EMPLOYMENT AGREEMENT
Exhibit 99.1
EXECUTION COPY
eLoyalty Corporation, a Delaware corporation (“eLoyalty”), and Xxx Xxxxxx (“Employee”) enter
into this Employment Agreement (this “Agreement”) effective as of March 5, 2001 (the “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, responsible
for strategic marketing and business development. Employee shall report to eLoyalty’s chief
executive officer and shall have the normal responsibilities, duties and authorities inherent in
his position. Employee’s principal place of employment shall be at eLoyalty’s corporate
headquarters. 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 (“Term of Employment”) covered by this Agreement
shall commence as of the Effective Date and continue until terminated in accordance with the terms
hereof.
3. Termination: This Agreement may be terminated as follows:
(a) Involuntary Termination. eLoyalty may terminate Employee’s employment for any reason by
giving Employee written notice of termination, which termination shall be effective as of such date
within the 90 day period beginning on the date of such notice as is specified therein (“Termination
Date”). Until such Termination Date, Employee shall make a good faith effort to satisfy those
professional obligations requested to be performed by eLoyalty, which may include transferring
duties and assisting in the orderly transition of client responsibilities, including meeting with
clients and returning all eLoyalty and client confidential material. If Employee’s employment with
eLoyalty is terminated by eLoyalty for any reason other than Serious Misconduct, Employee shall
receive:
(i) a lump sum payment within seven days of the Termination Date equal to the sum of Employee’s
annual base salary as in effect on the Termination Date, plus an amount equal to the average annual
bonus earned during the two years immediately preceding the Termination Date (for any year prior to
2001, the bonus earned shall be deemed to be equal to Employee’s base salary on the Effective
Date); and
(ii) with respect to any stock options outstanding on the Termination Date, continued vesting
of such stock options through the first anniversary of the Termination Date, as provided in the
respective applicable stock option agreements.
(b) Serious Misconduct. eLoyalty may terminate Employee’s employment immediately upon
written notice and with no continuation of salary, benefits or option vesting if Employee engages
in “Serious Misconduct.” For purposes of this Agreement, “Serious Misconduct” means embezzlement or
misappropriation of corporate funds, conviction of a felony, material breach of this Agreement or
willful and continued failure to substantially perform his duties or responsibilities. Prior to any
termination for Serious Misconduct, eLoyalty shall provide the Employee with fifteen days’ notice
and an opportunity to be heard at a meeting of the Board of Directors and, in the case of a willful
failure to perform his duties and responsibilities, an opportunity to cure.
(c) Constructive Discharge. A Constructive Discharge by eLoyalty shall be treated for all
purposes of this Agreement as a termination by eLoyalty for a reason other than Serious Misconduct
and shall entitle Employee to the benefits set forth in paragraph 3 (a) above. If (x) Employee
provides written notice to eLoyalty of the occurrence of Good Reason (as defined below) within a
reasonable time after Employee has knowledge of the circumstances constituting Good Reason, which
notice shall specifically identify the circumstances which Employee believes constitute Good
Reason; (y) eLoyalty fails to correct the circumstances within 15 days after such notice; and (z)
the Employee resigns within ninety days after the date of delivery of the notice referred to in
clause (x) above, then Employee shall be considered to have been subject to a Constructive
Discharge by eLoyalty. For purposes of this Agreement, “Good Reason” shall mean the occurrence of
any of the following events without Employee’s consent:
(i) a reduction by eLoyalty in Employee’s base salary or a reduction in his target bonus to less
than 100% of base salary;
(ii) diminutions in the Employee’s duties or responsibilities which are material in the aggregate;
(iii) a change in Employee’s reporting relationship such that Employee no longer reports directly
to the chief executive officer of eLoyalty or, if eLoyalty is acquired by any other entity, the
chief executive officer of the ultimate parent of eLoyalty;
(iv) a relocation of eLoyalty’s corporate offices or Employee’s principal place of employment to a
location outside of Lake, Xxxx and DuPage counties;
(v) the failure of eLoyalty to obtain a satisfactory agreement from any successor to all or
substantially all of the assets or business of eLoyalty to assume and agree to perform this
Agreement within 15 days after a merger, consolidation, sale or similar transaction; or
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(vi) a material breach of this Agreement by eLoyalty.
