Exhibit 10.2


 


Witness Systems Amended and Restated


Stock Incentive Plan


 


Option
Award


 


The
Option referred to herein is subject to the terms and conditions of the Amended
and Restated Stock Incentive Plan of Witness Systems, Inc. (the “Plan”).


 


1.     Exercise
Period of Option. 
Subject to the terms and conditions of this Option Award document and
the Plan, and unless otherwise modified by a written modification signed by the
Company and Optionee, this Option may be exercised with respect to all of the
Shares, but only according to the vesting schedule below and as described
in Section 10 below, prior to the date which is five (5) years (the “Term”)
following the date of grant (hereinafter “Expiration Date”).


 


2.     Restrictions
on Exercise.     This Option may not be exercised unless such
exercise is in compliance with the Securities Act of 1933 and all applicable
state securities laws as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the Company’s
Common Stock may be listed or traded at the time of exercise.  Optionee understands that the Company is
under no obligation to register, qualify or list the Shares with the Securities
and Exchange Commission (“SEC”), any state securities commission or any stock
exchange to effect such compliance.


 


3.     Termination
of Option.  Except
as provided below in this Section, this Option may not be exercised after the
date which is thirty (30) days after Optionee ceases to perform services for
the Company, or any Parent or Subsidiary. 
Optionee shall be considered to perform services for the Company, or any
Parent or Subsidiary, for all purposes under this Section and Section 10
hereof, if Optionee is an officer or full-time employee of the Company, or any
Parent or Subsidiary, or if the Board determines that Optionee is rendering
substantial services as a part-time employee, consultant, contractor or advisor
to the Company, or any Parent or Subsidiary. 
The Board shall have discretion to determine whether Optionee has ceased
to perform services for the Company, or any Parent or Subsidiary, and the
effective date on which such services cease (the “Termination Date”).  Notwithstanding anything contained herein to
the contrary, if the corporate position of Optionee is, at any time, altered or
revised such that Optionee’s responsibilities are materially reduced or
decreased for any reason, as determined by the Board in its sole discretion,
the vesting of Shares under Section 10 shall cease, effective as of the
date of such reduction in Optionee’s employment responsibilities; provided,
however, except as otherwise provided in this Option and the Plan, Optionee
shall have the right to exercise this Option with respect to Shares which have
vested under Section 10 as of the date of such reduction of Optionee’s
responsibilities.


 


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(a)   Termination
Generally.  If Optionee ceases to
perform services for the Company, or any Parent or Subsidiary, for any reason,
except death or disability (within the meaning of Code Section 22(e)(3)), this Option shall immediately be forfeited, along
with any and all rights or subsequent rights attached thereto, thirty (30) days
following the Termination Date, but in no event later than the Expiration Date.


 


(b)   Death
or Disability.  If Optionee
ceases to perform services for the Company, or any Parent or Subsidiary, as a
result of the death or disability of Optionee (as determined by the Board in
its sole discretion), this Option, to the extent (and only to the extent) that
it would have been exercisable by Optionee on the Termination Date, may be
exercised by Optionee (or, in the event of Optionee’s death, by Optionee’s
legal representative) within ninety (90) days after the Termination Date, but in
no event later than the Expiration Date.


 


(c)   No Right to Employment.  Nothing in the Plan or this Option Award
document shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company, or any Parent or Subsidiary, or limit in
any way the right of the Company, or any Parent or Subsidiary, to terminate
Optionee’s employment or other relationship at any time, with or without cause.


 


4.     Manner of Exercise.


 


(a)   Exercise Agreement.  This Option shall be exercisable by delivery
to the Company of such form of exercise agreement, notice or other form as may
be approved or accepted by the Company from time to time, which shall set forth
Optionee’s election to exercise this Option, the number of Shares being
purchased, any restrictions imposed on the Shares, and such other
representations and agreements as may be required by the Company to comply with
applicable securities laws.


 


(b)   Exercise Price.  Such notice shall be accompanied by full
payment of the Exercise Price for the Shares being purchased.  Payment for the Shares may be made in U.S.
dollars in cash (by check) or, where permitted by law and approved in advance
and in writing by the Compensation Committee of the Board in its sole
discretion:  (i) by surrender of shares
of Common Stock of the Company that have been owned by Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144,
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares), or were
obtained by Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Shares being purchased; (ii) by
instructing the Company to withhold Shares otherwise issuable pursuant to the
exercise of the Option having a Fair Market Value equal to the Exercise Price
of the Shares being purchased (including the withheld Shares); (iii) by
waiver of compensation accrued by Optionee for services rendered; or (iv) by
a combination of the foregoing.


 


(c)   Withholding Taxes.  Prior to the issuance of Shares upon exercise
of this Option, Optionee must pay, or make adequate provision for, any
applicable federal or state tax withholding


 


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obligations
of the Company.  Where approved by the
Compensation Committee, Optionee may provide for payment of withholding taxes
upon exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value equal to the minimum amount of taxes required to be
withheld.  In such case, the Company
shall issue the net number of Shares to Optionee by deducting the Shares
retained from the Shares otherwise issuable upon exercise.


 


(d)   Issuance of Shares.  Provided that such notice and payment are in
form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee’s legal
representative.


 


5.     Nontransferability
of Option.  This Option may not
be transferred in any manner, other than by will or by the laws of descent and
distribution, and may be exercised during Optionee’s lifetime only by
Optionee.  The terms of this Option shall
be binding upon the executor, administrators, successors and assigns of
Optionee.


