INTERACTIVE INTELLIGENCE, INC. NON-EMPLOYEE DIRECTOR CHANGE OF CONTROL AGREEMENT
EXHIBIT
10.38
INTERACTIVE
INTELLIGENCE, INC.
THIS
NON-EMPLOYEE DIRECTOR CHANGE OF
CONTROL AGREEMENT (“Agreement”) is effective as of _______ __, 2007, by and
between ______ (the “Director”) and Interactive Intelligence, Inc., an Indiana
corporation (the “Corporation”).
Recitals
A. The
board
of directors of the Corporation has determined that it is in the best interests
of the Corporation and its stockholders to assure that the Corporation will
have
the continued dedication and objectivity of the Director, notwithstanding
the
possibility, threat or occurrence of a Change of Control (as defined below)
of
the Corporation.
B. In
order
to accomplish the foregoing objective, the board of directors has directed
the
Corporation, upon execution of this Agreement by the Director, to amend the
terms of all outstanding stock option awards as of the date hereof granted
to
the Director under the Corporation's Outside Directors Stock Option Plan
(the
"Directors Plan") and the 2006 Equity Incentive Plan (the "2006 Plan" and
together with the Directors Plan, the "Plans") to the extent set forth
below.
C. Capitalized
terms used in the Agreement and not defined herein have the respective meanings
ascribed to them in the 2006 Plan.
In
consideration of the mutual
covenants herein contained, and in consideration of the continuing association
of the Director with the Corporation, the parties agree as follows:
1. Acceleration
of Option Vesting. If the Director's service on the board of
directors is terminated, for whatever reason, pursuant to a transaction
resulting in a Change in Control of the Corporation, any and all outstanding
stock option awards granted under the Plans will vest on a pro rata monthly
basis, including full credit for partial months elapsed;
provided,however, that for purposes of determining the vested
portion of the stock option awards, the Director shall be credited with one
additional month of service for each month of service completed by the Director,
up to a maximum of twenty-four (24) additional months of service
credit.
The
following examples illustrate the
effect of this grant of additional service credit:
Example
1: As of the effective date of a Change in Control, the
Director, who is then still serving as a director, has actually completed
6 full
months of service as a member of the Board of Directors. For purposes of
determining the vested portion of his outstanding stock option awards under
the
Plans, the Director will be deemed to have completed an additional 6 months
of
service (1 for each of the 6 full months he has actually completed), for
a total
of 12 months of service.
Example
2: As of the effective date of a Change in Control, the
Director, who is then still serving as a director, has actually completed
18 ½
months of service as a member of the Board of Directors. For purposes
of determining the vested portion of his outstanding stock option awards
under
the Plans, the Director will be deemed to have completed 19 months of service
and will be credited with an additional 19 months of service, for a total
of 38
months of service. For clarity, 12 of the 38 months would have
already vested on the first anniversary date of the option award and, therefore,
26 months of vesting would be accelerated upon the Change in
Control.
Example
3: As of the effective date of a Change in Control, the
Director, who is then still serving as a director, has actually completed
36
full months of service as a member of the Board of Directors. For
purposes of determining the vested portion of his outstanding stock option
awards under the Plans, the Director will be deemed to have completed an
additional 24 months of service, for a total of 60 months. Although
he has actually completed 36 full months of service, the Director is credited
with 24 additional months, which is the maximum number of additional months
of
service that can be credited under this Agreement.
2. Term. The
terms of this Agreement shall terminate upon the earlier of (i) the date
that
all obligations of the parties hereunder have been satisfied or (ii) on the
date, prior to a Change in Control, the Director is no longer a member of
the
board of directors of the Corporation.
3. Successors.
(a) Corporation’s
Successors. Any successor to the Corporation (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation
or
otherwise) to all or substantially all of the Corporation’s business and/or
assets shall assume the obligations under this Agreement and agree expressly
to
perform the obligations under this Agreement in the same manner and to the
same
extent as the Corporation would be required to perform such obligations in
the
absence of a succession. For all purposes under this Agreement, the
term “Corporation” shall include any successor to the Corporation’s business
and/or assets which executes and delivers the assumption agreement described
in
this subsection (a) or which becomes bound by the terms of this Agreement
by
operation of law.
