<PAGE>
As filed with the Securities and Exchange
Commission on March 30, 1998 Registration No. 333-_______
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
EARTHLINK NETWORK, INC.
(Exact name of issuer as specified in its charter)
Delaware 95-4481766
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3100 New Park Drive
Suite 210
Pasadena, California 91107
(Address of principal executive offices)
___________________
EARTHLINK NETWORK, INC.
1995 STOCK OPTION PLAN
(Full title of the plan)
___________________
Kirsten L. Hansen
Secretary and Director of Legal Affairs
3100 New York Drive
Suite 210
Pasadena, California 91107
(626) 296-2400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per share(1) offering price(1) registration fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 350,000 55.625 $19,468,750 $5,743.28
par value............ shares
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- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
This amount was calculated pursuant to Rule 457(c) on the basis of $55.625
per share, which was the average of the high and low prices of the
Registrant's Common Stock on March 26, 1998, as reported on the Nasdaq
National Market.
<PAGE>
Explanation Statement
This Registration Statement on Form S-8 is being filed pursuant to
General Instruction E of Form S-8 to register additional shares ("Shares") of
EarthLink Network, Inc. (the "Company") common stock, $.01 par value per
share ("Common Stock") under the 1995 Stock Option Plan (the "Plan"). The
Company registered an aggregate of 1,500,000 Shares under the Plan pursuant
to a Registration Statement on Form S-8 filed by the Company under
Registration Number 333-22317 (the "Original Registration Statement"), the
contents of which are incorporated herein by reference. The Original
Registration Statement registered 250,000 Shares more than the 1,250,000
Shares originally subject to the Plan. An amendment to increase the number
of Shares under the Plan by 600,000, from 1,250,000 to 1,850,000 Shares, was
approved at a Special Meeting of the Stockholders of the Company held
February 19, 1998. This Registration Statement on Form S-8 is being filed to
register the additional 350,000 Shares under the Plan which have not been
registered to date.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Not required to be filed with the Securities and Exchange Commission
(the "Commission").
Item 2. Registrant Information and Employee Plan Annual Information.
Not required to be filed with the Commission.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, filed by the Company with the Commission are
incorporated herein by reference and made a part hereof:
(i) The Company's Annual Report on Form 10-K for the year
ended December 31, 1997;
(ii) The Company's Current Report on Form 8-K, dated
February 17, 1998;
(iii) The description of the Company's Common Stock,
$.01 par value per share, contained in the Company's
Registration Statement on Form 8-A filed on January 9,
1997 (Registration No. 000-20799).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in the Registration Statement and to be part hereof from the date
of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document that is
incorporated by reference herein modifies or supersedes such earlier
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Registration Statement.
II-1
<PAGE>
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Under Section 145 of the General Corporation Law of the State of
Delaware, as amended, the Registrant has the power to indemnify directors and
officers under certain prescribed circumstances and subject to certain
limitations against certain costs and expenses, including attorneys' fees
actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to
which any of them is a party by reason of his or her being a director or
officer of the Registrant if it is determined that he acted in accordance
with the applicable standard of conduct set forth in such statutory provision.
Article XII of the Registrant's By-laws generally permits
indemnification of directors and officers to the fullest extent authorized by
the General Corporation Law of the State of Delaware. In addition, the
Company maintains customary directors' and officers' liability insurance.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed with or incorporated by reference into
this Registration Statement pursuant to Item 601 of Regulation S-K:
Exhibit No. Description
- ---------- -----------
4.1 Amended and Restated Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.1 of the Registrant's
Registration Statement on Form S-1, Reg. No. 333-15871).
4.2 Bylaws (incorporated herein by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-1, Reg. No.
333-15871).
4.3 Specimen Stock Certificate (incorporated herein by reference to
Exhibit 4.2 of the Registrant's Registration Statement on Form
S-1, Reg. No. 333-15871).
4.4 EarthLink Network, Inc. 1995 Stock Option Plan
5 Opinion of counsel with respect to the securities being
registered.
23.1 Consent of counsel (included in Exhibit 5).
23.2 Consent of Price Waterhouse LLP, independent accountants.
24 Power of Attorney (see signature pages to this Registration
Statement).
II-2
<PAGE>
Item 9. Undertakings.
(a) The Company hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high and of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent
change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act,
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Pasadena, California on this 26th day of March, 1998.
EARTHLINK NETWORK, INC.
