-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ANNNOn8kTX8yxIgAG78Px6X5qtjYgJBIbkwvvoL3mvNxWYptEKsjF/BaMtuf+8PS 373zgYllgx8Ylv+sQxIcjg== 0000898430-02-000117.txt : 20020413 0000898430-02-000117.hdr.sgml : 20020413 ACCESSION NUMBER: 0000898430-02-000117 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20020115 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INFOSPACE INC CENTRAL INDEX KEY: 0001068875 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 911718107 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-55807 FILM NUMBER: 2509217 BUSINESS ADDRESS: STREET 1: 601 108TH AVE NE STREET 2: SUITE 1200 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: 4258821602 FORMER COMPANY: FORMER CONFORMED NAME: INFOSPACE COM INC DATE OF NAME CHANGE: 19980824 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INFOSPACE INC CENTRAL INDEX KEY: 0001068875 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 911718107 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 601 108TH AVE NE STREET 2: SUITE 1200 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: 4258821602 FORMER COMPANY: FORMER CONFORMED NAME: INFOSPACE COM INC DATE OF NAME CHANGE: 19980824 SC TO-I 1 dsctoi.txt SCHEDULE TO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- SCHEDULE TO (Rule 13e-4) Tender Offer Statement Under Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934 ----------------- INFOSPACE, INC. (Name of Subject Company (Issuer) and Filing Person (Offeror)) ----------------- Options to Purchase Common Stock, Par Value $0.0001 Per Share, Having an Exercise Price of $10.00 or More Per Share (Title of Class of Securities) ----------------- 45678T 10 2 (CUSIP Number of Class of Securities) (Underlying Common Stock) ----------------- John M. Hall, Esq. Senior Vice President and General Counsel InfoSpace, Inc. 601 108/th/ Avenue, N.E., Suite 1200 Bellevue, Washington 98004 (425) 201-6100 (Name, address and telephone number of person authorized to receive notices and communications on behalf of filing person) ----------------- Copies to: Jeffrey D. Saper, Esq. Patrick J. Schultheis, Esq. Jack Helfand, Esq. Drew G. Markham, Esq. Wilson Sonsini Goodrich & Rosati Wilson Sonsini Goodrich & Rosati Professional Corporation Professional Corporation 650 Page Mill Road 5300 Carillon Point Palo Alto, California 94304 Kirkland, Washington 98033 (650) 493-9300 (425) 576-5800
CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee ------------------------------------------- $8,042,650 $1,608.53 -------------------------------------------
* Calculated solely for purposes of determining the filing fee. This amount assumes that options to purchase 14,337,514 shares of common stock of InfoSpace, Inc. having an aggregate value of $8,042,650 as of January 14, 2002 will be exchanged pursuant to this offer. The aggregate value of such options was calculated based on the Black-Scholes option pricing model. The amount of the filing fee, calculated in accordance with Rule 0-11(b) of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the value of the transaction. [_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Filing Party: Not applicable. Form or Registration No.: Not applicable. Date Filed: Not applicable.
[_] Check box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [_] third party tender offer subject to Rule 14d-1. [X] issuer tender offer subject to Rule 13e-4. [_] going-private transaction subject to Rule 13e-3. [_] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer. [_] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Item 1. Summary Term Sheet. The information set forth under the "Summary Term Sheet" section in the Offer to Exchange, dated January 15, 2002, attached hereto as Exhibit (a)(1) (the "Offer to Exchange"), is incorporated herein by reference. Item 2. Subject Company Information. (a) The name of the issuer is InfoSpace, Inc., a Delaware corporation (the "Company"), and the address of its principal executive office is 601 108/th/ Avenue N.E., Suite 1200, Bellevue, Washington 98004, (425) 201-6100. The information set forth in the Offer under the caption "The Offer--Information Concerning InfoSpace" is incorporated herein by reference. (b) This Tender Offer Statement on Schedule TO relates to an offer by the Company to exchange options having an exercise price of $10.00 or more per share (the "Eligible Options") to purchase shares of the Company's common stock, par value $0.0001 per share, that are outstanding under the Company's Restated 1996 Flexible Stock Incentive Plan (the "1996 Plan"), the Go2Net Inc. 1996 Stock Option Plan, the Go2Net Inc. 2000 Stock Option Plan, the Silicon Investor, Inc. 1996 Stock Plan, the WEB 21 Stock Option Plan, the Authorize.Net Corporation 1999 Stock Incentive Plan, the IQC Corporation Option to Purchase Common Stock, the SaveSmart, Inc. 1997 Equity Incentive Plan, the Saraide.com Inc. 1998 Equity Incentive Plan, the InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan and the INEX Corporation Share Option Plan regardless of when granted or whether vested or unvested and held by certain current full-time (40 hours or more per week) United States based employees of the Company and its U.S. subsidiaries for new options that will be granted under the 1996 Plan (the "New Options"), upon the terms and subject to the conditions described in the Offer to Exchange, the related memorandum from Naveen Jain dated January 15, 2002, attached hereto as Exhibit (a)(2), the Exchange Offer Summary Statement attached hereto as Exhibit (a)(3), the Election Form attached hereto as Exhibit (a)(4) and the Notice to Change Election From Accept to Reject attached hereto as Exhibit (a)(5) (together, as they may be amended or supplemented from time to time, the "Offer"). As of January 11, 2002, the total number of shares of common stock underlying the Eligible Options is 14,270,676, all of which are held by current employees eligible to participate in the Offer. The information set forth in the Offer to Exchange under the caption "Summary Term Sheet," and the sections under the caption "The Offer" entitled "Number of Options; Expiration Date," "Acceptance of Options for Exchange and Issuance of new Options," "Source and Amount of Consideration" and "Terms of New Options" is incorporated herein by reference. (c) The information set forth in the Offer to Exchange under the caption "The Offer--Price Range of Shares Underlying the Options" is incorporated herein by reference. Item 3. Identity and Background of Filing Person. (a) The filing person is the issuer. The information set forth under Item 2(a) above is incorporated herein by reference. Item 4. Terms of the Transaction. (a) The information set forth in the Offer to Exchange under the caption "Summary Term Sheet," and the sections under the caption "The Offer" entitled "Eligibility," "Number of Options; Expiration Date," "Procedures for Tendering Options," "Withdrawal Rights and Change of Election," "Acceptance of Options for Exchange and Issuance of New Options," "Conditions of the Offer," "Source and Amount of Consideration," "Effect of a Change of Control Prior to the Granting of New Options," "Terms of New Options," "Price Range of Shares Underlying the Options," "Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer," "Legal Matters; Regulatory Approvals," "Material U.S. Federal Income Tax Consequences," and "Extension of Offer; Termination; Amendment" is incorporated herein by reference. 2 (b) The information set forth in the Offer to Exchange under the caption "The Offer--Interests of Directors and Officers; Transactions and Arrangements Concerning the Options" is incorporated herein by reference. Item 5. Past Contacts, Transactions, Negotiations and Arrangements. (e) The information set forth in the Offer to Exchange under the caption "The Offer--Interests of Directors and Officers; Transactions and Arrangements Concerning the Options" is incorporated by reference. The exhibits attached hereto as Exhibits (d)(1) through (d)(12) contain information regarding the subject securities. Item 6. Purposes of the Transaction and Plans or Proposals. (a) The information set forth in the Offer to Exchange under the caption "The Offer--Purpose of the Offer" is incorporated herein by reference. (b) The information set forth in the Offer to Exchange under the caption "The Offer" entitled "Acceptance of Options for Exchange and Issuance of New Options" and "Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer" is incorporated herein by reference. (c) The information set forth in the Offer to Exchange under the caption "The Offer--Purpose of the Offer" is incorporated herein by reference. Item 7. Source and Amount of Funds or Other Consideration. (a) The information set forth in the Offer to Exchange under the caption "The Offer" entitled "Source and Amount of Consideration" and "Terms of New Options" is incorporated herein by reference. (b) Not applicable. (d) Not applicable. Item 8. Interest in Securities of the Subject Company. (a) The information set forth in the Offer to Exchange under the caption "The Offer--Interests of Directors and Officers; Transactions and Arrangements Concerning the Options" is incorporated herein by reference. (b) The information set forth in the Offer to Exchange under the caption "The Offer--Interests of Directors and Officers; Transactions and Arrangements Concerning the Options" is incorporated herein by reference. 3 Item 9. Person/Assets, Retained, Employed, Compensated or Used. (a) Not applicable. Item 10. Financial Statements. (a) The information set forth in the Offer to Exchange under the caption "The Offer" entitled "Information Concerning InfoSpace," "Financial Information" and "Additional Information" is incorporated herein by reference. (b) Not applicable. Item 11. Additional Information. (a) The information set forth in the Offer to Exchange under the caption "The Offer" entitled "Interests of Directors and Officers; Transactions and Arrangements Concerning the Options" and "Legal Matters; Regulatory Approvals" is incorporated herein by reference. (b) Not applicable. Item 12. Exhibits. (a) (1) Offer to Exchange, dated January 15, 2002. (2) Memorandum from Naveen Jain to InfoSpace's Employees dated January 15, 2002. (3) Form of Exchange Offer Summary Statement. (4) Form of Election Form. (5) Form of Notice to Change Election From Accept to Reject. (6) Stock Option Exchange Offer; Frequently Asked Questions. (7) Form of E-Mail Reminder to Employees. (8) Form of Promise to Grant Stock Option. (9) Power Point Presentation of Offer to Exchange. (10) InfoSpace, Inc. Annual Report on Form 10-K for its fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on April 2, 2001, and incorporated herein by reference. (11) InfoSpace, Inc. Quarterly Report on Form 10-Q for its fiscal quarter ended March 31, 2001, filed with the Securities and Exchange Commission on May 15, 2001, and incorporated herein by reference. (12) InfoSpace, Inc. Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2001, filed with the Securities and Exchange Commission on August 13, 2001, and incorporated herein by reference. (13) InfoSpace, Inc. Quarterly Report on Form 10-Q for its fiscal quarter ended September 30, 2001, filed with the Securities and Exchange Commission on November 9, 2001, and incorporated herein by reference. (b) Not applicable (d) (1) Form of InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan Nonqualified Stock Option Letter Agreement.
4 (2) InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan, which is incorporated herein by reference to the Registration Statement on Form S-1 (No. 333-93167) filed by the Company on July 12, 2000. (3) Go2Net, Inc. 2000 Stock Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (4) Go2Net, Inc. 1996 Stock Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (5) Silicon Investor, Inc. 1996 Stock Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (6) WEB21 Stock Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (7) Authorize.Net Corporation 1999 Stock Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (8) IQC Corporation Option to Purchase Common Stock, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (9) SaveSmart, Inc. 1997 Equity Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-37252) filed by the Company on May 17, 2000. (10) Saraide.com Inc. 1998 Equity Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-37252) filed by the Company on May 17, 2000. (11) INEX Corporation Share Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-90815) filed by the Company on November 12, 1999. (12) InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-81593) filed by the Company on June 25, 1999.
(g) Not applicable. (h) Not applicable. Item 13. Information Required by Schedule 13E-3. (a) Not applicable. 5 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule TO is true, complete and correct. INFOSPACE, INC. /s/ EDMUND O. BELSHEIM _____________________________________ Edmund O. Belsheim President and Chief Operating Officer Date: January 15, 2002 6 INDEX TO EXHIBITS
Exhibit Number Description - ------ ----------- (a)(1). Offer to Exchange, dated January 15, 2002. (a)(2). Memorandum from Naveen Jain to InfoSpace's Employees dated January 15, 2002. (a)(3). Form of Exchange Offer Summary Statement. (a)(4). Form of Election Form. (a)(5). Form of Notice to Change Election From Accept to Reject. (a)(6). Stock Option Exchange Offer; Frequently Asked Questions. (a)(7). Form of E-Mail Reminder to Employees. (a)(8). Form of Promise to Grant Stock Option. (a)(9). Power Point Presentation of Offer to Exchange. (a)(10) InfoSpace, Inc. Annual Report on Form 10-K for its fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on April 2, 2001, and incorporated herein by reference. (a)(11) InfoSpace, Inc. Quarterly Report on Form 10-Q for its fiscal quarter ended March 31, 2001, filed with the Securities and Exchange Commission on May 15, 2001, and incorporated herein by reference. (a)(12) InfoSpace, Inc. Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2001, filed with the Securities and Exchange Commission on August 13, 2001, and incorporated herein by reference. (a)(13) InfoSpace, Inc. Quarterly Report on Form 10-Q for its fiscal quarter ended September 30, 2001, filed with the Securities and Exchange Commission on November 9, 2001, and incorporated herein by reference. (d)(1). Form of InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan Nonqualified Stock Option Letter Agreement. (d)(2). InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan, which is incorporated herein by reference to the Registration Statement on Form S-1 (No. 333-93167) filed by the Company on July 12, 2000. (d)(3). Go2Net, Inc. 2000 Stock Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (d)(4). Go2Net, Inc. 1996 Stock Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (d)(5). Silicon Investor, Inc. 1996 Stock Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (d)(6). WEB21 Stock Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (d)(7). Authorize.Net Corporation 1999 Stock Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (d)(8). IQC Corporation Option to Purchase Common Stock, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-47874) filed by the Company on October 13, 2000. (d)(9). SaveSmart, Inc. 1997 Equity Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-37252) filed by the Company on May 17, 2000. (d)(10) Saraide.com Inc. 1998 Equity Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-37252) filed by the Company on May 17, 2000. (d)(11) INEX Corporation Share Option Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-90815) filed by the Company on November 12, 1999. (d)(12) InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan, which is incorporated herein by reference to the Registration Statement on Form S-8 (No. 333-81593) filed by the Company on June 25, 1999.
