UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.    )

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APAC CUSTOMER SERVICES, INC.

(Name of Registrant as Specified In Its Charter)

 

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2333 Waukegan Road, Suite 100
Bannockburn, Illinois 60015
(847) 374-4980

Notice of Annual Meeting of Shareholders
To Be Held On June 15, 2010

To the Shareholders of APAC Customer Services, Inc.:

The Annual Meeting of Shareholders of APAC Customer Services, Inc. will be held at the Marriott Lincolnshire Resort, 10 Marriott Drive, Lincolnshire, Illinois 60069 on Tuesday, June 15, 2010, at 10:00 a.m. Central Daylight Time for the following purposes:

1. To elect seven directors.

2. To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm.

3. To consider and transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

Information with respect to the above matters is set forth in the Proxy Statement which accompanies this Notice.

Shareholders of record at the close of business on April 20, 2010 are entitled to notice of, and to vote at, the Annual Meeting.

Even if you plan to attend the meeting in person, please read these proxy materials and date, sign and mail the enclosed proxy in the envelope provided, which requires no postage for mailing in the United States. A prompt response is helpful, and your cooperation will be appreciated. Shareholders who are present at the Annual Meeting may withdraw their proxies and vote in person if they so desire.

By Order of the Board of Directors

Robert B. Nachwalter
Senior Vice President, General Counsel and Corporate
Secretary

Dated: April 28, 2010

APAC Customer Services, Inc.
2333 Waukegan Road, Suite 100
Bannockburn, Illinois 60015
(847) 374-4980

Proxy Statement

Annual Meeting of Shareholders to be Held June 15, 2010

This Proxy Statement and the accompanying proxy card are being mailed to shareholders of APAC Customer Services, Inc. (“Company”) on or about May 6, 2010, in connection with the solicitation of proxies by the Board of Directors for the Annual Meeting of Shareholders to be held on June 15, 2010. The purpose of the Annual Meeting is to consider and act upon the matters specified in the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

Each shareholder is entitled to one vote for each Common Share (as defined in the Company’s Amended and Restated Articles of Incorporation, dated August 8, 1995, as subsequently amended) held as of the record date. A majority of the outstanding Common Shares entitled to vote at this meeting and represented in person or by proxy will constitute a quorum. As of the close of business on April 20, 2010, the record date for determining shareholders entitled to vote at the Annual Meeting, 52,322,726 Common Shares were outstanding.

If the form of Proxy that accompanies this Proxy Statement is executed and returned, it will be voted in accordance with the indicated direction. A Proxy may be revoked at any time prior to the voting thereof by written notice to our Corporate Secretary, by executing and delivering a subsequently dated proxy card or by voting in person at the Annual Meeting. Shareholders whose Common Shares are held in the name of a bank, broker or other holder of record will receive voting instructions from the holder of record.

The affirmative vote of the holders of a majority of the Common Shares entitled to vote and represented in person or by proxy at the Annual Meeting is required for the election of directors and for any other proposal submitted to a vote. Shareholders are not entitled to cumulate their votes. Shares represented by proxies which are marked “withhold” or to deny discretionary authority on any matter will be treated as shares present and entitled to vote, which will have the same effect as a vote against any such matter. Broker “non-votes” and the shares as to which shareholders abstain are included for purposes of determining whether a quorum of shares is present at a meeting, except as to matters for which a non-vote is indicated on the broker’s proxy. If a non-vote is indicated on the broker’s proxy with respect to a particular matter, the shares will not be treated as represented at the meeting for the purposes of determining a quorum for such matter. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Votes will be tabulated by representatives of BNY Mellon Shareowner Services, our transfer agent and inspector of elections for the Annual Meeting. We will bear all expenses incurred in the solicitation of proxies.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on June 15, 2010

A copy of this proxy statement and of our annual report to stockholders is available at: http://ir.apaccustomerservices.com/proxy10.cfm.

The 2010 annual meeting will be held on June 15, 2010, at 10:00 a.m., Central Daylight Time, at the Marriott Lincolnshire Resort, 10 Marriott Drive, Lincolnshire, Illinois 60069.

At the annual meeting, you will be asked to consider and vote on:

	•		To elect seven directors;
	•		To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm; and
	•		To consider and transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

For the reasons set forth in more detail elsewhere in this proxy statement, our Board of Directors recommends a vote “FOR” the approval of each of the proposals set forth above.

The materials available at the http://ir.apaccustomerservices.com/proxy10.cfm website include a copy of this proxy statement, a copy of our annual report to stockholders and a copy of the form of proxy.

You may contact the Corporate Secretary, at 1-800-776-2722 if you would like to obtain directions to be able to attend the annual meeting and vote in person.

COMMON SHARES BENEFICIALLY OWNED BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT

The following table sets forth certain information, as of April 1, 2010, regarding the beneficial ownership of Common Shares by (i) each person known by us to own beneficially more than 5% of our outstanding Common Shares, (ii) each director and nominee, (iii) each Named Executive Officer (as defined in “Compensation Discussion and Analysis — Overview of Compensation Process” appearing in the “Executive Compensation” section of this Proxy Statement) and (iv) all directors, director nominees and executive officers as a group. Except as otherwise indicated, we believe that each beneficial owner of Common Shares listed below, based on information provided by such owner, has sole investment and voting power with respect to such Common Shares. Unless otherwise indicated, the address of each of the shareholders named below is c/o APAC Customer Services, Inc., 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015.

		Common Shares Benefically Owned
Name		Number				Percent (1)
Theodore G. Schwartz			14,994,697	(2)(3)			27.8	%
FMR LLC			5,284,674	(4)			9.8	%
Ronald L. Chez			3,650,569	(5)			6.8	%
Wells Fargo & Company			2,799,553	(6)			5.2	%
Trust Four Hundred Thirty U/A/D 4/2/94			2,040,000	(7)			3.8	%
Trust Seven Hundred Thirty U/A/D 4/2/94			2,040,000	(7)			3.8	%
Trust 3080			500,000	(7)			*
Trust 3081			500,000	(7)			*
Katherine Andreasen			—	(3)			*
Cindy K. Andreotti			243,306	(3)			*
Kevin T. Keleghan			—	(3)			*
John C. Kraft			174,743	(3)			*
Michael P. Marrow			417,025	(3)			*
John J. Park			213,109	(3)			*
Samuel K. Skinner			43,874	(3)			*
John L. Workman			71,572	(3)			*
Arthur D. DiBari			130,000	(3)			*
Mark E. McDermott			287,816	(3)			*
Robert B. Nachwalter			30,000	(3)			*
Andrew B. Szafran			480,000	(3)			*
All directors, nominees and executive officers as a group (13 persons)			17,086,142	(3)			31.7	%

Notes to Common Shares Beneficially Owned Table

PROPOSAL 1
THE ELECTION OF DIRECTORS

At the Annual Meeting, seven directors are to be elected to serve until the next Annual Meeting of Shareholders.

It is intended that the executed and returned proxy cards (except proxy cards marked to the contrary) will be voted for the nominees listed below. Proxies cannot be voted for a greater number of persons than the number of nominees listed below. It is expected that the nominees will serve, but if any nominee declines or is unable to serve for any unforeseen cause, the proxies will be voted to fill any vacancy so arising in accordance with the discretionary authority of the persons named in the proxies.

The Board of Directors recommends a vote FOR the election of each of the following nominees:

Nominees for Election

Name		Age				Position
Katherine Andreasen			44			Ms. Andreasen became a director in November 2009. Ms. Andreasen was recommended as a nominee to join the Board during fiscal 2009 by one of the current directors. Ms. Andreasen is Chief Human Resources Officer for Orchard Brands, a portfolio company of Golden Gate Capital and a leading multi-channel marketer of apparel and home products. From May 2008 to June 2009, she was the senior executive for Human Resources at Bill Me Later, Inc., one of the fastest-growing divisions of eBay/PayPal. Prior to that, from August 2006 to May 2008 she served as the Chief Human Resources Officer for Orbitz Worldwide, managing global human resources, real estate and facilities management organizations. Before joining Orbitz, from May 2002 to August 2006, she was Senior Vice President, Human Resources, Cendant Corporation.
						Ms. Andreasen is a senior human resources professional who brings considerable human resources and talent management experience to APAC. She has substantial experience in the services industry and has been responsible for large non-exempt workforces similar to APAC which allows her to provide insight and guidance on critical employment issues. She has also designed and managed complex compensation plans and programs for private and public companies.
Kevin T. Keleghan			52			Mr. Keleghan became a director in November 2009. Mr. Keleghan was recommended as a nominee to join the Board during fiscal 2009 by one of the current directors. Mr. Keleghan is President and Chief Executive Officer of Axiant, LLC a leading provider of financial services and recovery management solutions for issuers and investors in debt products. Axiant, LLC filed for protection under Chapter 11 of the U.S. Bankruptcy Code which was converted to a Chapter 7 liquidation in December 2009. Prior to joining Axiant, he was President and Chief Executive Officer at Outsourcing Solutions, Inc. (“OSI”) one of the largest providers of outsourced services in the accounts receivable management industry from 2002 to 2008. OSI filed for protection under Chapter 11 of the U.S. Bankruptcy Code in December 2002 and emerged from Chapter 11 protection in May of 2003. From 1996 to 2002, he served at Sears Holdings Corporation in various roles including, President of Credit Card Services, Vice President of Marketing Credit Card Products and Vice President of Operations for Sears Credit Services.
						Mr. Keleghan is a seasoned professional with considerable industry knowledge in the area of outsourcing services. As a result of his expertise, Mr. Keleghan is able to advise APAC on the development of new services, center operations and client management. He has also had responsibility for large non-exempt workforces which are similar to APAC’s workforce.

Name		Age				Position
Michael P. Marrow			52			Michael P. Marrow became a director in February 2008 when he joined us as President and Chief Executive Officer. From January 2003 to February 2008, Mr. Marrow was employed by Affiliated Computer Services, Inc. (“ACS”), a leader in business process outsourcing and information technology solutions. From June 2007 through February 2008, he served as Managing Director of Emerging markets and was responsible for service delivery centers in India, Mexico, Malaysia, Fiji, China, Ghana, Guatemala, Jamaica, Dominican Republic, Poland, Brazil and the Philippines with approximately 15,000 employees. From January 2003 through June 2007, Mr. Marrow was the Managing Director of ACS’s Contact Center Practice and managed 31 ACS contact centers with over 16,000 employees located in the U.S., Mexico, Argentina, India and the Philippines.
						Mr. Marrow is our CEO and has substantial knowledge and expertise in the field of business process outsourcing and information technology solutions — specifically the operation of service delivery/call centers. He has had extensive operational experience in the outsourcing of services both domestically and internationally. During his career he has had responsibility for contact centers with tens of thousands of employees located in the U.S., and overseas.
John J. Park			48			John J. Park became a director in August 2004. Mr. Park was the Chief Financial Officer at Hewitt Associates, a global human resources outsourcing and consulting firm, from November 2005 to January 2010. Prior to joining Hewitt, Mr. Park served as Chief Financial Officer of Orbitz, Inc., an online travel company, from October 2000 until February 2005, and as acting President from November 2004 until February 2005. Prior to joining Orbitz, Mr. Park held various executive positions with Sears, Roebuck and Co., including Vice President, Finance for its services and credit card businesses.
						Mr. Park has served in the role of Chief Financial Officer for public companies which results in him bringing substantial finance experience to APAC — specifically the Audit Committee. Based on his considerable finance experience, Mr. Park qualifies as an “audit committee financial expert” which is important to the Company. As a senior finance professional he can provide guidance and oversight on finance issues facing public companies. Additionally, Mr. Park served as a senior officer of one of the world’s leading HR consulting and outsourcing companies. As a result, he has knowledge with outsourcing as well the field of human resources which allows him to advise on issues APAC similarly confronts.
Theodore G. Schwartz			56			Theodore G. Schwartz is Chairman of the Board of Directors of the Company. Mr. Schwartz is the founder of the Company and has served as the Company’s Chairman since its formation in May 1973. He served as the Company’s Chief Executive Officer until January 2000, and again from May 2001 until March 2004.
						Mr. Schwartz is an award-winning pioneer in the call center and outsourcing industry. In his growing of APAC, Mr. Schwartz created a number of innovative approaches and systems for call centers. As the current Chairman of the Board and the former President and CEO of APAC, he led APAC to becoming a leader in global outsourced services and solutions. His insight and institutional knowledge is of considerable value to APAC.