(b) Director’s
Successors. Without the written consent of the Corporation, the
Director shall not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity. The
terms of this Agreement and all rights of the Director hereunder shall inure
to
the benefit of, and be enforceable by, the Director’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
4. Federal
Excise Tax.
(a) Avoidance
of Excise Tax. If the option acceleration provided for in this
Agreement would be subject to the excise tax or denial of deduction imposed
by
Sections 280G and 4999 of the Code (an “Excess Parachute Payment”), then the
Director's benefits under this Agreement shall be reduced, or portions of
the
then unvested options shall not vest as provided herein, in order to avoid
any
Excess Parachute Payment.
(b) Calculation
by Independent Public Accountants. Unless the Corportion and the
Director otherwise agree in writing, any calculation of the amount of any
Excess
Parachute Payments shall be made in writing by the Corporation's independent
public accountants (the “Accountants”), whose determination, absent manifest
error, shall be conclusive and binding upon the Director and the
Corporation. For purposes of making such calculation, the Accountants
may rely on reasonable, good faith interpretations concerning the application
of
Sections 280G and 4999 of the Code. The Corporation and the Director
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make the required
calculation. The Corporation shall bear all fees and expenses the
Accountants may charge in connection with such calculation.
5. Arbitration.
(a) Disputes
Subject to Arbitration. To the extent permitted by law, any claim,
dispute or controversy arising out of this Agreement, the interpretation,
validity or enforceability of this Agreement or the alleged breach hereof
shall
be submitted by the parties to binding arbitration by a sole arbitrator under
the rules of the American Arbitration Association. Judgment may be
entered on the award of the arbitrator in any court having
jurisdiction.
(b) Costs
of
Arbitration. All costs of arbitration, including reasonable attorneys
fees of the Director, will be borne by the Corporation, except that, if the
Director initiates arbitration and the arbitrator finds the Director's claims
to
be frivolous, the Director shall be responsible for his own costs and attorneys
fees.
(d) Acknowledgment. THE
DIRECTOR HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. THE DIRECTOR UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
THE DIRECTOR AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, OR RELATING TO,
OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT
THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF THE DIRECTOR’S RIGHT TO A JURY TRIAL
AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF
THIS
AGREEMENT.
6. Notice. Notices
and all other communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or
when
mailed by U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of the Director, mailed notices shall be
addressed to him/her at the home address that was most recently communicated
to
the Corporation in writing. In the case of the Corporation, mailed
notices shall be addressed to its corporate headquarters, and all notices
shall
be directed to the attention of its Secretary.
7. Miscellaneous
Provisions.
(a) Amendment
and Waiver. No provision of this Agreement shall be modified,
amended, waived or discharged unless the modification, amendment, waiver
or
discharge is agreed to in writing and signed by the Director and by an
authorized officer of the Corporation (other than the Director). No
waiver by either party of any breach of, or of compliance with, any condition
or
provision of this Agreement by the other party shall be considered a waiver
of
any other condition or provision or of the same condition or provision at
another time.
(b) Integration. This
Agreement, the Plans and any outstanding option award agreements referenced
in
this Agreement represent the entire agreement and understanding between the
parties as to the subject matter of this Agreement and supersede all prior
or
contemporaneous agreements, whether written or oral, with respect to this
Agreement, the Plans and such option award agreements.
(c) Choice
of
Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Indiana, without
regard to where the Director has his residence or principal office or where
he
performs his duties hereunder.
(d) Severability. The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(e) Amendment
of Award Agreements. The Corporation and the Director agree that the
provisions of this Agreement shall supersede any conflicting provisions of
any
stock option award agreement of the Director, and the Corporation and the
Director agree to execute such further documents as may be necessary to amend
any such agreement. All other terms of the Director's stock option
award agreement shall remain in full force and effect.
(f) Director
Service. Nothing in this Agreement is intended to or shall modify the
nature of the Director's service as a member of the board of directors of
the
Corporation. This Agreement should not be construed as giving the
Director any right to be retained as a director of the Corporation.
(g) Headings. The
headings of sections herein are included solely for convenience of reference
and
shall not control the meaning or interpretation of any provisions of this
Agreement.
(h) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed
an
original, but all of which together will constitute one and the same
instrument
IN
WITNESS WHEREOF, each of the parties
has executed this Agreement, in the case of the Corporation by its duly
authorized officer, as of the day and year first above written.
| INTERACTIVE INTELLIGENCE, INC. | DIRECTOR | ||||
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