Exhibit 10.5


 


EARTHLINK, INC.


EQUITY PLAN


FOR NON-EMPLOYEE DIRECTORS


Nonqualified Stock Option Agreement


 


No. of
Shares Subject to


Nonqualified
Stock Option:                


 


THIS
NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of the 2nd
day of January 2004 between EarthLink, Inc., a Delaware Corporation
(the “Company”), and                       
(the “Non-Employee Director”) is made pursuant and subject to the provisions of
the Company’s Equity Plan for Non-Employee Directors (the “Plan”), a copy of
which is attached hereto.  All terms used
herein that are defined in the Plan have the same meaning given them in the
Plan.


 


1.                                       Grant of Option.  Pursuant to the Plan, the Company, on                       
(the “Date of Grant”), granted to the Non-Employee Director, subject to the
terms and conditions of the Plan and subject further to the terms and
conditions herein set forth, the right and option to purchase from the Company
all or any part of an aggregate of         
Shares, at the price of $          
per share, which is the Fair Market Value of a Share at the Date of
Grant.  This Option is to be treated as a
Nonqualified Stock Option.  This Option
is exercisable as hereinafter provided.


 


2.                                       Terms and Conditions.  This Option is subject to the following terms
and conditions:


 


(a)                                  Expiration Date.  This Option shall expire at           
on                         
(the “Expiration Date”) which is 10 years from the Date of Grant.


 


(b)                                 Exercise of Option.  Except as otherwise provided in the Plan and
in paragraph 3, 4, 5 or 6, this Option shall become exercisable with respect to
one-fourth of the Shares subject to this Option on each annual anniversary of
the Date of Grant, provided the Non-Employee Director is still serving as a
Non-Employee Director of the Company at such time, until the Option becomes
exercisable with respect to all of the Shares subject to the Option.  Once this Option has become exercisable in
accordance with the preceding sentence, it shall continue to be exercisable
until the earlier of the termination of the Non-Employee Director’s rights
hereunder pursuant to paragraphs 3, 4, 5 or 6 or until the Expiration
Date.  A partial exercise of this Option
shall not affect the Non-Employee Director’s right to exercise this Option with
respect to the remaining Shares, subject to the conditions of the Plan and this
Agreement.


 


(c)                                  Method of Exercise and Payment
for Shares.  This Option shall be exercised by delivering
written notice to the attention of the Company’s Secretary at the Company’s
principal office located at 1375 Peachtree Street, Atlanta, Georgia 30309.  The exercise date shall be (i) in the
case of notice by mail, the date of


 





















 


postmark, or (ii) if delivered in
person, the date of delivery.  Such
notice shall specify the number of Shares with respect to which the Option is
being exercised and shall be accompanied by payment of the Option price, in
cash or a cash equivalent acceptable to the Board, or, if the Board permits, by
(i) the surrender of Shares that the Non-Employee Director has owned for
at least six months with an aggregate Fair Market Value (determined as of the
preceding business day) which, together with any cash or cash equivalent the
Non-Employee Director pays, is not less than the Option price of the number of
Shares for which the Option is being exercised, (ii) by a cashless
exercise through a broker or (iii) by any combination of the
aforementioned methods of payment.


 


(d)                                 Nontransferability.  This Option 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 Non-Employee Director only by the
Non-Employee Director or by the Non-Employee Director’s guardian or legal
representative.  Notwithstanding the
preceding sentence, the Non-Employee Director, at any time prior to his death,
may assign all or any portion of the Option granted to him to (i) his
spouse or lineal descendant, (ii) the trustee of a trust established for
the primary benefit of his spouse or lineal descendant, or (iii) a
partnership of which his spouse or lineal descendants are the only
partners.  In such event , the spouse,
lineal descendants, trustee or partnership will be entitled to all the rights
of the Non-Employee Director with 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 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 Non-Employee
Director 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 Non-Employee Director and a copy thereof shall be
delivered to the Board on or prior to the effective date of the assignment.


 


3.                                       Exercise in the Event of Death.  This Option shall be exercisable for all or
part of the number of Shares that the Non-Employee Director is entitled to
purchase pursuant to paragraph 2(b) as of the date of the Non-Employee
Director’s death, reduced by the number of shares for which the Non-Employee
Director previously exercised the Option, in the event the Non-Employee
Director dies while serving as a Non-Employee Director and prior to the
Expiration Date and prior to the termination of the Non-Employee Director’s  rights under paragraphs 4, 5, or 6.  In that event, this Option may be exercised
by the Non-Employee Director’s estate, or the person or persons to whom his
rights under this Option shall pass by will or the laws of descent and
distribution, during the remainder of the period preceding the Expiration Date
or within one year of the date the Non-Employee Director dies, whichever is
shorter.


 


4.                                       Exercise in the Event of
Disability.  This Option shall be exercisable for all or
part of the number of Shares that the Non-Employee Director is entitled to
purchase pursuant to paragraph 2(b) as of the date the Non-Employee
Director incurs a Disability, reduced by the


 


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number of Shares for which the Non-Employee Director previously
exercised the Option, if the Non-Employee Director incurs a Disability while
serving as a Non-Employee Director and prior to the Expiration Date and prior
to the termination of the Non-Employee Director’s rights under paragraphs 3, 5,
or 6.  In that event, the Non-Employee
Director or his legal representative may exercise this Option during the
remainder of the period preceding the Expiration Date or within one year of the
date the Non-Employee Director ceases serving as a Non-Employee Director on
account of such Disability, whichever is shorter.


