EXHIBIT 99
PHASE I OF THE TERRA NETWORKS, S.A.
STOCK OPTION PROGRAM:
FORM OF
TERRA NETWORKS, S.A.
STOCK OPTIONS TRANSFER AGREEMENT
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between
TERRA NETWORKS, S.A.
and
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as the Beneficiary
CONTENTS
THE PARTIES...................................................................
RECITALS......................................................................
CLAUSES.......................................................................
1. Subject Matter........................................................
2. Exercise of the Options...............................................
3. Conditions for exercise of the Options................................
4. Termination of the Agreement..........................................
5. Notices...............................................................
6. Miscellaneous.........................................................
7. Governing law and jurisdiction........................................
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TRANSFER AGREEMENT
Made in Madrid, on ________ __, ____ by and
BETWEEN
I. TERRA NETWORKS, S.A., a company organized and existing under the laws of
Spain, with registered offices at Avda. de las Dos Xxxxxxxxx, number 33,
Atica 1, 28223 Pozuelo xx Xxxxxxx (Madrid) with identification number
(N.I.F.) A-82.196.080 (hereinafter "TERRA"). XXXXX is represented herein
by its Chief Financial Officer, Xxxxxxx de Xxxxxxx Xxxxxxxx, and its
Corporate Human Resources Director, Xxxxxx Xxxxxxx Xxxx
AND
II. holder of ______ social security/passport number, who has reached the
age of majority, with address at ________________________________, acting
on his/her own behalf (hereinafter the "Beneficiary").
TERRA and the Beneficiary shall hereinafter be referred to each individually as
a Party and jointly as the Parties to this Agreement.
RECITALS
I. WHEREAS, in light of the growing competition in the telecommunications
market and the globalisation of the sector, TERRA desires to establish
an incentive plan for employees of its subsidiaries and/or affiliates in
Spain and abroad and, in particular, the subsidiaries in Mexico, Brazil,
Chile, Peru, Guatemala, Argentina and the United States (hereinafter
referred to as the "Terra Group"), as a means of encouraging their
continued employment in the Terra Group, thereby maintaining their
loyalty to the companies that make up the Terra Group for the duration
of the incentive plan.
II. WHEREAS, given the Beneficiary's status as an employee of _____________,
a company belonging to the Terra Group, it is the intent of TERRA,
pursuant to the policy described above and in accordance with the
provisions of this Agreement, to transfer Options over a number of its
stock shares (each one of them hereinafter referred to individually as a
"Share" and all of them jointly as the "Stock") in favour of the
Beneficiary.
III. WHEREAS, in order to facilitate the exercise of the options by the
Beneficiary, the options shall be settled by cash differences and
entitle the Beneficiary to receive, pursuant to the terms set forth
herein, an amount in cash or in Stock.
IV. WHEREAS, the future trading price of the Stock shall serve as the
valuation basis for calculating the compensation obtained by the
Beneficiary, within the framework of the incentive plan, on exercising
the options. This provides a reliable measure of TERRA's performance and
a means of assessing the performance of the Beneficiary within the Terra
Group as the compensation due depends on the future evolution of the
trading price of the Stock.
V. WHEREAS, in order to achieve the objectives of the incentive plan set
forth in Recital I above, it is essential that the exercise of the
options transferred to the Beneficiary be subject to common, uniform
procedures and conditions that ensure that the incentive plan is
effectively designed to meet the objective of encouraging employees to
remain with the Terra Group for the term of the options, as well as at
generating shareholder value and developing a common company culture
both at the national and international levels, and to facilitate by
means of a common incentive plan the geographical mobility of employees
of the Terra Group companies.
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VI. NOW, THEREFORE it is the intent of TERRA and the Beneficiary to enter
into this Agreement for the transfer of stock options (hereinafter the
"Agreement") and to establish the procedure and conditions for
exercising the options subject to the provisions set forth as follows:
ARTICLES
ONE. SUBJECT MATTER
1.1 Transfer of the Options: TERRA herein transfers to the Beneficiary _____
Stock options (hereinafter "Options"). Each Option shall entitle the
Beneficiary to acquire a Share on the terms and conditions set forth
herein.
1.2 Exercise price: The Options transferred by TERRA to the Beneficiary
hereunder have an exercise price of ELEVEN POINT EIGHTY-ONE EUROS
(EUR11.81), equal to the share price at the company's initial public
offering, as provided in the prospectus registered October 29, 1999 with
the Comision Nacional del Xxxxxxx de Valores (National Stock Market
Commission).
1.3 Certificate of Options: TERRA herein delivers to the Beneficiary a
certificate evidencing the number of Options granted to the Beneficiary,
which certificate shall be incorporated into this Agreement as an Annex.
1.4 Non-transferability of the Options: The rights of the Beneficiary under
the Options are granted personally thereto and are non-transferable and
non-negotiable.
1.5 Scope of the Options: Subject to the terms of subsection 4.1 below, the
Parties expressly agree that the Options shall extend to any securities,
assets or funds as may replace or entitle the Stock in the event, inter
alia, of a merger.
TWO. EXERCISE OF THE OPTIONS
2.1 Non-exercise period: Except as provided in Articles Three and Four
below, in no event may the Options be exercised prior to December, 2001.
2.2 Exercise dates: Subject to terms of subsection 2.1 above, the Options
may be exercised according to the dates (each one of them referred to as
an "Exercise Date") and limits set out below, provided the conditions
for exercise provided in Clause Three below are met at the Exercise Date
in question:
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Exercise date Proportion of exercisable Options
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December 2001 A maximum of one third of the Options held by the
Beneficiary.
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January 2003 A maximum of two thirds of the Options held by the
Beneficiary, unless the Options were exercised on
the previous Exercise Date.
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February 2004 All of the Options remaining to be exercised.
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Between each of the Exercise Dates regulated in the table above, TERRA
shall establish on a quarterly basis other dates on which the Options
may be exercised (each one also referred to hereinafter as "Exercise
Date"). For these purposes, TERRA undertakes in each case to notify the
Beneficiary at least thirty (30) business days in advance of each of
these Exercise Dates as to the exact day and month of the Exercise
Dates. Each of the Exercise Dates stipulated in the preceding table and
the subsequent quarterly Exercise Dates until the next following
Exercise Date provided in the table (but not including the same) shall
make up a "Period".
The last Period (within the meaning of the preceding paragraph) shall
include only the last Exercise Date (in February 2004), as there shall
be no Exercise Dates subsequent thereto.
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The limits established for each Exercise Date in the preceding table
shall be understood to refer to the entire Period, such that the
Beneficiary cannot exceed in any one Period the limits established in
the table for the first Exercise Date.
2.3 Exercise procedure: A Beneficiary wishing to exercise the Options
vested, according to the Exercise Dates and the limits set forth in
subsections 2.1 and 2.2 above, shall notify Terra twenty (20) business
days prior to the Exercise Date pursuant to Article Five below, as to
the number of Options the Beneficiary proposes to exercise.
Exercised Options shall be paid out in cash differences and the
Beneficiary shall be given Stock or a cash amount according to the
settlement procedure provided in subsection 2.4 below; the option
between one form of payment or the other shall rest exclusively with
TERRA. For these purposes, the Beneficiary shall specify in the notice
the securities account in which he wishes the Stock to be deposited,
where applicable, as well as the bank account to which he wishes the
cash amount to be transferred and, where applicable, the cash balance
resulting from the pay-out in Stock.
