
  Phone 847-374-4998

  
	
  One Parkway North Center, 5th Floor

  	
   

  	
  Fax 847-236-5453

  
	
  Deerfield, IL 60015

  	
   

  	
  wnrothman@apacmail.com

  

 

 

Warren N. Rothman

Senior Vice President

Human Resources

 

 

January 6,
2000

 

Mr. Daniel S.
Hicks

16631 Wright
Circle

Omaha, NE
68130

 

Dear Dan:

 

This is to
confirm that should your employment with the company terminate for “Good
Reason” following a “Change of Control” (terms defined in my December 27, 1999
letter to you), this will not be construed as a voluntary termination
per the terms of the Employee Reimbursement Agreement attached to the
above-referenced December 27, 1999 letter.

 

Sincerely,

 

 

/s/ Warren N.
Rothman

Warren N.
Rothman

Senior Vice
President,

Human
Resources

 

 

 

 

I have received
and understand the terms detailed above.

 

 

	
  /s/ Daniel S. Hicks

  	
   

  	
  1-7-00

  
	
  Daniel S. Hicks

  	
  Date

  

 

 

 

 

APAC Customer
Services, Inc.

Employee
Reimbursement Agreement

 

	
  Employee:

  	
  Dan Hicks

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  New Department:

  	
  Inbound SBU

  	
   

  	
  New GL Number:

  	
   

  
	
   

  	
   

  	
   

  
	
  New Position:

  	
  Vice President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

In order to receive relocation benefits under
the Deerfield Relocation Program, this Employee Reimbursement Agreement must be
completed, signed and returned to U.S. Relocation prior to commencement of any
benefits. U.S. Relocation will return the fully executed Agreement to the
appropriate manager to be place in your file.

 

                This
Agreement between APAC Customer Services, Inc. (the “Company”) and the Employee
identified above, is effective on JAN 7, 2000. 
In consideration of the material promises herein, the parties agree as
follows:

 

                The Company
agrees to pay the relocation benefits under the Deerfield Relocation Program
(the “Benefits”) to assist Employee and Employee’s family and household members
to relocate to the Deerfield, Illinois area.

 

                Employee
agrees to relocate to the Deerfield, Illinois area to assume the new position
with the Company identified above. 
Employee further agrees to reimburse the Company the amounts specified
below if, within 24 months of the relocation, (i) Employee voluntarily
terminates his employment with the Company, or (ii) the Company terminates
Employee for “cause”, which means termination of your employment due to (a)
gross misconduct or gross negligence in the performance of your employment
duties, (b) commission by you of a crime involving fraud or moral turpitude
that can reasonably be expected to have an adverse effect on the business,
reputation or financial situation of the Company, or (c) refusal to comply with
lawful directives, rules or policies of the company.

 

                In the event
that Employee is obligated to reimburse the Company in accordance with the
above paragraph, Employee will reimburse the percentage of the Benefits shown
in the following schedule within 30 days of termination:

 

	
  Length of Service

  From Relocation

  	
   

  	
  Percentage of Benefit

  to be Reimbursed

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12 months or less

  	
   

  	
  100

  	
  %

  
	
  At least 12 months,

  	
   

  	
   

  	
   

  
	
  But less than 24 months

  	
   

  	
  50

  	
  %

  
	
  As least 24 months

  	
   

  	
  0

  	
  %

  

 

                Employee
agrees that such reimbursement may be withheld from any final wages, including
vacation pay, due at the time of his termination.  Employee further agrees that he will execute any required
withholding agreement that the Company determines necessary.

 

 

                Employee
specifically agrees and acknowledges that his employment that his employment
with the Company is one of “at will” and this document does not create a
contract of employment for any specific period of time or in any way alters at
will status, meaning that either you or the Company are free to terminate the
employment relationship at any time for any reason.  Employee also specifically agrees and acknowledges that receipt
of relocation benefits does not extend or guarantee him employment in any way
or any specified period of time.

 

	
  EMPLOYEE

  	
  APAC CUSTOMER SERVICES, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Daniel S. Hicks

  	
   

  	
  By:

  	
  /s/ Warren N. Rothman

  
	
   

  	
   

  
	
  Date:

  	
  1-7-00

  	
   

  	
  Date:

  	
  1/7/00

  

 

 

 

 

	
  

  	
  APAC Customer Services, Inc.

  	
   

  	
  Phone 847-374-4998

  
	
  One Parkway North Center, 5th Floor

  	
   

  	
  Fax 847-236-5453

  
	
  Deerfield, IL 60015

  	
   

  	
  wnrothman@apacmail.com

  

 

 

Warren N. Rothman

Senior Vice President

Human Resources

 

 

December 27,
1999

 

PERSONAL
AND CONFIDENTIAL

 

Mr. Dan Hicks

16631 Wright
Circle

Omaha, NE
68130

 

RE: Deerfield
Relocation Program — Amended

 

Dear Dan:

 

Welcome to our
corporate headquarters! On behalf of APAC Customer Services, I am pleased to
present you with a comprehensive relocation package for your move to the
Deerfield, Illinois area.  This letter
is merely intended to outline the key components of the Deerfield Relocation
Program for your information.  More
specific information about the Program will be provided to you shortly from
U.S. Relocation, our relocation partner.

