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EXHIBIT 4.2
FORM OF INDIVIDUAL EMPLOYEE OR CONSULTANT STOCK OPTION AGREEMENT
On February 24, 2000 RateXchange Corporation's Board of Directors
authorized the issuance of options to purchase an aggregate of 4,290,000 shares
of common stock to approximately thirty-five officers, directors and employees
of and consultants to RateXchange, at a strike price of $7.00. Of these options,
75,000 were revoked prior to vesting and 968,750 vested immediately. An
additional 400,000 options vested as of March 2000 upon meeting a vesting
provision that the Company's stock price trade at $20 or more for ten
consecutive days. Another 300,000 options are scheduled to vest in the event
RateXchange completes a second public offering pursuant to which the Company's
shares are sold for at least $15. The remaining options vest over periods of
between one and four years. All of the options expire on February 24, 2005.
NON-QUALIFIED, NON-PLAN STOCK OPTION AGREEMENT
This Non-Qualified, Non-Plan Stock Option Agreement is made effective
the 24th day of February, 2000 (which date is hereinafter referred to as the
"DATE OF GRANT") by and among RATEXCHANGE CORPORATION, a Delaware corporation
hereinafter referred to as the "COMPANY") and __________________________________
(hereinafter referred to as "OPTIONEE"). If Optionee is presently or
subsequently becomes employed by or retained by a subsidiary of the Company, the
term "Company" shall be deemed to refer collectively to RateXchange Corporation
and the subsidiary or subsidiaries which employ or retain the Optionee.
RECITALS
A. From time to time, the Company grants stock options to key
employees, officers, consultants and directors of the Company as an incentive to
encourage such persons to remain in its service and to enhance the ability of
the Company to attract new employees, officers, consultants and directors whose
services are considered unusually valuable by providing an opportunity to have a
proprietary interest in the success of the Company; and
B. The Company's Board of Directors (the "BOARD") believes that the
granting of the Option herein described to Optionee is consistent with the
stated purposes for the grant of a stock option.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Optionee agree
as follows:
1. Grant of Option. The Company hereby grants to Optionee the right and
option (hereinafter referred to as the "OPTION") to purchase an aggregate of
______________ shares
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(such number being subject to adjustment as provided in paragraph number 12
hereof) of RateXchange Corporation (the "STOCK") on the terms and conditions
herein set forth. This Option may be exercised in whole or in part and from time
to time only to the extent the Option is vested and as hereinafter provided.
2. Vesting. Unless otherwise agreed, the Option shall vest as follows:
(a) Employees:
(i) Twenty-five percent (25%) of the shares shall vest twelve
(12) months after the Date of Grant;
(ii) One-thirty sixth (1/36) of the remaining shares shall
vest each month thereafter.
(b) Consultants:
(i) Fifty percent (50%) of the shares shall vest immediately
on the Date of Grant;
(ii) One-twelfth (1/12) of the remaining shares shall vest
each month thereafter.
(c) Board Members:
(i) Fifty percent (50%) of the shares shall vest immediately
on the Date of Grant;
(ii) Fifty percent (50%) of the shares shall vest 12 months
after the Date of Grant.
3. Purchase Price. The price at which Optionee shall be entitled to
purchase the Stock covered by the Option shall be $7.00 per share.
4. Term of Option. The Option hereby granted shall be and remain in
force and effect for a period of five (5) years from the Date of Grant, through
and including the normal close of business of the Company on February 24, 2005
(hereinafter referred to as the "EXPIRATION DATE"), subject to earlier
termination as provided in paragraphs 8 and 9 hereof.
5. Exercise of Option. The Option may be exercised by Optionee at any
time and from time to time on or after the vesting date set forth above, and
through the Expiration Date as to all or any part of the shares of the Stock
then vested by delivery to the Company of written notice of exercise and payment
of the purchase price as provided in paragraphs 6 and 7 hereof.
6. Method of Exercising Option. Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by timely delivery to the
Company of an executed written Stock Option Exercise Agreement in the form
attached hereto as Exhibit 1, which agreement shall be effective on the date
received by the Company (the "EFFECTIVE DATE"). The
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agreement shall state Optionee's election to exercise the Option, the number of
shares in respect of which an election to exercise has been made, the method of
payment elected (see paragraph 7 hereof), the exact name or names in which the
shares will be registered and the Social Security number of Optionee. Such
notice shall be signed by the Optionee and shall be accompanied by payment of
the purchase price of such shares. In the event the Option shall be exercised by
a person or persons other than Optionee pursuant to paragraph 9 hereof, such
notice shall be signed by such other person or persons and shall be accompanied
by proof acceptable to the Company of the legal right of such person or persons
to exercise the Option. All shares delivered by the Company upon exercise of the
Option as provided herein shall be fully paid and nonassessable upon delivery.
