EXHIBIT 10.28
SEVERANCE AGREEMENT AND GENERAL RELEASE
This Severance Agreement and General Release (this "Agreement") is
entered into by and between Xxxxx Xxxx ("Employee") and eLoyalty Corporation, a
Delaware corporation ("eLoyalty" or the "Company"), on the date set forth at the
Employee signature lines below, arising out of the employment relationship
between Employee and eLoyalty and constitutes an amendment to Employee's
Employment Agreement with eLoyalty, a copy of which is attached hereto as
Exhibit A (the "Employment Agreement"). It shall become effective seven days
after execution of the Agreement by both parties, unless revoked within such
seven-day period in accordance with this Agreement.
Employee's employment will terminate effective November 30, 2004
("Termination Date").
Pursuant to the Employment Agreement and subject to the terms and
conditions thereof, Employee will receive payments in lieu of notice equal to
her regular base salary, less applicable deductions, beginning on the day after
the Termination Date and continuing through February 28, 2005 ("Termination
Payments"); provided, however, that notwithstanding the terms of the Employment
Agreement, the Termination Payments will continue in the event that Employee
secures alternative employment during the period they are being made. In
addition, if Employee accepts this Agreement and does not revoke her acceptance
(as described below), Employee would receive payments equal to her regular base
salary, less applicable deductions, for an additional period ending May 31,
2005, subject to the terms and conditions set forth in this Agreement.
Employee will continue to pay her portion of the cost of her
existing medical, dental, vision and flexible spending account coverage while
receiving Termination Payments, and such coverage will continue until February
28, 2005 ("Termination Benefit Period"). Employee, however, may elect to
discontinue such coverage by submitting a completed election change form to
eLoyalty's Employee Loyalty Service Center ("ELSC") at eLoyalty Corporation, 000
Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxx, 00000 within 31 days of the
Termination Date; however, any such change will not be effective until the day
after the election change form is received by the ELSC. Except as otherwise
provided in this Agreement (if it becomes effective as provided herein), after
the Termination Benefit Period, Employee will no longer be eligible to
participate in any eLoyalty benefit programs, except to the extent that she may
be eligible to continue her existing health benefit coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), at
the applicable COBRA rate and for the period prescribed by COBRA.
In addition to Employee's Termination Payments and the Termination
Benefit Period, and in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound, the parties, eLoyalty
and Employee, agree as follows:
1. Employee specifically acknowledges and agrees that she is not otherwise
entitled to the additional payments and benefits set forth in Paragraph 4 below,
that the Company is providing such payments and benefits in exchange for the
mutual covenants and agreements set forth herein, and that such payments and
benefits under Paragraph 4 below are greater than the payments and benefits
Employee would have been entitled to receive upon termination in the absence of
this Agreement. Further, Employee specifically acknowledges and agrees that (i)
the payments and benefits described in this Agreement are in full and final
settlement of any and all amounts that may be claimed to be payable to Employee
by the Company for any period or portion thereof ending on or prior to the date
hereof, and (ii) Employee is not entitled to any other payments whatsoever,
including, without limitation, any amounts in the nature of base or incentive
(bonus) compensation, commissions or other compensatory payments or
reimbursements.
2. Employee represents and warrants that Employee has no interest or
obligation that is inconsistent with or in conflict with this Agreement or that
would prevent, limit or impair Employee's performance of any part of this
Agreement.
3. In exchange for the valuable consideration set forth in Paragraph 4
below and the mutual covenants contained herein:
a. Employee agrees to release and forever discharge the Company and
its past and present officers, directors, employees, agents, subsidiaries,
divisions, affiliates, stockholders, predecessors, successors and assigns,
(collectively "Releasees") from any and all claims and/or causes of action,
known or unknown, arising (i) from or during Employee's employment or (ii) as a
result of the termination of that employment, whether currently known or
unknown, and agrees that she will not assert any such claims and/or causes of
action against any Releasees. This release includes, but is not limited to, (i)
claims and/or causes of action arising under Title VII of the Civil Rights Act;
(ii) claims and/or causes of action arising under the Americans with
Disabilities Act; (iii) claims and/or causes of action arising under the Age
Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act; (iv) claims and/or causes of action arising under federal, state
or local laws, including national origin, religion, sex, disability, race, or
age discrimination, or any other discrimination or retaliation prohibited by
law; (v) claims and/or causes of action growing out of any alleged legal
restrictions on eLoyalty's right to terminate its employees, including breach of
contract, express or implied, discharge in violation of public policy, wrongful
or retaliatory termination, or promissory estoppel; or (vi) tort claims and/or
causes of action, including infliction of emotional distress, defamation, libel
or slander. This release specifically excludes the following: (i) any right
Employee has to seek or obtain indemnification from the Company or relating to
her service with the Company, whether by contract, insurance policy, statute,
law or otherwise; (ii) any right or claims relating to facts or circumstances
arising after this Agreement is executed; (iii) any expense reimbursement that
has been validated and approved through the Company's normal processes; and/or
(iv) any right provided for or any action necessary to enforce any right or
obligation provided in this Agreement.