Name		Age				Position
Samuel K. Skinner			71			Samuel K. Skinner previously served on our Board of Directors from July 2003 to June 2005. He rejoined the Board in June 2008. Mr. Skinner is of counsel to the law firm Greenberg Traurig, LLP where he concentrates on corporate, governmental and regulatory matters. From 2000 to 2003, Mr. Skinner was president and CEO of USF Corporation, and chairman from January 1, 2000 through May 2003. Mr. Skinner previously served as president of Commonwealth Edison Company and its holding company, Unicom Corporation (Exelon Corporation). He also was formerly White House chief of staff to President George H.W. Bush and, prior to that, served as U.S. Secretary of Transportation from February 1989 to December 1991. Mr. Skinner previously was United States Attorney for the Northern District of Illinois from 1975 to 1977, having served in that office for eight years. Mr. Skinner also serves on the boards of directors of Express Scripts, Inc., Navigant Consulting, Inc., Echo Global Logistics, Inc. and MedAssets, Inc. He previously served on the boards of Diamond Management and Technology Consultants, Dade Behring, Chicago Board Options Exchange and Virgin America.
						Mr. Skinner has had a distinguished career with both the government and in the private sector. As a lawyer with more than 40 years of experience, he counsels APAC in a variety of areas including advising on litigation, regulatory and governmental matters and corporate governance. Additionally, Mr. Skinner’s impressive leadership positions both with the government and private corporations bring valuable management experience and knowledge to the Board. He brings insights into corporate governance and legal matters that face the board, developed through his long professional experience with such matters as an attorney and member of numerous other boards.
John L. Workman			57			John L. Workman has served as a Director since June 2008. Mr. Workman is currently Executive Vice President and Chief Financial Officer of Omnicare, Inc. a position which was appointed to in November 2009. From September 2004 to October 2009, Mr. Workman was Executive Vice President and Chief Financial Officer of HealthSouth Corporation. From 1998 to 2004, Mr. Workman served in various management and executive capacities with U.S. Can Corporation, including serving as its Chief Financial Officer from 1998 to 2002, as its Chief Operating Officer from 2002 to 2003, and its Chief Executive Officer from 2003 to 2004. Prior to joining U.S. Can Corporation, Mr. Workman was employed by Montgomery Ward & Company, Inc. for 14 years, where he held several management and executive positions, including General Auditor, Chief Financial Officer, and Chief Restructuring Officer. Mr. Workman previously served on the boards of Halozyme Therapeutics, Inc., U.S. Can Corporation and ValueVision International, Inc. Mr. Workman began his career in public accounting, and was a partner with the public accounting firm KPMG.
						Mr. Workman has served in the role of Chief Financial Officer for public companies which results in him bringing substantial finance experience to APAC — specifically the Audit Committee. Based on his considerable finance experience, Mr. Workman qualifies as an “audit committee financial expert” which is important to the Company. Additionally, Mr. Workman has held senior positions overseeing the area of information technology and, therefore, can share his experience and advise APAC on issues in this area. Finally, as a partner in public accounting, Mr. Workman can advise APAC on accounting/audit issues that face public companies.

Meetings of our Board of Directors and Corporate Governance

Our Board of Directors met 18 times during fiscal year 2009 and periodically took action by unanimous written consent. All incumbent directors attended at least 75% of the aggregate of such meetings and meetings of Board committees on which they served in fiscal year 2009 during the periods that such directors served.

We have a commitment to good corporate governance practices. These practices provide a framework within which our Board of Directors and management can pursue the strategic objectives of APAC and ensure the Company’s long-term vitality for the benefit of stockholders. The foundation of our practices is an independent and qualified Board of Directors. All directors are elected annually by a majority of votes cast by stockholders. Our Board of Directors has determined that, other than Messrs. Marrow and Schwartz, all current Board members, all nominees for election as directors, and all individuals who served as Board members during fiscal year 2009, are or were independent as defined by the NASDAQ listing standards. All Board committees are composed entirely of independent directors. Our independent directors hold executive sessions periodically throughout the year.

The Board carefully evaluates each incoming director candidate based on selection criteria and overall priorities for Board composition that are periodically re-examined by the corporate governance committee with input from the rest of the directors. As our directors’ commitments change, the Board revisits their situations to ensure that they can continue to serve the best interests of the Company and its stockholders. We also demand high standards of ethics from our directors and management as described in the Code of Business Conduct and Ethics.

Director Independence

The Board of Directors has determined that the following seven of the Company’s nine current directors are “independent” as defined by applicable law and NASDAQ listing standards: Ms. Andreasen, Ms. Andreotti, Messrs. Keleghan, Kraft, Park, Skinner and Workman. Each of our Audit, Compensation and Nominating and Corporate Governance committees is composed only of independent directors, as identified below under the heading “Board Committees.”

Based on such standards, Mr. Schwartz is not independent because of his significant ownership interest in the Company which exceeds 10%. Mr. Marrow is not independent because he is an executive officer of the Company.

Board Leadership Structure

The Company’s Bylaws provide that the Chairman of the Board of Directors shall be appointed by the Board of Directors. The Board is free to choose its Chairman in any way that the Board deems to be in the best interest of the Company and its shareholders. The Chairman of the Board has general authority over the Company’s business and affairs, subject to the Board of Directors, and is responsible for ensuring that the Board’s directives are carried out. The Chairman may also serve as the chief executive officer of the Company. The Board determines whether the role of the Chairman and the Chief Executive Officer should be separated or combined based on its judgment as to the structure that best serves the interests of the Company. The Board does not have a firm policy as to whether the position of the Chairman and the position of the Chief Executive Officer should be separate and intends to preserve the freedom to decide what is in the best interest of the Company at any point in time.

Board’s Role in Risk Oversight

Risk is an integral part of Board and committee deliberations throughout the year. The Company’s Board of Directors administers its risk oversight function directly and through both its Audit Committee and Compensation Committee. The Audit Committee has oversight responsibility with respect to the Company’s financial risk assessment and financial risk management. The Audit Committee meets regularly with management to review the Company’s risk exposures, the potential financial impact those risks may have on the Company, the steps management takes to address those risks, and how management monitors emerging risks. With respect to the Company’s compensation plans and programs, the Compensation Committee structures such plans and programs to balance risk and reward, while mitigating the incentive for excessive risk taking by the Company’s officers and employees. The full Board of Directors has oversight responsibility of enterprise risk management and periodically requests management to review the Company’s major enterprise risk exposures, the potential financial or other impact on the Company, and the process for managing such risks.

Board Committees

Our Board of Directors has established three standing committees and has adopted written charters for each committee: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee each comprised of independent directors. Our Board of Directors appoints the members of each committee. While our Board’s committees are constituted as described below and vote on matters as described below, other members of our Board, including directors not determined by our Board to qualify as independent, are frequent participants (although not voting participants) in committee meetings and proceedings.

Each committee’s charter and the Company’s Corporate Governance Guidelines are available on our website at www.apaccustomerservices.com. A copy of each charter is also available in print to shareholders upon request, addressed to our Corporate Secretary c/o APAC Customer Services, Inc., 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015.

Audit Committee

Our Audit Committee consists of Messrs. Workman (Chairman), Keleghan, Park and Skinner. Our Audit Committee has direct responsibility for appointing our independent registered public accounting firm, reviewing the proposed scope of the annual audit, overseeing the adequacy and effectiveness of accounting and financial controls, and reviewing the annual and quarterly financial statements with management and the independent registered public accounting firm. Our Audit Committee met six times in fiscal year 2009 and periodically took action by unanimous written consent. All members of our Audit Committee are independent as defined for audit committee members by the listing standards of NASDAQ. Our Board of Directors has determined that each member of our Audit Committee is financially literate in accordance with the listing standards of NASDAQ and that Messrs. Park and Workman are both an “audit committee financial expert,” as defined by the SEC. For details regarding Mr. Park’s and Mr. Workman’s qualifications as an “audit committee financial expert,” see “Nominees for Election” appearing in the “Proposal 1. The Election of Directors” section of this Proxy Statement.

Compensation Committee

Our Compensation Committee consists of Ms. Andreotti (Chairperson), Ms. Andreasen and Messrs. Kraft and Park. Bhaskar Menon also served as a member of the Compensation Committee during fiscal 2009. Mr. Menon was not re-nominated to serve as a director at the 2009 Annual Meeting of Shareholders and, therefore, ceased serving as a director on June 3, 2009. Our Compensation Committee is directly responsible for approving senior management compensation and overseeing our equity compensation plans. For a more detailed description of the responsibilities and authority of the Compensation Committee, see “Compensation Discussion and Analysis — Overview of Compensation Process” appearing in the “Executive Compensation” section of this Proxy Statement. Our Compensation Committee met nine times in fiscal year 2009 and periodically took action by unanimous written consent. All members of our Compensation Committee are independent directors as defined by the listing standards of NASDAQ.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee consists of Messrs. Kraft (Chairman), Ms. Andreasen, Ms. Andreotti and Mr. Skinner. The Nominating and Corporate Governance Committee is directly responsible for identifying and recommending to our Board of Directors individuals qualified to serve as directors, recommending directors to serve on committees of our Board of Directors, advising our Board of Directors with respect to matters of Board composition and procedures, developing and recommending to our Board of Directors corporate governance principles applicable to us, overseeing corporate governance matters generally, and reviewing on an annual basis director compensation. The Nominating and Corporate Governance Committee met six times during fiscal year 2009 and periodically took action by unanimous written consent. All members of our Nominating and Corporate Governance Committee are independent directors as defined by the listing standards of NASDAQ.

The Nominating and Corporate Governance Committee assists the Board in identifying qualified persons to serve as directors of the Company. The Committee evaluates all proposed director nominees, evaluates incumbent directors before recommending re-nomination, and recommends all approved candidates to the Board for appointment or nomination.

Our Nominating and Corporate Governance Committee believes that the minimum qualifications for serving as a director are the ability to apply good and independent judgment in a business situation and the ability to represent the interests of all shareholders. Our directors play a critical role in guiding the Company’s strategic direction and oversee the management of the Company. A director also must be free from any conflicts of interest that would interfere with his or her loyalty to us or our shareholders. Candidates considered by our Nominating and Corporate Governance Committee for election or re-election to our Board of Directors should possess the following qualifications: the highest level of personal and professional ethics, integrity and values; an inquiring and independent mind; practical wisdom and mature judgment; broad training and experience at the policy-making level in business, finance and accounting, government, education or technology; expertise that is useful to us and complementary to the background and experience of other Board members, so that an optimal balance of Board members can be achieved and maintained; willingness to devote sufficient time and attention to carrying out the duties and responsibilities of Board membership; commitment to serve on the Board for several years to develop knowledge about our business; willingness to represent the best interests of all shareholders and objectively appraise management performance; and involvement only in activities or interests that do not conflict with the director’s responsibilities to us and our shareholders.

Our Nominating and Corporate Governance Committee considers diversity in its nomination of directors to the Board, and in its assessment of the effectiveness of the Board and its committees. In considering diversity, the Nominating and Corporate Governance Committee looks at a range of different personal factors in light of the business, customers, suppliers and employees of the Company. The range of factors includes diversity of personal and business backgrounds and prior board service, financial expertise, international experience, industry experience, leadership skills, including prior management experience, and a variety of subjective factors. In addition to diversity of experience and backgrounds, racial, ethnic and gender diversity are also considered in the director selection process, but there is no specific policy regarding Board diversity. The Nominating and Corporate Governance Committee regularly reports to the full Board on its assessment of the composition and functioning of the Board.

Once a person has been identified by our Nominating and Corporate Governance Committee as a potential candidate, the committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If our Nominating and Corporate Governance Committee determines that the candidate warrants further consideration, our Chairman or another member of the committee or of our Board of Directors, including directors who have not been designated as independent, contacts the person. Generally, if the person expresses a willingness to be considered and to serve on our Board, our Nominating and Corporate Governance Committee requests information from the candidate, reviews the person’s accomplishments and qualifications, including in light of any other candidates that the committee might be considering, and conducts one or more interviews with the candidate. Other members of our Board, including Messrs. Schwartz and Marrow, will also interview the candidate. In certain instances, committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater firsthand knowledge of the candidate’s accomplishments. The committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder, although, as stated above, our Board may take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held.

