exv10w29



 





Exhibit 10.29




EXECUTIVE EMPLOYMENT AGREEMENT




     eLoyalty Corporation (the “Company”), and Steven H. Shapiro, an individual (“Employee”), enter
into this Employment Agreement (“Agreement”) as of April 24, 2006.



     Whereas, the Company desires to employ Employee to provide personal services to the
Company and to provide Employee with certain compensation and benefits in return for his services;
and



     Whereas, Employee wishes to be employed by the Company and to provide personal
services to the Company in return for certain compensation and benefits.



     Now, Therefore, in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the parties hereto as follows:



     1. Duties. The Company shall employ Employee as its Vice President, General Counsel and
Corporate Secretary, and Employee accepts such employment upon the terms and conditions herein.
Employee shall have such responsibilities, duties and authority as the President & Chief Executive
Officer may reasonably designate and are customarily associated with his positions. During the
term of his employment with the Company, Employee shall perform faithfully the duties assigned to
him to the best of his ability, and Employee shall devote his full and undivided business time and
attention to the transaction of the Company’s business.



     2. Outside Activities.



          (a) Non-Company Activities. Except in conformity with the requirements with the Company’s
then-effective Code of Ethical Business Conduct, Employee will not during the term of this
Agreement undertake or engage (other than as a passive investor) in any other employment,
occupation or business enterprise, whether as an agent, partner, proprietor, officer, director,
employee, consultant, contractor or otherwise, whether during or outside the business hours of the
Company. Employee may engage in civic and not-for-profit activities so long as such activities do
not interfere with the performance of his duties hereunder.




          (b) No Adverse Interests. Except as permitted by Paragraph 2(c), during his employment
Employee agrees not to acquire, assume or participate in, directly or indirectly, any position,
investment or interest which is known or should be known by him to be adverse or antagonistic to
the Company, its business or prospects, financial or otherwise.




          (c) Non-Competition. During the term of his employment by the Company, except on behalf of
the Company, Employee will not directly or indirectly, whether as a stockholder, agent, partner,
proprietor, officer, director, employee, consultant, contractor, or in any capacity whatsoever,
engage in, become financially interested in, be employed by or have any business connection with
any other person, corporation, firm, partnership or other entity whatsoever known by him to compete
directly with the Company, anywhere throughout the




 









 







world, in any line of business engaged in (or planned to be engaged in) by the Company;
provided, however, that anything above to the contrary notwithstanding, Employee may own, as a
passive investor, public securities of any competitor corporation, so long as his direct holdings
in any one such corporation shall not in the aggregate constitute more than one percent (1%) of the
voting stock of such corporation.




     3. Term of Employment; Termination.



          (a) At-Will Relationship. Employee’s employment relationship is at-will. Either Employee or
the Company may terminate the employment relationship at any time, for any reason or no reason,
with or without Cause or advance notice.




          (b) Termination By The Company Without Cause; Termination By Employee With Good Reason.




               (i) Cause Definition. For purposes of this Agreement, “Cause” shall mean any of the
following: (i) conviction, including a plea of guilty or no contest, of any felony or any crime
involving moral turpitude or dishonesty; (ii) fraud upon the Company (or an affiliate),
embezzlement or misappropriation of corporate funds; (iii) willful acts of dishonesty materially
harmful to the Company; (iv) activities materially harmful to the Company’s reputation; (v)
Employee’s willful misconduct, willful refusal to perform his duties, or substantial willful
disregard of his duties, provided that the Company first provides Employee with written notice of
such conduct and thirty (30) days to cure such conduct, if such conduct is reasonably susceptible
to cure; (vi) material breach of the Proprietary Information Agreement; or (vii) material breach
causing material harm to the Company of this Agreement, any other agreement with the Company, any
policy of the Company, or any statutory duty or common law duty of loyalty owed to the Company;
provided, no act or omission on Employee’s part shall be considered “willful” unless it is done by
the Employee without reasonable belief that the Employee’s action was in the best interests of the
Company.



