EXHIBIT 4.9
EARTHLINK NETWORK, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
EarthLink Network, Inc., a Delaware corporation (the "Company"), hereby grants
to Xxxxxxx Xxxxxx (the "Optionee") an option (the "Option") to purchase a total
of 50,000 shares of Common Stock (the "Shares") of the Company, at the price an
on the terms set forth herein.
1. Nature of the Option. This Option is intended to be a nonstatutory stock
option and is not intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or to
otherwise qualify for any special tax benefits to the Optionee.
2. Definitions. As used herein, the following definitions shall apply.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Common Stock" shall mean the Common Stock of the Company.
(c) "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 the Company or any Parent or Subsidiary of the
Company which now exists or is hereafter organized or acquired by or
acquires the Company. Continuous Employment shall not be considered
interrupted in the case of transfers between locations of the Company or
between the Company, its parent, or any of its Subsidiaries or its
successors.
(d) "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.
(e) "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.
(f) "Optioned Stock" shall mean the Common Stock subject to this
Option.
(g) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Sections 424(e) and (g) of the Code.
(h) "Subsidiary" shall mean a subsidiary corporation, whether now or
hereafter existing, as defined in Sections 424(f) and (g) of the Code.
(i) "Termination for Cause" shall mean termination of employment as a
result of (i) any act or acts by the Optionee constituting a felony under
any federal, state or local law; (ii) the Optionee's willful and continued
failure to perform the duties assigned to him as an Employee; (iii) any
material breach by the Optionee of any agreement with the Company
concerning his employment or other understanding concerning the terms and
conditions of employment by the Company; (iv) dishonesty, gross negligence
or malfeasance by the Optionee in the performance of Optionee's duties as
an Employee without informing appropriate members of management to whom
such Optionee reports, which action or actions, in the determination of the
Board, have caused or substantially contributed to the material
deterioration in the business or financial condition of the Company or any
affiliate of the Company, taken as a whole.
3. Date of Grant; Term ot Option. This Option is granted as of November 7,
1997 (the "Grant Date"), and subject to Section 8 hereof, it may not be
exercised later than November 6, 2007.
4. Option Exercise Price. The Option exercise price is $16.00 per Share.
5. Exercise of Option. This Option shall he exercisable during its term only
as follows;
(a) Right to Exercise. This Option shall vest and be exercisable,
cumulatively in twenty equal quarterly installments commencing three months
after the date of grant and continuing to vest as to one additional
installment every quarter thereafter as long as the Optionee remains an
Employee or this Agreement is otherwise terminated.
(a) Method of Exercise. This Option shall he exercisable from time to
time as to all or any portion of the Shares as to which this Option is then
exercisable by execution of a stock purchase agreement in the form of
Attachment A attached hereto (the "Stock Purchase Agreement"). The Stock
Purchase Agreement shall be duly completed and signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company or such other person as may be designated by the Company. The Stock
Purchase Agreement shall be accompanied by payment of the aggregate Option
exercise price. Such payment of the aggregate Option exercise price shall
be by check payable to the Company. The certificate or certificates for the
Shares as to which this Option shall be exercised shall be registered in
the name of the Optionee (or any permitted successor or assign) and shall
be legended as required under Section 15 hereof and/or applicable blue sky
or other laws.
(b) Restriction on Exercise. This Option may not be exercised if the
issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or
regulations. The Company shall not be obligated to take any affirmative
action in order to cause the exercised of this Option or the issuance of
shares pursuant thereto to comply with such laws or regulations. As a
condition to the exercise of this Option, the Company may require the
Optionee to make any representation and warranty to the Company as may be
required by any applicable law or regulation. This Option may not be
exercised for a fraction of a Share.
(c) Effect of Exercise. Exercise of this Option in any manner shall
result in a decrease in the number of Shares which thereafter may be
available for sale under this Option by the number of Shares as to which
this Option is exercised.
6. No Rights as Shareholder. Until this Option is properly exercised in whole
or in part in accordance with the terms of Section 5 hereof, no right to vote or
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 this Option is exercised, except
as provided in Section 10 hereof.
7. Deliver of Share Certificates. As soon as practicable after any proper
exercise of this Option, the Company shal1, 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 this Option shall have been exercised. The time of issuance and delivery
of the certificate(s) representing the Shares for which this Option shall have
been exercised may be postponed by the Company for such period as may be
required by the Company, with reasonable diligence, to comply with any
applicable listing requirements of any national or regional securities exchange
or any law or regulation applicable to the issuance or delivery of such Shares.
8. Termination of Status as an Employee. If the Optionee ceases to serve as an
employee for any reason other than death, Disability or Termination for Cause,
and thereby terminates his Continuous Status as an Employee, the Optionee shall
have the right to exercise this Option at any time within 30 days after the date
of such termination. If the Optionee ceases to serve as an Employee due to death
or Disability, this Option may be exercised at any time within 180 days
subsequent to the death or Disability of the Optionee, in the case of death, by
the Optionee's estate or by a person who acquired the right to exercise this
Option be bequest or inheritance, or, in the case or Disability by the Optionee,
but in any case only to the extent the Optionee was entitled to exercise this
Option at the date of such termination. If an Optionee's Continuous Status as an
Employee terminates, due to his Termination for Cause, this Option shall
terminate as of the date of such Termination for Cause to the extent not
exercised as of such date. To the extent that the Optionee was not entitled to
exercise this Option at the date of termination, or to the extent this
Option is not exercised within the time specified herein, this Option shall
terminate. Notwithstanding the foregoing, this Option shall not be exercisable
after the expiration of the term set forth in Section hereof.
