EXHIBIT 4.5
EARTHLINK NETWORK, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
EarthLink Network, Inc., a California corporation (the "Company"), hereby grants
to Xxxxxx Xxxxxxx (the "Optionee") an option (the "Option") to purchase a total
of 10,000 shares of Common Stock (the "Shares") of the Company, at the price and
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 his duties as an Employee or any conduct by the Optionee which
involves a material conflict of interest with any business of the Company or any
affiliate of the Company; or (v) the Optionee's taking or knowingly omitting to
take any other action or actions 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 of Option. This Option is granted as of December 1,
1995 (the "Grant Date"), and subject to Section 8 hereof, it may not be
exercised later than November 30, 2005.
4. Option Exercise Price. The Option exercise price is $9.07 per Share.
5. Exercise of Option. This Option shall be exercisable during its term only
as follows:
(a) Right to Exercise. This Option shall vest and be exercisable in equal
quarterly installments with the first installment vesting on September 19, 1995
and with an additional installment scheduled to vest on the nineteenth day of
each third calendar month thereafter though March, 2000, as long as the Optionee
remains in the Continuous Employment of the Company. The exact number of
installments shall be equal to that number of installments that enables this
Option to vest in full on March 19, 2000, provided that this Option has not
otherwise terminated.
(b) Method of Exercise. This Option shall be 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.
(c) Restrictions 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 exercise 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.
(d) 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 shall, 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 to the extent that the Optionee was entitled to exercise
this Option at 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 130 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 by bequest or inheritance, or, in the case of 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 3 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 and
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 or 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 or 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 purpose 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 law 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 MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER, OR ITS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY."
(b) "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 AND 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 of 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 States 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 June 19, 1995
EarthLink Network, Inc.
By:
------------------------------
Xxx Xxxxxx
Its CEO
ACKNOWLEDGMENT
The Optionee hereby accepts this Option subject to all of the terms and
provisions hereof.
-----------------------------
Xxxxxx Xxxxxxx
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
OPTION 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 AND 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.
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.
For Use Upon Exercise of Options
EARTHLINK NETWORK, INC.
STOCK PURCHASE AGREEMENT
This Agreement is made as of the ___ day of ____________, 19 , by and
between EarthLink Network, Inc., a California corporation (the "Company"), and
Xxxxxx Xxxxxxx ("Optionee"). Unless the context herein otherwise requires,
capitalized terms used herein shall have the same meaning as such capitalized
terms have under the Nonstatutory Stock Option Agreement dated as of June 19,
1995 between the Company and Optionee (the "Option Agreement").
R E C I T A L S
A. Optionee was granted a Stock Option (the "Option") on June 19, 1995.
B. Pursuant to said Option, Optionee was granted the right to purchase
10,000 shares of the Company's common stock, as adjusted in accordance with the
Plan (the "Optioned Shares") at $9.07 per Share (the "Exercise Price"), as
adjusted in accordance with the Option Agreement.
C. Optionee has elected to exercise the Option to purchase _____ of such
Optioned Shares (herein referred to as the "Shares") under the Option Agreement.
D. As required by the Option Agreement, as a condition to Optionee's
exercise of his Option, Optionee must execute this Agreement which gives the
Company the right of first refusal upon transfer.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Exercise of Option. Subject to the terms and conditions hereof, Optionee
hereby agrees to exercise his Option or a portion thereof to purchase ____
Shares at $__________ per payable in accordance with the terms and provisions of
the Option Agreement.
2. Company's Right To Repurchase Shares.
(a) If an Optionee ceases to serve as an Employee for any reason, including
death, Disability or Termination for Cause, and thereby terminates his
Continuous Status As An Employee, the Company shall have the right to repurchase
all of the Shares purchased by Optionee hereunder, at a price to be determined
as set forth below. Such right on the part of the Company shall commence upon
the last day of such Optionee's Continuous Status As An Employee (the
"Termination Date") and shall expire on the 90th day after the Termination Date.
