EXHIBIT 10.27
EMPLOYMENT AGREEMENT
eLoyalty Corporation, a Delaware corporation doing business as eLoyalty
("eLoyalty"), and Xxxxx Xxxxxx ("Employee") enter into this Employment Agreement
("Agreement") as of January 21, 2002 ("Effective Date").
In consideration of the agreements and covenants contained in this
Agreement, eLoyalty and Employee agree as follows:
1. EMPLOYMENT DUTIES: eLoyalty shall employ Employee as a Senior Vice
President. Employee shall have the normal responsibilities, duties and authority
of a Senior Vice President of eLoyalty and shall, at the direction of eLoyalty's
management, participate in the administration and execution of eLoyalty's
policies, business affairs and operations. eLoyalty's Board of Directors or
management may, from time to time, expand or contract such duties and
responsibilities and may change Employee's title or position. Employee shall
perform faithfully the duties assigned to Employee to the best of Employee's
ability and shall devote Employee's full and undivided business time and
attention to the transaction of eLoyalty's business.
2. TERM OF EMPLOYMENT: The term of employment ("Initial Term of
Employment") covered by this Agreement shall commence as of the effective date
of this Agreement and continue until January 31 2004, subject to the provisions
of paragraph 3 below. This Agreement may be renewed for additional one-year
periods by the mutual written agreement of the parties ("Renewal Term"). The
Initial Term of Employment and any Renewal Terms shall be hereinafter referred
to as the "Term of Employment". If this Agreement is not renewed by the parties
upon the expiration of the Initial Term of Employment or upon the expiration of
any Renewal Term, eLoyalty shall, within 30 days from the expiration of the
Initial Term of Employment or the expiration of the Renewal Term, as the case
may be, pay to Employee a lump sum amount equivalent to six (6) months of
Employee's normal salary (but not bonus) as Employee's severance payment,
subject to ordinary tax and other withholdings in accordance with eLoyalty's
normal payroll practices. In addition to the foregoing, if Employee fails to
find reasonably comparable employment in the U.S., Australia or elsewhere by the
end of the sixth (6th) month after the expiration of the Initial Term of
Employment or the Renewal Term, as the case may be, eLoyalty hereby agrees to
pay a further severance payment equivalent of six months of employee's normal
salary (but not bonus and subject to ordinary tax and other withholdings),
payable in monthly installments, unless Employee begins comparable employment
with another employer during such time, in which case eLoyalty's obligations
shall cease immediately. For the purposes of this Agreement, the term
"comparable employment" shall mean any employment where Employee may earn annual
cash compensation that is comparable with the annual cash compensation earned by
Employee during the one year immediately prior to the termination of Employee's
employment. If the parties fail to renew the Agreement upon expiration of the
Initial
Term of Employment, Employee agrees to use Employee's best efforts to secure
comparable employment as soon as reasonably possible after such expiration and
to notify eLoyalty in writing of such employment not later than one (1) business
day after securing the same. As a condition of receiving severance under this
Paragraph, Employee will be required to execute a general release and waiver,
including but not limited to, a release of any and all claims and for any and
all other damages resulting from Employee's termination from employment.
3. TERMINATION: eLoyalty may terminate Employee's employment for any
reason upon written notice to Employee, provided that unless (a) such
termination is in the form of a non-renewal of this Agreement as described in
paragraph 2 above (in which case the severance provisions of such paragraph 2
shall apply) or (b) eLoyalty has terminated Employee's employment for Serious
Misconduct as described below, eLoyalty shall pay to Employee a lump sum amount
equivalent to twelve (12) months of Employee's normal salary (but not bonus) as
Employee's severance payment, subject to ordinary tax and other withholdings in
accordance with eLoyalty's normal payroll practices. In the event of a
termination requiring such a lump sum payment, eLoyalty will also continue
Employee's health insurance benefits for the lesser of twelve (12) months from
the effective date of termination (if Employee remains eligible under these
health insurance plans) or until Employee begins employment with another
employer during such time, at which time eLoyalty's obligations to continue
Employee's health insurance benefits shall cease immediately. Employee shall
notify eLoyalty in writing of such new employment not later than one (1)
business day after securing the same. In addition, eLoyalty may terminate
Employee's employment and this Agreement immediately without notice and with no
severance pay and no benefit continuation if Employee engages in "Serious
Misconduct." For purposes of this Agreement, "Serious Misconduct" means fraud,
embezzlement, misappropriation of corporate funds, any acts of dishonesty,
engaging in activities materially harmful to eLoyalty's reputation or business,
conviction of a crime, willful refusal to perform or substantial disregard of
Employee's assigned duties (including, but not limited to, refusal to travel or
work the requested hours), or any violation of any statutory or common law duty
of loyalty to eLoyalty. If Employee resigns from, or in any other way
terminates, her employment during the Initial Term of Employment or during any
subsequent Renewal Term, Employee shall not be entitled to any severance pay or
continuation of her salary or benefits.
4. CHANGE IN CONTROL.
(a) Notwithstanding anything contained in this Agreement, if following a
Change in Control (as defined in defined in Paragraph 4(b) below), (a)
Employee's title, position, duties or salary is diminished and Employee resigns
within 90 days after the diminishment becomes effective, or (b) Employee's
position is eliminated or Employee's employment otherwise is terminated for
reasons other than Serious Misconduct, eLoyalty shall pay to Employee a lump sum
amount equivalent to twelve (12) months of Employee's normal salary (but not
bonus) as Employee's severance payment, subject to ordinary tax and other
withholdings in accordance with eLoyalty's normal payroll practices. In the
event of a termination requiring such a lump sum payment, eLoyalty will
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also continue Employee's health insurance benefits for the lesser of twelve (12)
months from the effective date of termination (if Employee remains eligible
under these health insurance plans) or until Employee begins employment with
another employer during such time, at which time eLoyalty's obligations to
continue Employee's health insurance benefits shall cease immediately. Employee
shall notify eLoyalty in writing of such new employment not later than one (1)
business day after securing the same.
(b) The term "Change in Control" for the purposes hereunder shall be as
defined in eLoyalty Corporation 2000 Stock Incentive Plan. Notwithstanding the
foregoing, the following events and other events reasonably related to them,
individually or in any aggregate combination, shall not be construed as a
"Change in Control" of eLoyalty: (i) the private placement of eLoyalty preferred
stock recently consummated between eLoyalty and affiliates of Technology
Crossover Ventures and Xxxxxx Xxxx Ventures ("Financing"); (ii) any tender offer
made by eLoyalty to its employees pursuant to which employee stock options were
exchanged for common stock of eLoyalty, (iii) the rights offering authorized by
the eLoyalty's Board of Directors in conjunction with the Financing (the "Rights
Offering"); (iv) any conversion of the preferred stock issued pursuant to the
Financing and/or the Rights Offering into common stock of eLoyalty and (iv) the
1-10 reverse stock split authorized by eLoyalty's Board of Directors.
5. SALARY: As compensation for Employee's services, eLoyalty shall pay
Employee a base salary in the amount listed in EXHIBIT A to this Agreement.
Employee's base salary shall be subject to annual review and may, at the
discretion of eLoyalty's management, be adjusted from that listed in EXHIBIT A
according to Employee's responsibilities, capabilities and performance during
the preceding year.
6. BONUSES: eLoyalty may elect to pay Employee annual bonuses. Payment of
such bonuses, if any, shall be at the sole discretion of eLoyalty.
