<PAGE>
EXHIBIT 99.2
PRIMUS KNOWLEDGE SOLUTIONS, INC.
NONQUALIFIED STOCK OPTION LETTER AGREEMENT
TO: Kristopher Klein
We are pleased to inform you that you have been selected by the Company
to receive a stock option (the "Option") to purchase shares (the "Option
Shares") of the Company's Common Stock.
The terms of the Option are as set forth in this Agreement and the
Change of Control Agreement, a copy of which is attached as Exhibit A hereto,
and to the extent not inconsistent with this Agreement or with the Change of
Control Agreement, shall be the same as the terms described in the Company's
1999 Stock Incentive Compensation Plan (the "Plan"), a copy of which is attached
hereto as Exhibit B.
The most important terms of the Option are summarized as follows:
Grant Date: May 31, 2000
Number of Shares: 125,000
Exercise Price: $28.125 per share
Expiration Date: May 31, 2010
Type of Option: Nonqualified Stock Option ("NSO")
Vesting and Exercisability: The Option will vest and become exercisable
according to the following schedule:
Date On and After Which Option is Portion of Total Option Which Is
Vested and Exercisable Vested and Exercisable
May 31, 2001 25%
Each one-month period completed An additional 1/48
thereafter
May 31, 2004 100%
Method of Exercise: You may exercise the Option by giving written
notice to the Company, in form and substance satisfactory to the Company, which
will state the election to exercise the Option and the number of shares of
Common Stock for which you are exercising the Option. The written notice must be
accompanied by full payment of the exercise price for the number of shares of
Common Stock you are purchasing.
Form of Payment: You may pay the Option exercise price, in whole or in
part, in cash, by check or, unless the Board determines otherwise, by (a)
tendering (either actually or
<PAGE>
by attestation) shares of Common Stock held by you for a period of at least six
months having a fair market value on the day prior to the date of exercise equal
to the exercise price (you should consult your tax advisor before exercising the
Option with stock you received upon the exercise of an ISO); (b) if and so long
as the Common Stock is registered under the Securities Exchange Act of 1934, as
amended, delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay the exercise price; or (c) such
other consideration as the Board may permit.
Withholding Taxes: As a condition to the exercise of any portion of the
Option that is treated as a nonqualified stock option, you must make such
arrangements as the Company may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with
such exercise. The Company has the right to retain without notice sufficient
shares of stock to satisfy the withholding obligation. Unless the Board
determines otherwise, you may satisfy the withholding obligation by electing to
have the Company withhold from the shares to be issued upon exercise that number
of shares having a fair market value equal to the amount required to be withheld
(up to the minimum required federal tax withholding rate). The Company may also
deduct from the shares to be issued upon exercise any other amounts due from you
to the Company.
Limited Transferability: During your lifetime only you can exercise the
Option. The Option is not transferable except by will or by the applicable laws
of descent and distribution. The Option may be exercised by a designated
beneficiary or the personal representative of your estate.
Termination of Option: The unvested portion of the Option will terminate
automatically and without further notice immediately upon termination (voluntary
or involuntary) of your employment or service relationship with the Company. It
is your responsibility to be aware of the date your Option terminates. The
vested portion of the Option will terminate automatically and without further
notice on the earliest of the following dates:
(a) three months after termination of your employment or service
relationship with the Company for any reason other than Disability or death;
(b) one year after termination of your employment or service
relationship with the Company by reason of Disability or death; or
(c) the Expiration Date;
except, that if the Company terminates your services for Cause you will forfeit
the unexercised portion of the Option, including vested and unvested shares, on
the date the Company notifies you of your termination. If you die while the
Option is exercisable, the Option may be exercised until one year after the date
of death or the Expiration Date, whichever is earlier.
Registration: At the present time, the Company has an effective
registration statement with respect to the Option Shares. The Company intends to
maintain this registration but has no obligation to do so. In the event that
such registration is no longer effective, you will not be able to exercise the
Option unless exemptions from registration under federal and state securities
laws are available; such exemptions from registration are
-2-
<PAGE>
very limited and might be unavailable. By accepting the Option, you hereby
acknowledge that you have read and understand Section 15.3 of the Plan.
Binding Effect: This Agreement will inure to the benefit of the
successors and assigns of the Company and be binding upon you and your heirs,
executors, administrators, successors and assigns.
Limitation on Rights; No Right to Future Grants; Extraordinary Item of
Compensation: By entering into this Agreement and accepting the grant of the
Option evidenced hereby, you acknowledge: (a) that the grant of the Option is a
one-time benefit which does not create any contractual or other right to receive
future grants of options, or benefits in lieu of options; (b) that all
determinations with respect to any such future grants, including, but not
limited to, the times when options will be granted, the number of shares subject
to each option, the option price, and the time or times when each option will be
exercisable, will be at the sole discretion of the Company; (c) that the value
of the Option is an extraordinary item of compensation which is outside the
scope of your employment contract, if any; (d) that the Option is not part of
normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments; (e) that the vesting of the
Option ceases upon termination of employment or service relationship with the
Company for any reason except as may otherwise be explicitly provided in the
Change of Control Agreement, the Plan or this Agreement; (f) that the future
value of the underlying Option Shares is unknown and cannot be predicted with
certainty; and (g) that if the underlying Option Shares do not increase in
value, the Option will have no value.
Employee Data Privacy: By entering this Agreement, you (a) authorize
the Company and your employer, if different, and any agent of the Company, to
disclose to the Company or any of its affiliates any information and data the
Company requests in order to facilitate the grant of the Option; (b) waive any
data privacy rights you may have with respect to such information; and (c)
authorize the Company and its agents to store and transmit such information in
electronic form.
Please execute the following Acceptance and Acknowledgment and return
it to the undersigned.
Very truly yours,
PRIMUS KNOWLEDGE SOLUTIONS, INC.
By: /s/ Michael A. Brochu
---------------------
Michael A. Brochu
Its: President and Chief Executive Officer
-3-