(d) Resignation. Employee may terminate his employment upon giving eLoyalty 90 days written
notice. eLoyalty may make the termination effective at any time within the 90 day notice period.
During this period Employee shall make a good faith effort to satisfy those professional
obligations requested to be performed by eLoyalty, which may include transferring duties and
assisting in the transition of client responsibilities, including meeting with clients.
(e) Disability. eLoyalty or Employee may terminate Employee’s employment at any time by
reason of Employee’s Disability. A termination of Employee’s employment by reason of Disability
shall be treated for all purposes of this Agreement as a termination by eLoyalty for a reason other
than Serious Misconduct and shall entitle Employee to the benefits set forth in paragraph 3(a)(i)
above. For purposes of this Agreement, “Disability” means Employee’s inability, due to physical or
mental incapacity, to substantially perform his duties and responsibilities contemplated by this
Agreement for a period of not less than 180 days. In the event of a dispute as to whether Employee
is disabled, the determination shall be made by a licensed medical doctor selected by the eLoyalty
and agreed to by Employee. If the parties cannot agree on a medical doctor, each party shall select
a medical doctor and the two doctors shall select a third who shall be the approved medical doctor
for this purpose. Employee agrees to submit to such tests and examinations as such medical doctor
shall deem appropriate.
(f) Death. A termination of Employee’s employment by reason of death shall be treated for
all purposes of this Agreement as a termination by eLoyalty for a reason other than Serious
Misconduct and shall entitle Employee’s estate to the benefits set forth in paragraph 3(a)(i)
above.
4. Salary: As compensation for Employee’s services, eLoyalty shall pay Employee a base salary at
the annual rate listed on Exhibit A to this Agreement. Employee’s base salary shall be subject to
annual review and may, by mutual agreement of eLoyalty and Employee, be adjusted from that listed
in Exhibit A according to Employee’s responsibilities, capabilities and performance during the
preceding year.
5. Bonuses: (a) Employee shall be eligible to receive a sign-on bonus in the amount set forth
on Exhibit A to this Agreement in the form of a loan evidenced by, and subject to the terms and
conditions of, a promissory note (the “Promissory Note”). The loan will be made as of the Effective
Date, or as soon thereafter as is practicable after eLoyalty has received Employee’s signed
Promissory Note. The loan will be fully forgiven on the earliest to occur of (i) 24 months after
the date the loan was made, assuming Employee’s employment continues through such date; (ii) any
termination of employment by eLoyalty for reasons other than Serious Misconduct; (iii) any
termination of employment by Employee pursuant to a Constructive Discharge; (iv) any termination of
employment by eLoyalty or Employee for Employee’s Disability; or (v) Employee’s death. Employee
will be obligated to repay his loan with accrued interest thereon in accordance with the terms of
the Promissory Note only if his employment terminates on
account of his resignation other than pursuant to a Constructive Discharge or eLoyalty’s
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termination of his employment for Serious Misconduct before the expiration of such 24-month period.
(b) In addition, Employee shall be eligible to receive a performance bonus under this paragraph (b)
based upon the attainment of objectives determined in accordance with and subject to the terms and
conditions of eLoyalty’s then applicable discretionary bonus program. Employee’s target bonus for
the 2001 calendar year shall equal 100% of the base salary listed in Exhibit A to this Agreement,
with 75% of this 2001 target bonus amount guaranteed (subject to Employee’s continued employment
with eLoyalty) and 25% thereof required to be earned based upon the attainment of mutually agreed
objectives, and shall otherwise be subject to the terms and conditions of eLoyalty’s then current
bonus program. For calendar years after 2001, Employee’s target bonus for any year shall not be
less than 100% of his base salary for such year and, subject to approval of the Compensation
Committee of eLoyalty’s Board of Directors, shall be based upon objectives mutually agreed upon by
Employee and eLoyalty’s chief executive office.