7. Method of Payment for Options. Payment for shares purchased upon the
exercise of the Option shall be made by the Optionee in cash or such other
method permitted by the Board in its sole discretion, including (i) tendering
shares, (ii) broker-assisted cashless exercise, or (iii) any combination of the
above.
8. Termination of Employment. In the event that Optionee is terminated
as an employee of or consultant to the Company for any reason other than for
Cause, as defined below, then Optionee may at any time within three (3) months
next succeeding the effective date of such termination exercise the Option to
the extent that Optionee was entitled to exercise the Option at the date of
termination, provided that in no event shall the Option, or any part thereof, be
exercisable after the Expiration Date. If Optionee's employment or service is
terminated for Cause, the Option shall lapse at the time of such termination.
For purposes of this Agreement, "Cause" means if the Board, in its reasonable
and good faith discretion, determines that Optionee (i) has developed or pursued
interests substantially adverse to the Company, (ii) materially breached any
employment, engagement or confidentiality agreement or otherwise failed to
satisfactorily discharge Optionee's duties, (iii) has not devoted all or
substantially all of his business time, effort and attention to the affairs of
the Company (or such lesser amount as has been agreed to in writing by the
Company), (iv) is convicted of a felony involving moral turpitude, or (v) has
engaged in activities or omissions that are detrimental to the well-being of the
Company. Nothing in this Agreement shall confer on Optionee any right to
continue in the employ of, or other relationship with, the Company or limit in
any way the right of the Company to terminate Optionee's employment or other
relationship at any time, with or without cause.
9. Death of Optionee. In the event of the death of Optionee within a
period during which the Option, or any part thereof, could have been exercised
by Optionee, including three (3) months after the date of Optionee's death (the
"OPTION PERIOD"), the Option shall lapse unless it is exercised within the
Option Period and in no event later than fifteen (15) months after the date of
Optionee's death by the Optionee's legal representative or representatives or by
the person or persons entitled to do so under Optionee's last will and testament
or if the Optionee fails to make a testamentary disposition of such Option or
shall die intestate, by the person or persons entitled to receive such Option
under the applicable laws of descent and distribution. An Option may be
exercised following the death of the Optionee only if the Option was exercisable
by the Optionee immediately prior to Optionee's death. In no event shall the
Option, or any part thereof, be exercisable after the Expiration Date. The Board
shall have the right to require evidence satisfactory to it of the rights of any
person or persons seeking to exercise the Option under this paragraph 9 to
exercise the Option.
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10. Nontransferability. The Option granted by this Option Agreement
shall be exercisable only during the term of the Option provided in paragraph 4
hereof and, except as provided in paragraphs 8 and 9 above, only by Optionee
during Optionee's lifetime and while an employee, officer, consultant or
director of the Company. No right or interest of Optionee in the option may be
pledged, encumbered, or hypothecated to or in favor of any party other than the
Company, or shall be subject to any lien, obligation, or liability of Optionee
to any other party other than the Company.
11. Delivery of Shares. No shares of Stock shall be delivered upon
exercise of the Option until (i) the purchase price shall have been paid in full
in the manner herein provided; (ii) applicable taxes required to be withheld
have been paid or withheld in full; (iii) approval of any governmental authority
required in connection with the Option, or the issuance of shares thereunder,
has been received by the Company; and (iv) if required by the Board, Optionee
has delivered to the Board a written statement in form and content satisfactory
to the Company as provided in paragraph 13 hereof.
12. Adjustments. In the event a stock dividend is declared upon the
Stock, the shares of Stock then subject to the Option shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of Stock or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, there
shall be substituted for each such share of Stock then subject to the Option the
number and class of shares of Stock into which each outstanding share of Stock
shall be so exchanged, all without any change in the aggregate purchase price
for the shares then subject to the Option.
13. Securities Act. The Company shall have the right, but not the
obligation, to cause the shares of Stock issuable upon exercise of the Option to
be registered under the appropriate rules and regulations of the Securities and
Exchange Commission. The Company shall not be required to deliver any shares of
Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for the Company, such issuance would violate the Securities
Act of 1933 or any other applicable federal or state securities laws or
regulations. The Company may require that Optionee, prior to the issuance of any
such shares pursuant to exercise of the Option, sign and deliver to the Company
a written statement containing such terms and conditions as counsel for the
Company may reasonably require to assure compliance with the Securities Act of
1933 or other applicable federal or state securities laws and regulations.