7. EMPLOYEE BENEFITS: During the Term of Employment, Employee shall be
entitled to participate in such employee benefit plans, including group pension,
life and health insurance and other medical benefits, and shall receive all
other fringe benefits as eLoyalty may make available generally to its Senior
Vice Presidents. Subject to the eligibility requirements for such insurance,
Employee's coverage for Accidental Death, Dismemberment, Short-Term and Long
term Disability, Business Travel Accident Insurance and Life Insurance will
begin on the Effective Date in accordance with the terms of eLoyalty's standard
policy afforded to all its U.S.-based Senior Vice Presidents. eLoyalty agrees
that it will, to the extent not in violation under the applicable laws, waive
the one-year employment eligibility requirement under the Family and Medical
Leave Act of 1993 in order to allow Employee to be immediately eligible for up
to twelve-weeks of unpaid leave for certain family and medical reasons permitted
such Act. Notwithstanding the foregoing, eLoyalty reserves the right to enforce
all other eligibility requirements under the Family and Medical Leave Act of
1993.
8. BUSINESS EXPENSES: eLoyalty shall reimburse Employee for all reasonable
and necessary business expenses incurred by Employee in performing Employee's
duties. Employee shall provide eLoyalty with supporting documentation
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sufficient to satisfy reporting requirements of the Internal Revenue Service and
eLoyalty. eLoyalty's determination as to reasonableness and necessary shall be
final.
9. RELOCATION EXPENSES: During the Initial Term of Employment under this
Agreement, eLoyalty shall reimburse Employee for those re-location expenses, and
pay Employee for certain allowances, as specifically described in EXHIBIT B
attached hereto.
10. VACATION AND SICK DAYS: Employee will be entitled to vacation time in
accordance with eLoyalty's standard policy for U.S.-based Senior Vice
Presidents. In addition to the foregoing, Employee will also be entitled to use
any of Employee's current unused vacation time from Employee's employment with
eLoyalty Corporation (Australia) Pty. Ltd. ("eLoyalty Australia") which has been
accrued up to the Effective Date and which was not paid out in any manner by
eLoyalty Australia to Employee upon Employee's termination of employment with
eLoyalty Australia. Any vacation time used by Employee on and after the
Effective Date will first be counted against the unused vacation time
transferred from eLoyalty Australia. Employee acknowledges that eLoyalty will
not be paying any long service leave to Employee under the applicable Australian
laws.
11. NONCOMPETITION AND NONDISCLOSURE: Employee acknowledges that the
successful development and marketing of eLoyalty's professional services and
products require substantial time and expense. Such efforts generate for
eLoyalty valuable and proprietary information ("Confidential Information") which
gives eLoyalty a business advantage over others who do not have such
information. Confidential Information of eLoyalty and its clients and prospects
includes, but is not limited to, the following: business strategies and plans;
proposals; deliverables; prospects and customer lists; methodologies; training
materials; and computer software. Employee acknowledges that during the Term of
Employment, Employee will obtain knowledge of such Confidential Information.
Accordingly, Employee agrees to undertake the following obligations which
Employee acknowledges to be reasonably designed to protect eLoyalty's legitimate
business interests without unnecessarily or unreasonably restricting Employee's
post-employment opportunities:
(a) Upon termination of the Term of Employment for any reason, Employee
shall return all eLoyalty property, including but not limited to computer
programs, files, notes, records, charts, or other documents or things containing
in whole or in part any of eLoyalty's Confidential Information;
(b) During the Term of Employment and subsequent to termination, Employee
agrees to treat all such Confidential Information as confidential and to take
all necessary precautions against disclosure of such information to third
parties during and after Employee's employment with eLoyalty . Employee shall
refrain from using or disclosing to any person, without the prior written
approval of eLoyalty's Chief Executive Officer any Confidential Information
unless at that time the information has become generally and lawfully known to
eLoyalty's competitors;
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(c) Without limiting the obligations of paragraph 11(b), Employee shall
not, for a period of one year following Employee's termination of employment for
any reason, for Employee's self or as an agent, partner or employee of any
person, firm or corporation, engage in the practice of consulting or related
services for (1) any client of eLoyalty, for whom Employee performed services,
or (2) any prospective eLoyalty client to whom Employee submitted, or assisted
in the submission of a proposal during the one year period preceding Employee's
termination of employment, provided however, that unless eLoyalty decides to
re-establish its business in Australia, Employee shall not be deemed to be in
breach of this provision if Employee engages in such restricted activities in
Australia as described in this sub-clause (c);
(d) During a one year period immediately following Employee's termination
of employment for any reason, Employee shall not induce or assist in the
inducement of any eLoyalty employee away from eLoyalty's employ or from the
faithful discharge of such employee's contractual and fiduciary obligations to
serve eLoyalty's interests with undivided loyalty;
12. REMEDIES: Employee recognizes and agrees that a breach of any or all
of the provisions of paragraph 11 will constitute immediate and irreparable harm
to eLoyalty's business advantage, including but not limited to eLoyalty's
valuable business relations, for which damages cannot be readily calculated and
for which damages are an inadequate remedy. Accordingly, Employee acknowledges
that eLoyalty shall therefore be entitled to an order enjoining any further
breaches by the Employee. Employee agrees to reimburse eLoyalty for all costs
and expenses, including reasonable attorneys' fees incurred by eLoyalty in
connection with the enforcement of its rights under any provision of this
Agreement.
13. INTELLECTUAL PROPERTY: During the Term of Employment, Employee shall
disclose to eLoyalty all ideas, inventions and business plans which Employee
develops during the course of Employee's employment with eLoyalty, which relate
directly or indirectly to eLoyalty's business, including but not limited to any
computer programs, processes, products or procedures which may or may not, upon
application, be protected by patent or copyright. Employee agrees that any such
ideas, inventions or business plans shall be the property of eLoyalty and that
Employee shall, at eLoyalty's request and cost, provide eLoyalty with such
assurances as is necessary to secure a patent or copyright.
14. ASSIGNMENT: Employee acknowledges that the services to be rendered
pursuant to this Agreement are unique and personal. Accordingly, Employee may
not assign any of Employee's rights or delegate any of Employee's duties or
obligations under this Agreement. eLoyalty may assign its rights, duties or
obligations under this Agreement to a subsidiary or affiliated company of
eLoyalty or purchaser or transferee of a majority of eLoyalty's outstanding
capital stock or a purchaser of all, or substantially all, of the assets of
eLoyalty.
15. NOTICES: All notices shall be in writing, except for notice of
termination of employment, which may be oral if confirmed in writing within 14
days. Notices
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intended for eLoyalty shall be sent by registered or certified mail addressed to
it at c/o eLoyalty's General Counsel, 000 Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxx,
Xxxxxxxx 00000 or its current principal office, and notices intended for
Employee shall be either delivered personally to Employee or sent by registered
or certified mail addressed to Employee's last known address.
16. ENTIRE AGREEMENT: This Agreement and Exhibits A and B attached hereto
constitute the entire agreement between eLoyalty and Employee. Neither Employee
nor eLoyalty may modify this Agreement by oral agreements, promises or
representations. The parties may modify this Agreement only by a written
instrument signed by the parties.
17. APPLICABLE LAW: This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
18. MEDIATION OF DISPUTES: Neither party shall initiate arbitration or
other legal proceedings (except for any claim under Paragraph 11 of this
Agreement), against the other party, or, in the case of eLoyalty, any of its
directors, officers, employees, agents, or representatives, relating in any way
to this Agreement, to Employee's employment with eLoyalty, the termination of
Employee's employment or any or all other claims that one party might have
against the other party until 30 days after the party against whom the claim[s]
is made ("Respondent") receives written notice from the claiming party of the
specific nature of any purported claim and the amount of any purported damages.
Employee and eLoyalty further agree that if Respondent submits the claiming
party's claim to JAMS/Endispute, for nonbinding mediation, in Chicago, Illinois,
prior to the expiration of such 30 day period, the claiming party may not
institute arbitration or other legal proceedings against Respondent until the
earlier of (i) the completion of nonbinding mediation efforts, or (ii) 90 days
after the date on which the Respondent received written notice of the claimant's
claim.
