RIGHTS OFFERING AGREEMENT
RIGHTS OFFERING AGREEMENT, dated as of May 16, 2000 (this "Agreement"), by and
among Telefonica, S.A., a company organized under the laws of the Kingdom of
Spain ("Telefonica"), Terra Networks, S.A., a company organized under the laws
of the Kingdom of Spain ("Terra"), and Lycos, Inc., a Delaware corporation
("Lycos").
W I T N E S S E T H :
WHEREAS, Terra and Lycos have entered into an Agreement and Plan of
Reorganization dated as of the date hereof, pursuant to which Lycos will
become a wholly owned subsidiary of Terra (the "Reorganization Agreement";
capitalized terms used herein but not defined herein shall have the meanings
ascribed thereto in the Reorganization Agreement);
WHEREAS, in connection with the Reorganization Agreement, Terra (the
"Terra Board") has agreed to consummate a rights offering (the "Rights
Offering") of shares of common stock ("Subscription Stock") equal to an
aggregate value, including a par value plus premium to be paid in by the
subscribers, of 2.2 billion Euros (the "Subscription Amount");
WHEREAS, Telefonica wishes to support Terra's business prospects and
join other Terra shareholders in a common vision for Terra's success.
NOW THEREFORE, in consideration of the above-referenced recitals,
and other good and valuable consideration, the receipt and adequacy of which
is hereby conclusively acknowledged, the parties hereto intending to be
legally bound, agree as follows:
1. Rights Offering.
(a) As soon as reasonably practicable after the date of this Agreement,
the Board of Directors of Terra will call a meeting of the Terra shareholders
("Terra Shareholders") as soon as practicable to seek their approval to
delegate to the Board of Directors the power to effectuate the Rights Offering
in an amount equal to the Subscription Amount, in accordance with the Spanish
Corporation Law of 1989 (Texto Refundido de xx Xxx de Sociedades Anonimas).
The Terra Shareholders shall agree that necessary terms and conditions,
including in order to permit Telefonica to subscribe to the shares of the
Subscription Stock in accordance with Section 2 below, shall be determined by
the Board of Directors or the Delegated Committee of the Board of Directors
(the "Committee") at a meeting of such Board or Committee to be held in order
to carry out the Rights Offering. The per share subscription price shall be
the closing price per share of the Terra Capital Stock on the Spanish
Continuous Market Exchange (Systema de Interconexion Bursatil- Xxxxxxx
Continuo) ("SCME") on May 16, 2000. The Rights Offering shall be effective,
available for subscription, completed and the proceeds therefrom received by
Terra at least ten full SCME trading days prior to the period during which the
Terra Average Price is to be calculated pursuant to the terms of the
Reorganization Agreement.
(b) As soon as practicable following the date of this Agreement, Terra
shall (i) prepare and file with the CNMV a relevant fact disclosure (hecho
relevante), (ii) prepare and arrange to have a prior notice to the CMNV
outlining the proposed transaction (comunicacion previa) and have registered
with and verified by the CMNV a prospectus (folleto), and (iii) prepare and
file with the U.S. Securities and Exchange Commission a registration statement
on Form F-1 (the "Registration Statement"), if necessary, relating to the
Rights Offering. Terra shall use its reasonable best efforts to have such
prospectus registered, and the Registration Statement, if required, filed with
and declared effective, by the relevant securities authorities as promptly as
practicable after such filings. Terra shall also use its reasonable best
efforts to (i) obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the Rights Offering, (ii) make the filings
with and obtain the authorization of the listing of Terra Shares on the
Spanish Stock Exchange and the verification by the NSEC and the Managing
Companies of the Spanish Stock Exchanges and (iii) make the filing with and
obtain the approval of the Nasdaq National Market to authorize the quotation
of the ADSs.
2. Telefonica Commitment.
Subject to the terms and conditions of this Agreement, Telefonica agrees
that it shall subscribe for all of the shares of the Subscription Stock not
subscribed for by other shareholders of Terra in the Rights Offering;
provided, however, that in no event shall Telefonica be required to subscribe
for in excess of the entire Subscription Amount in connection with the Rights
Offering.
3. Voting of Terra Shares. Telefonica agrees that it shall vote all of its
Terra Shares, which Telefonica represents to constitute approximately 66.6% of
the outstanding Terra Shares (all such shares, as they may be adjusted as a
result of any stock split, stock dividend, reclassification, merger,
reorganization, recapitalization or other change in the capital structure of
Terra, as well as any Terra Shares acquired after the date hereof and prior to
the meeting at which a vote of the Terra Shareholders is held in respect of
the matters contemplated hereby or by the Reorganization Agreement, the
"Subject Shares"), in favor of the matters to be voted upon by the holders of
Terra Shares pursuant to the transaction contemplated hereby and by the
Reorganization Agreement. Telefonica agrees that it shall vote all such Terra
Shares against any matter upon which the Terra Shareholders are asked to vote
involving any amendment of the Terra Articles or the Terra By-Laws or any
proposals or transactions involving Terra or its Subsidiaries that, in any
such case, would prevent or materially delay consummation of the transactions
contemplated hereby or by the Reorganization Agreement or change in any manner
the voting rights of any class of capital stock of Terra.
