<PAGE>
EXHIBIT 4.4
EARTHLINK, INC.
STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.........................................................1
1.01. Acceleration Date...................................................1
1.02. Administrator.......................................................1
1.03. Agreement...........................................................1
1.04. Board...............................................................1
1.05. Cause...............................................................1
1.06. Change in Control...................................................1
1.07. Code................................................................2
1.08. Committee...........................................................2
1.09. Common Stock........................................................2
1.10. Company.............................................................2
1.11. Control Change Date.................................................2
1.12. Employee............................................................2
1.13. Exchange Act........................................................2
1.14. Fair Market Value...................................................2
1.15. Incentive Stock Option..............................................2
1.16. Nonqualified Stock Option...........................................2
1.17. Option..............................................................3
1.18. Participant.........................................................3
1.19. Permitted Transferees...............................................3
1.20. Person..............................................................3
1.21. Plan................................................................3
1.22. Subsidiary..........................................................3
1.23. Ten Percent Shareholder.............................................3
1.24. Voting Stock........................................................3
ARTICLE II PURPOSES...........................................................3
ARTICLE III ADMINISTRATION....................................................4
ARTICLE IV ELIGIBILITY........................................................4
ARTICLE V STOCK SUBJECT TO PLAN...............................................4
5.01. Shares Issued.......................................................4
5.02. Aggregate Limits....................................................4
5.03. Individual Limits...................................................5
5.04. Reallocation of Shares..............................................5
ARTICLE VI TERMS AND CONDITIONS OF ALL OPTIONS................................5
6.01. Grants..............................................................5
6.02. Option Price........................................................5
6.03. Maximum Option Period...............................................5
6.04. Nontransferability..................................................5
6.05. Employee Status.....................................................6
6.06. Change in Control...................................................6
6.07. Exercise............................................................6
6.08. Performance Objectives..............................................7
6.09. Payment.............................................................7
6.10. Shareholder Rights..................................................7
6.11. Forfeiture Provisions...............................................7
6.12. Other Conditions....................................................8
i
<PAGE>
7.01. Reload Provision....................................................8
ARTICLE VII ADDITIONAL TERMS AND CONDITIONS OF INCENTIVE STOCK
OPTIONS................................................................8
7.01. Employee Status......................................................8
7.02. Exercise Price.......................................................8
7.03. Aggregate Exercise Limits............................................8
7.04. Restrictions on Ten-Percent Shareholders.............................9
7.05. Validity of Options..................................................9
7.05. Notification Upon Sell...............................................9
ARTICLE VIII LIMITATION ON BENEFITS...........................................9
ARTICLE IX ADJUSTMENT UPON CHANGE IN COMMON STOCK............................10
ARTICLE X COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES..............10
10.01. Compliance..........................................................11
7.01. Postponement of Exercise............................................11
ARTICLE XI GENERAL PROVISIONS................................................11
11.01. Effect on Employment and Service....................................11
11.02. Unfunded Plan.......................................................12
11.03. Tax Withholding.....................................................12
11.04. Governing Law.......................................................12
ARTICLE XII AMENDMENT........................................................12
ARTICLE XIII DURATION OF PLAN................................................13
ARTICLE XIV EFFECTIVE DATE OF PLAN...........................................13
ARTICLE XV RULES OF CONSTRUCTION.............................................13
ii
<PAGE>
EARTHLINK, INC.
STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.01. ACCELERATION DATE means the earlier of (i) the date that the Board
approves a transaction or series of transactions that, if consummated, would
result in a Change in Control or (ii) the date that an agreement is entered into
with respect to a transaction or series of transactions that, if consummated,
would result in a Change in Control.
1.02. ADMINISTRATOR means the Committee and any delegate of the Committee that
is appointed in accordance with Article III.
1.03. AGREEMENT means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of an Option granted to the Participant.
1.04. BOARD means the Board of Directors of the Company.
1.05. CAUSE means (i) the Participant's willful and repeated failure to comply
with the lawful directives of the Board, the Board of Directors of any
Subsidiary or any supervisory personnel of the Participant, (ii) any criminal
act or act of dishonesty or willful misconduct by the Participant that has a
material adverse affect on the property, operations, business or reputation of
the Company or any Subsidiary, (iii) the material breach by the Participant of
the terms of any confidentiality or noncompetition agreement that the
Participant has with the Company or any Subsidiary or (iv) acts by the
Participant of willful malfeasance or gross negligence in a matter of material
importance to the Company or any Subsidiary. For purposes of the Plan, in no
event shall any termination of employment be deemed for Cause unless the
Company's Chief Executive Officer concludes that the situation warrants a
determination that the Participant's employment terminated for Cause; in the
case of the Chief Executive Officer, any determination that the Chief Executive
Officer's employment terminated for Cause shall be made by the Board acting
without the Chief Executive Officer.