(b) The repurchase price shall be an amount equal to the higher of the
exercise price of the Option or 100% of the Company's net book value per share
times the number of shares to be repurchased. For purposes of the foregoing
determination, the net book value shall mean the book value of the Company's
assets net of all of the Company's liabilities as determined by the Company's
accountants, in accordance with generally accepted accounting principles
consistently applied, as of the last day of the last calendar quarter prior to
the Termination Date. The repurchase price may be paid by
the Company by check, evidence of cancellation of indebtedness of Optionee to
Company, or some combination thereof, as the Company acting in its sole
discretion determines.
3. Right of First Refusal. Before any Shares registered in the name of
Optionee may be sold or transferred (including transfer by operation of law),
such Shares shall first be offered to the Company at the same price, and upon
the same terms (or terms as similar as reasonably possible), in the following
manner:
(a) Optionee shall deliver a notice ("Notice") to the Company stating (i)
his bona fide intention to sell or transfer such Shares, (ii) the number of such
Shares to be sold or transferred, (iii) the price for which he proposes to sell
or transfer such Shares, and (iv) the name of the proposed purchaser or
transferee.
(b) Within 30 days after receipt of the Notice, the Company or its assignee
may elect to purchase any or all Shares to which the Notice refers, at the price
per Share and on the same terms (or terms as similar as reasonably possible)
specified in the Notice.
(c) If all or a portion of the Shares to which the Notice refers are not
elected to be purchased pursuant to paragraph 3(b) hereof, Optionee may sell the
Shares not purchased by the Company to any person named in the Notice at the
price and terms specified in the Notice or at a higher price, provided that such
sale or transfer is consummated within 60 days of the date of said Notice to the
Company, and provided, further, that any such sale is in accordance with all the
terms and conditions hereof.
In the event of any transfer by operation of law or other involuntary transfer
(including, but not limited to, by will or by the laws of descent or
distribution) where there is no price established as a matter law, the Company
shall have the right to repurchase all of the Shares purchased by Optionee
hereunder, at a price to be determined as set forth in Section 2(b) above. In
such event, Optionee or Optionee's estate shall notify the Company promptly
after the happening of the event giving rise to the involuntary transfer. Within
30 days after receipt of such Notice, the Company or its assignee may elect to
purchase any or all Shares to which the Notice refers.
4. Termination of Repurchase Right and Right of First Refusal. Optionee's
obligations and the Company's rights under paragraphs 2 and 3 above shall
terminate upon the earlier of (i) the first sale of Common Stock by the Company
to the public which raises an aggregate of not less than $5,000,000.00 and which
is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act"), or (ii) the merger or
consolidation of the Company into, or the sale of all or substantially all of
the Company's assets to, another corporation, if immediately after such merger,
consolidation or sale of assets, at least 50% of the capital stock of the
Company or such other corporation is owned by persons who are not holders of
capital stock of the Company immediately prior to such merger, consolidation or
sale.
5. Assignment. The Company may assign its rights under paragraphs 2 and 3
hereof to one or more persons, who shall have the right to so exercise such
rights in his own name and for his own account. If the exercise of any such
right requires the consent of the California Securities Commissioner or the
consent of the Securities Commissioner, or the equivalent, of another state, the
parties agree to
cooperate in requesting such consent.
6. Adjustment. If, from time to time during the term of the right of first
refusal available pursuant to paragraph 3 hereof:
(a) There is any stock dividend or liquidating dividend of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company; or
(b) There is any stock consolidation, merger, or sale of substantially all
of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Optionee is entitled by reason of his ownership of
Shares shall be immediately subject to the right of first refusal set forth in
paragraph 3 hereof, and be included in the word "Shares" for all purposes with
the same force and effect as the Shares presently subject to such right of first
refusal (provided, however, if such consolidation, merger or sale of all, or
substantially all, of the assets of the Company causes a termination of the
right of first refusal set forth in paragraph 3 hereof, then such new,
substituted or additional securities or other property shall not be included in
the word "Shares" for the purposes of this paragraph).