2.4 Pay-out: The TERRA Nominations and Remuneration Committee, in
collaboration with the TERRA management, shall carry out the
calculations described below to settle the Options for cash differences.
The purpose of the pay-out regulated in this subsection is to deliver to
the Beneficiary a net amount, in Stock or cash, after deducting all
those amounts payable by the Beneficiary in relation to the exercise of
the Option. Consequently, the procedure to be followed is:
(i) Determine the arithmetic mean of the Stock price weighted by the
trading volume of the ten (10) trading days immediately following
the Exercise Date (hereinafter, the "Average Value"). Where as a
result of a change in the trading price between the date of the
Beneficiary notice referred to in subsection 2.3 above and the
trading days taken as basis for calculating the Average Value,
the latter is lower than the exercise price of the Options, the
exercise price shall be taken to be equal to the Average Value.
(ii) Multiply the number of Options exercised by the Average Value
(hereinafter, the "Gross Amount").
(iii) Deduct from the Gross Amount the result of multiplying the
exercise price by the number of Options exercised.
(iv) The Gross Amount shall also be reduced by any such withholding,
tax prepayments and other deductions or taxes as may be required
by law.
The amount yielded by subtracting from the Gross Amount the deductions
provided in subparagraphs (iii) and (iv) above shall hereinafter be
referred to as the "Net Amount".
Once the Net Amount has been determined, TERRA may at its sole
discretion choose between:
(i) depositing in the securities account designated for such purpose
by the Beneficiary the integer number of Stock shares yielded by
dividing the Net Amount by the Average Value, within fifteen (15)
business days after the Exercise Date. The cash balance of the
Net Amount remaining after this operation and which cannot be
delivered in the form of Stock because it is less than the
Average Value shall be delivered to the Beneficiary in Euros (or
the equivalent amount in legal currency of Spain) by money
transfer to the bank account number specified by the Beneficiary
in the notice; or
(ii) depositing in the bank account designated for such purpose by the
Beneficiary a cash amount equal to the Net Amount (in Euros or
the equivalent amount in the legal currency of Spain).
2.5 Settlement adjustment: Should a decision be made by TERRA capable of
having a material-deep adverse effect on the Stock price or of diluting
the value of the Stock (including, but not limited to, capital increases
with issue of bonus shares or shares for less than full consideration,
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capital reductions with refund of contributions, capital increases with
issue of shares at prices below the trading price, reduction of the par
value of the shares, or a share split), the TERRA Nominations and
Remuneration Committee shall make the necessary valuation adjustments so
that the Beneficiary's remuneration is not affected by such
circumstances, which are unrelated to the Beneficiary's work performance
in the Terra Group. This adjustment shall in all events be carried out
according to purely objective criteria.
As soon as the Nominations and Remuneration Committee approves the
valuation adjustment provided in the preceding paragraph, TERRA shall
send the Beneficiary a notice explaining the adjustment and the
procedure to be followed thereafter for calculating the pay-out.
2.6 Death of Beneficiary: In the event of death of the Beneficiary before he
has exercised all of his Options, the rightful heirs of the Beneficiary,
after duly evidencing such status, shall receive in advance the amount
in Stock or cash to which the Beneficiary would have been entitled for
the unexercised Options according to the valuation calculation set forth
in subsection 2.4 above. For these purposes, the Average Value shall be
determined by the TERRA management on the basis of the closing price of
the Stock on the stock market session of the day of the Beneficiary's
death, which shall be evidenced by means of a copy of the relevant death
certificate.
TERRA shall deliver to the heirs the cash or the Stock and cash balance,
as applicable, to which the Beneficiary would have been entitled for the
unexercised Options within twenty (20) business days after receipt of
the death certificate.
2.7 Beneficiaries without residence in Spain: Beneficiaries whose tax
residence is outside Spain must evidence such circumstance by means of
the relevant certificate of residence issued for such purpose by the
competent tax authorities. This certificate must be submitted to TERRA
together with the notice of exercise set forth in subsection 2.3 above.
Failure to comply with this condition shall result in the pay-out
procedure for Options exercised by the Beneficiary being carried out as
if the Beneficiary had tax residence in Spain.
THREE. CONDITIONS FOR EXERCISE OF THE OPTIONS
In order to exercise the Options, the Beneficiary must necessarily be an
employee of the Terra Group on the Exercise Date. In the event that on the
Exercise Date in which the Beneficiary would have chosen to exercise his
Options the Beneficiary is no longer an employee of a Terra Group company, the
following provisions shall apply:
(i) Unilateral voluntary termination of the employment relation by the
Beneficiary: if the Beneficiary, for whatever reason, voluntarily and
unilaterally terminates his employment relation with the Terra Group
before all of his Options have been exercised, he shall lose Beneficiary
status and forfeit his right to receive Stock or any amount whatsoever
in respect of the Options not exercised as of that date.
(ii) Termination of employment relation for lack of renewal of the
Beneficiary's employment agreement: If the Terra Group decides not to
renew Beneficiary's temporary contract before the latter has
exercised all of his Options, the Beneficiary shall lose his status as
such and forfeit his right to receive Stock or any amount whatsoever for
the Options not exercised as of the date of termination.
(iii) Termination for cause: If the Terra Group terminates the employment
relation with the Beneficiary before the latter has exercised all of his
Options for cause, and such termination is declared, as applicable,
rightful or justified in a final unappealable ruling by the court or
authority with competence in each jurisdiction, the Beneficiary shall
lose his status as such and hence his right to receive Stock or any
amount whatsoever for the Options not exercised as of the date of
termination.
(iv) Retirement or equivalent situations, disability, wrongful or unjustified
dismissal, mutual accord or unilateral dismissal by the Terra Group: In
the event of (i) retirement or equivalent situations, (ii) final
declaration of permanent disability, (iii) termination of the employment
relation declared wrongful or unjustified by the court or authority with
competence in each jurisdiction, (iv) termination of the employment
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relation by mutual accord of the Terra Group and the Beneficiary,
(v) unilateral dismissal by the Terra Group or, where applicable, loss of
trust by the latter in Beneficiary, before the Beneficiary has exercised
all of his Options, the unexercised Options of the Beneficiary shall be
settled immediately as provided in subsection 2.4 above.
For these purposes, the Average Value shall be determined by the TERRA
Nominations and Remuneration Committee on the basis, in each case, of
the Stock price weighted by the trading volume of the trading days of
the week in which (i) the Beneficiary retires, (ii) the final resolution
of permanent disability is issued, (iii) a final order of wrongful or
unjustified termination of employment is entered, (iv) the mutual accord
to terminate the employment relation between the Terra Group and the
Beneficiary is reached, or (v) the Beneficiary is unilaterally dismissed
by the Terra Group.
TERRA shall deliver to the Beneficiary the cash or the Stock and cash
balance, as applicable, to which the Beneficiary is entitled for the
unexercised Options within twenty (20) business days after the last
business day of the week in which the Average Value is calculated
according to the preceding paragraph.