19. BINDING ARBITRATION: Employee and eLoyalty agree that all claims or
disputes relating to Employee's employment with eLoyalty or the termination of
such employment, and any and all other claims that Employee might have against
eLoyalty, any eLoyalty director, officer, employee, agent, or representative,
and any and all claims or disputes that eLoyalty might have against Employee
(except for any claims under Paragraph 11 of this Agreement) shall be resolved
under the Expedited Commercial Rules of the American Arbitration Association in
Illinois. If either party pursues a claim and such claim results in an
Arbitrator's decision, both parties agree to accept such decision as final and
binding. eLoyalty and Employee agree that any litigation under Paragraph 10 of
this Agreement shall be brought in a relevant court, state or federal, in
Illinois.
20. SEVERABILITY: Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity,
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without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
21. WORK AUTHORIZATION. This Agreement and eLoyalty's obligations
hereunder are subject to Employee's receipt of the appropriate U.S. work
authorization from the U.S. Immigration and Naturalization Office (INS) and to
Employee's maintenance of such appropriate U.S. work authorization during the
Term of Employment. If Employee fails to obtain the appropriate U.S. work
authorization from the INS before the Effective Date, or fails to maintain the
appropriate U.S. work authorization from the INS during the Term of Employment,
eLoyalty shall have the right to, notwithstanding anything contained in Section
3 hereunder, immediately terminate this Agreement upon written notice to
Employee without any further liability to Employee.
22. ACCELERATION OF EQUITY INCENTIVE AWARDS.
(a) OUTSTANDING EQUITY INCENTIVE AWARDS. Subject to the approval of
eLoyalty's Board of Directors and the terms and conditions of the
eLoyalty Corporation 1999 Stock Incentive Plan and/or the eLoyalty
Corporation 2000 Stock Incentive Plan, as applicable, the Offer to
Exchange Certain Outstanding Stock Options for the Right to Receive
Shares of Common Stock (the "Offer to Exchange"), and the applicable
Stock Option Agreement(s) and/or Installment Stock Award
Agreement(s), as separately amended by the parties, eLoyalty agrees
that:
(I) if Employee completes the Initial Term of Employment (that is,
Employee has not resigned or been terminated by eLoyalty for
any reason during such Initial Term of Employment): (i) the
stock options granted by eLoyalty to Employee prior to the
Effective Date hereunder and listed in EXHIBIT A hereto will
become immediately exercisable at the expiration of the
Initial Term of Employment with respect to any or all of the
remaining shares subject thereto; and (ii) any or all of the
shares remaining subject to the installment stock awards
granted by eLoyalty to Employee prior to the Effective Date
hereunder and listed in EXHIBIT A hereto will become issuable
at the expiration of the Initial Term of Employment; or
(II) if the parties renew this Agreement for any additional Renewal
Terms, then in lieu of Section 22(a)(I) above, (i) the stock
options granted by eLoyalty to Employee prior to the Effective
Date hereunder and listed in EXHIBIT A hereto will become
immediately exercisable at the earlier of the termination of
Employee's employment during such Renewal Term (other than
termination by eLoyalty for Serious Misconduct) or expiration
of such Renewal Term with respect to any or all of the
remaining shares subject thereto; and (ii) any or all of the
shares remaining subject to the installment stock awards
granted by eLoyalty to Employee prior to
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the Effective Date hereunder and listed in EXHIBIT A hereto
will become issuable at the earlier of the termination of
Employee's employment during such Renewal Term (other than
termination by eLoyalty for Serious Misconduct) or expiration
of such Renewal Term. If Employee's employment is terminated
by eLoyalty during the Renewal Term for Serious Misconduct,
any stock option or installment stock award that remains
outstanding but unvested will terminate in its entirety upon
the effective date of Employee's termination of employment.
The accelerated vesting of any stock options described in this
Section 22(a) shall not otherwise alter any other terms and
conditions of the stock options set forth in Employee's applicable
stock option agreement(s).
(b) FUTURE EQUITY INCENTIVE AWARDS. Subject to the approval of
eLoyalty's Board of Directors and the terms and conditions of the
eLoyalty Corporation 1999 Stock Incentive Plan and/or the eLoyalty
Corporation 2000 Stock Incentive Plan, as applicable, and any stock
option agreements and/or restricted stock agreements entered into by
Employee and eLoyalty, in the event eLoyalty grants Employee options
to purchase eLoyalty's common stock after the Effective Date
hereunder ("Future Option Grants) or additional restricted shares of
eLoyalty common stock after the Effective Date hereunder ("Future
Restricted Stock Awards") , eLoyalty agrees to accelerate the
vesting of such Future Option Grants and Future Restricted Stock
Awards as set forth below:
(I) Upon Employee's completion of the Initial Term of Employment
(that is, Employee has not resigned or been terminated by
eLoyalty for any reason during such Initial Term of
Employment):
i. any outstanding Future Options Grants will become
immediately exercisable on January 31, 2004 with respect
to the portion of shares of eLoyalty common stock
remaining subject thereto for which the Future Option
Grants otherwise would become exercisable as of June 30,
2004 if Employee were to continue in the employ of
eLoyalty through June 30, 2004; and
ii. any outstanding Future Restricted Stock Awards will
become immediately vested on January 31, 2004 with
respect to the portion of restricted shares of eLoyalty
common stock remaining subject thereto that would have
vested as of June 30, 2004 if Employee were to continue
in the employ of eLoyalty through June 30, 2004.
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(II) If this Agreement is renewed by the mutual written agreement
of the parties for an additional one year period after the
Initial Term of Employment, upon Employee's completion of such
additional one-year Renewal Term (that is, Employee has not
resigned or been terminated by eLoyalty for any reason during
such Renewal Term):
i. any outstanding Future Options Grants will become
immediately exercisable on January 31, 2005 with respect
to the portion of shares of eLoyalty common stock
remaining subject thereto for which the Future Option
Grants otherwise would become exercisable as of January
31, 2006 if Employee were to continue in the employ of
eLoyalty through January 31, 2006; and
ii. any Future Restricted Stock Awards will become
immediately vested on January 31, 2005 with respect to
the portion of restricted shares of eLoyalty common
stock remaining subject thereto that would have vested
as of January 31, 2006 if Employee were to continue in
the employ of eLoyalty through January 31, 2006.
23. Employee acknowledges that Employee has read, understood and accepts
the provisions of this Agreement.
eLoyalty Corporation Xxxxx Xxxxxx
By: /s/ Xxxxxx Xxxxxxx /s/ Xxxxx Xxxxxx
--------------------------- ----------------------
Position: Senior Vice President
---------------------
Date: February 1, 2002 Date: January 31, 2002
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EXHIBIT A
BASE SALARY, EFFECTIVE DATE
AND
OUTSTANDING STOCK OPTIONS AND INSTALLMENT STOCK AWARDS
GRANTED PRIOR TO EFFECTIVE DATE
EMPLOYEE: Xxxxx Xxxxxx
POSITION: Senior Vice President
BASE SALARY: US$250,000
EFFECTIVE DATE: January 21, 2002
NUMBER OF SHARES (AFTER TAKING INTO ACCOUNT ELOYALTY'S 1-10 REVERSE STOCK SPLIT)
SUBJECT TO OUTSTANDING STOCK OPTIONS GRANTED BY ELOYALTY TO EMPLOYEE PRIOR TO
THE EFFECTIVE DATE (AS DESCRIBED IN PARAGRAPH 22(A) OF THE AGREEMENT): 2,000
(this includes shares subject to both vested and unvested stock options as of
the Effective Date)
NUMBER OF SHARES (AFTER TAKING INTO ACCOUNT ELOYALTY'S 1-10 REVERSE STOCK SPLIT)
SUBJECT TO OUTSTANDING INSTALLMENT STOCK AWARDS GRANTED BY ELOYALTY TO EMPLOYEE
PRIOR TO THE EFFECTIVE DATE (AS DESCRIBED IN PARAGRAPH 22(A) OF THE AGREEMENT):
6,099
________________________________
Xxxxx Xxxxxx
________________________________
Date
________________________________
eLoyalty Corporation
________________________________
Date
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EXHIBIT B
REIMBURSABLE RELOCATION EXPENSES
(I) GENERAL RELOCATION RULES:
Employee acknowledges and agrees that:
(a) The terms of this Exhibit B shall apply only during the Initial Term
of Employment. In the event that Employee desires for the Agreement to be
extended for one or more Renewal Terms, then, not later that thirty (30) days
prior to the expiration of the Initial Term of Employment, Employee shall
initiate discussions with eLoyalty regarding the reimbursement and allowance
obligations of eLoyalty that will apply during any such Renewal Term and the
parties will negotiate in good faith to reach agreement regarding such
obligations, to be set forth in a substitute Exhibit B.