1.06. CHANGE IN CONTROL means the occurrence of any of the following: (i)(a) the
Company consolidates with, or merges with or into, another Person, (b) there is
a merger, reorganization, consolidation, share exchange or other transaction
involving the Voting Stock of the Company, (c) the Company sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
the assets of the Company to any Person, (d) any Person consolidates with, or
merges with or into, the Company, or (e) any similar event, where with respect
to each of the events described in (a) through (e) the outstanding Voting Stock
of the Company is converted into or exchanged for cash, securities or other
property, except that none of the foregoing events will constitute a Change in
Control where the outstanding Voting Stock of the Company is converted into or
exchanged for Voting Stock of the surviving or transferee Person and the
beneficial owners of the Voting Stock of the Company immediately before such
event own, directly or indirectly, Voting Stock representing not less than 60
percent of the voting power of the Voting Stock of the surviving or transferee
Person immediately after such event, or (ii) any
<PAGE>
transaction that results in any person, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company,
beneficially owning Voting Stock of the Company representing, directly or
indirectly, 40 percent or more of the voting power of the Voting Stock of the
Company, or (iii) the approval by the holders of Voting Stock of the Company
of any plan or proposal for liquidation or dissolution of the Company or (iv)
the consummation of any other transaction that a majority of the Board, in
its sole and absolute discretion, determines constitutes a Change in Control
for purposes of this Plan.
1.07. CODE means the Internal Revenue Code of 1986, as amended.
1.08. COMMITTEE means the Compensation Committee of the Board, if the Board
appoints one, or the Board itself if no Compensation Committee is appointed. If
such Compensation Committee is appointed, if and to the extent deemed necessary
by the Board, such Compensation Committee shall consist of two or more
non-employee outside directors, all of whom are "non-employee directors" within
the meaning of Rule 16b-3 under the Exchange Act and "outside directors" within
the meaning of Section 162(m) of the Code.
1.09. COMMON STOCK means the voting common stock, $.01 par value per share, of
the Company.
1.10. COMPANY means EarthLink, Inc.
1.11. CONTROL CHANGE DATE means the date on which a Change in Control occurs. If
a Change in Control occurs on account of a series of transactions, the "Control
Change Date" is the date of the last of such transactions.
1.12. EMPLOYEE means any person whom the Company or any Subsidiary employs under
the rules of Section 3401(c) of the Code and the regulations thereunder.
1.13. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
1.14. FAIR MARKET VALUE means, on any given date, the fair market value of a
share of Common Stock as the Administrator in its discretion shall determine;
provided, however, that the Administrator shall determine Fair Market Value
without regard to any restriction other than a restriction which, by its terms,
will never lapse and, if the shares of Common Stock are traded on any stock
exchange, the Fair Market Value of a share of Common Stock shall be the closing
price of a share of Common Stock as reported on such stock exchange on such
date, or if the shares of Common Stock are not traded on such stock exchange on
such date, then on the next preceding day that the shares of Common Stock were
traded on such stock exchange, all as reported by such source as the
Administrator shall select. The Fair Market Value that the Administrator
determines shall be final, binding and conclusive on the Company and each
Participant.
1.15. INCENTIVE STOCK OPTION means an Option that is subject to Section 422 of
the Code.
1.16. NONQUALIFIED STOCK OPTION means an Option that is not subject to Section
422 of the Code.
2
<PAGE>
1.17. OPTION means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in the
Agreement that specifies the terms and conditions of the Option.
1.18. PARTICIPANT means an Employee, contractor, agent or other service provider
of the Company or any Subsidiary, including a member of the Board, who satisfies
the requirements of Article IV and who the Administrator selects to receive an
Option.
1.19. PERMITTED TRANSFEREES means, with respect to any Person that is a natural
person, (i) such individual's spouse, estate, lineal descendants, heirs,
executors, legal representatives and administrators and (ii) any trust for the
benefit of any of the foregoing, and with respect to any Person that is not a
natural person, any other Person controlled by such Person.
