OPTION ASSUMPTION AGREEMENTAssumption Agreement |
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Exhibit 2.3
OPTION ASSUMPTION AGREEMENT
This Option Assumption Agreement
(this “Agreement”) is being executed and delivered as of the
date set forth below by and among eBay
Inc., a Delaware corporation (the “Purchaser”), Skype Technologies S.A., a limited
company registered under the laws of Luxembourg (the “Company”),
and the holder of options to subscribe for ordinary shares of the Company
identified on the signature page hereto (“Optionholder”).
RECITALS
A. The Purchaser, the Company, and the shareholders and
warrantholders of the Company (collectively, the “Sellers”)
have entered into a Sale and Purchase Agreement (the “Purchase
Agreement”), pursuant to which, subject to the terms and conditions
thereof, the Sellers are agreeing to sell to the Purchaser and/or an affiliate
of the Purchaser nominated by the Purchaser, and the Purchaser and/or an
affiliate of the Purchaser nominated by the Purchaser is agreeing to acquire
from the Sellers, the entire issued share capital of the Company (the “Transaction”).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Purchase Agreement.
B. Optionholder is a holder of one or more options
(“Options”) to subscribe for ordinary shares in the capital
of the Company (“Ordinary Shares”) granted under the Skype
Stock Option Plan (the “Plan”).
C. Optionholder wishes to have all Options held by
Optionholder assumed by eBay upon Completion of the Transaction, subject to the
terms and conditions set forth in this Agreement.
Agreement
For
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement, intending to be legally
bound, agree as follows:
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[For
Optionholders who are not already entitled to acceleration of vesting in
connection with the Transaction only.] In connection with the Transaction
and contingent upon the execution of this Agreement by Optionholder,
Optionholder will be entitled to acceleration of vesting of 25% of
Optionholder’s unvested Options, which accelerated vesting will be
spread evenly across the remaining vesting period of Optionholder’s
Options. By way of example only, see Schedule 1 for an
illustrative example of how the accelerated vesting would be applied. |
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At Completion,
each of Optionholder’s Options that is outstanding and unexercised
immediately prior to Completion, whether or not vested, will be converted
into and become an option to purchase shares of common stock of eBay (“eBay
Shares”) as provided in sub-clause 2.3 of the Purchase Agreement
(each such Option being referred to as an “Assumed Option”).
Therefore, after Completion: |
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all rights to
subscribe for Ordinary Shares under Optionholder’s Options will be
converted as contemplated by the Purchase Agreement into rights to purchase
eBay Shares; |
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each Assumed
Option may be exercised solely to purchase eBay Shares; |
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the number of
eBay Shares subject to each Assumed Option will be determined by multiplying
the number of Ordinary Shares that were subject to such Assumed Option
immediately prior to Completion by the Conversion Ratio (as defined below),
and rounding the resulting number up to the nearest whole number of eBay
Shares; |
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the per share
strike price for the eBay Shares issuable upon exercise of each Assumed
Option will be determined by dividing the per share strike price of Ordinary
Shares subject to such Option, as in effect immediately prior to Completion,
by the Conversion Ratio, and rounding the resulting strike price up to the
nearest whole cent; |
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such Assumed
Option will be subject to the terms and conditions set out in Schedule 2;
and |
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except as
provided above and as set forth in Schedule 2, the provisions of
such Assumed Option will remain the same as the provisions of
Optionholder’s Option. |
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The “Conversion
Ratio” means the number determined by dividing: (i) €2,500,000,000; by (ii) the
product of: (A) the Aggregate Outstanding Share Number; and
(B) Completion Purchaser Share Price (adjusted to the extent appropriate
to reflect any stock split, division or subdivision of shares, stock
dividend, issuance of bonus shares, reverse stock split, consolidation of
shares, reclassification, recapitalization or other similar transaction with
respect to eBay Shares). |
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By way of
example only, assuming that the Aggregate Outstanding Share Number is 698,430
(the actual number is likely to be this number) and the Completion Purchaser
Share Price is €31.70
(the actual price will only be known at Completion), the Conversion Ratio
would be 112.9. Thus, for example, if Optionholder currently holds an Option
to purchase 100 Ordinary Shares with a strike price of €12.20 per Ordinary Share, such Option
would be converted into an option to purchase 11,293 eBay Shares with a
strike price of €0.11
per share. |
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Without
prejudice to the existing provisions relating to tax and social security
contributions applicable to the Options which shall continue to apply to the
Assumed Options, if eBay or any other company within the eBay Group (the
companies within the “eBay Group” for these purposes being
determined by eBay’s board of directors or a committee thereof (the
“eBay Board”) is obliged to (or would suffer a
disadvantage if it were not to) account for any amount of tax or social
security contributions (including employer social security contributions) in