7. Legends. All certificates representing any Shares of the Company subject
to the provisions of this Agreement shall have endorsed thereon legends in
substantially the following form unless in the opinion of the Company's counsel
such legends are no longer necessary:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER, OR ITS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY."
(b) "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 AND 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."
8. Investment Representations. Unless the Shares have been registered under
the Act, in which event the Company will so advise Optionee in writing, Optionee
agrees, represents and warrants, in connection with the proposed purchase of the
Shares, as follows:
(a) Optionee represents and warrants that he is purchasing the Shares
solely for Optionee's own account for investment and not with a view to, or for
resale in connection with any distribution thereof within the meaning of the
Act. Optionee further represents that he does not have any present intention of
selling, offering to sell or otherwise disposing of or distributing the Shares
or any
portion thereof; and that the entire legal and beneficial interest of the Shares
Optionee is purchasing is being purchased for, and will be held for the account
of, Optionee only and neither in whole nor in part for any other person.
(b) Optionee represents and warrants that he is aware of the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire the
Shares. Optionee further represents that he has a preexisting personal or
business relationship with the officers and directors of the Company and that
Optionee has such knowledge and experience in business and financial matters to
enable him to evaluate the risks of the prospective investment and to make an
informed investment decision with respect thereto and that he has the capacity
to protect his own interests in connection with the purchase of the Shares.
Optionee further represents and warrants that Optionee has discussed the Company
and its plans, operations and financial condition with its officers, has
received all such information as he deems necessary and appropriate to enable
Optionee to evaluate the financial risk inherent in making an investment in the
Shares and has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.
(c) Optionee represents and warrants that he realizes that Optionee's
purchase of the Shares will be a speculative investment and that he is able,
without impairing Optionee's financial condition, to hold the Shares for an
indefinite period of time and to suffer a complete loss on his investment.
(d) Optionee represents and warrants that the Company has disclosed to him
or her in writing: (i) the sale of the Shares has not been registered under the
Act, and the Shares must be held indefinitely unless a transfer of them is
subsequently registered under the Act or an exemption from such registration is
available, and that the Company is under no obligation to register the Shares;
and (ii) the Company shall make a notation in its records of the aforementioned
restrictions on transfer and legends.
(e) Optionee represents and warrants that he is aware of the provisions of
Rule 144, promulgated under the Act, which, in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or an affiliate of such issuer) in a non-public offering subject
to the satisfaction of certain conditions, including among other things: the
resale occurring not less than two (2) years from the date Optionee has
purchased and paid for the Shares; the availability of certain public
information concerning the Company; the sale being through a broker in an
unsolicited "brokers' transaction" or in a transaction directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
that any sale of the Shares may be made by Optionee, if he is an affiliate of
the Company, only in limited amounts during any three-month period not exceeding
specified limitations. Optionee further represents that Optionee understands
that at the time he wishes to sell the Shares there may be no public market upon
which to make such a sale, and that, even if such a public market then exists,
the Company may not be satisfying the current public information requirements of
Rule 144, and that, in such event, he may be precluded from selling the Shares
under Rule 144 even if the two-year minimum holding period had been satisfied.
Optionee represents that he understands that in the event the applicable
requirements of Rule 144 are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
(f) Without in any way limiting Optionee's representations and warranties
set forth herein, Optionee further agrees that he shall in no event make any
disposition of all or any portion of the Shares which Optionee is purchasing
unless and until:
(i) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) Optionee shall have (x) notified the Company of the proposed
disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (y) furnished the
Company with an opinion of his own counsel to the effect that such
disposition will not require registration of such shares under the Act, and
such opinion of his counsel shall have been concurred in by counsel for the
Company and the Company shall have advised Optionee of such concurrence.