Our Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders. In considering candidates submitted by shareholders, our Nominating and Corporate Governance Committee will take into consideration the needs of our Board of Directors and the qualifications of the candidate. Our Nominating and Corporate Governance Committee may also take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held. To have a candidate considered by our Nominating and Corporate Governance Committee, a shareholder must submit the recommendation in writing and must include the following information: the name of the shareholder and evidence of the person’s ownership of Common Shares, including the number of shares owned and the length of time of ownership; the name of the candidate; the candidate’s resume or a listing of his or her qualifications to be a director; and the candidate’s consent to be named as director if selected by our Nominating and Corporate Governance Committee and nominated by our Board.

The shareholder recommendation and information described above must be sent to our Corporate Secretary c/o APAC Customer Services, Inc., 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015 and must be received by our Corporate Secretary not later than the close of business on the 90^th day, nor earlier than the close of business on the 120^th day prior to the anniversary date of our most recent annual meeting of shareholders.

Search Committee

The Company previously had a Search Committee which consisted of Messrs. Kraft, Park, Schwartz and Ms. Andreotti. In connection with the search for a replacement for Mr. Keller, our former Chief Executive Officer, this committee was formed to expedite changes in management and was involved with the evaluation of potential candidates for the office of Chief Executive Officer as well as to assist with the negotiation of mutually agreeable transition plans in the office of the Chief Executive Officer. This Committee was formally dissolved on April 28, 2009.

Strategic Alternatives Committee

The Company previously had a Strategic Alternatives Committee which consisted of Mr. Park. This Committee was formed to find and to evaluate alternate debt financing sources for the Company. This Committee was formally dissolved on April 28, 2009.

Transition Oversight/Business Operations Committee

The Company previously had a Transition Oversight Committee which consisted of Messrs. Schwartz, Marrow and Ms. Andreotti. This committee was formed to provide the Board an opportunity to provide input to management with respect to various operational matters. This Committee was formally dissolved on February 17, 2010.

Special Committee

The Company previously had a Special Committee. On January 29, 2009, we received a proposal from Tresar Holdings LLC, an affiliate of Theodore G. Schwartz, our Company’s chairman and principal shareholder (“Tresar”), to acquire all of the outstanding shares of common stock of our Company other than those shares held by Theodore G. Schwartz and certain related holders (the “Tresar Proposal”). In response to the receipt of the Tresar Proposal, our Board of Directors formed a special committee of independent directors to review the proposal. The Special Committee consisted of Ms. Andreotti and Messrs. Kraft, Menon, Park and Workman. On March 9, 2009, we announced that the Special Committee and Tresar had jointly agreed not to further pursue the Tresar Proposal, and that Tresar had withdrawn its proposal. This Committee was formally dissolved on April 28, 2009.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2009, members of our Compensation Committee included Ms. Andreotti (Chairperson), Ms Andreasen and Messrs, Menon, Park and Kraft. None of the members of the Compensation Committee serve as, or formerly served as, officers of the Company.

During fiscal year 2009, none of our executive officers served on the board of directors or compensation committee of any other corporation where any member of our Compensation Committee or our Board of Directors was engaged as an executive officer. None of the members of our Compensation Committee have ever been employed by us.

Shareholder Communications with our Board of Directors

Our Board of Directors has established a process to receive communications from shareholders. Shareholders may contact any member (or all members) of our Board by mail. To communicate with our Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to our Board of Directors or any such individual director, or group or committee of directors, by either name or title. All such correspondence should be sent “c/o Corporate Secretary” to APAC Customer Services, Inc., 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015.

All communications received as set forth in the preceding paragraph will be opened by the office of the Corporate Secretary for the sole purpose of determining the nature of the communications. Communications that constitute advertising, promotions of a product or service, or patently offensive material will not be forwarded to the directors. Other communications will be forwarded promptly to the addressee or addressees.

Policy Regarding Director Attendance at Annual Meetings

We consider attendance and participation at the annual meeting of shareholders to be important to effectively fulfill the responsibilities of our directors. Accordingly, it is our policy to encourage each of our directors to attend the annual meeting. All of the directors then serving on the Board were in attendance at the 2009 Annual Meeting.

Director Compensation

Our Nominating and Corporate Governance Committee reviews and approves the compensation paid to each member of our Board on an annual basis. Each director who is not employed by us is compensated for his or her services as a director with: (i) an annual cash retainer of $22,000; (ii) a cash payment of $1,500 for each board meeting attended in person and a cash payment of $750 for each board meeting attended by telephone; and (iii) quarterly grants of options to purchase Common Shares. The total number of options to be granted annually to each director is calculated as of the date of our annual meeting of shareholders and is calculated by dividing $90,000 by the average fair market value of a common share over the preceding twelve (12) month period. Options are granted to directors in four equal installments as of the first trading day of each calendar quarter. Options have an exercise price equal to the fair market value of a Common Share on the date of grant. Additionally, Mr. Schwartz receives an annual fee of $15,000 for his services as Chairman of the Board.

For Board committee service: (i) the Audit Committee chairman receives an annual fee of $10,000; (ii) each of the other committee chairmen receives an annual fee of $5,000; and (iii) each committee member, including the committee chairmen, receives a cash payment of $1,500 for each committee meeting attended in person and a cash payment of $750 for each committee meeting attended by telephone.

Directors who are requested to perform services beyond regular attendance at board and committee meetings are compensated and receive cash payments ranging from $250 to $1,500 per day depending on the circumstances. Directors are also reimbursed for certain expenses in connection with attendance at Board and committee meetings as well as approved education programs and other required travel.

2009 Director Compensation

The following table sets forth the information with respect to all compensation paid or earned for services rendered to us by each member of our Board of Directors (other than Mr. Marrow, our Chief Executive Officer) during fiscal year 2009. During fiscal year 2009, Mr. Marrow was an employee of ours and did not receive any additional compensation for his services as a director.

		Fees Earned or				Option				All Other
		Paid in Cash				Awards				Compensation				Total
Name		($)(1)				($)(2)				($)				($)
Katherine Andreasen (3)			7,270				—				—				7,270
Cindy K. Andreotti (4)			99,250				102,225				—				201,475
Kevin T. Keleghan (3)			6,520				—				—				6,520
John C. Kraft (4)			72,000				102,225				—				174,225
Bhaskar Menon (5)			24,500				—				—				24,500
John J. Park			69,250				102,225				—				171,475
Theodore G. Schwartz			56,500				102,225				—				158,725
Samuel K. Skinner			58,000				102,225				—				160,225
John L. Workman			62,000				102,225				—				164,225

Notes to 2009 Director Compensation Table

EXECUTIVE OFFICERS

Set forth below is certain information concerning the current executive officers of the Company, which officers serve at the discretion of the Board of Directors.

Name		Age				Position and Business Experience
Michael P. Marrow			52			Michael P. Marrow became a director in February 2008 when he joined us as President and Chief Executive Officer. From January 2003 to February 2008, Mr. Marrow was employed by ACS, a leader in business process outsourcing and information technology solutions. From June 2007 through February 2008, he served as Managing Director of Emerging markets and was responsible for service delivery centers in India, Mexico, Malaysia, Fiji, China, Ghana, Guatemala, Jamaica, Dominican Republic, Poland, Brazil and the Philippines with approximately 15,000 employees. From January 2003 through June 2007, Mr. Marrow was the Managing Director of ACS’s Contact Center Practice and managed 31 ACS contact centers with over 16,000 employees located in the U.S., Mexico, Argentina, India and the Philippines.
Andrew B. Szafran			43			Andrew B. Szafran has served as Senior Vice President and Chief Financial Officer of APAC since May 2008. Mr. Szafran was previously Vice President and Chief Financial Officer of Communications Supply Corp. (“CSC”), a nationwide distributor of low voltage infrastructure products and industrial wire and cable with $700 million in annual revenues. Serving in that capacity since 2002, he was responsible for managing the finance and human resources functions as well as for legal affairs. Mr. Szafran was a key member of the management team that diversified CSC’s business and significantly increased its revenue and profitability. In addition to his operations finance and accounting experience, Mr. Szafran has extensive experience in the areas of financial planning and analysis, corporate finance, mergers and acquisitions, risk management and taxation. Prior to joining CSC, Mr. Szafran held various financial positions of increasing responsibility with Alliant Exchange, Inc. and its affiliate, Alliant Foodservice, Inc., for seven years. He served most recently as Senior Vice President, Finance.
Christopher H. Crowley			39			Mr. Crowley joined APAC as Senior Vice President, Sales in March 2009. Mr. Crowley was most recently at Cybernet Software Systems where he served as Senior Vice President of Sales focusing on IT Solutions for technology companies. Prior to that, he worked in the business process outsourcing industry in the role of Senior Vice President of Sales for Teletech Holdings, Inc., and earlier, Senior Vice President of Sales with Sutherland Global Services. Mr. Crowley also has several years of operations and service delivery experience having worked as Director of Operations for North American Service Delivery when he first started with Sutherland in 1997. He began his career as a Business Development Manager responsible for field sales at MCI Communications.
Arthur Di Bari			53			Mr. Di Bari joined us as Senior Vice President, Operations in March 2008. From 2005 to 2008 Mr. DiBari was Regional Vice President, Emerging Markets for the Americas for ACS, a leading provider of business process outsourcing and information technology solutions. Mr. Di Bari joined ACS in 2004. Prior to that, Mr. Di Bari spent over six years with Aegis Communications Group, a Texas-based customer care organization, where he held numerous operational roles of increasing responsibility, including Senior Vice President of Operations.

Name		Age				Position and Business Experience
Joseph R. Doolan			46			Mr. Doolan has served as Vice President and Controller since February 2006. Prior to joining APAC, from 2004 to 2006 Mr. Doolan was Vice President and Controller for CNH Capital, a broad-based financial services company and a subsidiary of CNH Global N.V., where he managed the North American and International finance teams. Prior to joining CNH Capital from 2002 to 2003, Mr. Doolan was Controller at GE Healthcare Financial Services. From 1995 to 2002, Mr. Doolan worked for Heller Financial Inc. where he held various positions of increasing responsibility in finance and accounting.
Eric Tinch			45			Mr. Tinch is our Senior Vice President, Human Resources. He joined APAC on April 12, 2010. Prior to joining APAC, Mr. Tinch served as Global HR Business Services Leader for Convergys Corporation from 2006 to 2010 where he, oversaw a global business services organization responsible for providing human resources management services. Prior to that, he worked for MarketSource, Inc. a sales and marketing outsourcing organization from 2003 to 2006 in the role of Vice President Human Resources. Before that, Mr. Tinch served as Senior Vice President Business Strategies and Operations for CIT Group, Inc. from 2002 to 2003 and Executive Vice President — Human Resources & Field Operations for WH Smith Retail Travel from 2000 to 2002. Mr. Tinch began his career in military intelligence with the Air Force and subsequently spent eight years with the Central Intelligence Agency in field operations and human resources.
Mark E. McDermott			49			Mr. McDermott is a Vice President of our company and serves as our Chief Information Officer, a position he has had since April 2004. Previously, Mr. McDermott served as our Vice President, Solutions. He has been employed by us in various positions since March 1996. From April 2004 until June 2007, Mr. McDermott was our Senior Vice President and Chief Information Officer. From June 2007 until March 2008, Mr. McDermott was our Senior Vice President, Operations and Chief Information Officer.
Robert B. Nachwalter			39			Mr. Nachwalter has served as our Senior Vice President and General Counsel since November 2008. Prior to joining APAC, Mr. Nachwalter was Senior Vice President and General Counsel for Whitehall Jewelers Holdings, Inc. (“Whitehall”), a publicly-traded national retailer of fine jewelry with approximately 375 stores in 39 states. Whitehall filed for protection under Chapter 11 of the U.S. Bankruptcy Code in June 2008. Before Whitehall, Mr. Nachwalter was senior legal counsel with Ryder System, Inc., a Fortune 500 transportation and logistics company.

EXECUTIVE COMPENSATION

Employment Arrangements with Michael P. Marrow, President and Chief Executive Officer

Effective February 25, 2008, Mr. Michael P. Marrow was appointed our Chief Executive Officer and joined our Board of Directors.

