Exhibit 10.3
INDEMNIFICATION
AGREEMENT
INDEMNIFICATION
AGREEMENT made effective as of the 15 th day of May, 2008, between
eLoyalty Corporation, a Delaware corporation (the
“Company”), and Steven C. Pollema (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.
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(d) Excluded Claim : means
any payment for Losses or Expenses in connection with any Claim:
(i) 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 (ii) 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 (iii) resulting from Indemnitee’s
knowingly fraudulent, dishonest or willful misconduct; or
(iv) 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 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 (including,
without limitation, a Claim by or in the right of the Company), 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
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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 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 C
