Exhibit 10.2
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") made effective as of 11:59
p.m. September 21, 1999, by and between APAC Customer Services, Inc., an
Illinois corporation (the "Company"), and Peter M. Leger, a resident of the
State of Illinois (the "Executive").
In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:
SECTION I
EMPLOYMENT
The Company agrees to employ the Executive, and the Executive agrees
to be employed by the Company for the Period of Employment as provided in
Section III below upon the terms and conditions provided in this Agreement.
SECTION II
POSITION, RESPONSIBILITIES AND DUTIES
From the effective date hereof through September 30, 1999, the
Executive shall perform such duties and shall receive such compensation as
are mutually agreed upon by the Executive and the Company. From and after
October 1, 1999, the Executive shall devote all of his business time,
attention and skill to the business and affairs of the Company and its
subsidiaries, and shall report to the Board of Directors of the Company
(the "Board of Directors"). The Executive may serve on corporate, civic or
charitable boards or committees so long as, in the judgment of the Board of
Directors, such activities do not interfere with the Executive's
responsibilities hereunder. The Compensation Committee of the Board of
Directors (the "Compensation Committee") shall annually establish
reasonable, mutually agreed upon, written performance management objectives
with the Executive which shall be formally reviewed annually, with informal
reviews to be performed quarterly. The reasonable, mutually agreed upon,
performance management objectives for fiscal year 2000 shall be established
as soon as practicable.
From and after October 1, 1999, the Executive shall serve as Chief
Operating Officer of the Company; from and after the date described in
Section III, the Executive shall serve as Chief Executive Officer of the
Company. In either case, the Executive shall be responsible for the
typical management responsibilities expected of an officer holding such
position and such other responsibilities consistent with his position as
may be assigned to the Executive from time to time by the Board of
Directors. In performing his duties as Chief Operating Officer or Chief
Executive Officer hereunder, the Executive shall report directly to the
Chairman and have the President of the Company reporting to him, and shall
have the authority customarily held by others holding positions with
similar reporting relationships, in similar businesses, subject to the
general and customary supervision of the Board of Directors.
On or before the date on which the Executive commences as Chief
Executive Officer, the Company shall amend its by-laws to separate the
offices of Chairman and Chief Executive Officer. No later than October 31,
1999, the Company shall nominate for and cause the Executive to be elected
to the Board of Directors and, thereafter while he is employed hereunder,
to be reelected to the Board of Directors at the end of each term; provided
that, the Executive shall resign from the Board of Directors upon his
termination of employment if so requested by the Company.
The Board of Directors expects that, taking into account the current
state of the Company's planning process (strategic, operational and
financial plans) for fiscal year 2000, the Executive will contribute his
best efforts toward (i) identifying a management team (including any open
positions to be recruited) within sixty (60) days of the full-time
commencement date specified in Section III, and (ii) establishing a
strategic, operational and financial plan no later than December 31, 1999.
This plan would include a threshold budget and an organizational reporting
structure including the desired reports of the Executive and any open
positions. This plan would be presented to the Board of Directors within
the first two weeks of December to allow for its comments and should be
finalized by year end. The Executive and Board of Directors also shall
establish reasonable and mutually agreed upon threshold, target and maximum
goals and Incentive Bonus Plan award levels in connection with such
strategic, operational and financial plan.
SECTION III
TERM
The Executive shall commence as a non-officer employee of the Company
as of the effective date hereof. The Executive shall commence as Chief
Operating Officer on October 1, 1999 (the "full-time commencement date"),
with his service as Chief Executive Officer as provided in Section II
commencing on a date determined by the Company that is not later than sixty
(60) days after the full-time commencement date (or a later date that the
Executive and the Company reasonably and mutually agree upon in writing, as
being in the best interests of the Company, but in no event later than
April 1, 2000), and he shall continue as Chief Executive Officer of the
Company, subject to the terms hereof through December 31, 2004, subject to
earlier termination as provided in this Agreement (the "Period of
Employment"). Effective January 1, 2005 (and each succeeding January 1
that is two (2) years later), the Period of Employment will be extended for
two (2) years, unless either the Executive or the Company shall have given
the other written notice, no later than the January 1 preceding the
December 31 that would otherwise be the last day of the Period of
Employment, of his or its desire to not extend the Period of Employment
(with the Executive's termination on the last day of the Period of
Employment in such case not constituting a termination of the Executive's
employment for purposes of Section VIII.A-D, but constituting a termination
of employment for purposes of the Company's plans and programs, unless his
employment with the Company otherwise continues).