 

Relocation
Program

 

1.               The
Company-provided benefits under the Program are as follows:

 

a.               Marketing
assistance with the sale of your home in Omaha, Nebraska via a realtor referred
to you by U.S. Relocation.

 

b.              Payment of closing
costs associated with the sale of your home in Omaha, including realtor
commission and other costs normally paid by the seller.

 

c.               Payment for the
move and complete unpack of your household goods and personal possessions from
your home in Omaha to your new home in the Deerfield, Illinois area.

 

d.              Payment of a moving
allowance in the amount of $10,000 (net of taxes) to assist you with miscellaneous
expenses.

 

e.               Home finding
assistance in the Deerfield, Illinois area via a realtor associated with one of
the Company’s preferred relocation partners.

 

 

	
  

  	
  Mr. Dan Hicks

  December 27, 1999

  Page 2

  	
   

  	
   

  

 

f.                 Payment of any
points and loan origination fees associated with your new mortgage on your new
home in the Deerfield, Illinois area, up to 2% of the principal amount of your
new mortgage.

 

g.              Payment of any fees
associated with the purchase of your new home in the Deerfield, Illinois area
normally paid for by the buyer, such as recording fees, title/abstract fees and
home inspections, up to 1% of the principle amount of your new mortgage.

 

h.              Payment (to be
applied toward your new mortgage) of an amount (net of taxes) that, in addition
to the proceeds from the sale of your current home, will maintain your current
equity position (estimated to be 33.9%) in your new home in the Deerfield,
Illinois area.  (We estimate this amount
to be approximately $133,825, but it could be more or less depending on your actual
current equity position and the sale price of your current home.)

 

i.                  Payment of a
monthly mortgage subsidy (net of taxes) for five years.  This payment will equal 100% of the
difference, if any, between the total monthly payments (including principle,
interest, and property taxes) on your home in Omaha and your new home in the
Deerfield, Illinois area for the first three years, 75% of the difference for
Year 4, and 50% of the difference for Year 5.

 

j.                  Duplicate
mortgage protection for up to 3 months on your Omaha home, once you have closed
on your Chicago area residence.

 

k.               A bridge loan,
secured by the equity in your Omaha home, will be available to enable you to
close on your Chicago area home.

 

l.                  Additional
services, such as temporary housing and household goods storage, are available
to you, as your individual situation requires.

 

 

	
  

  	
  Mr. Dan Hicks

  December 27, 1999

  Page 3

  	
   

  	
   

  

 

 

2.               To be eligible for
these relocation benefits, you must execute an Employee Reimbursement Agreement
under which you agree to reimburse the Company in the event that, within 24
months of your move to Deerfield, Illinois, you voluntarily terminate your
employment or the Company involuntarily terminates your employment for
“Cause.”  An Employee Reimbursement
Agreement is attached for your review and signature.

 

3.               Relocation benefits
that are subject to tax will be grossed-up for tax purposes.  The amount of the payments for these
relocation benefits will be reflected on your W-2 at the end of the year.

 

Compensation

 

1.               Your 20% increase
in base compensation from $170,000 to $204,000 (annual amount is stated for
convenience and not intended as a contract) will become effective when you
complete the relocation of your household to the Deerfield, Illinois area.  Your relocation must be complete by April
30, 2000, although we are aware of the tight housing market and your commitment
to be working full-time in Deerfield by that date.

 

2.               Your annual bonus
opportunity will be consistent with that available to executives at your level
in the organization as it exists from year to year.  For 2000, this opportunity is 15%-30%-45% of base salary for
threshold-target-maximum performance, respectively.

 

3.               Upon signing this letter and the
enclosed Employee Reimbursement Agreement, and subject to the approval of the
Compensation Committee, you will be granted options to purchase 15,000 shares
of APAC stock at an exercise price equal to the mean between the high and low
prices at which APAC’s common stock trades on the day you sign these documents
as

 

 

	
  

  	
  Mr. Dan Hicks

  December 27, 1999

  Page 4

  	
   

  	
   

  

 

 

reported by Bloomberg Financial Markets.  Such options will vest at the rate of 20% per year during the
first five years of the options’ ten-year term.  In addition, you will be eligible to participate in APAC’s going
forward performance-based stock option plan, and will be eligible for
additional awards pursuant to this plan.

 

4.               With respect to the stock options
granted pursuant to this letter as well as all other options granted to you, in
the event of a “Change Control” (as defined below), 50% of the unvested portion
of all outstanding options shall be fully and immediately vested; the balance
shall vest if within one (1) year of the “Change of Control”, your employment
with APAC terminates for “Good Reason” (as hereinafter defined).

