Document:

exv10w1

 

2006 Executive

Annual Incentive Plan

March 2006

 

 

2006 Executive Annual Incentive Plan

The performance goals for 2006 are based on the 2006 business plan approved by the Board of
Directors. These goals reflect the Board of Directors and CEO’s expectations for performance and
accountability of the leadership team.

For 2006, the goals will be comprised of six measures which are listed below with the weighting:

	 	•	 	Financial Objectives: 70%

	 	–	 	EPS: 40%
	 
	 	–	 	EBITDA: 30%

	 	•	 	Business Objectives: 20%

	 	–	 	Safety: 10%
	 
	 	–	 	SG&A: 5%
	 
	 	–	 	Working Capital: 5%

	 	•	 	Personal Business Goal: 10%

Three performance levels have been established for each measure, with a corresponding percentage of
the target award opportunity.

	 	•	 	Minimum performance (80% obtainment) pays 50% of the target award opportunity.
	 
	 	•	 	Expected performance (100% obtainment) pays 100% of the target award opportunity.
	 
	 	•	 	Superior performance (120% obtainment) pays 150% of the target award opportunity.

Some incentive can still be earned if you are close to, but fall short of the goals. Also, higher
incentives may be earned if goals are exceeded. Therefore, if actual performance falls between any
of the defined levels, the award opportunities will be calculated proportionately.

2006 Performance Goals Definitions

Financial Measures — 70%

     Earnings Per Share (EPS — 40% weighting)

	 	•	 	The definition of EPS is net income divided by the number of shares outstanding. EPS
is the most common way that public companies are measured.

     Earnings before interest, taxes, depreciation, and amortization (EBITDA — 30% weighting)

	 	•	 	EBITDA is a commonly used measure of cash flow from operations. Cash flow is critical
to our company in order for us to meet our debt covenants, make capital investments, pay
the interest on our debt, and begin to pay down our debt. Depreciation and amortization
are expenses of the business that relate to past investments (i.e., the purchase of
barges). Therefore, to determine how much cash is available, we add these expenses back to
our operating earnings.

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2006 Performance Goals Definitions Continued

Business Objectives — 20%

A portion of the incentive opportunity will be determined by performance on key measures of
strategy, operations, or people. For 2006, given we are in a goal development transition year as a
Company, we have provided targets and measures for Safety, SG&A and Working Capital.

     Safety (10% weighting)

	 	•	 	It is critical that we continue to provide a safe environment for all employees. In
2005, we experienced a unique level of performance with an incident rate of 2.19. We will
continue to work toward similar positive results in 2006. However, we have elected to
leave the target goal at 2.5 due to the potential increase of exposure resulting from more
aggressive production turns. Safety will be measured by the incident rate which is
defined as the number of recordable injuries × 200,000 divided by the number of employee
hours worked.

     Selling, General, & Administrative (SG&A — 5% weighting))

	 	•	 	This expense category is disclosed in the Company financial statements and will be
measured as a percent of total revenue. It represents our need to be more efficient and to
improve our profit margins.

     Working Capital (5% weighting)

	 	•	 	By managing our working capital, we generate cash to help pay down debt and pay for
investments. Working capital is measured by adding accounts receivable + inventory minus
accounts payable divided by revenue.

Personal Business Goal — 10%

	 	•	 	Each individual will select a goal from their 2006 department goals which must be
agreed upon between the individual and Supervisor and approved by the Compensation
Committee. There is no minimum threshold of achievement for this goal. The individual
must achieve a performance level of “expected” to receive a payout. If the goal is
exceeded, a percentage level of achievement equal to that achieved by the Financial
Measures will be awarded, if it is higher.

3

 

Plan Administration

Eligibility Criteria

	 	•	 	Full-time salaried senior executive employees identified by the Compensation
Committee
	 
	 	•	 	Hire date on or before September 30, 2006
	 
	 	•	 	Employed by ACL or one of its subsidiaries at time the incentive awards are paid
	 
	 	•	 	Individual performance rated at a satisfactory level or higher

Award Calculations

The awards will be calculated based on the following formula:

     Actual Base Salary Earnings × Target Award Opportunity × Performance Score for Each Goal

Actual base salary earnings are the base compensation earned from January 1 through December
31. The overall performance score is the scores for each of the financial, business and personal
objectives multiplied by their weighting and added together.

Timing of Payment

Earned disbursement of the 2006 Bonus amounts will occur after the 2006 financial results have
been tabulated, E&Y has finished their audit and the Audit Committee has signed-off on the results
of the audit; estimated to be early February, 2007. Also, all payments must be approved in advance
by the Compensation Committee of the Board of Directors. In all events, bonus amounts will be paid
no later than December 31, 2007 with respect to the 2006 bonus program

Administration

The Compensation Committee of the Board of Directors has the full power, authority and
discretion to construe, interpret and administer this bonus program. The Compensation Committee may
delegate this authority to any appropriate person or persons and such delegates shall have all the
powers the Compensation Committee would have if it had acted itself. As a condition of eligibility
to participate in this bonus program, a participant must accept that all determinations of the
Compensation Committee or any of its delegates will be final, conclusive and binding.