1 EX-99.(A)(1) 3 dex99a1.txt OFFER TO EXCHANGE, DATED JANUARY 15, 2002 EXHIBIT (a)(1) ----------------- OFFER TO EXCHANGE CERTAIN OUTSTANDING OPTIONS HELD BY ELIGIBLE EMPLOYEES FOR NEW OPTIONS (THE "OFFER TO EXCHANGE") ----------------- This document constitutes part of a prospectus relating to the InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan, Go2Net, Inc. 2000 Stock Option Plan, Go2Net, Inc. 1996 Stock Option Plan, Silicon Investor, Inc. 1996 Stock Plan, WEB21 Stock Option Plan, Authorize.Net Corporation 1999 Stock Incentive Plan, IQC Corporation Option to Purchase Common Stock, SaveSmart, Inc. 1997 Equity Incentive Plan, Saraide.com Inc. 1998 Equity Incentive Plan, INEX Corporation Share Option Plan and InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan covering securities that have been registered under the Securities Act of 1933, as amended. January 15, 2002 EXHIBIT (a)(1) InfoSpace, Inc. Offer to Exchange Certain Outstanding, Unexercised Options to Purchase InfoSpace Common Stock Held by Eligible Employees for a New Option to be Granted under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan (the "Offer") The offer and withdrawal rights of this Offer to Exchange expire at 9 p.m., Pacific Time, on February 15, 2002, unless the Offer is extended. Should you decide to tender your options or withdraw your tendered options, we must receive, before 9 p.m., Pacific Time, on February 15, 2002 (or such later date and time to which we may extend the expiration of the Offer), a properly completed and executed Election Form, and any other documents required by the Election Form or, as the case may be, a Notice to Change Election from Accept to Reject. These documents must be received by fax (fax # (425) 201-6185), hand delivery or mail to InfoSpace, Inc., Attn: Brent Satterlee, 601 108th Avenue NE, Suite 1200, Bellevue, WA 98004. This is a one-time offer, and we plan to strictly enforce the tender offer period and the cut-off time for the Offer of 9 p.m., Pacific Time, on February 15, 2002. InfoSpace, Inc. is offering Eligible Employees the opportunity to exchange Eligible Options granted under the InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan, Go2Net, Inc. 2000 Stock Option Plan, Go2Net, Inc. 1996 Stock Option Plan, Silicon Investor, Inc. 1996 Stock Plan, WEB21 Stock Option Plan, Authorize.Net Corporation 1999 Stock Incentive Plan, IQC Corporation Option to Purchase Common Stock, SaveSmart, Inc. 1997 Equity Incentive Plan, Saraide.com Inc. 1998 Equity Incentive Plan, INEX Corporation Share Option Plan and InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan for new options which we will grant under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan. "Eligible Options" are outstanding unexercised options (whether or not vested) with a per share exercise price of $10.00 or more. An "Eligible Employee" refers to all employees who: (i) are full-time (40 hours or more per week) U.S. based employees of InfoSpace or a U.S. subsidiary of InfoSpace working in the U.S. and paid through U.S. payroll, (ii) were hired on or before August 1, 2001, and (iii) are employed from the date of the Offer through the date that the new options are granted. Persons who may not participate in the Offer, even if they may otherwise qualify as an Eligible Employee, include members of our board of directors, Section 16 officers of InfoSpace (officers who have been deemed "insiders" of InfoSpace), consultants and contractors, and employees who have received an option grant with an exercise price per share of less than $10.00 during the six month period prior to the date that the Offer commences. We are making the Offer upon the terms and conditions described in this Offer to Exchange, the related memorandum from Naveen Jain, Chairman and Chief Executive Officer, dated January 15, 2002, your exchange offer summary statement which you will receive by January 17, 2002, the Election Form and the Notice to Change Election from Accept to Reject, which together, as they may be amended from time to time, constitute the Offer. If you meet the eligibility requirements and choose to participate in the Offer, and subject to the terms of this Offer, we will grant you (1) a new option to purchase one share of common stock for every ten shares of common stock underlying your Eligible Options, and (2) at the discretion of our board of directors, a new option to purchase a number of shares of our common stock which has been determined in accordance with our compensation policies and practices. The grant of the compensatory option set forth in (2) will not necessarily be received by all participating Eligible Employees and, to the extent applicable, it will vary by Eligible Employee. The number of shares underlying your compensatory option, if any, will be disclosed to you in your exchange offer summary statement which will be delivered to you no later than January 17, 2002, which is twenty business days prior to the expiration of the Offer. If you choose to participate, you must tender all of your Eligible Options, including any unexercised vested and unvested Eligible Options. Partial tenders of Eligible Options will not be accepted. The Offer is currently scheduled to expire at 9 p.m., Pacific Time, on February 15, 2002, and we expect to cancel all tendered Eligible Options accepted by us on February 19, 2002, or as soon as possible thereafter. Subject to the terms and conditions of this Offer, we plan to grant the new options on the first business day that is six months and one day after the date we cancel the Eligible Options accepted for exchange (such date is referred to as the "date of grant"). The Offer is not conditioned on a minimum number of options being tendered. Participation in the Offer is completely voluntary. The Offer is subject to conditions that we describe in Section 7 of this Offer to Exchange. In order to receive a new option pursuant to this Offer, you must continue to be an Eligible Employee as of the date on which the new options are granted, which will be the first business day that is six months and one day after the cancellation date. Once your Eligible Option is cancelled, it is gone forever. Accordingly, if your employment terminates for any reason prior to the grant of the new options, you will not have the benefit of either the cancelled Eligible Option or a new option. Any new option that you may receive in the Offer will be granted under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan. The exercise price per share of the new options will be 100% of the fair market value on the date of grant, as determined by the closing price of our common stock reported by the Nasdaq National Market for the date of grant. Each new option granted will be 25% vested on the date of grant and the remaining 75% of the option will vest in equal monthly installments over the three-year period beginning on the date that is one month after the date of the new option grant, subject to your continued active full-time (40 hours or more per week) employment by us through each such vesting date. Although our board of directors has approved the Offer, neither we nor our board of directors makes any recommendation as to whether you should tender or not tender your Eligible Options for exchange. You must evaluate the risks associated with the Offer and make your own decision whether or not to tender your Eligible Options. Shares of InfoSpace common stock are traded on the Nasdaq National Market under the symbol "INSP." On January 11, 2002, the closing price of our common stock reported on the Nasdaq National Market was $2.68 per share. As of January 11, 2002, the total number of shares underlying Eligible Options was 14,337,514. Assuming that all of the Eligible Options are tendered for exchange, we would issue new options to purchase up to 3,500,000 shares, approximately 1,500,000 of which relate to options to be issued in exchange for Eligible Options and approximately 2,000,000 of which relate to the compensatory options to be granted to some tendering Eligible Employees. The total shares underlying options which could be issued in the exchange would represent approximately 1% of our total shares outstanding following the issuance. We recommend that you evaluate current market quotes for our common stock, among other factors, before deciding whether or not to tender your options. This Offer has not been approved or disapproved by the Securities and Exchange Commission (the "SEC") or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of the information contained in this Offer. Any representation to the contrary is a criminal offense. You should direct general questions about the Offer or requests for additional copies of materials related to this Offer to: Brent Satterlee InfoSpace, Inc. 601 108th Avenue NE, Suite 1200 Bellevue, Washington 98004 Telephone: (425) 709-8008 Fax: (425) 201-6185 Email: eo@infospace.com 2 IMPORTANT If you wish to tender your Eligible Options for exchange, you must complete and sign the Election Form in accordance with its instructions, and fax, hand deliver or mail it and any other required documents to InfoSpace, Inc., Attn: Brent Satterlee at fax number (425) 201-6185 on or before 9:00 p.m., Pacific Time, on February 15, 2002. We are not making the Offer to, and we will not accept any tender of Eligible Options from or on behalf of, option holders in any jurisdiction in which the Offer or the acceptance of any tender of Eligible Options would not be in compliance with the laws of that jurisdiction. However, we may, at our sole discretion, take any actions necessary for us to make the Offer to option holders in any of these jurisdictions. We have not authorized any person to make any recommendation on our behalf as to whether you should tender or not tender your Eligible Options through the Offer. You should rely only on the information in this document or to which we have referred you. We have not authorized anyone to give you any information or to make any representation in connection with the Offer other than the information and representations contained in this document and in the related memorandum from Naveen Jain dated January 15, 2002, your exchange offer summary statement, the Election Form and the Notice to Change Election from Accept to Reject. If anyone makes any recommendation or representation to you or gives you any information, you must not rely upon that recommendation, representation or information as having been authorized by us. 3 TABLE OF CONTENTS
Page SUMMARY TERM SHEET................................................................................ 1 CERTAIN RISKS OF PARTICIPATING IN THE OFFER....................................................... 7 THE OFFER......................................................................................... 10 1. Eligibility................................................................................ 10 2. Number of Options; Expiration Date......................................................... 10 3. Purpose of the Offer....................................................................... 12 4. Procedures for Tendering Options........................................................... 13 5. Withdrawal Rights and Change of Election................................................... 14 6. Acceptance of Options for Exchange and Issuance of New Options............................. 15 7. Conditions of the Offer.................................................................... 15 8. Source and Amount of Consideration......................................................... 17 9. Effect of a Change of Control Prior to the Granting of New Options......................... 17 10. Terms of New Options...................................................................... 17 11. Information Concerning InfoSpace.......................................................... 20 12. Financial Information..................................................................... 20 13. Price Range of Shares Underlying the Options.............................................. 23 14. Interests of Directors and Officers; Transactions and Arrangements Concerning the Options. 24 15. Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer....... 24 16. Legal Matters; Regulatory Approvals....................................................... 24 17. Material U.S. Federal Income Tax Consequences............................................. 25 18. Extension of Offer; Termination; Amendment................................................ 26 19. Fees and Expenses......................................................................... 27 20. Additional Information.................................................................... 27 21. Miscellaneous............................................................................. 28 SCHEDULE A........................................................................................ 30
i SUMMARY TERM SHEET The following are answers to some of the questions that you may have about the Offer. We urge you to read carefully the remainder of this Offer to Exchange, the accompanying memorandum from Naveen Jain dated January 15, 2002, your exchange offer summary statement which you will receive by January 17, 2002, the Election Form and the Notice to Change Election From Accept to Reject because the information in this summary is not complete and may not contain all of the information that is important to you. We have included page references to the remainder of this Offer to Exchange where you can find a more complete description of the topics in this summary. Q1. What securities are you offering to exchange? A1. We are offering to exchange all outstanding, unexercised options to purchase shares of InfoSpace common stock granted under the InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan, Go2Net, Inc. 2000 Stock Option Plan, Go2Net, Inc. 1996 Stock Option Plan, Silicon Investor, Inc. 1996 Stock Plan, WEB21 Stock Option Plan, Authorize.Net Corporation 1999 Stock Incentive Plan, IQC Corporation Option to Purchase Common Stock, SaveSmart, Inc. 1997 Equity Incentive Plan, Saraide.com Inc. 1998 Equity Incentive Plan, INEX Corporation Share Option Plan and InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan (the "Eligible Stock Plans") that are held by Eligible Employees, as defined in the answer to question 2 below, and that have an exercise price per share equal to or greater than $10.00 per share (the "Eligible Options") for new options which we will grant under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan (the "1996 Plan"). (Page 10) Q2. Who is eligible to participate? A2. Employees are eligible to participate ("Eligible Employees") if they hold Eligible Options, are full-time (40 hours or more per week), U.S. based employees of InfoSpace or a U.S. subsidiary of InfoSpace working in the U.S. and paid through the U.S. payroll as of the date the Offer commences, were hired on or before August 1, 2001 and remain employed as of the date on which the tendered options are cancelled. However, members of our board of directors, named Section 16 officers of InfoSpace (officers deemed by us to be "insiders" of InfoSpace), consultants and contractors, and employees who have received an option grant with an exercise price of less than $10.00 during the six month period prior to the date that the Offer commences are not eligible. To receive a new option, you must remain an Eligible Employee through the date the New Options are granted, which will be on the first business day that is six months and one day after the date the we cancel the tendered options. If InfoSpace does not extend the Offer, the New Options will be granted on August 20, 2002. (Page 10) Q3. How does this exchange offer differ from the previous one which we withdrew in November, 2001? A3. There are several significant differences, including the following: 1. You are able to retain any options that you may have been granted in February 2001; 2. You will receive new options for the options you turn in rather than restricted stock. These options will have a new exercise price that will equal the fair market value on the first trading day that is six months and a day from the cancellation date; 3. The vesting schedule for these options will be 25% vested upon grant and then monthly over a three-year period thereafter; and 4. The Offer is not conditioned on a minimum number of options being tendered. 1 Q4. Why is InfoSpace making the Offer? A4. We believe that granting stock options provides an opportunity to (1) align employee and stockholder interests, and (2) provide incentives for employees to achieve high levels of performance. We are committed to promoting employee ownership because it helps us to attract and retain the best and brightest employees. The Offer provides an opportunity for us to offer Eligible Employees a valuable incentive for their continued efforts and dedication to our company. Some of our outstanding options, whether or not they are currently exercisable, have exercise prices that are significantly higher than the current market price of our shares (that is, these options are "underwater"). By making this offer to exchange outstanding options for new options that will have an exercise price equal to the market value of the shares on the grant date, we intend to provide our Eligible Employees with the benefit of owning options that over time may have a greater potential to increase in value. (Page 12) Q5. What are the conditions of the Offer? A5. The Offer is not conditioned on a minimum number of options being tendered. Participation in the Offer is completely voluntary. The conditions are described in Section 7 of this Offer. (Page 15) Q6. Are there any eligibility requirements that I must satisfy after the expiration date of the Offer to receive the new options? A6. To receive a grant of new options through the Offer and under the terms of the 1996 Plan you must be an Eligible Employee as of the date the new options are granted. (Page 11) As discussed below, subject to the terms of this Offer, we will grant the new options six months and one day after the date that we cancel the tendered options. If, for any reason, you do not remain an Eligible Employee through the date we grant the new options, you will not receive any new options or other compensation in exchange for your tendered options that have been accepted for exchange and cancelled. (Page 11) Q7. How many new options will I receive in exchange for my tendered options? A7. Subject to the terms of this Offer, if you meet the eligibility requirements and choose to participate in the Offer, we will grant you (1) a new option to purchase one share of common stock for every ten shares of common stock underlying your Eligible Options (the "Exchange Option"), and (2) at the discretion of our board of directors, a new option to purchase a number of shares of our common stock which has been determined in accordance with our compensation policies and practices (the "Compensatory Option"). The Compensatory Option will not necessarily be received by all participating Eligible Employees and, to the extent applicable, it will vary by Eligible Employee. The number of shares underlying your Compensatory Option, if any, will be disclosed to you in your exchange offer summary statement which will be delivered to you no later than January 17, 2002, which is twenty business days prior to the expiration of the Offer. The form of the exchange offer summary statement has been filed as Exhibit (a)(3) to the Schedule TO filed with the Securities and Exchange Commission on January 15, 2002. We have reserved an aggregate of 1,500,000 shares for issuance under the Exchange Options and 2,000,000 shares for issuance under the Compensatory Options. The Exchange Option and the Compensatory Option (collectively, the "New Options") will be granted under the 1996 Plan unless prevented by law or applicable regulations. All New Options will be subject to a new option agreement between you and InfoSpace. (Page 11) Q8. When will I receive my New Options? A8. Our board of directors intends to grant the New Options on the first business day that is six months and one day after the date on which we cancel all tendered options. If we cancel tendered options on February 19, 2002, which is the scheduled date for the cancellation of the options (the first business day following the expiration date), we expect that the New Options will be granted on August 20, 2002. (Page 15) 2 Q9. Why won't I receive my New Options immediately after the expiration date of the Offer? A9. If we were to grant the New Options on any date which is earlier than six months and one day after the date we cancel the options accepted for exchange, we could be subject to onerous accounting charges. We would be required for financial reporting purposes to treat the New Options as variable awards. This means that we would be required to record the non-cash accounting impact of decreases and increases in our share price as a compensation expense for the New Options issued under this Offer. We would have to continue this variable accounting for these New Options until they were exercised, forfeited or terminated. The higher the market value of our shares, the greater the compensation expense we would have to record. By deferring the grant of the New Options for six months and one day, we believe that we will not have to treat the New Options as variable awards. (Page 24) Q10. If I tender options in the Offer, will I be eligible to receive other option grants before I receive my New Options? A10. No. If we accept options that you tender in the Offer, you will not be granted any other options until the grant date for your New Options at the earliest. We will defer the grant to you of any other options for which you may otherwise be eligible in order to avoid incurring compensation expense against our earnings because of accounting rules that could apply to these interim option grants as a result of the Offer. (See the answer to question 9 above.) (Page 15) In addition, besides the New Options to be granted in connection with the Offer, we do not anticipate any other broad-based or company-wide option grant programs in 2002 in connection with performance reviews or otherwise. Q11. Will I be required to give up all my rights to the cancelled options? A11. Yes. Once we have accepted your tendered options, those options will be cancelled and you will no longer have any rights under those options. We currently expect to accept all properly tendered options promptly following the expiration of the Offer which is scheduled for 9 p.m., Pacific Time, on February 15, 2002, unless we extend it. If, for any reason, you do not remain an Eligible Employee through the date we grant the New Options, you will not receive any New Options or other compensation in exchange for your tendered options that have been accepted for exchange and cancelled. (Page 11) Q12. What will be the exercise price of the New Options? A12. The exercise price per share of the New Options will be 100% of the fair market value of our common stock on the date of grant, as determined by the closing price reported by the Nasdaq National Market on the date of grant. (Page 18) We cannot predict the exercise price of the New Options. Because the grant of New Options is intended to occur on the first business day that is six months and one day after the cancellation date, there is a risk that the New Options may have a higher exercise price than some or all of your current options. We recommend that you evaluate current market quotes for our shares, among other factors, before deciding whether or not to tender your options. (Page 23) Q13. When will the New Options vest? A13. The shares underlying the New Options will be 25% vested on the date of grant and the remaining 75% will vest ratably each month over the following three-year period beginning on the date that is one month after the date of the New Option grant, subject to your continued active full-time (40 hours or more per week) employment through each such vesting date and the terms and conditions of the 1996 Plan and your option agreement. (Page 18) 3 Q14. If I choose to tender an Eligible Option, do I have to tender all the shares covered by that Eligible Option, and do I have to tender my other Eligible Options? A14. Yes. We are not accepting partial tenders of Eligible Options, and in order to participate in the Offer you must tender all of your Eligible Options. Accordingly, you must tender all of the unexercised shares covered by each of your Eligible Options. You may, of course, exercise any vested options that you hold prior to the time you tender your Eligible Options. (Page 11) Q15. What if InfoSpace enters into a merger or other similar transaction? A15. It is possible that, prior to the grant of the New Options, we might effect, or enter into an agreement providing that we will enter into, a merger or other similar transaction. If you tender your Eligible Options and they are accepted for exchange and cancelled, we will give you a Promise to Grant Stock Option that is a binding commitment, and we will require that any successor to our company be legally obligated by that commitment. (Page 17) You should be aware that these types of transactions could have substantial effects on our share price, including appreciation in the price of our shares. Depending on the structure of the transaction, tendering Eligible Employees might be deprived of any further price appreciation in the shares associated with the New Options. For example, if our shares were acquired in a cash merger, the fair market value of our shares, and hence the price at which we grant the New Options, would likely be a price at or near the cash price being paid for the shares in the transaction, yielding limited or no financial benefit to a recipient of the New Options for that transaction. In addition, in the event of an acquisition of our company for stock, tendering Eligible Employees might receive New Options to purchase shares of a different issuer. (Page 17) Q16. Are there circumstances where I would not be granted New Options? A16. Yes. Even if we accept your tendered options, we will not grant New Options to you if we are prohibited by applicable law or regulations from doing so. Such a prohibition could result from changes in SEC rules, regulations or policies or Nasdaq National Market listing requirements. We will use reasonable efforts to avoid the prohibition, but if it is applicable throughout the period from the first business day that is six months and one day after the cancellation date, you will not be granted a New Option. We do not anticipate any such prohibitions and are referring to the possibility only in an abundance of caution. (Page 24) Also, if you are no longer an Eligible Employee on the date we grant New Options, you will not receive any New Options or any consideration on account of the cancelled options. (Page 10) Q17. What happens to my options if I choose not to participate or if my tendered options are not accepted for exchange? A17. Options that you choose not to tender for exchange or that we do not accept for exchange retain their current exercise price and current vesting schedule and remain outstanding until you exercise them or they terminate or expire by their terms. (Page 11) You should note that there is a risk that any incentive stock options ("ISOs") you hold may be affected, even if you do not participate in the exchange. We believe that you will not be subject to current U.S. federal income tax if you do not elect to participate in the Offer. We also believe that the Offer will not change the U.S. federal income tax treatment of subsequent grants and exercises of your ISOs (and sales of shares acquired upon exercise of such options) if you do not participate in the Offer. (Page 25) However, the IRS may characterize the Offer as a "modification" of those ISOs for U.S. tax purposes, even if you decline to participate. Please read Section 17 of "The Offer" for more information. (Page 26) 4 Q18. Will I have to pay taxes if I exchange options in the Offer? A18. If you exchange your Eligible Options for New Options, you should not be required under current law to recognize income for U.S. federal income tax purposes at the time of the exchange. Further, at the grant date of the New Options, you will not be required under current law to recognize income for U.S. federal income tax purposes. We recommend that you consult with your own tax advisor to determine the tax consequences of tendering options through the Offer. (Page 25) Q19. If my Eligible Options are ISOs, will my New Options be ISOs? A19. No. All New Options granted pursuant to the Offer will be nonstatutory stock options even if the Eligible Options that you tendered were ISOs. The New Options will not be eligible for favorable tax treatment applicable to ISOs. (Page 25) Q20. When does the Offer expire? Can the Offer be extended, and if so, how will I be notified if it is extended? A20. The Offer expires on February 15, 2002, at 9 p.m., Pacific Time, unless we extend it. We may, in our sole discretion, extend the Offer at any time, but we cannot assure you that the Offer will be extended or, if extended, for how long. If the Offer is extended, we will make a public announcement of the extension no later than 6:00 a.m., Pacific Time, on the next business day following the previously scheduled expiration of the offer period. (Page 11) Q21. When will my New Option(s) expire? A21. Your New Option(s) will expire ten years from the date of grant, or earlier, in accordance with the 1996 Plan, if your employment with InfoSpace terminates. (Page 18) Q22. How do I tender my Eligible Options? A22. If you decide to tender your Eligible Options, we must receive, before 9 p.m., Pacific Time, on February 15, 2002 (or such later date and time as we may extend the expiration of the Offer), a properly completed and executed Election Form and any other documents required by the Election Form via fax (fax # (425) 201-6185), hand delivery or mail to InfoSpace, Inc., Attn: Brent Satterlee, 601 108th Avenue NE, Suite 1200, Bellevue, WA 98004. If we do not receive an Election Form from you by 9 p.m., Pacific Time, on the Expiration Date, you will be deemed to have rejected the Offer. This is a one-time offer, and we plan to strictly enforce the tender offer period and the cut-off time for the Offer of 9 p.m., Pacific Time, on February 15, 2002 (or such later date and time as we may extend the expiration of the Offer). We reserve the right to reject any or all tenders of options that we determine are not in appropriate form or that we determine are unlawful to accept. Subject to our rights to extend, terminate and amend the Offer, we currently expect that we will accept all properly tendered Eligible Options promptly after the expiration of the Offer. (Page 13) Q23. During what period of time may I withdraw previously tendered Eligible Options? A23. You may withdraw your tendered Eligible Options at any time before the Offer expires at 9:00 p.m., Pacific Time, on February 15, 2002. If we extend the Offer beyond that time, you may withdraw your tendered Eligible Options at any time until the extended expiration of the Offer. To withdraw tendered Eligible Options, you must deliver to us via fax (fax # (425) 201-6185), hand delivery or mail to InfoSpace, Inc., Attn: Brent Satterlee, 601 108th Avenue NE, Suite 1200, Bellevue, WA 98004, a signed Notice to Change Election From Accept to Reject, with the required information while you still have the right to withdraw the tendered options. Once you have withdrawn options, you may re-tender options only by again following the delivery procedures described above prior to the expiration of the Offer. (Page 14) 5 Q24. Does InfoSpace and its board of directors recommend that I participate in the Offer? A24. Although our board of directors has approved the Offer, neither we nor our board of directors makes any recommendation as to whether you should tender or not tender your options. You must make your own decision whether or not to tender options. (Page 13) We strongly urge you to read this Offer to Exchange, the related memorandum from Naveen Jain, dated January 15, 2002, your exchange offer summary statement which you will receive no later than January 17, 2002, the Election Form and the Notice to Change Election from Accept to Reject and understand the risks before making your decision. For a summary of the risks relating to the Offer, please see "Certain Risks of Participating in the Offer" beginning on page 7 of this Offer to Exchange. For questions regarding tax implications or other investment related questions, you should talk to your own legal counsel, accountant, financial and/or tax advisor. Q25. Who can I talk to if I have questions about the Offer? A25. For questions about the Offer, or to obtain copies of the documents constituting the Offer, you should send an email to Brent Satterlee at eo@infospace.com or call him at (425) 709-8008. 