**Exhibit 10.4**

 

EARTHLINK, INC.

 

Retention Incentive Award Agreement

 

StatedDollar Value of Retention Incentive Award

GrantedHereunder:  $2,200,000

 

THIS RETENTION INCENTIVE AWARD AGREEMENT(this “Agreement”) dated as of the 17th day of February, 2009, betweenEarthLink, Inc., a Delaware corporation (the “Company”), and Rolla P. Huff(the “Participant”) is a stand-alone incentive award that is made outside ofbut subject by this reference to the provisions of the Company’s 2006 Equityand Cash Incentive Plan (the “Plan”), a copy of which is attached hereto.  All terms used herein that are defined in thePlan have the same meaning given them in the Plan, except that the term “Changein Control Event” shall have the meaning given it in the Employment Agreementdated December 30, 2008 between the Participant and the Company (the “EmploymentAgreement”).

 

# 1.                                       Grant of IncentiveAward.  Pursuant to the Plan, theCompany, on February 3 2009 (the “Date of Grant”), granted to theParticipant an Incentive Award (as defined in the Plan) with a stated dollarvalue of $2,200,000 (this “Award”). Subject to the terms and conditions of the Plan, this Award representsan unsecured promise of the Company to pay, and the right of the Participant toreceive, up to $2,200,000, payable in cash, shares of the Common Stock of theCompany or a combination thereof, at the time and on the terms and conditionsset forth herein.  As the holder of the Award,the Participant has only the rights of a general unsecured creditor of theCompany.

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# 2.                                       Terms andConditions.  This Awardis subject to the following terms and conditions:

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## (a)                                  Vesting ofAward.

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### (i)                                     In General.

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##### (A)                              This Award shall becomeearned and payable as to fifty percent (50%) of its stated dollar value as ofthe end of 2009, provided the Participant has been continuously employed by, orproviding services to, the Company or an Affiliate from the Date of Grant throughthe end of 2009.

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##### (B)                                The remaining fifty percent(50%) of the stated dollar value of the Award shall become earned and payable infull as of the end of 2010, provided the Participant has been continuouslyemployed by, or providing services to, the Company or an Affiliate from theDate of Grant through the end of 2010.

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### (ii)                                  Termination of Employment Onor After a Change in Control Event.

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##### (A)                              Notwithstandingthe foregoing, if at any time on or after a Change in Control Event theParticipant’s employment is terminated (1) by the 

 

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##### Company or an Affiliate for any reason otherthan Cause and other than on account of “Total Disability” (as such term isdefined in the Employment Agreement) or death or (2) by the Participantfor “Good Reason” (as such term is defined in the Employment Agreement), then,to the extent the outstanding Award has not become earned and payable in full, onehundred percent (100%) of the remaining stated dollar value of the outstanding Awardshall become earned and payable in full as of the end of the year in whichoccurs the termination of the Participant’s employment.

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### (iii)                               Termination ofEmployment Other Than On or After a Change in Control Event.

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##### (A)                              Notwithstanding theforegoing, if at any time before a Change in Control Event and during 2009, theParticipant’s employment is terminated (1) by the Company or an Affiliatefor any reason other than Cause and other than on account of Total Disabilityor death or (2) by the Participant for Good Reason, the Award shall becomeearned and payable, as of the end of 2009, with respect to that percentage ofits stated dollar value that equals fifty percent (50%) multiplied by afraction, the numerator of which equals the number of full or partial months of2009 during which the Participant remained continuously employed by, orproviding services to, the Company or an Affiliate and the denominator of whichis twelve (12). Notwithstanding the immediately preceding sentence, however, ifthe Participant’s employment is terminated (1) by the Company or an Affiliatefor any reason other than Cause and other than on account of Total Disabilityor death or (2) by the Participant for Good Reason and a Change in ControlEvent occurs thereafter and before the end of 2009, one hundred percent (100%)of the remaining stated dollar value of the Award shall become earned andpayable in full as of the end of 2009.

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##### (B)                                Notwithstanding the foregoing,if at any time before a Change in Control Event and during 2010, theParticipant’s employment is terminated (1) by the Company or an Affiliatefor any reason other than Cause and other than on account of Total Disabilityor death or (2) by the Participant for Good Reason, the Award shall becomeearned and payable, as of the end of 2010, with respect to that percentage ofits stated dollar value that equals the remaining fifty percent (50%)multiplied by a fraction, the numerator of which is the number of full orpartial months of 2010 during which the Participant remained continuouslyemployed by, or providing services to, the Company or an Affiliate and thedenominator of which is twelve (12). Notwithstanding the immediately precedingsentence, however, if the Participant’s employment is terminated (1) bythe Company or an Affiliate for any reason other than Cause and other than onaccount of Total Disability or death or (2) by the Participant for Good Reasonand a Change in Control Event occurs thereafter and before the end of 2010, onehundred percent (100%) of the remaining stated dollar value of the Award shallbecome earned and payable in full as of the end of 2010.