6. Stock Option: As of the Effective Date, Employee shall be granted a nonqualified stock option
(the “Option”) to purchase the number of shares of common stock of eLoyalty set forth on Exhibit A
to this Agreement. The Option shall be granted under and in accordance with the provisions of the
eLoyalty 1999 Stock Incentive Plan (the “Incentive Plan”), and will be subject, in all respects, to
the terms and conditions of the Incentive Plan. In addition, the Option will be evidenced by, and
subject to the terms and conditions of, a Stock Option Agreement in the form attached hereto (the
“Option Agreement”) reflecting the vesting schedule set forth on Exhibit A hereto, as well as the
other customary terms and conditions applicable to options granted under the Incentive Plan. Each
option granted to Employee after the Effective Date shall provide for accelerated vesting upon a
change in control of eLoyalty or death or Disability on a basis no less favorable than the terms of
the Option.
7. Employee Benefits: During the Term of Employment, Employee shall be entitled to participate in
such employee benefit plans, including eLoyalty’s 401(k) plan and deferred compensation plan and
its group life and health insurance and other medical benefits, and shall receive all other fringe
benefits, including 22 paid vacation days, as eLoyalty may make available generally to its Senior
Vice Presidents.
8. Business Expenses: eLoyalty shall reimburse Employee for all reasonable and necessary business
expenses incurred by Employee in performing Employee’s duties including wireless service and
business use of an automobile in accordance with eLoyalty’s expense reimbursement policies.
Employee shall provide eLoyalty with supporting documentation sufficient to satisfy reporting
requirements of the Internal Revenue Service and eLoyalty. eLoyalty’s determination as to
reasonableness and necessity shall be final.
9. 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
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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; computer software;
and other Trade Secrets (as defined in paragraph 11) of eLoyalty, its customers and its vendors.
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.
(c) Without limiting the obligations of paragraph 9(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 any client of eLoyalty for whom Employee performed services, or 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 the
foregoing shall not preclude Employee from providing consulting or related services which are not
competitive with consulting or related services then provided by eLoyalty to its customers or with
consulting or related services which senior management of eLoyalty is actively planning for
eLoyalty to provide to its customers.
(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.
10. Remedies: Employee recognizes and agrees that a breach of any or all of the provisions of
paragraph 9 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
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inadequate remedy. Accordingly, Employee acknowledges that eLoyalty shall therefore be entitled to
an order enjoining any further breaches by the Employee.
11. Agreements Regarding Prior Employment.
(a)
As used in this Agreement, the following terms have the following meanings.
“Trade Secret” means the whole or any portion of the property of a person (the “Owner”) consisting
of any information, pattern, compilation, data, list, document, memorandum, process, program,
device, method, technique, formula or improvement, whether patentable or not, relating to the
business of the Owner (i) of which Employee became aware as a consequence of or through his
relationship with the Owner; (ii) which derives independent economic value, actual or potential,
form not being generally known to the public or to other persons who can obtain economic value from
its disclosure or use; and (iii) which is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. Assuming these three criteria are met, Trade Secrets shall
include information relating to the financial affairs, customers, employees, employees’
compensation, research, development, inventions, existing and future products and services, plans
and designs, and marketing of the Owner. Trade Secrets shall not include any data or information
that has been voluntarily disclosed to the public by the Owner or become generally known to the
public.
(b) To induce eLoyalty to enter into this Agreement, Employee represents to eLoyalty that Employee
has not disclosed to eLoyalty, directly or indirectly, any Trade Secret of any former employer and
that Employee does not believe that the performance of his duties and responsibilities arising from
this Agreement will require his reliance on, use of or disclosure of any Trade Secret of any former
employer.
(c) Employee and eLoyalty hereby covenant to each other that neither eLoyalty nor Employee intends
to obtain, learn, disclose or use any Trade Secret of any former employer of Employee. Employee
will not disclose to eLoyalty any Trade Secret of a former employer, and eLoyalty will not request
Employee to make any such disclosure.