14. Federal and State Taxes. Upon exercise of the Option, or any part
thereof, the Optionee may incur certain liabilities for federal, state or local
taxes and the Company may be required by law to withhold such taxes for payment
to taxing authorities. Upon determination by the Company of the amount of taxes
required to be withheld, if any, with respect to the shares to be issued
pursuant to the exercise of the Option, Optionee must pay all minimum statutory
Federal, state, and local tax withholding requirements.
15. Administration. This Option Agreement shall at all times be
administered by the Board and decisions of the majority of the Board with
respect to this Option Agreement shall be final and binding upon Optionee and
the Company.
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16. Obligation to Exercise. Optionee shall have no obligation to
exercise any option granted by this Agreement.
17. Governing Law. This Option Agreement shall be interpreted and
administered under the laws of the State of California without regard to
conflict of law principles.
18. Amendments. This Option Agreement may be amended only by a option
agreement executed by the Company and Optionee. The Company and Optionee
acknowledge that changes in federal tax laws enacted subsequent to the Date of
Grant, and applicable to stock options, may provide for tax benefits to the
Company or Optionee. In any such event, the Company and Optionee agree that this
Option Agreement may be amended as necessary to secure for the Company and
Optionee any benefits that may result from such legislation. Any such amendment
shall be made only upon the mutual consent of the parties, which consent (of
either party) may be withheld for any reason.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed and Optionee has hereunto set his or her hand as of the date first
written above.
RATEXCHANGE CORPORATION
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By:
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Its:
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OPTIONEE
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EXHIBIT 1
STOCK OPTION EXERCISE AGREEMENT
This Agreement is made this _____ day of ________________, 2000 between
RateXchange Corporation, a Delaware corporation (the "Company"), and the
optionee named below ("Optionee").
The Company and Optionee hereby agree as follows:
1. PURCHASE OF SHARES. On this date and subject to the terms and
conditions of this Agreement, Optionee hereby exercises the Non-Qualified,
Non-Plan Stock Option Agreement between the Company and Optionee dated effective
February 24, 2000 (the "Option"), with respect to __________ Shares [COMPLETE]
of the Company's Common Stock (the "Shares") at an aggregate purchase price
equal to $__________ [COMPLETE] (the "Purchase Price"). The term "Shares" refers
to the Shares purchased under this Agreement and includes all securities
received (a) in replacement of the Shares, and (b) as a result of stock
dividends or stock splits in respect of the Shares. Capitalized terms used
herein that are not defined herein have the definitions ascribed to them in the
Option.
2. REPRESENTATIONS OF PURCHASER. Optionee represents and warrants to
the Company that:
(a) Optionee has received, read and understood the Option and agrees to
abide by and be bound by its terms and conditions.
(b) Optionee is capable of evaluating the merits and risks of this
investment, has the ability to protect Optionee's own interests in this
transaction and is financially capable of bearing a total loss of this
investment.
(c) Optionee is fully aware of (i) the highly speculative nature of the
investment in the Shares, and (ii) the financial hazards involved.
(d) Optionee is purchasing the Shares for Optionee's own account for
investment purposes only and not with a view to, or for sale in connection with,
a distribution of the Shares within the meaning of the Securities Act of 1933,
as amended (the "1933 Act").
3. COMPLIANCE WITH SECURITIES LAWS. Optionee understands and
acknowledges that the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the 1933 Act and all applicable state
securities laws. Optionee agrees to cooperate with the Company to ensure
compliance with such laws.
4. RESTRICTIONS ON TRANSFER. Optionee understands that the Shares must
be held indefinitely unless they are registered under the 1933 Act or unless an
exemption from such registration is available. If Optionee is an affiliate or
control person, Optionee understands that the Shares are "control shares" that
must be sold in compliance with Rule 144 promulgated under the 1933 Act.
Optionee also understands that the Company is under no obligation to register
the
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Shares, and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee. Optionee
further understands that the transfer of the Shares may be restricted by
applicable state securities laws.
5. STOP-TRANSFER NOTICES. Optionee understands and agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
6. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.
7. ENTIRE AGREEMENT. The Option is incorporated herein by reference.
This Agreement and the Option constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and are governed by
California law.
Submitted By: Accepted By:
"OPTIONEE" "COMPANY"
RATEXCHANGE CORPORATION,
a Delaware corporation
____________________________ By:____________________________________
Name:_______________________
Name:__________________________________
Address:____________________
____________________ Title:_________________________________
____________________
Dated: ______ __, ____ Dated: ______ __, _____
Register Shares in the Following Name: _________________________________
Social Security Number of Optionee: ___________________________________
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