(b) If Employee resigns from her employment with eLoyalty, or is
terminated by eLoyalty for Serious Misconduct at anytime during the Term of
Employment, Employee's rights to receive reimbursement of all relocation
expenses and payment of any all allowances, if any, described hereunder
(collectively, "Relocation Costs") will terminate immediately, including,
without limitation, Employee's rights to receive any reimbursement for the final
return trip as set forth in Paragraph 2(d) below, reimbursement for the return
moving costs as set forth in Paragraph 3(c) below and to receive outplacement
assistance as set forth in Paragraph 11 below. In such event, Employee will be
solely responsible for any costs or expenses incurred by Employee after the
termination of Employee's employment, including without limitation, any monthly
payments required for Employee's housing or automobile leased by Employee as a
result of Employee's relocation to the U.S. Employee will indemnify and hold
harmless eLoyalty (and its subsidiaries, parent and sister companies and their
agents, employees, officers and directors) from any and all liabilities, costs
and expenses (included, but not limited to, attorney's fees) arising in
connection with any claims by third parties against eLoyalty with respect to any
such costs or expenses incurred by Employee after the date of Employee's
termination of employment.
(c) Unless specifically set forth otherwise below, if Employee resigns
from eLoyalty's employment on or before January 31, 2003, or is terminated by
eLoyalty for Serious Misconduct on or before January 31, 2003, Employee will be
required to repay eLoyalty a pro-rata portion of all Relocation Costs paid by
eLoyalty to Employee hereunder, amounting to 1/12 of the Relocation Costs for
each month between the effective date of termination of Employee's employment
and January 31, 2003. Employee will not be obligated to repay eLoyalty for
Relocation Costs reimbursed or paid by eLoyalty hereunder if Employee is
terminated by eLoyalty for any reason other than Serious Misconduct on or before
January 31, 2003. If Employee resigns or if Employee is terminated by eLoyalty
for any reason (including Serious Misconduct) after January 31, 2003, Employee
will not be obligated to repay eLoyalty for any Relocation Costs reimbursed or
paid by eLoyalty hereunder which were incurred by Employee after January 31,
2003.
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(d) If Employee is terminated by eLoyalty for any reason other than for
Serious Misconduct during the Term of Employment, Employee's rights to receive
reimbursement of all Relocation Costs, if any, will also terminate immediately,
except for: (i) reimbursement of monthly housing lease payments under the Lease
until January 31, 2004 as described in Section (II)(4)(a) hereunder; (ii)
reimbursement of monthly auto lease payments under the Auto Lease until January
31, 2004 as described in Section (II)(6)(a) hereunder; (iii) reimbursement for
the final return trip as set forth in Paragraph 2(d) below; (iv) reimbursement
for the return moving costs as set forth in Paragraph 3(c) below; and (v)
outplacement assistance as set forth in Paragraph 11 below.
(e) If permitted under applicable laws, eLoyalty reserves the right to
offset all repayments due from Employee hereunder against amounts payable by
eLoyalty to Employee under this Agreement, if any, upon termination or
expiration of the Term of Employment.
(f) eLoyalty shall have the right to proceed against Employee or
Employee's property in a court in any location to enable eLoyalty to enforce a
judgment or other court order entered in favor of eLoyalty. Employee waives any
objection that Employee may have to the location of the court in which eLoyalty
has commenced a proceeding.
(g) Employee must submit original receipts for all expense reimbursement
set forth herein.
(II) REIMBURSABLE RELOCATION EXPENSES AND ALLOWANCES:
Subject to the provisions of Section (I) above and in consideration of
Employee's relocation from Australia to the United States to work as an employee
of eLoyalty for the Initial Term of Employment, eLoyalty agrees to reimburse
Employee for those relocation costs listed below:
1. House-hunting Trip.
(a) House-hunting Expenses: eLoyalty will reimburse Employee for
Employee's reasonable expenses incurred in a one-week house-hunting
trip in the U.S not to exceed Twenty-Five Thousand United States
Dollars (US$25,000), provided that Employee complies with eLoyalty's
current expense policy. Such expenses reimbursable by eLoyalty will
include: (1) a roundtrip business class airfare for each of
Employee, Employee's spouse and Employee's child for such
house-hunting trip, (2) reasonable hotel accommodations for a week
and (3) rental car and other reasonable travel expenses incurred in
connection with Employee's house hunting activities.
(b) Relocation Consultant: Employee may use the services of an
independent relocation consultant approved by eLoyalty in connection
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with Employee's house hunting activities, and eLoyalty will, at its
sole discretion, either directly pay to such relocation consultant,
or reimburse Employee, for the reasonable costs of such services,
provided such costs do not exceed One Thousand United States Dollars
(US$1,000).
2. Airfares.
(a) Initial Trip: eLoyalty will reimburse Employee for the purchase of
one business-class airfare for each of Employee, Employee's spouse
and Employee's child associated with Employee's final move from
Sydney, Australia to Chicago, Illinois. Such travel expenses will be
reimbursed based on the most direct route.
(b) Annual Trips: As long as Employee remains in the employ of eLoyalty,
eLoyalty will, during the Initial Term of Employment, reimburse
Employee for Employee's purchase of roundtrip airfares from the
United States to Australia, for Employee, Employee's spouse,
Employee's child and/or Employee's spouse's parents, provided that
such reimbursement shall not exceed the net amount of Fifty-Six
Thousand United States Dollars (US$56,000) per year ("Annual Airfare
Budget"). The parties agree to review the Annual Airfare Budget
promptly after December 31, 2002 to determine if the Annual Airfare
Budget of Fifty-Six Thousand United States Dollars (US$56,000) would
be sufficient to cover two round-trip business class airfares for
each of Employee, Employee's spouse, Employee's child and one
round-trip business class airfare for each of Employee's spouse's
parents for the calendar year of 2003. If the parties mutually agree
that such Annual Airfare Budget of Fifty-Six Thousand United States
Dollars (US$56,000) would be materially insufficient, the parties
will negotiate in good faith for an equitable adjustment to such
Annual Airfare Budget for the calendar year of 2003.
(c) Emergency Trips: As long as Employee remains in the employ of
eLoyalty, eLoyalty will, during the Initial Term of Employment,
reimburse Employee for the purchase of business class airfare for
Employee's emergency trips back to Australia, provided that eLoyalty
shall have the final determination in its sole discretion as to
whether any such trips proposed to be undertaken by Employee qualify
as an "emergency trip".
(d) Final Return Trip: If at the expiration of any Term or if Employee
is terminated by eLoyalty during the Term of Employment for any
reason other than for Serious Misconduct and Employee decides to
return back to Australia within twelve (12) months after such
termination or expiration of the Term of Employment, eLoyalty will
purchase for each of Employee, Employee's spouse and Employee's
child a business class airfare for a one-way trip from the U.S. to
NSW, Australia. This trip may be direct or
13
indirect, provided that the total cost is no greater than the cost
of a direct one-way trip from the U.S. to NSW, Australia.