 

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### (iv)                              Vesting Date.  The Award shall be forfeitable until itbecomes earned and payable as described above. Each date upon which the Award or any portion thereof becomes earned andpayable shall be referred to as a “Vesting Date” with respect to the applicablestated dollar amount of the Award.

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## (b)                                 Settlement ofAward.  Subject to the terms of this Section 2and Sections 3 and 15 below, the Company shall pay to the Participant the stateddollar value of the Award that has become earned and payable under Section 2(a) aboveas the Company may determine within the 90 days following the applicableVesting Date.  Payment shall be made in asingle lump sum in cash, shares of Common Stock of the Company (to the extentavailable for payment) or any combination thereof, as the Company in its solediscretion shall determine.  As acondition to the settlement of the Award, the Participant shall be required topay any required withholding taxes attributable to the Award in cash or cashequivalent 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 by anyother medium of payment as the Committee shall authorize.

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# 3.                                       Termination ofAward.  Notwithstanding any otherprovision of this Agreement, the portion of the Award that have not becomeearned and payable as of the latest time set forth above, or on or before thetermination of the Participant’s employment with the Company and any Affiliate,shall expire and may not become earned and payable after such time, except asdescribed in Sections 2(a)(ii) and (iii) above.

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# 4.                                       ShareholderRights.  The Participant shall not haveany rights as a shareholder with respect to shares of Common Stock that may bedelivered with respect to the Award until issuance of the shares of CommonStock that are to be paid with respect to such Award.  The Company may include on any certificatesrepresenting shares of Common Stock issued pursuant to this Award such legendsreferring to any representations, restrictions or any other applicablestatements as the Company, in its discretion, shall deem appropriate.

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# 5.                                       Transferability.  Except as provided herein, this Award isnontransferable except by will or the laws of descent and distribution.  If this Award is transferred by will or thelaws of descent and distribution, the Award must be transferred in its entiretyto the same person or persons or entity or entities.  Notwithstanding the foregoing, theParticipant, at any time prior to the Participant’s death, may transfer all orany 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 inwhich such family members are the only partners, on such terms and conditionsas are appropriate for such transferees to be included in the class oftransferees who may rely on a Form S-8 registration statement under theSecurities Act of 1933 to sell shares received pursuant to the Award.  Any such transfer will be permitted only if (i) theParticipant does not receive any consideration for the transfer and (ii) theCommittee expressly approves the transfer. Any transferee to whom this Award is transferred shall be bound by thesame terms and conditions that governed the Award during the time it was heldby the Participant (which terms and conditions shall still be read from theperspective of the Participant); provided, however, that such transferee maynot transfer the Award except than by will or the laws of descent anddistribution.  Any such transfer shall beevidenced by an appropriate written document that the Participant and thetransferee execute and the Participant shall deliver a copy thereof to theCommittee on or before the effective date of the transfer.  No right or interest of the Participant 

 

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# or any transferee in this Award shall beliable for, or subject to, any lien, liability or obligation of the Participantor transferee.

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# 6.                                       RestrictiveCovenants.

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(a)                                  In return forthis Award, the Participant agrees that during Participant’s employment, andfor a period of eighteen (18) calendar months following Participant’stermination of employment, that Participant will not, directly or indirectly, (i)(A) solicit,induce, recruit, or cause any employee of the Company or its Affiliates toresign employment with the Company or its Affiliates, or (B) participatein making hiring decisions, encourage the hiring of, or aid in the hiringprocess of any such employee on behalf of any employer other than the Companyand its Affiliates, or (ii) solicit any actual or prospective customers ofthe Company and its Affiliates with whom Participant had material business-relatedcontact while performing services for the Company and its Affiliates for thepurpose of selling products or services that compete with the business of theCompany.

 

(b)                                 This Award is conditionedupon the Participant’s compliance with the provisions of this Section 6.  In the event the Participant shall materiallybreach the provisions of this Section 6 and not cure or cease (asappropriate) such material breach within ten (10) days of receipt ofnotice thereof from the Company, the vesting and payments above shall terminateand Participant shall return to the Company the gross amount of all cashpayments paid in connection with this Award. Termination of such vesting andpayments shall not be the Company’s sole and exclusive remedy for a breach ofthis Section 6.  In addition, theCompany shall be entitled to damages and injunctive relief to enforce this Section 6in the event of a breach by the Participant.

