**Exhibit 10.25**

 

**FORM OF**

**CHORDIANT SOFTWARE, INC.**

**CEO AND CFO RESTRICTED STOCK AGREEMENT**

 

This**CEO AND CFO RESTRICTED STOCK AGREEMENT** is entered into as of **October****10, 2002** (the “***Exchange Date***”), by andbetween **CHORDIANT SOFTWARE, INC.,** a Delaware corporation (the “***Company***”) and Stephen Kelly (“***Grantee***”), the Chief Executive Officer of the Company.

 

**RECITALS**

 

A.    The Company has offered to Grantee,and Grantee has elected to accept the Company’s offer, to exchange certain of Grantee’s stock options for restricted shares of the Company’s Common Stock, par value $0.001. 

 

B.    As partial consideration for Grantee being issued the restricted shares of theCompany’s Common Stock, Grantee must execute this Restricted Stock Agreement, setting forth the rights and restrictions of the Restricted Stock. 

 

**AGREEMENT**

 

The parties, intending to be legally bound, hereby agree as follows: 

 

**1.    GRANTOF RESTRICTEDSTOCK; PAYMENTFOR SHARES.**

 

**(a)    ****Grant of Shares.**  Pursuant to and subject to the terms of the Company’s **[1999 Equity Incentive Plan] / [2000 Nonstatutory Equity IncentivePlan]**, attached hereto as **EXHIBIT A** (the “***Plan***”), the Company hereby grants to Grantee as of the Exchange Date              sharesof the Company’s common stock, par value $0.001 per share, subject to the restrictions set forth below***(the “Restricted Stock”).***

 

**(b)    ****Consideration.**  The Company hereby acknowledges that the surrender of certain stockoptions, as set forth on **EXHIBIT B** (the “***Tendered Options***”), by Grantee constitutes all consideration for this grant of Restricted Stock. 

 

**2.    RESTRICTIONSAND RELATEDTERMS.**

 

**(a)    ****Restrictions Generally.**  Until they expire in accordance with Section 2(d) or 2(e), the following restrictions (the “***Restrictions***”) shall apply to theRestricted Stock: 

 

**(i)    **Grantee shall have no right to sell, transfer, assign, pledge, or otherwise encumber or dispose of the Restricted Stock (except for transfers and forfeitures to the Company); and 

 

**(ii)    **the Restricted Stock shallbe subject to a risk of forfeiture as set forth in Section 2(c). 

 

**(b)    ****Rights as Stockholder.**  Grantee shall be entitled to receive dividends on the Restricted Stock when, as, and if dividends are declared and paid on the Company’s common stock,shall be entitled to vote Restricted Stock on any matter submitted to a vote of holders of the Company’s common stock, and shall have all other rights of a stockholder of the Company, except as otherwise expressly provided in this Section 2.Dividends other than regular quarterly dividends, and any securities or property resulting from an adjustment under Section 7(d) of the Plan, shall be subject to the Restrictions to the same extent as Restricted Stock to which they relate.

 

**(c)    ****Forfeitureof Restricted Stock.**  If Grantee ceases to be employed by or provide services to the Company (or any of its subsidiaries) for any reason prior to the expiration of the Restrictions, the Restricted 

 

Stock as to which Restrictions have not previously expired and/or lapsed shall be forfeited to the Companyat the time of such cessation. 

 

**(d)    ****Vesting; Expiration of Restrictions.**

 

**(i)    **Subject to the limitations contained in subparagraphs (c)(ii), (c)(iii) and (c)(iv) below, the Restricted Stock shall vest, and the Restrictions shall expire (suchvesting and expiration and lapse of Restrictions, the ***“Vesting”***): 

 

**(1)    **For all shares of Restricted Stock granted in respect of Tendered Options that would have been vested through December 31, 2002, had such Tendered Options not beenexchanged for Restricted Stock (the ***“Vested Options”***), in equal installments on February 15, 2003 (the ***“First Installment Date”***), May 15, 2003 (the ***“Second Installment Date”***),August 15, 2003 (the ***“Third Installment Date”***), November 15, 2003 (the ***“Fourth Installment Date”***), February 15, 2004 (the ***“Fifth Installment Date”***) and March 15, 2004 (the***“Sixth Installment Date”***). The First, Second, Third, Fourth, Fifth and Sixth Installment Dates are collectively referred to as the ***“Installment Dates”*** or individually as the ***“InstallmentDate.”***

 

**(2)    **All shares of Restricted Stock granted in respect of Tendered Options that are not Vested Options and would have vested as of December 31, 2003 if such Tendered Options had not been exchanged forRestricted Stock (the ***“2003 Options”***), shall vest, and the Restrictions thereon shall expire and lapse, over the same number of quarters of 2004 over which such 2003 Options would have vested had the 2003 Options not beenexchanged, and the vesting dates for each applicable quarter shall be on the Fifth Installment Date, the Sixth Installment Date and on August 15, 2004 and November 15, 2004. 