The Executive agrees that, prior to the full-time commencement date,
he will cooperate in connection with transitional matters, including the
issuance of press releases by the Company and meetings and communications
with its bank lenders. Press releases related to the Executive's
commencement of employment hereunder shall be subject to the reasonable
review and approval of the Executive.
Notwithstanding any provision of this Agreement to the contrary, in
the event that the Executive fails to commence as Chief Operating Officer
of the Company on October 1, 1999, for any reason whatsoever (other than
because of the Company's refusal to permit the Executive to so commence
when he is ready, willing and able to do so), the Company shall have the
right, in its sole discretion, to void this Agreement by written notice to
the Executive and, thereafter, shall have no monetary or other obligations
to the Executive under this Agreement whatsoever, but shall pay on behalf
of the Executive the legal fees described in Section IV.D, and shall pay to
the Executive the amounts described in the first sentence of Section II.
Notwithstanding the foregoing, (i) if the Executive may not commence
employment as a result of short-term illness, the October 1, 1999 date
specified above shall be extended until the Executive recovers, but not
beyond November 1, 1999; and (ii) if the Executive has provided transition
services to the Company in anticipation of commencing employment, but does
not commence employment other than because of his wilful refusal to
commence employment, he shall be compensated for such services by the
Company, as an independent contractor (within 30 days after his
presentation of an itemized bill), at the rate of $250 for each hour of
such services.
SECTION IV
COMPENSATION AND BENEFITS
A. Compensation
During the Period of Employment, the Company agrees to pay the
Executive a base salary at an annual rate of (i) through January 1, 2001,
Five Hundred Thousand Dollars ($500,000.00); (ii) from and after January 2,
2001 and through December 30, 2001, Five Hundred Twenty-Five Thousand
Dollars ($525,000.00); and (iii) from and after December 31, 2001 and
through December 31, 2002, Five Hundred Fifty Thousand Dollars
($550,000.00). Thereafter, the Executive's Base Salary shall be reviewed
at least annually by the Compensation Committee and may be increased (but
not decreased) as it deems appropriate. The base salary amount in effect
from time to time during the Period of Employment shall hereinafter be
referred to as "Base Salary." Such Base Salary shall be payable according
to the customary payroll practices of the Company as in effect from time to
time, but in no event less frequently than once each month.
B. Annual Incentive and Other Bonus
(1) The Executive will be eligible for an annual incentive bonus
("Annual Incentive Bonus"). For the Period of Employment through January
1, 2001, the Executive shall be entitled to receive an Annual Incentive
Bonus in the amount of Five Hundred Seventy-Five Thousand Dollars
($575,000.00) (the "Guaranteed Bonus"), with Three Hundred Thousand Dollars
($300,000.00) of such Guaranteed Bonus payable on the full-time
commencement date; One Hundred Thousand Dollars ($100,000.00) of such
Guaranteed Bonus payable on each of the ninetieth (90th) and one hundred
eightieth (180th) day after the full-time commencement date; and Seventy-
Five Thousand Dollars ($75,000.00) of such Guaranteed Bonus payable on the
two hundred seventieth (270th) day after the full-time commencement date;
provided in each case that the Executive is then in the employ of the
Company or his employment has terminated due to death, Disability, by the
Company Without Cause, or by the Executive for Good Reason After Change in
Control, all as defined below. If the Executive terminates his employment
with the Company before January 2, 2001, other than for Good Reason After
Change in Control, he shall only be entitled to the Guaranteed Bonus to the
extent it has been paid as of the date of his termination, and if the
Executive's employment is terminated by the Company With Cause before
January 2, 2001, he shall only be entitled to such portion of the
Guaranteed Bonus equal to the sum of (i) Three Hundred Thousand Dollars
($300,000.00), plus (ii) a portion of the remainder of the bonus determined
by multiplying Two Hundred Seventy-Five Thousand Dollars ($275,000.00) by a
fraction, the numerator of which is the number of days he was employed
hereunder and the denominator of which is the number of days from the full-
time commencement date specified in Section III through January 2, 2001,
and, he shall not be entitled to any remaining portion of the Guaranteed
Bonus, and, to the extent necessary to accomplish the foregoing, he shall
return the Guaranteed Bonus that he has already received (in four equal
installments on the first day of each of the first four months after his
termination).
(2) From and after January 3, 2001, for each fiscal year of the
Period of Employment, the Executive will be eligible for an Annual
Incentive Bonus under the Company's Incentive Bonus Plan and this Agreement
with a threshold award of thirty percent (30%), a target award of sixty
percent (60%) and a maximum award of ninety percent (90%) of the
Executive's Base Salary for such fiscal year, payable to the Executive in
accordance with the Company's Incentive Bonus Plan based on the achievement
of reasonable, mutually agreed upon operational and financial goals (with
corresponding goals established for the payment of threshold, target and
maximum awards, and awards between the goals determined by straight line
interpolation) as established by the Executive and approved by the Board of
Directors and the Compensation Committee in a manner that will cause such
awards to constitute performance-based compensation for purposes of Section
162(m) of the Internal Revenue Code (the "Code").