12. 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, 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 (including reimbursement of Employee’s expenses and, if Employee is no longer in the
employ of eLoyalty, reasonable per diem compensation to Employee), provide eLoyalty with
such assurances as is necessary to secure a patent or copyright.
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13. 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 affiliate of eLoyalty with the consent of Employee. This Agreement shall be binding
upon and inure to the benefit of any purchaser or transferee of a majority of eLoyalty’s
outstanding capital stock or a purchaser or transferee of all, or substantially all, of the assets
of eLoyalty.
14. Notices: All notices hereunder shall be in writing, except for notice of termination of
employment, which may be oral if confirmed in writing within 14 days. Notices intended for eLoyalty
shall be sent by registered or certified mail addressed to it at 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.
15. Entire Agreement: This Agreement and Exhibit A attached hereto, together with the other
plans, programs and agreements referred to herein, constitute the entire agreement between eLoyalty
and Employee with respect to the subject matter hereof. 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. eLoyalty shall prepare amendments to
Exhibit A from time to time as necessary to reflect changes to the terms set forth therein.
16. Waiver of Breach: No waiver by any party hereto of a breach of any provision of this
Agreement by any other party, or of compliance with any condition or provision of this Agreement to
be performed by such other party, will operate or be construed as a waiver of any subsequent breach
by such other party of any similar or dissimilar provisions and conditions at the same or any prior
or subsequent time. The failure of any party hereto to take any action by reason of such breach
will not deprive such party of the right to take action at any time while such breach continues.
17. Applicable Law: This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois.
18. 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 9 of this Agreement) shall be resolved under the Expedited
Commercial Rules of the American Arbitration Association. 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 9 or 10 of this Agreement
shall be brought in the Circuit Court for Xxxx County, Illinois.
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19. 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, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
20. Acknowledgement: Employee acknowledges that Employee has read, understood and accepts the
provisions of this Agreement.
| eLoyalty Corporation | Xxx Xxxxxx | |||||||
By: /s/
Xxxxx X. Xxxxxx
|
/s/ Xxx Xxxxxx | |||||||
|
|
||||||||
| Xxxxx X. Xxxxxx | ||||||||
| President and Chief Executive Officer | ||||||||
Date:
|
January 8, 2001 | Date: January 2, 2001 | ||||||
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EXHIBIT A
EMPLOYEE:
|
Xxx Xxxxxx | |
POSITION:
|
Senior Vice President | |
BASE SALARY:
|
$400,000 per annum | |
SIGN-ON BONUS/LOAN:
|
$250,000 | |
EFFECTIVE DATE:
|
Xxxxx 0, 0000 | |
XXXXX OPTION:
|
Initial grant as of the Effective Date, under the Incentive Plan, of a nonqualified option to
purchase 250,000 shares of eLoyalty Corporation common stock, having the following exercise price and normal vesting schedule, subject to the terms and conditions of the Incentive Plan and the applicable Option Agreement: |
|
| Exercise Price: Closing price per share of eLoyalty common stock on the date of grant. | ||
| Vesting Schedule: The
Option shall become vested and exercisable with respect to 62,500 shares
(25% of the shares covered by the Option) on the last day of the month in which the first anniversary of the Effective Date occurs (subject to Employee’s continued employment with eLoyalty). The remaining 187,500 shares covered by the Option shall vest and become exercisable in equal monthly increments (each equal to 1/36 of such remaining shares) on the last day of each month over the thirty-six (36) consecutive month period beginning in the month following the month in which the first anniversary of the Effective Date occurs (subject to Employee’s continued employment with eLoyalty). The option shall be subject to accelerated vesting upon a change in control of eLoyalty or in the event of death or termination of employment by |
Exhibit A - 1
| reason of Disability or Constructive Discharge in accordance with the terms set forth in the
attached option agreement. |
| /s/ Xxx Xxxxxx | eLoyalty Corporation | |||||||
| By: | /s/ Xxxxx X. Xxxxxx | |||||||
| Xxxxx X. Xxxxxx | ||||||||
| President and Chief | ||||||||
| Executive Officer | ||||||||
| January 2, 2001 | January 8, 2001 | |||||||
Date
|
Date | |||||||
Exhibit A - 2
eLoyalty Corporation, a Delaware corporation (the “Company”), hereby grants to the individual
whose name appears below (the “Optionholder”), pursuant to the provisions of the eLoyalty
Corporation 1999 Stock Incentive Plan (the “Plan”), an option to purchase from the Company (the
“Option”) such number of shares of its Common Stock, $0.01 par value (“Stock”), as set forth below
at the price per share set forth below but only upon and subject to the terms and conditions set
forth herein, in the Plan, and in Annex I hereto. The Option is a non-statutory stock option, which
means it is not intended to qualify as an “incentive stock option” under Code Section 422.