b. Employee and the Company agree not to disparage, defame, libel,
slander, place in a negative light, or otherwise harm the reputation, business
or goodwill of the other, including any statements in any format regarding the
Company's employment practices,
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business, services, products, conduct, or policies, or its employees, directors,
officers or agents. Any public statements by Employee or the Company regarding
the other will be mutually agreed in writing, in advance of publication or
dissemination.
c. Employee agrees to return all property in good working condition
(including computer equipment, any and all files and documents, whether in
written or electronic form or in any other form or media whatsoever, and
including all copies, excerpts and derivatives) of the Releasees in her
possession. Employee specifically understands and agrees that no payments or
obligations set forth in Paragraph 4 below shall arise until Employee returns
all such property to the Company pursuant to this Paragraph.
d. Employee agrees that the terms of this Agreement are confidential
and that Employee will treat them as confidential and will not disclose them to
any person, except as may be required by law or legal process, other than
Employee's attorneys, accountants, tax or financial advisors, or spouse or
domestic partner (who must be informed of and agree to be bound by the terms of
this Paragraph). Notwithstanding the foregoing, Employee will notify any person,
firm, corporation or other entity with which Employee becomes employed of
Employee's undertakings in Paragraph 7 and 8 hereof.
4. In exchange for Employee's covenants contained herein, the Company
agrees:
a. To pay Employee the gross amount of $75,000.00 (from which
applicable taxes, benefit premiums and other withholdings will be deducted).
Such gross amount will be paid in installments of $12,500.00 (less applicable
deductions) on regular eLoyalty paydays, beginning on the first payday after the
Termination Payments have ended, until the total gross amount is reached. These
payments represent continuation of Employee's base salary through May 31, 2005.
b. To provide Employee with the option of continuing her existing
medical and dental/vision coverage, and the health care spending account and
dependent care spending account benefits for three additional months. Such
continuation will begin on the first day following expiration of the Termination
Benefit Period set forth above. Employee will continue to pay her portion of the
cost of those coverages and benefits during this period. Employee, however, is
not required to continue such coverage or benefits and she may terminate them
within 31 days of the Termination Date by following the procedure outlined
above. (After coverage ends, Employee may be eligible for continued health
benefit coverage under COBRA).
5. This Agreement does not waive any benefits Employee may be eligible to
receive under the eLoyalty Corporation 401(k) Plan. Employee acknowledges that
eligibility and benefits under that plan, if any, will be determined and payable
in accordance with the terms of that plan.
6. This Agreement does not waive Employee's entitlement to receive
continued vesting in her outstanding grants of restricted Company stock for the
period in which she receives payments pursuant to Paragraph 4. Employee and
Company have agreed that Employee will continue to vest in her grants during
that period.
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7. Employee acknowledges that Employee has an obligation of confidence,
non-disclosure and non-use with respect to any and all confidential information
and trade secrets that Employee acquired during the course of employment with
Company, pursuant to the Employment Agreement. This obligation of confidence,
non-disclosure and non-use extends to both Company information and third-party
information held by the Company in confidence, and this obligation continues
after the Termination Date. Employee acknowledges that in her position, she has
had access to confidential and proprietary information including, without
limitation, that concerning eLoyalty's business, operations, services/products,
strategies, finances, customers, prospects, employees, plans, designs, and
goals. Employee further acknowledges that she is bound by the non-competition,
confidentiality/trade secrets and non-solicitation provisions of the Employment
Agreement and that such provisions continue in full force and effect according
to the terms of that agreement. Employee represents and acknowledges that her
experience and capabilities are such that she would be able to use her skills
and knowledge in businesses that do not compete with the business of eLoyalty.