 

**(3)    **All shares of Restricted Stock granted in respect of Tendered Options thatare neither Vested Options nor 2003 Options and which would have fully vested during 2004 (the ***“2004 Options”***) had such 2004 Options not been exchanged for Registered Stock shall vest, and the Restrictions thereon shallexpire and lapse, in equal installments on the Fifth Installment Date, the Sixth Installment Date and on the 15th of August 15, 2004 and November 15, 2004. 

 

**(4)    **All shares of Restricted Stock granted in respect of Tendered Options other than Vested Options, the2003 Options or the 2004 Options and which would have fully vested during 2005 (the ***“2005 Options”***) shall vest, and the Restrictions thereon shall expire and lapse, in equal installments on the 15th of each February, May,August and November, starting in 2005, over the duration of the remaining original vesting period of the exchanged or cancelled 2005 Options, such that the Restricted Stock exchanged for 2005 Options will be fully vested as of the date such 2005Options would have been fully vested if such 2005 Options were not exchanged or cancelled. 

 

**(ii)    **The portion of Restricted Stock subject to Vesting on each Installment Date (the ***“Conditional Vesting Amount”***), shall so Vest only if the“Target EPS Goals” or “Cumulative EPS Goals” (as each such term is defined below) have been met by the Company for each such Installment Date. 

 

**(iii)    **In the event that the Target EPS Goals are not met by the Company for anInstallment Date, the Conditional Vesting Amount subject to Vesting on such date shall not Vest, and such amount shall be carried forward to the next Installment Date (***“Carried Forward Portion”***). Any Carried Forward Portioncarried over to another Installment Period shall vest in such Installment Period only if the Cumulative EPS Goals have been met for such Installment Period. All such Carried Forward Portions may continue to be carried forward until the SixthInstallment Date. 

 

**(iv)    **In the event that the Target EPS Goals are not met by the Company for the Sixth Installment Date, the Conditional Vesting Amount subject to Vesting on such date, and the Conditional Vesting Amountcarried over from any other prior Installment Date, shall not Vest and such Restricted Stock shall be returned to the Company for cancellation. 

 

 

**(v)    **No fractional share shall vest at any time, and any fractional shares that are not vested as of the final vesting installment shall be combined and shall vest at that time. 

 

**(vi)    **Notwithstanding theforegoing, and provided the Restricted Stock has not been forfeited pursuant to Section 2(c) of this Agreement, in the event of a Change in Control, as defined in the Plan, the vesting of the Restricted Stock shall be automatically acceleratedimmediately prior to the Change in Control such that the Restricted Stock will be vested to the same extent as the Restricted Stock would have been vested (in the absence of a Change in Control) as of the date one (1) year following the date of theChange in Control. 

 

**(vii)    **As set forth above, the Vesting of the Restricted Stock granted in respect of Tendered Options shall be subject to the Company meeting earnings per share goals (as defined below, the“***Target EPS Goals***” or the “***Cumulative EPS Goals***,” together, the “***EPS Goals***”) for each respective Installment Date, as set forth in the chart below. The EPS Goals shall becalculated by the Board of Directors based on the total earnings of the Company (excluding expenses associated with: (i) purchased in process research and development; (ii) stock-based compensation expenses; (iii) amortization of acquired intangibleassets; (iv) integration related charges; (v) restructuring charges; and (vi) other one time charges) divided by the number of shares then outstanding (as reported in the latest public filing of the Company with the Securities and ExchangeCommission in the Company’s Quarterly Report on Form 10-Q, or Annual Report on Form 10-K). 

 

**Quarter**
    
**Target**

**EPS Goals**
    
**Cumulative**

**EPS Goals**

Q3 2002
    
-0.09
    
-0.09

Q4 2002
    
-0.05
    
-0.14

Q1 2003
    
-0.05
    
-0.19

Q2 2003
    
-0.02
    
-0.21

Q3 2003
    
      0
    
-0.21

Q4 2003
    
 0.03
    
-0.18

 

**In USDollars**

 
   
**First**

**Installment**

**Date**

**Q3 2002**
  
**Second**

**Installment**

**Date**

**Q4 2002**
  
**Third**

**Installment**

**Date**

**Q1 2003**
  
**Fourth**

**Installment**

**Date**

**Q2 2003**
  
**Fifth**

**Installment**

**Date**

**Q3 2003**
  
**Sixth**

**Installment**

**Date**

**Q4 2003**

**The “Target EPS Goals”**
  
**-0.09**
  
**-0.05**
  
**-0.05**
  
**-0.02**
  
**      0**
  
**  0.03**

**The “Cumulative EPS Goals”**
  
**-0.09**
  
**-0.14**
  
**-0.19**
  
**-0.21**
  
**-0.21**
  
**-0.18**

 

**3.    CERTIFICATES REPRESENTING RESTRICTED STOCK.**

 

**(a)    **Restricted Stock shall not be evidenced by issuance of certificates, and shall remain in the custody ofthe Company or its designee until such time as the Restrictions on such shares have expired. In addition, Restricted Stock shall be subject to such stop-transfer orders and other restrictive measures as the Company shall deem advisable under federalor state securities laws, rules and regulations thereunder, and the rules of any national securities exchange on which Common Stock is then quoted or listed, or to implement the Restrictions. 