Compensation

We entered into an Executive Employment Agreement with Mr. Marrow which provides that he will be paid an annual base salary of $350,000 and will be eligible to participate in and earn an annual bonus pursuant to the terms of the APAC Customer Services, Inc. Management Incentive Plan, as amended and restated effective August 2, 2007 (the “Management Incentive Plan”). No annual cash bonus is guaranteed. Mr. Marrow is eligible for a target bonus equal to 60% of his base salary and a maximum bonus equal to 120% of his base salary. In addition, we agreed to pay Mr. Marrow a sign-on bonus of $100,000 and granted him an option to purchase 900,000 Common Shares. The option vests in five equal annual installments beginning on February 25, 2009 and has an exercise price of $1.21 per share. We also agreed to reimburse Mr. Marrow up to $3,000 per month for actual and reasonable expenses incurred by him in connection with his maintenance of a residence near our headquarters facility.

On January 11, 2010, the Compensation Committee approved an annual management incentive program pursuant to our MIP (the “2010 MIP”) for Mr. Marrow and all other executive officers of the Company. Under the terms of our 2010 MIP, Mr. Marrow is eligible to receive a cash bonus for fiscal year 2010 based on our achieving certain financial performance goals established by the Compensation Committee. Mr. Marrow’s 2010 MIP will be based 40% on our achieving the threshold or maximum revenue amounts established by our Compensation Committee and 60% on our achieving the threshold or maximum adjusted PTP amounts established by our Compensation Committee. PTP is defined as “pre-tax profit” or “net income before income taxes.” For additional discussion on 2010 MIP, see Compensation Discussion and Analysis — Annual Cash Incentive.

In determining Mr. Marrow’s compensation package, our objective was to change the mix of compensation provided to our Chief Executive Officer and place more weight on the long-term equity component. As a result, Mr. Marrow’s annual base salary and annual incentive opportunity are less than those provided to Mr. Keller, our former Chief Executive Officer; however, the number of stock options granted to him is more than double the amount provided to Mr. Keller when he became our Chief Executive Officer in March 2004.

Potential Payments Upon Termination or Change of Control

Mr. Marrow’s Executive Employment Agreement requires us to provide compensation to him in the event of a termination of employment. Mr. Marrow also has an Employment Security Agreement which provides for certain payments in the event of a change of control of our company. In addition, to the extent not contemplated by his Executive Employment Agreement or the Employment Security Agreement, Mr. Marrow’s stock option agreement provides for the acceleration of vesting in the event of a change of control and upon termination under certain circumstances. Our Compensation Committee retains discretion to determine the amount, if any, of any additional payments and benefits which may be paid to Mr. Marrow upon termination of his employment. In making such a determination, our Compensation Committee may consider a number of factors including the reasons for the termination, his tenure and performance, his personal circumstances and the amount of payments and benefits, if any, generally offered to executive officers at other companies in similar positions.

Mr. Marrow has signed an Agreement Protecting Company Interests which provides that during the term of his employment with us and for a period of two years after his termination, he will not solicit our clients or employees and will refrain from working for or consulting with any of our competitors. In the event Mr. Marrow violates his Agreement Protecting Company Interests, we may be entitled to recover some or all of the payments and benefits that were paid by us upon termination of employment.

The nature and amount of payments and benefits Mr. Marrow is entitled to in the event of a termination of employment as a result of retirement, death or disability, involuntary termination (not for cause), voluntary termination, termination for cause, and termination in connection with a change of control, as well as in the event of a change of control without termination of employment are identical to the payments and benefits for the Named Executive Officers (other than Mr. Keller, our former Chief Executive Officer) described under “Potential Payments Upon Termination or Change of Control” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement, with the exception of the following:

	•		In the event of involuntary termination not for “cause” Mr. Marrow will be entitled to severance payments in an amount equal to his base salary for a period of 12 months payable in equal installments over a period of 24 months.
	•		We will reimburse Mr. Marrow for payments by him to exercise his rights under COBRA for a period of 12 months.
	•		In the event Mr. Marrow voluntarily terminates his employment with us for any reason prior to a change of control, or in the event Mr. Marrow is terminated for “cause” (as defined in his Executive Employment Agreement), he is not entitled to receive any payments or benefits other than accrued obligations earned by him prior to the date of his termination. Such accrued obligations generally consist of his then-current base salary through the termination date to the extent not theretofore paid, and any accrued but unused vacation days as of his termination date.
	•		As used in Mr. Marrow’s Executive Employment Agreement, “cause” shall mean (i) the commission by him of an act of malfeasance, dishonesty, fraud, or breach of trust against the company or any of its employees, clients, or suppliers, (ii) the breach by him of any fiduciary or common law duty to the company, or any obligations under his Executive Employment Agreement, or any other agreement between him and the company, (iii) his willful failure to comply with the company’s material written policies, (iv) his failure, neglect, or refusal to perform his duties under his Executive Employment Agreement, or to follow the lawful written directions of the company (including, without limitation, from the our Board of Directors), which failure is not cured (if curable) within ten (10) days after written notice has been given by the company to him, (v) his conviction of, or plea of guilty or no contest to, any felony, or (vi) any act or omission by him that is, or is reasonably likely to be, materially injurious to our financial condition, business reputation or business relationships, or that otherwise is materially injurious to the our employees, clients, customers or suppliers.

Employment Arrangements with Messrs. Szafran, DiBari, McDermott and Nachwalter

Compensation

We entered into an Employment Agreement with Mr. Szafran on May 12, 2008 which provides that he will be paid an annual base salary of $300,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. Szafran is eligible for a target bonus equal to 50% of his base salary and a maximum bonus equal to 100% of his base salary. In addition to the above, when Mr. Szafran joined us, we granted him an option to purchase 450,000 Common Shares. The option vests in five equal annual installments beginning on May 14, 2009 and has an exercise price of $1.10 per share.

Mr. Szafran participates in the 2010 MIP described in detail in the Compensation Discussion and Analysis. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. Szafran see discussion under Payments Made Upon Termination or Change in Control.

We entered into an Employment Agreement with Mr. DiBari on March 11, 2008 which provides that he will be paid an annual base salary of $285,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. DiBari is eligible for a target bonus equal to 50% of his base salary and a maximum bonus equal to 150% of his base salary. In addition to the above, when Mr. DiBari joined us, we agreed to pay him a sign-on bonus of $45,000 and we granted him an option to purchase 300,000 Common Shares. The option vests in five equal annual installments beginning on March 24, 2009 and has an exercise price of $.79 per share.

Mr. DiBari participates in the 2010 MIP described in detail in the Compensation Discussion and Analysis. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. DiBari see discussion under Payments Made Upon Termination or Change in Control.

We entered into an Employment Agreement with Mr. McDermott on April 12, 2004 which provides that he will be paid an annual base salary of $225,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. McDermott is eligible for a target bonus equal to 40% of his base salary and a maximum bonus equal to 80% of his base salary. In addition to the above, when Mr. McDermott entered into this Employment Agreement, we granted him an option to purchase 25,000 Common Shares. The option vests in four equal annual installments beginning on April 15, 2005 and has an exercise price of $2.955 per share.

Mr. McDermott participates in the 2010 MIP described in detail in the Compensation Discussion and Analysis. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. McDermott see discussion under Payments Made Upon Termination or Change in Control.

We entered into an Employment Agreement with Mr. Nachwalter on November 17, 2008 which provides that he will be paid an annual base salary of $250,000 and will be eligible to participate in and earn an annual bonus pursuant to our MIP. No annual cash bonus is guaranteed, but Mr. Nachwalter is eligible for a target bonus equal to 50% of his base salary and a maximum bonus equal to 100% of his base salary. In addition to the above, when Mr. Nachwalter joined us, we granted him an option to purchase 150,000 Common Shares. The option vests in five equal annual installments beginning on November 21, 2009 and has an exercise price of $1.18 per share.

Mr. Nachwalter participates in the 2010 MIP described in detail in the Compensation Discussion and Analysis. For information on Potential Payments Upon Change of Control, Retirement, Death or Disability, Involuntary Termination (Not for Cause), Voluntary Termination and Termination for Cause with respect to Mr. Nachwalter see discussion under Payments Made Upon Termination or Change in Control.

2009 Summary Compensation Table

The following table sets forth information with respect to all compensation paid or earned for services rendered to us by the Named Executive Officers during fiscal years 2009, 2008 and 2007.

														Non-Equity
														Incentive Plan				Option				All Other
Name and						Salary				Bonus				Awards				Awards				Compensation				Total
Principal Position		Year				($)				($)(1)				($)(2)				($)(3)				($)(4)				($)
Michael P. Marrow (5)			2009				363,462				—				266,747				477,975				18,882				1,127,066
President, Chief Executive Officer and Director			2008				282,692				100,000				300,000				506,790				3,416				1,192,898
Andrew B. Szafran (5)			2009				311,538				—				228,641				—				17,183				557,362
SVP, Chief Financial Officer			2008				176,538				—				150,000				241,605				4,047				572,190
Arthur D. DiBari (5)			2009				295,962				—				211,648				483,705				6,061				997,376
SVP, Operations			2008				208,269				177,508				177,800				110,310				4,352				678,239
Mark E. McDermott			2009				257,538				—				148,800				—				16,160				422,498
VP and CIO			2008				276,000				—				111,333				—				(1,541	)			385,792
			2007				291,346				—				—				—				12,861				304,207
Robert B. Nachwalter (5)			2009				259,615				—				187,500				—				1,526				448,641
SVP, General Counsel and Corporate Secretary			2008				19,231				—				30,303				95,670				29				145,233
Robert J. Keller (6)			2009				—				—				—				—				481,846				481,846
Former President, Chief			2008				199,514				—				99,462				—				306,250				605,227
Executive Officer and Director			2007				440,000				—				—				454,500				5,477				899,977

Notes to 2009 Summary Compensation Table

2009 Grants of Plan-Based Awards

The following table sets forth the number of restricted Common Shares and stock options, if any, granted to the Named Executive Officers during fiscal year 2009 and details concerning each Named Executive Officer’s annual non-equity incentive plan award opportunity under the 2009 MIP. For further information see “Compensation Discussion and Analysis — Long-Term Equity Incentives — 2009 Equity Grants to Named Executive Officers” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

																						All Other
																						Option								Grant Date
										Payments Under								All Other Stock				Awards:				Exercise or				Fair Value of
										Non-Equity				Payments Under				Awards: Number				Number of				Base Price				Stock and
		Compensation								Incentive Plan				Equity Incentive				of Shares of Stock				Securities				of Option				Option
Name and		Committee				Grant				Awards (1)				Plan Awards				or Units				Underlying				Awards				Awards
Principal Position		Action				Date				($)				(#)				(#)				Options				($/Sh)				($)(2)
Michael P. Marrow											266,747				—
President, Chief Executive Officer and Director			4/13/2009				5/8/2009												—				150,000				5.53				477,975
Andrew B. Szafran											228,641				—
SVP, Chief Financial Officer																			—				—				—				—
Arthur D. DiBari											211,648				—
SVP, Operations			4/13/2009				5/8/2009												—				50,000				5.53				159,325
			8/18/2009				8/18/2009												—				100,000				5.43				324,380
Mark E. McDermott											148,800				—
VP and CIO																			—				—				—				—
Robert B. Nachwalter											187,500				—
SVP, General Counsel and Corporate Secretary																			—				—				—				—
Robert J. Keller											—				—				—				—				—				—
Former President, Chief Executive Officer and Director

Notes to 2009 Grants of Plan-Based Awards Table

Outstanding Equity Awards on January 3, 2010

The following table sets forth information regarding the outstanding equity awards held by the Named Executive Officers as of January 3, 2010. The vesting dates for any equity awards not vested on January 3, 2010 are set forth in the applicable footnotes. Some of the equity awards set forth in this table have vested since the January 3, 2010 effective date of this table as noted in the footnotes.

