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
”).
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.
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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1.
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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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2.
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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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3.
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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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4.
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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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5.
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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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6.
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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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7.
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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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8.
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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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9.
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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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10.
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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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11.
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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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12.
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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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13.
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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
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