The amounts received under the preceding paragraph must be immediately
returned to TERRA by the Beneficiary if the Beneficiary, either directly
or through any companies in which he holds any interest or any entities
related to the Beneficiary, in his own name or jointly with other
entities or on behalf of any other person or entity, directly or
indirectly prior to the last Exercise Date (as defined in subclause 2.2
above): (i) initiates, continues or becomes involved in any activity
that directly or indirectly competes with the business of the Terra
Group, (ii) provides advisory services to or in any way collaborates,
whether as agent, employee or otherwise, with any person or entity that
competes directly or indirectly with the business of the Terra Group,
(iii) provides any information regarding the Terra Group business to a
third party, including, but not limited to, client lists, know-how and
strategies, or (iv) promotes or recommends the recruitment of any Terra
Group employee to another employer.
If after the last Exercise Date (as defined in subsection 2.2 above) (i)
the competent court or authority in each jurisdiction taking under
consideration the propriety or impropriety of the termination of the
Beneficiary's employment has not yet entered a ruling or such ruling is
not final, or (ii) the authority or court responsible for determining
the degree of the Beneficiary's disability has not yet reached a final
decision, the Beneficiary shall retain his status as such and TERRA
shall withhold the cash or the Stock and cash balance, where applicable.
Once a final ruling of wrongful dismissal or permanent disability is
handed down, TERRA shall deliver to the Beneficiary the cash or Stock
and cash balance, where applicable, to which the Beneficiary is
entitled. In the event the court or other authority rules the dismissal
justified, the Beneficiary shall be entitled to no cash or Stock
whatsoever.
FOUR. TERMINATION OF THE AGREEMENT
4.1 Change of control: In the event of a change of control (as defined
below) of Telefonica, S.A., TERRA or any Terra Group company in which
the Beneficiary is employed, the Beneficiaries shall receive the cash or
Stock and cash balance to which they are entitled for the exercise of
the Options according to the procedures laid down in Articles Two and
Three.
A change of control of TERRA shall be understood to be any circumstance
that leads to TERRA no longer being part of the Telefonica group within
the meaning of Article 4 of the Stock Market Act 24/1988 (Ley del Xxxxxxx
de Valores) and Article 42 of the Spanish Commerce Code (Codigo de
Comercio).
Similarly, a change of control in the Terra Group company in which the
Beneficiary is employed shall be understood to be any circumstance that
leads to the said company no longer being part of the Telefonica group
within the meaning of the preceding paragraph.
A change of control in Telefonica, S.A. shall mean any acquisition of
(i) stock, (ii) convertible bonds or options or warrants, (iii) any
other instrument that directly or indirectly entitles its holder to make
a subscription for or acquisition of Telefonica, S.A. shares, whereby a
percentage equal to or greater than 10% of Telefonica, S.A. shares
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(that is, either event (i), (ii) or (iii)) is acquired or could be
acquired and that consequently entails the prior notice obligation
provided in Article 53 of the Stock Market Act 24/1988 pursuant to Royal
Decree 377/1991 of March 15, 1991.
Similarly, the following shall also be understood to be a change of
control for the purposes hereof: (i) any modification in the majority
composition of the Board of Directors of Telefonica, S.A. as its stands
at November 30, 1999 as a result of a change in the shareholder
structure of Telefonica, S.A., (ii) application by Telefonica, S.A. or
TERRA for receivership or declaration by Telefonica, S.A. or TERRA of
bankruptcy, or court takeover of the former, (iii) adoption of a
winding-up or liquidation resolution in Telefonica, S.A or TERRA,
(iv) disposal or encumbrance in any way and under any title of more than
50% of the assets of Telefonica, S.A. or of TERRA, and (v) any event
which results in that the Telefonica, S.A shareholders as of November 30,
1999 no longer control or own at least 75% of the capital share of
Telefonica, S.A. or of the resulting entity, as applicable.
In the event there occurs a change of control, the TERRA Nominations and
Remuneration Committee shall determine the Average Value on the basis,
inter alia, of the closing price of the Stock on the day preceding the
date of the change of control.
The date on which the change of control occurs is understood to be the
earliest of the following: the date of (a) knowledge of the change of
control, (b) filing of the notice provided in Royal Decree 377/1991 of
15 March 1991 or the one referred to by Circular 2/1993 of the Sociedad
Rectora de la Bolsa de Madrid (Madrid Stock Exchange Governing
Commission), (c) modification in the majority composition of the
Telefonica, S.A. Board of Directors with respect to its composition at
30 November 1999 as a result of a change in the shareholder structure,
(d) the filing of the application for receivership or the court order of
bankruptcy or the decision ordering court takeover, (e) adoption of the
winding-up or liquidation resolution, (f) the disposition or encumbrance
in any manner and under any title of more than 50% of the assets, and
(g) the event as a consequence of which the shareholders as at 30
November 1999 no longer control or own at least 75 % of the capital
stock.
4.2 Non-compliance with conditions for exercise: The Beneficiary shall
forfeit all rights in respect of the Options in the event of
non-compliance with any of the conditions for exercise set forth in
Article Three.
4.3 Automatic termination: In any event, this Agreement shall be rendered
null and void and the Beneficiary shall forfeit all rights in the
Options after the last Exercise Date. Prior to the last Exercise Date,
as set forth in subsection 2.2 above, TERRA shall notify the Beneficiary
at least thirty (30) business days in advance, pursuant to Article Five
above, as to the number of Options still to be exercised at that time.
FIVE. NOTICES
5.1 Form: All notices between the Parties pursuant to this Agreement and
those which must be exchanged by the Beneficiaries and either Party
hereto shall be in writing, by letter or fax, unless otherwise required
by law.
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5.2 Addresses: The Parties designate the following addresses for
notification purposes:
(i) Terra NETWORKS, S.A.
Address: Avda. de las Dos Xxxxxxxxx, xxxxxx 00, Xxxxxxxx Atica,
edificio 1-1(a) planta, 28223 Pozuelo xx Xxxxxxx, Madrid.
Contact person: Xxxxxx Xxxxxxx
Telefax: (00) 00 000 00 00
(ii) _______________
Address:
5.3 Change of address: Any change in the above information must be notified
by the affected Party to the other Party in the manner provided in
subsection 5.1 above.
SIX. MISCELLANEOUS
6.1 Whole agreement: This Agreement contains the whole agreement between the
Parties in relation to the subject matter hereof and supersedes any
other agreements.
6.2 Assignments: Neither Party may assign its rights and obligations under
this Agreement without the prior written consent of the other Party.
Without prejudice to the above, the Options shall in no event and under
no title be transferable by the Beneficiary, as provided in subsection
1.4 above.
6.3 Business days: For the purposes hereof, a business day is understood to
be any day on which (i) there is a trading session on the Madrid Stock
of Exchange with no suspension or restriction of trading of the Stock
for any reason and (ii) bank offices in Madrid are open to the public to
perform financial transactions. In the event that any of the dates
provided for in this Agreement does not fall on a business day, the date
provided herein shall be understood to fall on the next following
business day.
SEVEN. GOVERNING LAW AND JURISDICTION
7.1 Governing law: This Agreement shall be governed and construed according
to the laws of Spain.
7.2 Jurisdiction: The Parties hereto waive any other jurisdiction to which
they may be entitled and expressly submit to the jurisdiction of the
courts of the city of Madrid in relation to any disputes that may arise
in relation to this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have hereunto set their hand in two (2)
counterparts, initialling each page hereof, at the place and date first above
written.
Terra NETWORKS, X.X.