6 CERTAIN RISKS OF PARTICIPATING IN THE OFFER Participation in the Offer involves a number of potential risks, including those described below. This list and the risk factors, beginning on page 16 in InfoSpace's Annual Report on Form 10-K, filed on April 2, 2001, and on page 30 in InfoSpace's Quarterly Report on Form 10-Q, filed on November 9, 2001, highlight the material risks of participating in this Offer. Eligible participants should carefully consider these risks and are encouraged to speak with an investment and tax advisor as necessary before deciding to participate in the Offer. In addition, we strongly urge you to read the rest of this Offer to Exchange, along with the memorandum from Naveen Jain dated January 15, 2002, your exchange offer summary statement which you will receive no later than January 17, 2002, the Election Form and the Notice to Change Election from Accept to Reject, for a more detailed discussion of the risks which may apply to you, before deciding to participate in this Offer. ECONOMIC RISKS If your employment terminates for any reason prior to the grant of the new option, you will receive neither a new option nor the return of your cancelled option. Once your option is cancelled, you will no longer have any rights with respect to it. Accordingly, if your employment terminates for any reason prior to the grant of the new option, you will not have the benefit of either the cancelled option or the new option. The Offer is not a guarantee of employment for any period. Your employment with InfoSpace or one of its subsidiaries remains "at will" and may be terminated at any time by either you or InfoSpace (or one of its subsidiaries, as applicable), with or without cause or notice, subject to the provisions of applicable laws. If our stock price increases after the date your tendered options are cancelled, your cancelled options might have been worth more than the new options that you will receive in exchange for them. We cannot predict the exercise price of new options. Because we will grant new options on the first business day that is six months and one day after the date we cancel the options tendered in the Offer, the new options may have a higher exercise price than some or all of your current options. For example, if you cancel options with a $10 exercise price, and InfoSpace's stock appreciates to $12 when the new option grants are made, your new option will have a higher exercise price than the cancelled option. Participation in the Offer will make you ineligible to receive any new option grants until August 20, 2002 at the earliest. Employees are generally eligible to receive option grants at any time that the board of directors or Compensation Committee chooses to make them. However, if you participate in the Offer, you will not be eligible to receive the options issued to you in exchange for your tendered options until the first business day that is six months and one day after the date we cancel the options tendered in the Offer. Other than the new options, we do not anticipate any other broad-based or company-wide option grant programs in 2002 in connection with performance reviews or otherwise. If we are prohibited by applicable law or regulations from granting new options, you will not receive either a new option or the return of your cancelled option. We will not grant new options to you if we are prohibited by applicable law or regulations from doing so. Such a prohibition could result from changes in SEC rules, regulations or policies or Nasdaq listing requirements. 7 We are unaware of such prohibition at this time, and we will use reasonable efforts to effect the grant, but if the grant is prohibited as of the date of grant we will not grant you any new options and you will not receive any other compensation for the options you tendered. We do not anticipate any such prohibitions and are referring to the possibility in an abundance of caution. You may lose the potential benefit of any vested options that you tender in this offer. The shares underlying your new options are scheduled to vest 25% upon grant and then in equal monthly installments over the following three-year period beginning on the date that is one month after the date of the new option grant. Accordingly, with a new vesting schedule you will lose the benefit of vesting that has already occurred with respect to your tendered options. You will generally forfeit any portion of shares underlying options that you receive in this offer that are not vested when your service with us terminates for any reason. In such case, your unvested options will expire and will not continue to vest in accordance with the Restated 1996 Flexible Stock Incentive Plan. You may benefit from an increase in the trading price of our common stock to a lesser extent if you tender your options in this offer. If the trading price of our common stock increases after this offer, of which we can give you no assurance whatsoever, you may benefit to a lesser extent if you tender your options. If the trading price of our common stock increases above the exercise price of your tendered options, because of the higher number of shares under your current option, you may benefit more from holding your current options. We advise you to consult with your financial advisor regarding the potential benefits of holding your options at different trading prices of our common stock. TAX-RELATED RISKS FOR U.S. RESIDENTS Even if you elect not to participate in the option exchange program, your ISOs may be affected. We believe that you will not be subject to current U.S. federal income tax if you do not elect to participate in the Offer. We also believe that the Offer will not change the U.S. federal income tax treatment of subsequent grants and exercises of your ISOs (and sales of shares acquired upon exercises of such options) if you do not participate in the Offer. However, the IRS may characterize the Offer as a "modification" of those ISOs, even if you decline to participate. In 1991, the IRS issued a private letter ruling in which another company's option exchange program was characterized as a "modification" of the ISOs that could be exchanged. This does not necessarily mean that our offer to exchange options will be viewed the same way. Private letter rulings issued by the IRS contain the IRS's opinion regarding only the specific facts presented by a specific person or company. The person or company receiving the letter may rely on it, but no other person or company may rely on the letter ruling or assume the same opinion would apply to their situation, even if the facts at issue are similar to those in the letter. While such letters do not provide certainty, they may indicate how the IRS will view a similar situation. We, therefore, do not know if the IRS will assert the position that our offer constitutes a "modification" of ISOs that can be tendered. A successful assertion by the IRS of this position could extend the options' holding period to qualify for favorable tax treatment. Accordingly, to the extent you dispose of your ISO shares prior to the lapse of the new extended holding period, your ISO could be taxed similarly to an NSO. 8 Your new option will be a nonstatutory stock option, whereas your cancelled option may have been an ISO. All new options will be nonstatutory stock options and not ISOs, regardless of whether the options you exchange are ISOs. The new options will not be eligible for favorable tax treatment applicable to ISOs. In general, nonstatutory stock options are less favorable to you from a tax perspective. For more detailed information, please read Section 17 of this Offer to Exchange. We advise you to consult with your financial advisor regarding the different tax treatments of ISOs and nonstatutory stock options. BUSINESS-RELATED RISKS For a description of risks related to InfoSpace's business, please see Section 21 of this Offer to Exchange. 9 THE OFFER 1. Eligibility You are an employee eligible to participate in the offer (an "Eligible Employee") if: (1) you are a full-time (40 hours or more per week) U.S. based employee of InfoSpace or a U.S. subsidiary of InfoSpace (the "U.S. subsidiaries") working in the U.S. and paid through U.S. payroll; (2) you were hired on or before August 1, 2001; (3) you are employed by InfoSpace or one of its U.S. subsidiaries on the date this Offer is made and remain employed as of the date the tendered options are accepted for exchange and the date the new stock options are granted; and (4) you hold one or more unexercised options to purchase InfoSpace common stock with an exercise price of $10.00 or more per share. You are not eligible to participate in the Offer if: (1) you are a non-U.S. based employee of InfoSpace or any of its subsidiaries; (2) you were hired after August 1, 2001; (3) you are employed by InfoSpace or one of its U.S. subsidiaries, but you are paid through payroll outside the U.S. or only work part-time; (4) you are a member of our board of directors; (5) you are a consultant or contractor; (6) you are a Section 16 officer (an officer of InfoSpace who is a deemed "insider"); (7) you have received an option grant with an exercise price of less than $10.00 during the six month period prior to the date that the Offer commences; or (8) you are otherwise not an Eligible Employee as described above. If you meet the eligibility requirements, but you are on an approved leave of absence during the election period, you are still eligible to participate in the Offer. However, the vesting of your new option generally will be suspended during your leave of absence. In order to receive a new option, you must remain an Eligible Employee as of the date the new options are granted, which will be the first business day that is six months and one day after the date we cancel the options accepted for exchange. If, for any reason, you do not remain an Eligible Employee through the date we grant the new options, you will not receive any new options or other compensation in exchange for your tendered options that have been accepted for exchange and cancelled. Subject to the terms and conditions of this Offer, if InfoSpace does not extend the Offer and your options are properly tendered by February 15, 2002, you will be granted new options on August 20, 2002. 2. Number of Options; Expiration Date Subject to the terms and conditions of the Offer, we will exchange all outstanding, unexercised options to purchase InfoSpace common stock with an exercise price of $10.00 or more per share granted under the InfoSpace, Inc. and Saraide Inc. 2000 Stock Plan, Go2Net, Inc. 2000 Stock Option Plan, Go2Net, Inc. 1996 Stock Option Plan, Silicon Investor, Inc. 1996 Stock Plan, WEB21 Stock Option Plan, Authorize.Net Corporation 1999 Stock Incentive Plan, IQC Corporation Option to Purchase Common Stock, SaveSmart, Inc. 1997 Equity Incentive Plan, Saraide.com Inc. 1998 Equity Incentive Plan, INEX Corporation Share Option Plan and InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan and held by Eligible Employees (the "Eligible 10 Options") that are properly tendered in accordance with Section 4 and not validly withdrawn before the "Expiration Date," as defined below, for a new option we will grant under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan (the "1996 Plan"). We are not accepting partial tenders of Eligible Options, and in order to participate in the Offer you must tender all of your Eligible Options. Therefore, you must tender all of the unexercised shares subject to each of your Eligible Options. You are not required to tender any other awards, including grants of restricted stock. If your Eligible Options are properly tendered and accepted for exchange, we will grant you (1) a new option to purchase one share of InfoSpace common stock for every ten shares of common stock underlying your Eligible Options (the "Exchange Option") and (2) at the discretion of our board of directors, a new option to purchase a number of shares of our common stock which has been determined in accordance with our compensation policies and practices (the "Compensatory Option"). The Compensatory Option will not necessarily be received by all participating Eligible Employees and, to the extent applicable, it will vary by Eligible Employee. The number of shares underlying your Compensatory Option, if any, will be disclosed to you in your exchange offer summary statement which will be delivered to you no later than January 17, 2002, which is twenty business days prior to the expiration of the Offer. The form of the exchange offer summary statement has been filed as Exhibit (a)(3) to the Schedule TO filed with the Securities and Exchange Commission on January 15, 2002. In regard to the Exchange Option, all fractional amounts will be rounded up. For example, assume that you tender Eligible Options to purchase 3,725 shares. 3,725 option shares divided by ten equals 372.5. The Exchange Option grant would be rounded up to 373 shares. The Exchange Option and the Compensatory Option (collectively, the "New Options") will each be subject to the terms of: . the 1996 Plan; and . a new option agreement between you and InfoSpace. Once we have accepted Eligible Options tendered by you, your Eligible Options will be cancelled and you will no longer have any rights under those options. We currently expect to accept all properly tendered Eligible Options promptly following the expiration of the Offer. You have the right to change your election regarding tendered Eligible Options at any time before the expiration of the Offer. If, for any reason, you do not remain an Eligible Employee through the date we grant the New Options, you will not receive any New Options or other compensation in exchange for your tendered Eligible Options that have been accepted for exchange and cancelled. This means that if you resign, with or without a good reason, or die or we terminate your employment for any reason, prior to the date we grant the New Options, you will not receive anything for the Eligible Options that you tendered and we cancelled. Options that you do not tender for exchange or that we do not accept for exchange retain their current exercise price and current vesting schedule and remain outstanding until you exercise them or they expire by their terms. The term "Expiration Date" means 9 p.m., Pacific Time, on February 15, 2002, unless and until we, in our sole discretion, have extended the period of time during which the Offer will remain open, in which event the term "Expiration Date" refers to the latest time and date at which the Offer, as so extended, expires. If you decide to tender your Eligible Options or withdraw your tendered Eligible Options, we must receive, before 9 p.m., Pacific Time, on February 15, 2002 (or such date and time as we may extend the expiration of the Offer), a properly completed and executed Election Form and any other documents required by the Election Form, or as the case may be, a Notice to Change Election from Accept to Reject. This is a one-time offer, and we will strictly enforce the tender offer period and the cut-off time for the Offer. See Section 18 of this Offer to Exchange for a description of our rights to extend, delay, terminate and amend the Offer. 11 We will publish notice or otherwise inform you in writing if we decide to take any of the following actions: . increase or decrease the amount of compensation offered for the Eligible Options; . decrease the number of options eligible to be tendered in the Offer; or . increase the number of options eligible to be tendered in the Offer by an amount that exceeds 2% of the shares issuable upon exercise of the options that are subject to the Offer immediately prior to the increase. If the Offer is scheduled to expire at any time earlier than the tenth (10th) business day from, and including, the date that notice of the increase or decrease is first published, sent or given in the manner specified in Section 18 of this Offer, we will extend the Offer so that the Offer is open at least ten (10) business days following the publication, sending or giving of such notice. We will also notify you of any other material change in the information contained in this Offer. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, Eastern Time. 3. Purpose of the Offer We previously issued the Eligible Options to: . provide our employees with additional incentives and to promote the success of our business; and . encourage our employees to continue their employment with us. Our board of directors has authorized this Offer to provide Eligible Employees an incentive for their continued efforts and dedication. As a company, we are committed to employee ownership because it helps us attract and retain the best and brightest employees. Some of our outstanding options, whether or not they are currently exercisable, have exercise prices that are significantly higher than the current market price of our shares (that is, these options are "underwater"). By making this Offer to exchange outstanding Eligible Options for New Options that will have an exercise price equal to the fair market value of the shares on the grant date, we intend to provide our Eligible Employees with the benefit of owning options that over time may have a greater potential to increase in value. However, because we will grant New Options on the first business day that is six months and one day after the date we cancel the Eligible Options accepted for exchange, there is a risk that the New Options may have a higher exercise price than some or all of the cancelled Eligible Options. From time to time we engage in strategic transactions with business partners, customers and other third parties. We may engage in transactions in the future with these or other companies which could significantly change our structure, ownership, organization or management or the composition of our board of directors, and which could significantly affect the price of our shares. If we engage in such a transaction or transactions before the date we grant the New Options, our shares could increase (or decrease) in value, and the exercise price of the New Options could be higher (or lower) than the exercise price of options you elect to have cancelled as part of this Offer. For example, if our common stock was acquired in a cash merger, the fair market value of our common stock, and hence the price at which we grant the New Options, would likely be at a price at or near the cash price being paid for our common stock in the transaction, yielding limited or no financial benefit to a recipient of the New Options for that transaction. In addition, in the event of an acquisition of our company for stock, tendering employees might receive new options to purchase shares of a different issuer. As is outlined in Section 10, the exercise price of any New Options granted to you in return for your tendered Eligible Options will be the fair market value of the underlying shares on the date of grant. You will be at risk of any such increase in our share price before the grant date of the New Options for these or any other reasons. If you tender your Eligible Options and they are accepted for exchange and cancelled, we will give you a Promise to Grant Stock Option that is a binding commitment, and we will require that any successor to our company be legally obligated by that commitment. 12 Subject to the above, and except as otherwise disclosed in this Offer to Exchange or in our filings with the Securities and Exchange Commission, we presently have no plans or proposals that relate to or would result in: . any extraordinary transaction, such as a merger, consolidation, reorganization or liquidation, involving us or any of our subsidiaries; . any purchase, sale or transfer of a material amount of our assets or any of our subsidiaries; . any material change in our present dividend rate or policy, or our indebtedness or capitalization; . any change in our present board of directors or management, including a change in the number or term of directors or to change any executive officer's material terms of employment. We do, however, intend to fill the vacancy on our board of directors that was created when Peter L.S. Currie resigned as a director on January 8, 2002. No nominations have been made for this vacancy and no other vacancies are currently anticipated; . any other material change in our corporate structure or business; . our common stock being delisted from a national securities exchange or not being authorized for quotation in an automated quotation system operated by a national securities association; . our common stock becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act; . the suspension of our obligation to file reports pursuant to Section 15(d) of the Securities Exchange Act; or . the acquisition by any person of an amount of our securities or the disposition of an amount of any of our securities, or any change in charter or bylaws, or any actions which may impede the acquisition of control of us by any person. Neither we nor our board of directors makes any recommendation as to whether you should tender or not tender your options, nor have we authorized any person to make any such recommendation. You are urged to evaluate carefully all of the information in this Offer and to consult your own investment and tax advisors. Bearing the risks of this Offer in mind, you must make your own decision whether or not to tender your options for exchange. 4. Procedures for Tendering Options Proper Tender of Options. To validly tender your options through the Offer, you must, in accordance with the terms of the Election Form, properly complete, execute and deliver the Election Form and any other required documents to us via fax (fax # (425) 201-6185), hand delivery or mail to InfoSpace, Inc., Attn: Brent Satterlee, 601 108th Avenue NE, Suite 1200, Bellevue, WA 98004. We must receive all of the required documents before the Expiration Date, 9 p.m., Pacific Time, on February 15, 2002. The delivery of all documents, including Election Forms and any Notices to Change Election From Accept to Reject and any other required documents, is at your risk. In all cases, you should allow sufficient time to ensure timely delivery. We intend to confirm the receipt of your Election Form within three business days prior to the expiration of the Offer and we will send a final confirmation e-mail following the expiration of the Offer to confirm what remaining forms were received. However, these e-mails do not constitute acceptance of the options for exchange. If you have not received such a confirmation of receipt, it is your responsibility to ensure that we have received your Election Form. 13 Determination of Validity; Rejection of Options; Waiver of Defects; No Obligation to Give Notice of Defects. We will determine, in our sole discretion, all questions as to the form of documents and the validity, form, eligibility, including time of receipt, and acceptance of any tender of options. Our determination of these matters will be final and binding on all parties. We reserve the right to reject any or all tenders of options that we determine are not in appropriate form or that we determine are unlawful to accept. Otherwise, we will accept properly and timely tendered options that are not validly withdrawn unless we reject the tendered options under the Offer. We also reserve the right to waive any of the conditions of the Offer or any defect or irregularity in any tender of any particular options or for any particular option holder, provided that if we grant any such waiver, it will be granted to all option holders and tenders of options. No tender of options will be deemed to have been properly made until all defects or irregularities have been cured by the tendering option holder or waived by us. Neither we nor any other person is obligated to give notice of any defects or irregularities in tenders, nor will anyone incur any liability for failure to give any notice. This is a one-time offer, and we will strictly enforce the Offer period, subject only to an extension which we may grant in our sole discretion. Our Acceptance Constitutes an Agreement. Your tender of options pursuant to the procedures described above constitutes your acceptance of the terms and conditions of the Offer. Our acceptance for exchange of your options tendered by you through the Offer will constitute a binding agreement between InfoSpace and you upon the terms and subject to the conditions of the Offer. Subject to our rights to extend, terminate and amend the Offer, we currently expect that we will accept promptly after the expiration of the Offer all properly tendered options that have not been validly withdrawn. 