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EXHIBIT 4.02
EMPLOYEEMATTERS/ESOURCEONE, INC.
1999 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
EmployeeMatters, Inc. (formerly known as eSourceOne, Inc.), a Delaware
corporation (the "Company"), hereby grants an option to purchase shares of its
common stock (the "Shares") to the optionee named below. The terms and
conditions of the option are set forth in this cover sheet, in the attachment
and in the Company's 1999 Stock Option Plan (the "Plan").
Date of Option Grant: ____________
Name of Optionee: <>
Optionee's Social Security Number: <>
Number of Shares Covered by Option: <>
Exercise Price per Share: $0.10
Vesting Start Date: <>
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH
IS ALSO ATTACHED.
Optionee:
----------------------------------------
(Signature)
Company:
-----------------------------------------
(Signature)
Title:
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Attachment
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EMPLOYEEMATTERS/ESOURCEONE, INC.
1999 STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
NONSTATUTORY STOCK This option is not intended to be an incentive stock option
OPTION under section 422 of the Internal Revenue Code and will be
interpreted accordingly.
VESTING This option is only exercisable before it expires and then
only with respect to the vested portion of the option.
Your right to purchase Shares under this option vests as to
one-fourth (1/4) of the total number of Shares covered by
this option, as shown on the cover sheet, on the one-year
anniversary of the Vesting Start Date, provided you then
continue in Service. Thereafter, the number of Shares which
you may purchase under this option shall vest at the rate
of one-fourth (1/4) of the total number of Shares covered
by this option on each of the three succeeding
anniversaries of the Vesting Start Date, and provided that
you then remain in Service. The resulting aggregate number
of vested Shares will be rounded to the nearest whole
number, and you cannot vest in more than the number of
Shares covered by this option.
In the event of a Change in Control of the Company prior to
expiration of this option and at a time when you are an
Employee of the Company, any unvested Shares covered by
this option shall become fully and immediately vested on
your CiC Involuntary Termination Date. You will experience
a "CiC Involuntary Termination Date" if your Service is
terminated by the Company or its successor (other than for
Cause) within one year of the date of consummation of a
Change in Control of the Company. No additional Shares will
vest after your Service has terminated for any reason.
TERM Your option will expire in any event at the close of
business at Company headquarters on the day before the 10th
anniversary of the Date of Option Grant, as shown on the
cover sheet. Your option will expire earlier if your
Service terminates, as described below.
REGULAR TERMINATION If your Service terminates for any reason,
other than death, Disability or Cause, then your option
will expire at the close of business at Company
headquarters on the 90th day after your termination date.
TERMINATION FOR If your Service is terminated for Cause, then you shall
CAUSE immediately forfeit all rights to your option and the
option shall immediately expire.
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DEATH If your Service terminates because of your death, then your
option will expire at the close of business at Company
headquarters on the date twelve (12) months after the date
of death. During that twelve month period, your estate or
heirs may exercise the vested portion of your option.
In addition, if you die during the 90-day period described
in connection with a regular termination (i.e., a
termination of your Service not on account of your death,
Disability or Cause), and a vested portion of your option
has not yet been exercised, then your option will instead
expire on the date twelve (12) months after your
termination date. In such a case, during the period
following your death up to the date twelve (12) months
after your termination date, your estate or heirs may
exercise the vested portion of your option.
DISABILITY If your Service terminates because of your Disability, then
your option will expire at the close of business at Company
headquarters on the date twelve (12) months after your
termination date.
LEAVES OF ABSENCE For purposes of this option, your Service does
not terminate when you go on a bona fide employee leave of
absence that was approved by the Company in writing, if the
terms of the leave provide for continued Service crediting,
or when continued Service crediting is required by
applicable law. However, your Service will be treated as
terminating 90 days after you went on employee leave,
unless your right to return to active work is guaranteed by
law or by a contract. Your Service terminates in any event
when the approved leave ends unless you immediately return
to active employee work.
The Company determines which leaves count for this purpose,
and when your Service terminates for all purpose under the
Plan.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by filing the proper "Notice of
Exercise" form at the address given on the form. Your
notice must specify how many Shares you wish to purchase.
Your notice must also specify how your Shares should be
registered (in your name only or in your and your spouse's
names as community property or as joint tenants with right
of survivorship). The notice will be effective when it is
received by the Company.
If someone else wants to exercise this option after your
death, that person must prove to the Company's satisfaction
that he or she is entitled to do so.
FORM OF PAYMENT When you submit your notice of exercise, you
must include payment of the option price for the Shares you
are purchasing. Payment may be made in one (or a
combination) of the following forms:
- Cash, your personal check, a cashier's check or a money
order.
- Shares which have already been owned by you for more
than six months and which are surrendered to the
Company. The value of the Shares, determined as of the
effective date of the option exercise, will be applied
to the option price.
- To the extent a public market for the Shares exists as
determined by the Company, by delivery (on a form
prescribed by the Company) of an irrevocable direction
to a securities broker to sell Shares and
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to deliver all or part of the sale proceeds to the
Company in payment of the aggregate exercise price.
WITHHOLDING TAXES You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a result of
the option exercise or sale of Shares acquired under this
option.
RESTRICTIONS ON By signing this Agreement, you agree not to exercise this
EXERCISE AND SALE option or sell any Shares acquired under this option at a
time when applicable laws, regulations or Company or
underwriter trading policies prohibit exercise or sale. In
particular, the Company may impose the following two types
of "Suspension Periods."