X.x.
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Xxxxxxx de Xxxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxx Xxxx
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ANNEX-1
CERTIFICATE
TERRA NETWORKS, S.A.
with registered office in Madrid,
GRANT OF ______ OPTIONS OVER SHARES OF TERRA NETWORKS, S.A. SUBJECT TO THE
STOCK OPTIONS TRANSFER AGREEMENT ENTERED INTO ON _______ __, ___ AND PURSUANT TO
THE INCENTIVE PLAN
This Certificate represents ____ irrevocable purchase Options over stock of
Terra Networks, S.A. (hereinafter, the "Options") granted by the latter to
_____ (hereinafter, the "Beneficiary"). Each Option entitles the Beneficiary to
acquire one share of Stock and shall have an Exercise Price of ELEVEN POINT
EIGHTY-ONE EUROS (EUR11.81).
The Options have been granted by Terra Networks, S.A. under the Options
Transfer Agreement entered into by _____________ and the Beneficiary on
_________ __, ___(hereinafter, the "Agreement"). The number of Options
transferred to the Beneficiary is set out in the following table:
===============================
Number of Options
-------------------------------
------------
===============================
The Options documented herein shall be only be exercisable according to the
procedure and the terms and conditions set forth in the Agreement.
This certificate is not a security and is not negotiable. The rights of the
Beneficiary under the Agreement are not incorporated into this certificate and
the transfer, endorsement or encumbrance of this certificate shall in no even
imply the transfer or encumbrance of the said rights.
NOW, THEREFORE, considering the obligations assumed by Terra Networks, S.A. and
contained in the Agreement and in this document, Terra Networks, S.A. signs
this Certificate on this day _________ __, ____.
Terra Networks, X.X.
X.x.
---------------------------
Xxxxxxx de Xxxxxxx Xxxxxxxx
---------------------------
Xxxxxx Xxxxxxx Xxxx
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GENERAL TERMS AND CONDITIONS
PHASE II OF THE TERRA NETWORKS, S.A.
STOCK OPTION PROGRAM
DECEMBER 2000
GENERAL TERMS AND CONDITIONS
PHASE II OF THE TERRA NETWORKS, S.A.
STOCK OPTION PROGRAM
Terra Networks, S.A., a company validly incorporated and in existence in
accordance with the laws of Spain, with its registered office at Nicaragua 54,
08029 Barcelona, and with Fiscal ID number A-82.196.080 (hereinafter, the
"Company") has decided to implement Phase II of the Stock Option Plan of
the Company (hereinafter, the "Program") by granting options in respect of
shares in the Company (hereinafter, the "Options") for the purpose of enhancing
the motivation and loyalty and rewarding the work carried out by employees of
the Terra Lycos Group based on their length of service and strategic
contribution to the business of the Company.
In order to regulate the terms and conditions of grant and exercise of the
Options, the Company has approved the following terms and conditions of the
Program which are applicable to all Options granted pursuant thereto.
1. PARTICIPANTS
Those employees, executives and directors of the Company and its Spanish and
foreign subsidiaries (hereinafter jointly referred to as the "Terra Lycos
Group") who are so invited may participate in the Program.
Those employees who are undergoing a trial period at the option Grant Date (as
hereinafter defined) shall be deemed to be Participants on condition that they
successfully complete the said trial period and fulfil the foregoing
conditions. For the purposes of the Stock Plan a general trial period is
established of six months from the date of joining the Terra Lycos Group.
Participants who are resident for tax purposes outside Spain must evidence this
fact prior to each Exercise Date of their Options by means of the corresponding
certificate of residency issued by the competent tax authorities. Failure to
comply with this condition will result in settlement of the Options which the
Participant exercises taking place as if the Participant were resident in Spain
for tax purposes.
-2-
2. GENERAL FEATURES OF THE PROGRAM
2.1 Nature
Inclusion of the Participant in the Program shall not entitle the same
to participate in subsequent grants or plans which may be established by
the Company.
The profit which the Participant may obtain from his or her
participation in the Program shall not form part of his or her normal or
established remuneration for the purposes of calculating compensation
for dismissal, leaving payment, compensation for redundancy, end of
service payment, bonus, compensation for non-competition, length of
service bonus, pension or retirement benefits, compensation for early
retirement, or damages or any other type of payment due from the company
to the person rendering his or her services.
2.2 Limit of entitlement
On joining the Program, the Participant acknowledges:
a) That his or her participation in the Program is voluntary.
b) That, except as otherwise stated in this document, entitlement to
exercise the Options shall cease at the time when the Participant
ceases in his or her employment relationship with the Terra Lycos
Group company.
c) That acceptance by the Participant implies agreement to each and
every one of the terms and conditions, and consequently no
partial waiver or acceptance thereof shall be permitted.
Furthermore, when joining the Program, the Participant:
a) Authorises the Company, and therefore the person or persons
responsible for administering the Program, to disclose such
information and data which the Company obtains from the
Participant to any Terra Lycos Group company for the appropriate
administration thereof.
b) Recognises the Board of Director's authority, or any delegated
entity, for the implementation, administration and interpretation
of the Stock Options Plan, and its authority to propose or approve
any modifications which may be deemed needed for its management
and to achieve its objectives.
-3-
3. OPTIONS
3.1 Grant of the Options
In order to achieve the proposed objectives the Company shall grant to
each of the Participants joining the Program the number of Options
indicated thereto in the Letter of Invitation.
Participation in the Program will take effect by the Participant sending
the Letter of Invitation to the Company, duly signed.
The Options shall be deemed to be granted on the date fixed for the
purpose in the Letter of Invitation (hereinafter, "Grant Date").
3.2 Exercise Price
Each Option shall grant the Participant the right to acquire one
ordinary fully paid up share in the Company on prior payment of the
fixed exercise price established in the Letter of Invitation
(hereinafter, the "Exercise Price"), and the Participant must
furthermore provide the Company with the funds necessary to pay the
taxes, payment on account of tax or withholdings resulting from the
exercise thereof.
3.3 Non-Transferability of the Options
The Options shall be of a completely personal nature and therefore may
not be transferred to third parties except in the cases and on the terms
and conditions set out in this document.
3.4 Scope of the Options
The Options do not accord the Participant the status of shareholder in
the Company nor, therefore, the voting and financial rights inherent in
such status.
In the event that the Company undergoes a structural modification which
involves its extinction (for example, if it is merged into another
company), the Options shall be deemed to relate to shares in the company
which replaces it.
-4-
4. EXERCISE OF THE OPTIONS
4.1 Exercise of the Options
The Options may only be exercised on the exercise dates established in
the Letter of Invitation (each of them individually hereinafter referred
to as "Exercise Date" and collectively as the "Exercise Dates").
4.2 Exercise Dates
The Participant may exercise his or her Options in accordance with the
timetable established in the Letter of Invitation without prejudice to
the ability of the Company to modify the Exercise Dates established in
the Letter of Invitation on the grounds that they may be prejudicial to
the interests thereof. The Company shall in any event give appropriate
notice in good time to the Participant of the new Exercise Date/s.
Options not exercised on any of the Exercise Dates may be successively
exercised on any of the following Exercise Dates.
4.3 Terms and Conditions of Exercise
Uninterrupted continuation of the employment relationship. In order to
exercise the Options, the Participant must have continued without
interruption in his or her employment relationship with one of the Terra
Lycos Group companies from the Grant Date to the corresponding Exercise
Date.