C. Equity Incentives
(1) As of the effective date hereof, (i) 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) (an "NSO")
under the APAC TeleServices, Inc. Amended and Restated 1995 Incentive Stock
Plan (the "Stock Plan") covering One Hundred Thousand (100,000) shares of
the Common Stock of the Company at an exercise price equal to the mean
between the high and low prices at which the Company's Common Stock traded
on the date of grant, as reported on the NASDAQ National Market System, and
(ii) the Company shall grant to the Executive an NSO under the Stock Plan
covering One Million (1,000,000) shares of the Common Stock of the Company
at an exercise price equal to the mean between the high and low prices at
which the Company's Common Stock traded on the date of grant, as reported
on the NASDAQ National Market System; provided that, the grant under this
clause (ii) shall not be exercisable unless shareholder approval of the
amendment to the Stock Plan's limits necessary to permit the grant is
secured and shall only be exercisable as otherwise provided in this
Agreement.
Subject to the Executive's continuing employment with the Company
through the date(s) on which specified portion(s) of the foregoing options
become exercisable (as hereinafter described), and except as otherwise
provided with respect to options becoming exercisable pursuant to Section
VIII.A-C, the foregoing options shall become exercisable with respect to
40% of the shares subject thereto on the second anniversary of the full-
time commencement date, and cumulatively as to an additional 20% of the
shares subject to the options on each succeeding anniversary, so that it
shall be fully exercisable on the fifth such anniversary. Commencing in
the March following the first anniversary of the full-time commencement
date, and continuing thereafter on the schedule applicable to other senior
executives, the Company will make additional option grants to the Executive
based on the Compensation Committee's assessment of his performance, with
each such option grant anticipated to cover between Seventy Five Thousand
(75,000) (if the Executive's and the Company's performances have been at a
target level under the Annual Incentive Plan) and One Hundred Thousand
(100,000) shares of the Company's Common Stock (if the maximum goal used
for such purpose has been met or exceeded), with grant sizes between target
and maximum performance determined by straight line interpolation. If a
Change in Control, as defined below, occurs, then to the extent any option
previously granted to the Executive is then not exercisable, its
exercisability shall accelerate as to fifty percent (50%) of the previously
unexercisable portion, and such option shall thereafter become additionally
exercisable (if at all) to the extent it would have been exercisable
without such acceleration.
(2) The Company shall submit the above-described amendment to
the Stock Plan to a vote of its shareholders no later than the 2000 Annual
Meeting of Shareholders.
D. Additional Benefits
The Executive will be entitled to participate in all compensation or
employee benefit plans or programs and receive all benefits and perquisites
for which the Chairman or any direct report to the Executive ("senior
executive") is eligible under any existing or future plan or program
established by the Company for senior executive employees. 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 may
include group medical, life or other insurance, tax qualified pension,
savings, thrift and profit sharing plans, termination pay programs, sick
leave plans, travel or accident insurance, short and long term disability
insurance, and contingent compensation plans including capital accumulation
programs, restricted stock programs, stock purchase programs and stock
option plans. Nothing in this Agreement will preclude the Company from
amending or terminating any of the plans or programs applicable to senior
executive employees of the Company. Notwithstanding the foregoing
sentence, no such amendment or termination shall reduce or otherwise
adversely affect the Executive's rights under Section IV.C. of this
Agreement. In addition to the foregoing benefits, the Executive shall be
entitled to receive a paid vacation of four (4) weeks during each year of
the Period of Employment; provided that 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, the
reasonable attorneys' fees incurred by him in connection with the
negotiation and preparation of this Agreement.
SECTION V
BUSINESS EXPENSES
The Company will 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.
SECTION VI
DISABILITY
The Executive's employment hereunder may be terminated by the Company
during the Period of Employment if (i) the Executive becomes physically or
mentally incapacitated, (ii) the Executive is unable for a period of one
hundred eighty (180) consecutive days to perform his material duties and
responsibilities and (iii) a physician appointed by the Chief of Medicine
of Evanston Northwestern Healthcare Hospital, Evanston, Illinois, or
another health professional designated by the Executive and agreed upon by
the Company determines that the Executive's incapacity is continuing beyond
such one hundred eighty (180) day period (such continued incapacity is
hereinafter referred to as "Disability"). Upon any such termination for
Disability, the Executive shall be entitled to receive (i) his Base Salary
through the date on which the Executive is first eligible to receive
payment of long term disability benefits under the Company's long term
disability benefit plan as then in effect covering the Executive; (ii) if
such date is on or before January 2, 2001, the remaining payments of his
Guaranteed Bonus as described in Section IV.B(1); (iii) if such date is
after January 2, 2001, his Annual Incentive Bonus at target, prorated
through such date; and (iv) 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 IV.D.
