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EXHIBIT 4.2
THE CONCENTRIC NETWORK CORPORATION
NETHERLANDS
SHARE OPTION SCHEME
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TABLE OF CONTENTS
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1. Purposes.............................................................. 1
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2. Definitions and interpretation........................................ 1
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3. Selection of Eligible Employees....................................... 3
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4. Grant of Options...................................................... 3
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5. Exercise of an Option................................................. 4
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6. Period of Option and provisions for Participants leaving the Group.... 4
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7. Variation of capital.................................................. 5
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8. Exchange of Options................................................... 6
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9. Takeover and liquidation.............................................. 6
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10. Rights attaching to shares allotted pursuant to an Option............. 7
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11. Availability of shares................................................ 7
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12. General............................................................... 7
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DRAFT AS OF 02/04/00
The Concentric Network Corporation Netherlands Share Option Scheme
1. Purposes
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The purposes of the Concentric Network Corporation Netherlands Share Option
Scheme are (i) to attract and retain the best available personnel for positions
of substantial responsibility, (ii) to provide additional incentive to Eligible
Employees, and (iii) to promote the success of the Company's business. The
Scheme allows the Company to grant Options to purchase Ordinary Shares to
Eligible Employees to achieve these purposes.
2. Definitions and interpretation
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2.1 For the purposes of the Scheme, unless the context otherwise requires,
the following words and expressions shall have the following meanings:
"the Adoption Date" means the date on which the Board passes
a resolution adopting the Scheme;
"the Auditors" means the auditors for the time being of
the Company (acting as experts and not
as arbitrators);
"the Board" means the board of directors of the
Company or the persons appointed by the
board of directors of the Company to act
as a committee for all or any matters
relating to the Scheme;
"the Company" means Concentric Network Corporation
registered in Delaware;
"Control" has the same meaning as in article 10a
paragraph 5 of the US Taxes Act;
"Date of Grant" means the date on which an Option is,
was, or is to be granted under the
Scheme;
"Disability" means total and permanent disability, as
evidenced to the satisfaction of the
Board;
"Eligible Employee" means a person who is at the relevant
Date of Grant a Full-Time Director or a
Qualifying Employee in either case of a
company selected by the Board to
participate in the Scheme;
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"Full-Time Director" means a director of the Company and/or
any Subsidiary whose terms of office or
employment require him to work for at
least twenty-five hours per week
(excluding meal breaks);
"Group" means the Company and the Subsidiaries;
"Option" means an option to acquire Scheme Shares
granted pursuant to the Scheme;
"Option Price" in relation to any Scheme Share means an
amount determined by the Board being
equal to the amount determined to be the
market value on the Date of Grant of an
Ordinary Share;
"Ordinary Shares" means shares of common stock of the
Company;
"Participant" means any person who for the time being
participates in the Scheme;
"Qualifying Employee" means an employee of the Company and/or
a Subsidiary (who is not a director of
the Company or a Subsidiary);
"Qualifying Employment" means office or employment either as a
Full-Time Director or as a Qualifying
Employee as the case may be;
"Record Date" in relation to any particular payment of
dividend or the making of any other
distribution to the Company's
stockholders means the date on which any
such stockholder must duly be recognised
as such by the Company in order to have
the right to receive such dividend or
other distribution;
"the Rules" means these rules as from time to time
amended;
"the Scheme" means The Concentric Network Corporation
Netherlands Share Option Scheme
constituted and governed by the Rules;
"Scheme Shares" means Ordinary Shares to be acquired by
a Participant on the exercise by him of
an Option;
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"Subsidiary" means any body corporate of which the
Company is for the time being to be
taken to have Control and which is a
subsidiary of the Company within article
10a, paragraph 4 of the US Taxes Act;
"Subsisting Option" means an Option which has neither lapsed
nor been exercised;
2.2 Where the context so permits the singular shall include the plural and
vice versa and the masculine shall include the feminine.
2.3 Reference to any Act shall include any statutory modification,
amendment or re-enactment thereof.
3. Selection of Eligible Employees
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3.1 The Board may from time to time at its discretion grant an Option to an
Eligible Employee to be selected in each case at the discretion of the Board
pursuant to the terms of the Scheme.
4. Grant of Options
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4.1 Subject to the limitations referred to herein, the Board shall
determine the number of Scheme Shares to be included in an Option.
4.2 Options may be exercised on the Date of Grant, subject to the
provisions of the Option Certificate.