 

For purposes hereof, the term “Good Reason” shall mean any of (i) your
dismissal from employment by APAC, other than for “Cause” (as defined below),
(ii) your voluntary resignation within ninety (90) days following (A) a
material alteration in your title, duties or responsibilities or (B) relocation
of your office by more than twenty (20) miles from both your current personal
residence and Deerfield, Illinois or (C) reduction in your base salary or
Incentive Bonus participation; provided such voluntary resignation shall be
upon no less than thirty (30) days prior written notice and the reasons
specified therein are not cured during the (30) day period immediately
following such notice.

 

5.               Finally, if APAC
terminates your employment other than for “Cause”, you will be entitled to
receive severance payments equal to twelve (12) months base salary.  Termination for “Cause” means termination of
your employment due to (a) gross misconduct or gross negligence in the performance
of your employment duties, (b) commission by you of a crime involving fraud or
moral turpitude that can reasonably be expected to have an adverse effect on
the business, reputation or financial situation of the Company, or (c) refusal
to comply with lawful directives, rules or policies of the Company.

 

 

	
  

  	
  Mr. Dan Hicks

  December 27, 1999

  Page 5

  	
   

  	
   

  

 

 

More detailed
information about these benefits will be provided in the Program materials from
U.S. Relocation.  The description in
those materials will govern over this summary. 
Any questions you may have about the Relocation Program should be
directed to Cindy Corkery, Director, Corporate Recruiting.  Please direct all questions about
compensation to me.  Also, please note
that by signing this letter, you agree that it supercedes the relevant terms
outlined in your September 7, 1999 letter, as well as any other oral or written
commitments made to you.

 

Once again,
welcome to Deerfield.  You are an
important asset to the Company, and Peter, Clark and I look forward to having
you on the team.

 

	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Warren N. Rothman

  	
   

  
	
  Warren N. Rothman

  
	
  Senior Vice President

  
	
  Human Resources

  
	
   

  	
   

  
	
  WNRpl

  	
   

  
	
  Enclosures

  	
   

  
	
  Cc:  

  	
  Cindy Corkery

  
	
   

  	
  Clark Sisson

  
	
   

  	
  Peter Leger

  
				

 

 

 

 

	
  Accepted by:

  
	
   

  
	
  /s/ Dan Hicks

  	
   

  
	
  Dan Hicks

  
	
   

  
	
  Dated:  1-5-00

  

 

 

 

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

ATTACHMENT
A

 

A “Change in
Control” shall be deemed to have occurred if (I) a tender offer shall be made
and consummated for the ownership of more than 50% of the outstanding voting
securities of the company, (ii) the Company 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
company, as the same shall have existed immediately prior to such merger or
consolidation, (iii) the company shall sell all or substantially all of its
assets to another corporation which is not a wholly-owned subsidiary or affiliate,
(iv) as a result of, or in connection with, any contested election for the
Board of Directors, 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 Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company, or any successor thereto, or (v) 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 company, shall acquire more than
50% of the outstanding voting securities of the company (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)(l)(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 company, 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 percent (27%) of the company’s voting securities
while it is a public company, then “33-1/3” shall be substituted for “50%” in
clauses (i), (ii), and (v) of the first sentence of this paragraph.

 

	
  

  	
  APAC Customer Services, Inc.

  	
   

  	
  Phone 847-374-4998

  
	
  One Parkway North Center, 5th Floor

  	
   

  	
  Fax 847-236-5453

  
	
  Deerfield, IL 60015

  	
   

  	
  wnrothman@apacmail.com

  

 

 

Warren N. Rothman

Senior Vice President

Human Resources

 

 

PERSONAL
AND CONFIDENTIAL

 

September 7,
1999

 

Mr. Dan Hicks

16631 Wright
Circle

Omaha, NE
68103

 

Dear Dan:

 

I am pleased
to confirm the recent discussions you have had with Clark.  Specifically:

 

1.                                       Your
base salary has been increased to $170,000, effective August 16, 1999.

 

2.                                       Your
bonus for the July-December, 1999 period under the Management Bonus Plan (MBP)
will be guaranteed at the 50% funding level, or $17,000 (less withholding).
This payment is contingent on you being actively employed by the company on the
date the MBP bonuses are paid, consistent with the updated terms of the Plan.

 

3.                                       Regarding
your stock options (total of 150,000 granted through August 3, 1999), in the
event there is a “change of control” of the power to vote APAC’s common stock,
and if thereafter you are dismissed from employment other than for gross
negligence or “cause” (as said term is defined in APAC’s stock option grant
materials), you will then be fully vested in all of the above-mentioned stock
options.

 

We look
forward to your continued contributions to the company going forward.

 

Best personal
regards!

 

Sincerely,

 

 

/s/ Warren N.
Rothman

Warren N.
Rothman

Senior Vice
President

Human
Resources

 

WNR:ca

 

Cc: Clark
Sisson

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