3. Shipment of Household Goods and/or Personal Effects:
(a) Initial Moving Costs: eLoyalty will directly pay for the initial
shipment of Employee's furnishings and personal effects from
Employee's primary residence in Australia to the State of Illinois,
U.S., provided that Employee has obtained eLoyalty's prior approval
of such shipping costs payable by eLoyalty.
(b) Temporary Furniture Rental Pending Shipment: If there is an interim
period that Employee requires furnishings in the U.S. while waiting
for the arrival of Employee's furnishings that were shipped from
Australia to the U.S. as described in Paragraph 1(a) above, eLoyalty
will, as long as Employee remains in the employ of eLoyalty during
such interim period, reimburse Employee for the reasonable costs
incurred by Employee during this interim period for the rental of
any such temporary furnishings in the U.S., provided that Employee
has obtained eLoyalty's prior approval of such temporary furniture
rental costs reimbursable by eLoyalty.
(c) Return Moving Costs. If at the expiration of any Term or if Employee
is terminated by eLoyalty during the Term of Employment for any
reason other than for Serious Misconduct and Employee decides to
return back to Australia within twelve (12) months after such
termination or expiration of the Term of Employment, eLoyalty shall
directly pay for the reasonable costs of shipping Employee's
furnishings and personal effects from the State of Illinois, U.S. to
Employee's primary residence in Australia, provided that Employee
has obtained eLoyalty's prior approval of such return shipping costs
payable by eLoyalty.
4. Monthly Housing Allowance; Lease Deposit; and Utilities Setup Charges.
(a) Monthly Housing Allowance.
- In connection with Employee's relocation to the U.S.
hereunder, Employee has executed a written lease ("Lease")
with Xxxxxx Xxxxxx and Xxxxx Natanshon (collectively,
"Lessor") for housing in the U.S. for a period of two years,
commencing from February 1, 2002 ("Lease Effective Date") and
expiring on January 31, 2004 ("Lease Expiration Date").
- eLoyalty has directly paid to Lessor the net amount of Five
Thousand Dollars (U.S.$5,000) representing payment for the
first month (the month of February 2002) under the lease
("First Month Payment") and the net amount of Five Thousand
Five Hundred Dollars (U.S.$5,500)
14
representing payment for the final month (the month of January
2004) under the Lease ("Last Month Prepayment").
- In addition, as long as Employee remains in the employ of
eLoyalty until January 31, 2004, eLoyalty will, at eLoyalty's
sole discretion, either pay to Employee or directly to Lessor:
(i) the net amount of Five Thousand United States Dollars
(US$5,000) a month to be applied against Employee's monthly
payments required under the Lease from March 1, 2002 to
January 31, 2003, and (ii) the net amount of Five Thousand
Five Hundred United States Dollars (US$5,500) a month to be
applied against Employee's monthly payments required under the
Lease from February 1, 2003 to December 31, 2003. Such monthly
housing allowance will be paid by eLoyalty, at eLoyalty's sole
discretion, to Employee or the Lessor no later than the first
of each month from March 1, 2002.
- If eLoyalty is a guarantor of such Lease and Employee fails to
remit to Lessor any such monthly lease payments made by
eLoyalty to Employee hereunder, Employee will indemnify and
hold harmless eLoyalty (and its subsidiaries, parent and
sister companies and their agents, employees, officers and
directors) from any and all liabilities, costs and expenses
(included, but not limited to, attorney's fees) arising in
connection with any claims by Lessor or any third parties
against eLoyalty for such monthly payments due under the Lease
which have been paid by eLoyalty to Employee. If eLoyalty is a
guarantor of such Lease, Employee may not renew the Lease at
the Lease Expiration Date without eLoyalty's prior written
consent.
- Consistent with Section (I)(b) (General Relocation Rules), all
such monthly lease payments under this Paragraph 4(a) will
cease immediately if eLoyalty terminates Employee for Serious
Misconduct or Employee resigns at any time and Employee will
be solely responsible for all payments due under the Lease
after the date of such termination or resignation. In such
event, Employee will indemnify and hold harmless eLoyalty (and
its subsidiaries, parent and sister companies and their
agents, employees, officers and directors) from any and all
liabilities, costs and expenses (included, but not limited to,
attorney's fees) arising in connection with any claims by
Lessor or any third parties against eLoyalty for such payments
due under the Lease after the date of such termination or
resignation.
- In addition, if eLoyalty terminates Employee for Serious
Misconduct or Employee resigns at any time prior to January
31, 2003, Employee will repay to eLoyalty a pro-rata portion
of all monthly lease payments (including, without limitation,
a pro-rata portion of the First Month Payment and the Last
Month Prepayment) paid by eLoyalty to
15
Employee and/or Lessor hereunder as further described under
Section (I)(c) (General Relocation Rules).
- If Employee is terminated by eLoyalty for any reason other
than for Serious Misconduct during the Initial Term of
Employment, eLoyalty will, at its sole discretion, either
reimburse Employee, or pay the Lessor, for all monthly
payments remaining under the Lease from Employee's date of
termination to the Lease Expiration Date, provided that at
eLoyalty's request, Employee will fully cooperate with
eLoyalty in negotiating the early termination of the Lease
with Lessor.
(b) Lease Deposit. eLoyalty has paid directly to the Lessor, a one-time
security deposit ("Deposit") in the amount of one month's rent
required under the Lease. Employee will ensure that eLoyalty
receives a full refund of such Deposit upon the termination or
expiration of such Lease. Employee agrees that it will immediately
remit to eLoyalty all such Deposit proceeds refunded by the Lessor
to Employee. Notwithstanding anything contained in this Agreement,
if Employee resigns or is terminated by eLoyalty prior to January
31, 2004, Employee will immediately repay to eLoyalty all such
Deposit (not any pro-rata portion) paid by eLoyalty and Employee
shall be entitled to retain any such Deposit proceeds refunded by
the Lessor to Employee at the termination or expiration of such
Lease. eLoyalty reserves the right to offset its loss of any portion
of such Deposit against any amounts payable by eLoyalty to Employee
upon termination or expiration of the Term of Employment.
(c) Initial Utilities Set-Up Charges. Employee will be reimbursed for
all actual and reasonable one-time costs charged by the various
utility companies for the initial set up of the necessary utilities
(such as telephone, electric, gas, etc.) in Employee's first leased
home in the U.S. during the Initial Term of Employment.
5. Appliances. In the event that the first home Employee leases in the U.S.
does not have any necessary major appliances such as a washer, dryer or
dish washer, eLoyalty will, during the Initial Term of Employment,
reimburse Employee for Employee's purchase of such necessary major
appliances, provided that Employee remains in the employ of eLoyalty
during such Initial Term of Employment. eLoyalty will also, during the
Initial Term of the Agreement, either purchase or rent miscellaneous small
electrical appliances for Employee's use that are deemed reasonable and
necessary by eLoyalty, such as toaster, hair dryer, alarm clock,
microwave, or television, provided that Employee remains in the employ of
eLoyalty during such Initial Term of Employment. The aggregate amount of
such purchase and/or lease of the reasonably necessary major appliances
and small electrical appliances reimbursable by eLoyalty during the
Initial Term of the Agreement shall not exceed Seven Thousand Five Hundred
United States Dollars (US$7,500).
16
6. Automobile Lease Allowance; Automobile Registration Costs; Sale of
Australia Automobiles
(a) Automobile Lease Allowance.