1.20. PERSON means any individual, corporation, partnership, limited liability
company, joint venture, incorporated or unincorporated association, joint-stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof or any other entity of any kind.
1.21. PLAN means the EarthLink, Inc. Stock Incentive Plan.
1.22. SUBSIDIARY means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, if at the time of the granting
of the Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
1.23. TEN PERCENT SHAREHOLDER means any individual who (considering the stock
attribution rules described in Section 424(d) of the Code) owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company, its parent within the meaning of Section 424(e) of the Code or
any Subsidiary.
1.24. VOTING STOCK with respect to any specified Person means any class or
classes of stock of the specified Person pursuant to which the holders thereof
have the general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of the specified
Person.
ARTICLE II
PURPOSES
This Plan is intended to assist the Company and its Subsidiaries in recruiting
and retaining individuals with ability and initiative by enabling such persons
to participate in the future success of the Company and to associate their
interests with those of the Company and its shareholders. The Plan is intended
to permit the grant of Options. The proceeds the Company receives from the sale
of Common Stock pursuant to any Participant's exercise of an Option shall be
used for general corporate purposes.
3
<PAGE>
ARTICLE III
ADMINISTRATION
The Administrator shall have the complete authority to grant Options on such
terms (not inconsistent with the provisions of this Plan), as the Administrator
may consider appropriate. Such terms may include conditions (in addition to
those contained in this Plan) on the exercisability of all or any part of an
Option. The Administrator also shall administer the Plan. The Administrator
shall have the complete authority to interpret all provisions of this Plan; to
prescribe the form of Agreements; to accelerate the exercisability of an Option;
to adopt, amend and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of this Plan. The express grant in the Plan of
any specific power to the Administrator shall not be construed as limiting any
power or authority of the Administrator. Any decision or action of the
Administrator in connection with the administration of this Plan shall be final
and conclusive. Neither the Administrator nor any member of the Committee shall
be liable for any act done in good faith with respect to this Plan, any
Agreement or any Option. The Company shall bear all expenses of administering
this Plan. The Administrator, in its discretion, may delegate to one or more
officers of the Company or another committee of the Board, all or part of the
Administrator's authority and duties with respect to grants of Options to
Participants who are not subject to the reporting and other provisions of
Section 16 of the Exchange Act. The Administrator may revoke or amend the terms
of such delegation at any time but such action shall not invalidate any prior
actions of the Administrator's delegate or delegates that were consistent with
the terms of the Plan.
ARTICLE IV
ELIGIBILITY
Any Employee, contractor, consultant, agent or other service provider of the
Company or any Subsidiary (including a corporation that becomes a Subsidiary
after the adoption of this Plan) is eligible to receive Options if the
Administrator, in its sole discretion, determines that such person has
contributed significantly or can be expected to contribute significantly to the
profits or growth of the Company or any Subsidiary. Members of the Board or the
Board of Directors of any Subsidiary also may receive Options.
ARTICLE V
STOCK SUBJECT TO PLAN
5.01. SHARES ISSUED. On the exercise of any Option, the Company may deliver to
the Participant (or the Participant's broker if the Participant so directs)
shares of Common Stock from its authorized but unissued shares of Common Stock
or from reacquired shares of Common Stock.
5.02. AGGREGATE LIMITS. The maximum number of shares of Common Stock that may be
issued under this Plan pursuant to the exercise of Options is 20,000,000 shares
of Common Stock. The maximum number of shares shall be subject to adjustment as
provided in Article IX.
4
<PAGE>
5.03. INDIVIDUAL LIMITS. Subject to the other limitations set forth in this
Plan, no individual may, in any calendar year, be granted aggregate Options
covering more than 750,000 shares of Common Stock. If an Option that a
Participant holds is canceled, the canceled Option shall continue to be counted
against the maximum number of shares of Common Stock for which Options may be
granted to the Participant in any calendar year and any replacement Options
granted to such Participant in replacement of the canceled Options also shall
count against such maximum limit. The maximum number of shares that may be
granted in any calendar year to any individual shall be subject to adjustment as
provided in Article IX.
5.04. REALLOCATION OF SHARES. If an Option is terminated, in whole or in part,
for any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or the terminated portion thereof may be reallocated to
other Options to be granted under this Plan, subject to the aggregate limits
described above.