SECTION VII
DEATH
In the event that the Executive's employment is terminated because of
his death during the Period of Employment, (i) the Executive's estate shall
be entitled to receive his Base Salary through the date of the Executive's
death; (ii) the Executive's estate shall be entitled to receive (A) if such
date is on or before January 2, 2001, the remaining payments of his
Guaranteed Bonus as described in Section IV.B(1); or (B) if such date is
after January 2, 2001, his Annual Incentive Bonus at target, prorated
through such date, and (iii) the Executive's designated beneficiary or
estate, as the case may be, shall be entitled to his accrued benefits,
including, but not limited to, life insurance proceeds, under the terms
of the plans, policies and procedures of the Company, including any plans
or programs in which he participates pursuant to Section IV.D.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. Termination Without Cause
If the Company terminates the Executive's employment Without Cause on
or before December 31, 2001, the Executive shall be entitled to receive
continued payment of an amount equal to his Base Salary, through December
31, 2002; provided that, if the Executive's employment terminates Without
Cause before January 1, 2001, the total amount of such payments that would
have been continued through December 31, 2002 shall instead be allocated
equally over a twenty-four (24) month period. If the Company terminates
the Executive's employment Without Cause after December 31, 2001 and before
the end of the Period of Employment, the Executive shall be entitled to
receive continued payment of an amount equal to his Base Salary, for a
period of one (1) year. In either case, such continued Base Salary shall
be payable according to the customary payroll practices of the Company, but
in no event less frequently than once each month. Notwithstanding the
foregoing, if a Change in Control occurs after the Executive's termination
Without Cause, the Company shall use its best efforts to pay the remaining
payments due to him under this paragraph in a lump sum as soon as
practicable and, if reasonably feasible, before consummation of the Change
in Control, but in any event not later than within thirty (30) days after
the Change in Control.
In addition, if the Company terminates the Executive's employment
Without Cause before the end of the Period of Employment, the Executive
shall (i) if the termination occurs after January 2, 2001, receive an
amount equal to the prorated Annual Incentive Bonus, if any, payable under
the Company's Incentive Bonus Plan based on actual performance for the year
in which the termination of employment occurred (based on the number of
days in such year through the date of termination), payable at the same
time that bonuses are paid for such year, (ii) receive 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 IV.D, (iii) have, for vesting schedule purposes only, the vesting
of each Company stock option granted to the Executive determined as if the
Executive's employment had terminated on the next anniversary of the date
of grant (provided that, if a stock option by its terms shall not have
vested in any respect as of such anniversary, it shall nonetheless be
exercisable with respect to no fewer than twenty percent (20%) of the
shares subject thereto), (iv) receive payment for all accrued but unused
vacation, and (v) be entitled to payment, when due, by the Company of any
premiums for continued Company health care coverage under Section 4980B of
the Code, to the extent elected by the Executive and in effect.
B. Termination for Nonperformance
If the Company terminates the Executive for Nonperformance, the
Executive shall be entitled to receive continued payment of an amount equal
to his Base Salary for one-half (1/2) of the period that would then apply
if the Company had terminated his employment Without Cause, or if greater,
for one (1) year. In addition, the Executive shall (i) receive an amount
equal to the one-half (1/2) of a prorated Annual Incentive Bonus, if any,
payable under the Company's Incentive Bonus Plan based on actual
performance for the year in which the termination of employment occurred
(based on the number of days in such year through the date of termination),
payable at the same time that bonuses are paid for such year, (ii) receive
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 IV.D, (iii) have, for vesting schedule purposes only,
the vesting of one-half (1/2) of each Company stock option granted to the
Executive pursuant to this Agreement determined as if the Executive's
employment had terminated on the next anniversary of the date of grant
(provided that, if a stock option by its terms shall not have vested in any
respect as of such anniversary, it shall nonetheless be exercisable with
respect to no fewer than ten percent (10%) of the shares subject thereto),
(iv) receive payment for all accrued but unused vacation, and (v) be
entitled to payment, when due, by the Company of any premiums for continued
Company health care coverage under Section 4980B of the Code, to the extent
elected by the Executive and in effect.
