Exhibit 10.4

 

Performance-Based RSUs

(Business Segment Revenue Growth)

 

EARTHLINK, INC.
2011 EQUITY AND CASH INCENTIVE PLAN

 

Restricted Stock Unit Agreement

 

No. of Restricted Stock
Units Awarded Hereunder:            

 

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated as of the 16th day
of February, 2012, between EarthLink, Inc., a Delaware corporation (the
“Company”), and                                (the “Participant”) is made
pursuant and subject to the provisions of the Company’s 2011 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 Restricted Stock Units. 
Pursuant to the Plan, the Company, on February 16, 2012 (the “Date of Grant”),
granted to the Participant                          Restricted Stock Units, each
Restricted Stock Unit corresponding to one share of the Common Stock of the
Company (this “Award”). Subject to the terms and conditions of the Plan, each
Restricted Stock Unit represents an unsecured promise of the Company to deliver,
and the right of the Participant to receive, one share of the Common Stock of
the Company at the time and on the terms and conditions set forth herein. As a
holder of Restricted Stock Units, the Participant has only the rights of a
general unsecured creditor of the Company.

 

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

 

(a)                                 Expiration Date.  This Award shall expire at
11:59 p.m. on February 15, 2022 (the “Expiration Date”). In no event shall the
Expiration Date be later than 10 years from the Date of Grant.

 

(b)                                 Vesting of Award.

 

(i)                                     In General.  Except as otherwise
provided below, the outstanding Restricted Stock Units shall be considered
“Performance-Based” and shall become eligible to become earned and payable upon
the achievement of the performance objective set forth on the attached Exhibit A
by the date set forth therein. The Performance-Based Restricted Stock Units that
become eligible to become earned and payable shall then become earned and
payable when the Company’s Audit Committee approves the Company’s earnings
release for its fiscal year ending December 31, 2014, provided the Participant
has been continuously employed by, or providing services to, the Company or an
Affiliate from the Date of Grant until the Company’s Audit Committee approves
the Company’s earnings release for its fiscal year ending December 31, 2014. 
Notwithstanding any other provision of this Agreement, none of the
Performance-Based Restricted Stock Units shall become eligible to become earned
and payable if the performance objective set forth on the attached Exhibit A is
not achieved for the Company’s fiscal year ending December 31, 2014.

 

(ii)                                  Reduction in Workforce.  If the
Participant’s employment or service is terminated by the Company or an Affiliate
and the Participant is entitled to receive severance benefits under any
severance plan maintained by the Company or an Affiliate, then, to the extent
not earned and payable previously, the Performance-Based Restricted Stock Units
that are eligible to become earned and payable at that time shall become earned
and payable on termination of the Participant’s employment or service by the
Company or an Affiliate under circumstances in which the Participant is entitled
to receive such severance benefits, on the same basis they would have become
earned and payable if the Performance-Based Restricted Stock Units that are
eligible to become earned and payable at that time had been scheduled to become
earned and payable pro rata as of each monthly anniversary of the Date of Grant
based upon the Participant’s continued employment or service from the Date of
Grant until the

 

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termination of the Participant’s employment with or service to the Company and
its Affiliates (giving the Participant credit for continuous employment or
service from the Date of Grant until termination of the Participant’s employment
or service position elimination) (rounded to the nearest whole share). 
Notwithstanding the foregoing, none of the Performance-Based Restricted Stock
Units that are not then eligible to become earned and payable shall become
earned and payable on termination of the Participant’s employment or service by
the Company or an Affiliate under circumstances in which the Participant is
entitled to receive severance benefits under any severance plan maintained by
the Company or an Affiliate.

 

