Document:

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

11.exv10w30

 

Exhibit 10.30

INDEMNIFICATION AGREEMENT

     INDEMNIFICATION AGREEMENT made effective as of the 24th day of April, 2006, between
eLoyalty Corporation, a Delaware corporation (the “Company”), and Steven H. Shapiro (the
“Indemnitee”).

     WHEREAS, it is essential to the Company and its stockholders to attract and retain qualified
and capable directors, officers, employees, agents and fiduciaries;

     WHEREAS, the Certificate of Incorporation of the Company (the “Certificate of Incorporation”)
and the Company’s Bylaws require the Company to indemnify and advance expenses to its directors and
officers to the extent not prohibited by law;

     WHEREAS, historically, basic protection against undue risk of personal liability of directors
and officers has been provided through insurance coverage affording reasonable protection at
reasonable cost;

     WHEREAS, it is presently uncertain whether, and to what extent, such insurance is or will
continue to be available to the Company at a reasonable cost for the protection of Indemnitee;

     WHEREAS, in recognition of Indemnitee’s need for protection against personal liability in
order to induce Indemnitee to serve or continue to serve the Company in an effective manner, and,
in the case of directors and officers, to supplement the Company’s directors’ and officers’
liability insurance coverage, and in part to provide Indemnitee with specific contractual assurance
that the protection promised by the Certificate of Incorporation and Bylaws will be available to
Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of
Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or
any acquisition transaction relating to the Company), the Company wishes to provide the Indemnitee
with the benefits contemplated by this Agreement; and

     WHEREAS, as a result of the provision of such benefits Indemnitee has agreed to serve or to
continue to serve the Company;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1. Definitions. The following terms, as used herein, shall have the following
respective meanings:

     (a) Claim: means any threatened, pending or completed action, suit, arbitration or
proceeding, or any inquiry or investigation, whether brought by or in the right of the Company or
otherwise, that Indemnitee in good faith believes might lead to the institution of any such action,
suit, arbitration or proceeding, whether civil, criminal, administrative, investigative or other,
or any appeal therefrom.

 

 

     (b) D&O Insurance: means any valid directors’ and officers’ liability insurance
policy maintained by the Company for the benefit of the Indemnitee.

     (c) Company Determination: means a determination based on the facts known at the
time, by: (i) a majority vote of a quorum of disinterested directors of the Company, or (ii) if
such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors of
the Company so directs, by independent legal counsel in a written opinion, or (iii) a majority of
the disinterested stockholders of the Company.

     (d) Excluded Claim: means any payment for Losses or Expenses in connection with any
Claim: (i) based upon or attributable to Indemnitee gaining in fact any personal profit or
advantage to which Indemnitee is not entitled; or (ii) for the return by Indemnitee of any
remuneration paid to Indemnitee without the previous approval of the stockholders of the Company
which is illegal; or (iii) for an accounting of profits in fact made from the purchase or sale by
Indemnitee of securities of the Company within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, or similar provisions of any state law; or (iv) resulting from
Indemnitee’s knowingly fraudulent, dishonest or willful misconduct; or (v) the payment of which by
the Company under this Agreement is not permitted by applicable law.

     (e) Expenses: means any reasonable expenses incurred by Indemnitee as a result of a
Claim or Claims by reason of (or arising in part out of) Indemnifiable Events including, without
limitation, attorneys’ fees and all other costs, expenses and obligations paid or incurred in
connection with investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in any Claim by reason of (or
arising in part out of) any Indemnifiable Event.

     (f) Fines: means any fine, penalty or, with respect to an employee benefit plan, any
excise tax or penalty assessed with respect thereto.

     (g) Indemnifiable Event: means any event or occurrence, occurring prior to, on or
after the date of this Agreement, related to the fact that Indemnitee is, was or has agreed to
serve as, a director or officer of the Company, or is or was serving at the request of the Company
as a director, officer, employee or agent of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise; provided that the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or proceeding, the
Indemnitee had no reasonable cause to believe his conduct was unlawful.

     (h) Judicial Determination: means a final nonappealable determination of a court of
competent jurisdiction.

     (i) Losses: means any amounts or sums which Indemnitee is or becomes obligated to pay
as a result of a Claim or Claims made against Indemnitee for Indemnifiable Events

2

 

including,
without limitation, damages, judgments and sums or amounts paid in settlement of a Claim or Claims,
and Fines.

     2. Basic Indemnification Agreement. In consideration of, and as an inducement to, the
Indemnitee rendering valuable services to the Company, the Company agrees that in the event
Indemnitee is or becomes a party to or witness or other participant in, or is threatened to be made
a party to or witness or other participant in, a Claim by reason of ( or arising in part out of) an
Indemnifiable Event, the Company will indemnify Indemnitee to the fullest extent authorized by law,
against any and all Losses and Expenses (including all interest, assessments and other charges paid
or payable in connection with or in respect of such Losses and Expenses) of such Claim, whether or
not such Claim proceeds to judgment or is settled or otherwise is brought to a final disposition,
subject in each case, to the further provisions of this Agreement.

