CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is made by and between CHORDIANT SOFTWARE, INC. (the "Company") and Gary DanielsAllen Swann ("Executive"). This Agreement will become effective upon its execution by both parties hereto (the "Effective Date").
 

RECITALS

WHEREAS Executive is employed by the Company pursuant to the terms of Executive's offer letter from the Company;
 

WHEREAS Executive has been granted restricted shares of the Company's common stock ("Restricted Shares"), as well as option(s) to purchase shares of the Company's common stock (the "Options"), pursuant to the applicable restricted stock agreement(s), stock option agreement(s) and equity incentive plan(s) (together, the "Prior Grants");
 

WHEREAS in the future, Executive may be granted additional shares of restricted stock and/or options to purchase the Company's common stock, subject to the Board's sole discretion (together with Prior Grants, the "Stock Awards"); and
 

WHEREAS the Company believes it is imperative to provide Executive with accelerated vesting of the Stock Awards, as well as other severance benefits, in the event that Executive is terminated without Cause (as defined herein) or resigns for Good Reason (as defined herein) in connection with a Change of Control (as defined herein).
 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein, and other good and valuable consideration, the parties hereto hereby agree as follows:
 

1. TERMINATION OF EMPLOYMENT.
(a) At-Will Employment. Unless specified otherwise in Executive's employment or offer letter, Executive's employment is at-will, which means that the Company may terminate Executive's employment at any time, with or without advance notice, and with or without Cause. Similarly, Executive may resign his/her employment at any time, with or without advance notice or Good Reason. Executive shall not receive any compensation of any kind, including, without limitation, severance benefits, following Executive's last day of employment with the Company (the "Termination Date"), except as expressly provided herein, as otherwise agreed in writing between Executive and the Chief Executive Officer of the Company, or as provided in any plan documents governing the Stock Awards. Executive shall devote all reasonable efforts to the performance of Executive's duties, and shall perform such duties in good faith.
(b) Termination Related to a Change of Control. If Executive's employment is terminated without Cause or Executive resigns for Good Reason within ninety (90) days prior to or twelve (12) months after a Change of Control, and Executive signs a release substantially in the form (whichever is applicable) attached hereto as Exhibit A (the "Release"), then the Company shall provide Executive with the following severance benefits:
(i) The Company shall make severance payments to Executive in the form of continuation of Executive's base salary in effect on the Termination Date for twelve (12) months following the Termination Date (the "Severance Period"). These payments will be made on the Company's ordinary payroll dates and will be subject to standard payroll deductions and withholdings. Notwithstanding the preceding, Executive's severance payments specified above will be reduced by the Company by an amount equal to what Executive is paid or entitled to under any contractual or statutory notice period contained in any employment letter/arrangement or by way of law, such that the total severance payments plus any notice pay shall not exceed twelve (12) months of base salary.
(ii) The Company will pay Executive an amount equal to Executive's annual bonus (provided the Executive is under a non-commission, Company bonus plan). The bonus will be calculated at one of the following rates, whichever is higher: (1) as if both Executive and the Company achieved one hundred (100) percent of their specified performance objectives; or (2) the actual performance of the Company and Executive as measured against the specified performance objectives. This amount will be paid over the entire Severance Period on the Company's ordinary payroll dates, in equal installments, and will be subject to standard payroll deductions and withholdings.
(iii) The Company will pay the premiums necessary to continue Executive 's life and health insurance during the Severance Period.
(iv) Provided that Executive is not, or is no longer, an executive officer or director of the Company, then the time period in which Executive is required to repay any promissory note, loan or other indebtedness to the Company shall be extended by sixty (60) months..
(v) The Company will accelerate the vesting of the Stock Awards such that the greater of the following shall vest within ten (10) days after the date Executive signs the Release: (a) 50% of the unvested shares as of the Termination Date subject to the Stock Awards (after taking into account any additional acceleration of vesting Executive may be receiving under any plan document(s) governing the Stock Awards instituted prior to or after this Agreement is executed, including any additional acceleration of vesting of restricted stock under any restricted stock agreement(s)); or (b) all such shares that would have vested if Executive had worked for the Company for twelve (12) additional months beyond the Termination Date. This acceleration of vesting will be in addition to any acceleration of vesting that the Executive would otherwise receive under the Company's 2000 Nonstatutory Equity Incentive Plan, the Company's 1999 Equity Incentive Plan, or any other plan document(s) and including any additional acceleration of vesting of restricted stock under any restricted stock agreement(s)). Executive shall have sixty (60) months to exercise any vested Options in addition to any time specified in the plan document(s) governing the Options. The Stock Awards shall continue to be governed by the terms of the applicable restricted stock agreement(s), stock option agreements and equity incentive plan documents.
(vi) With respect to any Prior Grant intended to be an incentive stock option, the acceleration of the vesting of the Prior Grant and the extension of the time that Executive shall have to exercise the Prior Grant as provided in Paragraph 1(b)(v) of this Agreement are deemed to be a modification of the Prior Grant within the meaning of Section 424(h) of the Internal Revenue Code ("Code"). Such modification shall result in the granting of a new option as of the date of execution of this Agreement, including providing a new grant date for purposes of starting the holding period specified in Section 422(a)(1) of the Code and for purposes of the provision that the option price be not less than the fair market value of the stock at the time such option is granted as specified in Section 422(b)(4) of the Code. If Executive and the Company agree that the Prior Grant shall remain an incentive stock option and if the new option meets the requirements for incentive stock options specified in Section 422(b) of the Code, and the $100,000 per year limitation specified in Section 422(d) of the Code as of the date of execution of this Agreement, then the unexercised portion of the Prior Grant shall be appropriately modified as to the date of grant and the option price; provided, however, that the option price shall be the greater of the original option price of the Prior Grant or the fair market value of the stock on the date of execution of this Agreement. If Executive and the Company do not agree that such Prior Grant shall remain an incentive stock option, then the Prior Grant shall be deemed to be a nonstatutory stock option as of the date of execution of this Agreement, and the Prior Grant shall be appropriately modified to reflect such changed status.
(c) Termination For Cause Procedure. The Company may not terminate Executive's employment for Cause unless and until Executive receives a copy of a resolution duly adopted by the affirmative vote of at least a majority of the Board of Directors of the Company ("Board") finding that in the good faith opinion of the Board, Executive was guilty of the conduct constituting "Cause" and specifying the particulars thereof in detail. The Company shall provide Executive with reasonable notice of the Board vote and an opportunity for Executive, together with Executive's counsel, to be heard before the Board.

 

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