- During the Initial Term of Employment, eLoyalty will, at
eLoyalty's sole discretion, pay to Employee or directly to the
applicable automobile leasing company ("Auto Lessor"), the net
amount of Seven Hundred and Fifteen United States Dollars
(US$715) per month to be applied against Employee's monthly
payments required for Employee's lease of an automobile in the
U.S ("Automobile Lease") until January 31, 2004 ("Automobile
Lease Expiration Date"). In addition to the foregoing,
eLoyalty has paid directly to the Auto Lessor, a one-time
lease acquisition payment ("Acquisition Payment") of One
Thousand Dollars (US$1,000), which covers the costs of
acquiring the necessary registration and license plates to
operate the leased automobile in the U.S. as well as other
related local governmental fees charged. In no event shall
eLoyalty be responsible for reimbursing or paying Employee or
Auto Lessor any other associated costs of operating such
leased automobile (e.g. gasoline, car insurance, repairs and
maintenance, renewal registration, vehicle stickers, etc.)
- Consistent with Section (I)(b) (General Relocation Rules), all
such monthly lease payments under this Paragraph 6(a) will
cease immediately if eLoyalty terminates Employee for Serious
Misconduct or Employee resigns at any time during the Initial
Term of Employment, and Employee will be solely responsible
for all payments due under the Automobile Lease after the date
of such termination or resignation. In such event, Employee
will indemnify and hold harmless eLoyalty (and its
subsidiaries, parent and sister companies and their agents,
employees, officers and directors) from any and all
liabilities, costs and expenses (included, but not limited to,
attorney's fees) arising in connection with any claims by the
Auto Lessor or any third parties against eLoyalty for such
payments due under the Automobile Lease after the date of such
termination or resignation.
- In addition, if eLoyalty terminates Employee for Serious
Misconduct or Employee resigns at any time prior to January
31, 2003, Employee will repay to eLoyalty a pro-rata portion
of all monthly lease payments paid by eLoyalty to Employee
hereunder as further described under Section (I)(c) (General
Relocation Rules).
17
- If Employee is terminated by eLoyalty for any reason other
than for Serious Misconduct during the Initial Term of
Employment, eLoyalty will, at its sole discretion, and either
reimburse Employee, or pay to the Auto Lessor, for all monthly
payments remaining under the Automobile Lease from Employee's
date of termination to the Automobile Lease Expiration Date,
provided that at eLoyalty's request, Employee will fully
cooperate with eLoyalty in negotiating the early termination
of the Auto Lease with Auto Lessor.
(b) Sale of Employee's Automobiles in Australia. eLoyalty will reimburse
Employee for losses that Employee incurs as a result of the sale of
two automobiles owned by Employee in Australia in connection with
Employee's relocation to the U.S., provided that such reimbursement
by eLoyalty shall not exceed Sixteen Thousand United Stated Dollars
(US$16,000) for both vehicles and Employee must have used Employee's
best efforts to mitigate any such losses.
7. Land Tax. As long as Employee remains in the employ of eLoyalty, eLoyalty
will, during the Initial Term of Employment, reimburse Employee for the
reasonable annual cost of Employee's land tax xxxx on Employee's current
primary residence in Australia (which is the special tax incurred by
Employee as Employee will not be living at such primary residence in
Australia), which are above and beyond the normal real estate taxes
Employee pays on such primary residence and which solely are attributable
to Employee's absence from such residence as a result of Employee's
relocation to the U.S. to work for eLoyalty. Employee estimates that as of
the Effective Date of this Agreement, such amount reimbursable by eLoyalty
is approximately US$4,000 and that the first installment would be payable
in July 2002.
8. Visa Processing. As long as Employee remains in the employ of eLoyalty,
eLoyalty will, during the Initial Term of Employment, pay, or reimburse
Employee, for reasonable costs to obtain the proper work authorization
from the U.S. Immigration and Naturalization Office (INS) for Employee's
U.S. relocation and any necessary dependent U.S. visas required for
Employee's spouse and Employee's child in connection with their relocation
to the U.S. as a result of Employee's employment by eLoyalty in the U.S.
9. Taxes.
(a) Grossing up for Taxes. As long as Employee remains in the employ of
eLoyalty, eLoyalty will, during the Initial Term of Employment,
reimburse Employee for any incremental taxes actually incurred by
Employee (both US and foreign) under the items set forth in
Paragraphs 1 through 8 above. eLoyalty will calculate any
incremental tax resulting from these items and gross-up Employee's
compensation in an amount adequate to offset the increased tax cost.
18
(b) Tax Returns Preparation Costs. As long as Employee remains in the
employ of eLoyalty, eLoyalty will, during the Initial Term of
Employment, pay PriceWaterhouseCoopers (PWC) to prepare both
Employee's annual U.S. and Australian income tax returns.
10. Outplacement Assistance. If Employee's employment is terminated by
eLoyalty for any reason other than for Serious Misconduct, eLoyalty will
provide Employee with up to ninety (90) days of reasonable outplacement
assistance, in the geography elected by the Employee, from the
outplacement firm of Drake Beam (or another similar outplacement firm
designated by eLoyalty) as such services are generally provided to
terminated eLoyalty employees.
19
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made
and entered into as of the 20th day of October, 2003, by and between eLoyalty
Corporation, a Delaware corporation ("eLoyalty"), and Xxxxx Xxxxxx, a resident
of the State of Illinois ("Employee").
RECITALS
A. eLoyalty and Employee are parties to that certain Employment Agreement,
dated as of January 21, 2002 (the "Agreement"), setting forth the terms and
conditions of Employee's employment with eLoyalty.
B. The parties desire to amend the Agreement as set forth herein to
reflect the changes in the terms and conditions of Employee's employment
resulting the mutual decision to extend the term of Employee's employment.
NOW, THEREFORE, in consideration of the Recitals, the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. All capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to such terms in the Agreement.
2. The Term of Employment is hereby extended for a period of three (3)
successive Renewal Terms (the third such Renewal Term being a partial term of
eleven (11) months), ending on December 31, 2006.
3. The Agreement hereby is amended by deleting Exhibit B attached thereto
and inserting in lieu thereof Attachment 1 attached hereto.
4. The Agreement shall remain unmodified other than as expressly set forth
herein and, as so modified, shall remain in full force and effect.
5. This Amendment shall be governed in all respects by the laws of the
State of Illinois.
6. This Amendment shall be effective only upon approval hereof by the
Compensation Committee of eLoyalty's Board of Directors, which approval shall be
sought at the next regular meeting of such committee, currently scheduled for
November 6, 2003.
IN WITNESS WHEREOF, Employee and the duly authorized officer of eLoyalty have
executed this Amendment as of the date set forth above.
Employee eLoyalty Corporation
/s/ Xxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxx
---------------- -------------------
Xxxxx Xxxxxx Title: President & Chief Executive Officer
2
ATTACHMENT 1
EXHIBIT B
REIMBURSABLE RELOCATION EXPENSES
(I) GENERAL RELOCATION RULES:
Employee acknowledges and agrees that:
(a) The terms of this Exhibit B shall apply only during the Initial Term
of Employment and the first three (3) Renewal Terms (the third such Renewal Term
being a partial term of eleven (11) months) (collectively, the "Applicable
Term"). In the event that Employee desires for the Agreement to be extended for
one or more additional Renewal Terms, then, not later that thirty (30) days
prior to the expiration of the Applicable Term, Employee shall initiate
discussions with eLoyalty regarding the reimbursement and allowance obligations
of eLoyalty that will apply during any such Renewal Term and the parties will
negotiate in good faith to reach agreement regarding such obligations, to be set
forth in a substitute Exhibit B.
(b) If Employee resigns from her employment with eLoyalty, or is
terminated by eLoyalty for Serious Misconduct at anytime during the Term of
Employment, Employee's rights to receive reimbursement of all relocation
expenses and payment of any all allowances, if any, described hereunder
(collectively, "Relocation Costs") will terminate immediately, including,
without limitation, Employee's rights to receive any reimbursement for the final
return trip as set forth in Section II, Paragraph 1(c) below, reimbursement for
the return moving costs as set forth in Section II, Paragraph 2 below and to
receive outplacement assistance as set forth in Section II, Paragraph 8 below.