By: /s/ Charles G. Betty
----------------------------------
Charles G. Betty
President, Chief Executive
Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Charles G. Betty and Grayson
Hoberg as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto each of said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing required or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or their substitutes, could lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below on March 26, 1998 by the following persons in
the capacities indicated.
/s/ Charles G. Betty
- ---------------------------------- President, Chief Executive Officer and
Charles G. Betty Director (principal executive officer)
/s/ Grayson L. Hoberg
- ---------------------------------- Vice President, Finance and Chief
Grayson L. Hoberg Financial Officer (principal financial
and accounting officer)
/s/ Sky D. Dayton
- ---------------------------------- Director
Sky D. Dayton
/s/ Sidney Azeez
- ---------------------------------- Director
Sidney Azeez
/s/ Robert M. Kavner
- ---------------------------------- Director
Robert M. Kavner
/s/ Linwood A. Lacy, Jr.
- ---------------------------------- Director
Linwood A. Lacy, Jr.
II-4
<PAGE>
/s/ Paul McNulty
- ---------------------------------- Director
Paul McNulty
/s/ Kevin M. O'Donnell
- ---------------------------------- Director
Kevin M. O'Donnell
/s/ John W. Sidgmore
- ---------------------------------- Director
John W. Sidgmore
/s/ Reed E. Slatkin
- ---------------------------------- Director
Reed E. Slatkin
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
4.1 Amended and Restated Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.1 of the Registrant's
Registration Statement on Form S-1, Reg. No. 333-15871).
4.2 Bylaws (incorporated herein by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-1, Reg. No.
333-15871).
4.3 Specimen Stock Certificate (incorporated herein by reference to
Exhibit 4.2 of the Registrant's Registration Statement on Form
S-1, Reg. No. 333-15871).
4.4 EarthLink Network, Inc. 1995 Stock Option Plan
5 Opinion of counsel with respect to the securities being
registered.
23.1 Consent of counsel (included in Exhibit 5).
23.2 Consent of Price Waterhouse LLP, independent accountants.
24 Power of Attorney (see signature pages to this Registration
Statement).
I
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EXHIBIT 4.4
EARTHLINK NETWORK, INC.
1995 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 1995 Stock Option Plan
are to attract and retain the best available personnel, to provide additional
incentive to the Employees of the Company and its Subsidiaries, to promote
the success of the Company's business and to enable the Employees to share in
the growth and prosperity of the Company by providing them with an
opportunity to purchase stock in the Company.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected
in the terms of the written stock option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Affiliate" shall mean any entity that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the Company.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. References in the Plan to any section of the Code
shall be deemed to include any amendment or successor provisions to such
section and any regulations issued under such section.
(d) "Common Stock" shall mean the Common Stock of the Company.
(e) "Company" shall mean EarthLink Network, Inc., a California
corporation.
(f) "Committee" shall mean the Committee appointed by the Board
in accordance with Section 4(a) of the Plan, if one is appointed.
(g) "Continuous Employment" or "Continuous Status As An
Employee" shall mean the absence of any interruption or termination of
employment or service as an Employee by or to the Company or any Parent or
Subsidiary of the Company which now exists or is hereafter organized or
acquired by or acquires the Company. Continuous Employment shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Board or in the case of transfers between
locations of the Company or between the Company, its Parent, or any of its
Subsidiaries or its successors.
(h) "Disability" shall mean the inability of the Optionee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or has lasted or can be expected to last for a continuous period of not
less than 12 months. In determining the Disability of an Optionee, the Board
may require the Optionee to furnish proof of the existence of Disability and
may select a physician to examine the Optionee. The final determination as
to the Disability of the Optionee shall be made by the Board.
(i) "Disinterested Person" shall mean an administrator of the
Plan who, during the one year prior to service as an administrator of the
Plan, has not been granted or awarded and, during such service, is not
granted or awarded stock, stock options or stock appreciation rights pursuant
to the Plan or any other plan of the Company or any of its Affiliates
entitling the participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any Affiliates, except for any plan
under which the award of stock, stock options or stock appreciation rights is
not subject to the discretion of any person or persons. The term
"Disinterested Person" shall be interpreted in a manner consistent with the
meaning of such term under Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act.
(j) "Employee" shall mean any person, including officers and
directors, employed by the
1
<PAGE>
Company, its Parent, any of its Subsidiaries or its successors. A person
shall not be deemed to be employed by the Company merely because such person
is a member of the Board of Directors of the Company or a consultant to the
Company.