9. Nontransferability of Option. This Option may not be sold, pledged,
assigned, hypothecated, gifted, transferred or disposed of in any manner, either
voluntarily or involuntarily by operation of law, other than by will or by the
laws of descent or distribution or as a transfer between spouses incident to a
divorce, and any such attempt may result, at the discretion of the Board, in the
termination of this Option. During the lifetime of the Optionee this Option may
be exercised only by the Optionee or his guardian. Subject to the foregoing, the
terms of this Option shall be binding upon the executors, administrators, heirs,
successors assigns of the Optionee.
10. Adjustment Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the shareholders of the Company, the
number of Shares covered by this Option, as well as the exercise price per Share
of the Shares covered by this Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, combination, recapitalization or
reclassification of the Common Stock, or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company (other than stock bonuses to employees or directors); provided, however,
that the conversion of any convertible securities of the Company shall not be
deemed to have been effected without the receipt of consideration. Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number of price of Shares subject to this
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 provisions for the assumption of this Option,
if then outstanding, by the successor corporation or a Parent of a Subsidiary
thereof, or (ii) declare that this Option, if then outstanding, shall terminate
as of a date fixed by the Board which is at least 30 days after the notice
thereof to the Optionee (unless such 30 day period is waived by the Optionee)
and shall give the Optionee the right to exercise this Option as to all or any
part of the shares underlying this Option to the extent then exercisable,
provided such exercise does not violate Section 8 hereof.
(c) No fractional share of Common Stock shall be issuable on account of any
action aforesaid, and the aggregate number of shares into which Shares then
covered by this 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. Investment Representations. Unless the Shares have been registered under
the Securities Act of 1993, in connection with the acquisition of this Option,
the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons
and by reason of his business or financial experience, has, and could be
reasonably assumed to have the capacity to protect his interests in
connection with the acquisition of this Option and the Shares.
12. Reservation of Shares. The Company covenants and agrees that during the
term of this Option the Company will at all times have authorized and reserved
for the purposes of the issue upon exercise of this Option at least the maximum
number of shares of Common Stock as are issuable upon the exercise of this
Option.
13. Continuation of Employment. This Option shall not confer upon the Optionee
any right whatsoever to continue in the employment of the Company or any of its
Subsidiaries or limit or restrict in any respect the rights of the Company,
which rights are hereby expressly reserved, to terminate the Optionee's
employment and compensation at any time for any reason whatsoever, with or
without cause, in the Company's discretion and with or without notice
14. Withholding. The Company reserves the right to withhold, in accordance with
any applicable laws, from any Consideration payable to Optionee any taxes
required to be withheld by federal, state or local laws as a result of the grant
or exercise of this Option or the sale or other disposition of the Shares issued
upon exercise of this Option. If the amount of any consideration payable to the
Optionee is insufficient to pay such taxes or if no consideration is payable to
the Optionee, upon the request of the Company, the Optionee shall pay to the
Company an amount sufficient for the Company to satisfy any federal, state or
local tax withholding requirements it may incur, as a result of the grant or
exercise of this Option or the sale or other disposition of the Shares issued
upon the exercise of this Option.
15. Legends. Each certificate representing the Shares shall contain such
legends as may be required under applicable blue sky laws. Unless an appropriate
registration statement is filed and becomes effective pursuant to the Securities
Act of 1993, as amended, with respect to the Shares, each certificate
representing such Shares shall also have endorsed thereon a legend substantially
as follows:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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 AN 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."
16. Action by the Company. The existence of this Option shall not affect in any
way the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, or any class of preferred
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer ot all or any
part of its assets or business, or any other corporate act or proceeding.
17. Interpretation. As a condition to the granting of this Option, the Optionee
and each person who succeeds to the Optionee's rights hereunder, agrees that any
dispute or disagreement which shall arise under or as a result of or pursuant to
this Option shall be determined by the Board in its sole discretion, and that
any such determination or interpretation of the terms of this Option by the
Board shall be final, binding and conclusive.
18. Notices. Any notice to be given to the Company pursuant to this Option
shall be addressed to the Company in care of its Secretary (or such other person
as the Company may designate from time to time) as its principal office, and any
notice to be given to the Optionee shall be delivered personally or addressed to
him at the address given beneath his signature set forth below, or at such other
address as the Optionee may hereafter designate in writing to the Company. Any
such notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, registered or certified, and
deposited, postage and registry or certification fee prepaid, in a post office
or branch post office regularly maintained by the United State Postal Service.
19. Invalid Provisions. In the event that any provision of this Option is found
to be invalid or otherwise unenforceable under any applicable law, such
invalidity or enforceability 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.
20. Governing Law. This Option shall be governed by and construed in accordance
with the laws of the State of California.
Dated as of November 7, 1997
EarthLink Network, Inc.
By:______________________________
Name: ___________________________
Title:___________________________
ACKNOWLEDGMENT
The Optionee hereby accepts this Option subject to all of the terms and
provisions hereof.
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Name:
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Address:
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City, State:
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THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS
OF A STOCK PURCHASE AGREEMENT TO BE ENTERED INTO BETWEEN THE HOLDER OF THIS
OPTION AND THE COMPANY UPON EXERCISE OF THIS OPTION, A COPY OF WHICH AGREEMENT
IS ON FILE WITH THE SECRETARY OF THE COMPANY.