5. Withdrawal Rights and Change of Election You may only withdraw your tendered options or change your election in accordance with the provisions of this Section. You may withdraw your tendered options at any time before 9 p.m., Pacific Time, on February 15, 2002. If we extend the Offer beyond that time, you may withdraw your tendered options at any time until the extended expiration of the Offer. In addition, if we have not accepted your tendered options for exchange by March 14, 2002, you may withdraw your tendered options at any time after March 14, 2002. To validly withdraw tendered options, you must deliver to InfoSpace, Inc., Attn: Brent Satterlee via fax (fax # (425) 201-6185), hand delivery or mail, in accordance with the procedures listed in Section 4 above, a signed and dated Notice to Change Election From Accept to Reject, with the required information, while you still have the right to withdraw the tendered options. If you first decline to participate in the Offer and then decide to participate, you must deliver a new Election Form to InfoSpace, Inc., Attn: Brent Satterlee via fax (fax # (425) 201-6185), hand delivery or mail, in accordance with the procedures listed in Section 4 above. If you deliver a new Election Form that is properly signed and dated, it will replace any previously submitted Election Form, which will be disregarded. Except as described in the following sentence, the Notice to Change Election From Accept to Reject and any new or amended Election Form must be executed by the Eligible Employee who tendered the options to be withdrawn exactly as the Eligible Employee's name appears on the option agreement or agreements evidencing such options. If the signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another person acting in a fiduciary or representative capacity, the signer's full title and proper evidence of the authority of such person to act in that capacity must be indicated on the Notice to Change Election From Accept to Reject or any new or amended Election Form. 14 You may not rescind any withdrawal, and any options you withdraw will thereafter be deemed not properly tendered for purposes of the Offer, unless you properly re-tender those options before the Expiration Date by following the procedures described in Section 4. Neither we nor any other person is obligated to give notice of any defects or irregularities in any Notice to Change Election From Accept to Reject or any new or amended Election Form, nor will anyone incur any liability for failure to give any notice. We will determine, in our sole discretion, all questions as to the form and validity, including time of receipt, of Notices to Change Election From Accept to Reject and new or amended Election Forms. Our determination of these matters will be final and binding. 6. Acceptance of Options for Exchange and Issuance of New Options Upon the terms and conditions of the Offer and promptly following the Expiration Date, if, at our discretion, we accept any Eligible Options tendered pursuant to the Offer, we will accept for exchange and cancel all Eligible Options properly tendered and not validly withdrawn before the Expiration Date. Once the Eligible Options are cancelled, you will no longer have any rights with respect to those Eligible Options. Subject to the terms and conditions of this Offer, if your Eligible Options are properly tendered and accepted for exchange, these options will be cancelled as of the date of our acceptance, which we anticipate to be February 19, 2002, and you will be granted New Options on the first business day that is six months and one day after the date we cancel the Eligible Options accepted for exchange. Our board of directors intends to grant the New Options promptly after the date that is at least six months and one day after the date we cancel Eligible Options tendered in this Offer. Thus, subject to the terms and conditions of this Offer, if your Eligible Options are properly tendered by February 15, 2002, the scheduled Expiration Date of the Offer, and accepted for exchange and cancelled on February 19, 2002, we expect that you will be granted the New Options on August 20, 2002. If we accept and cancel Eligible Options properly tendered for exchange after February 19, 2002, the period in which the New Options will be granted will be similarly delayed. Promptly after the Expiration Date and the date we accept and cancel Eligible Options tendered for exchange, we will issue to you a Promise to Grant Stock Option, by which we will commit to grant the New Options to you on a date no earlier than August 20, 2002, provided that you remain an Eligible Employee on the date on which the grant of the New Option is made. If we accept the Eligible Options that you tender in the Offer, you will not be granted any other options until the grant date of your New Options at the earliest. We will defer the grant to you of other options to avoid incurring compensation expense against our earnings because of accounting rules that could apply to interim option grants as a result of the Offer. If, for any reason, you are not an Eligible Employee through the date we grant the New Options, you will not receive any New Options or other compensation in exchange for your tendered Eligible Options which have been cancelled pursuant to this Offer. In addition, besides the New Options, we do not anticipate any other broad-based or company-wide option grant programs in 2002 in connection with performance reviews or otherwise. We are not accepting partial tenders of Eligible Options, and in order to participate in the Offer you must tender all of your Eligible Options. Therefore, you must tender all of the unexercised shares subject to each of your Eligible Options. You are not required to tender any other awards, including grants of restricted stock. For purposes of the Offer, we will be deemed to have accepted for exchange Eligible Options that are validly tendered and not properly withdrawn, if and when we give oral or written notice to the option holders of our acceptance for exchange of such options, which notice may be made by press release, inter-office memorandum or e-mail. Subject to our rights to extend, terminate and amend the Offer, we currently expect that we will accept promptly following the Expiration Date all properly tendered Eligible Options that are not validly withdrawn. We will send a Promise to Grant Stock Option to each option holder from whom we accept properly tendered Eligible Options. 7. Conditions of the Offer Notwithstanding any other provision of the Offer, we will not be required to accept any options tendered for exchange, and we may terminate or amend the Offer, or postpone our acceptance and cancellation of any options 15 tendered for exchange, in each case, subject to Rule 13e-4(f)(5) under the Securities Exchange Act, if at any time on or after January 15, 2002, and prior to the Expiration Date, any of the following events has occurred, or has been determined by us to have occurred, and, in our reasonable judgment in any case and regardless of the circumstances giving rise to the event, including any action or omission to act by us, the occurrence of such event or events makes it inadvisable for us to proceed with the Offer or with such acceptance and cancellation of options tendered for exchange: . there shall have been threatened or instituted or be pending any action or proceeding by any governmental, regulatory or administrative agency or authority that directly or indirectly challenges the making of the Offer, the acquisition of some or all of the tendered options pursuant to the Offer, or the issuance of new options, or otherwise relates in any manner to the Offer, or that, in our reasonable judgment, could materially and adversely affect our business, condition, income, operations or prospects or materially impair (such as by increasing the accounting or other costs of the Offer to InfoSpace) the contemplated benefits of the Offer to InfoSpace where the "contemplated benefits" include the opportunity for us to align employee and stockholder interests and offer Eligible Employees a valuable incentive to stay with InfoSpace and to achieve high levels of performance; . there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or InfoSpace, by any court or any authority, agency or tribunal that, in our reasonable judgment, would or might directly or indirectly: (a) make the acceptance for exchange of, or issuance of new options for, some or all of the tendered options illegal or otherwise restrict or prohibit consummation of the Offer or that otherwise relates in any manner to the Offer; (b) delay or restrict our ability, or render us unable, to accept for exchange, or issue new options for, some or all of the tendered options; (c) materially impair (such as by increasing the accounting or other costs of the Offer to InfoSpace) the contemplated benefits, as described above, of the Offer to InfoSpace; or (d) materially and adversely affect InfoSpace's business, condition, income, operations or prospects or materially impair the contemplated benefits, as described above, of the Offer to InfoSpace; . a tender or exchange offer for some or all of our shares, or a merger or acquisition proposal for InfoSpace, shall have been proposed, announced or made by another person or entity or shall have been publicly disclosed; . any change or changes shall have occurred in InfoSpace's business, condition, assets, income, operations, prospects or stock ownership that, in our reasonable judgment, is or may be material to InfoSpace or may materially impair the contemplated benefits, as described above, of the Offer to InfoSpace; . any general suspension of trading in, or limitation on prices for, securities on any national securities exchange, the Nasdaq stock market or the over-the-counter market; or . any actual or anticipated change in the United States generally accepted accounting principles or tax code which could materially and adversely affect the manner in which we are required for financial accounting purposes to account for the Offer. The conditions of the Offer are for InfoSpace's benefit. We may assert them in our sole discretion regardless of the circumstances giving rise to them before the Expiration Date. We may waive them, in whole or in part, at any time and from time to time prior to the Expiration Date, in our sole discretion, whether or not we waive any other condition of the Offer. Our failure at any time to exercise any of these rights will not be deemed a waiver of any such rights. The waiver of any of these rights with respect to particular facts and circumstances will not be deemed a waiver with respect to any other facts and circumstances. Any determination we make concerning the events described in this Section 7 will be final and binding upon all persons. 16 8. Source and Amount of Consideration. Consideration. We will issue the New Options under our 1996 Plan in exchange for Eligible Options that are properly tendered and accepted for exchange by us. We will grant each Eligible Employee who properly tenders their Eligible Options (1) a new option to purchase one share of common stock for every ten shares of common stock underlying his or her Eligible Options (the "Exchange Option") and (2) at the discretion of our board of directors, a new option to purchase a number of shares of our common stock which has been determined in accordance with our compensation policies and practices (the "Compensatory Option"). The Compensatory Option will not necessarily be received by all participating Eligible Employee and, to the extent applicable, it will vary by Eligible Employee. The number of shares underlying your Compensatory Option, if any, will be disclosed to you in your exchange offer summary statement which will be delivered to you no later than January 17, 2002, which is twenty business days prior to the expiration of the Offer. The form of the exchange offer summary statement has been filed as Exhibit (a)(3) to the Schedule TO filed with the Securities and Exchange Commission on January 15, 2002. Assuming that all of the Eligible Options are tendered for exchange, we would issue New Options to purchase up to 3,500,000 shares, which includes approximately 1,500,000 shares for issuance under the Exchange Options and approximately 2,000,000 shares for issuance under the Compensatory Options. The total shares underlying options which could be issued in the exchange would represent approximately 1% of our total shares outstanding following the issuance. 9. Effect of a Change of Control Prior to the Granting of New Options. If we are acquired or involved in a similar transaction before the New Options are granted, we would require the surviving corporation to assume our obligation to grant new options. The Promise to Grant Stock Option that we will give you is a binding commitment, and we will require any successor to our company to be legally bound by that commitment. The new options would still be granted on the new grant date, but they would be options to purchase the shares of the surviving corporation. The exercise price would be equal to the fair market value of the surviving company's stock on the date of grant. You should be aware that these types of transactions could have substantial effects on our share price, including potentially substantial appreciation in the price of our shares. Depending on the structure of this type of transaction, tendering Eligible Employees might be deprived of any further price appreciation in the shares associated with the New Options. For example, if our shares were acquired in a cash merger, the fair market value of our shares, and hence the price at which we grant the New Options, would likely be a price at or near the cash price being paid for the shares in the transaction, yielding limited or no financial benefit to a recipient of the New Options for that transaction. In addition, in the event of an acquisition of our company for stock, tendering Eligible Employees might receive New Options to purchase shares of a different issuer. 10. Terms of New Options. The New Options will be granted under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan (the "1996 Plan"). A new stock option agreement will be entered into between InfoSpace and each Eligible Employee who has tendered options in the Offer for each New Option granted. The form of option agreement related to our 1996 Plan has been filed as Exhibit (d)(1) to the Schedule TO filed with the Securities and Exchange Commission on January 15, 2002. The terms and conditions of the New Options may vary from the terms and conditions of the Eligible Options tendered for exchange. All New Options granted in exchange for Eligible Options will be nonstatutory stock options ("NSOs"), regardless of whether you tender Eligible Options that are incentive stock options or nonstatutory stock options. You should refer to Section 17 of this Offer to Exchange for a discussion of the U.S. federal income tax consequences relating to the New Options. The following description summarizes the material terms of the 1996 Plan and the options granted thereunder. 17 General. The maximum number of shares currently reserved for issuance through the exercise of options granted under the 1996 Plan is approximately 54,000,000. As of January 11, 2002, 15,139,863 shares are available for grant under the 1996 Plan. Administration. The 1996 Plan is administered by the board of directors or a committee appointed by the board of directors (the "Administrator"). Subject to the other provisions of the 1996 Plan, the Administrator has the power to determine the terms and conditions of the options granted, including the fair market value of the shares, the number of shares subject to the option and the exercisability of the options. Term. Your new option will expire ten years from the date of grant. Termination. The termination of your option under the circumstances specified in this section will result in the termination of your interests in the 1996 Plan. The unvested portion of your option will terminate automatically upon your termination of employment or service relationship with us whether voluntary or involuntary. The vested portion of your option will terminate automatically and without further notice on the earliest of the following dates: . three months after termination of your employment or service relationship with us for any reason other than disability or death; . one year after termination of your employment or service relationship with us by reason of disability or death; . ten days after termination of your employment with us for "Cause" as it is defined in your option agreement; or . the expiration date of your option. Exercise Price. The Administrator determines the exercise price at the time the option is granted. For all Eligible Employees, the exercise price per share of the New Options will be 100% of the fair market value on the date of grant, as determined by the closing price of our common stock reported by the Nasdaq National Market for the date of grant. Vesting and Exercise. Each New Option granted pursuant to the Offer will vest as follows: 25% of the shares subject to the New Option will be vested on the date that the New Option is granted and the remaining 75% of the New Option will vest in equal monthly installments over a three (3) year period beginning on the date that is one month after the date that the New Option is granted, subject to your continued active full-time (40 hours or more per week) employment through each such vesting date. Notwithstanding the foregoing, in the event of any "corporate transaction," as it is defined in the 1996 Plan, 25% of the unvested shares subject to your New Option would vest immediately prior to the corporate 18 transaction. If, in connection with the corporate transaction, the successor corporation does not assume or substitute your New Option, your New Option shall first accelerate vesting by 25%, and then to the extent unexercised and/or unvested, terminate upon the effective date of the corporate transaction. Unless otherwise provided by the Administrator, your options will cease vesting during the time you are on a leave of absence and such vesting will not resume until the date you return to work. Payment of Exercise Price. You may exercise your options, in whole or in part, by delivery of a written notice to us together with a share subscription or purchase form which is accompanied by payment in full of the eligible exercise price. The permissible methods of payment of the option exercise price are determined by the Administrator and may include the following: . cash; . check; . other shares which, in the case of shares acquired directly or indirectly from us, (a) have been owned by you for more than six (6) months (or any shorter period necessary for us to avoid a charge to our earnings for financial reporting purposes) on the date of surrender, and (b) have a fair market value on the date of surrender equal to the aggregate exercise price of the shares as to which said option shall be exercised; . consideration received pursuant to a cashless exercise program adopted by us in connection with the 1996 Plan; . a combination of the foregoing methods; or . such other consideration as the Administrator shall permit. Adjustments Upon Certain Events. In the event of any merger, reorganization, consolidation, recapitalization, stock split, stock dividend, or other change in our capital structure, the Administrator will adjust the price of each option and the number of shares subject to each option in such manner as the Administrator determines to be appropriate in order to preserve (but not increase), the benefit of the option to the employee. Termination of Employment. If, for any reason, you are not an Eligible Employee of InfoSpace or one of our subsidiaries from the date you tender Eligible Options through the date we grant the New Options, you will not receive any New Options or any other compensation in exchange for your tendered Eligible Options that have been accepted for exchange. This means that if you resign, with or without good reason, or die, or we terminate your employment, with or without cause, before the date we grant the New Options, you will not receive anything for the Eligible Options that you tendered and, because we will have cancelled the Eligible Options that you tendered, we will not be able to return your Eligible Options to you. Transferability of Options. New Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during your lifetime, only by you. 19 Registration of Option Shares. Approximately 54,000,000 shares of common stock issuable upon exercise of options under the 1996 Plan have been registered under the Securities Act of 1933 on registration statements on Form S-8 filed with the Securities Exchange Commission. All the shares issuable upon exercise of all New Options to be granted pursuant to the Offer will be registered under the Securities Act of 1933. Unless you are an affiliate (as defined in the Securities Act of 1933), you generally will be able to sell your option shares free of any transfer restrictions under applicable U.S. securities laws. U.S. Federal Income Tax Consequences. You should refer to Section 17 of this Offer to Exchange for a discussion of the material U.S. federal income tax consequences relating to the New Options, and the Eligible Options tendered for exchange, as well as the consequences of accepting or rejecting the New Options under this Offer to Exchange. We recommend that you consult with your own tax advisor to determine the tax consequences of this transaction to you. Our statements in this Offer to Exchange concerning the 1996 Plan and the New Options are merely summaries and do not purport to be complete. The statements are subject to, and are qualified in their entirety by reference to, all provisions of the 1996 Plan and the applicable form of option agreement thereunder. Please contact Brent Satterlee by telephone ((425) 709-8008) or email (eo@infospace.com), to receive a copy of the 1996 Plan and the form of option agreements thereunder. We will promptly furnish you copies of these documents at our expense. 11. Information Concerning InfoSpace Our principal executive offices are located at 601 108th Avenue NE, Suite 1200, Bellevue, Washington 98004, and our telephone number is (425) 201-6100. InfoSpace, Inc. provides wireless and Internet software and application services. We distribute our products and services on multiple platforms, including PCs and non-PC devices which use ground wire Internet connections (or wireline devices) and wireless devices such as cell phones, pagers and personal digital assistants. 12. Financial Information The following tables set forth selected financial and operating data of InfoSpace. The selected audited historical statement of operations data for the years ended December 31, 1999 and December 31, 2000 and the selected audited historical balance sheet data as of December 31, 1999 and December 31, 2000 have been derived from the financial statements included in our annual report on Form 10-K for the year ended December 31, 2000. The selected historical statement of operations data for the nine months ended September 30, 2000 and September 30, 2001, and the selected historical balance sheet data as of September 30, 2001, which are included in our quarterly report on Form 10-Q for the quarter ended September 30, 2001, are unaudited, but include, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such data. The information presented below should be read together with our financial statements and related notes. We have presented the following data in thousands, except per share amounts. 20 INFOSPACE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data)
December 31, September 30, ------------------- ------------- 2000 1999 2001 ---------- -------- ------------- (unaudited) ASSETS Current assets: Cash and cash equivalents........................... $ 370,148 $414,661 $227,544 Accounts receivable, net............................ 33,881 13,551 18,082 Other current assets................................ 36,812 29,352 43,823 ---------- -------- -------- Total current assets............................ 440,841 457,564 289,449 Long-term and other investments........................ 154,025 222,761 143,662 Property and equipment, net, and other long-term assets 56,212 13,924 43,417 Intangible assets, net................................. 621,032 259,670 460,945 ---------- -------- -------- Total assets.................................... $1,272,110 $953,919 $937,473 ========== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities.................................... $ 73,966 $ 39,267 $ 49,592 Minority interest...................................... 21,599 -- -- Other noncurrent liabilities........................... 7,973 5,632 7,324 Stockholders' equity................................... 1,168,572 909,020 880,557 ---------- -------- -------- Total liabilities and stockholders' equity...... $1,272,110 $953,919 $937,473 ========== ======== ========
21 INFOSPACE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands, except share data)
Years Ended Nine Months Ended December 31, September 30, -------------------- -------------------- 2000 1999 2001 2000 --------- --------- --------- --------- (unaudited) Revenues (includes related party revenues of $32,095, $2,921, $12,889 and $17,462........................................ $ 214,530 $ 71,980 $ 130,558 $ 149,068 Cost of revenues............................................. 35,627 13,472 31,795 24,536 --------- --------- --------- --------- Gross profit.............................................. 178,903 58,508 98,763 124,532 Total operating expense...................................... 492,855 161,052 420,756 330,589 --------- --------- --------- --------- Loss from operations...................................... (313,952) (102,544) (321,993) (206,507) Other income, net............................................ 27,682 22,342 14,327 21,831 Gain (loss) on investments, net.............................. 9,222 -- (88,468) 8,474 --------- --------- --------- --------- Loss from operations before income tax expense, minority interest, cumulative effect of change in accounting principle and preferred stock dividend....... (277,048) (80,202) (396,134) (175,752) Income tax expense........................................... (137) (744) (86) Minority interest............................................ (3,171) -- -- (4,244) --------- --------- --------- --------- Loss from operations before cumulative effect of change in accounting principle and preferred stock dividend.... (280,356) (80,202) (396,878) (180,082) Cumulative effect of change in accounting principle.......... (2,056) -- (3,171) (2,055) --------- --------- --------- --------- Net loss.................................................. $(282,412) $ (80,202) $(400,049) $(182,137) ========= ========= ========= ========= Preferred stock dividend..................................... -- (159,931) -- -- --------- --------- --------- --------- Net loss applicable to common stockholders................... $(282,412) $(240,133) $(400,049) $(182,137) ========= ========= ========= ========= Basic and diluted net loss per share: Loss per share before accounting change................... $ (0.92) $ (0.93) $ (1.23) $ (0.60) Accounting change......................................... (0.01) -- (0.01) (0.01) --------- --------- --------- --------- Loss per share............................................ $ (0.93) $ (0.93) $ (1.24) $ (0.61) ========= ========= ========= ========= Shares used in computing diluted net loss per share.......... 304,480 257,752 323,006 300,847 ========= ========= ========= ========= Other comprehensive income: Net loss applicable to common stockholders................... $(282,412) $(240,133) $(400,049) $(182,137) Foreign currency translation adjustment................... (316) 36 (545) (229) Unrealized gain (loss) on equity investments.............. (95,279) 79,570 12,969 (67,130) --------- --------- --------- --------- Comprehensive income......................................... $(378,007) $(160,527) $(387,625) $(249,496) ========= ========= ========= =========
22 The financial information in the following documents is incorporated herein by reference: . Our annual report on Form 10-K for the fiscal year ended December 31, 2000, as filed with the SEC on April 2, 2001; . Our quarterly report on Form 10-Q for the quarter ended March 31, 2001, as filed with the SEC on May 15, 2001; . Our quarterly report on Form 10-Q for the quarter ended June 30, 2001, as filed with the SEC on August 13, 2001; and . Our quarterly report on Form 10-Q for the quarter ended September 30, 2001, as filed with the SEC on November 9, 2001. For a copy of our audited financial statements for the two fiscal years ended December 31, 2000 and December 31, 1999, as filed with the SEC, please see the Form 10-K for the fiscal year ended December 31, 2000. For our most recent unaudited balance sheet, unaudited comparative year-to-date income statements and related earnings per share data, unaudited statements of cash flows and unaudited comprehensive income, as filed with the SEC, please see the Form 10-Q for the quarter ended September 30, 2001. As of September 30, 2001, InfoSpace's book value per share was $2.90. SEE SECTION 20 FOR INSTRUCTIONS ON HOW YOU CAN OBTAIN COPIES OF OUR SEC FILINGS AND COPIES OF THE FINANCIAL STATEMENTS REFERENCED ABOVE. 13. Price Range of Shares Underlying the Options. The shares underlying your options are currently traded on the Nasdaq National Market under the symbol "INSP." The following table shows, for the periods indicated, the high and low sales prices per share of our common stock as reported by the Nasdaq National Market, as adjusted for stock dividends and stock splits.