(k) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(l) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(m) "Nonstatutory Stock Option" shall mean an Option which is
not an Incentive Stock Option.
(n) "Option" shall mean a stock option granted pursuant to the
Plan evidencing the grant of a right to an Employee pursuant to the Plan to
purchase a specified number of Shares at a specified exercise price.
(o) "Option Agreement" shall mean a written agreement
substantially in one of the forms attached hereto as Exhibit A, or such other
form or forms as the Board (subject to the terms and conditions of this Plan)
may from time to time approve, evidencing and reflecting the terms of an
Option.
(p) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(q) "Optionee" shall mean an Employee who is granted an Option.
(r) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as deemed in Sections 424(e) and (g) of the Code.
(s) "Plan" shall mean this 1995 Stock Option Plan.
(t) "Share" or "Shares" shall mean shares of the Common Stock,
as adjusted in accordance with Section 10 of the Plan.
(u) "Stock Purchase Agreement" shall mean an agreement
substantially in the form attached hereto as Exhibit B, or such other form or
forms as the Board (subject to the terms and conditions of this Plan) may
from time to time approve, which is to be executed as a condition of
purchasing Optioned Stock upon exercise of an Option.
(v) "Subsidiary" shall mean a subsidiary corporation, whether
now or hereafter existing, as defined in Sections 424(f) and (g) of the Code.
(w) "Termination for Cause" shall mean termination of employment
as a result of (i) any act or acts by the Optionee constituting a felony
under any federal, state or local law; (ii) the Optionee's willful and
continued failure to perform the duties assigned to him or her as an
Employee; (iii) any material breach by the Optionee of any agreement with the
Company concerning his or her employment or other understanding concerning
the terms and conditions of employment by the Company; (iv) dishonesty, gross
negligence or malfeasance by the Optionee in the performance of his or her
duties as an Employee or any conduct by the Optionee which involves a
material conflict of interest with any business of the Company or Affiliate;
or (v) the Optionee's taking or knowingly omitting to take any other action
or actions in the performance of Optionee's duties as an Employee without
informing appropriate members of management to whom such Optionee reports,
which action or actions, in the determination of the Board, have caused or
substantially contributed to the material deterioration in the business or
financial condition of the Company or any Affiliate, taken as a whole.
3. Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold pursuant to the exercise of Options under the Plan is 1,850,000 Shares.
The Shares may be authorized, but unissued or reacquired Shares.
If an Option should expire or become unexercisable for any reason
without having been exercised in full or if the Company repurchases Shares
from the Optionee pursuant to the terms of a Stock Purchase Agreement, the
2
<PAGE>
unpurchased or repurchased Shares, respectively, which were subject thereto
shall, unless the Plan shall have been terminated, return to the Plan and
become available for other Options under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by the Board.
Members of the Board who are eligible for Options or have been granted
Options may vote on any matters affecting the administration of the Plan or
the grant of any Options pursuant to the Plan, except that no such member
shall act upon the granting of an Option to himself or herself, but any such
member may be counted in determining the existence of a quorum at any meeting
of the Board or Committee during which action is taken with respect to the
granting of Options to him or her.
The Board may at any time appoint a Committee consisting of not
less than two persons to administer the Plan on behalf of the Board, subject
to such terms and conditions as the Board may prescribe. Members of the
Committee shall serve for such period of time as the Board may determine.
From time to time the Board may increase the size of the Committee and
appoint additional members thereto, remove members (with or without cause)
and appoint new members in substitution therefor, fill vacancies however
caused, or remove all members of the Committee and thereafter directly
administer the Plan. In the event the Company has a class of equity
securities registered under Section 12 of the Exchange Act and unless the
Board determines otherwise, from the effective date of such registration
until six months after the termination of such registration, all grants of
Options to persons subject to the provisions of Section 16(b) of the Exchange
Act during any and all periods of time when all members of the Board do not
qualify as Disinterested Persons shall be made by, or only in accordance with
the recommendations of, a Committee of two or more persons having full
authority to act in the matter and all of whom are Disinterested Persons.