C. Termination for Good Reason After Change in Control
If the Executive terminates his employment with the Company for Good
Reason After Change in Control, (i) the Executive shall be entitled to
receive a lump sum payment, within thirty (30) days after termination,
equal to the sum of (A) two (2) years' Base Salary, at the Base Salary rate
in effect on the date of the Executive's termination, and (B) if the
termination occurs (I) on or before January 2, 2001, in addition to the
remaining payments of the Guaranteed Bonus described in Section IV.(B), one
year's Annual Incentive Bonus at target (i.e., 60% of Base Salary), and
(II) after January 2, 2001, two years' Annual Incentive Bonus at target, at
the Base Salary rate in effect on the date of the Executive's termination,
(ii) all then outstanding stock options granted to the Executive shall
become exercisable (or comparable arrangements shall be made if such
options cannot be made exercisable), (iii) the Executive shall be entitled
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 IV.D, (iv) the Executive shall
receive payment for all accrued but unused vacation, and (v) the Company
shall pay, when due, any premiums for continued Company health care
coverage under Section 4980B of the Code, to the extent elected by the
Executive and in effect.
D. Termination With Cause
If the employment of the Executive is terminated by the Company With
Cause, (i) the Executive shall be entitled to receive his Base Salary
prorated through the date of termination, and (ii) the Executive shall be
entitled 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 IV.D.
E. Effect of Terminations
Upon termination of the Executive's employment, the Period of
Employment and the Company's obligation to make payments under this
Agreement will cease as of the date of termination, except as otherwise
expressly provided in this Agreement, and any stock options held by him
that are then exercisable shall only remain exercisable for a period of
ninety (90) days. The Executive shall have the right to voluntarily
terminate this Agreement, other than for Good Reason After Change in
Control, upon sixty (60) days' prior written notice to the Company. If the
Executive voluntarily terminates his employment with the Company, other
than for Good Reason After Change in Control, (i) the Executive shall be
entitled to receive his Base Salary prorated through the date of the
Executive's voluntary termination, (ii) his Guaranteed Bonus shall be
governed by Section IV.(B), and (iii) the Executive shall be entitled 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 IV.D.
F. Offset
No amount to which the Executive is entitled under this Section
shall be subject to offset for any income which he derives from employment
and/or consulting or from any other source.
G. Definitions
For this Agreement, the following terms have the following meanings:
(1) 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 the Executive specifying the event relied
upon for such termination, due to (A) gross misconduct or gross negligence
in the performance of the Executive's employment duties, (B) willful
disobedience by the Executive of the lawful directions received from or
policies established by the Board of Directors, which continues for more
than seven (7) days after the Company notifies the Executive of its
intention to terminate his employment on account of such
disobedience, or (C) commission by 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.
(2) Termination "for Nonperformance" means termination, after
January 2, 2001, of the Executive's employment by the Board of Directors
acting in good faith by written notice by the Company to the Executive
specifying the event relied upon for such termination, due to failure of
the Executive and/or the Company to achieve overall financial and/or
operational objectives that are reasonable and have been established
mutually by the Executive and the Board of Directors and that are
consistent with the threshold goals described in Section IV.B.1.
(3) Termination "Without Cause" means termination by the Company
of the Executive's employment other than due to death, Disability, or
termination With Cause or termination for Nonperformance.
(4) Termination for "Good Reason After Change in Control" means
termination of the Executive's employment by the Executive (a) within three
(3) months after the Executive has (i) except as provided in clause (b)(i),
failed to be elected or reelected to the Board of Directors, or (ii) failed
to be elected or maintained as Chief Executive Officer as and when
(including agreed upon extensions) described in Section III (irrespective
of whether a Change in Control has occurred or is anticipated to occur in
the future), or (b) within twelve (12) months following a Change in Control
as defined in Section VII.G.5, but only if, after notice by the Executive
to the Company and a fifteen (15) day opportunity by the Company to cure,
(i) the Executive is not elected, reelected or otherwise continued in the
office of Chief Executive Officer and/or as a member of the Board of
Directors or (if the Board of Directors consists of only one (1) member,
the Executive Committee of the Company), (ii) the Executive's principal
place of work (not including regular business travel) is relocated by more
than fifty (50) miles, (iii) the Executive's duties, responsibilities or
authority as an executive employee are materially reduced or diminished
from those in effect on the full-time commencement date without the
Executive's written consent; provided that any reduction or diminishment in
any of the foregoing resulting merely from the acquisition of the Company
and its existence as a subsidiary or division of another entity shall not
be sufficient to constitute Good Reason After Change in Control if the
Executive is still in the senior executive position of such subsidiary or
division, (iv) the compensation received by the Executive is reduced in the
aggregate, and such reduction is not remedied within thirty (30) days of
the Executive's notice to the Company thereof, (v) a determination is made
by the Executive in good faith that as a result of the Change in Control,
and a change in circumstances thereafter and since the date of this
Agreement significantly affecting his position, he is unable to carry out
the authorities, powers, functions or duties attached to his position and
contemplated by Section II of this Agreement and the situation is not
remedied within thirty (30) days after receipt of the Company of written
notice from the Executive of such determination, (vi) the Company violates
the material terms of the Agreement, or (vii) there is a liquidation,
dissolution, consolidation or merger of the Company or transfer of all or a
significant portion of its assets unless a successor or successors (by
merger, consolidation or otherwise) to which all or a significant portion
of its assets have been transferred shall have assumed all duties and
obligations of the Company under this Agreement.