High Low --------- -------- Fiscal Year 2001: Quarter ended March 31, 2001..... $ 9.8750 $ 2.0625 Quarter ended June 30, 2001...... 5.6500 1.5625 Quarter ended September 30, 2001. 3.7900 1.0600 Quarter ended December 31, 2001.. 2.7500 1.3200 Fiscal Year 2000: Quarter ended March 31, 2000..... $138.5000 $40.2500 Quarter ended June 30, 2000...... 78.2500 37.1250 Quarter ended September 30, 2000. 60.0000 25.5000 Quarter ended December 31, 2000.. 31.3125 5.4375 Fiscal Year 1999: Quarter ended March 31, 1999..... $ 12.4063 $ 3.5625 Quarter ended June 30, 1999...... 18.1563 8.8125 Quarter ended September 30, 1999. 14.7345 9.2188 Quarter ended December 31, 1999.. 54.2500 9.6875
As of January 11, 2002, the last reported sale price during regular trading hours of our common stock, as reported by the Nasdaq National market, was $2.68 per share. WE RECOMMEND THAT YOU EVALUATE CURRENT MARKET QUOTES FOR OUR COMMON STOCK, AMONG OTHER FACTORS, BEFORE DECIDING WHETHER OR NOT TO TENDER YOUR OPTIONS. 23 14. Interests of Directors and Officers; Transactions and Arrangements Concerning the Options. A list of our directors and executive officers is attached to this Offer to Exchange as Schedule A. Based upon the eligibility requirements for participation in the Offer, none of our directors, executive officers or principal stockholders are eligible to participate in the Offer. Accordingly, none of our directors, executive officers or principal stockholders have any interest in any Eligible Options. 15. Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer. Options we acquire through the Offer will be cancelled and the shares subject to those options will be returned to the applicable pool of shares available for grants under the plans pursuant to which they were originally granted (other than the Go2Net, Inc. 2000 Stock Option Plan, Go2Net, Inc. 1996 Stock Option Plan, Silicon Investor, Inc. 1996 Stock Plan, WEB21 Stock Option Plan, Authorize.Net Corporation 1999 Stock Incentive Plan, IQC Corporation Option to Purchase Common Stock, SaveSmart, Inc. 1997 Equity Incentive Plan, Saraide.com Inc. 1998 Equity Incentive Plan and INEX Corporation Share Option Plan). To the extent these shares are not reserved for issuance upon exercise of the New Options to be granted in connection with the Offer, the shares will be available for future awards to employees and other eligible plan participants under such plans without further stockholder action, except as required by applicable law or the rules of the Nasdaq National Market or any other securities quotation system or any stock exchange on which our shares are then quoted or listed. We believe that we will not incur any compensation expense solely as a result of the transactions contemplated by the Offer because: . we will grant the New Options no earlier than the first business day that is six months and one day after the date that we accept and cancel the Eligible Options tendered for exchange, and . the exercise price of all the New Options will equal the market value of the shares of common stock on the date we grant the New Options. If we were to grant the New Options on any date that is earlier than six months and one day after the date we cancel the Eligible Options accepted for exchange, we would be subject to onerous accounting charges. We would be required for financial reporting purposes to treat the New Options as variable awards. This means that we would be required to record the non-cash accounting impact of decreases and increases in our share price as a compensation expense for the New Options issued under this Offer. We would have to continue this variable accounting for these New Options until they were exercised, forfeited or terminated. The higher the market value of our shares, the greater the compensation expense we would have to record. By deferring the grant of the New Options for six months and one day, we believe we will not have to treat the New Options as variable awards. 16. Legal Matters; Regulatory Approvals. We are not aware of any license or regulatory permit that appears to be material to our business that might be adversely affected by our exchange of options and issuance of new options as contemplated by the Offer, or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of our options as contemplated herein. Should any such approval or other action be required, we presently contemplate that we will seek such approval or take such other action. We cannot assure you that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to our business. Our obligation under the Offer to accept tendered options for exchange and to issue new options for tendered options is subject to the conditions described in Section 7. If we are prohibited by applicable laws or regulations from granting new options during the period beginning immediately after the day that is six months and one day from the date that we cancel the options 24 accepted for exchange, in which period we currently expect to grant the new options, we will not grant any new options. Such a prohibition could result from changes in foreign or domestic laws, SEC rules, regulations or policies or Nasdaq National Market listing requirements. We are unaware of any such prohibition at this time, and we will use reasonable efforts to effect the grant, but if the grant is prohibited throughout the period we will not grant any new options and you will not get any other compensation for the options you tendered. We do not anticipate any such prohibitions and are referring to the possibility in an abundance of caution. 17. Material U.S. Federal Income Tax Consequences. The following is a general summary of the material U.S. federal income tax consequences of the exchange of options pursuant to the Offer. This discussion is based on the Internal Revenue Code, its legislative history, Treasury Regulations thereunder and administrative and judicial interpretations thereof as of the date of the Offer, all of which are subject to change, possibly on a retroactive basis. This summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to be applicable in all respects to all categories of option holders. Eligible Employees who exchange outstanding Eligible Options for New Options should not be required to recognize income for federal income tax purposes at the time of the exchange. We believe that the exchange will be treated as a non-taxable exchange. We advise all Eligible Employees considering exchanging their Eligible Options to meet with their own tax advisors with respect to the federal, state, and local tax consequences of participating in the Offer. Incentive Stock Options. The following discussion regarding incentive stock options ("ISO") is presented to help Eligible Employees compare the different tax consequences of ISOs and nonstatutory stock options ("NSO"). If you tender Eligible Options and we accept them for exchange, your New Option will qualify as an NSO, even if the Eligible Options that you tendered were ISOs. In general, an option holder will not realize taxable income upon the exercise of an ISO. However, an option holder's alternative minimum taxable income will be increased by the amount that the aggregate fair market value of the shares underlying the option, which is generally determined as of the date of exercise, exceeds the aggregate exercise price of the option. If an option holder sells the option shares acquired upon exercise of an ISO in a qualifying disposition, any excess of the sale price of the option shares, over the exercise price of the option will be treated as long-term capital gain taxable to the option holder at the time of the sale. Any such capital gain will be taxed at the long-term capital gain rate in effect at the time of sale. In this event we will not be entitled to any tax deduction. The disposition of the option shares is qualifying if it is made: . more than two years after the date the ISO was granted, and . more than one year after the date the ISO was exercised. If you dispose of the shares before either holding period, the lesser of (i) the excess of the fair market value of the shares at the date of exercise over the exercise price, or (ii) the excess of the fair market value at the time of disposition over the exercise price, will be taxable income to you at the time of the disposition. Any additional gain or loss, if any, will be long-term gain or short-term capital gain or loss, depending upon whether or not the shares were sold more than one year after the option was exercised. We will be entitled to a tax deduction equal to the amount of any income you recognize upon a disqualifying disposition. You should note that there is a risk that any ISO you hold may be affected, even if you do not participate in the option exchange program. We believe that you will not be subject to current U.S. federal income tax if you do not elect to participate in the option exchange program. We also believe that the option exchange program will not change the U.S. federal income tax treatment of subsequent grants and exercises of your ISO (and sales of shares acquired upon exercise of such options) if you do not participate in the option exchange program. 25 However, the IRS may characterize the option exchange program as a "modification" of those ISOs, even if you decline to participate. In 1991, the IRS issued a private letter ruling in which another company's option exchange program was characterized as a "modification" of the ISO that could be exchanged. This does not necessarily mean that our offer to exchange options will be viewed the same way. Private letter rulings issued by the IRS contain the IRS's opinion regarding only the specific facts presented by a specific person or company. The person or company receiving the letter may rely on it, but no other person or company may rely on the letter ruling or assume the same opinion would apply to their situation, even if the facts at issue are similar. While such letters do not provide certainty, they may indicate how the IRS will view a similar situation. We, therefore, do not know if the IRS will assert the position that our option exchange program constitutes a "modification" of ISOs that can be tendered. A successful assertion by the IRS of this position could extend the options' holding period to qualify for favorable tax treatment. Accordingly, to the extent you dispose of your ISO shares prior to the lapse of the new extended holding period, your ISO could be taxed similarly to an NSO. Nonstatutory Stock Options. Under current law, an option holder will not realize taxable income upon the grant of an NSO. However, when an option holder exercises the option, the difference between the exercise price of the option, and the fair market value of the shares subject to the option on the date of exercise will be compensation income taxable to the option holder and is subject to withholding if the option holder is an employee. We will be entitled to a deduction equal to the amount of compensation income taxable to the option holder if we comply with eligible reporting requirements. We recommend that you consult your own tax advisor with respect to the federal, state and local tax consequences of participating in the Offer. 18. Extension of Offer; Termination; Amendment We expressly reserve the right, in our sole discretion, at any time and from time to time, and if any event listed in Section 7 has occurred or is deemed by us to have occurred, to extend the period of time during which the Offer is open and thereby delay the acceptance for exchange of any options by giving oral or written notice of such extension to the option holders or making a public announcement thereof. We also expressly reserve the right, in our reasonable judgment, prior to the Expiration Date to terminate or amend the Offer and to postpone our acceptance and cancellation of any options tendered for exchange, if any event listed in Section 7 has occurred or is deemed by us to have occurred, by giving oral or written notice of such termination or postponement to you or by making a public announcement thereof. Our reservation of the right to delay our acceptance and cancellation of options tendered for exchange is limited by Rule 13e-4(f)(5) promulgated under the Securities Exchange Act of 1934, which requires that we must pay the compensation offered or return the options tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law, we further reserve the right, in our sole discretion, and regardless of whether any event listed in Section 7 has occurred or is deemed by us to have occurred, to amend the Offer in any respect, including, without limitation, by decreasing or increasing the compensation offered in the Offer to option holders or by decreasing or increasing the number of options being sought in the Offer. Amendments to the Offer may be made at any time and from time to time by public announcement of the amendment. In the case of an extension, the amendment must be issued no later than 6:00 a.m., Pacific Time, on the next business day after the last previously scheduled or announced Expiration Date. Any public announcement made through the Offer will be disseminated promptly to option holders in a manner reasonably designated to inform you of the change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law, we have no obligation to publish, advertise or otherwise communicate any such public announcement. 26 If we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition of the Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Securities Exchange Act of 1934. These rules require that the minimum period during which an offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend on the facts and circumstances, including the relative materiality of such terms or information. If we decide to take any of the following actions, we will publish notice or otherwise inform you in writing of these actions: . increase or decrease the amount of compensation offered for the Eligible Options; . decrease the number of options eligible to be tendered in the Offer; or . increase the number of options eligible to be tendered in the Offer by an amount that exceeds 2% of the shares issuable upon exercise of the options that are subject to the Offer immediately prior to the increase. If the Offer is scheduled to expire at any time earlier than the tenth (10th) business day from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified in this Section, we will extend the Offer so that the Offer is open at least ten (10) business days following the publication, sending or giving of notice. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, Eastern Time. 19. Fees and Expenses We will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of options pursuant to this Offer. 20. Additional Information This Offer is part of a Tender Offer Statement on Schedule TO that we have filed with the Securities and Exchange Commission. This Offer does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that you review the Schedule TO, including its exhibits, and the following materials which we have filed with the SEC before making a decision on whether to tender your options: 1. InfoSpace's annual report on Form 10-K for our fiscal year ended December 31, 2000, filed with the SEC on April 2, 2001; 2. InfoSpace's quarterly report on Form 10-Q for the quarter ended March 31, 2001, filed with the SEC on May 15, 2001; 3. InfoSpace's quarterly report on Form 10-Q for the quarter ended June 30, 2001, filed with the SEC on August 13, 2001; and 4. InfoSpace's quarterly report on Form 10-Q for the quarter ended September 30, 2001, filed with the SEC on November 9, 2001; These filings, our other annual, quarterly and current reports, our proxy statements and our other SEC filings may be examined, and copies may be obtained, at the following SEC public reference room: 450 Fifth Street, N.W. Room 1024 Washington, D.C. 20549 You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. 27 Our SEC filings are also available to the public on the SEC's Internet site at http://www.sec.gov. Our common stock is quoted on the Nasdaq National Market under the symbol "INSP" and our SEC filings can be read at the following Nasdaq National Market address: Nasdaq Operations 1735 K Street, N.W. Washington, D.C. 20006 Each person to whom a copy of this Offer to Exchange is delivered may obtain a copy of any or all of the documents to which we have referred you, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents) at no cost, by: . writing to us at InfoSpace, Inc., 601 108th Avenue NE, Suite 1200, Bellevue, Washington 98004 Attention: Brent Satterlee; . e-mailing the Exchange Offer Hotline at eo@infospace.com; or . telephoning the Exchange Offer Hotline at (425) 709-8008. As you read the foregoing documents, you may find some inconsistencies in information from one document to another. If you find inconsistencies between the documents, or between a document and this Offer to Exchange, you should rely on the statements made in the most recent document. The information contained in this Offer to Exchange about InfoSpace should be read together with the information contained in the documents to which we have referred you. 21. Miscellaneous We are not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the Offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with such law. If, after such good faith effort, we cannot comply with such law, the Offer will not be made to, nor will tenders be accepted from or on behalf of, the option holders residing in such jurisdiction. This Offer to Exchange and our SEC reports referred to above include "forward-looking statements." When used in this Offer to Exchange, the words "anticipate," "believe," "estimate," "expect," "intend" and "plan" as they relate to InfoSpace or our management are intended to identify these forward-looking statements. All statements by us regarding our expected future financial position and operating results, our business strategy, our financing plans and expected capital requirements, forecasted trends relating to our services or the markets in which we operate and similar matters are forward-looking statements. The documents we filed with the SEC, including our annual report for the year ended December 31, 2000, on Form 10-K filed on April 2, 2001, discuss some of the risks that could cause our actual results to differ from those contained or implied in the forward-looking statements. These risks include, but are not limited to: . We have a history of losses and expect to continue to incur significant operating losses, and we may never be profitable. . We have relatively limited operating history, which makes it difficult to evaluate our future prospects. . Our financial results are likely to continue to fluctuate, which could cause our stock price to be volatile or decline. . Our stock price has been and is likely to continue to be highly volatile. . If we are unable to diversify our revenue base, a significant portion of our revenues will continue to be derived from wireline consumer services, which could weaken our financial position. 28 . Our financial and operating results will suffer if we are unsuccessful at integrating acquired businesses. . Our future earnings could be negatively affected by significant charges resulting from the impairment in the value of acquired assets. . Our revenues are attributable to a small number of customers, the loss of any one of which could harm our financial results. . We depend on third parties for content, and the loss of access to this content could cause us to reduce our product offerings to customers. . Unless we are able to hire, retain and motivate highly qualified employees, we will be unable to execute our business strategy. . Our historical and future expansion in personnel and facilities will continue to significantly strain our management, operational and financial resources. . Our expansion into international markets may not be successful and may expose us to risks that could harm our business. . We have implemented anti-takeover provisions that could make it more difficult to acquire us. . Our systems could fail or become unavailable, which would harm our reputation, result in a loss of current and potential customers and could cause us to breach existing agreements. . We rely heavily on our proprietary technology, but we may be unable to adequately protect or enforce our intellectual property rights thus weakening our competitive position and negatively impacting our financial results. . Intense competition in the wireline, wireless and broadband markets could prevent us from entering those markets or cause us to lose market share. . We rely on the Internet infrastructure, and its continued commercial viability, over which we have no control and the failure of which could substantially undermine our business strategy. We have not authorized any person to make any recommendation on our behalf as to whether you should tender or not tender your options through the Offer. You should rely only on the information in this document or documents to which we have referred you. We have not authorized anyone to give you any information or to make any representations in connection with the Offer other than the information and representations contained in this document, the memorandum from Naveen Jain dated January 15, 2002, your exchange offer summary statement which you will receive by January 17, 2002, the Election Form and the Notice to Change Election from Accept to Reject. If anyone makes any recommendation or representation to you or gives you any information, you must not rely upon that recommendation, representation or information as having been authorized by us. INFOSPACE, INC. January 15, 2002 29 SCHEDULE A INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF INFOSPACE, INC. The directors and executive officers of InfoSpace, Inc. and their positions and offices as of January 11, 2002, are set forth in the following table:
Name Position andOffices Held ---- ------------------------------------------------ Naveen Jain............... Chairman and Chief Executive Officer Edmund O. Belsheim, Jr.... President, Chief Operating Officer and Director Tammy D. Halstead......... Chief Financial Officer Rasipuram ("Russ") V. Arun Executive Vice President and Chief Technology Officer York Baur................. Executive Vice President, Wireline and Broadband Jan E. Claesson........... Executive Vice President, Wireless Prakash Kondepudi......... Executive Vice President, Merchant John E. Cunningham, IV.... Director Richard D. Hearney........ Director Rufus W. Lumry, III....... Director William D. Savoy.......... Director Lewis M. Taffer........... Director
