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EXHIBIT 4.5
EARTHLINK, INC.
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of the Stock Option Plan for Non-Employee Directors (the
"Plan") of EarthLink, Inc., a Delaware corporation (the "Company"), is to
promote the long-term interests of the Company by attracting and retaining
qualified and experienced persons for service as non-employee directors of
the Company by providing an additional incentive for such non-employee
directors to work for the success and growth of the Company through ownership
of the Company's common stock.
2. DEFINITIONS
When used herein, the following terms shall have the meanings set
forth below:
2.1. "Affiliate" means the same as set forth in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended.
2.2. "Board" means the Board of Directors of the Company.
2.3. "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 more than 50 percent of the Voting
Stock of the surviving or transferee Person immediately after such event, or
(ii) any 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, more than 50 percent of the Voting Stock of the
Company, or (iii) the approval by the holders of the 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.
2.4. "Code" means the Internal Revenue Code of 1986, as amended.
2.5. "Company" means EarthLink, Inc., a Delaware corporation.
2.6. "Disability" means a mental or physical condition that, in the
opinion of the Company, renders the director unable or incompetent to serve
as a director, which condition in the opinion of the physician that the
Company employs is expected to be permanent or to last for an indefinite
duration or a duration in excess of six months.
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2.7. "Fair Market Value" means, with respect to the Company's
Shares, the closing price of the Shares on the date on which the value is to
be determined, as reported on the stock exchange on which such Shares are
traded, or such other source of quotations for or reports of trading activity
in Shares as the Board from time to time may select, or if the Shares are not
traded on such exchange on such date, then on the next preceding day that the
Shares were traded on such exchange, or as reported by such other source as
the Board from time to time may select. If at the time of the determination
of Fair Market Value the Shares are not actively traded on any such stock
exchange, Fair Market Value means the fair market value of a Share as the
Board determines taking into account such facts and circumstance as the Board
deems material to the value of the Shares. The Fair Market Value that the
Board determines shall be final, binding and conclusive on the Company and
each Non-Employee Director.
2.8. "Non-Employee Director" means a director of the Company who is
not an officer or employee of the Company or any of its subsidiaries or
Affiliates and who was not elected or appointed to the Board pursuant to
voting rights or other similar authority granted to the holders of any
preferred stock or similar equity securities of the Company, which voting
rights or similar authority are exclusive of any voting rights or other
similar authority granted to any class or classes of any common stock of the
Company that generally has the voting power under ordinary circumstances to
elect at least a majority of the Board. A "Non-Employee Director" includes
any director of the Company who serves as a consultant to the Company.
2.9. "Non-Qualified Stock Option" means an Option not entitled to
special tax treatment under Section 422 of the Code.
2.10. "Option" means a stock option that entitles the holder to
purchase from the Company a stated number of Shares at the price set forth in
the agreement that specifies the terms and conditions of the Option.
2.11. "Optionee" means a Non-Employee Director to whom an Option is
granted.
2.12. "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.
2.13. "Plan" means the EarthLink, Inc. Stock Option Plan for
Non-Employee Directors contained herein, and as it may be amended from time
to time.
2.14. "Shares" means the shares of the Company's common stock, $.01
par value per share.
2.15. "Voting Stock" means with respect to any specified Person 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.
3. ADMINISTRATION OF THE PLAN
The Board shall administer the Plan. The Board shall have the sole
responsibility for construing and interpreting the Plan, for establishing and
amending such rules and regulations as it deems necessary or desirable for
the proper administration of the Plan, and for resolving all questions
arising under the Plan.
Any decision or action the Board takes arising out of or in
connection with the construction, administration, interpretation and effect
of the Plan and of its rules and regulations
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shall, to the extent permitted by law, be within its absolute discretion,
except as otherwise specifically provided herein, and shall be conclusive and
binding upon the Company, all Optionees and any other person, whether that
person is claiming under or through any Optionee or otherwise.
4. ELIGIBILITY
All Non-Employee Directors of the Company shall be eligible to
participate in the Plan during the time they serve as Non-Employee Directors.
A Non-Employee Director's right to participate in the Plan shall
automatically terminate on and after the time he is no longer a Non-Employee
Director.