Without prejudice to the foregoing, the Participant shall be entitled to
exercise the Options when his or her employment relationship with one of
the Terra Lycos Group companies has been suspended for one of the
following reasons:
a) Temporary disability recognised by the competent public health
service.
b) Maternity, risk during pregnancy and adoption and sheltering, on
a pre-adoption or permanent basis, of those under six years old,
in situations recognised by the competent public authorities in
each case or in default thereof so considered by the Company on
objective criteria.
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c) Leave granted by the corresponding Terra Lycos Group company to
cover a position in another Terra Lycos Group company.
d) Financial, technical and organisational reasons or force majeure.
e) Any others to the extent that the corresponding Terra Lycos Group
company continues to have obligations of an employment nature (or
equivalent in other jurisdictions) to the Participant.
f) Any other grounds similar or analogous to the above under which,
in accordance with the purpose of the Program, the Terra Lycos
Group wishes the Participant to maintain his or her right to
exercise the Options.
4.4 Exercise Procedure
The Company shall send to the Participant the Letter-Notification
informing the same of the method of settling the Options at least thirty
(30) days prior to the Exercise Date.
Participants who wish to exercise their Options should state their
intention to exercise by returning the Letter-Notification to the
Company duly completed and signed.
For the purposes of settling the Options in accordance with the
provisions of the foregoing paragraph, the Company shall only take into
account Letter-Notifications received at least ten (10) days prior to
the corresponding Exercise Date.
The Letter-Notifications shall contain the irrevocable decision of the
Participant to exercise his or her Options as well as the corresponding
information depending on the appropriate settlement procedure.
In accordance with the provisions of the foregoing sub-section 4.2, the
Company shall notify the Participant of an intention to modify the
Exercise Date at least thirty (30) days prior to the initially planned
Exercise Date and make all efforts to indicate the new Exercise Date at
the same time.
The new Exercise Date must in any event be notified by means of the
corresponding Letter-Notification and the same shall not imply any
modification of the Option exercise procedure indicated in this document
nor of the subsequent Exercise Dates indicated in the Letter of
Invitation.
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5. SETTLEMENT OF THE OPTIONS
5.1 Settlement Procedure
The Company may elect to settle the Participant's Options (i) by
delivering all of the shares corresponding to the Options exercised on
prior payment of the Exercise Price, or (ii) without prior payment, by
delivery of the difference between the market price of the shares and
the Exercise Price, whether in cash, shares or a combination of the two
(hereinafter, "settlement by differences"), or (iii) by a combination of
the two.
5.2 Calculation of the Net Profit per Option
In order to calculate the Net Profit per Option, the Company shall
proceed as indicated below:
(i) It shall determine the "Option Settlement Value" as the
arithmetical mean of the closing price of the shares on the
Madrid Stock Exchange over the five days prior to the Exercise
Date.
(ii) It shall determine the "Gross Profit per Option" as the result of
deducting the Exercise Price from the Option Settlement Value.
(iii) It shall determine the "Net Profit per Option", by deducting the
taxes and/or withholdings or payments on account of tax which
must be made by the Company in accordance with the corresponding
tax legislation in each jurisdiction (hereinafter, the "Taxes")
from the Gross Profit per Option.
5.3 Settlement Procedure on prior payment up in cash
The Participant shall be entitled to acquire as many shares in the
Company as Options exercised. For these purposes, the Company shall
debit the Option Exercise Price plus the Taxes resulting from settlement
of the Options to the bank account designated by the Participant in the
Letter-Notification and deliver the corresponding shares to the
Participant.
The Company shall notify the Participant of the amount owing as a result
of settlement of the Options and applicable taxes. In the event that the
Company has not been able to collect the Exercise Price in accordance
with the provisions of the foregoing paragraph as the result of an
insufficient balance on the bank account designated by the Participant
or for other reasons attributable thereto, it shall be deemed that the
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Participant has waived all rights deriving from exercise of the
corresponding Options.
5.4 Settlement by Differences Procedure
In the event of settlement by differences, the Company shall deliver a
net amount, in shares or in cash as it deems fit, after deducting the
amounts which the Option holder is under an obligation to pay in
relation to exercise of his or her Option, i.e. the Exercise Price and
corresponding Taxes.
To this end the Company shall firstly calculate the Net Profit on the
Options exercised.
In the case of settlement by differences in shares, the Company shall
transfer, for account of the Participant, such shares as may be
necessary to obtain the sum of the Exercise Price and the corresponding
Taxes on the Options exercised. For these purposes, the Participant has
authorised the Company by signature of the Letter of Invitation to
transfer the necessary shares on his or her behalf to obtain the said
sum. The Company shall make a prior estimate of the taxes generated by
settlement of the Options and shall use its best efforts to deliver to
the Participant the net profit after tax corresponding thereto. Capital
gains or losses generated as a result of the said sales shall be for
account of the Participant. If the price obtained from transfer of the
shares is insufficient to cover the Exercise Price and the Taxes, the
Company may debit the difference between the amounts obtained and the
Exercise Price plus Taxes to the account of the Participant.
The remaining shares after the Exercise Price and the applicable amount
of taxes has been obtained shall be deposited in the securities account
designated by the Participant within the shortest possible time after
the Exercise Date.
If, as a result of the foregoing, the resulting number of shares is not
a whole number, delivery shall be made to the Participant of the whole
number of shares by rounding down to the nearest whole number and the
difference relating to the remaining share fraction remaining shall be
delivered to the same in cash.
In the event of settlement by differences in cash, the Company shall
transfer the whole of the shares of the Participant on behalf and for
account thereof during the period of five days prior to the Exercise
Date. With the proceeds of the transfer, the Company shall retain the
sum of the Exercise Price and the Taxes corresponding to the Options
exercised and deposit the remainder of the amounts obtained in the cash
account designated by the Participant within the shortest possible time
after the Exercise Date.
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5.5 Value Adjustments
In the event of dilution of the value of shares in the Company as the
result of company operations carried out in the interests of the Company
(for example, capital increases wholly or partially paid up, capital
reductions with return of contributions, capital increases with the
issue of shares at a price lower than their list price, reduction in the
nominal amount of shares or share split or any other similar which in
the view of the Company has the effect of dilution), the corresponding
value adjustments shall be made in accordance with objective criteria as
determined by the Company's auditors who shall report on the existence
of the dilution and quantify the same.
6. EARLY SETTLEMENT OF OPTIONS
6.1 Cases of Early Settlement
The Participant shall be entitled to early settlement of his or her
Options on the terms set out in this section in the following cases:
(a) Dismissal. In the event of unilateral dismissal by the Company
declared unfair by a firm judgment of a court or by agreement
reached by way of judicial or non-judicial settlement.
(b) Termination as a result of breach by the Company. In the event of
termination of contract by the Participant due to a serious
culpable breach by the Company of its obligations pursuant to the
provisions of applicable legislation so declared by firm judicial
decision or by agreement reached by way of judicial or
non-judicial settlement before the bodies with competence in each
case.
(c) Retirement. In the event of retirement and early retirement on
the initiative of the Company, either individually or linked to
redundancy proceedings.