In such event, Employee will be solely responsible for any costs or expenses
incurred by Employee after the termination of Employee's employment, including
without limitation, any monthly payments required for Employee's housing as a
result of Employee's relocation to the U.S. Employee will indemnify and hold
harmless eLoyalty (and its subsidiaries, parent and sister companies and their
agents, employees, officers and directors) from any and all liabilities, costs
and expenses (included, but not limited to, attorney's fees) arising in
connection with any claims by third parties against eLoyalty with respect to any
such costs or expenses incurred by Employee after the date of Employee's
termination of employment.
(c) If Employee is terminated by eLoyalty for any reason other than for
Serious Misconduct during the Term of Employment, Employee's rights to receive
reimbursement of all Relocation Costs, if any, will also terminate immediately,
except for: (i) reimbursement of monthly housing payments until December 31,
2006 as described in Section II, Paragraph (3)(a) hereunder; (ii) reimbursement
for the final return trip as set forth in Section II, Paragraph 1(c) below;
(iii) reimbursement for the return moving costs as set forth in Section II,
Paragraph 2 below; (iv) payment of the Equity Protection Payment (to the extent
payable in accordance with the terms thereof) set forth
1
in Section II, Paragraph 3(c) below, and (v) outplacement assistance as set
forth in Section II, Paragraph 8 below.
(d) If permitted under applicable laws, eLoyalty reserves the right to
offset all repayments due from Employee hereunder against amounts payable by
eLoyalty to Employee under this Agreement, if any, upon termination or
expiration of the Term of Employment.
(e) eLoyalty shall have the right to proceed against Employee or
Employee's property in a court in any location to enable eLoyalty to enforce a
judgment or other court order entered in favor of eLoyalty. Employee waives any
objection that Employee may have to the location of the court in which eLoyalty
has commenced a proceeding.
(f) Employee must submit original receipts for all expense reimbursement
set forth herein.
(II) REIMBURSABLE RELOCATION EXPENSES AND ALLOWANCES:
Subject to the provisions of Section I above, eLoyalty agrees to reimburse
Employee for those relocation costs listed below:
1. Airfares.
(a) Annual Trips: As long as Employee remains in the employ of eLoyalty
, eLoyalty will, during the Applicable Term, reimburse Employee for
Employee's purchase of roundtrip airfares from the United States to
Australia, for Employee, Employee's spouse, Employee's child and/or
Employee's spouse's parents, provided that such reimbursement shall
not exceed the net amount of Fifty-Six Thousand United States
Dollars (US$56,000) per year ("Annual Airfare Budget").
(b) Emergency Trips: As long as Employee remains in the employ of
eLoyalty, eLoyalty will, during the Applicable Term, reimburse
Employee for the purchase of business class airfare for Employee's
emergency trips back to Australia, provided that eLoyalty shall have
the final determination in its sole discretion as to whether any
such trips proposed to be undertaken by Employee qualify as an
"emergency trip".
(c) Final Return Trip: If at the expiration of the Term of Employment or
if Employee is terminated by eLoyalty during the Term of Employment
for any reason other than for Serious Misconduct and Employee
decides to return back to Australia within twelve (12) months after
such termination or expiration of the Term of Employment, eLoyalty
will purchase for each of Employee, Employee's spouse and Employee's
child a business class airfare for a one-way trip from the U.S. to
NSW, Australia. This trip may
2
be direct or indirect, provided that the total cost is no greater
than the cost of a direct one-way trip from the U.S. to NSW,
Australia.
2. Return Shipment of Household Goods and/or Personal Effects. If at the
expiration of the Term of Employment or if Employee is terminated by eLoyalty
during the Term of Employment for any reason other than for Serious Misconduct
and Employee decides to return back to Australia within twelve (12) months after
such termination or expiration of the Term of Employment, eLoyalty shall
directly pay for the reasonable costs of shipping Employee's furnishings and
personal effects from the State of Illinois, U.S. to Employee's primary
residence in Australia, provided that Employee has obtained eLoyalty's prior
approval of such return shipping costs payable by eLoyalty.
3. Monthly Housing Allowance; Lease Deposit; and Principal Protection.
(a) Monthly Housing Allowance.
- In connection with Employee's relocation to the U.S.
hereunder, Employee has executed a written lease ("Lease")
with Xxxxxx Xxxxxx and Xxxxx Natanshon (collectively,
"Lessor") for housing in the U.S. for a period of two years,
commencing from February 1, 2002 ("Lease Effective Date") and
expiring on January 31, 2004 ("Lease Expiration Date").
- eLoyalty has directly paid to Lessor the net amount of Five
Thousand Five Hundred Dollars (U.S.$5,500) representing
payment for the final month (the month of January 2004) under
the Lease ("Last Month Prepayment").
- Employee has contracted to purchase a home located at 000 X.
Xxxxxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxx 00000, to serve as her
primary residence through at least December 31, 2006 (the
"Purchased Residence").
- As long as Employee remains in the employ of eLoyalty until
December 31, 2006, eLoyalty will pay to Employee the net
amount of Five Thousand Five Hundred United States Dollars
(US$5,500) a month to be applied against either (i) Employee's
monthly payments required under the Lease or (ii) Employee's
financing payments for the Purchased Residence. Such monthly
housing allowance will be paid by eLoyalty to Employee no
later than the first of each month. eLoyalty will not be
obligated to make such payment for the month of January 2004,
as eLoyalty already has made the Last Month Prepayment.
- If eLoyalty is a guarantor of such Lease and Employee fails to
remit to Lessor any such monthly lease payments made by
eLoyalty to
3
Employee hereunder, Employee will indemnify and hold harmless
eLoyalty (and its subsidiaries, parent and sister companies
and their agents, employees, officers and directors) from any
and all liabilities, costs and expenses (included, but not
limited to, attorney's fees) arising in connection with any
claims by Lessor or any third parties against eLoyalty for
such monthly payments due under the Lease which have been paid
by eLoyalty to Employee. If eLoyalty is a guarantor of such
Lease, Employee may not renew the Lease at the Lease
Expiration Date without eLoyalty's prior written consent.
- Consistent with Section I, Paragraph (b), all such monthly
housing payments under this Paragraph 4(a) will cease
immediately if eLoyalty terminates Employee for Serious
Misconduct or Employee resigns at any time and Employee will
have no claim against eLoyalty therefor after the date of such
termination or resignation. In such event, Employee will
indemnify and hold harmless eLoyalty (and its subsidiaries,
parent and sister companies and their agents, employees,
officers and directors) from any and all liabilities, costs
and expenses (included, but not limited to, attorney's fees)
arising in connection with any claims by Lessor or any third
parties against eLoyalty for any payments due under the Lease
after the date of such termination or resignation.
- If Employee is terminated by eLoyalty for any reason other
than for Serious Misconduct during the Applicable Term,
eLoyalty will continue to pay Employee her monthly housing
allowance until the earliest of (i) the date that Employee
both sells the Purchased Residence and makes her final return
trip to Australia, (ii) twelve (12) months following the
effective date of termination and (iii) the end of the
Applicable Term.
(b) Lease Deposit. eLoyalty has paid directly to the Lessor, a one-time
security deposit ("Deposit") in the amount of one month's rent
required under the Lease. Employee will ensure that eLoyalty
receives a full refund of such Deposit upon the termination or
expiration of such Lease. Employee agrees that it will immediately
remit to eLoyalty all such Deposit proceeds refunded by the Lessor
to Employee. Notwithstanding anything contained in this Agreement,
if Employee resigns or is terminated by eLoyalty prior to January
31, 2004, Employee will immediately repay to eLoyalty all such
Deposit (not any pro-rata portion) paid by eLoyalty and Employee
shall be entitled to retain any such Deposit proceeds refunded by
the Lessor to Employee at the termination or expiration of such
Lease. eLoyalty reserves the right to offset its loss of any portion
of such Deposit against any amounts payable by eLoyalty to Employee
upon termination or expiration of the Term of Employment.