 

**(b)    **Subject to Section 2(e),upon expiration of the Restrictions on any Restricted Stock, the Company shall promptly be deposited into your account established with RBC Capital Markets. 

 

 

**4.    ****STOCK POWERS.**  Grantee agrees to execute and deliver to the Company, in connection herewith, one or more stock powers in the form attached hereto as**EXHIBIT C** authorizing the transfer of the Restricted Stock to the Company. 

 

**5.    TAX MATTERS.**

 

**(a)    ****Recognition of Income.**  Grantee understands that under Section 83 and other applicableprovisions of the Internal Revenue Code of 1986, as amended (the “***Code***”) the fair market value of the Restricted Stock on the date when the Restrictions expire minus the fair market value of the Restricted Stock (withoutregard to the Restrictions) on the Exchange Date will be reportable as ordinary income at such time. Grantee further understands that, in lieu of the foregoing, Grantee may elect to be taxed at the time the Restricted Stock is acquired hereunder ona recognized income amount equal to the fair market value of the Restricted Stock (without regard to the Restrictions) on the Exchange Date less Grantee’s basis in the Restricted Stock, which will be the fair market value of the RestrictedStock (without regard to the Restrictions) on the Exchange Date, by filing an election with the Internal Revenue Service pursuant to Section 83(b) of the Code within thirty (30) calendar days after Exchange Date (an “***83(b)Election***”). Grantee acknowledges that it is Grantee’s sole responsibility to seek advice regarding Section 83(b) and to determine whether to make an 83(b) Election. 

 

**(b)    ****Tax Withholdings.**

 

**(i)    **If Grantee does not file an83(b) Election, Grantee is required to pay the employee portion of any applicable tax withholding and other payroll tax amounts. Grantee hereby directs the Company to sell on Grantee’s behalf on each vesting date a number of shares of theRestricted Stock that vests on a vesting date with a value equal to the amount of the employee tax withholdings and other payroll taxes for such shares of stock and to use the proceeds from the sale of such shares of stock to pay for all applicabletax withholdings. 

 

**(ii)    **If Grantee files an 83(b) Election within thirty (30) calendar days of the Exchange Date, Grantee will be required to tender a check on the Exchange Date in the amount of the applicable employee taxwithholdings and other payroll taxes, if any, for the grant of the Restricted Stock. 

 

**6.    ****GRANTEE BOUNDBY PLAN.**  Grantee hereby acknowledges receipt of the attached copy of thePlan and agrees to be bound by all the terms and provisions thereof (as presently in effect or hereafter amended), which are incorporated herein by reference, and by all decisions and determinations of the Committee thereunder. Capitalized terms nototherwise defined herein shall have the meaning ascribed thereto in the Plan; *provided, however,* that in the event the provisions hereof conflict or are inconsistent with the terms of the Plan the provisions hereof shall govern the RestrictedStock. 

 

**7.    MISCELLANEOUS.**

 

**(a)    **This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties. This Agreement constitutes the entire agreement between theparties with respect to the Restricted Stock, and supersedes any prior agreements or documents with respect to the Restricted Stock. Notwithstanding the foregoing, nothing in this Agreement shall affect the parties’ rights or obligations underany change of control agreement executed prior to or after the effective date of this Agreement. 

 

**(b)    **This Agreement is not an employment or other services contract and nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company(or any subsidiary of the Company) to terminate Grantee’s employment or services for any reason and at any time, with or without cause, and with or without notice. 

 

**(c)    **In addition to any other limitation on transfer imposed by applicablesecurities laws, Grantee shall not assign, pledge, hypothecate, donate, encumber or otherwise dispose of any interest in the shares of Restricted Stock while such shares are subject to the Restrictions set forth in this Agreement. After theRestrictions 

 

have expired with respect to any such shares of Restricted Stock, the shares with respect to which theRestrictions have expired may be freely disposed of by Grantee. 

 

**(d)    **Except as permitted by the Plan, no amendment, alteration, suspension, discontinuation, or termination of this Agreement which may impose any additional obligation upon the Company or materiallyimpair the rights of Grantee with respect to the Restricted Stock shall be valid unless in each instance such amendment, alteration, suspension, discontinuation, or termination is expressed in a written instrument duly executed in the name and onbehalf of the Company and by Grantee. 

 

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**IN WITNESS WHEREOF**, this **CEO AND CFO RESTRICTED STOCK AGREEMENT** is entered into asof the date first set forth above. 

 

**CHORDIANT SOFTWARE, INC.**
   
**GRANTEE**

By:
    
By:
 
Print Name:
 
Steve Vogel
   
Print Name:
 
Stephen Kelly

Print Title:
 
Chief Financial Officer
   
Print Title:
 
Chief Executive Officer