(d) Disability. In the event of a declaration of disability which
definitively prevents the employment services from being
provided, acknowledged by the Public Authority competent for the
purpose or by a final judgment of a court, which gives rise to
extinction of the employment relationship with the Company.
(e) Death. In the event of the death of the Participant, his or her
successors in title shall be entitled to receive the results of
early settlement of the Options.
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(f) Mutual agreement or unilateral withdrawal by the Participant. In
the event of termination of the employment relationship by mutual
agreement between the Participant and any of the Terra Lycos
Group companies, or on unilateral withdrawal by the Participant
with compensation pursuant to the provisions of Section 10.3 of
Royal Decree 1382/1985 if the said Royal Decree is applicable to
the Participant. The said agreement may provide for partial
settlement of the Options.
(g) Substantial reduction in the liquidity of the shares. In the
event that, as a result of concentration of ownership of the
shares, the liquidity thereof is substantially reduced,
`substantially' taken to mean the existence of a free float of
less than 20%. Free float shall mean the volume of ordinary
shares of the Company held by persons or entities whose holding
in the capital of the company is less than 5%. Both direct and
indirect holdings shall be taken into account, within the meaning
of Section 53 of the Securities Market Act of 28 July 1988 and
Royal Decree 377/1991, of 15 March, for these purposes.
(h) Exclusion from listing on official secondary markets. In the
event of exclusion of the Terra Networks, S.A. shares from
listing on Spanish Stock Exchanges by decision of the Spanish
Securities Market Commission in accordance with the provisions of
the first paragraph of Section 34 of the Securities Market Act,
and in the event of an application for exclusion from listing of
the Terra Networks, S.A. shares on the said markets submitted by
the Company on previously passing the appropriate legal
resolutions; and, furthermore, in the event that the Terra
Networks, S.A. securities cease to be traded on the North
American NASDAQ irrespective of the existing free float.
(i) Insolvency of the Company. In the event that the Company makes an
application for legal temporary receivership, a decision is
issued declaring the company bankrupt or other decisions to place
the Company under judicial administration.
6.2 Options Affected by Early Settlement
In the circumstances stipulated in sub-sections (a) to (f) of the
foregoing section 6.1, all of the Participant's Options not exercised up
to that time in accordance with the procedure laid down in section 5
shall be settled early on the Exercise Date immediately following the
occurrence of any of the said circumstances. In the circumstances
stipulated in the foregoing sub-section (g), the Options shall be settled
early within the five following stock exchange business days from when
the Company has firm knowledge that the concentration in ownership which
reduces the free float in the terms set out in the said sub-section has
taken place if the Takeover Bid takes the form of a share exchange or
swap. In the event that a Takeover Bid has been registered, however,
with the aim of acquiring by means thereof or together with shares
already held by the bidder, at least 80% of the total capital of the
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company and the report by the Board of Directors reflects acceptance of
the bid by a majority of its members, the Options shall be settled early
within the five stock exchange business days following that on which the
said report is issued, in the case of a Takeover Bid in the form a share
exchange or swap.
If the Takeover Bid is made in cash, then the shares shall be settled as
part of the Takeover Bid procedure, the same being delivered for sale on
the terms and conditions and within the periods offered.
In the circumstances stipulated in sub-section (h), the Options shall be
settled early in the five business days prior to the date fixed for
exclusion from listing by decision of the Spanish Securities Market
Commission in accordance with paragraph 1 of Section 35 of the
Securities Market Act. If the exclusion from listing is requested by the
issuer company and the Spanish Securities Market Commission makes
exclusion conditional on the issuer making an exclusion Offer, the
Options shall be settled within the first five stock exchange business
days following the time when the Company makes the exclusion Offer, if
this is in the form of share swap or exchange. If the exclusion Offer is
formulated by means of payment in cash, then the shares shall be settled
as part of the exclusion Offer procedure, the same being delivered for
sale on the terms and conditions and in the periods offered. A similar
procedure shall be followed in the case of exclusion of the Terra
Networks, S.A. securities from trading on the US NASDAQ.
In the circumstances stipulated in sub-section (i), the Options shall be
settled early within the five business days following the date on which
the application is submitted for a legal declaration of temporary
receivership or the decision is issued declaring the bankruptcy or other
decision resulting in judicial administration of the Company.
Early settlement of the Options in the cases stipulated in the foregoing
sub-section 6.1 shall take place in accordance with the settlement
procedure established by the Company for the purpose, provided that the
said settlement results in a profit to the Participant; otherwise, early
settlement of the Options shall not take place.
7. EXTINCTION OF THE OPTIONS
The Options granted to the Participant shall be extinguished on any of
the following grounds:
(i) If the final possible Exercise Date for exercising the Options is passed
and the Participant has not given effective notice of his or her
decision to exercise the Options in due time and manner.
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(ii) As a result of termination of the employment relationship except in the
cases expressly indicated in these terms and conditions of the Program
which give rise to early settlement of the Options on the terms
stipulated in the foregoing sub-section 6.1.
(iii) As a result of failure to comply with the requirements laid down for
exercise of the Options.
(iv) As a result of serious breach of obligations arising out of the
employment relationship with any Terra Lycos Group company, including
non-competition provisions. In this latter case, moreover, the
Participant shall immediately return the amount or shares received
pursuant to the Program to the Company.
If, after the final Option Exercise Date, (i) the judicial or
administrative body with competence in each jurisdiction, in which
proceedings have commenced for determining the fairness or unfairness of
termination of the employment relationship of the Participant, has not
made a finding or its finding is not final, or (ii) the administrative
authority or judicial body establishing the degree of disability of the
Participant has not pronounced or its pronouncement is not final, the
Participant shall maintain his or her status as such and the Company
shall withhold the money or shares and residue, if any. After the
corresponding decision is issued finding that extinction of the
employment relationship is unfair or improper, or a declaration of
permanent invalidity is made, the Company shall deliver to the
Participant the amount, in cash or shares and residue, if any. In the
event that it is declared that the termination of employment
relationship is fair, the Participant shall not be entitled to receive
any amounts or shares whatsoever.
8. COMMUNICATIONS
8.1 Form
All communications between the Company and the Participant in relation
to the Options shall be made in writing, by electronic mail, post or
fax, unless the law or these terms and conditions otherwise require.
8.2 Addresses
The address of the Company for the purpose of notices shall be as
follows:
Terra Networks, S.A.
Plan de Opciones
Avda. de las Dos Xxxxxxxxx, 33
Complejo Atica, Edif. 1-1(a) planta
28223 Pozuelo xx Xxxxxxx, Madrid
Fax: 00.00.000.00.00
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The address of the Participant shall be that designated in the Letter of
Invitation delivered to the same.
8.3 Change
Any change in the foregoing information must be notified in the manner
provided in the foregoing sub-section 8.1.
9. MISCELLANEOUS
9.1 Applicable law
Exercise and settlement of the Options shall be governed and interpreted
in accordance with Spanish law.
9.2 Competent jurisdiction
This Program shall be subject to the jurisdiction of the Courts of
Madrid City in relation to any dispute or disagreement which may arise
in relation to the application or interpretation of the content thereof.
10. Confidentiality
This document and those in general implementing the Terra Networks, S.A.