		Option Awards																				Stock Awards
										Equity Incentive																				Equity				Equity Incentive
										Plan Awards;																				Incentive Plan				Plan Awards:
		Number of				Number of				Number of																				Awards:				Market or Payout
		Securities				Securities				Securities												Number of				Market Value				Number of				Value of
		Underlying				Underlying				Underlying												Shares or				of Shares or				Unearned				Unearned Shares,
		Unexercised				Unexercised				Unexercised				Option								Units of Stock				Units of Stock				Shares, Units				Units or Other
		Options				Options				Unearned				Exercise				Option				That Have Not				That Have Not				or Other				Rights That Have
Name and		(#)				(#)				Options				Price				Expiration				Vested				Vested				Not Vested				Not Vested
Principal Position		Exercisable				Unexercisable				(#)				($)				Date				(#)				($)				(#)				($)
Michael P. Marrow			180,000				720,000	(1)							1.21				2/25/2018				—				—				—				—
President, Chief Executive Officer and Director			—				150,000								5.53				5/8/2019
Andrew B. Szafran			90,000				360,000	(2)							1.10				5/14/2018				—				—				—				—
SVP, Chief Financial Officer
Arthur D. DiBari			60,000				240,000	(3)							0.79				3/24/2018				—				—				—				—
SVP, Operations			—				50,000								5.53				5/8/2019
			—				100,000								5.43				8/18/2019
Mark E. McDermott			6,500				—	(4)							2.90				1/24/2012				—				—				—				—
VP and CIO			211,540				60,000								1.62				2/8/2015
Robert B. Nachwalter			30,000				120,000	(5)							1.18				11/21/2018				—				—				—				—
SVP, General Counsel and Corporate Secretary
Robert J. Keller			—				—	(6)							—				—				—				—				—				—
Former President, Chief Executive Officer and Director

Notes to Outstanding Equity Awards on January 3, 2010 Table

Number of

Common Shares

Underlying

Vesting Date & Number of Common Shares

Grant Date

Options

Vesting on Such Date

February 25, 2008

900,000

February 25, 2009

180,000

(Vested)

February 25, 2010

180,000

(Vested)

February 25, 2011

180,000

February 25, 2012

180,000

February 25, 2013

180,000

May 8, 2009

150,000

May 8, 2010

30,000

May 8, 2011

30,000

May 8, 2012

30,000

May 8, 2013

30,000

May 8, 2014

30,000

Number of

Common Shares

Underlying

Vesting Date & Number of Common Shares

Grant Date

Options

Vesting on Such Date

May 14, 2008

450,000

May 14, 2009

90,000

(Vested)

May 14, 2010

90,000

May 14, 2011

90,000

May 14, 2012

90,000

May 14, 2013

90,000

		Number of
		Common Shares
		Underlying				Vesting Date & Number of Common Shares
Grant Date		Options				Vesting on Such Date
March 24, 2008				300,000		March 24, 2009			60,000			(Vested)
						March 24, 2010			60,000			(Vested)
						March 24, 2011			60,000
						March 24, 2012			60,000
						March 24, 2013			60,000
May 8, 2009				50,000		May 8, 2010			10,000
						May 8, 2011			10,000
						May 8, 2012			10,000
						May 8, 2013			10,000
						May 8, 2014			10,000
August 18, 2009				100,000		August 18, 2010			20,000
						August 18, 2011			20,000
						August 18, 2012			20,000
						August 18, 2013			20,000
						August 18, 2014			20,000

Number of

Common Shares

Underlying

Vesting Date & Number of Common Shares

Grant Date

Options

Vesting on Such Date

November 21, 2008

150,000

November 21, 2009

30,000

(Vested)

November 21, 2010

30,000

November 21, 2011

30,000

November 21, 2012

30,000

November 21, 2013

30,000

2009 Options Exercised and Stock Vested

The following table sets forth information regarding the stock options exercised and restricted Common Shares vested for each of the Named Executive Officers during fiscal year 2009:

		Option Awards								Stock Awards
		Number of shares				Value				Number of shares				Value
		acquired upon				realized on				acquired on				realized on
Name and		exercise				exercise				vesting				vesting
Principal Position		(#)				($)				(#)				($)
Michael P. Marrow			—				—				—				—
President, Chief Executive Officer and Director
Andrew B. Szafran			—				—				—				—
SVP, Chief Financial Officer
Arthur D. DiBari			—				—				—				—
SVP, Operations
Mark E. McDermott			122,504				389,569				—				—
VP and CIO
Robert B. Nachwalter			—				—				—				—
SVP, General Counsel and Corporate Secretary
Robert J. Keller			—				—				—				—
Former President, Chief Executive Officer and Director

Additional Compensation Tables

All other tables have been omitted because they are not applicable to us in fiscal year 2009.

Compensation Discussion and Analysis

Overview of Compensation Process

The Compensation Committee of our Board of Directors is responsible for establishing, implementing and monitoring adherence with our compensation philosophy. The committee establishes total compensation for our President and Chief Executive Officer and, with input from our Chief Executive Officer, establishes compensation for our other Named Executive Officers. Our Compensation Committee does not delegate any of its authority in this regard. Mr. Marrow was our principal executive officer beginning in February 2008. Mr. Keller retired as our Chief Executive Officer on February 18, 2008. Our principal executive officer, our principal financial officer, our three most highly compensated executive officers (other than our principal executive officer and principal financial officer) who were serving as executive officers at the end of fiscal year 2009 and Mr. Keller, our former Chief Executive Officer, are our Named Executive Officers for 2009. As a result of severance payments made in 2009 to Mr. Keller, our former Chief Executive Officer, is still listed in Summary Compensation for our Named Executive Officers for 2009.

Our Compensation Committee is composed of four independent directors. From time to time, we retain independent compensation consultants to provide objective and expert advice on various compensation plan design issues.

From time to time, we also use additional compensation data which we obtain from established executive compensation survey sources.

In addition to Mr. Marrow, Mr. Szafran, our Senior Vice President and Chief Financial Officer and Mr. Michael V. Hoehne, our Vice President, Human Resources participated in the preparation, development and review of various executive compensation presentations made to our Compensation Committee and our Board of Directors during fiscal year 2009.

Compensation Consultant

In October 2009, the Compensation Committee retained the Delves Group (“Delves”), a compensation consultant, to provide an overall assessment of our management and sales compensation programs for our executive officers (including the Named Executive Officers) as well as certain other identified employees. Delves and its affiliates did not provide any other services to us in 2009.

Delves was engaged to conduct a competitive analysis of our total compensation programs for identified executives and managers — examining base salary, annual incentives, long-term incentives, benefits and perquisites. The analysis included a comparison of pay levels and structure to benchmark data. Delves also reviewed our current employment terms for executives, including, but not limited to severance, change-in-control provisions and other special provisions. Delves and the Compensation Committee are in the process of making an assessment of the effectiveness of our management and sales compensation programs, our equity granting practices, and identifying the gaps, if any, between our current compensation programs and our present compensation philosophy as well as the competitive market practices. With the compensation assessment ongoing, it has not yet been determined what, if any, modifications will be made to our current compensation policies and practices.

Compensation Objectives

We design our executive compensation policies with the objective of attracting, motivating and retaining the highest quality executives. Our goal is to compete in the market for high caliber individuals who possess the talent and capabilities we believe necessary to our success. We believe the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals and which aligns executives’ interests with those of our shareholders by rewarding performance which ultimately improves shareholder value.

Compensation Philosophy

We desire to attract and retain superior executive talent by offering a total compensation package that is competitive with the compensation practices of those companies with which we compete for executive talent. Such companies include both publicly-traded and private (i) companies in our industry, (ii) companies having annual revenue comparable to ours (i.e., under $500 million), and (iii) Chicago-area based Fortune 500 companies. We believe that total compensation packages for our executive officers should reward individual performance, put a significant portion of the executive’s compensation at risk of achieving pre-established objectives, and align the interests of our executive officers with those of our shareholders. To that end, our compensation packages contain both cash and stock-based compensation as well as short-term and long-term incentives.

The market for suitable executive leadership is very competitive and we contend with many larger companies for top executive-level talent. As a result, our practice is to target total compensation levels for our executive officers at above-median levels. Accordingly, our Compensation Committee determined that the total compensation packages for our executive officers should be between the 50th percentile and the 75th percentile of the packages of executive officers at companies with which we compete for executive talent. Variations to this objective may occur as dictated by the performance and/or experience level of an individual as well as other market factors.

Risk Assessment

In designing compensation plans and programs for our employees including the Named Executive Officers, the Compensation Committee structures such plans and programs to balance risk and reward, while mitigating the incentive for excessive risk taking. The following characteristics of our executive compensation plans and programs limit the possibility for excessive risk taking:

	•		The base salary is a fixed amount, and therefore does not encourage risk taking.
	•		The annual incentive compensation opportunity is capped at a maximum amount.
	•		All current outstanding long-term incentive opportunities are comprised of time-based options that vest over multiple years which align the option holders’ interests to the long-term stockholder interests.
	•		Members of the Compensation Committee approve the final incentive compensation awards after reviewing the executive and corporate performance awards, and may utilize negative discretion based on a variety of performance objectives, thereby diversifying the risk.

Elements of Compensation

To achieve our objectives, our executive compensation program includes the following components:

	•		Base Salary: An annual base salary, subject to discretionary annual merit increases based on the executive’s overall performance during the previous year;
	•		Annual Cash Incentive: A potential annual cash bonus under our management incentive plan based on our attaining certain specified financial performance measures;
	•		Long-Term Equity Incentives: Long-term incentives consisting of stock options and performance-based restricted share grants under our incentive stock plan; and
	•		Other Employee Benefits: Other employee benefits including the right to participate in company-sponsored benefit and welfare plans such as health, dental and prescription drug insurance, the premiums of which are partly paid for by us, company-sponsored flexible spending accounts for certain qualified medical, dental and childcare expenses, matching contributions to our 401(k) plan and supplemental 401(k) restoration plan for highly compensated employees, and company-subsidized supplemental life insurance.

The Summary Compensation Table sets forth the amounts for these components that we paid each of the Named Executive Officers in fiscal year 2009. See “2009 Summary Compensation Table” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement. For fiscal year 2009, we did not make any material changes to the weighting or amount of any components of the compensation paid to our Named Executive Officers.

In addition, to provide for executive stability, we offer our currently employed Named Executive Officers payments and benefits (i) in the event an executive officer is involuntarily terminated other than for cause or resigns for good reason and (ii) in the event we experience a change of control. See “Potential Payments Upon Termination or Change of Control” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

We compensate our currently employed Named Executive Officers (and other executive officers) primarily by using a combination of short-term compensation (salary and annual cash incentive compensation) and long-term compensation (stock options and restricted common shares). We have historically determined the mix of short-term and long-term compensation and the mix of base and incentive compensation by using market compensation information provided by an outside consultant or by reference to established executive compensation surveys. We believe it is important that a portion of our executive officers’ incentive compensation is dependent upon our stock price, and a substantial portion of their overall compensation opportunity consists of equity compensation. However, since the price of our Common Shares is subject to some factors outside our control and the control of our executive officers, we also believe it is important that a portion of an executive officer’s incentive compensation be tied to the performance of goals relating to the operations of our company. Accordingly, we tie our executive officers’ annual cash incentive compensation to the achievement of financial performance goals that we believe help to drive our business and create value for our shareholders. On a total dollar value basis, other benefits compensation is smaller when compared to cash and equity compensation portions of our total executive compensation package.

Conversely, there are certain types of compensation that we have elected to omit from our executive compensation packages, as we believe they are of limited value in attracting, retaining and motivating the type of executive officers we seek. Examples of the types of executive compensation that we deemed to be unnecessary include: (i) a defined benefit (pension) plan; (ii) a stipend or expenses for a company car; and (iii) country club memberships. We believe that we are not negatively affected by our failure to offer these types of benefits and perquisites to our executive officers.

Base Salary

Annual base salary is a major component of overall cash compensation each year. Generally, we determine base salaries for each Named Executive Officer by evaluating his or her experience, performance, and any changes in the executive’s duties during the year. We also consider the competitive market for executive talent, and compare salaries we pay our executive officers to those paid to executive officers in comparable positions at companies with which we compete for such talent. See “Compensation Philosophy.”

Salary levels are typically considered annually as part of our performance review process as well as upon a promotion or other change in job responsibility. Merit increases in annual base salary (if any) are discretionary, and are awarded depending upon the executive officer’s overall performance during the prior year.

The following table sets forth the annualized 2009 and 2010 base salaries for each of the currently employed Named Executive Officers.

