**Exhibit 10.1**

 

**PERSONAL AND CONFIDENTIAL**

 
| Pamela Schneider     |   |   | June 1, 2005 |
|----------------------|--------|--------|-------------------|
| 25089 N. Pawnee Road |   |   |
| Barrington, IL 60010 |   |   |

 

Dear Pam:

 

I am pleased to present this offer of employment tojoin APAC Customer Service, Inc. (“APAC” or the “Company”) as Senior VicePresident, General Counsel and Secretary, reporting to me.  The following terms will apply:

 

1.             Your start datewill be June 13, 2005.

 

2.             Your starting basesalary will be $260,000, on an annualized basis payable bi-weekly. This “basesalary” is stated for convenience only and is not intended as an annualcontract of employment.  Your base salarywill be reviewed each year at the time when increases for executives of APACare considered.  At the present time thatoccurs on or about April 1 of each year.

 

3.             You will be aparticipant in APAC’s Management Incentive Compensation Plan (“MIP”) as itexists from year to year.  We envision anopportunity of 10%-40%-80% for threshold-target-maximum performance,respectively.  The payout of MIP willdepend on APAC’s meeting its budgeted financial performance and your meetingyour individual and team performance goals that will be established each yearbetween you and the executive to whom you report.

 

4.             You will beentitled to paid vacation of four (4) weeks and will also be entitled toparticipate in all employee benefit plans and programs extended to employees atthe executive level (Benefits Summary enclosed).

 

5.             Subject to theapproval of the Compensation Committee, you will be granted options to purchase300,000 shares of APAC stock at an exercise price equal to the mean between thehigh and low prices at which APAC’s common stock trades on the day establishedby the Compensation Committee, as reported by Bloomberg Financial Markets.  The option grant date will be the later ofyour first date of employment and the date on which the Compensation Committeeapproves the grant. These options will vest at the rate of 20% per year duringthe first five years of your employment.

 

6.             Upon joining theCompany, you will receive an Employment Security Agreement, which outlinesadditional cash compensation protection in the event of “Change in Control” ofthe Company (copy enclosed).

 

7.             As a condition ofemployment, you will sign an Agreement Protecting Company Interests, a copy ofwhich is enclosed.

 

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8.             Except for (1) yourtermination of employment in connection with a “change in control” as definedin the Employment Security Agreement referenced above, or (2) yourtermination of employment by APAC “for cause” (defined as “(i) grossmisconduct or gross negligence in the performance of your employment duties, (ii) willfuldisobedience by you of the lawful directions received from the Company or fromthe person to whom you directly report or of established policies of theCompany, or (iii) commission by you of a crime involving fraud or moralturpitude that can reasonably be expected to have an adverse effect on thebusiness, reputation or financial situation of the Company”), or (3) yourtermination as a result of your resignation from employment with the Companyother than for Agreed Reason, and provided you sign a then-current Waiver &Release Agreement, APAC will pay you severance equal to (x) the monthly amountof your then-current Base Salary plus (y) the amount necessary to reimburse youfor payments you make in connection with your exercise of your rights underCOBRA to continue your and your dependants’ medical and dental benefits inaccordance with the terms of the Company’s welfare plans as may be in effectfrom time to time during each of the following twelve (12) months followingsuch termination.  Resignation for “AgreedReason” shall mean a resignation by you prior to any Change of Control if afternotice to the Company and a fifteen day opportunity by the Company to cure, (a) yourduties, responsibilities are materially reduced or diminished from those ineffect on your commencement of employment without your written consent or youno longer report to the Chief Executive Officer of the Company, or (b) yourbase salary and the incentive compensation opportunity available to you isreduced in the aggregate and not in accordance with a compensation reductionapplicable to all senior executives’ salaries generally.  Severance payments will be made in accordancewith either this agreement or the prevailing change of control agreement,whichever is more advantageous to you; but in no event will severance paymentsbe made under both agreements.  Suchpayments will be made on APAC’s customary payroll dates in installment equal toyour regular biweekly salary, less all applicable withholding taxes.  Notwithstanding the foregoing, no amountshall be paid pursuant to this Agreement prior to the date that is at least sixmonths following a termination of employment to the extent such amount would besubject to excise tax under the terms of Section 409A of the InternalRevenue Code of 1986, as amended.

 

You are not required tomitigate the amount of any severance payment provided for in this letter byseeking other employment or otherwise, nor shall the amount of any payment orbenefit provided for in this Employment Agreement be reduced by anycompensation, income or benefit you may receive from any source.  In addition, no payments to you under thisletter may be subject to any offset or setoff due to any claim the Company orits affiliates may have against you.

 

9.             This offer isextended contingent upon receipt of a completed Application for Employment,satisfactory references, and adequate results of a background investigation.

 

10.           You herebyrepresent and warrant that you are not subject to any covenants, agreements orrestrictions, including, without limitation, any covenants, agreements orrestrictions arising out of your prior employment or independent contractorrelationships, which would be breached or violated by your acceptance of thisoffer of employment or by your performance of your duties.  You acknowledge that it is APAC’s expresspolicy to abstain from the use or disclosure of the trade secrets andproprietary information of third parties, and you hereby expressly covenantthat you will not use or disclose trade secrets or proprietary information ofthird parties while working at APAC.

 

11,           This letter shallbe binding on the Company and any successor to its business or to a majority ofits business assets and the Company will require any successor in interest(whether direct or indirect) to expressly observe and agree to perform thisletter; provided, however, that no such assumption shall relieve the Company ofits obligations.

 

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12.           Any controversy orclaim arising out of or relating to this letter or a breach of its provisions,other than a claim for injunctive relief, shall be settled by arbitration inaccordance with the Employment Arbitration Rules of the AmericanArbitration Association in effect at the time demand for arbitration is made byeither party.  This arbitration shall beconducted before a single arbitrator selected by mutual agreement or three (3) arbitratorsif the parties are unable to agree on a single arbitrator within 30 days of thefirst demand for arbitration.  If threearbitrators are necessary, on arbitrator shall be named by APAC, a second shallbe named by you and the third shall be named by the two arbitrators sochose.  The arbitration shall occur ineither Cook or Lake County, Illinois.  Inthe event of any such dispute and arbitration the non-prevailing party shall beresponsible for the fees and expenses paid to the arbitrators and court reporters,but the parties shall be responsible for any respective attorneys’ feesregardless of outcome.

 

Pam, we are excited about your joining APAC.  If you have any questions please don’thesitate to contact me.

 

 

Sincerely,

 

 
| **APAC CUSTOMER SERVICES, INC.**           |                 |
|--------------------------------------------|----------------------|
| ** **                                 |                 |
|                                       |                 |
| **Robert J. Keller**                       | **ACCEPTED BY:**     |
| **President and Chief Executive  Officer** |                 |
| SLM/ml                                     |                 |
|                                       |                 |
|                                       | /s/ Pamela Schneider |   |
|                                       |                 |
|                                       | **Pamela Schneider** |
|                                       | June 1, 2005    |

 

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