(b) Powers of the Board. Subject to the provisions of the Plan,
the Board shall have the authority, in its discretion: (i) to grant Incentive
Stock Options and Nonstatutory Stock Options; (ii) to determine, upon review
of relevant information and in accordance with Section 7 of the Plan, the
fair market value per Share; (iii) to determine the terms and conditions of
vesting of Options, the exercise price of the Options and the consideration
to be paid for shares upon the exercise of Options (which exercise price and
consideration shall be determined in accordance with Section 7 of the Plan);
(iv) to determine the Employees to whom, and the time or times at which,
Options shall be granted, and the number of Shares to be subject to each
Option; (v) to prescribe, amend and rescind rules and regulations relating to
the Plan; (vi) to determine the terms and provisions of each Option Agreement
and each Stock Purchase Agreement (each of which need not be identical with
the terms of other Options and Stock Purchase Agreements) and, with the
consent of the holder thereof, to modify or amend each Option and Stock
Purchase Agreement; (vii) to determine whether a stock repurchase agreement
or other agreement will be required to be executed by any Employee as a
condition to the exercise of an Option, and to determine the terms and
provisions of any such agreement (which need not be identical with the terms
of any other such agreement) and, with the consent of the Optionee, to amend
any such agreement; (viii) to interpret the Plan, the Option Agreements, the
Stock Purchase Agreements or any agreement entered into with respect to the
grant or exercise of Options; (ix) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Board or to take such other actions as may
be necessary or appropriate with respect to the Company's rights pursuant to
Options or agreements relating to the grant or exercise thereof; and (x) to
make such other determinations and establish such other procedures as it
deems necessary or advisable for the administration of the Plan.
(c) Effect of the Board's Decision. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of Options.
5. Eligibility. Options may be granted only to Employees (including
employees of the Company who are also directors of the Company). An Employee
who has been granted an Option may, if such Employee is otherwise eligible,
be granted additional Options.
6. Term of Plan. Effectiveness of the Plan shall be subject to
approval by the shareholders of the Company within 12 months before or after
the date the Plan is adopted; provided, however, that Options may be granted
pursuant to the Plan prior to such shareholder approval subject to subsequent
approval of the Plan by such
3
<PAGE>
shareholders. Shareholder approval shall be obtained by the affirmative
votes of the holders of a majority of voting shares of the Company's capital
stock present and entitled to vote at a meeting of shareholders duly held in
accordance with the laws of the State of California or by such other means
authorized under law. The Plan shall continue in effect for a term of ten
years unless sooner terminated in accordance with the terms and provisions of
the Plan.
7. Option Price and Consideration.
(a) Exercise Price. The exercise price per Share for the Shares
to be issued pursuant to the exercise of a Nonstatutory Stock Option shall be
not less than 85% of the "fair market value" per Share, as described below.
The exercise price per Share for the Shares to be issued pursuant to the
exercise of an Incentive Option shall be the fair market value per Share.
However, with respect to both Incentive Stock Options and Nonstatutory Stock
Options, the exercise price shall be 110% of the fair market value per Share
on the date of grant in the case of any Optionee who, at the time the Option
is granted, owns stock (as determined under Section 424(d) of the Code)
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its Parent or Subsidiaries.
(b) Fair Market Value. The fair market value per Share on the
date of grant shall be determined by the Board in its sole discretion,
exercised in good faith; provided, however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the
average of the closing bid and asked prices of the Common Stock on the date
of grant, as reported in The Wall Street Journal (or, if not so reported, as
otherwise reported by the National Association of Securities Dealers
Automated Quotations ("Nasdaq") System), or, in the event the Common Stock is
listed on a stock exchange or on the Nasdaq Stock Market, the fair market
value per Share shall be the closing price on the exchange or on the Nasdaq
Stock Market as of the date of grant of the Option, as reported in The Wall
Street Journal.
(c) Payment of Consideration. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Board in its discretion on the date of
grant and may consist of cash, check, promissory notes or other forms of
legally permitted consideration if authorized by the Board in connection with
the grant of an Option.
8. Options.
(a) Terms and Provisions of Options. As provided in Section 4
of this Plan and subject to any limitations specified herein, the Board shall
have the authority to determine the terms and provisions of any Option
granted under the Plan or any agreement required to be executed in connection
with the grant or exercise of an Option. Each Option granted pursuant to
this Plan shall be evidenced by an Option Agreement. Options granted under
the Plan are conditioned upon the Company obtaining any required permit or
order from appropriate governmental agencies, authorizing the Company to
issue such Options and Shares issuable upon exercise thereof.