(5) 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
the 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)(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 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.
SECTION IX
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.
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 I and made a part hereof and
incorporated herein in its entirety by reference. 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.
SECTION X
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 XI
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 XII
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 between the Company, its predecessors and its
affiliates, and the Executive. This Agreement and the matters contemplated
hereby do not contravene any other agreement to which either the Executive
or the Company is a party
SECTION XIII
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 XIII is not intended to modify or limit the
rights of the Executive hereunder, including without limitation, the rights
of the Executive under Section VIII. As of the date of this Agreement, no
such transaction is contemplated by the Company.
SECTION XIV
SECTION 280G
Notwithstanding any provision of this Agreement to the contrary, in
the event that:
(i) the aggregate payments or benefits to be made or afforded to the
Executive under this Agreement 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 under this Agreement 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 XV
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 charged with waiver. A
waiver shall operate only as to the specific term or condition waived and
will not constitute a waiver for the future or act on anything other than
that which is specifically waived.
SECTION XVI
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 XVII
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:
(i) If to the Company, at:
APAC Customer Services, Inc.
One Parkway North Center
Deerfield, IL 60015
Attn: Chairman
With a copy to:
David M. Weiner, Esq.
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Suite 4200
Chicago, IL 60603
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, with a copy to:
William W. Merten, Esq.
McDermott, Will & Emery
227 West Monroe Street
Chicago, IL 60606
or such other address as may have been furnished to the Company by the
Executive in writing.
SECTION XVIII
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 VIII.G(4) and XIII) be assigned
by either party without the prior express written consent of the other
party.
SECTION XIX
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.
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.
E. Survivorship
The provisions of Sections IV-XIX shall survive the termination or
expiration of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY
APAC CUSTOMER SERVICES, INC.
By: Theodore G. Schwartz
Its: Chief Executive Officer
EXECUTIVE
/s/ Peter M. Leger
-----------------------------
Peter M. Leger
ATTACHMENT I
RESTRICTIVE COVENANT AGREEMENT
This Agreement made as of the 21st day of September, 1999, in
Deerfield, Illinois by and between APAC Customer Services, Inc., an
Illinois corporation on behalf of itself and its subsidiaries ("Employer")
and Peter M. Leger ("Employee").
WHEREAS, the Employer is in the business of performing telephone based
outsourcing services, including but not limited to inbound, outbound,
interactive and customer optimization services, and the Employer may
provide other related services on an internet or other basis; and
WHEREAS, Employer's telephone based outsourcing services are utilized
by a wide range of clients engaged in various business endeavors throughout
the continental United States, and Employer has, in the course of its
business, established a client base, a client list and an ongoing
relationship with its customers; and
WHEREAS, the employment relationship of the parties is being
established pursuant to the terms of an Employment Agreement of even date
herewith; and
WHEREAS, in consideration of the employment of Employee under such
Employment Agreement, and the payments provided to Employee thereunder, and
other good and valuable consideration, the receipt and sufficiency of which
are hereof acknowledged, Employee and Employer agree to execute and be
bound by this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
promises and covenants contained herein the parties agree as follows:
1. Recitals. Each of the above recitals are incorporated in this
Agreement and are binding upon the parties hereof. This Agreement
supersedes any and all previous agreements, understandings and commitments
between Employer and Employee with respect to the subject matter hereof.
Each such agreement, understanding and commitment is hereby revoked and
canceled.
2. Employee's Representation. Employee hereby represents and
warrants to and with employer that Employee is not subject to any
covenants, agreements or restrictions including without limitation any
covenants, agreement or restrictions arising out of Employee's prior
employment or independent contractor relationships, which would be breached
or violated by Employee's execution of this Agreement or by Employee's
performance of his duties hereunder. Employee acknowledges that it is
Employer's express policy and procedure to abstain from the use or
disclosure of the trade secrets and proprietary information of third
parties, and Employee hereby expressly covenants that he will not, in the
performance of his duties hereunder, use or disclose the trade secrets or
proprietary information of third parties.