 


6.     Tax
Consequences.  OPTIONEE
UNDERSTANDS THAT THE GRANT AND EXERCISE OF THIS OPTION, AND THE SALE OF SHARES
OBTAINED THROUGH THE EXERCISE OF THIS OPTION, MAY HAVE ADVERSE TAX
CONSEQUENCES TO OPTIONEE.  OPTIONEE
SHOULD CONSULT WITH HIS OR HER TAX ADVISOR AND MAY NOT RELY ON THE COMPANY
FOR ANY FINANCIAL, TAX OR OTHER ADVICE.


 


7.     Interpretation.  Any dispute regarding the interpretation of
this Option Award document shall be submitted by Optionee or the Compensation
Committee of the Board, which shall review such dispute at its next regular
meeting.  The resolution of such a
dispute by the Compensation Committee of the Board shall be final and binding
on the Company and Optionee.


 


8.     Entire Agreement.  The Plan is incorporated herein by this
reference.  The granting of this Option
constitutes a full accord, satisfaction and release of all obligations or
commitments made to Optionee by the Company or any of its officers, directors,
shareholders or affiliates with respect to the issuance of any securities, or
rights to acquire securities, of the Company or any of its affiliates.  This Option Award document and the Plan
constitute the entire agreement of the parties hereto, and supersede all prior
undertakings and agreements with respect to the subject matter hereof.


 


9.     Exercisability
of Option.  Subject to the terms
of the Plan and this Option Award document, the issuance of Shares pursuant to
the exercise of this Option shall be subject to the limitations set forth
herein defined below.  For purposes of
this Section, “Continuous Service” means a period of continuous performance of
services by Optionee for the Company, a Parent, or a Subsidiary, as determined
by the Board.


 


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Four Year Vesting:   Optionee may exercise
this Option with respect to the percentage of Shares set forth below only after
Optionee has completed the following periods of Continuous Service following
the date of grant:


 


(a)           After
twelve (12) months of Continuous Service, up to twenty-five percent (25%) of
the Shares;


 


(b)           After
thirteen (13) months of Continuous Service, and for each additional month of
Continuous Service thereafter through the end of the forty-eighth (48th)
month of Continuous Service, an additional amount of Shares per month; such
amount being equal to the quotient of 75% of the Shares divided by 36, such
that after forty-eight (48) months of Continuous Service, one hundred percent
(100%) of the Shares shall have vested.


 


If
Optionee’s employment with the Company is terminated by the Company other than
for Cause (as defined below) or by Optionee for Good Reason (as defined below)
at any time (i) during the 90-day period before a Change of Control (as
defined below) and (ii) for three hundred sixty (360) days after a Change
of Control, then (A) the Option granted hereby, if less than fully vested
as of the Termination Date, shall be deemed fully vested and exercisable; and (B) Section 3
above (other than the second sentence thereof) shall be deleted and replaced
with the following:  “This Option may not
be exercised more than three hundred sixty (360) days from the later of:
Optionee’s Termination Date or the date Optionee ceases to perform services for
the Company, or any Parent or Subsidiary (which date shall be determined by the
Board in its reasonable discretion).”


 


Definitions. 
For purposes of Section 10 of this Option, the following
definitions shall apply:


 


1.             Change of Control.  A “Change of
Control” shall be conclusively deemed to have occurred if (and only if) any of
the following shall have taken place: (i) a Change of Control is reported
by the Company in response to either Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of


 


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1934, as amended (“Exchange Act”), or Item 5.01 of Form 8-K
promulgated under the Exchange Act; (ii) any person (as such term is used
in Section 13(d) and 14(d)(2) of the Exchange Act) is or becomes
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding
securities; or (iii) following the election or removal of directors, a
majority of the Board consists of individuals who were not members of the Board
two (2) years before such election or removal, unless the election of each
director who was not a director at the beginning of such 2-year period has been
approved in advance by directors representing at least a majority of the
directors then in office who were directors at the beginning of the 2-year
period.


 


2.             “Good Reason” means Optionee’s termination of
employment for any of the following events, unless such event occurs with
Optionee’s express prior written consent:


 


(a)           The assignment to Optionee of any duties
materially inconsistent with, or a diminution of, his position, duties, titles,
scope of functional reporting, offices, responsibilities and status with the
Company as in effect immediately prior to the Change of Control of the Company,
except in connection with the termination of Optionee’s employment for
disability, retirement, or Cause or as a result of Optionee’s death or
termination of employment other than for Good Reason;


 


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(b)           A reduction of fifteen percent (15%) or
more in Optionee’s base salary as in effect on the date hereof or as the same
may be increased from time to time;


 


(c)           A change in the location of Optionee’s
principal place of employment by more than thirty-five (35) miles from the
location where he was principally employed immediately prior to the Change of
Control;


 


(d)           Any material breach by the Company of any
provision of this Option; or


 


(e)           Any failure by the Company to obtain the
assumption of this Option by any successor or assign of the Company.


 


3.             Cause.  “Cause” means
termination of Optionee’s employment under any one or more of the following
events:


 


(a)           Optionee’s knowing and willful misconduct
with respect to the business and affairs of the Company;


 


(b)           Any material violation by Optionee of any
policy of the Company relating to ethical conduct or practices or fiduciary
duties of a similarly situated executive;


 


(c)           Knowing and willful material breach of
any provision of this Agreement which is not remedied within thirty (30) days
after Optionee’s receipt of notice thereof;


 


(d)           Optionee’s commission of a felony or any
illegal act involving moral turpitude or fraud or Optionee’s dishonesty which
may reasonably be expected to have a material adverse effect on the Company;
and/or


 


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(e)           Failure to comply with reasonable
directives of the Board which are consistent with Optionee’s duties, if not
remedied within thirty (30) days after Optionee’s receipt of notice thereof.


 


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