               (ii) Good Reason Definition. For the purposes of this Agreement, “Good Reason” shall mean:
(i) a reduction of Employee’s base salary below the amount set forth in Paragraph 4 of this
Agreement, unless such reduction is shared proportionally by the three most highly-salaried
officers of the Company; (ii) an involuntary relocation of Employee’s place of work to any location
outside of the metropolitan area in which his primary office is located immediately prior to the
relocation, excluding temporary periods of thirty (30) days or less and ordinary course business
travel; (iii) a significant diminution by the Company in Employee’s position (including offices,
titles and reporting relationships), authority, duties or responsibilities, (excluding diminutions
resulting in the ordinary course from the Company becoming pursuant to a Change of Control part of
a larger organization in which Employee directly reports to the Chief Executive Officer of such
organization); (iv) a material breach by the Company of this Agreement; or (v) failure by the
Company to assign this Agreement to a successor upon a Change of Control. No Good Reason shall
exist where: (a) Employee consents to the event that forms the basis for the Good Reason
resignation; (b) Employee does not provide the Company’s President and Chief Executive Officer with
written notice describing in detail the Good Reason within thirty (30) days of its occurrence; or
(c) the Company cures the Good



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Reason within thirty (30) days of its receipt of such notice, if such conduct is reasonably
susceptible to cure.




               (iii) Severance Benefits. In the event that Employee’s employment is terminated without Cause
by the Company or terminated by Employee with Good Reason, Employee shall receive the following as
his sole and exclusive severance benefits (collectively, the “Severance Benefits”):



                    (1) Severance Pay. Employee will continue to receive base salary at the same rate in effect
as of the termination date (determined without regard for any reduction constituting Good Reason),
paid on the Company’s standard payroll dates for nine (9) months following the termination date
(“Severance Period”), subject to standard payroll deductions and withholdings. Such severance pay
entitlement shall increase to a total of twelve (12) months if Employee’s employment is terminated
by the Company without Cause or by Employee for Good Reason within 90 days after a Change of
Control as defined herein.



                    (2) Severance Bonus. Employee will be paid a bonus (the “Severance Bonus”) equal to 100% of
the average of (A) the annual bonus he was paid for year immediately preceding the termination and
(B) a reasonable estimate of his bonus for the year in which the termination occurs under the
Company’s then-current bonus plan if any, less standard payroll deductions and withholdings.



                    (3) Severance Health Premium Reimbursements. If Employee timely elects to continue his
Company-provided group health insurance coverage pursuant to the federal COBRA law, the Company
will reimburse Employee for the cost of such COBRA premiums to continue health insurance coverage
at the same level of coverage for Employee and his dependents (if applicable) in effect as of the
termination date, through the end of nine (9) months or until such time as Employee qualifies for
health insurance benefits through a new employer, whichever occurs first (“Severance Health Premium
Benefits”). Employee shall notify the Company in writing of such new employment not later than
five (5) business days after securing it. Company will reimburse Employee for the cost of COBRA
premiums for an additional three (3) months if Employee’s employment is terminated by the Company
without Cause or by Employee for Good Reason within 90 days after a Change of Control as defined
herein.



                    (4) Severance Vesting. The vesting of Employee’s “Restricted Stock Award” (as defined below
in Paragraph 7) and all other restricted stock or stock option or other equity grants that Employee
previously has received or may in the future receive from the Company, shall be accelerated so
that, as of the date of the termination, such restricted stock and stock option grants shall vest
as to the number of shares that would have vested had Employee provided an additional twelve (12)
months of continuous service to the Company.



               (iv) Severance Conditions. As a condition of and prior to the receipt of all or any of the
Severance Benefits, Employee must execute and allow to become effective a general release of claims
in a form mutually acceptable to the parties in their reasonable determination and to comply with
the terms of this Agreement (the “Severance Conditions”).



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Upon any termination of Employee’s employment by the Company without Cause or by Employee for
Good Reason, the Company and its affiliates (by and through their respective directors and senior
executive officers) and Executive agree not to disparage the other party.




          (c) Termination for Cause; Voluntary or Mutual Termination.




               (i) No Severance. In the event Employee’s employment is terminated by the Company at any time
for Cause, or Employee terminates his employment without Good Reason, or the parties mutually
terminate their employment relationship, Employee will not be entitled to any Severance Benefits,
pay in lieu of notice, or any other severance, compensation, benefits, equity, acceleration, or any
other amounts, with the exception of any benefit to which Employee has a vested right under a
written benefit plan.



               (ii) Resignation. Employee may voluntarily terminate his employment with the Company at any
time, without liability therefore. Employee agrees to use good faith to give the Company
reasonable notice of any such voluntary termination. Upon receipt of any termination notice from
Employee, the Company, at its election, may require Employee to resign his employment prior to the
occurrence of any requested termination date.