8. Employee acknowledges and agrees that in the event that Employee
breaches any provision of this Agreement, or any of the post-employment
covenants in the Employment Agreement, the Company will have the right to
immediately discontinue the payments and benefits described in Paragraph 4, in
addition to any other remedy that may be available to the Company, including but
not limited to recovery of amounts theretofore paid to Employee under Paragraph
4, additional monetary damages or injunctive relief. Employee further
acknowledges and agrees that she will pay any expenses or damages incurred by
the Company as a result of any such breach, including reasonable attorneys' fees
and costs. The parties expressly acknowledge that this provision does not apply
to a challenge or suit filed where such suit or challenge solely pertains to the
validity of this Agreement under the Age Discrimination in Employment Act as
amended by the Older Workers' Benefit Protection Act.
9. Employee acknowledges and agrees that if she is re-hired by eLoyalty
before all the installments described in Paragraph 4(a) have been received, the
installments will cease and Employee will not be entitled to any further
payments under this Agreement.
10. Except as specifically provided herein, the Employment Agreement, as
amended by this Agreement, and the provisions thereof that continue in effect
after termination of Employee's employment constitute the entire understanding
between Employee and the Company relating to the subject matter contained herein
and supersede any previous agreement(s) that may have been made in connection
with Employee's employment with eLoyalty. The provisions of the Employment
Agreement that expressly survive termination of Employee's employment with
eLoyalty, together with the provisions hereof, shall continue to survive such
termination.
11. This Agreement may not be changed, modified, or altered without the
express written consent of Employee and Xxxxx Xxxxxxxxx or an executive officer
of eLoyalty.
12. The Company's or Employee's failure to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of,
or deprive the Company or the Employee of, the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. To be
effective, any waiver by the Company must be in
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writing and signed by Xxxxx Xxxxxxxxx or an executive officer of eLoyalty. To be
effective, any waiver by the Employee must be in writing and signed by the
Employee.
13. This Agreement shall be construed in accordance with the laws of the
State of Illinois. The parties specifically agree that if any dispute should
arise with respect to this Agreement, any legal claim shall be brought in a
court of the State of Illinois, federal or state, as appropriate. The parties
specifically agree to waive any argument that jurisdiction or venue is not
proper in the State of Illinois.
14. If any provision herein is determined to be unenforceable, the parties
agree that any such provision, or any part thereof, shall be construed
consistent with the apparent purpose of the provision to avoid the
unenforceability or, in the event that this is not possible, the provision shall
be severed and all remaining provisions shall remain in full force and effect.
However, in the event that the waiver or release of any claim is found to be
invalid or unenforceable, then Employee shall promptly execute any documents
presented by Company that would make the waiver or release valid and
enforceable.
15. The parties to this Agreement have been given an opportunity to review
and to revise the language in this Agreement. Therefore, in any construction to
be made of this Agreement, the same shall not be construed against any party.
16. Employee acknowledges: that she has been advised to consult an
attorney before signing this Agreement; that she understands the terms of this
Agreement and is signing this Agreement knowingly and voluntarily. Employee
further understands that she may accept this Severance Agreement offer at any
time up to and including December 3, 2004 by returning one signed original of
this Agreement to Xxxxx Xxxxxxxxx, Director of Human Resources, at eLoyalty
Corporation, 000 Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxx 00000. If
Employee does not accept this Agreement on or before that date, the offer set
forth in this Agreement is automatically rescinded unless eLoyalty expressly
notifies Employee in writing otherwise. To be effective, any revocation within
the seven (7) day period after acceptance must be in writing and it must be
received by Xxxxx Xxxxxxxxx by the close of business on the seventh day. This
Agreement shall not become effective or enforceable until this seven (7) day
revocation period has expired. Employee expressly acknowledges that if she
revokes this Agreement, she is not entitled to any payments or benefits set
forth in Paragraph 4 of this Agreement.
IN WITNESS WHEREOF, the parties have executed and agreed to this Agreement
consisting of five (5) pages.
ELOYALTY CORPORATION
By: /s/ Xxxxx Xxxxxxxxx Date: 11/11/04
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XXXXX XXXX
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/s/ Xxxxx X. Xxxx Date: 11/22/04
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