<PAGE>
As filed with the Securities and Exchange
Commission on August 18, 1999 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 Registrant as Specified in Its Charter)
DELWARE 58-2389244
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3100 NEW YORK 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(1) per share(2) offering price(2) registration fee
- ------------------------- ------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 2,000,000 $48.3125 $96,625,000 $26,861.75
par value................ shares
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Pursuant to Rule 416(a) the number of shares of Common Stock registered
hereunder includes such indeterminate number of additional shares of Common
Stock as may be offered or issued in the future to prevent dilution resulting
from stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of computing the registration fee.
This amount was calculated pursuant to Rule 457(c) on the basis of $48.3125
per share, which was the average of the high and low prices of the
Registrant's Common Stock on August 16, 1999, as reported in THE WALL STREET
JOURNAL.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATION STATEMENT
This Registration Statement on Form S-8 is being filed by EarthLink
Network, Inc., a Delaware corporation (the "Company"), to register 2,000,000
additional shares of the Company's Common Stock, $.01 par value per share, under
the 1995 Stock Option Plan.
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, 1998;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999;
(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.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
II-1
<PAGE>
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:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
4.1 Certificate of Incorporation (incorporated herein by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-4, Reg. No. 333-52507).
4.2 Bylaws (incorporated herein by reference to Exhibit 3.2 of
the Registrant's Registration Statement on Form S-4, Reg.
No. 333-52507).
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. 333-15781).
4.4 EarthLink Network, Inc. 1995 Stock Option Plan
5 Opinion of Hunton & Williams, as counsel with respect to the
securities being registered.
23.1 Consent of Hunton & Williams (included in Exhibit 5).
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants.
24 Power of Attorney (see signature pages to this Registration
Statement).
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
II-2
<PAGE>
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 17th day of August, 1999.
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 L.
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 August 18, 1999 by the following persons
in the capacities indicated.
/s/ CHARLES G. BETTY President, Chief Executive Officer and
- ----------------------------- Director (principal executive officer)
Charles G. Betty
/s/ GRAYSON L. HOBERG Senior Vice President, Finance and Chief
- ----------------------------- Financial Officer (principal financial
Grayson L. Hoberg and principal accounting officer)
/s/ SKY D. DAYTON Founder and Chairman of the Board of
- ---------------------------- Directors
Sky D. Dayton
/s/ SIDNEY AZEEZ Director
- -----------------------------
Sidney Azeez
/s/ ROBERT M. KAVNER Director
- -----------------------------
Robert M. Kavner
II-4
<PAGE>
/s/ LINWOOD A. LACY, JR. Director
- -----------------------------
Linwood A. Lacy, Jr.
/s/ PAUL MCNULTY Director
- -----------------------------
Paul McNulty
/s/ KEVIN M. O'DONNELL Director
- -----------------------------
Kevin M. O'Donnell
/s/ WILLIAM T. ESREY Director
- -----------------------------
William T. Esrey
/s/ REED E. SLATKIN Director
- -----------------------------
Reed E. Slatkin
/s/ LEN J. LAUER Director
- -----------------------------
Len J. Lauer
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
4.1 Certificate of Incorporation (incorporated herein by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-4, Reg. No. 333-52507).
4.2 Bylaws (incorporated herein by reference to Exhibit 3.2 of
the Registrant's Registration Statement on Form S-4, Reg.
No. 333-52507).
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. 333-15781).
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 PricewaterhouseCoopers LLP, independent
accountants.
24 Power of Attorney (see signature pages to this Registration
Statement).
</TABLE>
1
<PAGE>
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 the Board appoints in
accordance with Section 4(a) of the Plan.
(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. Continuous Employment shall not be considered interrupted in the case
of authorized sick leave, authorized military leave or any other authorized
leave of absence the Board approves or in the case of transfers between
locations of the Company or between the Company, its Parent, or any of its
Subsidiaries or their 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.
1
<PAGE>
(i) "EMPLOYEE" shall mean any person, including officers and
directors, employed by the 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.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(l) "NON-EMPLOYEE DIRECTORS" shall mean directors who (i) are not
current officers or employees of the Company or its Parent or any Subsidiary,
(ii) do not, either directly or indirectly, receive compensation from the
Company or its Parent or any Subsidiary for services rendered in any capacity
other than a director, except for any amount not in excess of the amount for
which disclosure would be required pursuant to Regulation S-K 404(a) promulgated
under the Securities Exchange Act of 1934, (iii) do not possess an interest in
any transaction for which disclosure would be required pursuant to Regulation
S-K 404(a) promulgated under the Securities Exchange Act of 1934, and (iv) are
not engaged in any business relationship for which disclosure would be required
pursuant to Regulation S-K 404(b) promulgated under the Securities and Exchange
Act of 1934.