          (d) Termination for Death or Disability.




               (i) Termination. Employee’s employment will terminate upon his death or Disability.



               (ii) Disability Definition. For the purposes of this Agreement, “Disability” shall mean a
permanent disability rendering Employee unable to perform his duties for the Company for ninety
(90) consecutive days or one hundred eighty (180) days in any twelve (12) month period, which
determination shall be made after the period of disability, unless an earlier determination can be
made, by an independent physician appointed by the Board.



               (iii) Severance. Following the death or Disability of Employee while employed by the Company,
the Company will provide Employee (or, in the case of death, Employee’s estate) with Severance Pay
for twelve (12) months, payment of the Severance Bonus, and Severance Health Premium Reimbursements
for twelve (12) months (all as described and on the same terms and conditions provided above). The
Employee’s Restricted Stock Award and all other restricted stock or stock option grants that
Employee previously has received or may in the future receive from the Company, shall be vested as
to half of the unvested shares, and all such stock options shall be exercisable for one (1) year
following such termination (but not exceeding the term of such option).



               (iv) Severance Conditions. As a condition of and prior to the receipt of all or any of the
Severance provided for death or Disability, Employee (or, in the case of death, Employee’s estate)
must execute and allow to become effective a general release of claims in a form mutually
acceptable to the parties in their reasonable determination and to comply with the terms of this
Agreement (the “Severance Conditions”). Upon any termination of Employee’s employment for death or
Disability, the Company and its affiliates (by and through their



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respective directors and senior executive officers) and Executive (or, in the case of death,
Employee’s estate) agree not to disparage the other party.




          (e) No Mitigation. In no event shall Employee be obligated to seek other employment or take
any other action by way of mitigation of the severance amounts payable to the Employee under
Paragraph 3 of this Agreement, and such amounts (other than as provided at Paragraph 3(b)(iii)(3))
shall not be reduced whether or not the Employee obtains other employment.




          (f) Accrued Obligations. Not later than ten (10) days after termination of Employee’s
employment, the Company shall pay Employee (“Accrued Obligations”): (i) his accrued and unpaid
base salary at the rate in effect at the time of notice of termination; (ii) any previous year’s
earned but unpaid bonus and other earned and unpaid incentive cash compensation; and (iii) accrued
and unused vacation time, unpaid expense reimbursements and other unpaid cash entitlements earned
by Employee as of the date of termination pursuant to the terms of the applicable Company plan or
program.




     4. Salary. For services rendered hereunder, the Company shall pay Employee a base salary at
the per annum rate of $285,000, less standard payroll deductions and withholdings, and payable in
accordance with the Company’s regular payroll schedule. Employee’s base salary (as well as his
eligibility for incentive equity grants) shall be subject to annual review and his base salary may,
at the discretion of the Company’s Board of Directors, be adjusted from time to time.



     5. Bonuses. The Company shall pay to Employee a one-time cash bonus of $85,000 as of the
one-year anniversary of Employee’s official hire date, provided that Employee remains actively
employed by the Company as of that date. In addition, the Company may elect to pay Employee
bonuses in its sole discretion. Employee will be offered the opportunity to participate in the
Company’s then-current bonus plan with such terms and conditions as are applicable to similarly
situated employees. The Company shall have the sole discretion to change or eliminate bonus plans
or programs at any time (provided, however, that after the bonus plan has been established by the
Board for a given year, the Board shall not later materially change the bonus plan for such year to
Employee’s detriment without Employee’s consent), to determine whether performance criteria set
forth pursuant to the bonus plan for a year have been achieved, and to determine (in accordance
with this paragraph and such performance criteria and bonus plan) the amount of any bonus earned by
Employee, if any. Bonuses are intended to retain valuable Company employees, and if Employee is
not employed, for any reason on the last day of the bonus year, he will not have earned the bonus
and no partial or pro-rata bonus will be paid. Any bonus paid pursuant to this Paragraph 5 shall
be paid net of standard payroll deductions and withholdings



     6. Employee Benefits. Employee shall be entitled to participate in such employee benefit
plans, including the Company’s 401(k) plan, life insurance, and medical benefits plans, and shall
receive all other fringe benefits, as the Company may make available generally to its senior
executive employees generally, for which Employee is eligible under the terms and conditions of
such plans, in each case subject to the requirements, rules and regulations from



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time to time applicable thereto. Details about these benefits are set forth in summary plan
descriptions and other materials.