5. SHARES SUBJECT TO THE PLAN
An aggregate of 350,000 Shares (subject to adjustment in accordance
with Section 12 below) shall be reserved for issuance in connection with
Options granted under the Plan. The Shares so issued may be either authorized
but unissued Shares of the Company or Shares that have been or may be
reacquired by the Company, including treasury shares. Any Shares subject to
issuance upon exercise of Options but that are not issued because of a
surrender, lapse, expiration or termination of any such Option, shall once
again be reserved and available for issuance under the Plan.
6. GRANTING OF OPTIONS
6.1. All grants of Options under the Plan shall be automatic and
non-discretionary, and subject to the terms and conditions provided in this
Plan. All Options granted under the Plan shall be Non-Qualified Stock Options.
6.2. Subject to the provisions of the Plan, each Non-Employee
Director who was in office on March 8, 2000 shall on adoption of this Plan be
granted an Option to purchase 15,000 Shares. Each Non-Employee Director who
is elected or appointed to the Board after March 8, 2000 shall be granted an
Option to purchase 35,000 Shares on the date such director takes office.
6.3. Subject to the provisions of the Plan, each Non-Employee
Director who was in office on March 8, 2000 shall, as of the first business
day of each fiscal year of the Company beginning after the effective date of
the Plan, be granted an Option to purchase an additional 15,000 Shares. Each
Non-Employee Director who is elected or appointed to the Board after March 8,
2000 shall be granted any Option to purchase an additional 15,000 Shares
pursuant to this Plan. If at any time there is not sufficient Shares reserved
under the Plan for grants of Options, the Options to be granted each
Non-Employee Director under the Plan at such time shall be proportionately
adjusted.
6.4. The purchase price of each Share that may be purchased upon
exercise of an Option shall be the Fair Market Value of the Share on the date
the Option is granted. Options awarded pursuant to this Section 6 shall be
subject to such additional terms and conditions as are set forth in the
written agreement covering the Option.
6.5. Except as set forth in Sections 7.2 or 11, Options granted
under the Plan shall become exercisable with respect to one-third of the
Shares subject to the Option on each annual anniversary of the date of grant,
provided the Non-Employee Director is still serving as a Non-Employee
Director at such time, until the Option becomes exercisable with respect to
all of the Shares subject to the Option, provided the Option does not expire
by its terms before such time.
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7. TERMINATION OF DIRECTORSHIP
7.1. The Option of any Optionee whose status as a director of the
Company shall terminate because of death or Disability may be exercised, to
the extent exercisable on the date of death or Disability, at any time within
one year after the date of such termination or prior to the date on which the
Option expires by its terms, whichever is earlier. Any such exercise shall be
made (i) in the case of the death of the Optionee, by the executor or
administrator of the estate of the deceased Optionee or the person or persons
to whom the deceased Optionee's rights under the Option shall pass by will or
by the laws of descent and distribution, and (ii) in the case of the
Disability of the Optionee, by the Optionee or by the Optionee's guardian or
legal representative.
7.2. The Board in its discretion may declare that an Option of an
Optionee whose status as a director terminates because of removal from the
Board on or within one year after a Change in Control shall become fully
exercisable with respect to all Shares covered thereby and not previously
purchased upon exercise of the Option, and shall remain fully exercisable
until three months after the date of such termination or prior to the date
the Option expires by its terms, whichever is earlier. If the Board does not
make any such declaration before the Optionee's status as a director
terminates because of removal from the Board on or within one year after a
Change in Control, then the Option of any Optionee whose status as a director
so terminates may be exercised, to the extent exercisable on the date of such
termination, within three months after the date of termination or prior to
the date on which the Option expires by its terms, whichever is earlier.
7.3. The Option of any Optionee whose status as a director shall
terminate for any reason other than as specified in Sections 7.1 and 7.2 may
be exercised, to the extent exercisable on the date of such termination,
within three months after the date of such termination or prior to the date
on which the Option expires by its terms, whichever is earlier.