The address of each director and executive officer is: c/o InfoSpace, Inc., 601 108th Avenue NE, Suite 1200, Bellevue, WA 98004. 30 EX-99.(A)(2) 4 dex99a2.txt MEMORANDUM FROM NAVEEN JAIN TO INSP EMPLOYEES EXHIBIT (a)(2) THIS COMMUNICATION IS NOT AN OFFER TO EXCHANGE. AT THE TIME THE EXCHANGE PROGRAM IS COMMENCED, INFOSPACE WILL PROVIDE EMPLOYEES WHO ARE ELIGIBLE TO PARTICIPATE IN THE EXCHANGE PROGRAM WITH WRITTEN MATERIALS EXPLAINING THE PRECISE TERMS AND TIMING OF THE EXCHANGE PROGRAM. EMPLOYEES WHO ARE ELIGIBLE TO PARTICIPATE IN THE EXCHANGE PROGRAM SHOULD READ THESE WRITTEN MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE EXCHANGE PROGRAM. INFOSPACE WILL ALSO FILE THESE WRITTEN MATERIALS WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF A TENDER OFFER STATEMENT UPON THE COMMENCEMENT OF THE EXCHANGE PROGRAM. INFOSPACE EMPLOYEES WILL BE ABLE TO OBTAIN THESE WRITTEN MATERIALS AND OTHER DOCUMENTS FILED BY INFOSPACE WITH THE SECURITIES AND EXCHANGE COMMISSION FREE OF CHARGE FROM THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT www.sec.gov. I am pleased to announce that InfoSpace's board of directors has approved a Voluntary Stock Option Exchange Program ("Exchange Program") in which eligible employees will have the opportunity to exchange stock options ("Old Options") for the promise to grant new options ("New Options") to be granted in the future under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan. The Exchange Program begins on Tuesday, January 15, 2002. The Exchange Program is subject to the terms and conditions of the Offer to Exchange describing the Exchange Program, the Election Form for tendering options, the Notice to Change Election From Accept to Reject, each of which will be distributed to you on Tuesday, January 15, 2002, and your exchange offer summary statement which you will receive no later than Thursday, January 17, 2002. We strongly urge you to read all of these materials carefully and understand the risks before making your decision. We also strongly encourage you to consult your tax and financial advisors before making any decision about the Exchange Program. Participation by each eligible employee is voluntary. Stock options are an important component of our total compensation program. We believe that granting stock options provides an opportunity to: (1) align employee and stockholder interests, and (2) provide incentives for employees to achieve high levels of performance. InfoSpace recognizes that some of the options granted in past years have exercise prices significantly higher than the current market price of InfoSpace stock (that is, some options are "underwater"). The Exchange Program is an opportunity for, though not a guarantee of, the grant of New Options that may have a greater potential to increase in value over time. If you elect to participate in the Exchange Program, you must make your election by completing and returning the Election Form during the period beginning on January 15, 2002 and ending at 9:00 p.m., Pacific Time, February 15, 2002, unless the time period of the offer is extended by us (the "Expiration Date"). If your Election Form is received after this time, we will not accept it, or if you fail to turn it in, you will be deemed to have elected not to participate in the Exchange Program. The main features of the Exchange Program include the following: . Most full-time (40 hours or more per week) U.S. based employees of InfoSpace and its U.S. subsidiaries are eligible to participate in the Exchange Program. However, members of the board of directors and certain executive officers, including myself, are not eligible to participate. . Options eligible to be tendered are all options to purchase InfoSpace common stock with an exercise price of $10.00 or more per share. . In order to participate in the Exchange Program, you must tender all of your Old Options that have an exercise price of $10.00 or more per share. 1 . If you elect to participate in the Exchange Program, your Old Options will be cancelled and replaced with a promise to grant a New Option on the first business day that is six months and one day from the date that your Old Options are cancelled. We expect to cancel the Old Options on February 19, 2002 and grant the New Options on August 20, 2002. In the event that we cancel the Old Options on a date later than February 19, 2002, we will grant the New Options on the first business day that is six months and one day from the date that we cancel the Old Options. Once we cancel your Old Options, you will not be able to exercise your Old Options. . If you participate in the Exchange Program, we will grant you (1) a New Option to purchase one share of common stock for every ten shares of common stock underlying your Old Options and (2), at the discretion of our board of directors, a New Option to purchase a number of shares of our common stock which has been determined in accordance with our compensation policies and practices. The compensatory option set forth in (2) will not necessarily be received by all participating employees and will vary in size by employee. The number of shares underlying your compensatory option, if any, will be disclosed to you in your exchange offer summary statement which will be delivered to you no later than January 17, 2002. . The New Options will be granted under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan. . The New Options will be nonstatutory stock options, even if your Old Options were incentive stock options. . The exercise price of the New Options will be equal to the fair market value of InfoSpace shares on the day we grant the New Options, which is expected to be on August 20, 2002. "Fair market value" is the closing price of InfoSpace's common stock on Nasdaq on the date of the grant. This price may be higher, or lower, or the same as the exercise price of the Old Options to be cancelled. There is a possibility that the exercise price of the New Options could be higher than the exercise price of the Old Options. . The New Options will be 25% vested on the date of grant and the remaining 75% will vest in equal monthly installments over the three-year period beginning on the date that is one month after the date we grant the New Options. . You must be an eligible employee of InfoSpace or one of its U.S. subsidiaries on the date the New Options are granted. If your employment with InfoSpace or one of its subsidiaries terminates for any reason whatsoever before the date the New Options are granted (expected to be on August 20, 2002), you will not receive a New Option or any consideration for your cancelled Old Options. The Exchange Program is not a guarantee of employment for any period. Your employment with InfoSpace or one if its subsidiaries remains "at will" and may be terminated at any time by either you or InfoSpace (or one of its subsidiaries, as applicable), with or without cause or notice, subject to local law. If you have any questions about the Exchange Program or would like to obtain paper copies of the documents referenced in this letter, please call Brent Satterlee at (425) 709-8008 or email him at eo@infospace.com. We have not authorized any person to make any recommendation on our behalf as to whether you should tender or not tender your options through the Exchange Program. You should rely only on the information in this document, the documents to which we have referred you and your advisors. Thank you for your continued contributions to InfoSpace's success. /s/ Naveen Jain -------------------------------------- January 15, 2002 2 EX-99.(A)(3) 5 dex99a3.txt FORM OF EXCHANGE OFFER SUMMARY EXHIBIT (a)(3)
Name - ---------------------------------------------------------------------------------------------------------- Exchange Offer Summary Statement - ---------------------------------------------------------------------------------------------------------- Organization Head - --------------------------- ---------------------------------------------------------------------------- Exchange Option Grant - --------------------------- ---------------------------------------------------------------------------- Compensatory Option Grant - --------------------------- ---------------------------------------------------------------------------- Anticipated Grant Date - --------------------------- ---------------------------------------------------------------------------- Grant Date Price Shares Granted Shares Outstanding Grant History of Options Eligible for Exchange (options granted at $10.00 and above) Total: - --------------------------- --------------- --------------- ----------------- -------------------- 25% of the Stock Option Grant will vest on the Option Grant Date, and the remainder of the Stock Option Grant vests monthly over a three-year period, as long as you are still employed by InfoSpace Inc. or its subsidiary. This Grant Vesting & Terms Stock Option Grant is conditioned upon your participation in the Offer to Exchange and the Company's acceptance of the options offered for exchange and is subject to all terms and conditions of your Stock Option Agreement. This offer to exchange is more fully described in the Company's Offer to Exchange and related documents that have been distributed to you. - --------------------------- ---------------------------------------------------------------------------- It is InfoSpace's desire to maintain all information concerning stock Confidentiality options confidential. Please assist us in that effort by not discussing this Option Grant with others. - ---------------------------------------------------------------------------------------------------------- Disclaimer: The Grant History reflects our records as of December 26, 2001. If your records indicate otherwise, it is your responsibility to contact Brent Satterlee to discuss any discrepancies.
EX-99.(A)(4) 6 dex99a4.txt FORM OF ELECTION FORM EXHIBIT (a)(4) INFOSPACE, INC. VOLUNTARY STOCK OPTION EXCHANGE PROGRAM ELECTION FORM ___ I ACCEPT InfoSpace, Inc.'s offer to exchange all of my outstanding unexercised stock options with an exercise price of $10.00 or more per share (the "Eligible Options") for new options pursuant to the terms set forth in the Offer to Exchange dated January 15, 2002 from InfoSpace. I understand that all of my Eligible Options will be irrevocably cancelled on February 19, 2002. In exchange for the Eligible Options that I elect to tender, I will be granted (1) a new option to purchase one share of common stock for every ten shares of common stock underlying my Eligible Options (the "Exchange Option") and (2) if my exchange offer summary statement indicated that I was eligible to receive an additional option grant upon my participation in the Offer, a new option to purchase that number of shares indicated in my exchange offer summary statement (the "Compensatory Option"). ___ I DECLINE InfoSpace, Inc.'s offer to exchange all of my Eligible Options for new options pursuant to the terms set forth in the Offer to Exchange dated January 15, 2002 from InfoSpace. I acknowledge receipt of the Offer to Exchange dated January 15, 2002, the memorandum from Naveen Jain dated January 15, 2002, my exchange offer summary statement no later than January 17, 2002, this Election Form and the Notice to Change Election From Accept to Reject (together, as they may be amended from time to time, constituting the "Offer"), offering eligible employees the opportunity to exchange certain outstanding (i.e., unexercised) stock options for an option or options to be granted on the date that is six months and one day following the cancellation of the exchanged options. Whether you have elected to accept or decline the Offer, please sign this Election Form. In addition to signing this Election Form, you must print your name and indicate the date and time at which you signed it. You must also include a current work or home address and your identification number, such as your social security number or tax identification number. If you have elected to accept the Offer, please also indicate the number of unexercised shares underlying your Eligible Options. If you have elected to accept the Offer, by signing below, you certify that you have read Schedule A and the Instructions attached to this Election Form and that you agree to the terms and conditions stated in Schedule A and the Instructions to this Election Form. ____________________________________________ ______________________________________ Employee Signature Social Security Number/Tax File Number ____________________________________________ ______________________________________ Employee Name (Please Print) Date and Time ____________________________________________ ______________________________________ Number of Shares Underlying Eligible Options Home or Work Address
RETURN TO STOCK ADMINISTRATION, ATTN: BRENT SATTERLEE NO LATER THAN 9:00 P.M. PACIFIC TIME ON FEBRUARY 15, 2002 VIA FAX AT (425) 201-6185, MAIL OR HAND DELIVERY SCHEDULE A TO THE ELECTION FORM I understand and acknowledge that: (a) Tendering my Eligible Options by following the procedures described in the Offer and in the instructions to this Election Form will constitute my acceptance of the terms and conditions of the Offer. InfoSpace's acceptance for exchange of Eligible Options tendered in accordance with the Offer will constitute a binding agreement between InfoSpace and me upon the terms and conditions of the Offer. (b) Upon InfoSpace's acceptance of my Eligible Options for exchange, this Election Form will serve as an amendment to the option agreement(s) covering the Eligible Option(s) that I am tendering. (c) In exchange for the Eligible Options that I elect to tender, I will be granted (1) the Exchange Option and (2) if my exchange offer summary statement indicated that I was eligible to receive a Compensatory Option, the Compensatory Option. The Exchange Option and the Compensatory Option will each be individually referred to hereinafter as the "New Option." (d) The New Option will be subject to the terms of the Offer, the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan and a new option agreement between InfoSpace and me, and all applicable laws and regulations. (e) For each Eligible Option I elect to tender, I lose my right to purchase all outstanding unexercised shares under that option after it is accepted and cancelled by InfoSpace. (f) The New Option will be granted on August 20, 2002 or, if the Offer is extended, on the first business day that is six months and one day after my tendered Eligible Options are accepted for exchange and cancelled. I understand that there is a possibility that the exercise price of my New Option could be higher than the exercise price of my Eligible Options. (g) I must be an eligible employee of InfoSpace or one of its U.S. subsidiaries and otherwise be eligible under the InfoSpace, Inc. Restated 1996 Flexible Stock Incentive Plan on the date the New Option is granted in order to receive the New Option. I understand that I will have no rights with respect to my cancelled Eligible Options if my employment is terminated for any reason whatsoever before the grant of the New Option, which will occur no earlier than August 20, 2002. (h) The New Option that I will receive will be a nonstatutory stock option under U.S. federal tax law, even if my tendered Eligible Options qualify as incentive stock options. On the date that the New Option is granted to me, 25% of the shares of common stock subject to the New Option will be vested and the remaining 75% of the shares will vest in equal monthly installments beginning on the date that is one month after the date that the New Option is granted, subject to my continued active full-time employment through each such vesting date. (i) In order to participate in the Offer, I must tender all of the unexercised shares underlying all of my Eligible Options, and I am tendering all of the unexercised shares underlying all of my Eligible Options. (j) Under certain circumstances described in the Offer to Exchange, InfoSpace may terminate or amend and postpone its acceptance and cancellation of any Eligible Options tendered for exchange. In this event, I understand that the Eligible Options delivered with this Election Form but not accepted will be returned to me at my address indicated below. (k) InfoSpace has advised me to consult with my own advisors as to the consequences of participating or not participating in the Offer. (l) Participation in the Offer will not be construed as a right to my continued employment with InfoSpace or any of its subsidiaries for any period, and my employment with InfoSpace or any of its subsidiaries can be terminated at any time by me or InfoSpace (or one of InfoSpace's subsidiaries, as applicable), with or without cause or notice, subject to the provisions of local law. (m) All authority in this Election Form will survive my death or incapacity, and all of my obligations in this Election Form will be binding upon my heirs, personal representatives, successors and assigns. INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Delivery of Election Form. A properly completed and executed original of this Election Form (or a faxed copy of it), and any other documents required by this Election Form, must be received by InfoSpace, Inc., Stock Administration, Attn: Brent Satterlee, 601 108/th/ Avenue NE, Suite 1200, Bellevue, Washington 98004 either via mail, hand delivery or fax (fax # (425) 201-6185) on or before 9:00 p.m. Pacific Time on February 15, 2002 (the "Expiration Date"). The method by which you deliver any required documents is at your option and risk, and the delivery will be deemed made only when actually received by InfoSpace at the address or fax number listed above. In all cases, you should allow sufficient time to ensure timely delivery. We intend to confirm the receipt of your Election Form within three business days prior to the expiration of the Offer; if you have not received such a confirmation of receipt, it is your responsibility to ensure that InfoSpace has received your Election Form. 2. Withdrawals of Tendered Eligible Options. You may withdraw your tendered Eligible Options at any time before the Expiration Date. If InfoSpace extends the Offer beyond that time, you may withdraw your tendered Eligible Options at any time until the extended expiration of the Offer. In addition, although InfoSpace currently intends to accept your validly tendered Eligible Options promptly after the expiration of the Offer, if we do not accept your tendered Eligible Options before 9:00 p.m., Pacific Time, on March 14, 2002, you may withdraw your tendered Eligible Options at any time after such date. You may not withdraw a validly tendered Eligible Option that has been accepted by InfoSpace. To withdraw tendered Eligible Options you must deliver a signed and dated Notice to Change Election From Accept to Reject (or a faxed copy of the notice) with the required information to InfoSpace while you still have the right to withdraw the tendered Eligible Options. You may not rescind a withdrawal and you will be deemed not to have tendered any Eligible Options you have withdrawn unless you properly re-tender them before the Expiration Date by delivery of a new Election Form following the procedures described in these Instructions. Upon the receipt of such a new, properly signed and dated Election Form, any previously submitted Election Form or Notice to Change Election From Accept to Reject will be disregarded and will be considered replaced in full by the new Election Form. InfoSpace will not accept any alternative, conditional or contingent tenders. Although it is our intent to send you a confirmation of receipt of this Election Form, by signing this Election Form (or a facsimile of it), you waive any right to receive any notice of the receipt of the tender of your Eligible Options, except as provided for in the Offer to Exchange. Any confirmation of receipt sent to you will merely be a notification that we have received your Election Form and does not mean that your Eligible Options have been accepted or cancelled. 3. Tenders. InfoSpace will not accept partial tenders of Eligible Options, and in order to participate in the Offer you must tender all of the Eligible Options that you hold. Therefore, you must tender all of the shares underlying all of your Eligible Options (as described in the Offer). 4. Signatures on This Election Form. If this Election Form is signed by the holder of the Eligible Options, the signature must correspond with the name as written on the face of the option agreement or agreements to which the options are subject without alteration, enlargement or any change whatsoever. If your name has been legally changed since your option agreement was signed, please submit proof of the legal name change. If this Election Form is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity for the holder of the tendered Eligible Options, that person should so indicate when signing, and proper evidence satisfactory to InfoSpace of the authority of that person so to act must be submitted with this Election Form. 5. Other Information on This Election Form. In addition to signing this Election Form, you must print your name and indicate the date and time at which you signed it. You must also include a current work or home address, your identification number, such as your social security number or tax identification number, and the number of unexercised shares underlying your Eligible Options. 6. Requests for Assistance or Additional Copies. Questions about the Offer or requests for assistance, as well as requests for additional copies of the Offer to Exchange or this Election Form should be directed to Brent Satterlee at InfoSpace's principal address, telephone number (425) 709-8008, or e-mail address eo@infospace.com. 7. Irregularities. All questions as to the number of shares subject to options to be accepted for exchange, and the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of options will be determined by InfoSpace in its sole discretion. InfoSpace's determinations shall be final and binding on all parties. InfoSpace reserves the right to reject any or all tenders of options InfoSpace determines not to be in proper form or the acceptance of which may, in the opinion of InfoSpace's counsel, be unlawful. InfoSpace also reserves the right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular options, and InfoSpace's interpretation of the terms of the Offer (including these instructions) will be final and binding on all parties. No tender of options will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as InfoSpace shall determine. Neither InfoSpace nor any other person is or will be obligated to give notice of any defects or irregularities in tenders, and no person will incur any liability for failure to give any such notice. 8. Additional Documents to Read. You should be sure to read the Offer to Exchange, all documents referenced in the Offer to Exchange, your exchange offer summary statement which you received no later than January 17, 2002, and the memorandum from Naveen Jain dated January 15, 2002 before making any decisions regarding whether to participate in, or withdraw from, the Offer. 9. Important Tax Information. You should refer to Section 17 of the Offer to Exchange, which contains important U.S. federal income tax information. 