(b) Number of Shares. Each Option Agreement shall state the
number of Shares to which it pertains and whether such Option is intended to
constitute an Incentive Stock Option or a Nonstatutory Stock Option. The
maximum number of Shares which may be awarded as Options under the Plan
during any calendar year to any Optionee is 250,000 Shares. If an Option
held by an Employee is canceled, the canceled Option shall continue to be
counted against the maximum number of Shares for which Options may be granted
to such Employee and any replacement Option granted to such Employee shall
also count against such limit.
(c) Term of Option. The term of each Option may be up to ten
years from the date of grant thereof, as determined by the Board upon the
grant of the Option and specified in the Option Agreement, except that the
term of an Incentive Stock Option granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent of the total combined voting power of all classes of stock of the
Company or its Parent or Subsidiaries, shall not exceed five years from the
date of grant thereof.
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<PAGE>
(d) Exercise of Option.
(i) Procedure for Exercise; Rights as a Shareholder.
Any Option shall vest and become exercisable at such times, in such
installments and under such conditions as may be determined by the Board,
specified in the Option Agreement and as shall be permissible under the terms
of the Plan, including performance criteria with respect to the Company
and/or the Optionee, provided that each Option shall vest and become
exercisable at the rate of not less than 15% per year over five years from
the date such Option is granted.
An Option may be exercised in accordance with the provisions
of this Plan as to all or any portion of the Shares then exercisable under an
Option, from time to time during the term of the Option. An Option may not
be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company at its principal
business office in accordance with the terms of the Option Agreement by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company,
accompanied by an executed Stock Purchase Agreement (including the
attachments thereto) substantially in the form of Exhibit B hereto and as may
be modified by the Board from time to time, and any other agreements required
by the terms of the Plan and/or the Option Agreement. Full payment may
consist of such consideration and method of payment allowable under Section 7
of the Plan. Until the Option is properly exercised in accordance with the
terms of this Section 8(d), no right to vote or to receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock.
No adjustment shall be made for a dividend or other right for which the
record date is prior to the date the Option is exercised, except as provided
in Section 10 of the Plan.
As soon as practicable after any proper exercise of an
Option in accordance with the provisions of the Plan, the Company shall,
without transfer or issue tax to the Optionee, deliver to the Optionee at the
principal executive office of the Company or such other place as shall be
mutually agreed upon between the Company and the Optionee, a certificate or
certificates representing the Shares for which the Option shall have been
exercised. The time of issuance and delivery of the certificate(s)
representing the Shares for which the Option shall have been exercised may be
postponed by the Company for such period as may be required by the Company,
with reasonable diligence, to comply with any applicable listing requirements
of any national or regional securities exchange or any law or regulation
applicable to the issuance or delivery of such Shares. No Option may be
exercised unless the Plan has been duly approved by the shareholders of the
Company in accordance with applicable law. Notwithstanding anything to the
contrary herein, the terms of a Stock Purchase Agreement required to be
executed and delivered in connection with the exercise of an Option may
require the certificate or certificates representing the Shares purchased
upon the exercise of an Option to be delivered and deposited with the Company
as security for the Optionee's faithful performance of the terms and
conditions of his or her Stock Purchase Agreement.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares
as to which the Option is exercised.
(ii) Termination of Status as an Employee. If an
Optionee ceases to serve as an Employee for any reason other than death or
Disability, and thereby terminates his or her Continuous Status As An
Employee, to the extent that such Optionee was entitled to exercise the
Option at the date of such termination, such Optionee shall have the right to
exercise the Option at any time within 30 days subsequent to the last day of
such Optionee's Continuous Status As An Employee (unless at the time of grant
of such Option the Board specified a longer period, not to exceed 90 days),
provided, however, that no Option shall be exercisable after the expiration
of the term set forth in the Option Agreement. To the extent that such
Optionee was not entitled to exercise the Option at the date of the
terminating event, or if such Optionee does not exercise such Option (which
such Optionee was entitled to exercise) within the time specified herein, the
Option shall terminate. In the event that an Optionee's Continuous Status As
An Employee terminates due to death or Disability, to the extent that such
Optionee was entitled to exercise the Option at the date of such termination,
the Option may be exercised any time within 180 days subsequent to the death
or Disability of the Optionee (unless at the time of grant of such Option the
Board specified a longer period, not to exceed one year), provided, however,
that no Option shall be exercisable after the expiration of the Option term
set forth in the Option Agreement. To the extent that such Optionee was not
entitled to exercise
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such Option at the date of his or her termination due to death or Disability
or if such Option is not exercised (to the extent it could be exercised)
within the time specified herein, the Option shall terminate.