4.3 As soon as practicable after Options have been granted, the Board shall
issue to each Participant an Option Certificate in the form of a deed specifying
the option price and carrying a statement to the effect of Rule 4.4. The Option
Certificate may also contain other terms and conditions which are relevant to
the Option.
4.4 An Option granted to an Eligible Employee shall not be transferable by
the Eligible Employee other than by will or the laws of descent and
distribution.
4.5 The amount payable upon the exercise of an Option shall be the Option
Price.
4.6 Subject to the provisions of Rule 7, the total number of Ordinary
Shares issued or remaining to be issued on the exercise of Options granted under
the Scheme shall not exceed [1,000,000] Ordinary Shares. For the avoidance of
doubt, shares subject to an Option which has lapsed, been cancelled or
surrendered shall not count towards the above limits.
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4.7 The granting of Options does not qualify as an employment condition
and is purely discretionary to the Board.
5. Exercise of an Option
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5.1 An Option shall be exercised by delivering to the Secretary of the
Company a notice duly signed by the Participant in a form approved by the Board
together with payment by cheque or in cash of the Option Price for each Scheme
Share to be acquired and delivery of the Option Certificate for amendment or
cancellation as the case may be. An Option may be exercised in part but may not
be exercised in respect of a fraction of a Scheme Share.
5.2 Subject to any necessary consents and to an Option having been
exercised in accordance with the provisions of Rule 5.1, the Board shall as soon
as practicable make an allotment or procure the transfer to the Participant or
his nominee of the number of Scheme Shares specified in the notice exercising
the Option. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Ordinary Shares, notwithstanding the exercise of the Option.
6. Period of Option and provisions for Participants leaving the Group
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6.1 An Option may not be exercised later than the day specified in the
Option Certificate (the "Expiration Date"). An Option shall lapse on the
Expiration Date. The Expiration Date may not be later than the day before the
tenth anniversary of the date that the Option was granted.
6.2 Except as provided in Rules 6.4, 6.5 and 6.6 any Option will lapse at
the moment the Participant is not longer in Qualifying Employment.
6.3 Exercise of an Option shall only be effective provided that any income
or withholding tax liability arising to the Participant at the date of
exercising the Option is accompanied by payment of a sum equal to the tax due.
6.4 Subject to Rule 6.1, if a Participant ceases to be in Qualifying
Employment by reason of Disability, the Participant may exercise an Option in
accordance with the provisions of the Option Certificate. The Participant may
only exercise such Option within the period of time specified in the Option
Certificate (the "Termination Period"). If the Termination Period is not
specified in the Option Certificate, the Participant may exercise such Option
within 12 months of the date of cessation of employment and shall thereafter
cease to have any rights to exercise that Option.
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6.5 Subject to Rule 6.1, if a Participant dies whilst in Qualifying
Employment, his personal representatives may within the Termination Period
(which shall not exceed 12 months from the date of death) exercise an Option in
accordance with the provisions of the Option Certificate. If the Termination
Period is not specified in the Option Certificate, his personal representatives
may exercise such Option within 12 months of the Participant's death and shall
thereafter cease to have any rights to exercise that Option.
6.6 Subject to Rule 6.1, if a Participant ceases to be in Qualifying
Employment for any reason other than those specified in Rules 6.4 or 6.5, the
Participant may within the Termination Period exercise an Option in accordance
with the provisions of the Option Certificate. If the Termination Period is not
specified in the Option Certificate, the Participant may exercise such Option
within 3 months of the cessation of his employment and shall thereafter cease to
have any rights to exercise that Option.
6.7 If a Participant (or his personal representatives) shall cease to have
any rights to exercise an Option under this Rule such Option shall lapse.
6.8 Unless the Board provides otherwise, a Participant shall not be in
Qualifying Employment during any unpaid leave of absence.
7. Variation of capital
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7.1 In the event of any variation in or reorganisation of the share
capital of the Company whether by way of capitalisation or offer by way of
rights or reduction, sub-division or consolidation of shares, or otherwise,
then:
(A) the Option Price in respect of any Options granted pursuant to
the Scheme; and/or
(B) the number of Scheme Shares subject to any such Option;
shall be varied by the Board in such manner as the Auditors advise to be in
their opinion fair and reasonable. Such variation by the Board shall be final
and binding on the Participants and the Company.
7.2 In no circumstances shall the Option Price as reduced or adjusted
pursuant to Rule 7.1 in respect of any Scheme Share be less than the nominal
value of such share.