4. Purchase and Sale of Subject Shares. Telefonica and Terra each hereby
agrees that it will not, and that it shall use its reasonable best efforts to
cause its "affiliates" and "associates" (as such terms are defined under Rule
12b-2 promulgated under the Exchange Act ) not to, purchase or agree to
purchase any additional Terra Shares, any securities convertible into or
exchangeable for Terra Shares or any options, warrants or other rights to
acquire Terra Shares during the period during which the Terra Average Price is
to be calculated pursuant to the terms of the Reorganization Agreement and
that it will not, during such period, publicly announce any intention to
purchase any Terra Shares (other than pursuant to the Rights Offering).
Telefonica further agrees that it shall not sell, transfer, pledge, assign or
otherwise dispose of (collectively, "Transfer") or enter into any
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contract, option or other arrangement with respect to the Transfer of, or
the creation or offer of any derivative security in respect of, the Subject
Shares to any person or commit or agree, or announce an intention to, take any
of the foregoing actions.
5. Representations and Warranties. Telefonica represents and warrants (with
respect to the representations and warranties regarding Telefonica only) to
Lycos, Terra represents and warrants (with respect to the representations and
warranties regarding Terra only) to Lycos and Lycos represents and warrants
(with respect to the representations and warranties regarding Lycos only) to
Telefonica and Terra:
(a) It has full corporate power and authority to execute and deliver
this Agreement and the Reorganization Agreement (if it is a party thereto) and
has full corporate power and authority to consummate the transactions
contemplated hereby and thereby (if it is a party thereto); the execution and
delivery of this Agreement and the Reorganization Agreement (if it is a party
thereto) and the consummation of the transactions contemplated hereby and
thereby (if it is a party thereto) have been duly and validly approved by its
Board of Directors (or, in the case of Telefonica, the Chairman of the Board
of Telefonica under the authorization granted by the Executive Committee of
the Board of Telefonica); this Agreement and the Reorganization Agreement (if
it is a party thereto) has been duly and validly executed and delivered by it
and (assuming due authorization, execution and delivery by the other party or
parties thereto) constitutes valid and binding obligation(s) of it,
enforceable against it in accordance with its (or their) terms; neither the
execution and delivery of this Agreement or the Reorganization Agreement (if
it is a party thereto) by it nor the consummation by it of the transactions
contemplated hereby or thereby (if it is a party thereto), nor compliance by
it with any of the terms or provisions hereof, will violate any provision of
its certificate of incorporation, articles of incorporation, by-laws or other
similar documents or violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to it or any of its
properties or assets; and no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental or regulatory authority or instrumentality ("Governmental
Authority"), or of or with any third party, are necessary in connection with
the execution and delivery by it of this Agreement or the Reorganization
Agreement (if it is a party thereto) and the consummation by it of the
transactions contemplated hereby or thereby (if it is a party thereto) and
compliance by it with any of the provisions hereof or thereof (if it is a
party thereto), other than those the failure of which to obtain or make would
not reasonably be expected to prevent or materially delay the transactions
contemplated hereby and other than the approvals, filings, notices and
registrations referred to in Section 1 and in the Reorganization Agreement.
(b) Telefonica represents and warrants to Lycos that Telefonica owns,
directly or indirectly, all of the Subject Shares, free and clear of any
liens, pledges, charges, encumbrances and security interests whatsoever.
Telefonica represents and warrants to Lycos that Telefonica does not own (of
record or beneficially) any options, warrants, rights or other similar
instruments to acquire any capital stock or other voting securities of Terra.
Telefonica has the sole right to vote and Transfer the Subject Shares, and
none of the Subject Shares is subject to any voting trust or other agreement,
arrangement or restrictions with respect to the voting or Transfer of the
Subject Shares, except pursuant to this Agreement. Telefonica hereby agrees
that at all times prior to and including the date of Terra Shareholder
Meeting, it shall continue to own and have the right to vote no less than the
number and kind of Terra Shares held as of the date hereof. To the extent
inconsistent
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with the provisions of this Agreement, Telefonica hereby represents that
any proxies heretofore given in respect of the Subject Shares are not
irrevocable and that it hereby revokes any and all previous proxies given by
it with respect to the Subject Shares or any other voting securities of Terra.
Telefonica hereby agrees that it shall not, directly or indirectly, grant any
proxies or powers of attorney with respect to the Subject Shares or any other
voting securities of Terra with respect to any matter that would prevent or
materially delay Telefonica from complying with its obligations set forth in
this Agreement. The parties understand and agree that the representations and
warranties contained in this Section 5(b) regarding the Subject Shares do not
relate to any Subject Shares acquired after the date hereof.
6. General Provisions.
(a) This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
(b) This Agreement, together with the Reorganization Agreement (if a
party thereto) (including the documents and the instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof.
(c) This Agreement shall be governed and construed in accordance with
the laws of the Kingdom of Spain, without regard to any applicable conflicts
of law principles.