 

# 7.                                       Notice.  Any notice or other communication givenpursuant to this Agreement, or in any way with respect to the Award, shall bein writing and shall be personally delivered or mailed by United Statesregistered or certified mail, postage prepaid, return receipt requested, to thefollowing addresses:

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If to the Company:                                                                                             EarthLink, Inc.1375 Peachtree Street - Level A Atlanta, Georgia 30309Attention:  General Counsel

 

If to the Participant:                                                                                       Rolla P. Huff

                                                                                                                                                                                                14 MorainePoint

                                                                                                                                                                                                Victor, New York14564

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# 8.                                       No Right toContinued Employment or Service.  Neither the Plan, the granting of this Awardnor any other action taken pursuant to the Plan or this Award constitutes or isevidence of any agreement or understanding, express or implied, that theCompany or any Affiliate will retain the Participant as an employee or otherservice provider for any period of time or at any particular rate ofcompensation.

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# 9.                                       Agreement toTerms of Plan and Agreement.  The applicable terms of the Plan are herebyincorporated by reference.  TheParticipant has received a copy of the Plan, has read and 

 

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# understands the terms of the Plan and thisAgreement, and agrees to be bound by their terms and conditions with respect tothis Award.

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# 10.                                 TaxConsequences.  TheParticipant acknowledges that (i) there may be tax consequences upon paymentof the Award and upon any acquisition or disposition of shares of Common Stockissued pursuant to this Award and (ii) Participant should consult a taxadviser regarding the tax consequences of this Award.  The Participant is solely responsible fordetermining the tax consequences of the Award and for satisfying theParticipant’s tax obligations with respect to the Award (including, but notlimited to, any income or excise taxes resulting from the application of Code Section 409A).

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# 11.                                 Binding Effect.  Subject to the limitations stated above and inthe Plan, this Agreement shall be binding upon and inure to the benefit of thedistributees, legatees and personal representatives of the Participant and thesuccessors of the Company.

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# 12.                                 Conflicts.  In the event of any conflict between theprovisions of the Plan and the provisions of this Agreement, the provisions ofthe Plan shall govern.  All referencesherein to the Plan shall mean the Plan as in effect on the date hereof.

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# 13.                                 Counterparts.  This Agreement may be executed in a number ofcounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one in the same instrument.

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

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# 15.                                 Section 409A.  For purposes of this Agreement, all rights topayments hereunder shall be treated as rights to receive a series of separatepayments and benefits to the fullest extent allowed by Section 409A of theCode.  For purposes of this Agreement,termination of employment shall be construed consistently with a “Terminationof Employment” (as defined in the Employment Agreement).  Additionally, if the Participant is aSpecified Employee (as defined in the Employment Agreement) as of Participant’sTermination of Employment, and if the amounts that Participant is entitled toreceive hereto are not otherwise exempt from Section 409A of the Code,then to the extent necessary to comply with Section 409A of the Code nopayment that is triggered on the Participant’s Termination of Employment (suchas those under Sections 2(a)(ii) and (iii) above) may be madehereunder until after the date which is six (6) months after theParticipant’s Termination of Employment or, if earlier, the Participant’s dateof death.  Any such amount that wouldotherwise have been required to be paid during such six (6) months afterthe Participant’s Termination of Employment or, if earlier, until theParticipant’s date of death shall be paid in one lump sum payment as soon asadministratively feasible after the date which is six (6) months after theParticipant’s Termination of Employment or, if earlier, the Participant’s dateof death.  Any remaining amount shall bepaid as otherwise scheduled.  ThisAgreement is intended to comply with the applicable requirements of Section 409Aof the Code and shall be construed and interpreted in accordancetherewith.  The Company may at any timeamend, suspend or terminate this Agreement, or any payments to be madehereunder, as 

 

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# necessary tobe in compliance with Section 409A of the Code to avoid the imposition ofany potential taxes, penalty or interest as a result of failing to comply with Section 409Aof the Code.

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

 

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INWITNESS WHEREOF, the Company has caused this Agreement to be signed by a dulyauthorized officer, and the Participant has affixed his signature hereto.

 
|   | COMPANY:        |
|--------|-----------------|
|   |            |   |
|   | EARTHLINK, INC. |
|   |            |
|   |            |
|   | By:             |   |
|   |            |   |
|   | Name:           | Susan Bowick |
|   |            |   |
|   | Title:          | Chair, Leadership &  Compensation Committee |
|   |            |   |
|   |            |   |
|   | PARTICIPANT:    |
|   |            |
|   |            |
|   | Rolla P. Huff   |

 

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