Amendment

The Compensation Committee, in its sole discretion, may, at any time with or without notice,
amend, modify, suspend or terminate this bonus program, including the right to suspend or eliminate
some or all payments under this bonus program at any time.

4

 

Assignment

Payments under this bonus program may not be assigned or alienated.

Applicable Law

This document shall be governed by the laws of the State of Indiana.

No Employment Rights

Nothing contained in this bonus program shall be construed as a contract of employment between
ACL or its subsidiaries and a participant or as a right of any participant to be continued in the
employment of ACL or its subsidiaries, or as a limitation of the right of ACL or its subsidiaries
to discharge any of its employees with or without cause.

5<PAGE>

                                                                   Exhibit 10.16

                               AMENDMENT NO. 9 TO
                                 LOAN AGREEMENT

      This Amendment No. 9 to Loan Agreement (the "Amendment") is dated as of
the 2nd day of December, 2005 and is by and between LASALLE BANK NATIONAL
ASSOCIATION ("Lender") and eLOYALTY CORPORATION, a Delaware corporation (the
"Borrower").

                                   WITNESSETH:

      WHEREAS, Lender and Borrower are parties to that certain Loan Agreement,
dated as of December 17, 2001 (as amended or otherwise modified from time to
time, the "Loan Agreement"; capitalized terms used herein without definition
shall have the meanings ascribed to such terms in the Loan Agreement); and

      WHEREAS, the Borrower has requested that the Loan Agreement be amended in
certain respects;

      NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, each of Lender and Borrower hereby agree as follows:

      1. Amendments to Loan Agreement. In reliance on the representations and
warranties set forth in Section 2 of this Amendment and subject to the
satisfaction of the conditions precedent set forth in Section 3 of this
Amendment, the Loan Agreement is hereby amended as follows:

      1.1. The definition of Maturity Date in Section 1.1 of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

      ""Maturity Date" shall mean December 31, 2006."

      2. Representations and Warranties. To induce the Lender to enter into this
Amendment, the Borrower hereby represents and warrants to the Lender that:

      2.1. the execution, delivery and performance by the Borrower of this
Amendment and each of the other agreements, instruments and documents
contemplated hereby are within its corporate power, have been duly authorized by
all necessary corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not contravene or
conflict with any provision of law applicable to the Borrower, the certificate
of incorporation and by-laws of the Borrower (as amended to date), any order,
judgment or decree of any court or governmental agency, or any agreement,
instrument or document binding upon the Borrower or any of its property;

<PAGE>

      2.2. each of the Loan Agreement and the other Loan Documents, each as
amended by this Amendment, are the legal, valid and binding obligation of the
Borrower to the extent the Borrower is a party thereto, and the Loan Agreement
and such Loan Documents are enforceable against the Borrower in accordance with
their respective terms;

      2.3. the representations and warranties of Borrower contained in the Loan
Agreement and the Loan Documents, each as amended hereby, are true and correct
in all material respects as of the date hereof, with the same effect as though
made on the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties are true and correct as of such earlier date; and

      2.4. Borrower has performed in all material respects all of its
obligations under the Loan Agreement and the other Loan Documents to be
performed by it on or before the date hereof and as of the date hereof, Borrower
is in compliance with all applicable terms and provisions of the Loan Agreement
and each of the other Loan Documents to be observed and performed by it and,
assuming the effectiveness of the consents set forth herein, no Event of Default
has occurred and is continuing.

      3. Conditions. The effectiveness of the amendments and consents set forth
above is subject to the following conditions precedent:

      3.1. Borrower shall have executed and delivered to Lender, or shall have
caused to be executed and delivered to Lender, each in form and substance
satisfactory to Lender, this Amendment and such other documents, instruments and
agreements as Lender may reasonably request.

      3.2. Borrower shall have paid to Agent a fully earned, non-refundable fee
of $3,400.

      3.3. All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Lender and its legal counsel.

      3.4. Assuming the effectiveness of the consents set forth herein, no Event
of Default shall have occurred and be continuing.

      4. References; Effectiveness. Each of the Lender and the Borrower hereby
agree that all references to the Loan Agreement which are contained in any of
the other Loan Documents shall refer to the Loan Agreement as amended by this
Amendment.

      5. Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Amendment.

                                      -2-
<PAGE>

      6. Continued Effectiveness. Except as specifically set forth herein, the
Loan Agreement and each of the other Loan Documents shall continue in full force
and effect according to their respective terms.

      7. Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.

      8. Costs and Expenses. Borrower hereby agrees that all expenses incurred
by the Lender in connection with the preparation, negotiation and closing of the
transactions contemplated hereby, including without limitation reasonable
attorneys' fees and expenses, shall be part of the Obligations.

                                      -3-
<PAGE>

      IN WITNESS WHEREOF, this Amendment has been executed as of, and is
effective as of, the day and year first written above.

                                    eLOYALTY CORPORATION, a Delaware
                                    corporation, as Borrower

                                    By Steven Pollema
                                    Its VP, Operations & CFO

                                    LASALLE BANK NATIONAL ASSOCIATION, as
                                    Lender

                                    By Erin M. Frey
                                    Its VP

                                      -4-

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