ARTICLE VI
TERMS AND CONDITIONS
OF ALL OPTIONS
6.01. GRANTS. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom an Option is to be granted and will
specify the number of shares of Common Stock covered by such grant and whether
the Option is an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options also must comply with the provisions of Article VII.
6.02. OPTION PRICE. The Administrator on the date of grant shall determine the
price per share for Common Stock payable upon the exercise of an Option except
that the price per share for Common Stock shall not be less than the Fair Market
Value of a share of Common Stock on the date of grant of the Option.
6.03. MAXIMUM OPTION PERIOD. The Administrator on the date of grant shall
determine the maximum period in which an Option may be exercised, except that no
Option shall be exercisable after the expiration of 10 years from the date such
Option is granted. The terms of any Option may provide that it is exercisable
for a period less than such maximum period.
6.04. NONTRANSFERABILITY.
(a) Except as set forth in Section 6.04(b) below, each Option
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer of an Option, the
Option must be transferred to the same person or persons or entity or entities.
Except as set forth in Section 6.04(b) below, during the lifetime of the
Participant to whom the Option is granted, only the Participant may exercise the
Option. No right or interest of a Participant in any Option shall be liable for,
or subject to, any lien, obligation or liability of such Participant.
5
<PAGE>
(b) Notwithstanding Section 6.04(a) above, if the Agreement so
provides, an Option that is not an Incentive Stock Option may be transferred by
the Participant to the Participant's children, grandchildren, spouse, one or
more trusts for the benefit of such family members or a partnership in which
such family members are the only partners, on such terms and conditions as the
Securities Exchange Commission Rule 16b-3 as in effect from time to time may
permit. Any such transfer will be permitted only if (i) the Participant does not
receive any consideration for the transfer and (ii) the transfer is expressly
approved by the Administrator. The holder of such Option shall be bound by the
same terms and conditions that govern the Option during the period the
Participant held it; provided, however, that such transferee may not transfer
such Option except by will or the laws of descent and distribution. Any such
transfer shall be evidenced by an appropriate written document executed by the
Participant, and a copy thereof shall be delivered to the Administrator on or
prior to the effective date of the transfer.
6.05. EMPLOYEE STATUS. In the event that the terms of any Option provide that it
may be exercised only during employment or within a specified period of time
after termination of employment, the Administrator may decide to what extent
leaves of absence for governmental or military service, illness, temporary
disability or other reasons shall not be deemed interruptions of employment.
6.06. CHANGE IN CONTROL. Notwithstanding any provision of any Agreement, in the
event of or in anticipation of a Change in Control, the Administrator in its
discretion (i) may declare that some or all outstanding Options previously
granted under the Plan shall terminate as of a date on or after an Acceleration
Date or before or on the Control Change Date without any payment to the holder
of the Option, provided the Administrator gives prior written notice to the
Participants of such termination and gives such Participants the right to
exercise their outstanding Options before such date to the extent then
exercisable or (ii) may terminate on or after an Acceleration Date or before or
on the Control Change Date some or all outstanding Options previously granted
under the Plan in consideration of payment to the holder of the Option, with
respect to each share of Common Stock to which the Option is then exercisable,
of the excess of the Fair Market Value on such date of the Common Stock subject
to the exercisable portion of the Option over the Option price. The payment
described in (ii) above may be made in any manner the Administrator determines,
including in cash, Voting Stock or other property. The Administrator in its
discretion may take the actions described in (i) or (ii) above with respect to
some or all outstanding Options or on an Option-by-Option basis, which actions
need not be uniform with respect to all outstanding Options. The preceding
sentences to the contrary notwithstanding, the Options shall not be terminated
to the extent that written provision is made for their continuance, assumption
or substitution by a successor employer or its parent or subsidiary in
connection with the Change in Control.
6.07. EXERCISE. The Administrator in its discretion may but need not declare
that some or all outstanding Options previously granted under the Plan shall be
exercisable, in whole or in part, on the earlier of (i) immediately before the
time the Administrator takes either of the actions described in (i) or (ii) of
Section 6.06 above or (ii) as of the Control Change Date; if the Administration
makes such declaration, all such Options which became exercisable shall remain
exercisable thereafter in accordance with the terms of the Plan and the
applicable Agreement. The Administrator may act with respect to some or all
outstanding Options or on an Option-by-Option basis, which actions need not be
uniform for with respect to outstanding Options. Subject
6
<PAGE>
to the preceding sentences, an Option may be exercised in whole at any time
or in part from time to time at such times and in compliance with such
requirements as the Administrator shall determine and as set forth in the
Agreement. An Option granted under this Plan may be exercised with respect to
any number of whole shares less than the full number of shares for which the
Option could be exercised. A partial exercise of an Option shall not affect
the right to exercise the Option from time to time in accordance with this
Plan and the applicable Agreement with respect to the remaining shares
subject to the Option.