(e) Limit on Value of Optioned Stock. To the extent that the
aggregate fair market value (determined at the time an Incentive Stock Option
is granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under
all incentive stock option plans of the Company, its Parent or its
Subsidiaries, if any, exceeds $100,000, the Options in excess of such limit
shall be treated as Nonstatutory Stock Options.
(f) Expiration of Option. Notwithstanding any provision in the
Plan, including but not limited to the provisions set forth in this Section
8, an Option may not be exercised, under any circumstances, after the
expiration of its term.
9. Nontransferability of Options. Options granted under this Plan may
not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed
of in any manner, either voluntarily or involuntarily by operation of law,
other than by will or by the laws of descent or distribution or as a transfer
between spouses incident to a "divorce" within the meaning of Section 1041(a)
of the Code, and any such attempt may result, at the discretion of the Board,
in the termination of such Options. During the lifetime of the Optionee, his
or her Option may be exercised only by such Optionee or his or her legal
guardian.
10. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the shareholders of the
Company, the number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under the Plan but
as to which no Options have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option or repurchase of Shares
from an Optionee upon termination of employment or service, as well as the
exercise price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, combination,
recapitalization or reclassification of the Common stock, or the payment of a
stock dividend (but only on the Common Stock) or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company (other than stock bonuses to
Employees or directors); provided, however, that the conversion of any
convertible securities of the Company shall not be deemed to have been
effected without the receipt of consideration. Such adjustment shall be made
by the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares subject to the Plan or an
Option.
(b) In the event of a proposed dissolution or liquidation of the
Company or the sale of all or substantially all of the assets of the Company
(other than in the ordinary course of business), or the merger, consolidation
or reorganization of the Company with or into another corporation as a result
of which the Company is not the surviving corporation or as a result of which
the outstanding Shares are exchanged for or converted into cash or property
or securities not of the Company, the Board shall (i) make provision for the
assumption of all outstanding Options by the successor corporation or a
Parent or a Subsidiary thereof, or (ii) declare that outstanding Options
shall terminate as of a date fixed by the Board which is at least thirty (30)
days after the notice thereof to the Optionee (unless such thirty (30) day
period is waived by the Optionee) and shall give each Optionee the right to
exercise his or her Option as to all or any part of the shares underlying
such Option to the extent then exercisable, provided such exercise does not
violate Section 8(d)(ii) of the Plan.
(c) No fractional shares of Common Stock shall be issuable on
account of any action described in this Section, and the aggregate number of
shares into which Shares then covered by the Option, when changed as the
result of such action, shall be reduced to the largest number of whole shares
resulting from such action, unless the Board, in its sole discretion, shall
determine to issue scrip certificates in respect to any fractional shares,
which scrip certificates, in such event, shall be in a form and have such
terms and conditions as the Board in its discretion shall prescribe.
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11. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Board makes the determination
granting such Option, provided, however, that if the Board determines that
such grant shall be as of some future date, the date of grant shall be such
future date. Notice of the determination shall be given to each Employee to
whom an Option is so granted within a reasonable time after the date of such
grant.
12. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable
and shall make any amendments which may be required so that Options intended
to be Incentive Stock Options shall at all times continue to be Incentive
Stock Options for the purpose of the Code, except that, without approval of
the holders of a majority of the shares of the Company's capital stock
represented or present and entitled to vote at a valid meeting of the
Company's shareholders at which action is taken on an amendment or revision,
no such amendment or revision shall:
(i) Increase the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 10 of the Plan;
(ii) Materially change the designation of the class of
Employees eligible to be granted Options;
(iii) Remove the administration of the Plan from the Board
except to a Committee;
(iv) Materially increase the benefits accruing to
participants under the Plan; or
(v) Extend the term of the Plan.
(b) Effect of Amendment or Termination. Except as otherwise
provided in Section 10, any amendment or termination of the Plan shall not
affect Options already granted and such Options shall remain in full force
and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Company, which
agreement must be in writing and signed by the Optionee and the Company.
13. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, applicable state securities
laws, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to
such compliance.
(b) As a condition to the exercise of an Option, the Board may
require the person exercising such Option to execute an agreement with,
and/or may require the person exercising such Option to make any
representation and warranty to, the Company as may in the judgment of counsel
to the Company be required under applicable law or regulation, including but
not limited to a representation and warranty that the Shares are being
purchased only for investment and without any present intention to sell or to
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is appropriate under any of the aforementioned relevant
provisions of law.
14. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available, such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
The Company, during the term of this Plan, shall use its best efforts
to seek to obtain from appropriate regulatory agencies any requisite
authorization in order to issue and to sell such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain from any such regulatory agency having jurisdiction the
requisite authorization(s) deemed by the Company's counsel to be necessary
for the
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lawful issuance and sale of any Shares hereunder, or the inability of the
Company to confirm to its satisfaction that any issuance and sale of any
Shares hereunder will meet applicable legal requirements, shall relieve the
Company of any liability in respect to the failure to issue or to sell such
Shares as to which such requisite authority shall not have been obtained.
15. Stock Option and Stock Purchase Agreements. Options shall be
evidenced by written Option Agreements in such form or forms as the Board
shall approve from time to time. Upon the exercise of an Option, the
Optionee shall sign and deliver to the Company a Stock Purchase Agreement in
such form or forms as the Board shall approve from time to time.
16. Effective Date and Term of Plan. The Plan shall become effective
upon shareholder approval as provided in Section 17 of the Plan. The Plan
shall continue in effect for a term of ten years unless sooner terminated
under Section 12 of the Plan.
17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within 12 months before or after
the date the Plan is adopted by the Board. If such shareholder approval is
obtained at a duly held shareholders' meeting, it may be obtained by the
affirmative of the holders of a majority of the shares of the Company
represented or present and entitled to vote thereon. All Options granted
prior to shareholder approval of the Plan are subject to such approval, and
if such approval is not obtained within 12 months before or after the date
the Plan is adopted by the Board all such Options shall expire and shall be
of no further force or effect.
18. Taxes, Fees, Expenses and Withholding of Taxes.
(a) The Company shall pay all original issue and transfer taxes
(but not income taxes, if any) with respect to the grant of Options and/or
the issue and transfer of Shares pursuant to the exercise thereof, and all
other fees and expenses necessarily incurred by the Company in connection
therewith, and will from time to time use its best efforts to comply with all
laws and regulations which, in the opinion of counsel for the Company, shall
be applicable thereto.
(b) The grant of Options hereunder and the issuance of Shares
pursuant to the exercise thereof is conditioned upon the Company's
reservation of the right to withhold, in accordance with any applicable law,
from any compensation or other amounts payable to the Optionee, any taxes
required to be withheld under federal, state or local law as a result of the
grant or exercise of such Option or the sale of the Shares issued upon
exercise thereof. To the extent that compensation or other amounts, if any,
payable to the Optionee are insufficient to pay any taxes required to be so
withheld, the Company may, in its sole discretion, require the Optionee, as a
condition of the exercise of an Option, to pay in cash to the Company an
amount sufficient to cover such tax liability or otherwise to make adequate
provision for the Company's satisfaction of its withholding obligations under
federal, state and local law.
19. Liability of Company. The Company, its Parent or any
Subsidiary which is in existence or hereafter comes into existence shall not be
liable to an Optionee or other person if it is determined for any reason by the
Internal Revenue Service or any court having jurisdiction that any Options
intended to be Incentive Stock Options granted hereunder do not qualify as
incentive stock options within the meaning of Section 422 of the Code.
20. Information to Optionee. The Company shall provide without charge
at least annually to each Optionee during the period his or her Option is
outstanding a balance sheet and income statement of the Company. In the
event that the Company provides annual reports or periodic reports to its
shareholders during the period in which an Optionee's Option is outstanding,
the Company shall provide to each Optionee a copy of each such report.
21. Indemnification. No member of the Committee or of the Board shall
be liable for any act or action taken, whether of commission or omission,
except in circumstances involving actual bad faith, or for any act or action
taken, whether of commission or omission, by any other member or by any
officer, agent, or Employee. In addition to such other rights of
indemnification they may have as members of the Board, or as members of the
Committee, the Committee shall be indemnified by the Company against
reasonable expenses, including attorneys' fees actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or
in
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connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken, by commission or omission, in connection
with the Plan or any Option taken thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee or Board member is liable for actual bad faith
in the performance of his or her duties; provided that within 60 days after
institution of any such action, suit or proceeding, a Committee or Board
member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
22. Notices. Any notice to be given to the Company pursuant to the
provisions of this Plan shall be given in writing, addressed to the Company
in care of its Secretary at its principal office, and any notice to be given
to an Employee to whom an Option is granted hereunder shall be delivered
personally or addressed to him or her at the address given beneath his or her
signature on his Option Agreement or Stock Purchase Agreement or at such
other address as such Optionee or his or her transferee (upon the transfer of
the Optioned Stock) may hereafter designate in writing to the Company. Any
such notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, registered or certified, and
deposited, postage and registry or certification fee prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Service. It shall be the obligation of each Optionee and each transferee
holding Shares purchased upon exercise of an Option to provide the Secretary
of the Company, by letter mailed as provided hereinabove, with written notice
of his or her direct mailing address.