 


5.                                       Exercise in the Event of Removal
Within One Year After a Change in Control.  This Option shall
be exercisable for all or part of the number of Shares that the Non-Employee
Director is entitled to purchase pursuant to paragraph 2(b) as of the date
of removal from the Board on or within one year after a Change in Control,
reduced by the number of Shares for which the Non-Employee Director previously
exercised the Option, if the Non-Employee Director is removed from the Board on
or within one year after a Change in Control and prior to the Expiration Date
and prior to the termination of Non-Employee Director’s rights under paragraphs
3, 4, or 6.  In that event, the
Non-Employee Director may exercise this Option during the remainder of the
period preceding the Expiration Date or until the date that is three months
after the date he ceases serving as a Non-Employee Director on account of
removal on or within one year after a Change in Control, whichever is shorter.


 


6.                                       Exercise After Termination of
Directorship.  This Option shall be exercisable for all or
part of the number of Shares that the Non-Employee director is entitled to
purchase pursuant to paragraph 2(b) as of the date the Non-Employee
Director ceases serving as a Non-Employee Director, reduced by the number of
Shares for which the Non-Employee Director previously exercised the Option, if
the Non-Employee Director ceases serving as a Non-Employee Director prior to
the Expiration Date other than on account of death, Disability or removal on or
within one year after a Change in Control and prior to the termination of
Non-Employee Director’s rights under paragraphs 3, 4, or 5.  In that event, the Non-Employee Director may
exercise this Option during the remainder of the period preceding the
Expiration Date or until the date that is three months after the date he ceases
serving as a Non-Employee Director other than on account of death, Disability
or removal on or within one year after a Change in Control, whichever is
shorter.


 


7.                                       Minimum Exercise.  This Nonqualified Stock Option may not be
exercised for less than 100 Shares unless it is exercised for the full number
of Shares that remain subject to the Nonqualified Stock Option.


 


8.                                       Fractional Shares.  Fractional Shares shall not be issuable
hereunder, and when any provision hereof may entitle the Non-Employee Director
to a fractional Share such fraction shall be disregarded.


 


9.                                       Shareholder Rights.  The Non-Employee Director shall not have any
rights as a shareholder with respect to Shares subject to the Option until
issuance of the certificates representing such Shares upon exercise of the
Option.  The Company may include on any
certificates representing Shares issued pursuant to the Option such legends referring
to any representations, restrictions or any other applicable statements as the
Company, in its discretion, shall deem appropriate.


 


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10.                                 Change in Capital Structure.  The terms of this Option shall be adjusted in
accordance with the terms and conditions of the Plan as the Board determines is
equitably required in the event the Company effects one or more stock
dividends, stock split-ups, subdivisions or consolidations of shares or other
similar changes in capitalization.


 


11.                                 No Right to Continued Service.  This Option does not confer upon the
Non-Employee Director any right with respect to continued service as a
Non-Employee Director, nor shall it interfere in any way with any rights to
terminate the Non-Employee Director’s service as a director without assigning a
reason therefor.


 


12.                                 Non-Employee Director Bound by
Plan.  The Non-Employee Director hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by all the terms and
provisions of the Plan.


 


13.                                 Binding Effect.  Subject to the limitations stated above and
in the Plan, this Agreement shall be binding upon and inure to the benefit of
the legatees, distributes, and personal representatives of the Non-Employee
Director and the successors of the Company.


 


14.                                 Conflicts.  In the event of any conflict between the
provision of the Plan and the provision of this Agreement, the provisions of
the Plan shall govern.  All references
herein to the Plan shall mean the Plan as in effect on the date hereof.


 


15.                                 Taxes.  The Non-Employee Director shall satisfy all
amounts of any applicable withholding taxes attributable to the exercise of the
Option, and the Option shall not be deemed exercised and no Shares shall be
issued upon exercise until full payment has been made therefor.  Such withholding taxes may be paid in cash or
cash equivalent acceptable to the Board, or, if the Board permits (i) by
the surrender of Shares that the Participant has owned for at least six months
with an aggregate Fair Market Value (determined as of the preceding business
day) which, together with any cash or cash equivalent the Non-Employee Director
pays, is not less than the withholding taxes owed for the number of Shares for
which the Option is being exercised, (ii) by a cashless exercise through a
broker, or (iii) by any combination of the aforementioned methods of
payment.


 


16.                                 Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one in the same instrument.


 


17.                                 Miscellaneous.  The parties agree to execute such further
instruments and take such further actions as may be necessary to carry out the
intent of the Plan and this Agreement. 
This Agreement and the Plan shall constitute the entire agreement of the
parties with respect to the subject matter hereof.


 


18.                                 Governing Law.  This Agreement shall be governed by the laws
of the State of Delaware, except to the extent federal law applies.


 


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IN WITNESS WHEREOF, the Company has caused
this Agreement to be signed by a duly authorized officer, and the Non-Employee
Director has affixed his signature hereto.


 


	
   

  	
  COMPANY:

  
	
   

  	
  EarthLink, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Charles G. Betty

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  NON-EMPLOYEE DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  



 


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