(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 described 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 as the Board may
from time to time approve, which is to be executed as a condition of purchasing
Optioned Stock upon exercise of an Option.
2
<PAGE>
(v) "SUBSIDIARY" OR "SUBSIDIARIES" shall mean a subsidiary corporation
or corporations, 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) (A) any act by the Optionee constituting a felony under any
federal, state or local law; (B) the Optionee's willful and continued failure to
perform the duties assigned to him or her as an Employee; (C) 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; (D) 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 (E) the Optionee's taking or knowingly
omitting to take any other action in the performance of Optionee's duties as an
Employee without informing appropriate members of management to whom such
Optionee reports, which action, in the determination of the Board, has caused or
substantially contributed to the material deterioration in the business or
financial condition of the Company or any Affiliate, taken as a whole or (ii)
any other reason as defined in a written employment agreement between the
Company and the Optionee which the Board approves.
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 7,700,000 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 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 Board shall administer the Plan. 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 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 Non-Employee Directors 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.
(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 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 Option Agreements 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 any Employee, as a condition to the exercise of an Option, will have to
3
<PAGE>
execute a stock repurchase agreement or other agreement 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 the
Board previously granted 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).
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 and
conditioned upon subsequent approval of the Plan by such 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 or
represented and entitled to vote at a meeting of shareholders duly held in
accordance with the laws of the State of Delaware 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 Board in its sole discretion, exercised in
good faith, shall determine the fair market value per Share on the date of
grant.
(c) PAYMENT OF CONSIDERATION. The Board in its discretion on the date
of grant shall determine the consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, and the
consideration may consist of cash, check, promissory notes or other forms of
legally permitted consideration.
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
4
<PAGE>
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 that an Employee holds 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 shall be specified in the
Option Agreement and may be up to ten years from the date of grant thereof,
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.
(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 the Board may determine, 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.
An Option may be exercised from time to time during the term of
the Option in accordance with the provisions of this Plan as to all or any
portion of the Shares then exercisable under an 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 the Company has received full payment for the Shares
with respect to which the Option is exercised, 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 Company may
postpone the time of issuance and delivery of the certificate(s) representing
the Shares for which the Option shall have been exercised for such period as the
Company may require, 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
shareholders of the Company have duly approved the Plan 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
5
<PAGE>
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 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, given, 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, only he or she
or his or her legal guardian may exercise the Option.
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
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Common Stock) or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of full and adequate 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. The
Board shall make such adjustment and its 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.
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 from time to time amend
or terminate the Plan 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 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) Extend the term of the Plan; or
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(iv) Remove the administration of the Plan from the Board or the
Committee.
(b) EFFECT OF AMENDMENT OR TERMINATION. Except as Section 10
otherwise provides, 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 the Optionee and the
Company mutually agree otherwise in writing.
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 under such laws, 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 and
warranty 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 authorizations
that the Company's counsel deemed to be necessary for the 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.
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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 Board adopts the Plan. Shareholder approval at a duly held
shareholders' meeting 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 Board adopts the Plan, 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 the Company necessarily incurs 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 that federal, state or local
law requires to be withheld 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.
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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 the Internal Revenue Service or any court having
jurisdiction determines for any reason 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 action taken or for any omission, except in circumstances
involving actual bad faith, or for any action taken or for any 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
connection with any appeal therein, to which they or any of them may be a party
by reason of any action or omission in connection with the Plan or any Option
taken thereunder, and against all amounts they pay in settlement thereof
(provided independent legal counsel the Company has selected approves the
settlement) or they pay 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 at
its principal office in care of its Secretary, 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 the United
States Postal Service regularly maintains. 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.
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24. LEGENDS ON CERTIFICATES.
(a) FEDERAL LAW. Unless an appropriate registration statement
is filed pursuant to the 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 he or she shall show it 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 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
Bank of America Plaza
Suite 4100
600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2216
August 18, 1999
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 2,000,000 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., 1995 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,
HUNTON & WILLIAMS
<PAGE>
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 February 16, 1999, except as to Note
14, which is as of February 24, 1999, relating to the consolidated financial
statements, which appears in EarthLink Network, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Century City, California
August 18, 1999