23. No Enlargement of Employee Rights. This Plan is purely voluntary
on the part of the Company, and the continuance of the Plan shall not be
deemed to constitute a contract between the Company and any Employee, or to
be consideration for or a condition of the employment or service of any
Employee. Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the employ or service of the Company,
its Parent, Subsidiary or a successor corporation, or to interfere with the
right of the Company or any such corporations to discharge or to retire any
Employee at any time with or without cause and with or without notice. No
Employee shall have any right to or interest in Options authorized hereunder
prior to the grant thereof to such Employee, and upon such grant he or she
shall have only such rights and interests as are expressly provided herein,
subject, however, to all applicable provisions of the Company's Articles of
Incorporation, as the same may be amended from time to time.
24. Legends on Certificates.
(a) Federal Law. Unless an appropriate registration statement
is filed pursuant to the federal Securities Act of 1933, as amended, with
respect to the Options and Shares issuable under this Plan, each document or
certificate representing such Options or Shares shall be endorsed thereon
with a legend substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE,
TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY
BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED. "
(b) Additional Legends. Each document or certificate
representing the Options or Shares issuable under the Plan shall also contain
legends as may be required under applicable blue sky laws or by any Stock
Purchase Agreement or other agreement the execution of which is a condition
to the exercise of an Option under this Plan.
25. Availability of Plan. A copy of this Plan shall be delivered to
the Secretary of the Company and shall be shown by him or her to any eligible
person making reasonable inquiry concerning it.
26. Invalid Provisions. In the event that any provision of this Plan
is found to be invalid or otherwise unenforceable under any applicable law,
such invalidity or unenforceability shall not be construed as rendering any
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other provisions contained herein as invalid or unenforceable, and all such
other provisions shall be given full force and effect to the same extent as
though the invalid or unenforceable provision was not contained herein.
27. Severability. In the event that any provision of the Plan is found
to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all such other
provisions shall be given full force and effect to the saline extent as
though the invalid or unenforceable provision was not contained herein.
28. Applicable Law. To the extent that federal laws do not otherwise
control, this Plan shall be governed by and construed in accordance with the
laws of the State of California without regard to the conflict of laws
principles thereof.
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EXHIBIT 5
NationsBank Plaza
Suite 4100
600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2216
March 26, 1998
EarthLink Network, Inc.
3100 New York Drive
Pasadena, California 91107
Re: Registration Statement on Form S-8
1995 Stock Option Plan
Ladies and Gentlemen:
We have served as counsel for EarthLink Network, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to a Registration Statement on Form
S-8 (the "Registration Statement"), of an aggregate of 350,000 shares (the
"Shares") of common stock, $.01 par value, of the Company, to be issued and sold
by the Company to eligible employees, officers and directors of the Company
pursuant to the EarthLink Network, Inc., Stock Option Plan (the "Plan").
We have examined and are familiar with originals or copies
(certified, photostatic or otherwise identified to our satisfaction) of such
documents, corporate records and other instruments relating to the
incorporation of the Company and the authorization of the grants of
securities pursuant to the Plan as we have deemed necessary and advisable.
In such examinations, we have assumed the genuineness of all signatures on
all originals and copies of documents we have examined, the authenticity of
all documents submitted to us as originals and the conformity to original
documents of all certified, conformed or photostatic copies. As to questions
of fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of appropriate
governmental officials.
We express no opinion as to matters under or involving the
laws of any jurisdiction other than the corporate law of the State of
Delaware.
Based upon and subject to the foregoing and having regard for
such legal considerations as we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized; and
2. Upon the issuance and delivery of the Shares and the
receipt of payment therefor as provided in the Plan and
as contemplated by the Registration Statement, such
Shares will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement.
Very truly yours,
/s/ HUNTON & WILLIAMS
HUNTON & WILLIAMS
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EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 29, 1998 appearing on page
F-2 of EarthLink Network, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1997.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
Costa Mesa, California
March 26, 1998
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