4
(c) Initial Equity Protection.
- In connection with the purchase of the Purchased Residence,
Employee has made an Initial Equity Investment of $276,000,
being equal to the difference between (i) the contract
purchase price for the Purchased Residence (the "Purchase
Price") minus (ii) the original principal amount of the
mortgage loan for the Purchased Residence (the "Equity
Investment").
- In the event that, within twelve (12) months following the
earlier of (i) expiration of the Applicable Term and (ii)
termination of Employee's employment by eLoyalty, other than
for Serious Misconduct, Employee sells the Purchased Residence
after making a reasonable, good faith effort to maximize the
sales price therefor, and the contract sale price, less real
estate broker's commission payable by Employee with respect to
such sale, but including real property tax pro ration
allocations (the "Sale Price"), is such that Employee will not
receive amounts in connection with such sale equal to or in
excess of the Initial Equity Investment, then eLoyalty shall
pay to Employee, within ten (10) days following the closing of
such sale and written notification of the Sale Price, an
amount equal to the difference between the Initial Equity
Investment and the amount so received by Employee (such
payment hereinafter referred to as the "Equity Protection
Payment").
- eLoyalty's obligation to make the Equity Protection Payment
shall be subject to the following conditions:
- Employee shall make all reasonable, good faith
efforts to maximize the Sale Price.
- Employee shall maintain the Purchased Residence at
all times in good condition, ordinary wear and
tear excepted.
- Employee shall undertake no voluntary act with
respect to the Purchased Residence, including,
without limitation, any modification thereto, that
has the effect of reducing the market value
thereof.
- Employee shall maintain adequate insurance on the
Purchased Residence and, in the event of a loss
that reduces the value of Purchased Residence at
the time of its sale, the Sale Price shall be
deemed increased by the amount of any applicable
insurance recovery and the payment of the Equity
Protection Payment will be delayed until such
amount is reasonably determinable.
5
- Employee shall provide eLoyalty with prior written
notice (as promptly as is practicable and in no
event later than one business day prior to the
following described event) of (i) her intent to
enter into a sale contract for the Purchased
Residence that would result in an Equity
Protection Payment and (ii) any amendment or
modification to such a sale contract that would
increase the amount of any Equity Protection
Payment.
(d) Moving Costs. eLoyalty shall reimburse Employee for all costs
incurred by her and associated with her relocation to the Purchased
Residence, up to a maximum of Five Thousand Dollars ($5,000) and
subject to the presentation of appropriate documentation of the
incurrence thereof.
4. Automobile Lease Allowance; Automobile Registration Costs;
(a) Automobile Lease Allowance.
- During the Initial Term of Employment, eLoyalty will, at
eLoyalty's sole discretion, pay to Employee or directly to the
applicable automobile leasing company ("Auto Lessor"), the net
amount of Seven Hundred and Fifteen United States Dollars
(US$715) per month to be applied against Employee's monthly
payments required for Employee's lease of an automobile (the
"Leased Automobile") in the U.S ("Automobile Lease") until
January 31, 2004 ("Automobile Lease Expiration Date"). In
addition to the foregoing, eLoyalty has paid directly to the
Auto Lessor, a one-time lease acquisition payment
("Acquisition Payment") of One Thousand Dollars (US$1,000),
which covers the costs of acquiring the necessary registration
and license plates to operate the Leased Automobile in the
U.S. as well as other related local governmental fees charged.
In no event shall eLoyalty be responsible for reimbursing or
paying Employee or Auto Lessor any other associated costs of
operating such Leased Automobile (e.g. gasoline, car
insurance, repairs and maintenance, renewal registration,
vehicle stickers, etc.)
- Consistent with Section (I)(b) (General Relocation Rules), all
such monthly lease payments under this Paragraph 6(a) will
cease immediately if eLoyalty terminates Employee for Serious
Misconduct or Employee resigns at any time prior to the
Automobile Lease Expiration Date, and Employee will be solely
responsible for all payments due under the Automobile Lease
after the date of such termination or resignation and the
Buy-Out Payment described below shall not be made.. In such
event, Employee will indemnify and hold
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harmless eLoyalty (and its subsidiaries, parent and sister
companies and their agents, employees, officers and directors)
from any and all liabilities, costs and expenses (included,
but not limited to, attorney's fees) arising in connection
with any claims by the Auto Lessor or any third parties
against eLoyalty for such payments due under the Automobile
Lease after the date of such termination or resignation.
- If Employee is terminated by eLoyalty for any reason other
than for Serious Misconduct prior to the Automobile Lease
Expiration Date, eLoyalty will, at its sole discretion, either
reimburse Employee, or pay to the Auto Lessor, for all monthly
payments remaining under the Automobile Lease from Employee's
date of termination to the Automobile Lease Expiration Date,
provided that at eLoyalty's request, Employee will fully
cooperate with eLoyalty in negotiating the early termination
of the Auto Lease with Auto Lessor.
- On or prior, as mutually determined by eLoyalty and Employee,
the Automobile Lease Expiration Date, eLoyalty shall pay to
Employee an amount equal to the lesser of (i) the amount
necessary to purchase the Leased Automobile under the
Automobile Lease and (ii) the portion of Employee's Annual
Airfare Budget for 2003, which amount Employee shall pay to
Auto Lessor or its designee in order to purchase the Leased
Automobile.
- Upon any sale of the Leased Automobile by Employee, Employee
shall use commercially reasonable efforts to maximize the sale
proceeds thereof and shall promptly remit such proceeds to
eLoyalty.
5. Land Tax. As long as Employee remains in the employ of eLoyalty, eLoyalty
will, during the Applicable Term, reimburse Employee for the reasonable
annual cost of Employee's land tax xxxx on Employee's current primary
residence in Australia (which is the special tax incurred by Employee as
Employee will not be living at such primary residence in Australia), which
are above and beyond the normal real estate taxes Employee pays on such
primary residence and which solely are attributable to Employee's absence
from such residence as a result of Employee's relocation to the U.S. to
work for eLoyalty.
6. Visa Processing. As long as Employee remains in the employ of eLoyalty,
eLoyalty will, during the Applicable Term, pay, or reimburse Employee, for
reasonable costs to obtain the proper work authorization from the U.S.
Immigration and Naturalization Office (INS) for Employee's U.S. relocation
and any necessary dependent U.S. visas required for Employee's spouse and
Employee's child in connection with their relocation to the U.S. as a
result of Employee's employment by eLoyalty in the U.S.
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7. Taxes.
(a) Grossing up for Taxes. As long as Employee remains in the employ of
eLoyalty, eLoyalty will, during the Initial Term of Employment,
reimburse Employee for any incremental taxes actually incurred by
Employee (both US and foreign) under the items set forth in
Paragraphs 1 through 8 above. eLoyalty will calculate any
incremental tax resulting from these items and gross-up Employee's
compensation in an amount adequate to offset the increased tax cost.
(b) Tax Returns Preparation Costs. As long as Employee remains in the
employ of eLoyalty, eLoyalty will, during the Initial Term of
Employment, pay PriceWaterhouseCoopers (PWC) to prepare both
Employee's annual U.S. and Australian income tax returns.
8. Outplacement Assistance. If Employee's employment is terminated by
eLoyalty for any reason other than for Serious Misconduct, eLoyalty will
provide Employee with up to ninety (90) days of reasonable outplacement
assistance, in the geography elected by the Employee, from the
outplacement firm of Drake Beam (or another similar outplacement firm
designated by eLoyalty) as such services are generally provided to
terminated eLoyalty employees.
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