Document:

Exhibit 10.3

 

EARTHLINK, INC.

2006 EQUITY AND CASH INCENTIVE PLAN

 

Nonqualified Stock Option Agreement

 

No. of shares subject to

Nonqualified Stock Option:        

 

THIS NONQUALIFIED STOCK OPTION AGREEMENT
(this “Agreement”) dated as of the       day of                  ,
20        , between EarthLink, Inc., a
Delaware corporation (the “Company”), and                                         
(the “Participant”), is made pursuant and subject to the provisions of the
Company’s 2006 Equity and Cash Incentive Plan (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                         
         , 20     
(the “Date of Grant”), granted to the Participant, subject to the terms and
conditions of the Plan and subject further to the terms and conditions set
forth herein, the right and option to purchase from the Company all or any part
of an aggregate of                     
shares of the Common Stock of the Company, at the price of $                     
per share (which is not less than the Fair Market Value of a share of Common
Stock on the Date of Grant).  This Option
is intended to be treated as a nonqualified stock option, which is not subject
to Code Section 422.  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 11:59 p.m. on                          
       , 20     
(the “Expiration Date”) or such earlier time as set forth in Sections 3, 4, 5
or 6 of this Agreement.  In no event
shall the Expiration Date be later than 10 years from the Date of Grant.

 

(b)           Exercise of Option.  Except as provided in the Plan and in
Sections 3, 4, 5 or 6 of this Agreement, this Option shall become exercisable
with respect to         percent (       %)
of the shares of Common Stock subject to the Option on each of the               anniversaries of the Date of
Grant, provided that the Participant has been continuously employed by, or
providing services to, the Company or an Affiliate from the Date of Grant until
each such time.  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 Participant’s
rights hereunder pursuant to Sections 3, 4, 5 or 6 of this Agreement, or until
the Expiration Date.  A partial exercise
of this Option shall not affect the Participant’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 of exercise, along with the Option price for the portion

 

 

of the Option being exercised and all
applicable tax withholdings, to the attention of the Company’s Secretary at the
Company’s address specified in Section 11 below.  The exercise date shall be the date of
delivery.  The Participant shall pay the
Option price and all applicable tax withholdings in cash or cash equivalent
acceptable to the Committee.  However,
the Committee in its discretion may, but is not required to, allow the Participant
to pay the Option price and tax withholdings (i) by surrendering shares of
Common Stock the Participant already owns, (ii) by a cashless exercise through
a broker, (iii) by such other medium of payment as the Committee shall
authorize or (iv) by any combination of the allowable methods of payment set
forth herein.

 

(d)           Transferability.  Except as provided herein, this Option is
nontransferable and, during the Participant’s lifetime, only the Participant
may exercise this Option. 
Notwithstanding the foregoing, this Option may be transferred by will or
the laws of descent and distribution, and during the Participant’s lifetime,
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 are appropriate for such transferees to be
included in the class of transferees who may rely on a Form S-8 Registration
Statement under the Securities Act of 1933 to sell shares issuable upon
exercise of Options granted under the Plan. 
Any such transfer will be permitted only if (i) the Participant does not
receive any consideration for the transfer and (ii) the Committee expressly approves
the transfer.  Any transferee to whom
this Option is transferred shall be bound by the same terms and conditions that
governed this Option during the time it was held by the Participant (which
terms and conditions shall still be read from the perspective of the
Participant); provided, however, that the transferee may not transfer this
Option except by will or the laws of descent and distribution.  Any such transfer shall be evidenced by an
appropriate written document that the Participant executes and the Participant
shall deliver a copy thereof to the Committee on or prior to the effective date
of the transfer.  No right or interest of
the Participant or any transferee in this Option shall be liable for, or subject
to, any lien, obligation or liability of the Participant or any transferee.

 

3.             Exercise in the Event of Death.  This Option shall be exercisable for all or
part of the number of shares of Common Stock that the Participant is entitled
to purchase pursuant to Section 2(b) as of the date of the Participant’s death,
reduced by the number of shares for which the Participant previously exercised
the Option, in the event the Participant dies while employed by, or providing
services to, the Company or any Affiliate and prior to the Expiration Date and
the termination of the Participant’s rights under Sections 4, 5 or 6 of this
Agreement.  In that event, this Option
may be exercised by the Participant’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, for the remainder of the period preceding the Expiration Date or
within 180 days of the date the Participant dies, whichever period is shorter.