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8. Exchange of Options
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8.1 This Rule 8 applies where a company ("the Acquiring Company") obtains
Control of the Company as a result of:
(A) a general offer to acquire the whole of the issued share capital
of the Company (other than that which is already owned by it) made on a
condition such that if satisfied the Acquiring Company will have Control of the
Company; or
(B) a general offer to acquire all the Ordinary Shares (or such
Ordinary Shares as are not already owned by the Acquiring Company).
8.2 If as a result of the events specified in Rule 8.1(A) and 8.1(B) the
Acquiring Company has obtained Control of the Company, the Company shall seek
the agreement of the Acquiring Company, and if such agreement is obtained, the
Company shall forthwith notify each Participant thereof and any Subsisting
Option shall be released by the Participant for a new Option on terms agreed
between the Company and the Acquiring Company and certified by the Auditors as
fair and reasonable.
8.3 The provisions of this Rule 8 shall apply with any consequential
amendments in the event that Control of the Acquiring Company itself changes as
a result of the events specified in Rule 8.1.
9. Takeover and liquidation
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9.1 If the agreement of the Acquiring Company (as defined in Rule 8.1)
cannot be obtained for the release of Subsisting Options for new options in
accordance with Rule 8.2, then all Subsisting Options shall lapse immediately
prior to the consummation of a transaction described in Rule 8.1.
9.2 If a notice of a meeting to consider a resolution for any other
voluntary winding up of the Company shall be given, the Board shall notify a
Participant 10 days prior to the commencement of the winding up that he shall be
entitled (subject to Rules 6.1 and 6.2) to exercise any Subsisting Option then
held by him. All Subsisting Options shall lapse on the winding up of the
Company.
9.3 Upon the Board becoming aware that any of the events referred to above
has happened, the effect thereof shall be notified forthwith by the Board to the
Participants.
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10. Rights attaching to shares allotted pursuant to an Option
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All Scheme Shares allotted pursuant to the exercise of any Option shall as
to voting, dividend, transfer and other rights including those arising in the
liquidation of the Company, rank equally in all respects and as to one class
with the Ordinary Shares of the Company in issue as at the date of such
allotment, save that any allotment made after the earlier of the date of
announcement of a proposed dividend or other distribution and the Record Date of
a proposed dividend or other distribution shall be made upon terms that the
Ordinary Shares so allotted are not entitled to participate therein.
11. Availability of shares
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The Company will at all times keep sufficient authorised but unissued
Ordinary Shares or have under its control sufficient issued Ordinary Shares to
permit the exercise of all unexercised Options.
12. General
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12.1 Participation in the Scheme by a Participant is a matter entirely
separate from, and shall not affect, his pension rights and terms of employment
and, in particular (but without prejudice to the generality of the foregoing),
if a Participant shall cease for any reason (including, but without prejudice to
the generality of the foregoing, his wrongful dismissal) to be employed by or
hold office in the Company and/or any Subsidiary he shall not be entitled by way
of compensation for loss or otherwise howsoever, to any sum or benefit to
compensate him for the loss of any right or benefit under the Scheme.
12.2 The Company shall maintain all necessary books of account and
records relating to the Scheme.
12.3 The Scheme shall in all respects be administered by the Board which
may make such Rules not being inconsistent with the terms and conditions hereof
for the conduct of the Scheme as the Board thinks fit. Any dispute regarding the
interpretation of the Rules or the terms of any Option shall be determined by
the Board (upon such advice as it shall consider necessary) and its decision
shall be final and binding.
12.4 A Participant who is a director of the Company may, notwithstanding
his interest, vote on any resolution of the Board or the board of directors of
the Company concerning the Scheme (other than in respect of his own
participation therein) and may retain any benefits under the Scheme.
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12.5 The Board or the Company in general meeting may at any time
terminate the Scheme and in such event no further Options will be granted but
the subsisting rights of Participants will not thereby be affected.
12.6 The Board shall not grant Options and no Eligible Employee shall
exercise an Option or transfer any rights pursuant to an Option, while being in
the possession of inside information as set forth in US or Netherlands inside
trading legislation.
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The Concentric Network Corporation Netherlands Share Option Scheme
The option certificate
Article 1
This is to certify that ......................................... of
................................................ (hereinafter: the Employee) has
been granted an Option to acquire ordinary shares in Concentric Network
Corporation in accordance with and subject to the Rules of the Concentric
Network Corporation Netherlands Share Option Scheme.
Details of the Option are as follows:
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(1) (2) (3)
Number of shares over Option Price per Share Date of Grant of Option
which the Option is held
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Article 2
The Option is exercisable in accordance with the Rules of the said Scheme.