6.08. PERFORMANCE OBJECTIVES. The Administrator may prescribe that an Option is
exercisable only to the extent that certain performance objectives are obtained.
Such performance objectives may be based on one or more of the Company's or any
Subsidiary's (i) gross, operating or net earnings before or after taxes, (ii)
return on equity, (iii) return on capital, (iv) return on sales, (v) return on
assets or net assets, (vi) earnings per share, (vii) cash flow per share, (viii)
book value per share, (ix) earnings growth, (x) sales growth, (xi) volume
growth, (xii) cash flow (as the Administrator may define), (xiii) Fair Market
Value of the Company or any Subsidiary or shares of Common Stock, (xiv) share
price or total shareholder return, (xv) market share, (xvi) economic value
added, (xvii) market value added, (xviii) productivity, (xix) level of expenses,
(xx) quality, (xxi) safety, (xxii) customer satisfaction, or (xxiii) peer group
comparisons of any of the aforementioned performance objectives. If the
Administrator, on the grant of the Option, prescribes that the Option shall
become exercisable only upon the attainment of performance objectives stated
with respect to one or more of the foregoing criteria, the Option shall become
exercisable only to the extent the Administrator certifies that such performance
objectives have been attained.
6.09. PAYMENT. Unless the Agreement provides otherwise, payment of the Option
price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement so provides, the Administrator in its discretion
may permit a Participant to pay all or part of the Option price (i) by
surrendering shares of Common Stock to the Company that the Participant has held
for at least six months, (ii) by a cashless exercise through a broker, (iii) by
delivery of the full recourse, interest-bearing promissory note of the
Participant, (iv) by such other medium of payment as the Administrator, in its
discretion shall authorize or (v) by any combination of the aforementioned
methods of payment. If Common Stock is used to pay all or part of the Option
price, the sum of the cash and cash equivalent and other payments and the Fair
Market Value (determined as of the day preceding the date of exercise) of the
Common Stock surrendered must not be less than the Option price of the shares
for which the Option is being exercised.
6.10. SHAREHOLDER RIGHTS. No Participant shall have any rights as a shareholder
with respect to shares of Common Stock subject to an Option until the proper
exercise of such Option and the issuance to the Participant of the certificates
representing the shares of Common Stock for which the Option is exercised. The
Company may include on any certificates representing shares of Common Stock
issued pursuant to an Option such legends referring to any representations,
restrictions or any other applicable statements as the Company, in its
discretion, shall deem appropriate.
6.11. FORFEITURE PROVISIONS. Notwithstanding any other provisions of the Plan or
any Agreement, all rights to any Common Stock that a Participant has regarding
Options will be immediately discontinued and forfeited, and the Company shall
not have any further obligation
7
<PAGE>
hereunder to the Participant with respect to any Option and the Option will
not be exercisable for any number of shares of Common Stock (whether or not
previously exercisable), on and after the Participant is discharged from
employment with the Company or any Subsidiary for Cause.
6.12. OTHER CONDITIONS. The Administrator, in its discretion, may, as a
condition to the grant of an Option, require the Participant on or before the
date of grant of the Option to enter into (i) a covenant not to compete
(including a confidentiality, non-solicitation or other similar agreement) with
the Company or any Subsidiary, which shall become effective on the date of
termination of employment of a Participant with the Company or any Subsidiary or
another date and contain such terms and conditions as the Administrator shall
otherwise specify, and (ii) an agreement to cancel any employment agreement,
fringe benefit or compensation arrangement in effect between the Company or any
Subsidiary and such Participant. If the Participant shall fail to enter into any
such agreement or agreements at the Administrator's request, then no Option
shall be granted to the Participant and the number of shares of Common Stock
that would have been subject to such Option shall be added to the remaining
shares of Common Stock available under the Plan.