10. Miscellaneous. A. Data Privacy. By accepting the Offer, you hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, InfoSpace, Inc. or any of its affiliates for the exclusive purpose of implementing, administering and managing your participation in the Offer. You understand that InfoSpace, Inc. or any of its affiliates may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in InfoSpace, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the stock option plan and this Offer ("Data"). You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Offer, that these recipients may be located in your country, or elsewhere, and that the recipient's country may have different data privacy laws and protections than in your country. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the stock option plans and this Offer. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the stock option plans and this Offer. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting in writing your local human resources representative. You understand that withdrawal of consent may affect your ability to participate in this Offer and exercise or realize benefits from the stock option plans. B. Acknowledgement and Waiver. By accepting this Offer, you acknowledge that: (i) your acceptance of the Offer is voluntary; (ii) your acceptance of the Offer shall not create a right to further employment with your employer and shall not interfere with the ability of your employer to terminate your employment relationship at any time with or without cause subject to the provisions of local law; (iii) if you receive the New Option, it will be granted to you in your status as an employee of your employer and, in the event that InfoSpace is not your employer, the New Option grant can in no event be understood or interpreted to mean that InfoSpace is your employer or that you have an employment relationship with InfoSpace; (iv) the Offer, the Eligible Options and the New Option are outside the scope of your employment contract, if any, and are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (v) the future value of the shares underlying any New Option granted to you is unknown and cannot be predicted with certainty; (vi) if the shares underlying any New Option granted to you do not increase in value, the New Option will have no value; and (vii) no claim or entitlement to compensation or damages arises from the termination of the Eligible Options or diminution in value of the New Option or shares purchased through the exercise of the New Option, and you irrevocably release InfoSpace and any of its subsidiaries and affiliates from any such claim that may arise. Important: The Election Form (or a faxed copy of it) together with all other required documents must be received by InfoSpace on or before the Expiration Date. EX-99.(A)(5) 7 dex99a5.txt FORM OF NOTICE TO CHANGE ELECTION FORM EXHIBIT (a)(5) INFOSPACE, INC. VOLUNTARY STOCK OPTION EXCHANGE PROGRAM NOTICE TO CHANGE ELECTION FROM ACCEPT TO REJECT I previously received a copy of the Offer to Exchange, the memorandum from Naveen Jain dated January 15, 2002, my exchange offer summary statement no later than January 17, 2002, and an Election Form. I signed and returned the Election Form in which I elected to accept InfoSpace, Inc.'s ("InfoSpace") offer to exchange some or all of my options (the "Offer"). I now wish to change that election and reject the Offer. I understand that by signing this Notice and delivering it to Stock Administration, Attn: Brent Satterlee for receipt by 9:00 p.m. Pacific Time on February 15, 2002, I will be able to withdraw my acceptance of the Offer and reject the Offer instead. I understand that in order to reject the Offer, I must sign, date and deliver this notice via fax (fax # (425) 201-6185), mail or hand delivery to InfoSpace, Inc., Stock Administration, Attn: Brent Satterlee, 601 108/th/ Avenue NE, Suite 1200, Bellevue, Washington 98004 for receipt by 9:00 p.m. Pacific Time on February 15, 2002. I understand that by rejecting the Offer to exchange options, I will not receive any new options pursuant to the Offer and I will keep the options that I have. These options will continue to be governed by the stock option plan under which they were granted and by the existing option agreements between InfoSpace and me. I understand that I may change this election, and once again accept the Offer, by submitting a new Election Form to InfoSpace, Inc., Stock Administration, Attn: Brent Satterlee, 601 108/th/ Avenue NE, Suite 1200, Bellevue, Washington 98004 via fax (fax # (425) 201-6185), mail or hand delivery for receipt by 9:00 p.m. Pacific Time on February 15, 2002. I have read and followed the Instructions attached to this Notice and by signing this Notice I understand that I am bound by the additional terms and conditions set forth in the Instructions attached hereto. I have signed this Notice and printed my name exactly as it appears on the Election Form. I do not accept the Offer to exchange any options. ____________________________ ______________________________________ Employee Signature Social Security Number/Tax File Number ____________________________ ______________________________________ Employee Name (Please Print) Date and Time ____________________________ Home or Work Address RETURN TO STOCK ADMINISTRATION, ATTN: BRENT SATTERLEE NO LATER THAN 9:00 P.M. PACIFIC TIME ON FEBRUARY 15, 2002 VIA FAX AT (425) 201-6185, MAIL OR HAND DELIVERY INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Delivery of Notice to Change Election From Accept to Reject. A properly completed and executed original of this Notice to Change Election From Accept to Reject (or a faxed copy of it), and any other documents required by this Notice to Change Election From Accept to Reject, must be received by InfoSpace, Inc., Stock Administration, Attn: Brent Satterlee, 601 108/th/ Avenue NE, Suite 1200, Bellevue, Washington 98004 either via mail, hand delivery or fax (fax # (425) 201-6185) by 9:00 p.m. Pacific Time on February 15, 2002 (the "Expiration Date"). The method by which you deliver any required documents is at your option and risk, and the delivery will be deemed made only when actually received by InfoSpace at the address or fax number listed above. In all cases, you should allow sufficient time to ensure timely delivery. We intend to confirm the receipt of your Notice to Change Election From Accept to Reject within three business days prior to the expiration of the Offer; if you have not received such a confirmation of receipt, it is your responsibility to ensure that your Notice to Change Election From Accept to Reject has been received by us. Although by submitting a Notice to Change Election From Accept to Reject you have withdrawn your tendered options from the Offer, you may change your mind and re-accept the Offer until the expiration of the Offer. Tenders of options made through the Offer may be made at any time before the Expiration Date. If the Offer is extended by InfoSpace beyond that time, you may tender your options at any time until the extended expiration of the Offer. To change your mind and elect to participate in the Offer, you must deliver a new signed and dated Election Form (or a faxed copy of the Election Form) with the required information to InfoSpace, while you still have the right to participate in the Offer. Your options will not be properly tendered for purposes of the Offer unless the withdrawn options are properly re-tendered before the Expiration Date by delivery of the new Election Form following the procedures described in the Instructions to the Election Form. Although it is our intent to send you a confirmation of receipt of this Notice to Change Election From Accept to Reject, by signing this Notice to Change Election From Accept to Reject (or a faxed copy of it), you waive any right to receive any notice of the withdrawal of the tender of your options, except as provided for in the Offer to Exchange. 2. Signatures on This Notice to Change Election From Accept to Reject. If this Notice to Change Election From Accept to Reject is signed by the holder of the options, the signature must correspond with the name as written on the face of the option agreement or agreements to which the options are subject without alteration, enlargement or any change whatsoever. If your name has been legally changed since your option agreement was signed, please submit proof of the legal name change. If this Notice to Change Election From Accept to Reject is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity for the holder of the options, that person should so indicate when signing, and proper evidence satisfactory to InfoSpace of the authority of that person so to act must be submitted with this Notice to Change Election From Accept to Reject. 3. Other Information on This Notice to Change Election From Accept to Reject. In addition to signing this Notice to Change Election From Accept to Reject, you must print your name and indicate the date and time at which you signed. You must also include a home or work address and your identification number, such as your social security number or tax identification number. 4. Requests for Assistance or Additional Copies. Questions about the Offer or requests for assistance, as well as requests for additional copies of the Offer to Exchange or this Notice to Change Election From Accept to Reject should be directed to Brent Satterlee at InfoSpace's principal address, telephone number (425) 709-8008, or e-mail address eo@infospace.com. 5. Irregularities. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of this withdrawal from the Offer will be determined by InfoSpace in its sole discretion. InfoSpace's determinations shall be final and binding on all parties. InfoSpace reserves the right to reject any or all Notices to Change Election From Accept to Reject that InfoSpace determines not to be in proper form or the acceptance of which may, in the opinion of InfoSpace's counsel, be unlawful. InfoSpace also reserves the right to waive any of the conditions of the Offer and any defect or irregularity in the Notice to Change Election From Accept to Reject, and InfoSpace's interpretation of the terms of the Offer (including these instructions) will be final and binding on all parties. No Notice to Change Election From Accept to Reject will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with Notices to Change Election From Accept to Reject must be cured within the time as InfoSpace shall determine. Neither InfoSpace nor any other person is or will be obligated to give notice of any defects or irregularities in Notices to Change Election From Accept to Reject, and no person will incur any liability for failure to give any such notice. 6. Additional Documents to Read. You should be sure to read the Offer to Exchange, all documents referenced in the Offer to Exchange, your exchange offer summary statement which you received no later than January 17, 2002, and the memorandum from Naveen Jain dated January 15, 2002 before making any decisions regarding whether to participate in, or withdraw from, the Offer. 7. Important Tax Information. You should refer to Section 17 of the Offer to Exchange, which contains important U.S. federal income tax information. Important: The Notice to Change Election From Accept to Reject (or a faxed copy of it) together with all other required documents must be received by InfoSpace, on or before the Expiration Date. EX-99.(A)(6) 8 dex99a6.txt STOCK OPTION EXCHANGE OFFER EXHIBIT (a)(6) InfoSpace, Inc. ("InfoSpace" or the "Company") has distributed to employees eligible to participate in the exchange offer and has filed with the Securities and Exchange Commission (SEC) a Schedule TO (tender offer statement under the Securities Exchange Act of 1934, as amended) and related exhibits, including the Offer to Exchange, Election Form and other related documents (the Schedule TO and related exhibits will also be available without charge at the SEC website at www.sec.gov). Eligible Employees (as defined in FAQ No. 4 below) may obtain additional copies of these documents without charge by contacting the person specified in those documents. We strongly urge Eligible Employees to read all the materials carefully and understand the risks before making any decision about the program. We also strongly encourage Eligible Employees to consult their own tax and financial advisors before making any decision about the program. To the extent that any information in these Frequently Asked Questions conflicts with information contained in the Schedule TO and Exhibit (a)(1) thereto, you should rely on the information contained in the latter documents. Stock Option Exchange Offer Frequently Asked Questions EXCHANGE OFFER: 1. What is the exchange offer? The offer is for Eligible Employees to exchange Eligible Options for new stock options with strike prices equal to InfoSpace common stock's closing Fair Market Value on the Exchange Option Anticipated Grant Date. "Eligible Options" are outstanding unexercised options (whether or not vested) from any active InfoSpace-administered stock option plan with a per share exercise price equal to or greater than $10.00. The "Exchange Option Anticipated Grant Date" is expected to be on the first trading day that is six months and a day from the date the Eligible Options are cancelled (the "Cancellation Date"). The Cancellation Date is the first trading day following the end of the exchange offer. The exchange allows participating Eligible Employees to receive one (1) non-qualified option share for every ten (10) Eligible Option shares surrendered. All new options will be non-qualified stock options even if the Eligible Options are incentive stock options. In order to participate, an Eligible Employee must tender all Eligible Options held; partial tenders will not be accepted. Eligible Employees may also be eligible for a compensatory grant of options in conjunction with the exchange. See Questions 29 & 30 for more information on compensatory option grants. 2. Why is InfoSpace making the exchange offer to employees? The Company's Board of Directors has authorized this exchange offer in order to provide our Eligible Employees an incentive for their continued efforts and dedication. As a Company we are committed to employee ownership because it helps us attract and retain the best and brightest employees. In addition, many of our outstanding options have exercise prices that are significantly higher than the current market price of our common stock. The exchange offer may allow us to offer a more compelling equity incentive while decreasing the number of fully diluted shares outstanding. 3. How does this exchange offer differ from the previous one? There are several significant differences, including: 1. You are able to retain any options that you may have been granted related to the February 2001 grants. 2. You will receive new options for the options you turn in rather than restricted stock. These new options will have a new strike price that is expected to be set on the first trading day that is six months and a day from the Cancellation Date. 3. The vesting schedule for these new options will be 25% vested upon grant and then monthly thereafter over a three-year period. 4. There is no pre-determined participation threshold that must be met. ELIGIBILITY: 4. Who is eligible to participate in the offer? In order to qualify as an "Eligible Employee" you must meet all of the following criteria: 1. Be a full-time (40 hours or more per week) U.S.-based employee of InfoSpace, Inc. or a U.S. subsidiary of InfoSpace working in the U.S and be paid through the U.S. payroll; 2. Have been hired on or before August 1, 2001; 3. Be employed by InfoSpace on the date this offer is made and remain employed as of the date the tendered options are accepted for exchange by the Company and the date the new stock options are granted; and 4. Hold one or more unexercised Eligible Options. 5. Who is not eligible to participate? The following individuals are not eligible to participate: 1. Non U.S.-based InfoSpace employees and non-U.S. based employees of any InfoSpace subsidiary; 2. Employees hired after August 1, 2001; 3. Employees employed by InfoSpace or a U.S. subsidiary of InfoSpace but paid though payroll outside of the U.S.; 4. Members of the Board of Directors who are not employees; 5. Section 16 Officers; 6. Consultants or contractors; 7. Employees who have received an option grant with an exercise price less than $10.00 granted under any InfoSpace-administered option plan in the last six months before the beginning of the exchange offer; and 8. Any other individual not described as an "Eligible Employee" above. 6. If I'm on an approved leave of absence during the election period can I still participate? Yes. Forms will be sent to all Eligible Employees that are currently on an approved leave of absence. Vesting of the new options will be subject to the terms and conditions outlined in the exchange offer, the stock option plan and your option agreement. 7. If I choose not to participate in the exchange offer, will the Company make another offering in the future? The Company has no present plans to make another option exchange program available in the future. 8. Will Eligible Employees still receive an annual option grant? The Company has no present plans to engage in any other broad-based or Company-wide option grant program in 2002 in connection with performance reviews or otherwise. 2 OFFER DETAILS: 9. What are the important dates associated with this offer? 1. Beginning of exchange offer: January 15, 2002 2. Election period: January 15, 2002-February 15, 2002 3. Expiration of exchange offer: February 15, 2002 at 9:00 p.m. PST 4. Deadline for receipt of forms: February 15, 2002 at 9:00 p.m. PST 5. Cancellation Date: February 19, 2002 6. Exchange Option Anticipated Grant Date: August 20, 2002 7. Anticipated Date of Option Pricing: August 20, 2002
The Exchange Option Anticipated Grant Date is expected to be on the first trading day that is six months and a day from the cancellation date. The Anticipated Date of Option Pricing is expected to be the same day as the Exchange Option Anticipated Grant Date. Please be aware that although we do not currently intend to do so, we may, in our discretion, extend the exchange offer period. If we extend the exchange offer period, the dates above are subject to change. 10. What forms do I have to turn in and to whom do I give them? Your Election Form must be received by Brent Satterlee in the Bellevue office no later than 9:00 p.m. PST on the date the offer expires. Election forms received after this deadline will not be processed and you will not be able to participate in the offer. If you hold any original Option Agreements, you should turn in the agreements along with your Election Form. You may fax your election forms to Brent at 425.201.6185 and mail your Option Agreements to his attention at: 601 108/th/ Ave., Suite 1200, Bellevue, WA 98004. The delivery of all documents, including election forms, is at your own risk. In all cases, you should allow sufficient time to ensure timely delivery. 11. Will I receive a confirmation that the election form has been received in advance of the cutoff? Yes. We will send out an e-mail three business days prior to the expiration of the offer to your e-mail address of record to confirm whether your election form has been received or alerting you that it has not yet been received. We will send a final confirmation e-mail following the expiration of the offer to confirm what remaining forms were received. However, we are under no obligation to send out these emails and these e-mails do not constitute an acceptance of the options for exchange. 12. How do I properly tender my Eligible Options? You must complete and turn in your Election Form and any original Option Agreements for Eligible Options to Brent Satterlee by the deadline of 9:00 p.m., Pacific Standard Time, on February 15, 2002. You must turn in a form regardless of whether or not you intend to participate in the offer. You may mail or hand deliver your Election Form to Brent's attention at 601 108/th/ Avenue N.E., Suite 1200, Bellevue, Washington 98004. If you do not deliver your Election Form to us, or it is not received by the deadline, you will not be able to participate in the exchange and will be deemed to have rejected this Offer. 13. If I choose to surrender my options, and properly tender them, must the Company accept the offer? No. The Company will make its decision based on whether all of the conditions to the offer (all as described more fully in the Offer to Exchange) have been met. There is no pre-determined participation threshold that must be met so we may accept or reject the offer regardless of the number of options tendered. 14. When will the Company announce the decision to accept or reject the exchange offers? Upon expiration of the offer (expected to be February 15, 2002 at 9:00 p.m. PST) the Company will announce whether it intends to accept or reject all offers to exchange properly tendered Eligible Options. 3 15. What happens to the options I've agreed to exchange if the Company rejects the exchange offer? If the Company rejects the options tendered for exchange you will retain all of your current options. The options will retain their current exercise prices and vesting schedule until you exercise them or they expire by their terms. 16. What happens to my options if I do not participate in the offer? If you do not participate in the offer you will keep all of your current options, and you will not receive any new options in association with this Offer to Exchange. Your options will retain their current exercise prices and vesting schedule until you exercise them or they expire by their terms. Please note that the Company does not anticipate granting any options related to performance reviews before the 2003 calendar year. 17. Can I keep my vested options that are at or above $10.00 per share and just trade in my unvested options? No. While you may, of course, exercise any vested options that you hold prior to the time you tender your Eligible Options during the offering period, all Eligible Options, including any unexercised vested options and all unvested options, must be surrendered by an Eligible Employee in order to participate. 18. If after the 10:1 exchange there is a fractional amount left over - how will this be treated? All fractional amounts will be rounded up. For example: assume that you tender Eligible Options collectively covering 3,725 shares. 3,725 option shares divided by 10 equals 372.5. The new option grant would be rounded up to 373. 19. Do I have to return an election form if I do not want to participate in the exchange? Yes. All Eligible Employees must return an election form by the deadline whether they choose to participate in the offer or not. If you do not deliver your Election Form to us, you will be deemed to have rejected the offer. 