respect of Optionholder’s Assumed Option and/or the eBay Shares
acquired on the exercise of such Assumed Option (including the conversion of
Optionholder’s Options, the exercise of and any other dealing in
relation to such Assumed Option and the acquisition, holding and disposal of
eBay Shares) (together, the “Tax Liability”), then before
such Assumed Option may be exercised Optionholder must have entered into
arrangements acceptable to the eBay Board to secure that such a payment is
made (whether by paying an amount in respect of eBay’s estimate of the
Tax Liability, authorising the sale of some or all of the eBay Shares on
Optionholder’s behalf and the payment to the eBay Group company of the
relevant amount out of the proceeds of sale, withhold all applicable Tax
Liability legally payable by Optionholder from Optionholder’s wages or
other cash compensation paid to Optionholder by eBay or Optionholder’s
employer or from the proceeds of the sale of shares, withhold in shares of
common stock (if permissible under local law) provided that only the amount
of shares necessary to satisfy the minimum withholding amount are withheld,
or otherwise). |
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[For non-EMI
UK Optionholders only.] If Optionholder is resident in the United Kingdom
for tax purposes (a “UK Optionholder”), Optionholder agrees to be
bound by the provisions of Schedule 3 to this Agreement. As required
under Article 1 of Schedule 3 (PAYE and National Insurance rules
for UK Optionholders) to this Agreement, each UK Optionholder shall, under
paragraph 3A of Schedule 1 Social Security Contributions and Benefits
Act 1992 to pay to and indemnify the relevant member of the eBay Group
against an amount equal to pay secondary |
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class 1
national insurance contributions arising on exercise or release of such UK
Optionholder’s Assumed Option. In addition, as required under
Article 1.6 of Schedule 3, each UK Optionholder is required to
enter into an election with S Technologies Limited or the relevant eBay Group
member under section 431(1) of the Income Tax (Earnings and Pensions) Act
2003 in respect of eBay Shares acquired pursuant to this Agreement. |
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[For non-EMI
UK Optionholders only.]The Company or S Technologies Limited (or, if
appropriate, the other relevant member of the eBay Group) will account to HM
Revenue & Customs under PAYE for any income tax or national insurance
contributions (if any) arising on any gain made when UK Optionholder’s
Assumed Option is exercised or released in whole or part in accordance with
Articles 1.1 to 1.4 of Schedule 1. Each UK Optionholder shall enter into
such arrangements as the eBay Board requires to ensure that any liabilities
for which such UK Optionholder is obliged to account to a member of the eBay
Group under Schedule 1 to this Agreement, are accounted for to the
satisfaction of eBay, the Company, S Technologies Limited or the relevant eBay
Group member. |
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[For certain
Optionholders only.]Optionholder may exercise Optionholder’s vested
Options in anticipation of Completion, subject to compliance with applicable
securities laws. If Optionholder exercises any Options prior to Completion:
(a) the Skype Shares that Optionholder receives upon exercise will
automatically be sold to eBay in exchange for the consideration elected to be
received by Optionholder in accordance with the terms set forth in the
Purchase Agreement; and (b) Optionholder will be deemed to be a party
to, and will be bound by the terms of, the Purchase Agreement, the
Registration Rights Agreement and, if Optionholder has checked the box on the
accompanying Exercise Notice electing to receive the Earn Out Consideration
in the event Optionholder exercises any Options prior to Completion, the Earn
Out Agreement. |
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To exercise
vested Options prior to Completion, Optionholder must execute this Agreement
as well as completing and executing the accompanying Exercise Notice and
ensure that faxed or scanned copies of the original duly signed signature
page to this Agreement and the full original completed and signed Exercise
Notice are received by Ian Fulton no later than 18:00 Luxembourg time on
October 10, 2005. The original duly signed signature page to this
Agreement and the full original completed and signed Exercise Notice must be
received by Ian Fulton no later than 18:00 Luxembourg time on
October 11, 2005. Optionholders should also consider whether it is appropriate
to place an “X” in paragraph (f) of Exhibit A to this
Agreement and to the Exercise Notice. If it is appropriate for an
Optionholder to place an “X” in paragraph (f) of
Exhibit A to this Agreement then the Optionholder must ensure that
Exhibit A is delivered to Ian Fulton together with the duly signed
signature page to this Agreement. (Full details on the delivery methods of
this Agreement and the Exercise Notice are contained in the Frequently Asked
Questions as well as in the cover letter that Optionholders should have
already received.) If Optionholder exercises any vested Options prior to
Completion, eBay shall be entitled to satisfy any Tax Liability out of the
eBay Shares that Optionholder’s receives in exchange for
Optionholder’s Ordinary Shares and that are deposited into escrow
pursuant to the terms of the Purchase Agreement. |
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After
Completion, eBay will be filing certain documents with the United States
Securities and Exchange Commission and providing certain disclosures to Optionholder.
Once those documents are filed, the eBay Shares that Optionholder receives
upon exercise of Optionholder’s vested Assumed Options will not be
subject to resale restrictions under applicable US securities laws.