     7. Restricted Stock Award. Subject to and following approval by the Company’s Board of
Directors, the Company shall grant to Employee an award of 50,000 shares of restricted eLoyalty
common stock (the “Restricted Stock Award”). The Restricted Stock Award will be granted on the
next regular vesting date following the later of (i) commencement of Employee’s employment and (ii)
approval by the Board of Directors. Regular vesting dates are the last day of November, February,
May and August of each year. These shares will vest over a five-year period, with 20% vesting as
of the next regular vesting date following the first anniversary of Employee’s employment and the
remainder vesting 5% each quarter thereafter until fully vested. In addition, Employee may be
eligible for other future awards under any Company equity incentive plan as may be approved by the
Board of Directors and in effect from time to time. The specific terms and conditions of any grant
made pursuant to this Paragraph 7 shall be governed by any applicable plan document and any such
grant agreement as Employee may be required to sign as a condition of grant.



     8. Change of Control.



          (a) Change of Control Definition. A Change in Control shall have the meaning set forth in
Section 6.8(b) of the Company’s 1999 Stock Incentive Plan.




     9. Parachute Tax. Notwithstanding anything in the foregoing to the contrary, if any of the
payments to Employee (prior to any reduction below) provided for in this Agreement, together with
any other payments which Employee has the right to receive from the Company or any corporation
which is a member of an “affiliated group” as defined in Section 1504(a) of the Internal Revenue
Code of 1986, as amended (“Code”), without regard to Section 1504(b) of the Code, of which the
Company is a member (the “Payments”) would constitute a “parachute payment” (as defined in Section
280G(b)(2) of the Code), and if the Safe Harbor Amount is greater than the Taxed Amount, then the
total amount of such Payments shall be reduced to the Safe Harbor Amount. The “Safe Harbor Amount”
is the largest portion of the Payments that would result in no portion of the Payments being
subject to the excise tax set forth at Section 4999 of the Code (“Excise Tax”). The “Taxed Amount”
is the total amount of the Payments (prior to any reduction, above) notwithstanding that all or
some portion of the Payments may be subject to the Excise Tax. Solely for the purpose of comparing
which of the Safe Harbor Amount and the Taxed Amount is greater, the determination of each such
amount, shall be made on an after-tax basis, taking into account all applicable federal, state and
local employment taxes, income taxes, and the Excise Tax (all of which shall be computed at the
highest applicable marginal rate). If a reduction of the Payments to the Safe Harbor Amount is
necessary, then the reduction shall occur in the following order unless the Employee elects in
writing a different order (provided, however, that such election shall be subject to Company
approval if made on or after the date on which the event that triggers the Payments occurs):
reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of
employee benefits. In the event that acceleration of vesting of stock award compensation is to be
reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant
of the Employee’s participant’s stock awards unless the Employee elects in writing a different
order for cancellation.



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     10. Business Expenses. The Company shall reimburse Employee for all reasonable and necessary
business expenses incurred by Employee in performing Employee’s duties that are submitted in
compliance with the Company’s then-current policy on such business expense reimbursement. Employee
shall provide the Company with supporting documentation sufficient to satisfy reporting
requirements of such policy and the Internal Revenue Service. The Company’s determinations as to
reasonableness and necessity shall be final.



     11. Proprietary Information and Inventions; Non-Competition and Non-Solicitation. Employee
acknowledges that the successful development, marketing, sale and performance of the Company’s
professional services and products require substantial time and expense. Such efforts generate for
the Company valuable and proprietary information (“Confidential Information”), including without
limitation business plans and strategies, prospective or actual opportunities, prospects and
customer lists, proposals, deliverables, methodologies, training materials, other intellectual
property, the nature, identity and requirements of customers, clients, suppliers and business
partners, computer software, financial data of any nature, and any information of others that the
Company is obligated, contractually or otherwise, to treat in a confidential manner, in each case
in whatever form, whether oral, written, graphic, recorded, photographic, machine readable or
otherwise, and whether or not marked or otherwise labeled “confidential” or specifically indicated
as being confidential and/or proprietary in nature. The term “Confidential Information” also
includes all notes, analyses, compilations, studies, interpretations or other materials to the
extent such materials contain or are based on other Confidential Information. Employee
acknowledges that during his employment, he will obtain knowledge of such Confidential Information.
Employee agrees to undertake the following obligations which he acknowledges to be reasonably
designed to protect the Company’s legitimate business interests (including its Confidential
Information and its near-permanent relationships with customers and other third parties) without
unnecessarily or unreasonably restricting Employee’s post-employment opportunities:



          (a) Proprietary Information. During the term of employment with the Company, Employee shall
disclose to the Company all ideas, inventions and business plans that Employee develops during the
course of Employee’s employment with the Company that relate directly or indirectly to the
Company’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 the Company (and in
furtherance thereof hereby assigns to the Company any and all rights and interests of Employee
therein and thereto) and that Employee shall, at the Company’s request and cost (including
reimbursement of Employee’s expenses and, if Employee is no longer in the employ of the Company,
reasonable per diem compensation to Employee), provide the Company with such
assurances as is necessary to secure a patent or copyright..




          (b) Non-Competition. Without limiting the obligations of Paragraph 11(a), without the prior
written consent of the President and Chief Executive Officer or the authorized designee thereof,
Employee shall not, for himself or as an agent, partner or employee of any person, firm or
corporation: (i) for a period of twelve (12) months following his termination of employment with
the Company and all affiliates for any reason, engage in the practice of providing consulting or
related services for any Prohibited Client. The term “Prohibited Client” shall mean any client or
prospect of the Company to or for whom Employee directly or indirectly




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performed or provided consulting or related services, or with whom Employee had personal
contact, or prospect to whom Employee submitted, or assisted or participated in any way in the
submission, of a proposal, during the two (2) year period preceding termination of Employee’s
employment with the Company.




          (b) Non-Solicitation. While employed by the Company and during the twelve (12) month period
immediately following Employee’s termination of employment for any reason, Employee shall not
directly or indirectly hire, solicit, encourage, or otherwise induce or assist in the inducement
away from the Company of any Company customer, client, contractor, consultant, or other person or
party with whom the Company has a contractual relationship, any Prohibited Client, or any Company
employee (either away from the Company’s employ or from the faithful discharge of such employee’s
contractual, statutory and fiduciary obligations to serve the Company’s interests with undivided
loyalty).




          (d) Reasonable Alteration. In the event that a court or other adjudicative body should
decline to enforce the provisions of any part of this Paragraph 11, whether because of scope,
duration or otherwise, Employee and the Company agree that the provisions shall be modified to
restrict Employee’s competition with the Company to the maximum extent enforceable under applicable
law.




     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 the Company’s business advantage,
including but not limited to the Company’s valuable business relations, for which damages cannot be
readily calculated and for which damages are an inadequate remedy. Accordingly, Employee
acknowledges that the Company shall therefore be entitled to an order enjoining any further
breaches by the Employee, without the necessity of posting a bond.



     13. Policies and Procedures. The employment relationship between the parties shall be
governed by the general employment policies and practices of the Company, which the Company may
change from time to time, and Employee will be expected to abide by such Company policies and
practices.



     14. Assistance in Litigation. Employee shall upon reasonable notice and without compulsion of
law (e.g., subpoena), furnish accurate and complete information and other assistance to the Company
as the Company may reasonably require in connection with any litigation, proceeding or dispute to
which the Company is, or may become, a party, or in which it may otherwise become involved, either
during or after Employee’s employment; provided, if such assistance shall occur after termination
of Employee’s employment, the Company shall reimburse Employee for his reasonable expenses incurred
in connection with such assistance, including, without limitation, as relevant transportation,
meals and lodging, and shall also pay Employee a consulting fee of $200 per hour, as compensation
for his inconvenience and the disruption of his other endeavors.



     15. Indemnification. Employee’s rights to indemnification will be as provided in the
Indemnification Agreement between Employee and the Company, effective as of April 24, 2006.



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     16. Successors and Assigns. This Agreement is intended to bind and inure to the benefit of,
and be enforceable by, Employee and the Company, and their respective successors, assigns, heirs,
executors and administrators. Employee acknowledges that the services to be rendered pursuant to
this Agreement are unique and personal. Accordingly, Employee may not assign any of his rights or
delegate any of his duties or obligations under this Agreement. The Company may assign its rights,
duties or obligations under this Agreement to a subsidiary or affiliated company of the Company or
purchaser or transferee of a majority of the Company’s outstanding capital stock or a purchaser of
all, or substantially all, of the assets of the Company.