20. Can I withdraw my previously tendered options? Yes. You may withdraw your tendered options at any time before the expiration of the offer. Once you have withdrawn your options, you may re-tender them by completing and returning a new election form before the expiration of the offer. To withdraw your tendered options, you must deliver a Notice to Change Election From Accept to Reject Form to Brent Satterlee in the Bellevue office no later than 9:00 p.m. PST on February 15, 2002, the date the offer expires. STOCK OPTION GRANT 21. When will I receive my stock option agreement? If the Company accepts all offers to exchange properly tendered Eligible Options, then (i) we will promptly cancel the Eligible Options tendered for exchange, (ii) issue to you a Promise to Grant Stock Option, by which we will commit to grant new stock option(s) to you on the first trading day that is six months and a day from the Cancellation Date, and (iii) your stock option agreement as soon as practicable after the grant date. 22. What choice do I have in selecting a broker for exercising my options? InfoSpace employees may choose between E*Trade (OptionsLink), Paine Webber, Charles Schwab, and JP Morgan H&Q. You can obtain information, contact numbers, and fees for all four brokerage firms by contacting stock@infospace.com. 23. When will my option grant be priced? We expect that your options will be priced when they are granted, which is expected to be on the first trading day that is six months and a day from the Cancellation Date. 4 25. When will my option grant be viewable in OptionsLink? We expect that your options will be viewable in OptionsLink within 3-4 days of the grant/pricing date. STOCK OPTION VESTING 26. What will be the vesting schedule for the new stock options? The shares will be 25% vested on the option grant date and then vest monthly thereafter over a three-year period. The shares will vest subject to your continued active full-time employment through each such vesting date and the terms and conditions of the plan and your option agreement. 27. What happens if I participate in the Offer to Exchange and then take an approved leave of absence? Your vesting would be suspended for the unpaid portion of your leave just like it would with any other InfoSpace option grant. 28. What happens if I participate in the exchange and then separate from employment with InfoSpace? If your employment terminates for any reason before the grant is made you will not receive any new options. Consequently, if you are planning to terminate your employment before the grant date, you should not participate in the exchange offer. If your employment terminates for any reason (other than death or disability) after the grant is made you will have either 10 days or three months to exercise any vested options, depending on whether you were terminated for cause or not, in accordance with your stock option agreement. Unvested options would be forfeited. COMPENSATORY OPTION GRANT 29. What are compensatory grants? Compensatory option grants are discretionary grants that the Board of Directors, in its sole discretion has decided to grant to certain employees who participate in the offer. The number of options granted (if any) will vary among employees. You will be notified of your proposed compensatory grant no later than Thursday, January 17. If you accept the offer and InfoSpace accepts the tendered shares for exchange, you will receive any compensatory grant that was communicated to you on the same option grant date as the exchange options subject to your remaining an Eligible Employee on the date the compensatory option is granted. 30. If I am eligible to participate in the exchange offer and don't, will I be eligible to receive a compensatory option grant? No. You must participate in the exchange offer in order to be eligible to receive a compensatory option grant. ADDITIONAL INFORMATION SOURCES: 31. How do I decide if it makes sense for me to participate? Each Eligible Employee needs to evaluate his/her situation and consult his/her personal tax advisor, lawyer, or financial planner, to determine the tax, financial, and legal implications of this offer on his/her personal situation. We recommend that you evaluate current market quotes for our common stock, among other factors, before deciding whether or not to participate in the exchange offer. 32. If I have specific questions where should I direct them? All questions should be directed to eo@infospace.com or 425.709.8008. The Company will attempt to respond to all inquiries. If necessary, an additional FAQ will be created. 5 EX-99.(A)(7) 9 dex99a7.txt FORM OF E-MAIL REMINDER TO EMPLOYEES EXHIBIT (a)(7) InfoSpace, Inc. Form of E-Mail Reminder to Employees Dear _____________: This notice relates to InfoSpace's recent offer to exchange (the "Offer") certain outstanding options with an exercise price of $10.00 or more per share (the "Options") for new options which InfoSpace will issue under its Restated 1996 Flexible Stock Incentive Plan. The Offer will expire at 9:00 p.m., Pacific ------------------------------------------- Time, on February 15, 2002 (the "Expiration Time"). - -------------------------- [The following relates to employees who have tendered options] [We have received your Election Form advising us that you wish to participate in the Offer. Please note that you may still withdraw your tendered options in accordance with the terms of the Offer by delivering a Notice to Change Election From Accept to Reject at any time before the Expiration Time. This notice does not constitute an acceptance of your options for exchange. You will be notified as to whether we have accepted all properly tendered options for exchange after the Expiration Time.] [The following relates to employees who have returned an Election Form declining to tender options] [We have received your Election Form, in which you indicate that you are declining to tender options pursuant to the Offer. Please be advised that you may still decide to participate by delivering a new Election Form to Brent Satterlee, by fax at (425) 201-6185, mail or hand delivery, at any time before the Expiration Time.] [The following relates to employees who have not returned an Election Form] [We have not received your Election Form responding to the Offer. Whether you accept the Offer or not, please complete and deliver the Election Form to Brent Satterlee, by fax at (425) 201-6185, mail or hand delivery, before the Expiration Time.] [The following relates to employees who have returned a Notice to Change Election From Accept to Reject] [We have received your Notice to Change Election From Accept to Reject, in which you indicate that you have withdrawn any options that you previously tendered pursuant to an Election Form. Please be advised that you may still decide to participate by delivering a new Election Form to Brent Satterlee, by fax at (425) 201-6185, mail or hand delivery before the Expiration Time.] If you have any questions about the Offer, please send an e-mail to eo@infospace.com or call (425) 709-8008. - ---------------- EX-99.(A)(8) 10 dex99a8.txt FORM OF PROMISE TO GRANT STOCK OPTION EXHIBIT (a)(8) INFOSPACE, INC. VOLUNTARY STOCK OPTION EXCHANGE PROGRAM PROMISE TO GRANT STOCK OPTION Dear: On behalf of InfoSpace, Inc. (the "InfoSpace"), I am writing to you regarding InfoSpace's recent offer to exchange (the "Offer") certain outstanding options with an exercise price of $10.00 or more per share for a new option or options which InfoSpace will issue under its Restated 1996 Flexible Stock Incentive Plan. The Offer expired at 9:00 p.m., Pacific Time, on February 15, 2002. Promptly following the expiration of the Offer and pursuant to the terms and conditions of the Offer, InfoSpace accepted for exchange options to purchase a total of shares of common stock and cancelled all such options. [The following relates to employees who will receive an Exchange Option and a Compensatory Option in exchange for their Eligible Options: In accordance with the terms of the Offer, InfoSpace hereby promises to grant you a nonstatutory stock option to purchase shares of common stock (the "Exchange Option") and (ii) a nonstatutory stock option to purchase shares of common stock (the "Compensatory Option") on August 20, 2002. InfoSpace has agreed to grant you the Exchange Option and the Compensatory Option (each individually, the "New Option") in exchange for a stock option (or stock options) to purchase an aggregate of shares of InfoSpace common stock (the "Old Option") that you tendered to InfoSpace for cancellation pursuant to the terms of the Offer. InfoSpace cancelled your Old Option on February 19, 2002.] [The following relates to employees who will receive only an Exchange Option in exchange for their Eligible Options: In accordance with the terms of the Offer, InfoSpace hereby promises to grant you a nonstatutory stock option to purchase shares of common stock (the "New Option") on August 20, 2002. InfoSpace has agreed to grant you the New Option in exchange for a stock option (or stock options) to purchase an aggregate of shares of InfoSpace common stock (the "Old Option") that you tendered to InfoSpace for cancellation pursuant to the terms of the Offer. InfoSpace cancelled your Old Option on February 19, 2002.] The exercise price of the New Option will be the closing price of InfoSpace's common stock on the date of the grant, as listed on the Nasdaq National Market. The New Option will vest as follows: 25% of the shares subject to the New Option will be vested on the date of the grant and the remaining 75% of the shares will vest in equal monthly installments over a 3-year period beginning on the date that is one month after the date that the New Option is granted, subject to your continued active full-time employment through each such vesting date. The New Option will otherwise be subject to the standard terms and conditions of InfoSpace's Restated 1996 Flexible Stock Incentive Plan and a new option agreement between InfoSpace and you. In order to receive the New Option, you must be an eligible employee of InfoSpace or one of its subsidiaries on the date the New Option is granted. This Promise to Grant Stock Option does not constitute a guarantee of employment with InfoSpace or any of its subsidiaries for any period. Your employment with InfoSpace or any of our subsidiaries remains "at-will" and can be terminated by either you or InfoSpace at any time, with or without cause or notice. If you voluntarily terminate your employment with InfoSpace or any of our subsidiaries or if your employment is terminated by InfoSpace or any of our subsidiaries for any reason whatsoever before the New Option is granted, you will lose all rights you have to receive the New Option. This Promise to Grant Stock Option is subject to the terms and conditions of the Offer to Exchange dated January 15, 2002, the memorandum from Naveen Jain dated January 15, 2002, your exchange offer summary statement which was delivered to you no later than January 17, 2002, and the Election Form previously completed and submitted by you to InfoSpace, all of which are incorporated herein by reference. These documents reflect the entire agreement between you and InfoSpace with respect to this transaction. This Promise to Grant Stock Option may only be amended by means of a writing signed by you and a duly authorized officer of InfoSpace. INFOSPACE, INC. By: _________________________________ Date: _______________________, _________ 2 EX-99.(A)(9) 11 dex99a9.txt POWER POINT PRESENTATION OF OFFER TO EXCHANGE EXHIBIT (a)(9) Offer to Exchange InfoSpace, Inc. January 2002 1 Background / Introduction 2 "Safe Harbor" Comments made during this presentation are subject to the written terms of the Offer to Exchange, the stock option agreement and the stock plans of the Company. 3 What is the Offer to Exchange? Eligible Employees may exchange Eligible Options for new non-qualified stock options granted in 6 months + 1 day following the date the Eligible Options are cancelled. Exchange ratio is one option for every ten Eligible Option shares surrendered. Eligible employees are also eligible to receive a Compensatory Grant 4 What's different from the last Offer to Exchange? Employees retain their February 2001 options Employees receive options in exchange rather than restricted stock 25% of the Exchange Options will be vested upon grant; the remainder vest monthly over a three-year period No pre-determined participation threshold 5 Who are Eligible Employees? Full-time U.S.-based employees of InfoSpace, Inc. or a U.S. subsidiary of InfoSpace Employees employed on or before August 1, 2001 and remain employed until the Exchange Options are granted (expected to be the first trading day following six months and a day from the date the Eligible Options are cancelled) Employees with outstanding unexercised Eligible Options that have not received an option *$10/share in the 6 months before the commencement of the offer * less than 6 What are Eligible Options? Outstanding unexercised options (vested or not) with strike prices * $10 * more than or equal to 7 Exchange Example Post- Pre-Exchange Exchange Grant Strike Outstanding Exchange Outstanding Dates Price Options Options Options - -------------------------------------------------------------------------------- Unaffected 7/24/1998 $1.0000 1,000 1,000 * 2/6/2001 $3.6500 2,000 2,000 * - -------------------------------------------------------------------------------- - ------------------------------------ Eligible 4/17/2000 $45.4375 500 50 50 Options 9/18/2000 $35.1250 250 25 25 - ------------------------------------ ------------ -------- ----------- 3,750 75 3,075 * The options with a strike price below $10.00 are not eligible for he exchange. 8 How Does the Exchange Work? Each Eligible Employee must elect whether or not to participate The Company must decide to accept all of the tendered options (no pre-determined participation threshold) If accepted, new options will be granted on the first trading day that is six months and a day from the Cancellation Date of the exchange offer Exchange Options are expected to be priced at the close of market on the date of grant 9 Vesting Overview Options will be 25% vested upon grant (expected to be the first trading day following six months and a day from the date the Eligible Options are cancelled) Thereafter, options received for options exchanged will vest monthly over three years 10 Exercising the Vested Options On the first trading day following each vesting date, you may exercise your vested options, and the resulting shares or cash will be deposited to your brokerage account. Your trading, as always, is subject to the insider trading policy of the Company and the securities laws. 11 How do I make the decision? Each Eligible Employee needs to evaluate his/her situation - - Consult your professional tax, legal, and/or financial advisor(s) to determine the implications of this offer on your personal situation. Keep in mind that if you are eligible and choose not to participate, you are not eligible for a compensatory grant. 12 How do I participate? Give Brent Satterlee before 9:00 p.m. PST February 15, 2002: An Election Form REGARDLESS of whether you choose to participate or not Any original stock option agreements for any Eligible Option Grants * $10 * more than or equal to 13 Sources of Information Visit The Bridge Send questions via email to eo@infospace.com ---------------- 14 Questions? 15 EX-99.(D)(1) 12 dex99d1.txt FORM OF RESTATED 1996 FLEXIBLE STOCK PLAN EXHIBIT (d)(1) INFOSPACE, INC. RESTATED 1996 FLEXIBLE STOCK INCENTIVE PLAN NONQUALIFIED STOCK OPTION LETTER AGREEMENT TO: ________________ ("Optionee"). This Agreement is made as of ________________ , 200_. We are pleased to inform you that you have been selected by the Company to receive a stock option (the "Option") to purchase shares (the "Option Shares") of the Company's Common Stock under the Company's Restated 1996 Flexible Stock Incentive Plan (the "Plan"). The terms of the Option are as set forth in this Agreement and in the Plan. The Plan is incorporated by reference into this Agreement, which means that this Agreement is limited by and subject to the express terms and provisions of the Plan. Capitalized terms that are not defined in this Agreement have the meanings given to them in the Plan. The most important terms of the Option are summarized as follows: 1. Grant Date: 2. Number of Shares: 3. Exercise Price: $_____ per share 4. Expiration Date: 5. Vesting Commencement Date: 6. Type of Option: Nonqualified stock option ("NSO") 7. The Option shall vest as follows: 25% of the Number of Shares vests on the Grant Date. The remaining 75% of the Number of Shares vests on the __________ day of each month hereafter until __________, subject to the provisions below. 8. Exercisability: Any portion of the option that is not exercised shall accumulate and may be exercised at any time during the Option Period prior to the Termination Date. No partial exercise of this option may be for less than 5% of the total number of shares of Stock then available under this option. In no event shall the Company be required to issue fractional shares. 9. Termination of Option: The unvested portion of the Option will terminate automatically and without further notice immediately upon termination (voluntary or involuntary) of your employment or service relationship with the Company. The vested portion of the Option will terminate automatically and without further notice on the earliest of the dates set forth below: (a) three months after termination of your employment or service relationship with the Company for any reason other than disability (as defined below) or death; (b) one year after termination of your employment or service relationship with the Company by reason of disability or death; (c) ten days after termination of your employment with the Company for cause (as defined below); or (d) the Expiration Date. It is your responsibility to be aware of the date your option terminates. The term "disability" means a mental or physical impairment that is expected to result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes you to be unable, in the opinion of the Company, to perform your duties for the Company or an Affiliate and to be engaged in any substantial gainful activity. The term "cause" means dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as determined by the Plan Administrator, and its determination will be conclusive and binding. 10. Leave of Absence: The effect of a Company-approved leave of absence on the terms and conditions of the Option will be determined by the Plan Administrator and subject to applicable laws. Unless otherwise provided by the Plan Administrator, options will cease vesting during the time an optionee is on a leave of absence, and such vesting will not resume until that date that the optionee returns to work. 11. Method of Exercise: You may exercise the Option by giving written notice to the Company, in form and substance satisfactory to the Company, which will state the election to exercise the Option and the number of shares of Common Stock for which you are exercising the Option. The written notice must be accompanied by full payment of the exercise price for the number of shares of Common Stock you are purchasing. 12. Form of Payment: You may pay the Option exercise price, in whole or in part, in cash, by check or, unless the Plan Administrator determines otherwise, by (a) delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds necessary to pay the exercise price, or (b) such other consideration as the Plan Administrator may permit. 13. Withholding Taxes: As a condition to the exercise of any portion of the Option that is treated as a nonqualified stock option, you must make such arrangements as the Company may require for the satisfaction of any federal, state or local withholding tax obligations that may arise in connection with such exercise. The Company has the right to retain without notice sufficient shares of Common Stock to satisfy the withholding obligation. Unless the Plan Administrator determines otherwise, you may satisfy the withholding obligation by electing to have the Company withhold from the shares to be issued upon exercise that number of shares having a fair market value equal to the amount required to be withheld. 14. Limited Transferability: During your lifetime only you can exercise the Option. The Option is not transferable except by will or by the applicable laws of descent and distribution. The Plan provides for exercise of the Option by the personal representative of your estate or the beneficiary thereof following your death. 15. Registration: At the present time, the Company has an effective registration statement with respect to the Option Shares. The Company intends to maintain this registration but has no obligation to do so. In the event that such registration is no longer effective, you will not be able to exercise the Option unless exemptions from registration under federal and state securities laws are available; such exemptions from registration are very limited and might be unavailable. 16. Successors: This Agreement will inure to the benefit of the successors and assigns of the Company and be binding upon you and your heirs, executors, administrators, successors and assigns. 2 17. No Stockholder Rights: Neither Optionee nor any person entitled to exercise Optionee's rights in the event of his death shall have any of the rights of a stockholder with respect to the shares of Stock subject to this option except to the extent the certificates for such shares shall have been issued upon the exercise of this option. 18. Notice: Any notice required to be given under the terms of this Agreement shall be addressed to the Company in care of its Secretary at the Office of the Company, 601--108/th /Ave. NE, Suite 1200, Bellevue, WA 98004 and any notice to be given to Optionee shall be addressed to Optionee at the address given beneath Optionee's signature to this Agreement, or such other address as either part to this Agreement may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, registered or certified and deposited (postage or registration or certification fee prepaid) in a post office or branch post office regularly maintained by the United States. 19. Plan Administrator Decisions Conclusive: All decisions of the Plan Administrator upon any questions arising under the Plan or under this Agreement shall be conclusive. 20. Washington Law: The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Washington. IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement as of the day and year first above written. Optionee hereby accepts the nonqualified stock option described above and acknowledges receipt of a copy of this Agreement and the Plan. Please execute the following Acceptance and Acknowledgment and return it to the undersigned. Very truly yours, INFOSPACE, INC. By: Naveen Jain Naveen Jain Chairman 3 ACCEPTANCE AND ACKNOWLEDGMENT I, ______________, a resident of the state/province of ______________, accept the nonqualified stock option described in this Agreement and in the Plan, and acknowledge receipt of a copy of this Agreement and a copy of the Plan. I have read and understand the Plan. Dated: ____________________ _________________________________ ___________________________________ SSN or Taxpayer I.D. Number Signature of Optionee Address____________________________ ___________________________________ ___________________________________ Home Phone Number (____) __________ 4 -----END PRIVACY-ENHANCED MESSAGE-----