     3. Limitations on Indemnification. Notwithstanding the provisions of Section 2,
Indemnitee shall not be indemnified and held harmless from any Losses or Expenses (a) which have
been determined by Judicial Determination to constitute an Excluded Claim; (b) to the extent
Indemnitee is indemnified by the Company and has already received payment in full of all such
Losses and Expenses pursuant to the Certificate of Incorporation and Bylaws, D&O Insurance or
otherwise; or (c) other than pursuant to the last sentence of Section 4(d) or Section 12, in
connection with any claim initiated by Indemnitee, unless such claim has been authorized by a
Company Determination.

     4. Indemnification Procedures.

     (a) Promptly after receipt by Indemnitee of notice of any Claim, Indemnitee shall, if
indemnification with respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement thereof; provided, however, that the failure to
give such notice promptly shall not affect or limit the Company’s obligations with respect to the
matters described in the notice of such Claim, except to the extent that the Company is materially
prejudiced thereby. Indemnitee agrees further not to make any admission or effect any settlement
with respect to such Claim without the consent of the Company, except any Claim with respect to
which the Indemnitee has undertaken the defense in accordance with the second to last sentence of
Section 4(d).

     (b) If, at the time of the receipt of such notice, the Company has D&O Insurance in effect,
the Company shall give prompt notice of the commencement of Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all Losses
and Expenses payable as a result of such Claim.

     (c) The Company shall pay the Expenses of any Claim in advance of the final disposition
thereof and the Company, if appropriate, shall be entitled to assume the defense of such Claim,
with
counsel satisfactory to Indemnitee, upon the delivery to Indemnitee of written notice of its
election so to do. After the delivery of such notice, the Company will not be liable

3

 

to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by Indemnitee in
connection with such defense other than reasonable Expenses of investigation; provided
that Indemnitee shall have the right to employ separate counsel in such Claim but the fees
and expenses of such counsel incurred after delivery of notice from the Company of its assumption
of such defense shall be at the Indemnitee’s expense; provided further that if: (i)
the employment of counsel by Indemnitee has been previously authorized by the Company, (ii)
Indemnitee shall have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (iii) the Company shall not, in fact,
have employed counsel to assume the defense of such action, the reasonable fees and expenses of
counsel shall be at the expense of the Company.

     (d) All payments on account of the Company’s indemnification obligations under this Agreement
shall be made within thirty (30) days of Indemnitee’s written request therefor unless a Company
Determination is made that the Claims giving rise to Indemnitee’s request are Excluded Claims or
otherwise not payable under this Agreement, provided that all payments on account
of the Company’s obligation to pay Expenses under Section 4(c) of this Agreement prior to the final
disposition of any Claim shall be made within 20 days of Indemnitee’s written request therefor and
such obligation shall not be subject to Section 4(e) of this Agreement. In the event of a Company
Determination that Indemnitee is not entitled to indemnification in connection with the proposed
settlement of any Claim, Indemnitee shall have the right at his own expense to undertake defense of
any such Claim, insofar as such proceeding involves Claims against the Indemnitee, by written
notice given to the Company within 10 days after the Company has notified Indemnitee in writing of
its contention that Indemnitee is not entitled to indemnification; provided,
however, that the failure to give such notice within such 10-day period shall not affect or
limit the Company’s obligations with respect to any such Claim if such Claim is subsequently
determined not to be an Excluded Claim or otherwise to be payable under this Agreement, except to
the extent that the Company is materially prejudiced thereby. If it is subsequently determined in
connection with such proceeding that the Claims are not Excluded Claims or that Indemnitee is
otherwise entitled to be indemnified under the provisions of Section 2 hereof, the Company shall
promptly indemnify Indemnitee in full against all Losses and Expenses arising out of such Claims or
Indemnifiable Events.

     (e) Indemnitee hereby expressly undertakes and agrees to reimburse the Company for all Losses
and Expenses paid by the Company in connection with any Claim against Indemnitee in the event and
only to the extent that a Judicial Determination shall have been made that Indemnitee is not
entitled to be indemnified by the Company for such Losses and Expenses because the Claim is an
Excluded Claim or because Indemnitee is otherwise not entitled to payment under applicable law.

     (f) In connection with any dispute as to whether Indemnitee is entitled to be indemnified
hereunder the presumption shall be that Indemnitee is so entitled and the burden of proof shall be
on the Company to establish that Indemnitee is not so entitled.

4

 

     5. Settlement. The Company shall have no obligation to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any Claim effected without the Company’s prior
written consent. The Company shall not settle any Claim in which it takes the position that
Indemnitee is not entitled to indemnification in connection with such settlement without the
consent of Indemnitee, nor shall the Company settle any Claim in any manner which would impose any
Fine, admission of wrongdoing or any obligation on Indemnitee, without Indemnitee’s written
consent. Neither the Company nor Indemnitee shall unreasonably withhold its or his consent to any
proposed settlement.