Named Executive Officer		2009 Base Salary				2010 Base Salary
Michael P. Marrow		$	350,000			$	385,000
Arthur D. DiBari		$	285,000			$	309,000
Mark E. McDermott		$	248,000			$	251,720
Robert B. Nachwalter		$	250,000			$	256,250
Andrew B. Szafran		$	300,000			$	309,000

Annual Cash Incentive

No annual cash bonus is guaranteed, but our Named Executive Officers are eligible for annual bonuses under our MIP, which was approved by our shareholders on June 3, 2005 and amended and restated on August 2, 2007. The MIP gives the Compensation Committee the latitude to design cash and stock-based short-term and long-term incentive compensation programs to promote exceptional performance and achievement of corporate goals by key employees. Under the MIP, cash incentive opportunities are designed annually around a strategic mix of corporate and individual performance objectives which take into consideration our overall philosophy with respect to risk management. All performance targets for the Named Executive Officers are directly linked to the achievement of our annual financial plan. Any annual bonuses earned by the Named Executive Officers are payable in cash.

2009 MIP

For fiscal year 2009, all executive officers, including the Named Executive Officers were eligible to receive annual cash bonus payments on either an annual or a quarterly basis based on us achieving certain financial performance goals established by the Compensation Committee. No annual cash bonus was guaranteed, but each executive officer was eligible for a MIP ranging from 0% to 150% of his or her base salary. For all executive officers, other than our Senior Vice President, Sales who does not participate in the MIP, but instead participates in the Business Development Sales Commission, the 2009 MIP was based 50% on us achieving the threshold or maximum revenue amounts established by the Compensation Committee and 50% on us achieving the threshold or maximum PTP amounts established by the Compensation Committee. The threshold and maximum financial performance goals established by the Compensation Committee for the 2009 MIP were based on our 2009 financial plan approved by our Board of Directors. Revenue is defined as net revenue, as reported in our quarterly and annual audited financial statements. PTP is defined as “pre-tax profit” or “net income before income taxes.

2009 Management Incentive Plan
Financial Measures

		Percentage of Target
REVENUE
Maximum			200	%
Target			100	%
Threshold			100	%
PTP
Maximum			200	%
Target			100	%
Threshold			100	%

The range of potential annual incentive payments for the Named Executive Officers during fiscal year 2009 was determined by our Compensation Committee. The fiscal year 2009 annual bonus opportunity for Mr. Marrow at threshold, target and maximum levels was 50%, 50% and 100% of his base salary. The annual bonus opportunity for the other Named Executive Officers at threshold, target and maximum levels was 50%, 50% and 150% of base salary for Mr. DiBari, 50%, 50% and 90% of base salary for Mr. Szafran, 50%, 50% and 75% of base salary for Mr. Nachwalter and 40%, 40% and 60% of base salary for Mr. McDermott. The structure of the fiscal year 2009 annual bonus ensured that a significant portion of each Named Executive Officer’s total cash compensation was dependant on our results for the year.

Management Incentive Plan bonuses awarded in 2010 for performance in fiscal year 2009 are included in the “2009 Summary Compensation Table” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

2009 Performance Plus Bonus

On April 6, 2009 the Compensation Committee approved an additional one-time potential performance bonus (“2009 Performance Plus Bonus”) for the executive officers, including Named Executive Officers for the 2009 fiscal year in lieu of salary increases. The 2009 Performance Plus Bonus increased the maximum payout for each participant in the 2009 MIP, by an additional 10% subject to our meeting certain pre-determined targets. In order for the 2009 Performance Plus Bonus to be paid, we needed to achieve: (1) a minimum revenue target; (2) a PTP target; and (3) certain sales goals. We did not meet all of the required pre-determined targets and, as a result, there were no payments under the 2009 Performance Plus Bonus.

2010 MIP

Under the terms of the 2010 MIP, Messrs. Marrow and Szafran and all other executive officers, including Named Executive Officers, are eligible to receive annual cash bonus payments on either an annual or a quarterly basis based on us achieving certain financial performance goals established by the Compensation Committee. No annual cash bonus is guaranteed, but each executive officer is eligible for a MIP payment ranging from 0% to 150% of base salary.

The fiscal year 2010 annual bonus opportunity for Mr. Marrow at threshold, target and maximum levels is 30%, 60% and 120% of his base salary. The annual bonus opportunity for the other Named Executive Officers at threshold, target and maximum levels is 25%, 50% and 150% of base salary for Mr. DiBari, 25%, 50% and 100% of base salary for Mr. Szafran, 25%, 50% and 100% of base salary for Mr. Nachwalter and 20%, 40% and 80% of base salary for Mr. McDermott.

For all executive officers, other than our Senior Vice President, Sales who does not participate in the MIP, but instead participates in the Business Development Sales Commission Plan, the 2010 MIP will be based 40% on us achieving the threshold or maximum revenue amounts established by the Compensation Committee and 60% on us achieving the threshold or maximum PTP amounts established by the Compensation Committee. The threshold and maximum financial performance goals established by the Compensation Committee for the 2010 MIP are based on our 2010 financial plan approved by our Board of Directors. Revenue is defined as net revenue, as reported in our quarterly and annual audited financial statements. All incremental PTP bonus dollars which exceed the MIP 100% bonus payout threshold are subject to a required split of 60% of the additional PTP dollars going to the Company’s retained earnings and 40% of the additional PTP dollars being paid in bonuses to the employees.

Other Compensation Plans

In addition to the above-described plans for Named Executive Officers, the Company has compensation plans for other executives which support the Company’s overall business objectives by linking compensation to the attainment of goals as well as the creation of long-term stockholder value. The objective is to provide a total compensation package that—at expected levels of performance and consistent with an executive’s area of responsibility—is competitive with compensation opportunities available to executives of similar experience and standing in the competitive market.

Business Development Sales Commission Plan

For 2009 and 2010, we have the Customer Services Business Development Sales Commission Plan (BDSCP). The BDSCP is intended to motivate business practices which are in the best interest of our shareholders. The BDSCP seeks to accomplish several key objectives:

	•		Align Commission Compensation with Our Business Economics - A Business Development executive will seek to close business that fits our strategic plan and will work diligently to understand the operating cost models in order to negotiate favorable terms accordingly.
	•		Motivate Performance - the BDSCP design is intended to reward superior sales production.
	•		Focus on New Business - The BDSCP focuses the Business Development organization on the development of new service relationships with prospects that are not currently clients.
	•		Attract and Retain High Quality Talent - Business Development executives enjoy a highly competitive earnings opportunity within our marketplace.
	•		Maintain a Highly Competitive Sales Commission Plan within a Dynamic Marketplace - The BDSCP will be reviewed annually to ensure that it remains highly competitive and supports our strategic and business goals and, thus, management reserves the right to unilaterally alter the plan at any time to align the BDSCP with changing business objectives.

To ensure that compensation policies or practices are consistent with our risk management philosophy, sales opportunities are subject to a review and approval process.

Client Solutions Sales Incentive Plan

For 2009 and 2010, the Compensation Committee adopted the Client Solutions Sales Incentive Program (CSSIP). The CSSIP is also intended to motivate business practices which are in the best interest of our shareholders. The CSSIP seeks to accomplish several key objectives:

	•		Align Incentive Compensation with Our Business Economics - A Client Solutions executive will seek to build business that fits our strategic plan and will work diligently to understand the operating cost models in order to negotiate favorable terms accordingly.
	•		Motivate Performance - CSSIP design is intended to reward superior sales production.
	•		Focus on New Business - CSSIP rewards the development of new service relationships with prospects that are not currently clients.
	•		Attract and Retain High Quality Talent - Client Solutions executives enjoy a highly competitive earnings opportunity within our marketplace.
	•		Maintain a Highly Competitive Sales Incentive Plan within a Dynamic Marketplace - The CSSIP will be reviewed annually to ensure that it remains highly competitive and supports our strategic and business goals and, therefore, management reserves the right to unilaterally alter the CSSIP at any time to align the CSSIP with changing business objectives.

To ensure that compensation policies or practices are consistent with our risk management philosophy, payments under the CSSIP must be consistent with revenues and profit targets set by the Board and bonuses are paid based on target achievement. Target bonuses under the CSSIP are weighted more heavily towards profits.

Long-Term Equity Incentives

We believe that equity compensation is an important component of our currently employed Named Executive Officers’ overall compensation package. We believe that shareholder value is best enhanced if our executive officers are encouraged to strategically manage our company for long-term success. We grant long-term incentive compensation in the form of stock options and restricted Common Shares under our Amended and Restated 2005 Incentive Stock Plan (“Incentive Stock Plan”). We do not consider outstanding options or restricted Common Shares held by a Named Executive Officer when making an award.

While we believe that both forms of equity grants can be used to appropriately link the creation of shareholder value to long-term executive officer incentive compensation, we have until quite recently used only stock options for this purpose. Generally, we believe that stock options provide a more leveraged upside incentive for our executive officers especially when the price of our Common Shares is low and we are not profitable. Additionally, full-value restricted Common Shares would have little retention value given the generally low price of our Common Shares. We also prefer awarding executive officers stock options as incentives rather than restricted Common Shares, because the only time the currently employed Named Executive Officer receives value from an option is when the price of our Common Shares increases after the grant date. Restricted shares provide currently employed Named Executive Officers compensation if our Common Shares maintain their value, and provide increased compensation if the value of our Common Shares increases.

We structure our equity awards to promote the retention of our currently employed Named Executive Officers over longer periods of time. Equity awards to currently employed Named Executive Officers typically vest over time. Stock option grants to the currently employed Named Executive Officers vest in equal increments over four or five years after their grant date and have ten year terms. The exercise price for stock options is the fair market value of our Common Shares on the grant date. Until April 4, 2007, the fair market value of such Common Shares as determined under the Incentive Stock Plan was the average of the high and low selling prices of such Common Shares on the NASDAQ on the relevant valuation date, or, if there were no sales on the valuation date, on the next preceding date on which such selling prices were recorded. Effective April 4, 2007, the Incentive Stock Plan was amended to provide that the fair market value would be the closing price of the Common Shares on the NASDAQ on the valuation date. Grants of restricted Common Shares typically vest two years from the date of grant, and vesting is sometimes conditioned on the achievement of specified financial performance objectives established by the Compensation Committee.

2009 Equity Grants to Named Executive Officers

During fiscal year 2009, equity grants were issued the form of stock options to Mr. Marrow (150,000 shares) and to Mr. DiBari (150,000 shares).

Stock Option Grant Guidelines and Procedures

In October 2006, the Compensation Committee adopted standard policies and procedures regarding the granting of stock options to employees, including executive officers. Stock option grants are generally not “timed” to benefit the recipients, and are typically only approved during regularly scheduled quarterly meetings of the Compensation Committee, except in limited circumstances. For grants approved during the regularly scheduled Compensation Committee meetings, the issue date of such grants is set to be the third trading day after the next subsequent quarterly earnings announcement by us. We have not engaged in “back-dating” of options and do not grant options with an exercise price below the fair market value of our Common Shares as defined under our Incentive Stock Plan.

In May 2007, the Compensation Committee updated its guidelines for the granting of stock options for fiscal years 2007 and beyond. Options granted (excluding non-employee director grants) pursuant to these guidelines vest annually over a five-year period, as determined by the Compensation Committee, with partial acceleration of vesting upon a change of control if the employee is then employed by us and full vesting upon a termination of employment on or after a change of control in certain circumstances.

Employment Agreements

We entered into employment agreements with Mr. Marrow, our current President, Chief Executive Officer and Director, and with Messrs. Crowley, DiBari, McDermott, Nachwalter, Szafran and Tinch. Additionally, we entered into an employment agreement with Mr. Keller, our former Chief Executive Officer, under which we made severance payments during fiscal 2009. Other than the aforementioned parties, we have not entered into any agreements or understandings with another executive officer which guarantee continued employment or guarantee any level of compensation, including incentive or bonus payments other than as described in “Potential Payments Upon Termination or Change of Control” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement. We do not have a written policy regarding employment agreements.