All terms and conditions set forth in Annex I and the Plan are deemed to be incorporated herein in
their entirety. The terms “Constructive Discharge,” “Disability” and Serious Misconduct shall have
the meanings ascribed to such terms under the Optionholder’s employment agreement dated March 5,
2001. All other capitalized terms used in this Agreement and not otherwise defined herein have the
respective meanings assigned to them in Annex I or the Plan. The Option will become null and void
unless the Optionholder accepts this Agreement by executing it in the space provided and returning
it to the Company’s Chief Financial Officer, or his or her designee.
Optionholder’s Name:
|
Xxx Xxxxxx | |
Number of Shares Subject to
Option:
|
250,000 | |
Exercise Price Per Share:
|
[CLOSING PRICE ON 3/5/01] | |
Date of Option Grant (“Option
Date”):
|
March 5, 2001 | |
Date of Employment (“Employment
Date”):
|
March 5, 2001 | |
Exercise Provisions: |
(a) The Option will become exercisable as follows: (i) 25% of the shares subject to the
Option will become vested and exercisable on the last day of the month in which the one
year anniversary of the Employment Date occurs; (ii) additional increments of 1/36 of the
remaining shares subject to the Option will become vested and exercisable on the last day
of each calendar month for 36 months thereafter, beginning
Exhibit A - 3
the month immediately following the month in which the one year anniversary of the Employment Date
occurs, such that the Option will be fully exercisable four years after the Employment Date, and
(iii) as otherwise provided pursuant to paragraphs (b) through (h) of this Agreement or Section 6.8
of the Plan.
(b) If the Optionholder’s employment with the Company is terminated by the Company for Serious
Misconduct or is terminated by the Optionholder other than pursuant to a Constructive Discharge or
Disability, the Option will be exercisable only with respect to the number of shares subject to the
Option that are exercisable as of the effective date of the Optionholder’s termination of
employment with the Company. The Option may thereafter be exercised with respect to such number of
shares for a period of 90 days from the effective date of the Optionholder’s termination of
employment or until the Expiration Date, whichever period is shorter, after which the Option will
terminate in its entirety. The Option shall terminate upon the effective date of such termination
of employment with respect to any shares subject thereto that are not exercisable as of such
effective date.
(c) If, the Optionholder’s employment with the Company is terminated by the Company for reasons
other than Serious Misconduct or by the Optionholder pursuant to a Constructive Discharge, the
Option will continue to vest and become exercisable in accordance with paragraph (a) above through
the last day of the month coincident with or immediately preceding the first anniversary of the
effective date of the Optionholder’s termination of employment with the Company and may be
exercised for a period of 90 days from such first anniversary or until the Expiration Date,
whichever period is shorter, after which the Option will terminate in its entirety. The Option
shall terminate as of the first anniversary of the effective date of such termination of employment
with respect to any shares subject thereto that are not exercisable as of such first anniversary.