6.13. RELOAD OPTION. The Administrator, in its discretion, may accompany the
grant of an Option with a reload Option, which shall represent an additional
Option to acquire the same number of shares of Common Stock as used by the
Participant to pay for the original Option. The reload Option shall be subject
to all of the same terms and conditions as the original Option except that (i)
the purchase price for the shares of Common Stock subject to the reload Option
will be the same Fair Market Value of the shares of Common Stock that the
Participant used to pay for the original Option and (ii) such reload Option
shall conform to all the provisions of the Plan at the time the original Option
is exercised.
ARTICLE VII
ADDITIONAL TERMS AND CONDITIONS OF
INCENTIVE STOCK OPTIONS
7.01. EMPLOYEE STATUS. Notwithstanding any other provision of the Plan or any
Agreement, the Administrator may only grant an Incentive Stock Option to an
Employee of the Company or any Subsidiary.
7.02. EXERCISE PRICE. Notwithstanding any other provision contained in the Plan
or any Agreement, no Employee may receive an Incentive Stock Option under the
Plan, unless the Option price for such Incentive Stock Option is at least 100
percent of the Fair Market Value on the date of grant of the Common Stock
subject to such Incentive Stock Option.
7.03. AGGREGATE EXERCISE LIMITS. The Administrator may not grant an Incentive
Stock Option to the extent the aggregate Fair Market Value, determined at the
time the Administrator grants the Incentive Stock Option, of shares of Common
Stock with respect to which a Participant may exercise Incentive Stock Options
for the first time during any calendar year under this Plan and any other plan
of the Company (or any plan of any parent or Subsidiary of the Company) exceeds
$100,000. If the limitation is exceeded, the Incentive Stock Options that cause
the limitation to be exceeded shall be treated as Nonqualified Stock Options.
8
<PAGE>
7.04. RESTRICTIONS ON TEN-PERCENT SHAREHOLDERS. No Employee may receive an
Incentive Stock Option under the Plan if such Employee, at the time of grant, is
a Ten Percent Shareholder, unless the option price for such Incentive Stock
Option is at least 110 percent of the Fair Market Value on the date of grant of
the Common Stock subject to such Incentive Stock Option and such Incentive Stock
Option is not exercisable after the expiration of five years from the date such
Incentive Stock Option is granted.
7.05. VALIDITY OF OPTIONS. Incentive Stock Options that do not comply with this
Article VII shall be treated as Nonqualified Stock Options.
7.06. NOTIFICATION UPON SALE. Participant shall give written notice to the
Company if the Participant sells or otherwise disposes of any shares of Common
Stock acquired under an Incentive Stock Option before the expiration of the
later of the two-year period beginning on the date of grant of the Incentive
Stock Option or the one-year period beginning on the date that the Participant
exercises the Incentive Stock Option with respect to such shares of Common
Stock.
7.07. NO LIABILITY OF COMPANY. The Company shall not be liable to any
Participant or any other person if the Internal Revenue Service or any court
having jurisdiction over such matter determines for any reason that any Option
intended to be an Incentive Stock Option and granted hereunder does not qualify
as an Incentive Stock Option.
ARTICLE VIII
LIMITATION ON BENEFITS
Despite any other provisions of this Plan to the contrary, if the
receipt of any payments under this Plan would subject a Participant to tax under
Code Section 4999, the Administrator may determine whether some amount of
payments would meet the definition of a "Reduced Amount." If the Administrator
determines that there is a Reduced Amount, the total payments to the Participant
hereunder must be reduced to such Reduced Amount, but not below zero. If the
Administrator determines that the benefits and payments must be reduced to the
Reduced Amount, the Company must promptly notify the Participant of that
determination, with a copy of the detailed calculations by the Administrator.