8. NON-TRANSFERABILITY OF OPTIONS
Each Option granted under the Plan shall not be transferable
otherwise than by will or by the laws of descent and distribution, and shall
be exercised during the lifetime of the Optionee only by the Optionee or by
the Optionee's guardian or legal representative. Notwithstanding the
preceding sentence, an Optionee, at any time prior to his death, may assign
all or any portion of an Option granted to him to (i) his spouse or lineal
descendants, (ii) the trustee of a trust established for the primary benefit
of his spouse or lineal descendants, or (iii) a partnership of which his
spouse and lineal descendants are the only partners. In such event, the
spouse, lineal descendants, trust, or partnership will be entitled to all the
rights of the Optionee with the respect to the assigned portion of such
Option (except that such transferee may not transfer the Option other than by
will or by the laws of descent and distribution), and such portion of the
Option will continue to be subject to all of the terms, conditions and
restrictions applicable to the Option as set forth herein immediately prior
to the effective date of the assignment. Any such assignment will be
permitted only if (i) the Optionee does not receive any consideration
therefor, and (ii) the assignment is expressly approved by the Board. Any
such assignment shall be evidenced by an appropriate written document
executed by the Optionee and a copy thereof shall be delivered to the Board
on or prior to the effective date of the assignment.
9. TERMS OF OPTIONS
Options shall expire 10 years from the date of the granting thereof,
but shall be subject to earlier termination as provided in Section 7. Options
shall be evidenced by written agreements containing terms and conditions
consistent with the provisions of the Plan. Each agreement shall comply with
and shall be subject to the terms and conditions of the Plan and shall
constitute evidence, by the Non-Employee Director's signature thereon, that
it is the intent of the Non-Employee Director to continue to serve as a
director of the Company for the remainder of his
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term during which the Option was granted. It shall be a condition to the
exercise of an Option that the Optionee represent to the Company at the time
of exercise that the Shares are being acquired for investment and not with a
view to the distribution thereof and that the Optionee agrees that the Shares
will not be disposed of except pursuant to an effective registration
statement, unless the Company shall receive an opinion of counsel that such
disposition is exempt from registration under the applicable securities laws.
The Company may include on certificates representing Shares issued pursuant
to any Option such legends referring to the foregoing representations or
restrictions or any other applicable restrictions as the Company, in its
discretion, shall deem appropriate.
10. EXERCISE OF OPTIONS
An Optionee may exercise an Option by delivery of a written notice,
specifying the number of Shares with respect to which the Option is being
exercised, accompanied by payment in full of the purchase price of any Shares
to be purchased (in the form of a cashier's or certified check). The Option
shall not be deemed exercised and no Shares shall be issued upon exercise of
an Option until full payment has been made therefor. Notwithstanding the
foregoing sentences, the Board, in its discretion, may permit an Optionee to
pay the purchase price of the Shares to be purchased (i) in Shares that the
Optionee has owned for at least six months prior to the date of exercise
valued at their Fair Market Value on the day preceding the date of exercise
equal to the exercise price of the Option, (ii) in a cashless exercise
through a broker, or (iii) by any combination of the aforementioned methods
of payment. Shares issued upon exercise of an Option shall be issued only in
the name of the Optionee. All notices shall be delivered to the Secretary of
the Company and shall become effective when received.
11. CHANGE IN CONTROL
Outstanding Options previously granted under the Plan shall be
exercisable in whole or in part, with respect to the additional number of
Shares to which the Option is not at that time exercisable as if the Optionee
had remained on the Board for an additional 18 months from the date of the
Change in Control (it being deemed that the Non-Employee Director had an
additional 18 months on the Board for purposes of determining the extent of
the exercisability of such outstanding Options), on the earlier of (i)
immediately before the consummation of the Change in Control or (ii)
immediately before the Board takes any of the actions described in the next
sentence provided the Non-Employee Director to whom the Option was granted is
still serving as a Non-Employee Director at such time, and such Options shall
remain exercisable to such extent thereafter in accordance with the terms of
such Options, notwithstanding any provisions in the Options to the contrary
regarding exercisability. Notwithstanding any provision of any agreement
covering the Option to the contrary, in the event of or in anticipation of a
Change in Control, the Board 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 before the Change in Control without any payment to the
holder of the Option, provided the Board gives prior written notice to the
holders of the Options and gives them the right to exercise their outstanding
Options before such date to the extent they are exercisable and/or (ii) may
terminate some or all outstanding Options on the consummation of the Change
in Control in consideration of payment to the holder of each such Option,
with respect to each Share to which the Option is then exercisable, of the
excess of the Fair Market Value on such date of the Shares subject to the
Option over the Option price. The Board may take such actions with respect to
some or all outstanding Options or on an Option-by-Option basis, which
actions need not be uniform for all outstanding Options. Such payment in (ii)
above may be made in any manner the Board determines, including in cash,
Voting Stock or other property. However, such 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.