3. Confidentiality. Employee acknowledges that by virtue of his
employment or continued employment with Employer, he has been and/or will
be exposed to or has had or will have access to confidential information
regarding Employer's business of the most sensitive nature, including but
not limited to, trade secrets and proprietary information, all of which are
proprietary to Employer. Employee further acknowledges that it would be
possible for an employee, upon termination of his association with Employer
to use the knowledge or information obtained while working for or with
Employer to benefit other individuals or entities. Employee acknowledges
that Employer has expended considerable time and resources in the
development of certain confidential information used in connection with its
businesses, including without limitation business strategies and goals,
accounting methodology, pricing systems, advertising brochures and
materials, graphic and other designs, telemarketing programs and
techniques, copyrighted and non-copyrighted software source codes or object
codes, technology applications and advances, client and client prospect
lists or records, telephone calling lists, hiring, screening, training,
quality assurance and supervisory techniques, methods and know-how, client
information, client mark-ups, information regarding independent
contractors, use and utilization of copyrights, confidential information
and trade secrets of third parties, marketing techniques, supplier
information, and, generally, the confidential information of Employer which
gives, or may give, Employer an advantage in the marketplace against its
competitors (all of the foregoing being herein referred to collectively as
"Proprietary Information"), and which have been disclosed to or learned by
Employee solely for the purpose of Employee's employment with Employer.
Employee acknowledges that Employer's Proprietary Information constitutes a
proprietary and exclusive interest of Employer, and, therefore, Employee
agrees to hold and keep secret the Proprietary Information as described
herein and the confidential information of the clients of the Employer
which Employee has learned in his capacity as an employee of Employer (the
"Client Information"), as to which Employee is now or any time during his
employment shall become informed, and Employee shall not directly or
indirectly disclose any Proprietary Information or Client Information to
any person, firm, court, governmental agency or corporation or use the same
except in connection with the business and affairs of Employer.
4. Non-Competition. Employee agrees that during his employment and
for a period of twenty-four (24) months after the termination thereof for
any reason whatsoever, Employee will not participate, either directly or
indirectly, for himself or for any third party, in soliciting, selling,
administering, managing, or performing telephone based or internet based,
outsourcing, for or on behalf of: (a) any customer of Employer which was a
customer during any part of Employee's employment; (b) any person,
corporation, or other entity to whom the Employer made a written or oral
bid or presentation during Employee's employment; or (c) any person,
corporation, or other entity regarding which Employer had developed
confidential information and Employee became aware of such confidential
information as a result of his employment.
5. Non-Disturbance of Employees; Non-Disparagement. Employee
covenants that during his employment and for a period of twenty-four (24)
months after the termination thereof, for any reason whatsoever, Employee
shall not, directly or indirectly, as an employee, agent, salesman or
member of any person, corporation, firm or otherwise (a) solicit any
employee or agent of Employer or make such other contact with the employees
or agents of Employer, the product of which contact will or may yield a
termination of the employment or agency relationship of such employees or
agents from Employer or (b) make or cause others to make, whether in
writing or orally, disparaging statements or inferences with respect to the
Employer, its business, officers or shareholders.
6. Return of Materials. Employee will, at any time upon the request
of Employer, and in any event upon the termination of his employment, for
whatever reason, immediately return and surrender to Employer originals and
all copies of all records, notes, memoranda, electronic files, personal
computers, computer discs, computer equipment, telephones, price lists,
client and client prospects lists, business plans, recordings and other
documents and other property belonging to Employer, created or obtained by
Employee as a result of or in the course of or in connection with
Employee's employment with Employer hereunder. Employee acknowledges that
all such materials are, and will always remain, the exclusive property of
Employer.
7. Inventions. If at any time or times during his employment
hereunder, the Executive shall (either alone or with others) make,
conceive, discover or reduce to practice any invention, modification,
discovery, design, development, improvement, process, software program,
work of authorship, documentation, formula, data, technique, know-how,
secret or intellectual property right whatsoever or any interest therein
whether or not patentable or registrable under copyright or similar
statutes or subject to analogous protection) (herein called "Developments")
that (a) relates to the business of the Company or any customer of or
supplier to the Company or any of the products or services being developed,
manufactured or sold by the Company or which may be used in relation
therewith, (b) results from tasks assigned to the Executive by the Company
or (c) results from the use of premises or personal property (whether
tangible or intangible) owned, leased or contracted for by the Company,
such Developments and the benefits thereof shall immediately become the
sole and absolute property of the Company and its assigns, and the
Executive shall promptly disclose to the Company (or any persons designated
by it) each such Development and the Executive hereby assigns any rights he
may have or acquire in the Developments and benefits and/or rights
resulting therefrom to the Company and its assigns without further
compensation and shall communicate, without cost or delay, and without
publishing the same, all available information relating thereto (with all
necessary plans and models) to the Company.