(iii)          Change in Control.  In the event no provision is made for the
continuance, assumption or substitution by the Company or its successor in
connection with a Change in Control of the Performance-Based Restricted Stock
Units, then, contemporaneously with the Change in Control, the Performance-Based
Restricted Stock Units shall become earned and payable in full, to the extent
not earned and payable previously, provided the Participant has remained
continuously employed by, or providing service to, the Company or any Affiliate
from the Date of Grant until the Change in Control; provided that the
Performance-Based Restricted Stock Units shall not become earned and payable in
connection with the Change in Control if the date for attainment of the
performance objective on which such Performance-Based Restricted Stock Units
would have become eligible to become earned and payable has passed as of the
date of the Change of Control without achievement of the performance objective. 
If provision is made for the continuance, assumption or substitution by the
Company or its successor in connection with the Change in Control of the
Performance-Based Restricted Stock Units, then if the Participant’s employment
with, or service to, the Company and its Affiliates is terminated by the Company
or any Affiliate for any reason other than Cause, death or Disability or by the
Participant for Good Reason, on or within twenty-four (24) months after the
Change in Control, the Performance-Based Restricted Stock Units shall become
earned and payable in full, to the extent not earned and payable previously;
provided that the Performance-Based Restricted Stock Units shall not become
earned and payable upon such termination of the Participant’s employment with,
or service to, the Company and its Affiliates if the date for attainment of the
performance objective on which such Performance-Based Restricted Stock Units
would have become eligible to become earned and payable has passed as of the
date of the Change of Control without achievement of the performance objective. 
“Good Reason” means the Participant’s voluntary termination of employment or
service with the Company and its Affiliates other than on death or Disability
and based on:

 

(1)                                 The assignment to the Participant of duties
materially inconsistent with the Participant’s position and status with the
Company or Affiliate as they existed immediately prior to the Change in Control,
or a substantial diminution in the Participant’s title, offices or authority, or
in the nature of the Participant’s other responsibilities, as they existed
immediately prior to the Change in Control of the Company, except in connection
with the Participant’s termination of employment or service by the Company or an
Affiliate for Cause or on account of Disability or death or by the Participant
other than for Good Reason; or

 

(2)                                 A material reduction by the Company or an
Affiliate in the Participant’s base salary as in effect immediately prior to the
Change in Control or as the Participant’s salary may be increased from time to
time, without the Participant’s written consent; or

 

(3)                                 A material reduction by the Company or an
Affiliate in the target cash bonus payable to the Participant under any
incentive compensation plan(s), as it (or they) may be modified from time to
time, in effect immediately prior to the Change in Control, or a failure by the
Company or an Affiliate to continue the Participant as a participant in such
incentive compensation plan(s) on a basis that is not materially less than the
Participant’s participation immediately prior to the Change in Control or to pay
the Participant the amounts that the Participant would be entitled to receive in
accordance with such plan(s); or

 

(4)                                 The Company or an Affiliate requiring the
Participant to be based more than thirty-five (35) miles from the location where
the Participant is based immediately prior to the Change in Control, except for
travel on the Company’s or Affiliate’s business that is required or necessary to
performance of the Participant’s job and substantially consistent with the
Participant’s business travel obligations prior to the Change in Control.

 

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Additionally, the Participant must give the Company or Affiliate which employs
the Participant notice of any event or condition that would constitute “Good
Reason” within thirty (30) days of the event or condition which would constitute
“Good Reason,” and upon receipt of such notice the Company or Affiliate shall
have thirty (30) days to remedy such event or condition, and if such event or
condition is not remedied within such thirty (30)-day period, any termination of
employment by the Participant for “Good Reason” must occur within sixty (60)
days after the period for remedying such condition or event has expired.

 

(iv)                              Vesting Date.  Outstanding Performance-Based
Restricted Stock Units shall be forfeitable until they become earned and payable
as described above. Each date upon which the respective Performance-Based
Restricted Stock Units become earned and payable shall be referred to as a
“Vesting Date” with respect to such number of Performance-Based Restricted Stock
Units.

 

(c)                                  Settlement of Award.  Subject to the terms
of this Section 2 and Section 3 below, the Company shall issue to the
Participant one share of Common Stock for each Performance-Based Restricted
Stock Unit that has become earned and payable under Section 2(b) above and shall
deliver to the Participant such shares as soon as practicable after (and within
thirty (30) days of) the respective Vesting Date. As a condition to the
settlement of the Award, the Participant shall be required to pay any required
withholding taxes attributable to the Award in cash or cash equivalent
acceptable to the Committee. However, the Company in its discretion may, but is
not required to, allow the Participant to satisfy any such applicable
withholding taxes (but only for the minimum required withholding) (i) by
allowing the Participant to surrender shares of Common Stock that the
Participant already owns, (ii) through a cashless transaction through a broker,
(iii) by means of a “net settlement” procedure, (iv) by such other medium of
payment as the Committee shall authorize or (v) by any combination of the
allowable methods of payment set forth herein.

