ex10_38.htm


    
      

    

     

    EXHIBIT
      10.38

     

    
      INTERACTIVE
        INTELLIGENCE, INC.

      


      NON-EMPLOYEE
        DIRECTOR CHANGE OF CONTROL AGREEMENT

      


      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 1⁄2
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.

       

      (c)  Site
        of
        Arbitration.  The site of the arbitration proceeding shall be in
        Indianapolis, Indiana.

       

      (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	 
	 	 	 	 	 
	
                By

              	 	 	 	
                 

              	 
	
                Name

              	 	 	 	
                Name 

              	 
	
                Title