9. Escrow. As security for his faithful performance of the terms of this
Agreement and to insure the availability for delivery of Optionee's Shares upon
exercise of the Company's right to repurchase and right of first refusal herein
provided for, Optionee agrees to deliver to and deposit with the Secretary of
the Company or the Secretary's nominee (in either case, the "Escrow Agent"), as
Escrow Agent in this transaction, two Assignment Separate From Certificates duly
endorsed (with date and number of shares blank) in the form attached hereto as
Attachment A, together with the certificate or certificates evidencing the
Shares; said documents are to be held by the Escrow Agent and delivered to said
Escrow Agent pursuant to the Joint Escrow Instructions of the Company and
Optionee set forth in Attachment B attached hereto and incorporated herein by
this reference, which instructions shall also be delivered to the Escrow Agent
at the closing hereunder.
10. Restriction on Alienation. Optionee agrees that he will not sell,
transfer, gift, pledge, hypothecate, assign or otherwise dispose of any of the
Shares or any right or interest therein, whether voluntary, by operation of law
or otherwise, without the prior written consent of the Company, except a
transfer which meets the requirements of this Agreement. Any sale, transfer,
gift, pledge, hypothecation, assignment or disposition or purported sale,
transfer or other disposition of such Shares by Optionee shall be null and void
unless the terms, conditions and provisions of this Agreement are strictly
observed.
11. Lockup Agreement. Optionee, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by the Optionee during the period not to exceed 180 days as
requested by the managing underwriter following the effective date of a
registration statement of the Company filed under the Securities Act of 1933, as
amended, provided that all officers and directors of the Company are required or
agreed to enter into similar agreements. Such agreement shall be in writing in a
form satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the shares or other securities
subject to the foregoing restriction until the end of such period.
12. Miscellaneous.
(a) The Company shall not be required (i) to transfer on its books any
Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat as owner of such Shares
or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares shall have been so transferred.
(b) Subject to the provisions of this Agreement, Optionee shall, during the
term of this Agreement, exercise all rights and privileges of a stockholder of
the Company with respect to the purchased Shares.
(c) The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Agreement.
(d) Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to the other party hereto at his address hereinafter
shown below his signature or at such other address as such party may designate
by ten days' advance written notice to the other party hereto.
(e) This Agreement shall inure to the benefit of the successors and assigns
of the Company and, subject to all compliance with the restrictions on transfer
herein set forth, be binding upon Optionee, his heirs, executors,
administrators, and permitted successors and assigns.
(f) This Agreement shall be construed under the laws of the State of
California and constitutes the entire Agreement of the parties with respect to
the subject matter hereof superseding all prior written or oral agreements, and
no amendment or addition hereto shall be deemed effective unless agreed to in
writing by the parties hereto.
(g) Optionee agrees that, until a public market for the Shares exists, the
Shares cannot be readily purchased, sold, or evaluated in the open market, that
they have a unique and special value, and that the Company and its stockholders
would be irreparably damaged if the terms of this Agreement were not capable of
being specifically enforced, and for this reason, among others, Optionee agrees
that the Company shall be entitled to a decree of specific performance of the
terms hereof or an injunction restraining violation of this Agreement, said
right to be in addition to any other remedies of the Company.
(h) If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way and shall be construed in accordance with the purposes
and tenor and effect of this Agreement.
(i) Nothing in this Agreement shall be deemed to create any term of
employment or affect in any manner whatsoever the right or power of the Company
to terminate Optionee's employment, for any reason, with or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EarthLink Network, Inc.,
a California corporation
By:
Title:
OPTIONEE
Address:
CONSENT
The undersigned spouse of Optionee acknowledges that he/she has read the
foregoing Agreement and agrees that his interest, if any, in the Shares subject
to the foregoing Agreement shall be irrevocably bound by this Agreement and
further understands and agrees that any community property interest, if any,
shall be similarly bound by this Agreement.