Optionholder will be provided with additional information about
Optionholder’s Assumed Options, including about how to exercise such
Assumed Options and receive eBay Shares that are not subject to restrictions
on resale, after Completion. |
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If Optionholder
is a resident of any country other than the United States, Optionholder
warrants to (and agree with) eBay and the Company as set forth in Exhibit
A hereto. If Optionholder is a resident of the United States,
Optionholder warrants to (and agree with) eBay and the Company as set forth
in Exhibit B hereto. In addition, Optionholder warrants to (and
agree with) eBay and the Company that: |
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Optionholder
has the right, power, authority and capacity to enter into, execute, deliver
and perform all of Optionholder’s obligations under this Agreement; |
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this Agreement:
(a) has been duly and validly executed by Optionholder; and (b)
constitutes a valid and binding obligation of Optionholder, enforceable
against Optionholder in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
to general equitable principles; |
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neither the
execution, delivery or performance of this Agreement, nor the consummation of
any of the transactions contemplated by this Agreement, will: (a) result in
any violation or breach of any agreement or other instrument to which
Optionholder is a party or by which Optionholder is bound; or (b) result
in a violation of any legal requirement or order to which Optionholder is
subject; |
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no
authorization, consent or approval of, or notice to, any person or entity is
required to be obtained or given by Optionholder in connection with the
execution, delivery or performance of this Agreement; and |
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eBay may place
legends on, and impose other appropriate restrictions with respect to,
Optionholder’s Assumed Options as required to comply with applicable
securities laws. |
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This Agreement
shall be governed by and construed in accordance with English law. The
delivery of a signed copy of this Agreement by facsimile transmission or by
email in .pdf format shall be sufficient to bind the parties to the terms of
this Agreement. Optionholder agrees to execute and/or cause to be delivered
to eBay and the Company such other instruments and documents, and to take
such other actions, as eBay or the Company may reasonably request for the
purpose of carrying out or evidencing any of the actions contemplated by this
Agreement. If Optionholder has received this Agreement or any other document
related to the Transaction translated into a language other than English and
if the translated version is different than the English version, the English
version will control. |
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[For US
Optionholders only.] Optionholder hereby appoints the individual
identified on the signature page hereto to serve as Optionholder’s
Purchaser Representative (as that term is used in Regulation D of the
Securities Act of 1933, as amended) in connection with the Transaction and an
investment in eBay Options and eBay Shares. Optionholder hereby acknowledges
that: (a) Optionholder will consult with the Purchaser Representative in
connection with his or her evaluation of the merits and risks of the
Transaction and an investment in eBay Options and eBay Shares; and
(b) the Purchaser Representative has disclosed to Optionholder any
material relationship between eBay or any of eBay’s affiliates and
Purchaser Representative or any of his, her or its affiliates, which
currently exists, are contemplated or have existed at any time since
September 30, 2003. |
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If the
Transaction is abandoned or the Purchase Agreement is terminated in
accordance with its terms, this Agreement will be null and void. |
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Optionholder
acknowledges that: |
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Optionholder
has received and read the following information carefully: (a) a copy of
an Information Statement describing the Transaction, together with the
attachments thereto; (b) a list of Frequently Asked Questions regarding
the effect of the Transaction on Optionholder’s Options; and
(c) copies of the Purchase Agreement and the Earn Out |
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Agreement
(collectively, the “Transaction Documents”). |
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Neither the
Company nor eBay is providing Optionholder with any financial, investment or
tax advice regarding the Transaction, and neither this Agreement nor any of
the other documentation provided to Optionholder in connection with the
Transaction constitutes such advise. |
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Optionholder
will make Optionholder’s own legal, tax and accounting analysis with
respect to the exchange offer, the Assumed Options and the eBay Shares.
Optionholder is advised to discuss the financial impact of the Transaction on
Optionholder with Optionholder’s financial and/or tax advisors. |
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Neither the
Options nor the Ordinary Shares have been registered with the Spanish
Securities Market Commission (Comisión Nacional del Mercado de
Valores) and therefore they may not be offered in Spain except in
circumstances which do not constitute a public offer of securities in Spain
within the meaning of article 30bis of the Spanish Securities Market Law of
28 July 1988 (Ley 24/1988, de 28 de julio, del Mercado de Valores),
as amended and restated, and supplemental rules enacted thereunder. |
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This offer to
enter into this Agreement does not constitute an offering for securities for
which a public offering prospectus is required in Luxembourg. Accordingly, no
such prospectus has been prepared by the offeror and no approval has been sought
with or given by the Commission de Surveillance du Secteur Financier. |
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In Japan this
offer is exempted from the Securities Registration Statement filing
requirement under Art. 4, Para. 1 of the Japan Securities and Exchange Law. |
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Optionholder
acknowledges that the contents of this Agreement, the Purchase Agreement, the
Earn Out Agreement and their respective attachments (the “Information”)
are strictly confidential. Optionholder agree to hold the Information in
strict confidence and agrees not to disclose, copy, reproduce or distribute
any of it to any person other than to Optionholder’s professional
advisers who strictly need access to it for the purposes of advising
Optionholder on the entry into this Agreement, the Purchase Agreement or the
Earn Out Agreement, and only to the extent that they need that access, and on
the basis that they themselves will not disclose, copy, reproduce or
distribute it to any other person. |
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In witness whereof, the parties
hereto have caused this Agreement to be executed and delivered on the day and
year written below.
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eBay
Inc., |
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Delaware corporation |
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By: |
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Skype
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