(d) If the Optionholder’s employment with the Company terminates by reason of the Optionholder’s
death, the Option will become fully vested and exercisable as of the date of death with respect to
all of the shares subject to the Option. The Option may thereafter be exercised by the
Optionholder’s legal representative for a period of one year from the date of death or until the
Expiration Date, whichever period is shorter, after which the Option will terminate in its
entirety.
(e) If the Optionholder’s employment with the Company terminates by reason of the Optionholder’s
Disability, the Option will become exercisable as of the effective date of such termination with
respect to all of the shares subject to the Option. The Option may thereafter be exercised for a
period of 90 days from the effective date of such termination or until the Expiration Date,
whichever period is shorter, after which the Option will terminate in its entirety.
(f) If the Optionholder’s employment with the Company terminates by reason of the Optionholder’s
retirement after the Optionholder has completed five years of service as an Employee of the Company
and is at least 55 years of age (“Retirement”), the Option will remain exercisable with respect to
the number of shares subject to the
Exhibit A - 4
Option that are exercisable as of the effective date of the Optionholder’s Retirement, and may
thereafter be exercised for a period of two years from the effective date of the Optionholder’s
Retirement or until the Expiration Date, whichever period is shorter, after which the Option will
terminate in its entirety. The Option shall terminate as of the effective date of the
Optionholder’s Retirement with respect to any shares subject thereto that are not exercisable as of
such Retirement effective date.
(g) In the event of a Change in Control during the Optionholder’s employment by the Company, the
Option shall become immediately vested and exercisable with respect to the number of shares with
respect to which the Option would otherwise become vested during the twenty-four-month period
immediately following the Change in Control. The preceding sentence shall not result in accelerated
vesting with respect to the number of shares as to which the Option would become vested after such
twenty-four-month period. In the event of a termination of the Optionholder’s employment during the
twenty-four month period immediately following a Change in Control either by the Company for
reasons other than Serious Misconduct or by the Optionholder pursuant to a Constructive Discharge,
then, in lieu of vesting under paragraph (c) above, the Option shall become immediately vested and
exercisable with respect to the number of shares as to which the Option would otherwise become
vested during the twelve-month period immediately following such twenty-four month period and may
be exercised as to all shares for a period of 90 days from the effective date of such termination
of employment.
(h) If the Optionholder dies following the termination of the Optionholder’s employment with the
Company, the Option will be exercisable only to the extent that it is exercisable as of the date of
the Optionholder’s death and may thereafter be exercised only for that period of time for which the
Option is exercisable immediately prior to the Optionholder’s death; provided, however, that in the
event of the Optionholder’s death within 30 days of the last date on which such Option could
otherwise be exercised by the Optionholder, the Option shall continue to be exercisable until 30
days after the date of death or until the Expiration Date, whichever is shorter.
General:
This Agreement is subject to the provisions of the Plan, and will be interpreted in accordance
therewith. In the event of a discrepancy between this Agreement, or any other material describing
this Agreement or the Option awarded hereunder, and the actual terms of the Plan, the Plan will
govern in all respects. A copy of the Plan is available upon request by contacting the Legal
Department at the Company’s Lake Forest, Illinois office. The Optionholder hereby acknowledges that
he or she has read a copy of the Plan. This Agreement may be executed in two counterparts each of
which will constitute one and the same instrument.
Exhibit A - 5
IN WITNESS WHEREOF, this Agreement has been executed as the Option Date set forth above.
Accepted and agreed this |
||||||||
| 5th day of March, 2001 | eLoyalty Corporation | |||||||
| By: | ||||||||
Xxx Xxxxxx
|
Xxxxx X. Xxxxxx | |||||||
| Its: Chief Executive Officer | ||||||||
Exhibit A - 6
Annex I
to
Stock Option Agreement
to
Stock Option Agreement
1. Meaning of Certain Terms. As used herein, the following terms have
the meanings set forth below. “Board” means the Company’s Board of Directors. “Code”
means the Internal Revenue Code of 1986, as amended. References to this “Agreement,”
the “Option” and “herein” are deemed to include the Stock Option Agreement and this
Annex I to Stock Option Agreement taken as a whole. This Annex I and the Stock
Option Agreement are deemed to be one and the same instrument. The term
“employment” shall have the meanings set forth in
Section 1.4 of the Plan. Other
capitalized terms used herein without definition shall have the respective meanings set
forth in the Stock Option Agreement or the Plan, as appropriate.