Option Plan shall be deemed to be Confidential Information. The Parties
may only use Confidential Information for purposes connected with the
implementation and operation of this Document and to the extent
necessary for the said purpose. The contents of the said documents shall
not be disclosed to third parties without the prior consent of Terra
Networks, S.A. In particular, the Parties undertake to take the
necessary measures to prevent unauthorised third parties from gaining
access to Confidential Information.
-13-
GENERAL TERMS AND CONDITIONS
U.S. PROGRAM UNDER
PHASE II OF THE TERRA NETWORKS, S.A.
STOCK OPTION PLAN
GENERAL TERMS AND CONDITIONS
U.S. PROGRAM UNDER
PHASE II OF THE TERRA NETWORKS, S.A.
STOCK OPTION PLAN
Terra Networks, S.A., a company validly incorporated and in existence in
accordance with the laws of Spain, with its registered office at Nicaragua 54,
08029 Barcelona, and with Fiscal ID number A-82.196.080 (hereinafter, the
"Company") has decided to implement this U.S. Program ("Program") under Phase
II of the Stock Option Plan of the Company (the "Plan") by granting options
(hereinafter, the "Options") in respect of ordinary shares in the Company
("Shares") or American depository receipts or securities with respect to Shares
(such Shares, or receipts or securities with respect to Shares, "Securities")
for the purpose of enhancing the motivation and loyalty and rewarding the work
carried out by employees of the Company and its subsidiaries (collectively, the
"Terra Lycos Group") in the United States based on their length of service and
strategic contribution to the business of the Company. As used herein, the term
"subsidiary" means "subsidiary corporation" as such term is defined in Section
424 of the Internal Revenue Code of 1986, as amended and the Treasury
Regulations promulgated thereunder.
In order to regulate the terms and conditions of grant and exercise of the
Options, the Company has approved the following terms and conditions of the
Program which are applicable to all Options granted hereunder and pursuant to
the Plan. Options granted hereunder are subject to the Plan.
1. PARTICIPANTS
Those employees, executives and directors of the Company and its subsidiaries
in the United States who are so invited may participate in the Program.
Those employees who are undergoing a trial period at the option Grant Date (as
hereinafter defined) shall be deemed to be Participants on condition that they
successfully complete the said trial period and fulfil the foregoing
conditions. For the purposes of the Program a general trial period is
established of six months from the date of joining the Terra Lycos Group.
Participants who are resident for tax purposes outside Spain must evidence this
fact prior to each Exercise Date of their Options by means of the corresponding
certificate of residency issued by the competent tax authorities according to
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applicable tax law. Failure to comply with this condition will result in
settlement of the Options which the Participant exercises taking place as if
the Participant were resident in Spain for tax purposes.
2. GENERAL FEATURES OF THE PROGRAM
2.1 Nature
Inclusion of the Participant in the Program shall not entitle the same
to participate in subsequent grants or plans which may be established by
the Company.
The profit which the Participant may obtain from his or her
participation in the Program shall not form part of his or her normal or
established remuneration for the purposes of calculating compensation
for dismissal, leaving payment, compensation for redundancy, end of
service payment, bonus, compensation for non-competition, length of
service bonus, pension or retirement benefits, compensation for early
retirement, or damages or any other type of payment due from the Company
to the person rendering his or her services.
2.2 Limit of entitlement
On joining the Program, the Participant acknowledges:
a) That his or her participation in the Program is voluntary.
b) That, except as otherwise stated in this document, entitlement to
exercise the Options shall cease at the time when the Participant
ceases in his or her employment relationship with each Terra
Lycos Group company.
c) That acceptance by the Participant implies agreement to each and
every one of the terms and conditions, and consequently no
partial waiver or acceptance thereof shall be permitted.
Furthermore, when joining the Program, the Participant:
a) Authorises the Company, and therefore the person or persons
responsible for administering the Program, to disclose such
information and data which the Company obtains from the
Participant to any Terra Lycos Group company for the appropriate
administration thereof.
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b) Accepts the authority of the Board of Directors of the Company
(the "Board of Directors" or "Board") or an entity to whom
authority to administer the Program or the Plan had been
delegated, for the implementation, administration and
interpretation of the Program and the Plan, as well as its
authority to propose and approve the modifications needed to
effectuate the intent of the Program or the Plan.
3. OPTIONS
3.1 Letter of Invitation; Grant Date
In order to achieve the proposed objectives the Company shall grant to
each of the Participants joining the Program the number of Options
indicated thereto in the Letter of Invitation.
The Options shall be deemed to be granted on the date fixed for the
purpose in the Letter of Invitation (hereinafter, "Grant Date").
3.2 Exercise Price
The exercise price under each Option shall be set forth in the Letter of
Invitation (hereinafter, the "Exercise Price") and shall not be higher
than the fair market value of the Securities covered by the Option on
the Grant Date, as determined in good faith by the Board. The Exercise
Price of Options granted to officers shall not be less than the fair
market value of the Securities covered by the Option on the Grant Date,
as determined in good faith by the Board.
3.3 Non-Transferability of the Options
Except as provided in the Letter of Invitation, the Options shall be of
a completely personal nature and therefore may not be transferred to
third parties except in the cases and on the terms and conditions set
out in this document or the applicable Letter of Invitation.
3.4 No Rights as a Shareholder
The Options do not accord the Participant the status of shareholder in
the Company nor, therefore, the voting and financial rights inherent in
such status.
4. EXERCISE OF THE OPTIONS
4.1 Exercise of the Options
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Unless otherwise specified herein, each Option granted under the Program
shall be exercisable as follows:
(a) Options shall become exercisable in such installments as the
Board of Directors may determine and as shall be set forth in the
Letter of Invitation.
(b) Once an installment becomes exercisable, it shall remain
exercisable until the expiration or termination of the Option,
unless otherwise specified by the Board of Directors and set
forth in the Letter of Invitation.
(c) Installments that are exercisable may be exercised at any time or
from time to time, in whole or in part, for up to the total
number of Securities then exercisable.
(d) The Board of Directors shall have the right to accelerate the
date of exercise of any installment or any Option.
4.2 Terms and Conditions of Exercise
Uninterrupted continuation of the employment relationship. In order to
exercise the Options, the Participant must have continued without
interruption in his or her employment relationship with one of the Terra
Lycos Group companies from the Grant Date to the corresponding Exercise
Date; however, (x) in situations where Participants take approved leave
of absence, vesting and exercisability of Options shall be governed by
such policies and procedures as are determined in writing by the Board
of Directors and (y) a Participant shall be entitled to exercise vested
Options when his or her employment relationship with one of the Terra
Lycos Group Companies has been terminated for one of the reasons
detailed in Section 6(a)(ii) (in such instances, vested Options are
exercisable until termination of the Option, as specified in such
Section).
4.3 Exercise Procedure
(a) Options granted under the Program may provide for the payment of
the exercise price by delivery of cash or a check payable to the
order of the Company in an amount equal to the exercise price of
such Options.
(b) To the extent that the right to purchase Securities under an
Option has accrued and is in effect, Options may be exercised in
full at one time or in part from time to time, by giving written
notice, signed by the person or persons exercising the Option, to
the Company, stating the number of Securities with respect to
-5-
which the Option is being exercised, accompanied by payment in
full for such Securities as provided in subparagraph (a) above.