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12. LISTING AND REGISTRATION OF SHARES; CONTRACTS
Each Option shall be subject to the requirement that, if at any time
the Board shall determine, in its discretion, that the listing, registration
or qualification of the Shares covered thereby upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such Option or the issuance or purchase
of Shares thereunder, such Option may not be exercised in whole or in part
unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board. Each Option shall also be subject to the condition
that the Company shall not be obligated to issue or transfer its Shares to
the Optionee thereof on its exercise, if the Board determines that such
issuance or transfer would violate any covenant in any loan agreement or
other contract to which the Company is a party. The Company may include on
certificates representing Shares issued pursuant to an Option such legends
referring to the foregoing representations or restrictions or any other
applicable restrictions on resale as the Company, in its discretion, shall
deem appropriate.
13. ADJUSTMENT FOR CHANGES IN CAPITALIZATION
Any increase in the number of outstanding Shares of the Company
occurring through stock splits or stock dividends after the adoption of the
Plan shall be reflected proportionately in an increase in the aggregate
number of Shares then available for the grant of Options under the Plan, or
becoming available through the termination, surrender or lapse of Options
previously granted but unexercised, and in the number of Shares subject to
Options then outstanding. Any fractional shares resulting from such
adjustments shall be eliminated. If changes in capitalization other than
those considered above shall occur, the Board shall make such adjustment in
the number and class of Shares as to which Options may thereafter be granted,
and in the number and class of Shares remaining subject to Options then
outstanding, as the Board in its discretion may consider appropriate, and all
such adjustments shall be conclusion upon all persons.
14. TAXES
Each Optionee shall be responsible for satisfying any income and tax
withholding obligations attributable to participation in the Plan and the
exercise of any Options. The Board may permit an Optionee to satisfy any such
amounts (i) in Shares that the Optionee has owned for at least six months
prior to the date of exercise valued at their Fair Market Value on the day
preceding the date of exercise, (ii) in a cashless exercise through a broker
or (iii) by any combination of the aforementioned methods of payment.
15. LIMITATION OF RIGHTS
15.1. Neither the Plan, nor the granting of an Option nor any other
action taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain
a director for any period of time, or at any particular rate of compensation.
15.2. An Optionee shall have no rights as a stockholder with respect
to the Shares covered by Options until the date of the issuance of a stock
certificate upon exercise thereof, and no provision will be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
16. 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
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right to grant Options for proper corporate purposes otherwise than under the
Plan to any employee or 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, by purchase, lease, merger, consolidation or
otherwise, of all or any part of the business and assets of any person, firm,
corporation, association or other entity.
17. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective on March 8, 2000, subject to
approval by the Company's stockholders at the 2000 Annual Meeting of
Stockholders or any adjournment thereof or at a Special Meeting of
Stockholders. Options granted hereunder shall not be exercisable prior to
such stockholder approval. Unless earlier terminated by the Board, the Plan
shall terminate on March 8, 2010. No Option shall be granted under the Plan
after such date.
18. TERMINATION AND AMENDMENT OF THE PLAN
The Board, without further action on the part of the Company's
stockholders, may at any time terminate, suspend or modify the Plan to the
extent permitted by law, regulation or stock exchange requirements. The Plan
will automatically terminate on and after the time there is no longer any
Shares available for issuance pursuant to Options granted under the Plan. No
termination or amendment of the Plan, or amendment of any Option, shall
adversely affect any right acquired by any Optionee under an Option granted
before the date of such termination or amendment, unless such Optionee shall
consent; but it shall be conclusively presumed that any adjustment for
changes in capitalization as provided in Section 12 above does not adversely
affect any such right.
19. GOVERNING LAW
The Plan shall be construed and administered under the laws of the
State of Delaware.
IN WITNESS WHEREOF, the Plan has been executed on behalf of the
Company on this 8th day of April, 2000.
EARTHLINK, INC.
By:
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Title:
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