- The Company shall have the right to designate one or
more periods of time, each of which shall not exceed 180
days in length, during which this option shall not be
exercisable if the Company determines (in its sole
discretion) that such limitation on exercise could in
any way facilitate a lessening of any restriction on
transfer pursuant to the Securities Act of 1933 (the
"Securities Act") or any state securities laws with
respect to any issuance of securities by the Company,
facilitate the registration or qualification of any
securities by the Company under the Securities Act or
any state securities laws, or facilitate the perfection
of any exemption from the registration or qualification
requirements of the Securities Act or any applicable
state securities laws for the issuance or transfer of
any securities. Such limitation on exercise shall not
alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this option
shall be exercisable; and
- In connection with any underwritten public offering by
the Company of its equity securities pursuant to an
effective registration statement filed under the
Securities Act, including the Company's initial public
offering, you shall not sell, make any short sale of,
loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value
or agree to engage in any of the foregoing transactions
with respect to any Shares without the prior written
consent of the Company or its underwriters, for such
period of time after the effective date of such
registration statement as may be requested by the
Company or the underwriters (not to exceed 180 days in
length).
If the sale of Shares under the Plan is not registered
under the Securities Act, but an exemption is available
which requires an investment or other representation, you
shall represent and agree at the time of exercise that the
Shares being acquired upon exercise of this option are
being acquired for investment, and not with a view to the
sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by
the Company and its counsel.
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THE COMPANY'S RIGHT In the event that you propose to sell, pledge or otherwise
OF FIRST REFUSAL transfer to a third party any Shares acquired under this
Agreement, or any interest in such Shares, the Company
shall have the "Right of First Refusal" with respect to all
(and not less than all) of such Shares. If you desire to
transfer Shares acquired under this Agreement, you must
give a written "Transfer Notice" to the Company describing
fully the proposed transfer, including the number of Shares
proposed to be transferred, the proposed transfer price and
the name and address of the proposed transferee.
The Transfer Notice shall be signed both by you and by the
proposed new transferee and must constitute a binding
commitment of both parties to the transfer of the Shares.
The Company shall have the right to purchase all, and not
less than all, of the Shares on the terms of the proposal
described in the Transfer Notice (subject, however, to any
change in such terms permitted in the next paragraph) by
delivery of a notice of exercise of the Right of First
Refusal within thirty (30) days after the date when the
Transfer Notice was received by the Company. The Company's
rights under this subsection shall be freely assignable, in
whole or in part.
If the Company fails to exercise its Right of First Refusal
within thirty (30) days after the date when it received the
Transfer Notice, you may, not later than ninety (90) days
following receipt of the Transfer Notice by the Company,
conclude a transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in the
Transfer Notice. Any proposed transfer on terms and
conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by you,
shall again be subject to the Right of First Refusal and
shall require compliance with the procedure described in
the paragraph above. If the Company exercises its Right of
First Refusal, the parties shall consummate the sale of the
Shares on the terms set forth in the Transfer Notice within
60 days after the date when the Company received the
Transfer Notice (or within such longer period as may have
been specified in the Transfer Notice); provided, however,
that in the event the Transfer Notice provided that payment
for the Shares was to be made in a form other than lawful
money paid at the time of transfer, the Company shall have
the option of paying for the Shares with lawful money equal
to the present value of the consideration described in the
Transfer Notice.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns and shall be binding
upon any transferee of the Shares.
The Company's Right of First Refusal shall terminate in the
event that Stock is listed on an established stock exchange
or is quoted regularly on the NASDAQ National Market.
TRANSFER OF OPTION Prior to your death, only you may exercise this
option. You cannot transfer or assign this option. For
instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these
things, this option will immediately become invalid. You
may, however, dispose of this option in your will or it may
be transferred upon your death by the laws of descent and
distribution.
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Regardless of any marital property settlement agreement,
the Company is not obligated to honor a notice of exercise
from your spouse, nor is the Company obligated to recognize
your spouse's interest in your option in any other way.
RETENTION RIGHTS Your option or this Agreement do not give you the
right to be retained by the Company (or any Parent,
Subsidiaries or Affiliates) in any capacity. The Company
(and any Parent, Subsidiaries or Affiliates) reserve the
right to terminate your Service at any time and for any
reason.
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for your
option's Shares has been issued. No adjustments are made
for dividends or other rights if the applicable record date
occurs before your stock certificate is issued, except as
described in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or a
similar change in the Company stock, the number of Shares
covered by this option and the exercise price per Share may
be adjusted (and rounded down to the nearest whole number)
pursuant to the Plan. Your option shall be subject to the
terms of the agreement of merger, liquidation or
reorganization in the event the Company is subject to such
corporate activity.
LEGENDS All certificates representing the Shares issued upon
exercise of this option shall, where applicable, have
endorsed thereon the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED
BY THIS CERTIFICATE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
APPLICABLE LAW This Agreement will be interpreted and enforced under
the laws of the State of New York, excluding any conflicts
or choice of law rule or principle that might otherwise
refer construction or interpretation of this Agreement to
the substantive law of another jurisdiction.
THE PLAN AND The text of the Plan is incorporated in this Agreement by
reference.
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OTHER AGREEMENTS CERTAIN CAPITALIZED TERMS USED IN THIS AGREEMENT ARE
DEFINED IN THE PLAN, AND HAVE THE MEANING SET FORTH IN THE
PLAN. This Agreement and the Plan constitute the entire
understanding between you and the Company regarding this
option. Any prior agreements, commitments or negotiations
concerning this option are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
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