2. Time and Manner of Exercise of Option.
2.1. Term and Termination of Option. The maximum term of the
Option will be the date which is 10 years after the Option Date (the “Expiration Date”).
The Option will terminate, to the extent not exercised or earlier terminated pursuant to
the terms of this Agreement, on its Expiration Date. Notwithstanding any other term of
this Agreement, in no event may the Option be exercised, in whole or in part, after the
Expiration Date or its earlier termination.
2.2.
Exercisability of Option. The Option will become exercisable on
the date or dates as set forth in this Agreement.
2.3. Manner of Exercise. The Option may be exercised in whole or in
part by the Optionholder in the manner described in or established by the Committee
pursuant to Section 2.1 (c) of the Plan.
2.4 Tax Withholding. The Company will be entitled to withhold, or secure payment from
the Optionholder in lieu of withholding, the amount of any Federal, state, local or other
withholding taxes due upon exercise of the Option, in accordance with
Section 6.5 of the Plan.
3. Miscellaneous Provisions.
3.1. Option Confers No Rights as Stockholder. Neither the
Optionholder nor any other person has or will have any rights as a security holder of the
Company or any successor with respect to any shares of Common Stock or other
securities which are or become subject to the Option hereunder unless and until the
Optionholder becomes a holder of record with respect to such shares of Common Stock
or other securities following proper exercise of the Option.
3.2. Option Confers No Rights to Continue Employment or Service. In
no event will the granting of the Option or its acceptance by the Optionholder confer
Exhibit A - 7
upon the Optionholder any right to continued employment or service with the Company, or any
subsidiary or affiliate of the Company, or affect in any manner the right of the Company, or its
subsidiary or affiliate, to terminate the employment or service of the Optionholder at any time
without liability hereunder.
3.3. Designation as Nonqualified Stock Option. The Option is hereby
designated as a non-statutory stock option and shall not constitute an “incentive stock
option” within the meaning of section 422 of the Code; this Agreement will be
interpreted and treated consistently with such designation.
3.4. Decisions of the Committee. Subject to Section 1.3 of the Plan,
the Committee has the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action made or
taken by the Committee regarding the Plan or this Agreement shall be final, binding and
conclusive.
3.5. Non-transferability. Subject to Section 6.4 of the Plan, the Option
may not be transferred, assigned or pledged.
3.6. Conformity with Plan. The Option is intended to conform in all respects with, and
is subject to all applicable provisions of, the Plan, which is incorporated herein by reference.
In the event of any discrepancy between the Option, or a document that describes or explains the
Option, and the Plan, the Plan will govern in all respects.
3.7. Successors. This Agreement will be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons who
acquire any rights under Section 6.4 of the Plan.
3.8. Notices. All notices, requests or other communications relating to
the exercise of this Option (including, without limitation, the “cashless exercise” thereof
or tax withholdings relating thereto) will be made in writing in such form and substance,
and provided in accordance with such procedures, as may be prescribed by the
Committee from time to time and then in effect. Any other notices, requests or other
communications provided for in this Agreement will be made in writing either (1) by
actual delivery to the party entitled thereto, or (2) by mailing in the U.S. mails to the last
known address of the party entitled thereto, via certified or registered mail, return receipt
requested. Any such other notices will be deemed to be received in case (1) on the date
of its actual receipt by the party entitled thereto, and in case (2) on the date of its
mailing.
3.9. Governing Law. This Agreement, and all determinations made and
actions taken pursuant thereto, to the extent not otherwise governed by the Code or the
laws of the United States, will be governed by the laws of the State of Delaware and
construed in accordance therewith, without giving effect to the principles of conflicts of
laws.
Exhibit A
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