     17. Notices. All notices required by this Agreement shall be in writing. Notices intended
for the Company shall be sent by certified mail or nationally recognized overnight courier service,
addressed to it at 150 Field Drive, Suite 250, Lake Forest, Illinois 60045, or its current
principal office, and notices intended for Employee shall be either delivered personally to
Employee or sent by certified mail or nationally recognized overnight courier service addressed to
Employee at his address as listed on the Company’s payroll. Notices sent by certified mail in
accordance with the foregoing shall be deemed given three (3) business days following delivery to
the United States Postal Service, postage prepaid, and notices sent by overnight courier service in
accordance with the foregoing shall be deemed given one (1) business day following delivery to such
courier, delivery fees for overnight delivery prepaid.



     18. Entire Agreement. This Agreement constitutes the complete, final, and exclusive
embodiment of the entire agreement between Employee and the Company with regard to the subject
matter hereof. It is entered into without reliance on any promise or representation other than
those expressly contained herein, and it cannot be modified or amended except in a written
instrument signed by Employee and a duly authorized officer or director of the Company.



     19. Waiver. If either party should waive any breach of any provisions of this Agreement, he
or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or
any other provision of this Agreement.



     20. Applicable Law. This Agreement, and all questions concerning the construction, validity
and interpretation of this Agreement, shall be governed by and construed in accordance with the
laws of the State of Illinois as applied to contracts made and to be performed entirely within the
State of Illinois.



     21. Mediation of Disputes. Neither party shall initiate arbitration or other legal
proceedings (except for any claim under Paragraph 11 of this Agreement or the Proprietary
Information Agreement), against the other party, or, in the case of the Company, the Company, its
affiliates, and its and their directors, officers, employees, contractors, agents, and
representatives, relating in any way to claims or disputes or controversies of any nature
whatsoever arising from or regarding Employee’s employment, the termination of such employment,
this Agreement (including without limitation its interpretation, performance, enforcement or
breach) or any or all other claims that one party might have against the other party (collectively,
the “Claims”), until thirty (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 the Company further agree
that if Respondent submits the claiming party’s Claim to JAMS Inc. for nonbinding



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mediation, in Chicago, Illinois, prior to the expiration of such thirty (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) ninety (90) days after
the date on which the Respondent received written notice of the Claim. If Company is Respondent,
the Company shall pay the JAMS Inc. fees and Employee’s reasonable attorneys’ fees incurred by
Employee in connection with the mediation up to a maximum of $10,000.



     22. Binding Arbitration.



          (a) Employee and the Company agree that all Claims, to the fullest extent allowed by law,
shall be resolved by confidential, final and binding arbitration conducted 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. The parties acknowledge that by agreeing to this arbitration
procedure, they waive the right to resolve any such dispute through a trial by jury, judge or
administrative proceeding. The arbitrator shall: (a) have the authority to compel adequate
discovery for the resolution of the dispute and to award such relief as would otherwise be
permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential
findings and conclusions and a statement of the award. The Company shall pay all AAA arbitration
fees. Nothing in this Agreement is intended to prevent either Employee or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such
arbitration.




          (b) The arbitrator, and not a court, shall be authorized to determine whether the provisions
of this paragraph apply to a dispute, controversy or claim sought to be resolved in accordance with
these arbitration procedures.




     23. 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, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, and such invalid, illegal or
unenforceable provision will be reformed, construed and enforced in such jurisdiction so as to
render it valid, legal, and enforceable consistent with the general intent of the parties insofar
as possible.



     24. Right To Work. As required by law, this Agreement is subject to satisfactory proof of
Employee’s right to work in the United States.



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Employee acknowledges that he has read, understood and accepts the provisions of this
agreement. 




	 	 	 	 	 
	eLoyalty Corporation (“Company”)	 	Steven H. Shapiro (“Employee”)
	 
	 	 	 	 
	By:

	 	/s/ Kelly D. Conway
	 	/s/ Steven H. Shapiro
	 

	 	 
	 	 
	 
	Title:

	 	President & Chief Executive Officer	 	 
	 
	Date:

	 	April 24, 2006
	 	Date: April 24, 2006







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