 

4.             Exercise in the Event of
Disability.  This Option shall be exercisable for all or
part of the number of shares of Common Stock that the Participant is entitled
to purchase pursuant to

 

2

 

Section 2(b) as of the date the Participant
becomes disabled within the meaning of Code Section 22(e)(3) (“Disabled”),
reduced by the number of shares for which the Participant previously exercised
the Option, if the Participant becomes Disabled while employed by, or providing
services to, the Company or any Affiliate and prior to the Expiration Date and
the termination of the Participant’s rights under Sections 3, 5 or 6 of this
Agreement.  In that event, the
Participant may exercise this Option for the remainder of the period preceding
the Expiration Date or within 180 days of the date he ceases to be employed by, or provide services
to, the Company or any Affiliate on account of being Disabled, whichever period
is shorter.  The Committee, in its sole
discretion, shall determine whether the Participant is Disabled for purposes of
this Agreement.

 

5.             Exercise After Termination of
Employment or Service.  This Option shall be exercisable for all or
part of the number of shares of Common Stock that the Participant is entitled
to purchase pursuant Section 2(b) as of the date the Participant ceases to be
employed by, or provide services to, the Company or any Affiliate, reduced by
the number of shares for which the Participant previously exercised the Option,
if the Participant ceases to be employed by, or provide services to, the
Company or any Affiliate other than on account of death, becoming Disabled or
being terminated for Cause and prior to the Expiration Date and the termination
of the Participant’s rights under Sections 3, 4 or 6 of this
Agreement.  In that event, the
Participant may exercise this Option for the remainder of the period preceding
the Expiration Date or until the date that is 30 days after the date he ceases to be
employed by, or provide services to, the Company or any Affiliate, whichever
period is shorter.

 

6.             Termination of Employment or
Service for Cause.  Notwithstanding any other provision of this
Agreement, all rights hereunder will be immediately discontinued and forfeited,
and the Company shall not have any further obligation hereunder to the
Participant and the Option will not be exercisable for any number of shares of
Common Stock (even if the Option previously became exercisable), on and after
the time the Participant is discharged from employment or service with the
Company or any Affiliate for Cause.

 

7.             Agreement to Terms of the Plan
and Agreement.  The Participant has received a copy of the
Plan, has read and understands the terms of the Plan and this Agreement, and
agrees to be bound by their terms and conditions.

 

8.             Tax Consequences.  The Participant acknowledges (i) that there
may be adverse tax consequences upon acquisition or disposition of the shares
of Common Stock received upon exercise of this Option and (ii) that Participant
should consult a tax adviser prior to such acquisition or disposition.  This Option is intended to be exempt from
Code Section 409A.  However, the
Participant is solely responsible for determining the tax consequences of the
Option and for satisfying the Participant’s tax obligations with respect to the
Option (including, but not limited to, any income or excise taxes resulting
from the application of Code Section 409A), and the Company shall not be liable
if this Option is subject to Code Section 409A.

 

9.             Fractional Shares.  Fractional shares shall not be issuable
hereunder, and when any provision hereof may entitle the Participant to a
fractional share such fractional share shall be disregarded.

 

3

 

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 Committee
determines is equitably required in the event the Company effects one or more
stock dividends, stock splits, subdivisions or consolidations of shares or
other similar changes in capitalization.

 

11.           Notice.  Any notice or other communication given
pursuant to this Agreement, or in any way with respect to this Option, shall be
in writing and shall be personally delivered or mailed by United States
registered or certified mail, postage prepaid, return receipt requested, to the
following addresses:

 

	
  If to the Company:

  	
  EarthLink, Inc.

  
	
   

  	
  1375 Peachtree Street - Level A

  
	
   

  	
  Atlanta, Georgia 30309

  
	
   

  	
  Attention: Secretary

  
	
   

  	
   

  
	
  If to the Participant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

12.           Shareholder Rights.  The Participant shall not have any rights as a shareholder
with respect to shares of Common Stock subject to this Option until the
issuance of the shares upon exercise of the Option.

 

13.           No Right to Continued Employment
or Service.  This Option does not confer upon the
Participant any right with respect to continued employment by, or service with,
the Company or any Affiliate, nor shall it interfere in any way with the right
of the Company or any Affiliate to terminate the Participant’s employment or
service at any time without assigning a reason therefor.

 

14.           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, distributees, and personal representatives of the Participant and
the successors of the Company.

 

15.           Conflicts.  In the event of any conflict between the
provisions of the Plan and the provisions 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.

 

16.           Counterparts.  This Agreement may be executed in a number of
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.