Other Employee Benefits

We structure our compensation to provide competitive benefit packages to our currently employed Named Executive Officers. These include company-sponsored benefit and welfare plans such as health, dental and prescription drug insurance, the premiums of which are partly paid for by us, company-sponsored flexible spending accounts for certain qualified medical, dental and childcare expenses, matching contributions to our 401(k) plan, and company-subsidized supplemental life insurance. In addition, we offer a supplemental 401(k) restoration plan to our “highly compensated employees” (as such term is defined by the applicable regulations under the Internal Revenue Code), whose contributions to our 401(k) plan are limited by the Internal Revenue Code, to make up for the limitations so imposed. This restoration plan is available to all highly compensated employees, including all of our currently employed Named Executive Officers. We also make matching contributions on behalf of these highly compensated employees to the restoration plan (including any currently employed Named Executive Officer who elects to participate). We believe the maintenance of our 401(k) restoration plan (and our matching contributions to it) are necessary to maintain a competitive benefits package for our executive officers, so that they have the opportunity to defer the same percentage of their income, and receive similar matching contributions, as our other employees.

Severance and Change in Control Agreements

Each of our currently employed Named Executive Officers has a severance agreement that provides that if the executive’s employment is terminated without cause, or, in the case of Mr. Szafran, he voluntarily resigns for “good reason” or “agreed reason,” the executive will receive specified payments and benefits. Additionally, we provide separate employment security agreements to our currently employed Named Executive Officers as a retention incentive and to ensure that in a potential change of control situation that could benefit our shareholders, members of our management team retain their objectivity regarding the outcome of any transaction. Our stock option and restricted stock award agreements also provide for the acceleration of vesting in the event of termination and/or a change of control. See “Potential Payments Upon Termination or Change of Control” appearing elsewhere in the “Executive Compensation” section of this Proxy Statement.

Perquisites and Other Personal Benefits

Generally, we do not provide any perquisites or other personal benefits to our executive officers (including the currently employed Named Executive Officers). Mr. Marrow’s employment agreement provides that we will reimburse him up to $3,000 per month for reasonable, actual expenses incurred by him for the purpose of his maintaining a residence near our corporate headquarters.

Tax Considerations

Deductibility of Executive Compensation

As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), which generally provides that we may not deduct compensation of more than $1,000,000 that is paid to certain individuals, including the currently employed Named Executive Officers. Qualifying performance-based compensation is specifically exempt from the deduction limit. We believe that the compensation paid under the MIP is generally fully deductible for federal income tax purposes as it is based on objective performance standards that are established by the Compensation Committee in accordance with Section 162(m). However, in certain situations, the Compensation Committee may approve compensation that does not meet the exemption requirements of Section 162(m) in order to ensure competitive levels of total compensation for our executive officers.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained herein with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. The members of the Compensation Committee as of the date of this filing are reflected below.

Respectfully submitted,

COMPENSATION COMMITTEE

Cindy K. Andreotti, Chairperson
Katherine Andreasen
John C. Kraft
John J. Park

Potential Payments Upon Termination or Change of Control

We have certain agreements that require us to provide compensation to our currently employed Named Executive Officers in the event of a termination of employment or a change of control of our company. The payment and benefits due upon a currently employed Named Executive Officer’s termination of employment (other than in connection with a change of control) are set forth in individual agreements between us and each of the currently employed Named Executive Officers. Each of our currently employed Named Executive Officers also has an Employment Security Agreement which provides for certain payments in the event of a change of control. In addition, to the extent not contemplated by the employment agreements or the Employment Security Agreements, our stock option agreements and restricted stock award agreements provide for the acceleration of vesting in the event of a change of control and upon termination under certain circumstances. The Compensation Committee retains discretion to determine the amount, if any, of any additional payments and benefits which may be paid to a currently employed Named Executive Officer upon termination of his or her employment. In making such a determination, the Compensation Committee may consider a number of factors including the reasons for the termination, the currently employed Named Executive Officer’s tenure and performance, the currently employed Named Executive Officer’s personal circumstances and the amount of payments and benefits, if any, generally offered to executive officers at other companies in similar positions.

Each of the currently employed Named Executive Officers has signed an Agreement Protecting Company Interests which provides that during the term of his employment with us and for a specified period after his termination, he will not solicit our clients or employees and will refrain from working for or consulting with any of our competitors. The term of the non-solicitation and non-compete agreements is two years for Mr. Marrow and one year for Messrs. DiBari, McDermott, Nachwalter and Szafran. In the event any of the currently employed Named Executive Officers violates his or her Agreement Protecting Company Interests, we may be entitled to recover some or all of the payments and benefits that were paid by us upon termination of employment.

The following narrative describes the nature and amount of payments and benefits to each of our currently employed Named Executive Officers in the event of a termination of employment as a result of retirement, death or disability, involuntary termination (not for cause), voluntary termination, termination for cause, and termination in connection with a change of control, as well as in the event of a change of control without termination of employment.

Payments Made Upon Retirement

Each of the currently employed Named Executive Officers is eligible to elect normal retirement when he has completed at least ten years of continuous employment and the sum of his age and continuous service with us is equal to or greater than seventy. Upon normal retirement, some or all of the outstanding stock options that are not vested at the time of his retirement will accelerate and become exercisable. Generally, the vesting will be accelerated such that the options which would otherwise vest on the next anniversary of the grant date vest on the date of retirement; provided that the shares issuable upon exercise of such accelerated options are subject to certain restrictions on transfer for a period of two years after termination.

Payments Made Upon Death or Disability

In the event of the death or disability of a Named Executive Officer:

	•		The currently employed Name Executive Officer, or his beneficiary or estate, will be entitled to receive payment of any and all base salary earned through the date of his termination;
	•		Some or all of the outstanding stock options that are not vested at the time of his death or disability will accelerate and become immediately exercisable as described above under “Payments Made Upon Retirement;” and
	•		All then unvested restricted Common Shares will immediately vest.

Payments Made Upon Involuntary Termination (Not for Cause)

In the event of involuntary termination of a currently employed Named Executive Officer not for “cause”:

	•		Mr. Marrow will be entitled to severance payments in an amount equal to 12 months of his then-current base salary payable over a period of two years from the termination date. Mr. McDermott will be entitled to severance payments in an amount equal to twelve months of his base salary. Mr. Szafran will be entitled to severance payments in an amount equal to nine months of his base salary payable over a period over 12 months and Messrs. DiBari and Nachwalter will be entitled to severance payments in amounts equal to six months of their base salaries payable over a period of 12 months.
	•		We will reimburse Mr. Marrow for payments by him to exercise his rights under COBRA for a period of 12 months.

Payments Made Upon Voluntary Termination and Termination for Cause

In the event Mr. Marrow voluntarily terminates his employment with us for any reason prior to a change of control, or in the event Mr. Marrow is terminated for “cause” (as defined in his employment agreement), he is not entitled to receive any payments or benefits other than accrued obligations earned by Mr. Marrow prior to his date of termination. Such accrued obligations generally consist of unpaid base salary, pay for unused vacation time, expense reimbursements, and any vested benefits Mr. Marrow may have in our company retirement plans.

For each of the other currently employed Named Executive Officers, if he voluntarily terminates his employment with us, or if he is terminated for “cause” (as defined in his employment agreement), the currently employed Named Executive Officer is not entitled to receive any payments or benefits other than accrued obligations earned prior to the dated of his termination, unless, in the case of Mr. Szafran, he resigns for “Good Reason” or “Agreed Reason” as that term is defined in his employment agreement.

In the event Mr. Szafran voluntarily resigns for “Good Reason,” or “Agreed Reason” he is entitled to receive the same payments and benefits described above under “Payments Made Upon Involuntary Termination (Not For Cause).” “Agreed Reason” is defined in Mr. Szafran’s employment agreement as a termination prior to a change of control, if after notice and a period to cure, (i) we materially reduce or diminish his duties, responsibilities or authority as an executive officer, (ii) he no longer reports to our Chief Executive Officer, (iii) his base salary is reduced and not in accordance with a compensation reduction applicable to all executive officers, or (iv) any other material breach of the terms of his agreement or his employment in general.

As used in the employment agreements of all of the currently employed Named Executive Officers, “cause” is defined as (i) gross misconduct or gross negligence in the performance of his duties as set forth in employment agreement, (ii) willful disobedience of the lawful directions of the Board of Directors or of our company’s policies, or (iii) commission of a crime involving fraud or moral turpitude that can reasonably be expected to adversely affect the business of our company.

Payments Made Upon Change of Control

In the event we experience a change of control:

	•		Some or all of the currently employed Named Executive Officers’ outstanding stock options that are not vested at the time of the change of control will accelerate and become immediately exercisable. Generally, the vesting will be accelerated such that fifty percent (50%) of the previously unexercisable portion of such options shall become exercisable immediately upon the change of control; and
	•		All then unvested restricted Common Shares will immediately vest.

Payments Made Upon Termination in Connection with a Change of Control

Each of our currently employed Named Executive Officers has an Employment Security Agreement which establishes a “double trigger” severance plan that provides certain payments and benefits if the executive officer’s employment is terminated within one year after the change of control either by us, or by the executive for “good reason” as defined in the Employment Security Agreement (other than termination by us for cause or a termination by reason of death or disability). In the event a currently employed Named Executive Officer is terminated (other than termination by us for cause or a termination by reason of death or disability) within one year after the change of control or if he resigns for “good reason”:

	•		The currently employed Named Executive Officer is entitled to a lump sum severance payment in an amount equal to his base salary for 18 months;
	•		The currently employed Named Executive Officer is entitled to receive, an amount equal to one and one-half times any such annual MIP incentive award;
	•		Any stock options which remain unvested at the time of his termination shall become immediately exercisable; and
	•		We will reimburse each of the currently employed Named Executive Officers for payments by him to exercise his rights under COBRA for a period of 18 months.

Generally, a change of control under the Employment Security Agreements and the relevant stock option and restricted stock award agreements is deemed to occur if:

	•		A tender offer is made and consummated for the ownership of more than 50% of our outstanding voting securities;
	•		We merge or consolidate 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 are owned in the aggregate by our shareholders as they existed immediately prior to such merger of consolidation;
	•		We sell all or substantially all of our assets to another company;
	•		The persons who were our directors cease to constitute a majority of our Board of Directors under specific circumstances; or
	•		A person (as defined under the federal securities laws) shall acquire more than 50% of our outstanding voting securities.

Notwithstanding the foregoing, a change of control will not be deemed to occur merely due to the death of Mr. Theodore G. Schwartz, our Chairman and a principal stockholder, or as a result of an acquisition of our outstanding voting securities by Mr. Schwartz and one or more of his affiliates in a going private transaction, except in certain limited circumstance where the ownership interests of Mr. Schwartz and his affiliates falls below certain levels specified in the agreements. See the “Common Shares Beneficially Owned by Principal Shareholders and Management” section of this Proxy Statement.

As defined in the Employment Security Agreements and the relevant stock option and restricted stock award agreements, “good reason” for any Named Executive Officer to voluntarily terminate his employment with us shall exist if, after notice and an opportunity to cure:

	•		The currently employed Named Executive Officer’s principal place of work is moved more than fifty (50) miles;
	•		The currently employed Named Executive Officer’s duties and responsibilities are materially reduced or diminished; provided that such reduction is not, in the case of the currently employed Named Executive Officers other than Mr. Marrow, solely as a result of our acquisition and existence as a subsidiary of another entity;
	•		The currently employed Named Executive Officer’s base salary is reduced;
	•		The currently employed Named Executive Officer determines in good faith that, as a result of the change of control, he is unable to carry out his or her job responsibilities;
	•		There is a material violation of his employment agreement; or
	•		We consummate a liquidation, dissolution or merger or transfer all or substantially all of our assets and his employment agreement is not assumed by the surviving entity.

Estimated Payments on Termination or Change of Control

The following table sets forth the estimated payments to each of the currently employed Named Executive Officers under the circumstances outlined above. The amounts shown assume that such termination and/or change of control was effective as of January 3, 2010, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the currently employed Named Executive Officers upon their termination and/or in the event of a change of control. The actual amounts to be paid out can only be determined at the time of such currently employed Named Executive Officer’s separation from us and/or at the time of a change of control.

Pursuant to each currently employed Named Executive Officer’s Employment Security Agreement, the amounts payable upon termination following a change of control may be reduced under certain circumstances in the event any such payments are considered excess parachute payments under Section 280G of the Internal Revenue Code. In addition, the currently employed Named Executive Officers have provisions in their employment agreements that would delay the payments thereunder in order to avoid any negative impact to such executive officer under Section 409A of the Internal Revenue Code. The calculations presented do not give effect to any such provisions which would have the effect of reducing the amounts paid by us to the Named Executive Officers.