Upon disclosure of each Development to the Company, the Executive
will during his employment and at any time thereafter, at the request and
cost of the Company, sign, execute, make and do all such deeds, documents,
acts and things as the Company and its duly authorized agents may
reasonable require:
(a) to apply for, obtain and vest in the name of the Company
alone (unless the Company otherwise directs) letters patent,
copyrights or other analogous protection in any country throughout the
world and when so obtained or vested to renew and restore the same;
and
(b) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or
applications for revocation of such letters patent, copyright or other
analogous protection.
8. Remedies.
(a) Employee further acknowledges that in the event his
employment with Employer terminates for any reason, he will be able to
earn a livelihood without violating the foregoing restrictions and
that his ability to earn a livelihood without violating such
restrictions is a material condition to his employment with Employer.
(b) Employee acknowledges that compliance with the restrictive
covenants set forth in Paragraphs 2 through 7 herein is necessary to
protect the business, goodwill and Proprietary Information of Employer
and that a breach of these restrictions will irreparably and
continually damage Employer for which month damages may not be
adequate. Consequently, Employee agrees that, in the event that he
breaches or threatens to breach any of these covenants, Employer shall
be entitled to both (1) a temporary, preliminary or permanent
injunction in order to prevent the continuation of such harm and (2)
money damages insofar as they can be determined. Nothing in this
Agreement, however, shall be construed to prohibit Employer from also
pursuing any other remedy, the parties having agreed that all remedies
are to be cumulative. The parties expressly agree that the Employer
may, in its sole discretion, choose to enforce the restrictive
covenants in Paragraphs 2 through 7 hereof, in part, or to enforce any
of said restrictive covenants to a lesser extent than set forth
herein. As money damages for the period of time during which Employee
violates these covenants, Employer shall be entitled to recover the
amount of fees, compensation or other remuneration earned by Employee
as a result of any such breach.
9. Revision. In the event that any of the provisions, covenants,
warranties or agreements in this Agreement are held to be in any respect an
unreasonable restriction upon or are otherwise invalid, for whatsoever
cause, then the court so holding shall reduce and is so authorized to
reduce, the territory to which it pertains and/or the period of time in
which it operates, or the scope of activity to which it pertains or effect
any other change to the extent necessary to render any of the restrictions
of this Agreement enforceable.
10. General Provisions.
(a) Severability. Each of the terms and provisions of this Agreement
is to be deemed severable in whole or in part and, if any term or
provisions of the application thereof in any circumstances should be
invalid, illegal or unenforceable, the remaining terms and provisions or
the application thereof to circumstances other than those as to which it is
held invalid, illegal or unenforceable, shall not be affected thereby and
shall remain in full force and effect.
(b) Binding Agreement. This Agreement shall be binding upon the
parties, their heirs, successors, personal representatives and assigns.
Employer may assign this Agreement to any successor in interest to the
business, or part thereof, of Employer. Employee may not assign any of his
obligations or duties hereunder.
(c) Controlling Law and Jurisdiction. This Agreement shall be
governed by and interpreted and construed according to the laws of the
State of Illinois. Employee hereby consents to the jurisdiction of the
state and federal courts in Illinois in the event that any disputes arise
under this Agreement.
(d) Failure to Enforce. The failure to enforce any of the provisions
of this Agreement shall not be construed as a waiver of such provisions.
Further, any express waiver by any party with respect to any breach of any
provisions hereunder by any other party shall not constitute a waiver of
such party's right to thereafter fully enforce each and every provision of
the Agreement.
(e) Survival. The obligations contained in this Agreement shall
survive the termination, for any reason whatsoever, for cause or otherwise,
of Employee's employment with Employer.
(f) Gender. The masculine, feminine or neuter pronouns used herein
shall be interpreted without regard to gender, and the use of the singular
or plural shall be deemed to include the other whenever the context so
requires.
(g) Attorney's Fees. In the event, Employer must retain an attorney
to enforce the terms of this Agreement, Employee shall be liable to
Employer for the amount of such reasonable attorney's fees and other costs
incurred by Employer.
WHEREFORE, the parties have executed this Agreement on the date and
year first above written.
EMPLOYER: EMPLOYEE:
By: APAC Customer Services, Inc.
By: Theodore G. Schwartz /s/ Peter M. Leger
---------------------------- ----------------------------
Its Chief Executive Officer Peter M. Leger