(d) Except as otherwise required by applicable law or the rules of
the NASDAQ and Spanish Stock Exchange authorities (in which cases the party
proposing to make any disclosure shall provide reasonable notice to the other
party prior to making the proposed disclosure), none of the parties shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise make
any public statement concerning, the transactions contemplated by this
Agreement without the consent of Terra and Telefonica, in the case of a
proposed announcement or statement by Lycos, or Lycos, in the case of a
proposed announcement or statement by Terra or Telefonica, which consent shall
not be unreasonably withheld.
(e) This Agreement may not be amended, changed, supplemented, waived
or otherwise modified or terminated except by an instrument in writing signed
by Lycos and Telefonica. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(f) This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns, including without limitation in the case of any corporate party
hereto any corporate successor by merger or otherwise, and in the case of any
individual party hereto any trustee, executor, heir, legatee or personal
representative succeeding to the ownership of the Subject Shares or other
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securities subject to this Agreement. Notwithstanding any transfer of Subject
Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor.
(g) If any term of this Agreement or the application thereof to any party
or circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such term to the other
parties or circumstances shall not be affected thereby and shall be enforced
to the greatest extent permitted by applicable law, provided that in such
event the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(h) The parties acknowledge that money damages are not an adequate remedy
for violations of this Agreement and that any party may, in its sole
discretion, apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable law, each party waives any objection to
the imposition of such relief. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(i) This Agreement is not intended to be for the benefit of and shall not
be enforceable by any person or entity who or which is not a party hereto.
(j) Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(k) Each of Telefonica, Terra and Lycos irrevocably agree that any legal
action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by another party hereto
or its successors or assigns may be brought and determined in any Delaware
state court or Federal court sitting in the State of Delaware, and each of
Telefonica and Lycos hereby (x) irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive personal jurisdiction of the aforesaid
courts in the event any dispute arises out of this Agreement or any
transaction contemplated hereby, (y) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court and (z) agrees that it will not bring any action relating to
this Agreement or any transaction contemplated hereby in any court other than
any Delaware state or Federal court sitting in the State of Delaware. Any
service of process to be made in such action or proceeding may be made by
delivery of process in accordance with the notice provisions contained in
Section 6(k). Each of Telefonica, Terra and Lycos hereby irrevocably waives,
and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, (a) the
defense of sovereign immunity, (b) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason other than the
failure to serve process in accordance with this Section 6(k), (c) that it or
its property is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such
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courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or
otherwise), and (d) to the fullest extent permitted by applicable law that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by
such courts.
(l) Telefonica hereby appoints National Registered Agents, Inc., with
offices on the date hereof at 0 Xxxx Xxxxxxxxxx Xxxxxx in the City of Dover,
County of Kent, State of Delaware, and with offices on the date hereof at 000
Xxxxx Xxxxxx, Xxxxx Xxxxx, in the City of New York, County of New York, State
of New York, as its authorized agent (the "Authorized Agent"), upon whom
process may be served in any suit, action or proceeding arising out of or
relating to this Agreement or any transaction contemplated by this Agreement
that may be instituted in any court described in Section 6(k). Telefonica
agrees to take any and all reasonable action, including the filing of any and
all documents, that may be necessary to establish and continue such
appointment in full force and effect as aforesaid. Telefonica agrees that
service of process upon the Authorized Agent shall be, in every respect,
effective service of process upon Telefonica.
(m) Subject to the terms and conditions of this Agreement, the parties
hereto each agree to use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of transactions contemplated hereby and by the
Reorganization Agreement (if a party thereto) including, without limitation,
using its reasonable best efforts to obtain (and cooperating with the other
party hereto to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Authority (as defined in Section 5(a)) and
any other third party that is required to be obtained by any of the parties
hereto in connection with the transactions contemplated by this Agreement and
by the Reorganization Agreement (if a party thereto).
(n) All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Lycos, to:
Lycos, Inc.
000-0 Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Attn.: Xxxxxx X. Xxxxxx
With a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
0
Xxx Xxxx, XX 00000
Facsimile No.: 212-474-3700
Attn: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
and
if to Tiger, to:
Tiger, S.A.
Xxx xx xxx Xxx Xxxxxxxxx
00, Complejo Atica, Edeficial
Xxxxxxx xx Xxxxxxx
00000 Xxxxxx
Xxxxx
Facsimile No.: 011-34-91-452-3144
Attention: Xxxxxxx xx Xxxxxxx
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xx.
Xxx Xxxx, XX
Facsimile: 212-403-2000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and a copy to:
Xxxxxxxxx Xxxxxxx, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
(o) It is a condition precedent to the effectiveness of this Agreement
that the Reorganization Agreement shall have been executed and delivered by
each of the parties thereto and be in full force and effect. In the event the
Reorganization Agreement is terminated in accordance with its terms, this
Agreement shall automatically terminate and be of no further force or effect.
Upon such termination, except for any rights any party may have in respect of
any breach by any other party of its or his obligations hereunder, none of the
parties hereto shall have any further obligation or liability hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
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TELEFONICA, S.A.
By: /s/ Xxxx Xxxxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxxxx
Title: Chief Executive Officer
TERRA NETWORKS, S.A.
By: /s/ Xxxx Xxxxxxx
-------------------------
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
LYCOS, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
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