5. SHARES AVAILABLE FOR OPTIONS
In the event that the Board shall determine that any dividend or other
distribution (whether in the form of cash or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Securities or other
securities of the Company, issuance of warrants or other rights to purchase
Securities or other securities of the Company, or other similar corporate
transaction or event affects the Securities such that an adjustment is
determined by the Board to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Program, then the Board shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and type of Securities (or other
property) which thereafter may be made the subject of Options, (ii) the number
and type of Securities (or other property) subject to outstanding Options, and
(iii) the grant, purchase, or exercise price with respect to any Option or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Option.
6. OPTION GRANTS
(a) The Options granted to the Participant shall terminate as follows:
(i) Each Option shall expire not more than five (5) years from the date of
granting thereof, but may be subject to earlier termination as provided
in the applicable Letter of Invitation.
(ii) Ninety days following the termination of the employment relationship;
provided, however, that (a) if the termination of employment is because
the Participant has become permanently disabled (within the meaning of
Section 22(e) of the Internal Revenue Code of 1986) then the Option
shall terminate 180 days after the Participant ceases to be an employee,
or on the date on which the Option expires by its terms, whichever is
first, and (b) if the termination of employment is because of the death
of the Participant, then the Option shall terminate on the last day of
the 12th month following the death of the Participant, or on the date on
which the Option expires by its terms, whichever is first. The time
periods referred to above may be extended by the Board of Directors in
its sole discretion for such time periods following the date the
Participant ceases to be an employee of the Company as the Board
determines.
(b) Except to the extent that the applicable Letter of Invitation provides
otherwise, an Option granted to a Participant who ceases to be an
employee of a Terra Lycos Group company shall be exercisable only to the
extent that the right to purchase shares under such Option has accrued
-6-
and is in effect on the date such Participant ceases to be an employee
of a Terra Lycos Group company.
7. COMMUNICATIONS
7.1 Form
All communications between the Company and the Participant in relation
to the Options shall be made in writing, by electronic mail, post or
fax, unless the law or these terms and conditions otherwise require.
7.2 Addresses
The address of the Company for the purpose of notices shall be as
follows:
Lycos, Inc.
000-0 Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Stock Option Plan
Fax: 000-000-0000
E-Mail: xx.xxxxx.xxxxxxx@xxxx.xxxxxxxxxx.xxx
The address of the Participant shall be that designated in the Letter of
Invitation delivered to the same.
8. AMENDMENT AND TERMINATION
(a) Except to the extent prohibited by applicable law and unless
otherwise expressly provided in a Letter of Invitation or in the
Program or the Plan, the Board may amend, alter suspend,
discontinue or terminate the Program, the Plan or any portion
thereof at any time; provided, however, that no such action shall
be made without (i) shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement for
which or with which the Board deems it necessary or desirable to
qualify or comply or (ii) the consent of the affected
Participant, if such action would adversely affect the rights of
such Participant under any outstanding Option. Notwithstanding
anything to the contrary herein, the Board may amend the Program
or the Plan in such manner as may be necessary to enable the
Program or the Plan to achieve its stated purposes.
(b) The Board may waive any conditions or rights under, amend any
terms of, or amend, alter, suspend, discontinue or terminate, any
Option theretofore granted, prospectively or retroactively,
-7-
without the consent of any relevant Participant or holder or
beneficiary of an Option, provided, however, that no such action
shall impair the rights of any affected Participant or holder or
beneficiary under any Option theretofore granted under the
Program; and provided further that, except as provided in Section
5, no such action shall reduce the exercise price of any Option
established at the time of grant thereof.
(c) The Board shall be authorized to make adjustments in the terms
and conditions of, and the criteria included in, Options in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 5) affecting the
Company, or the financial statements of the Company, or of
changes in applicable laws, regulations or accounting principles,
whenever the Board determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Program.
(d) Notwithstanding any provision of the Program or any Letter of
Invitation to the contrary, the Board may cause any Option
granted hereunder to be canceled in consideration of a cash
payment or alternative Option issued to the holder of such
canceled Option equal in value to the fair market value of such
canceled Option.
(e) The Board may correct any defect, supply any omission, or
reconcile any inconsistency in the Program, the Plan, or any
Option in the manner and to the extent it shall deem desirable to
carry the Program or the Plan into effect.
9. MISCELLANEOUS
(a) No employee, Participant or other person shall have any claim to
be granted any Option under the Program or the Plan, and there is
no obligation for uniformity of treatment of employees,
Participants, or holders or beneficiaries of Options under the
Program or the Plan. The terms and conditions of Options need not
be the same with respect to each recipient.
(b) The Board may delegate to one or more officers or managers of the
Company, or a committee of such officers or managers, the
authority, subject to such terms and limitations as the Board
shall determine, to grant Options, or to cancel, modify, waive
rights with respect to, alter, discontinue, suspend or terminate
Options; provided, however, that any delegation to management
shall conform with the requirements of applicable law.
-8-
(c) The Company shall be authorized to withhold from any transfer of
Securities made under any Option or from any compensation or
other amount owing to a Participant the amount (in cash,
Securities, other securities or other property) of withholding
taxes due in respect of an Option and to take such other action
(including, without limitation, providing for elective payment of
such amounts in cash, Securities, other securities or other
property by the Participant) as may be necessary in the opinion
of the Company to satisfy all obligations for the payment of such
taxes.
(d) Nothing contained in the Program or the Plan shall prevent the
Company from adopting or continuing in effect other or additional
compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
(e) The grant of an Option shall not be construed as giving a
Participant the right to be retained in the employ or service of
any Terra Lycos Group company. Further, any such company may at
any time dismiss a Participant from employment free from any
liability, or any claim under the Program or the Plan, unless
otherwise expressly provided in any other agreement binding the
parties.
(f) If any provision of the Program, the Plan or any Option is or
becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction, or as to any person or Option, or would
disqualify the Program, the Plan or any Option under any law
deemed applicable by the Board, such provision shall be construed
or deemed amended to conform to applicable laws, or if it cannot
be so construed or deemed amended without, in the determination
of the Board, materially altering the intent of the Program, the
Plan or the Option, such provision shall be stricken as to such
jurisdiction, person or Option, and the remainder of the Program,
the Plan and any such Option shall remain in full force and
effect.
(g) Neither the Program, the Plan nor any Option shall create or be
construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company and a Participant or
any other person. To the extent that any person acquires a right
to receive payments from the Company pursuant to an Option, such
right shall be no greater than the right of any unsecured general
creditor of the Company.
(h) No fractional Securities shall be issued or delivered pursuant to
the Program or the Plan or any Option, and the Board shall
determine whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Securities, or
whether such fractional Securities or any rights thereto shall be
canceled, terminated or otherwise eliminated.
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(i) This document and those in general implementing the Program and
the Plan shall be deemed to be Confidential Information.
Participants and Terra Lycos Group companies may only use
Confidential Information for purposes connected with the
implementation and operation of the Program and the Plan and to
the extent necessary for the said purpose. The contents of the
said documents shall not be disclosed to third parties without
the prior consent of the Company. In particular, Participants and
Terra Lycos Group companies undertake to take the necessary
measures to prevent unauthorised third parties from gaining
access to Confidential Information.
10. GOVERNING LAW
This Program, its interpretation, performance or any breach thereof, will be
construed in accordance with, governed by, and all questions with respect
thereto will be determined by, the laws of the Commonwealth of Massachusetts
applicable to contracts entered into and wholly to be performed within said
state.