**Exhibit10.1**

 

 

# **PERSONAL AND CONFIDENTIAL**

 

May 19, 2004

 

Mr. James McClenahan

279 Benson Lane

Coppell, Texas 75019

 

Dear James:

 

I am pleased to present this offer ofemployment to join APAC Customer Services, Inc. (“APAC” or “the Company”) asSenior Vice President, Sales and Marketing, reporting to me.  This letter constitutes your EmploymentAgreement with APAC.

 

The following terms will apply:

 

1.     Your start date will be no later than May26, 2004.

 

2.     Your starting base salary will be TwoHundred Eighty Five Thousand Dollars ($285,000) on an annualized basis payablebi-weekly.  (This “base salary” isstated for convenience only and is not intended as an annual contract ofemployment.)  Your base salary will bereviewed each year at the time when increases for executives of APAC areconsidered.  At the present time thatoccurs on or about April 1 of each year.

 

3.     You will be a participant in APAC’s annualManagement Incentive Compensation Plan (“MIP”) as it exists from year to year(copy enclosed).  We envision anopportunity of 10%-40%-80% for threshold-target-maximum performance,respectively.  The payout of MIP willdepend on APAC’s  meeting its budgetedfinancial performance and your meeting your individual and team performancegoals as established each year between you and the executive to whom youreport; provided, however that APAC guarantees that your MIP payout for 2004will be not less than Twenty Eight Thousand Five Hundred Dollars ($28,500)

 

4.     Subject to the approval of the CompensationCommittee, you will be granted options to purchase 75,000 shares of APAC stockat an exercise price equal to the mean between the high and low prices at whichAPAC’s common stock trades on the day such approval is rendered, as reported byBloomberg Financial Markets.  Theseoptions will vest at the rate of 25% per year during the first four years ofyour employment.  A copy of our standardoption agreement is provided for your review.

 

5.     You will be entitled to paid vacation offour (4) weeks and will also be entitled to participate in all employee benefitplans and programs extended to employees at the executive level (BenefitsSummary enclosed).

 

6.     Upon joining the company, you will receivean Employment Security Agreement, which outlines additional cash compensationprotection in the event of “Change in Control” of the Company (draft copyenclosed).

 

7.     As a condition of employment, you will signan appropriate Agreement Protecting Company Interests, a copy of which isenclosed.

 

8.     Other than in the event of  (1.) your termination of employment inconnection with a “Change in Control” as defined in the Employment SecurityAgreement referenced above or (2) your termination of employment by APAC “forcause” (defined as “(i) gross misconduct or gross

 

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negligencein the performance of your employment duties; (ii) willful disobedience by youof the lawful directions received from the Company or from the person to whomyou directly report or of established policies of the Company; or (iii)commission by you of a crime involving fraud or moral turpitude that canreasonably be expected to have an adverse effect on the business, reputation orfinancial situation of the Company”), or (3.) your termination as a result ofyour resignation from employment with the Company other than for Agreed Reason,and provided you sign a then-current Waiver & Release Agreement, APAC willpay you severance equal to the product of twelve times the sum of (i) themonthly amount of your then-current Base Salary plus (ii) the amount necessaryto reimburse you for payments you make to exercise your rights under COBRA tocontinue your and your dependents’ medical and dental coverages as such may bein effect from time to time under the Company’s welfare plans—such severance tobe paid over the twelve (12) months following such termination.  Resignation for “Agreed Reason” shall mean aresignation by you prior to any Change in Control if after notice by you to theCompany and a fifteen day opportunity by the Company to cure, (ii) your duties,responsibilities or authority as an executive employee are materially reducedor diminished from those in effect on your commencement of employment withoutyour written consent or you no longer report to the Chief Executive Officer ofthe Company, or (ii) your base salary and the incentive compensationopportunity available to you is reduced in the aggregate and not in accordancewith a compensation reduction applicable to all senior executives’ salaries generallyto which all senior executives of the Company would be subject to an equivalentpercentage reduction in their base salaries. Severance payments will be made in accordance with either this agreementor the prevailing change of control agreement, whichever is more advantageousto you; but in no event will severance payments be made under bothagreements.  Such payments will be madeon APAC’s customary payroll dates in installments equal to your regularbiweekly salary, less all applicable withholding taxes.  You are not required to mitigate the amountof any severance payment provided for in this Employment Agreement by seekingother employment or otherwise, nor shall the amount of any payment or benefitprovided for in this Employment Agreement be reduced by any compensation,income or benefit you may receive from any source.  In addition, no payments to you under this Employment Agreementmay be subject to any offset or setoff due to any claim APAC or its affiliatesmay have against you.

 

9.     You will relocate to Deerfield, Illinoiswithin one year of your date of hire. APAC shall pay your relocation costs in accordance with APAC’s EmployeeRelocation Policy, Tier IV.  In theevent you leave APAC’s employment within two (2) years of your relocation date,you shall reimburse APAC for all relocation costs paid by APAC according to theEmployee Reimbursement Agreement (copy enclosed).

 

10.   This offer is extended contingent uponreceipt of a completed Application for Employment, satisfactory references, andadequate results of a background investigation (Application for Employment andbackground check release forms are enclosed).

 

11.   You hereby represent and warrant to and withAPAC Customer Services, Inc. that you are not subject to any covenants,agreements or restrictions, including, without limitation, any covenants,agreements or restrictions arising out of your prior employment or independentcontractor relationships, which would be breached or violated by youracceptance of this offer of employment or by your performance of your duties atAPAC.  You acknowledge that it is APAC’sexpress policy and procedure to abstain from the use or disclosure of the tradesecrets and proprietary information of third parties, and you hereby expresslycovenant that you will not, in the performance of your duties at APAC, use ordisclose the trade secrets or proprietary information of third parties.

 

12.   The Company will pay attorneys’ fees in anamount of up to $5,000 incurred by you in connection with the negotiation of thisletter agreement.

 

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13.   Any controversy or claim arising out of orrelating to this letter agreement or a breach of its provisions, other than aclaim for injunctive relief, shall be settled by arbitration in accordance withthe Employment Arbitration Rules of the American Arbitration Association ineffect at the time demand for arbitration is made by either party.  This arbitration shall be conducted beforethree (3) arbitrators.  One arbitratorshall be named by APAC, a second shall be named by you and the third arbitratorshall be named by the two arbitrators so chosen.  The arbitration will occur in either Cook or Lake County,Illinois.   In the event of any suchdispute the non-prevailing party shall be responsible for the attorneys’ feesand costs related to such dispute.

 

14.   This letter agreement shall be binding onthe Company and any successor to its business or to a majority of its businessassets and the Company will require any successor in interest (whether director indirect) to expressly assume and agree to perform this letteragreement;  provided, however, that nosuch assumption shall relieve the Company of its obligations.

 

 

James,we are excited about your joining APAC.

 

Sincerely,

 

APACCUSTOMER SERVICES, INC.

 

 

Robert J. KellerChief Executive Officer

 
| RJK/kbo                                       |             |               |
|-----------------------------------------------|------------------|--------------------|
|                                          |             |               |
| cc:       C. Corkery |             |               |
|                                          | ACCEPTED BY:     |               |
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|                                          |             |               |
|                                          | James McClenahan | (Date)   |

 

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