Promissory Note - eLoyalty Corp. and Jay Istvan
PROMISSORY NOTE
U.S. $250,000 February 20, 2001
FOR VALUE RECEIVED, the undersigned, Jay Istvan ("Borrower"), whose
principal current residence address is 614 West Maple Street, Hinsdale, Illinois
60521, hereby unconditionally promises to pay to the order of eLoyalty
Corporation, a Delaware corporation ("Lender"), having its principal office at
150 Field Drive, Lake Forest, Illinois 60045, in lawful money of the United
States of America and in immediately available funds, the principal sum of TWO
HUNDRED FIFTY THOUSAND DOLLARS AND NO CENTS ($250,000.00), together with
interest on the principal balance from time to time outstanding at the rate of
FIVE AND EIGHTEEN HUNDREDTHS PERCENT (5.18%) per annum from the date hereof
until payment in full thereof in accordance with the immediately succeeding
paragraph.
The principal indebtedness evidenced hereby, together with interest as
aforesaid, shall be payable on February 20, 2003 (the "Payment Date"), whereby
Borrower shall pay to Lender the sum of TWO HUNDRED SEVENTY-SIX THOUSAND FIVE
HUNDRED SEVENTY Dollars and Eighty-One Cents ($276,570.81), such sum comprised
of TWO HUNDRED FIFTY THOUSAND Dollars ($250,000.00) of principal repayment and
TWENTY-SIX THOUSAND FIVE HUNDRED SEVENTY Dollars and Eighty-One Cents
($26,570.81) of interest payment; provided, however, that if Borrower has been
employed by Lender, or any parent or subsidiary company of Lender, from the date
hereof through and including the Payment Date, then such principal indebtedness
and interest shall be discharged and forgiven by Lender and shall no longer be
due and, accordingly, Borrower shall have no further obligation to Lender
hereunder. In the event that, prior to the Payment Date, Borrower terminates his
employment with Lender of Borrower's own accord other than (i) pursuant to a
"Constructive Discharge," as defined in Borrower's Employment Agreement dated
effective as of January 29, 2001 (the "Employment Agreement") or (ii) by reason
of Disability, as defined in the Employment Agreement, or if Borrower's
employment with Lender is terminated prior to the Payment Date by Lender for
"Serious Misconduct," as defined in the Employment Agreement, then the full
amount of outstanding principal and accrued interest shall become due and
payable in accordance with and at the time provided by the following provisions
of this Note. In the event that Borrower's employment with Lender is terminated
by Lender for any reason other than Serious Misconduct, or is terminated by
Borrower pursuant to a Constructive Discharge or is terminated by either
Borrower or Lender by reason of Borrower's Disability or in the event of
Borrower's death, then such principal indebtedness and interest shall be
discharged and forgiven by Lender and shall no longer be due and, accordingly,
Borrower shall have no further obligation to Lender hereunder. Borrower,
however, shall in all cases be responsible for income tax on the principal plus
interest, if and when they are recognized as income, which may be withheld by
Lender.
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Borrower reserves the right to prepay this Note, in whole or in part, at
any time without penalty. In the event of such prepayment, the amount so prepaid
will be applied to principal due and interest will be adjusted accordingly.
Payments received by Lender from Borrower on this Note shall be applied first to
the payment of interest, which is due and payable and only thereafter to the
outstanding principal balance.
All payments of principal and interest under this Note shall be made by
Borrower to Lender, at Lender's principal place of business as set forth above,
or at such other place as Lender may from time to time designate in writing.
The occurrence or existence of one or more of the following events shall
constitute an event of default ("Default") under this Note: (i) the failure of
Borrower to pay when due any principal or interest due hereunder; or (ii) prior
to the Payment Date, Borrower shall no longer remain an employee of Lender, or a
parent or subsidiary company of Lender, because of termination of his employment
due to Serious Misconduct or because of Borrower's own accord other than
pursuant to a Constructive Discharge or by reason of his Disability.
In an event of Default, Lender may, by 90 days' written notice to Borrower,
declare all the indebtedness evidenced by this Note to be, and, upon the
expiration of such 90-day period, such indebtedness shall become immediately due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower.
If payment hereunder becomes due and payable on a day which is not a
"Business Day" (as defined below), the due date thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon during such
extension at the rate specified above. "Business Day" shall mean a day on which
banks in Chicago, Illinois are open for the transaction of banking business. In
no case or event whatsoever shall interest charged hereunder, however such
interest may be characterized or computed, exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court determines
that Lender has received interest hereunder in excess of the highest rate
applicable hereto, Lender shall (i) apply such excess to any unpaid principal
balance due and payable by Borrower hereunder to Lender; and (ii) if the amount
of such excess exceeds the unpaid principal and other liabilities due and
payable by Borrower hereunder, Lender shall remit such excess to Borrower.
Any notice hereunder shall be sufficiently given if in writing and
delivered in person or mailed by first class mail addressed as follows:
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IF TO BORROWER:
Jay Istvan
614 West Maple Street
Hinsdale, Illinois 60521
IF TO LENDER:
eLoyalty Corporation
150 Field Drive, Suite 250
Lake Forest, Illinois 60045
Attention: Senior Vice President and Chief Financial Officer
Borrower and Lender may each designate additional or different addresses by
notice to the other party as provided herein.
Lender shall be under no obligation to marshal any assets in favor of
Borrower in payment of any or all of Borrower's liabilities hereunder. To the
extent that Borrower makes a payment or payments to Lender, and such payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, provincial, state or
federal law, common law or equitable cause, then to the extent of such recovery,
the obligation or part hereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
Any dispute between Lender and Borrower arising out of, connected with,
related to, or incidental to the relationship established between them in
connection with this Note, and whether arising in contract, tort, equity, or
otherwise, shall be resolved in accordance with the internal laws and not the
conflicts of law provisions of the State of Illinois.
Except as provided in the immediately succeeding paragraph, Lender and
Borrower each agree that all disputes between them arising out of, connected
with, related to, or incidental to the relationship established between them in
connection with this Note and whether arising in contract, tort, equity, or
otherwise, shall be resolved only by state or federal courts located in Cook
County, Illinois, but Lender and Borrower acknowledge that any appeals from
those courts may have to be heard by a court located outside of Cook County,
Illinois. Borrower waives any and all objections that he may have to the
location of the court considering the dispute.
Borrower agrees that Lender shall have the right to proceed against
Borrower or his property in a court in any location to enable Lender to enforce
a judgment or other court order entered in favor of Lender. Borrower agrees that
he will not assert any permissive counterclaims in any proceeding brought by
Lender to enforce a judgment or other court order in favor of Lender. Borrower
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waives any objection that he may have to the location of the court in which
Lender has commenced a proceeding described in this paragraph.
Borrower waives personal service of any process upon him and consents that
all such service of process be made by registered mail directed to Borrower at
the address stated herein.
Borrower waives the posting of any bond otherwise required of Lender to
enforce any judgment or other court order entered in favor of Lender, or to
enforce this note by specific performance, temporary restraining order,
preliminary or permanent injunction.
Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note. Whenever in this Note reference is made to Lender or Borrower,
such reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns, and the provisions of this Note shall be
binding upon and shall inure to the benefit of said successors and assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
receiver and manager, trustee or debtor-in-possession of or for Borrower.
By: /s/ Jay Istvan
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Jay Istvan
Borrower