     6. No Presumption. For purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea
of nolo contendere, or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable law.

     7. Non-exclusivity, Etc. The rights of Indemnitee hereunder shall be in addition to
any other rights Indemnitee may have under the Certificate of Incorporation and Bylaws, the
Company’s By-laws, the Delaware General Corporation Law, any vote of stockholders or disinterested
directors or otherwise, both as to action in Indemnitee’s official capacity and as to action in any
other capacity by holding such office, and shall continue after Indemnitee ceases to serve the
Company as a director or officer for so long as Indemnitee shall be subject to any Claim by reason
of (or arising in part out of) an Indemnifiable Event. To the extent that a change in the Delaware
General Corporation Law (whether by statute or judicial decision) permits greater indemnification
by agreement than would be afforded currently under the Certificate of Incorporation and By-Laws
and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.

     8. Liability Insurance. To the extent the Company maintains an insurance policy or
policies providing directors’ and officers’ liability insurance, Indemnitee, if at any time an
officer or director of the Company, shall be covered by such policy or policies, in accordance with
its or their terms, to the maximum extent of the coverage available for any director or officer of
the Company.

     9. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company effectively to bring suit
to enforce such rights.

     10. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Losses and Expenses of a
Claim but not, however, for all of the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been

5

 

successful on the merits or otherwise in defense of any or all Claims relating in whole or in part
to any Indemnifiable Event or in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.

     11. Liability of Company. Indemnitee agrees that neither the stockholders nor the
directors nor any officer, employee, representative or agent of the Company shall be personally
liable for the satisfaction of the Company’s obligations under this Agreement and Indemnitee shall
look solely to the assets of the Company for satisfaction of any claims hereunder.

     12. Enforcement.

     (a) Indemnitee’s right to indemnification and other rights under this Agreement shall be
specifically enforceable by Indemnitee and shall be enforceable notwithstanding any adverse Company
Determination and no such Company Determination shall create a presumption that Indemnitee is not
entitled to be indemnified hereunder.

     (b) In the event that any action is instituted by Indemnitee under this Agreement, or to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid
all court costs and reasonable expenses, including reasonable counsel fees, incurred by Indemnitee
with respect to such action, unless the court determines that each of the material assertions made
by Indemnitee as a basis for such action was not made in good faith or was frivolous.

     13. Severability. In the event that any provision of this Agreement is determined by
a court to require the Company to do or to fail to do an act which is in violation of applicable
law, such provision (including any provision within a single section, paragraph or sentence) shall
be limited or modified in its application to the minimum extent necessary to avoid a violation of
law, and, as so limited or modified, such provision and the balance of this Agreement shall be
enforceable in accordance with their terms to the fullest extent permitted by law.

     14. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to agreements made and to be performed entirely
within such State.

     15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably
consents to the jurisdiction of the courts of and in the States of Delaware and Illinois for all
purposes in connection with any action or proceeding which arises out of or relates to this
Agreement and agrees
that any action instituted under this Agreement shall be brought only in the state or Federal
courts of the States of Delaware and Illinois.

     16. Notices. All notices or other communications required or permitted hereunder
shall be sufficiently given for all purposes if in writing and personally delivered, telegraphed,
telexed, sent by facsimile transmission or sent by registered or certified mail, return receipt

6

 

requested, with postage prepaid addressed as follows, or to such other address as the parties shall
have given notice of pursuant hereto:

     (a) If to the Company, to:

     (b)            eLoyalty Corporation

150 Field Drive

Suite 250

Lake Forest, Illinois 60045

Attention: General Counsel

Facsimile: (847) 582-7002

If to Indemnitee, to:

Steven H. Shapiro

1131 Bob O Link

Highland Park, IL 60035

Facsimile: 847-433-0528

     17. Counterparts. This Agreement may be signed in counterparts, each of which shall
be an original and all of which, when taken together, shall constitute one and the same instrument.

     18. Successors and Assigns. This Agreement shall be (i) binding upon all successors
and assigns of the Company, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or assets of the
Company, and (ii) binding upon and inure to the benefit of any successors and assigns, heirs, and
personal or legal representatives of Indemnitee.

     19. Amendment; Waiver. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in a writing signed by each of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

7

 

     IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement to be effective as
of the day and year first above written.

	 	 	 	 	 
	 	 	eLOYALTY CORPORATION
	 
	 	 	 	 
	/s/ STEVEN H. SHAPIRO

	 	By:
	 	/s/ KELLY D. CONWAY
	 

	 	 	 	 
	 

	 	 	 	Kelly D. Conway
	 

	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 
	April 24, 2006	 	April 24, 2006
	 	 	 
	Date	 	Date

8

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