**Exhibit 10.2**

 

**Witness Systems Amended and Restated**

**Stock Incentive Plan**

 

**OptionAward**

** **

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

 

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

 

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

 

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

 

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(a)*   TerminationGenerally.* If Optionee ceases toperform 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, alongwith any and all rights or subsequent rights attached thereto, thirty (30) daysfollowing the Termination Date, but in no event later than the Expiration Date.

 

(b)*   Deathor Disability.* If Optioneeceases to perform services for the Company, or any Parent or Subsidiary, as aresult of the death or disability of Optionee (as determined by the Board inits sole discretion), this Option, to the extent (and only to the extent) thatit would have been exercisable by Optionee on the Termination Date, may beexercised by Optionee (or, in the event of Optionee’s death, by Optionee’slegal representative) within ninety (90) days after the Termination Date, but inno event later than the Expiration Date.

 

(c)   *No Right to Employment.* Nothing in the Plan or this Option Awarddocument shall confer on Optionee any right to continue in the employ of, orother relationship with, the Company, or any Parent or Subsidiary, or limit inany way the right of the Company, or any Parent or Subsidiary, to terminateOptionee’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 deliveryto the Company of such form of exercise agreement, notice or other form as maybe approved or accepted by the Company from time to time, which shall set forthOptionee’s election to exercise this Option, the number of Shares beingpurchased, any restrictions imposed on the Shares, and such otherrepresentations and agreements as may be required by the Company to comply withapplicable securities laws.

 

(b)   *Exercise Price.* Such notice shall be accompanied by fullpayment 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 advanceand in writing by the Compensation Committee of the Board in its solediscretion:  (i) by surrender of sharesof Common Stock of the Company that have been owned by Optionee for more thansix (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 promissorynote, such note has been fully paid with respect to such shares), or wereobtained by Optionee in the open public market, having a Fair Market Valueequal to the Exercise Price of the Shares being purchased; (ii) byinstructing the Company to withhold Shares otherwise issuable pursuant to theexercise of the Option having a Fair Market Value equal to the Exercise Priceof the Shares being purchased (including the withheld Shares); (iii) bywaiver of compensation accrued by Optionee for services rendered; or (iv) bya combination of the foregoing.

 

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

 

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obligationsof the Company.  Where approved by theCompensation Committee, Optionee may provide for payment of withholding taxesupon exercise of the Option by requesting that the Company retain Shares with aFair Market Value equal to the minimum amount of taxes required to bewithheld.  In such case, the Companyshall issue the net number of Shares to Optionee by deducting the Sharesretained from the Shares otherwise issuable upon exercise.

 

(d)   *Issuance of Shares.* Provided that such notice and payment are inform and substance satisfactory to counsel for the Company, the Company shallcause the Shares to be issued in the name of Optionee or Optionee’s legalrepresentative.

 

**5.****     Nontransferabilityof Option.**  This Option may notbe transferred in any manner, other than by will or by the laws of descent anddistribution, and may be exercised during Optionee’s lifetime only byOptionee.  The terms of this Option shallbe binding upon the executor, administrators, successors and assigns ofOptionee.

 

**6.****     TaxConsequences.**  OPTIONEEUNDERSTANDS THAT THE GRANT AND EXERCISE OF THIS OPTION, AND THE SALE OF SHARESOBTAINED THROUGH THE EXERCISE OF THIS OPTION, MAY HAVE ADVERSE TAXCONSEQUENCES TO OPTIONEE.  OPTIONEESHOULD CONSULT WITH HIS OR HER TAX ADVISOR AND MAY NOT RELY ON THE COMPANYFOR ANY FINANCIAL, TAX OR OTHER ADVICE.

 

**7.**     **Interpretation.**  Any dispute regarding the interpretation ofthis Option Award document shall be submitted by Optionee or the CompensationCommittee of the Board, which shall review such dispute at its next regularmeeting.  The resolution of such adispute by the Compensation Committee of the Board shall be final and bindingon the Company and Optionee.

 

**8.**     **Entire Agreement.**  The Plan is incorporated herein by thisreference.  The granting of this Optionconstitutes a full accord, satisfaction and release of all obligations orcommitments made to Optionee by the Company or any of its officers, directors,shareholders or affiliates with respect to the issuance of any securities, orrights to acquire securities, of the Company or any of its affiliates.  This Option Award document and the Planconstitute the entire agreement of the parties hereto, and supersede all priorundertakings and agreements with respect to the subject matter hereof.

 

**9.****     Exercisabilityof Option. **Subject to the termsof the Plan and this Option Award document, the issuance of Shares pursuant tothe exercise of this Option shall be subject to the limitations set forthherein defined below.  For purposes ofthis Section, “Continuous Service” means a period of continuous performance ofservices by Optionee for the Company, a Parent, or a Subsidiary, as determinedby the Board.

 

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*Four Year Vesting:** *Optionee may exercisethis Option with respect to the percentage of Shares set forth below only afterOptionee has completed the following periods of Continuous Service followingthe date of grant:

 

(a)           Aftertwelve (12) months of Continuous Service, up to twenty-five percent (25%) ofthe Shares;

 

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

 

IfOptionee’s employment with the Company is terminated by the Company other thanfor 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 (asdefined below) and (ii) for three hundred sixty (360) days after a Changeof Control, then (A) the Option granted hereby, if less than fully vestedas of the Termination Date, shall be deemed fully vested and exercisable; and (B) Section 3above (other than the second sentence thereof) shall be deleted and replacedwith the following:  “This Option may notbe exercised more than three hundred sixty (360) days from the later of:Optionee’s Termination Date or the date Optionee ceases to perform services forthe Company, or any Parent or Subsidiary (which date shall be determined by theBoard in its reasonable discretion).”

 

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

 

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

 

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1934, as amended (“Exchange Act”), or Item 5.01 of Form 8-Kpromulgated under the Exchange Act; (ii) any person (as such term is usedin Section 13(d) and 14(d)(2) of the Exchange Act) is or becomesthe 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 outstandingsecurities; or (iii) following the election or removal of directors, amajority of the Board consists of individuals who were not members of the Boardtwo (2) years before such election or removal, unless the election of eachdirector who was not a director at the beginning of such 2-year period has beenapproved in advance by directors representing at least a majority of thedirectors then in office who were directors at the beginning of the 2-yearperiod.

 

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

 

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

 

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

 

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

 

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

 

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

 

3.             Cause.  “Cause” meanstermination of Optionee’s employment under any one or more of the followingevents:

 

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

 

(b)           Any material violation by Optionee of anypolicy of the Company relating to ethical conduct or practices or fiduciaryduties of a similarly situated executive;

 

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

 

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

 

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(e)           Failure to comply with reasonabledirectives of the Board which are consistent with Optionee’s duties, if notremedied within thirty (30) days after Optionee’s receipt of notice thereof.

 

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