All determinations of the Administrator under this Article VIII are binding upon
the Company and the Participant. It is the intention of the Company and the
Participant to reduce the payments under this Plan only if the aggregate Net
After Tax Receipts to the Participant would thereby be increased. If as result
of the uncertainty in the application of Code Section 4999 at the time of the
initial determination by the Administrator under this Article VIII, however, it
is possible that amounts will have been paid under the Plan to or for the
benefit of a Participant which should not have been so paid ("Overpayment") or
that additional amounts which will not have been paid under the Plan to or for
the benefit of a Participant could have been so paid ("Underpayment") - in each
case, consistent with the calculation of the Reduced Amount. If the
Administrator, based either upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Participant which the Administrator
believes has a high probability of success or controlling precedent or other
substantial authority, determines that an Overpayment has been made, any such
Overpayment must be treated for all purposes as a loan which the Participant
must repay to the Company together with interest at the applicable federal rate
under Code Section 7872(f)(2); provided, however, that no such loan may be
deemed to have been made and no amount shall be
9
<PAGE>
payable by Participant to the Company if and to the extent such deemed loan
and payment would not either reduce the amount on which the Participant is
subject to tax under Code Section 1, 3101 or 4999 or generate a refund of
such taxes. If the Administrator, based upon controlling precedent or other
substantial authority, determines that an Underpayment has occurred, the
Administrator must promptly notify the Company of the amount of the
Underpayment, which then shall be paid to the Participant. For purposes of
this section, (i) "Net After Tax Receipt" means the Present Value of a
payment under this Plan net of all taxes imposed on Participant with respect
thereto under Code Sections 1, 3101 and 4999, determined by applying the
highest marginal rate under Code section 1 which applied to the Participant's
taxable income for the immediately preceding taxable year; (ii) "Present
Value" means the value determined in accordance with Code Section 280G(d)(4);
and (iii) "Reduced Amount" means the smallest aggregate amount of all
payments under this Plan which (a) is less than the sum of all payments under
this Plan and (b) results in aggregate Net After Tax Receipts which are equal
to or greater than the Net After Tax Receipts which would result if the
aggregate payments under this Plan were any other amount less than the sum of
all payments to be made under this Plan.
ARTICLE IX
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options may be granted under
this Plan, the terms of outstanding Options, the per individual limitations on
the number of shares for which Options may be granted and any other limitations
in this Plan shall be adjusted as the Administrator shall determine to be
equitably required in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of shares or
(ii) engages in a transaction to which Section 424 of the Code applies or (b)
there occurs any other event which, in the judgment of the Administrator,
necessitates such action. In addition, the Administrator may make such other
adjustments to the terms of an outstanding Option to the extent equitable and
necessary to prevent an enlargement or dilution of the Participant's rights
thereunder as a result of any similar transaction. Any determination the
Administrator makes under this Article IX shall be final and conclusive. The
issuance by the Company of either shares of stock of any class or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the maximum
number of shares as to which Options may be granted, the per individual
limitations on the number of shares for which Options may be granted, any other
limitations in this Plan or the terms of outstanding Options. The Administrator
may grant Options in substitution for performance shares, stock awards, stock
options, stock appreciation rights, phantom shares, or similar awards held by an
individual who becomes an Employee, contractor, agent or other service provider
of the Company in connection with a transaction described in the first paragraph
of this Article IX. Notwithstanding any provision of the Plan (other than the
limitations of Section 5.02), the terms of such substituted Option shall be as
the Administrator, in its discretion, determines is appropriate.
10
<PAGE>
ARTICLE X
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
10.01. COMPLIANCE. No Option shall be exercisable, no Common Stock shall be
issued, no certificates for shares of Common Stock shall be delivered, and no
payment shall be made except in compliance with all applicable federal and state
laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement with any stock exchange to which the
Company is a party, and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any certificate for shares issued
to evidence Common Stock for which an Option is exercised may bear such legends
and statements as the Administrator may deem advisable to assure compliance with
federal and state laws and regulations. No Option shall be exercisable, no
Common Stock shall be issued, no certificate for shares of Common Stock shall be
delivered, and no payment shall be made under this Plan until the Company has
obtained such consent or approval as the Administrator may deem advisable from
regulatory bodies having jurisdiction over such matters.
10.02. POSTPONEMENT OF EXERCISE. The Administrator may postpone any exercise of
an Option for such time as the Administrator in its sole discretion may deem
necessary in order to permit the Company (i) to effect, amend or maintain any
necessary registration of the Plan or the shares of Common Stock issuable upon
the exercise of any Option under the securities laws, (ii) to permit any action
to be taken in order to (A) list such shares of Common Stock on a stock exchange
if shares of Common Stock are then listed on such exchange or (B) comply with
restrictions or regulations incident to the maintenance of a public market for
its shares of Common Stock, including any rules or regulations of any stock
exchange on which the shares of Common Stock are listed, or (iii) to determine
that such shares of Common Stock in the Plan are exempt from such registration
or that no action of the kind referred to in (ii)(B) above needs to be taken;
and the Company shall not be obligated by virtue of any terms and conditions of
any Agreement or any provision of the Plan to recognize the exercise of an
Option or to sell or issue shares of Common Stock in violation of the securities
laws or the laws of any government having jurisdiction thereof. Any such
postponement shall not extend the term of the Option and neither the Company nor
its directors and officers shall have any obligation or liability to any
Participant or to any other person with respect to shares of Common Stock as to
which the Option shall lapse because of such postponement.