 

3.                                      Termination of Award.  Notwithstanding
any other provision of this Agreement, outstanding Performance-Based Restricted
Stock Units that have not become earned and payable prior to the Expiration Date
shall expire and may not become earned and payable after such time. 
Additionally, any Performance-Based Restricted Stock Units that have not become
earned and payable on or before the termination of the Participant’s employment
with the Company and any Affiliate, and any Performance-Based Restricted Stock
Units with respect to which the applicable performance period has passed without
achievement of the related performance objective, shall expire and may not
become earned and payable after such time.

 

4.                                      Shareholder Rights.  Except as set forth
in Section 6 below, the Participant shall not have any rights as a shareholder
with respect to shares of Common Stock subject to any Performance-Based
Restricted Stock Units until issuance of the shares of Common Stock. The Company
may include on any certificates or notations representing shares of Common Stock
issued pursuant to this Award such legends referring to any representations,
restrictions or any other applicable statements as the Company, in its
discretion, shall deem appropriate.

 

5.                                      Transferability.  Except as provided
herein, this Award is nontransferable except by will or the laws of descent and
distribution. If this Award is transferred by will or the laws of descent and
distribution, the Award must be transferred in its entirety to the same person
or persons or entity or entities. Notwithstanding the foregoing, the
Participant, at any time prior to the Participant’s death, may transfer all or
any portion of this Award 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 received pursuant to the Award. 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 Award is transferred shall be bound by the same terms and
conditions that governed the Award 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 such transferee may not transfer
the Award except than 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 before the effective date of the transfer. No right or interest
of the Participant or any transferee in this Award shall be liable for, or
subject to, any lien, liability or obligation of the Participant or transferee.

 

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6.                                      Cash Dividends.  For so long as the
Participant holds outstanding Performance-Based Restricted Stock Units under
this Award, if the Company pays any cash dividends on its Common Stock, then the
Company will pay the Participant in cash for each outstanding Performance-Based
Restricted Stock Unit covered by this Award as of the record date for such
dividend, less any required withholding taxes, the per share amount of such
dividend that the Participant would have received had the Participant owned the
underlying shares of Common Stock as of the record date of the dividend if, and
only if, the Performance-Based Restricted Stock Units become earned and payable
and the related shares of Common Stock are issued to the Participant. In that
case, the Company shall pay such cash amounts to the Participant, less any
required withholding taxes, at the same time the related shares of Common Stock
are delivered. The additional payments pursuant to this Section 6 shall be
treated as a separate arrangement.

 

7.                                      Change in Capital Structure.  The terms
of this Award 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.

 

8.                                      Notice.  Any notice or other
communication given pursuant to this Agreement, or in any way with respect to
the Award, 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: General Counsel

 

 

 

If to the Participant:

 

 

 

 

 

 

 

 

 

10.                               No Right to Continued Employment or Service. 
Neither the Plan, the granting of this Award nor any other action taken pursuant
to the Plan or this Award constitutes or is evidence of any agreement or
understanding, express or implied, that the Company or any Affiliate will retain
the Participant as an employee or other service provider for any period of time
or at any particular rate of compensation.

 

11.                               Agreement to Terms of 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.

 

12.                               Tax Consequences.  The Participant
acknowledges that (i) there may be tax consequences upon acquisition or
disposition of the shares of Common Stock issued pursuant to this Award or the
receipt of cash dividends hereunder and (ii) Participant should consult a tax
adviser prior to such acquisition or disposition or receipt. The Participant is
solely responsible for determining the tax consequences of the Award and for
satisfying the Participant’s tax obligations with respect to the Award
(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
Award is subject to Code Section 409A.

 

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

 

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14.                               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.

 

15.                               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.

 

16.                               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.

 

17.                               Section 409A.  Notwithstanding any other
provision of this Agreement, it is intended that payments hereunder will not be
considered deferred compensation within the meaning of Section 409A of the Code.
For purposes of this Agreement, all rights to payments hereunder shall be
treated as rights to receive a series of separate payments and benefits to the
fullest extent allowed by Section 409A of the Code. Payments hereunder are
intended to satisfy the exemption from Section 409A of the Code for “short-term
deferrals.” Notwithstanding the preceding, neither the Company nor any Affiliate
shall be liable to the Participant or any other person if the Internal Revenue
Service or any court or other authority having jurisdiction over such matter
determines for any reason that any payments hereunder are subject to taxes,
penalties or interest as a result of failing to be exempt from, or comply with,
Section 409A of the Code.

 

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 Participant has affixed his signature hereto.

 

 

COMPANY:

 

 

 

EARTHLINK, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Participant:

 

 

 

[Participant’s Name]

 

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