 

4

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  EARTHLINK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Participant’s Name]

  
						

 

5Exhibit 10.4

 

EARTHLINK, INC.

2006 EQUITY AND CASH INCENTIVE PLAN

 

Nonqualified Stock Option Agreement

For Directors

 

No. of shares subject to

Nonqualified Stock Option:           

 

THIS NONQUALIFIED STOCK OPTION AGREEMENT
(this “Agreement”) dated as of the        day of                               ,
20     , between EarthLink, Inc., a Delaware
corporation (the “Company”), and                                        
(the “Participant”), is made pursuant and subject to the provisions of the
Company’s 2006 Equity and Cash Incentive Plan (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                       
     , 20      (the “Date of
Grant”), granted to the Participant, subject to the terms and conditions of the
Plan and subject further to the terms and conditions set forth herein, the
right and option to purchase from the Company all or any part of an aggregate
of             shares of
the Common Stock of the Company, at the price of $          
per share (which is not less than the Fair Market Value of a share of Common
Stock on the Date of Grant).  This Option
is intended to be treated as a nonqualified stock option, which is not subject
to Code Section 422.  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 11:59 p.m. on                   
     , 20      (the “Expiration
Date”) or such earlier time as set forth in Sections 3, 4, 5 or 6 of this
Agreement.  In no event shall the
Expiration Date be later than 10 years from the Date of Grant.

 

(b)           Exercise of Option.  Except as provided in the Plan and in
Sections 3, 4, 5 or 6 of this Agreement, this Option shall become exercisable
with respect to        percent (    %)
of the shares of Common Stock subject to the Option on each of the          anniversaries of the Date of
Grant, provided that the Participant has continuously served as a member of the
Board or the Board of Directors of an Affiliate from the Date of Grant until
each such time.  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 Participant’s
rights hereunder pursuant to Sections 3, 4, 5 or 6 of this Agreement, or until
the Expiration Date.  A partial exercise
of this Option shall not affect the Participant’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 of exercise, along with the Option price for the portion of the
Option being exercised and all applicable tax withholdings, to the attention of
the Company’s Secretary at the Company’s address specified in Section 11
below.  The exercise date shall be the date
of delivery.  The Participant shall pay
the Option price and all applicable tax withholdings in cash or cash equivalent
acceptable to the Committee.  However,
the Committee in its discretion may, but is not required to, allow the
Participant to pay the Option price and tax withholdings (i) by surrendering
shares of Common Stock the Participant already owns, (ii) by a cashless
exercise through a broker, (iii) by such other medium of payment as the
Committee shall authorize or (iv) by any combination of the allowable methods
of payment set forth herein.

 

(d)           Transferability.  Except as provided herein, this Option is
nontransferable and, during the Participant’s lifetime, only the Participant
may exercise this Option. 
Notwithstanding the foregoing, this Option may be transferred by will or
the laws of descent and distribution, and during the Participant’s lifetime,
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 are appropriate for such transferees to be included in
the class of transferees who may rely on a Form S-8 Registration Statement
under the Securities Act of 1933 to sell shares issuable upon exercise of
Options granted under the Plan.  Any such
transfer will be permitted only if (i) the Participant does not receive any
consideration for the transfer and (ii) the Committee expressly approves the
transfer.  Any transferee to whom this
Option is transferred shall be bound by the same terms and conditions that
governed this Option during the time it was held by the Participant (which
terms and conditions shall still be read from the perspective of the Participant);
provided, however, that the transferee may not transfer this Option except by
will or the laws of descent and distribution. 
Any such transfer shall be evidenced by an appropriate written document
that the Participant executes and the Participant shall deliver a copy thereof
to the Committee on or prior to the effective date of the transfer.  No right or interest of the Participant or
any transferee in this Option shall be liable for, or subject to, any lien,
obligation or liability of the Participant or any transferee.

 

3.             Exercise in the Event of Death.  This Option shall be exercisable for all or
part of the number of shares of Common Stock that the Participant is entitled
to purchase pursuant to Section 2(b) as of the date of the Participant’s death,
reduced by the number of shares for which the Participant previously exercised
the Option, in the event the Participant dies while serving as a member of the
Board or the Board of Directors of an Affiliate and prior to the Expiration
Date and the termination of the Participant’s rights under Sections 4, 5 or 6
of this Agreement.  In that event, this
Option may be exercised by the Participant’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, for the remainder of the period preceding the Expiration Date
or within 180 days of the date the Participant dies, whichever period is
shorter.