Event		M. Marrow				A. Szafran				A. DiBari				M. McDermott				R. Nachwalter
		(in dollars)
Retirement
Acceleration of stock options(1)		$	867,900			$	437,400			$	325,100			$	235,697			$	143,400
Death or Disability
Acceleration of stock options(1)			867,900				437,400				325,100				235,697				143,400
Involuntary Termination (Not for Cause)
Cash severance payment(2)			350,000				225,000				142,500				248,000				125,000
Continued health benefits			9,600				n/a				n/a				n/a				n/a
Total			359,600				225,000				142,500				248,000				125,000
Voluntary Termination (For Good Reason)
Cash severance payment(2)			n/a				225,000				n/a				n/a				n/a
Change of Control
Acceleration of stock options(1)			1,742,250				874,800				657,650				130,200				286,800
Change of Control with Termination
Cash severance payment(2)			525,000				450,000				427,500				372,000				375,000
Prorated annual incentive(2)			262,500				225,000				213,750				148,800				187,500
Continued health benefits			14,400				11,052				14,400				14,400				11,052
Acceleration of stock options(1)			3,484,500				1,749,600				1,315,300				260,400				573,600
Total			4,286,400				2,435,652				1,970,950				795,600				1,147,152

Notes to Estimated Payments on Termination or Change of Control Table

PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Ernst & Young LLP (“E&Y”) to serve as the Company’s independent registered public accounting firm for fiscal year 2010. E&Y has served as the Company’s independent registered public accounting firm since 2006 and is considered by management to be well qualified.

Although shareholder ratification of the Audit Committee’s appointment of E&Y as our independent registered public accounting firm is not required by the Company’s Bylaws or otherwise, the Board of Directors is submitting the appointment of E&Y to the shareholders for ratification. If the shareholders fail to ratify the Audit Committee’s appointment, the Audit Committee will reconsider whether to retain E&Y as the Company’s independent registered public accounting firm. In addition, even if the shareholders ratify the appointment of E&Y, the Audit Committee may in its discretion appoint a different independent accounting firm at any time during the year if the Audit Committee determines that a change is in the best interests of the Company.

Representatives of E&Y are expected to be present at the Annual Meeting of Shareholders, where they will have the opportunity to make a statement, if they desire to do so, and be available to respond to appropriate questions.

The Board of Directors recommends a vote “FOR” the ratification of the appointment of E&Y as the Company’s independent registered public accounting firm. Proxies received by the Board of Directors will be so voted unless shareholders specify in their proxies a contrary choice.

During fiscal years 2009 and 2008, the Company retained Ernst & Young LLP (“E&Y”) to audit the Company’s consolidated financial statements for 2009 and 2008, among other things. Fees billed to us by E&Y, for fiscal years 2009 and 2008, for audit and other professional services rendered were as follows:

		2009				2008
Audit Fees		$	617,400			$	643,519
Audit-Related Fees			45,000				45,000
Tax Fees			121,750				69,562
All Other Fees			—				—
Total		$	784,150			$	758,081

“Audit Fees” include fees associated with the annual audit, the reviews of our quarterly reports on Form 10-Q, fees associated with the services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements, and fees associated with Section 404 attestation services.

“Audit-Related Fees” include fees for information systems audits.

“Tax Fees” include tax compliance and assistance with tax audits.

All fees for services incurred in fiscal 2009 were approved by the Audit Committee. The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the Independent Auditors’ independence. A representative of E&Y is expected to be present at the Annual Meeting of Stockholders and will have an opportunity to make a statement and to respond to appropriate questions. Although the Company is not required to seek stockholder approval of this appointment, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Audit Committee will reconsider the appointment.

Policy Regarding the Pre-Approval of Audit and Non-Audit Services Provided by the Independent Registered Public Accounting Firm

Our Audit Committee is responsible for appointing our independent registered public accounting firm and approving the terms of the auditing and non-audit services provided by our independent registered public accounting firm. Our Audit Committee has established a policy governing services performed by our independent registered public accounting firm, which requires Audit Committee pre-approval of all audit and non-audit services to be provided by our independent registered public accounting firm, sets forth non-audit services which may not be performed by our independent registered public accounting firm and provides for regular review by the Audit Committee of the services performed by our independent registered public accounting firm and their fees. Our Audit Committee approved 100% of the fees for audit, audit related, tax and other services provided E&Y in fiscal year 2009 and 2008.

REPORT OF THE AUDIT COMMITTEE

The following report of the Audit Committee shall not be deemed to be soliciting material or to be filed with the SEC or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Securities and Exchange Act of 1934, as amended, except to the extent that we specifically request that the information be treated as soliciting material or that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.

The Board of Directors has appointed the Audit Committee, consisting of four directors which as of the date of this Proxy Statement are as follows: Messrs. Workman (Chairman), Keleghan, Park and Skinner. Each member of the Audit Committee is independent as such term is defined under the rules of the NASDAQ listing standards. The Board of Directors has adopted a written charter with respect to the responsibilities of the Audit Committee, which includes, among other things, reviewing the proposed scope of the internal audit, overseeing the adequacy and effectiveness of accounting and financial controls, and reviewing our annual and quarterly financial statements with management and the independent registered public accounting firm.

In fulfilling its responsibilities, the Audit Committee met and held discussions with management, our internal auditor and E&Y, our independent registered public accounting firm for fiscal year 2009, regarding the annual audit and our audited consolidated financial statements. Management represented to the Audit Committee that our financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed with management and E&Y the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2010. The Audit Committee discussed with E&Y the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended and adopted by the Public Company Accounting Oversight Board in Rule 3200T.

E&Y also provided to the Audit Committee the written disclosures and the letter required by the PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence. The Audit Committee has discussed the independence of E&Y with members of the firm.

Management is responsible for maintaining internal controls over our financial reporting process and assessing the effectiveness of our internal control over our financial process. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and issuing a report thereon, and to express an opinion on our management’s assessment and an opinion of effectiveness of our internal control over financial reporting based on their audit. As provided in its charter, the Audit Committee’s responsibilities include the monitoring and oversight of these processes.

In its oversight role for these matters, the Audit Committee relies on the information and representations made by management and the independent registered public accounting firm. Accordingly, the Audit Committee’s oversight does not provide an independent basis to certify that the audit of our financial statements has been carried out in accordance with generally accepted accounting principles or that our independent registered public accounting firm is in fact “independent.”

Based upon and in reliance upon the review and discussion referred to above and the review of E&Y’s report to the Audit Committee, the Audit Committee recommended to our Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2010, for filing with the SEC.

Respectfully submitted,

AUDIT COMMITTEE

John L. Workman, Chairman
Kevin T. Keleghan
John J. Park
Samuel K. Skinner

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

E&Y served as our independent registered public accounting firm for fiscal year 2009. The Audit Committee has retained E&Y to serve as our independent registered public accounting firm for fiscal year 2010. Representatives of E&Y are expected to be present at the Annual Meeting, where they will be available to make a statement and respond to appropriate questions.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our Corporate Governance Guidelines outline our policies and procedures for the review, approval or ratification of related party transactions and conflicts of interest. Our policy is that a director or executive officer must avoid any conflict of interest with our company. If a director develops an actual, potential or apparent conflict of interest with us or is unsure whether a potential situation might develop into a conflict of interest, he or she must report the conflict immediately to our Chairman and the Chairman of our Nominating and Corporate Governance Committee. The conflict must be resolved to the satisfaction of the Nominating and Corporate Governance Committee or the director must resign. Further, if a director or executive officer (or any member of his or her immediate family) has a personal interest in a matter before our Board of Directors, he or she must disclose to the full Board the material facts as to his or her relationship and interest. In addition to the approval processes described above, our Code of Business Ethics and Conduct prohibits any director or employee from engaging in any activity or association that conflicts with, or appears to conflict with, his or her ability to exercise independent judgment in our best interest and dictates that such individuals must avoid any situation that may create, or seem to create, a conflict between his or her personal interests and our company’s interests.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires that our executive officers, directors, and persons who own more than ten percent of our outstanding Common Shares report their beneficial ownership and changes in their beneficial ownership of our equity securities by filing reports with the SEC. Based on a review of the Forms 3, 4 and 5 furnished to us, during fiscal year 2009, to our knowledge, our officers, directors, and greater than ten percent beneficial owners filed the reports required by Section 16(a) on a timely basis during such year except for Mr. McDermott who filed a late Form 4.

ANNUAL REPORT ON FORM 10-K

A copy of our most recent Annual Report on Form 10-K filed with the SEC accompanies this Proxy Statement. Additional copies of the Annual Report on Form 10-K may be obtained from our website at http://ir.apaccustomerservices.com/proxy10.cfm, or by writing to APAC Customer Services, Inc., 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015, Attention: Robert B. Nachwalter, Senior Vice President, General Counsel and Corporate Secretary.

MULTIPLE SHAREHOLDERS SHARING AN ADDRESS

The rules of the SEC permit companies to provide a single copy of an annual report and proxy statement to households in which more than one shareholder resides. This process is known as householding. Shareholders who share an address and who have been previously notified that their broker, bank or other intermediary will be householding their proxy materials will receive only one copy of our Proxy Statement and Annual Report to Shareholders unless they have affirmatively objected to the householding notice.

Shareholders sharing an address who received only one set of these materials may request a separate copy which will be sent promptly at no cost by writing our Investor Relations department at: Investor Relations, APAC Customer Services, Inc., 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015. For future annual meetings, a shareholder may request separate annual reports or proxy statements, or may request the householding of such materials, by contacting us as noted above.

PROPOSALS OF SHAREHOLDERS FOR 2011 ANNUAL MEETING

A shareholder who intends to present a proposal at the 2011 Annual Meeting and who wishes to have the proposal included in our proxy statement for that meeting must deliver the proposal to the Corporate Secretary. All proposals must be received by the Corporate Secretary at our principal executive office located at 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015, no later than January 6, 2011, and must satisfy the applicable rules and regulations of the SEC to be eligible for inclusion in the proxy statement for that meeting.

A shareholder who intends to nominate a candidate for director or to present a proposal that is a proper subject for consideration at the 2011 Annual Meeting, even if the proposal is not submitted by the deadline for inclusion in the proxy statement, must provide written timely notice to the Corporate Secretary in accordance with our Bylaws. To be timely, such notice must be delivered to the Corporate Secretary at our principal executive offices between February 15, 2011 and March 17, 2011. However, if the date of our 2011 Annual Meeting is before May 16, 2011, or after August 15, 2011, the notice must be delivered to the Corporate Secretary at our principal executive office not more than 120 days prior to the 2011 Annual Meeting and not less than the later of 90 days prior to the 2011 Annual Meeting or 10 days following the day on which we first publicly announce the date of the 2011 Annual Meeting. The notice must describe certain information regarding the nominee and the shareholder giving the notice, including information such as name, address, occupation and shares held.

OTHER MATTERS TO COME BEFORE THE MEETING

The Board of Directors knows of no other business that may come before the Annual Meeting. However, if any other matters are properly presented to the Annual Meeting, the persons named in the proxies will vote upon them in accordance with their best judgment.

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY CARD AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.

By Order of the Board of Directors

Robert B. Nachwalter

Senior Vice President, General Counsel and Corporate Secretary

APAC Customer Services, Inc.

WO#
73986

6 FOLD AND DETACH HERE 6

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.		Please mark your votes as indicated in this example		x

The Board of Directors Recommends a Vote “FOR” the following nominees.

The Board of Directors Recommends a Vote “FOR” this proposal.

1.   Election of Directors:

FOR ALL

WITHHOLD FOR ALL

*EXCEPTIONS

FOR

AGAINST

ABSTAIN

01–Katherine Andreasen 02–Kevin T. Keleghan 03–Michael P. Marrow 04–John J. Park

o

o

o

2.

Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm.

o

o

o

05–Theodore G. Schwartz 06–Samuel K. Skinner 07–John L. Workman

YOUR VOTE IS IMPORTANT! PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “Exceptions” box above and write that nominee’s name in the space provided below.)

*Exceptions