Article 3
The Option is personal and is not capable of assignment. Any purported
assignment, pledge, disposal of or dealing with an Option shall cause the Option
to lapse forthwith.
Article 4
The Expiration Date will be .......................... [10 years after the date
of grant].
Article 5
At the Date of Grant, the Option becomes immediately and fully exercisable.
Article 6
If and insofar the Employee exercises the Option, the Employee is obliged to
immediately sell the Scheme Shares acquired.
Article 7
If the Employee has sold the Scheme Shares as mentioned in article 6, the
Employee is obliged to provide the Company with copies of the documents
regarding this sell.
Article 8
In the event the Qualifying Employment ends before ......................... [4
years after the date of grant], other than due to death of the Employee, a
penalty shall be due by the Employee if and insofar as the Option is exercised
before termination date (the Reimbursement).
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Article 9
The Reimbursement is determined by the Benefit of the Option, based upon the
following:
. if the Option is exercised by the Employee before one year's anniversary:
100% of the Benefit;
. if the Option is exercised by the Employee on one year's anniversary: 75%
of the Benefit;
. thereafter, if the Option is exercised by the Employee after one year's
anniversary, the percentage of 75 will decrease with 2.1 for each full
month the Qualifying Employment exists after ................. [4 years
after the date of grant].
Article 10
The Benefit will be determined at the difference between the fair market value
of the shares at the moment of exercise of the Option and the exercise-price of
the Option, minus taxes due upon exercise.
Article 11
Any tax and/or social security liabilities in connection with this Option will
be for the account of the Employee. By signing this Option Certificate, the
Employee declares to agree that the tax and/or social security liabilities are
exclusively levied at the moment the Option is exercised. The taxable value
amounts to the difference between the fair market value of the Scheme Shares and
the exercise price of the Option. The Employee will not take another position by
filing his individual income tax return.
Article 12
A form of exercise is printed on the reverse of this certificate.
THE COMMON SEAL of the Company was hereunto affixed in the presence of
_______________________________________
Director
_______________________________________
Director/Secretary
THIS CERTIFICATE SHOULD BE KEPT IN A SAFE PLACE. YOU WILL NEED TO PRODUCE IT IN
ORDER TO ACQUIRE THE SHARES SHOWN.
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NOTICE OF EXERCISE OF OPTION
I am entitled to exercise an Option under the Concentric Network Corporation
Netherlands Share Option Scheme as set out in the Option Certificate overleaf.
I now apply for shares indicated below and request that you arrange for the
allotment and immediately sell of these shares.
Number of shares applied for ______________
I enclose the sum of NLG ___________ in cash being payment in full for those
shares at the option price per share shown on the option certificate.
OR
I enclose a cheque made payable to [ ] for NLG _____________ being
payment in full for those shares at the option price per share shown on the
option certificate.
and confirm that as regards any tax liability arising upon exercise of the
Option, to the extent that the amount of such liability cannot be deducted in
full from my salary:
(a) I agree (and the Company has consented) to repay such amount to the [_]
Company in instalments by way of deduction from salary; or
(b) the cheque accompanying this notice of exercise includes a sum equal [_]
to the amount due.
Please tick the appropriate box and speak to [the Company Secretary] for
guidance if required.
Personal Details (block capitals)
Mr/Mrs/Miss/Ms__________________________________________________________________
FORENAMES_______________________________________________________________________
ADDRESS_________________________________________________________________________
_______________________________________________________________________________
POSTCODE________________________________________________________________________
SIGNED__________________________________________________________________________
DATE____________________________________________________________________________
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Addendum
Concentric Network Corporation Netherlands Share Option Scheme
Example
exercise price of the option NLG 100
fair market value of a share after 2 years NLG 150
The employee leaves the company two years (24 months) after the option is
granted. The option is exercised before termination date. The employee is
obliged to immediately sell the shares acquired.
The taxable benefit at the moment of exercising the option amounts to NLG 150
minus NLG 100 = NLG 50. Assuming that the maximum tax rate of 60% applies, the
taxation amounts to NLG 30 (= NLG 50 x 60%). Based on article 10 of the option
certificate, the benefit amounts to NLG 50 minus NLG 30 = NLG 20.
Article 8 and 9 of the certificate determine that 49.8% (see the schedule
attached) of the benefit must be paid by the employee to the employer. The
benefit is determined in article 10. As a result, the penalty amounts to NLG
9.96 (=NLG 20 x 49.8%).
Benefit of the option NLG 50.00
Minus: taxation NLG 30.00 -/-
Minus: penalty NLG 9.96 -/-
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Net result NLG 10.04
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