Date:
Spouse of Optionee
Spouse's Name:
ATTACHMENT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto and transfers unto _______________ (_____) shares of the Common Stock (the
"Shares") of EarthLink Network, Inc., a California corporation (the "Company"),
standing in the undersigned's name on the books of the Company represented by
Certificate No. ________ herewith, and does hereby irrevocably constitute and
appoint __________________________________ attorney to transfer the Shares on
the books of the Company with full power of substitution in the premises.
Dated:
Signature:
ATTACHMENT B
JOINT ESCROW INSTRUCTIONS
_______________199__
Secretary
EarthLink Network, Inc.
0000 Xxx Xxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Dear _________:
As Escrow Agent for both EarthLink Network, Inc., a California corporation
(the "Company"), and the undersigned grantee of an option to purchase stock of
the Company ("Optionee"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Stock Purchase
Agreement (the "Agreement"), dated as of ____________ 199__, to which a copy of
these Joint Escrow Instructions is attached as Attachment B, in accordance with
the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") shall elect to exercise
the repurchase right set forth in Section 2 of the Agreement or the right of
first refusal set forth in Section 3 of the Agreement (collectively, "Repurchase
Rights"), the Company shall give to Optionee and you a written notice specifying
the number of shares of stock to be purchased, the exercise price, and the time
for a closing hereunder at the principal office of the Company. Optionee and the
Company hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the exercise price (by check, evidence of
cancellation of indebtedness of Optionee' to the Company or a promissory note,
or some combination thereof) for the number of shares of stock being purchased
pursuant to the exercise of the Repurchase Rights.
3. Optionee irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said stock as defined in the Agreement. Optionee
does hereby irrevocably constitute and appoint you as his attorney-in-fact and
agent for the term of this escrow to execute with respect to such securities all
stock certificates, stock assignments, or other documents necessary or
appropriate to make such securities negotiable and complete any transaction
herein contemplated.
4. This escrow shall terminate at such time as there are no longer any
shares of stock subject to the Repurchase Rights under the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Optionee,
you shall deliver all of same to Optionee and shall be discharged of all further
obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Optionee while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of you own attorneys shall be conclusive evidence of such
good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary or proper to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel, and the
Company shall pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company shall
appoint any officer or employee of the Company as successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other address as a party may designate by ten
(10) days advance written notice to each of the other parties hereto.
COMPANY: EarthLink Network, Inc.
0000 Xxx Xxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Secretary
OPTIONEE:
ESCROW AGENT: EarthLink Network, Inc.
0000 Xxx Xxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Secretary
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
Very truly yours,
EarthLink Network, Inc.,
a California corporation
By:
Title:
OPTIONEE
Address:
Agreed to and accepted as of the date
set forth above.
ESCROW AGENT
Secretary
EarthLink Network, Inc.
Initial Public Offering of Common Stock
Lock-Up Agreement
May 28, 1996
UBS Securities, LLC
Xxxxx Xxxxxxx, Inc.
Xxxxxxxxxx Xxxx, Inc.
As Representatives of the several underwriters
c/o UBS Securities, LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between EarthLink
Network, Inc., a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, no par value (the "common Stock"),
of the Company.
In order to induce you and the other Underwriters to enter into the Underwriting
Agreement, the undersigned agrees not to offer, sell or otherwise dispose of any
shares of Common Stock of the Company beneficially owned by the undersigned, any
options or warrants to acquire shares of Common Stock or any securities
exchangeable for or convertible into shares of Common Stock for a period of 180
days following the day on which the Underwriting Agreement is executed without
the prior written consent of UBS Securities LLC.
If for any reason the Underwriting Agreement shall be terminated prior to the
Closing Date (as defined in the Underwriting Agreement), the agreement set forth
above shall likewise be terminated.
Very Truly Yours
By:
-----------------------------
Name:
-----------------------------
Address:
--------------------------
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