 

2

 

4.             Exercise in the Event of Disability.  This Option shall be exercisable for all or
part of the number of shares of Common Stock that the Participant is entitled
to purchase pursuant to Section 2(b) as of the date the Participant becomes
disabled within the meaning of Code Section 22(e)(3) (“Disabled”), reduced by
the number of shares for which the Participant previously exercised the Option,
if the Participant becomes Disabled while serving as a member of the Board or
the Board of Directors of an Affiliate and prior to the Expiration Date and the
termination of the Participant’s rights under Sections 3, 5 or 6 of this
Agreement.  In that event, the
Participant may exercise this Option for the remainder of the period preceding
the Expiration Date or within 180 days of the date he ceases to serve as a director on account of
being Disabled, whichever period is shorter. 
The Committee, in its sole discretion, shall determine whether the
Participant is Disabled for purposes of this Agreement.

 

5.             Exercise After Termination of
Employment or Service.  This Option shall be exercisable for all or
part of the number of shares of Common Stock that the Participant is entitled
to purchase pursuant Section 2(b) as of the date the Participant ceases to
serve as a member of the Board or the Board of Directors of an Affiliate,
reduced by the number of shares for which the Participant previously exercised
the Option, if the Participant ceases to be employed by, or provide services
to, the Company or any Affiliate other than on account of death, becoming Disabled
or being terminated for Cause and prior to the Expiration Date and the
termination of the Participant’s rights under Sections 3, 4 or 6 of this
Agreement.  In that event, the
Participant may exercise this Option for the remainder of the period preceding
the Expiration Date or until the date that is 30 days after the date he ceases to
serve as a director, whichever period is shorter.

 

6.             Termination of Service for Cause.  Notwithstanding any other provision of this
Agreement, all rights hereunder will be immediately discontinued and forfeited,
and the Company shall not have any further obligation hereunder to the
Participant and the Option will not be exercisable for any number of shares of
Common Stock (even if the Option previously became exercisable), on and after
the time the Participant is removed from service on the Board or the Board of
Directors of an Affiliate for Cause.

 

7.             Agreement to Terms of the Plan
and Agreement.  The Participant has received a copy of the
Plan, has read and understands the terms of the Plan and this Agreement, and
agrees to be bound by their terms and conditions.

 

8.             Tax Consequences.  The Participant acknowledges (i) that there
may be adverse tax consequences upon acquisition or disposition of the shares
of Common Stock received upon exercise of this Option and (ii) that Participant
should consult a tax adviser prior to such acquisition or disposition.  This Option is intended to be exempt from
Code Section 409A.  However, the
Participant is solely responsible for determining the tax consequences of the
Option and for satisfying the Participant’s tax obligations with respect to the
Option (including, but not limited to, any income or excise taxes resulting
from the application of Code Section 409A), and the Company shall not be liable
if this Option is subject to Code Section 409A.

 

9.             Fractional Shares.  Fractional shares shall not be issuable
hereunder, and when any provision hereof may entitle the Participant to a
fractional share such fractional share shall be disregarded.

 

3

 

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 Committee
determines is equitably required in the event the Company effects one or more
stock dividends, stock splits, subdivisions or consolidations of shares or
other similar changes in capitalization.

 

11.           Notice.  Any notice or other communication given
pursuant to this Agreement, or in any way with respect to this Option, shall be
in writing and shall be personally delivered or mailed by United States
registered or certified mail, postage prepaid, return receipt requested, to the
following addresses:

 

	
  If to the Company:

  	
  EarthLink, Inc.

  
	
   

  	
  1375 Peachtree Street - Level A

  
	
   

  	
  Atlanta, Georgia 30309

  
	
   

  	
  Attention: Secretary

  
	
   

  	
   

  
	
  If to the Participant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

12.           Shareholder Rights.  The Participant shall not have any rights as a shareholder
with respect to shares of Common Stock subject to this Option until the issuance
of the shares upon exercise of the Option.

 

13.           No Right to Continued Service.  This Option does not confer upon the
Participant any right with respect to continued service with the Company or any
Affiliate, nor shall it interfere in any way with the right of the Company or
any Affiliate to remove the Participant from its Board of Directors at any time
without assigning a reason therefor.

 

14.           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, distributees, and personal representatives of the Participant and
the successors of the Company.

 

15.           Conflicts.  In the event of any conflict between the
provisions of the Plan and the provisions 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.

 

16.           Counterparts.  This Agreement may be executed in a number of
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.

 

4

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  EARTHLINK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Participant’s Name]

  
						

 

5

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