ARTICLE XI
GENERAL PROVISIONS
11.01. EFFECT ON EMPLOYMENT AND SERVICE. Neither the adoption of this Plan, its
operation, nor any Agreement or other documents describing or referring to this
Plan shall confer upon any individual any right to continue in the employ or
service of the Company or any Subsidiary or in any way affect the right and
power of the Company or any Subsidiary to terminate the employment or service of
any individual at any time with or without assigning a reason therefor.
11
<PAGE>
11.02. UNFUNDED PLAN. The Plan, insofar as it provides for grants of Options,
shall be unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by grants under this Plan. Any liability of
the Company to any person with respect to any grant under this Plan shall be
based solely upon any contractual obligations that may be created pursuant to
this Plan. No such obligation of the Company shall be deemed to be secured by
any pledge of, or other encumbrance on, any property of the Company.
11.03. TAX WITHHOLDING. Unless an Agreement provides otherwise, each Participant
shall be responsible for satisfying in cash or cash equivalent acceptable to the
Administrator any income and employment tax withholding obligations attributable
to participation in the Plan and the exercise of Options granted thereunder. In
accordance with procedures that the Administrator establishes, the Administrator
may permit a Participant to pay such amounts (i) by surrendering shares of
Common Stock that the Participant has held for at least six months, (ii) by a
cashless exercise through a broker, (iii) by delivery of the full recourse,
interest-bearing promissory note of the Participant, (iv) by such other medium
of payment as the Administrator, in its discretion, shall authorize, or (v) by
any combination of the aforementioned methods of payment.
11.04. RESERVATION OF SHARES. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of shares of Common Stock as
shall be sufficient to satisfy the requirements of the Plan. Additionally, the
Company, during the term of this Plan, shall use its best efforts to seek to
obtain from appropriate regulatory agencies any requisite authorizations needed
in order to issue and to sell such number of shares of Common Stock as shall be
sufficient to satisfy the requirements of the Plan. However, the inability of
the Company to obtain from any such regulatory agency the requisite
authorizations the Company's counsel deems to be necessary for the lawful
issuance and sale of any shares of Common Stock hereunder, or the inability of
the Company to confirm to its satisfaction that any issuance and sale of any
shares of Common Stock 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 of Common Stock as to which such requisite authority shall not
have been obtained.
11.05. GOVERNING LAW. This Plan and all Options granted hereunder shall be
governed by the laws of the State of Delaware, except to the extent federal law
applies.
11.06. OTHER ACTIONS. Nothing in the Plan shall be construed to limit the
authority of the Company to exercise its corporate rights and powers, including,
by way of illustration and not by way of limitation, the right to grant options
for proper corporate purposes otherwise than under the Plan to any employee or
to any other person, firm, corporation, association or other entity, or to grant
options to, or assume options of any person in connection with, the acquisition,
purchase, lease, merger, consolidation, reorganization or otherwise, of all or
any part of the business and assets of any person, firm, corporation,
association or other entity.
ARTICLE XII
AMENDMENT
The Board may amend this Plan from time to time or terminate the Plan;
provided, however, that no amendment may become effective until shareholder
approval is obtained if (i) the amendment increases the aggregate number of
shares of Common Stock that may be
12
<PAGE>
issued pursuant to Options under the Plan or (ii) the amendment changes the
class of individuals eligible to become Participants. No amendment shall,
without a Participant's consent, adversely affect any rights of such
Participant under any outstanding Option at the time such amendment is made.
ARTICLE XIII
DURATION OF PLAN
No Option may be granted under this Plan 10 years after the Board
adopts the Plan. Options granted before that date shall remain valid in
accordance with their terms.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
Options may be granted under this Plan upon its adoption by the Board,
provided that no Option shall be effective or exercisable unless the Company's
shareholders approve this Plan within 12 months of the Board's adoption of this
Plan.
ARTICLE XV
RULES OF CONSTRUCTION
Headings are given to the articles and sections of this Plan solely as
a convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
EARTHLINK, INC.
BY:
-------------------------------------------
TITLE:
---------------------------------------=
13
