**Exhibit 10.3**

 

EARTHLINK, INC.EQUITY PLAN FOR NON-EMPLOYEE DIRECTORS

(asamended effective May 8, 2008)

 

RestrictedStock Unit Agreement

 

No. of RestrictedStock

Units Awarded Hereunder:

 

THIS RESTRICTEDSTOCK UNIT AGREEMENT (this “Agreement”) dated as of the       dayof          ,20    , between EarthLink, Inc., a Delawarecorporation (the “Company”), and                    (the “Participant”) is made pursuant and subject to the provisions of theCompany’s Equity Plan for Non-Employee Directors (as amended effective May 8,2008) (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.

 

# 1.                                        Awardof Units.  Pursuant to the Plan, theCompany, on                  , 20     (the “Date of Award”),awarded to the Participant           Restricted StockUnits, each Restricted Stock Unit corresponding to one share of the Company’s$0.01 par value Common Stock (this “Award”). Subject to the terms and conditions of the Plan, each Restricted StockUnit represents an unsecured promise of the Company to deliver, and the rightof the Participant to receive, one share of the $0.01 par value common stock ofthe Company (the “Common Stock”) at the time and on the terms and conditionsset forth herein.  As a holder ofRestricted Stock Units, the Participant has only the rights of a generalunsecured creditor of the Company.

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# 2.                                        Termsand Conditions.  This Award issubject to the following terms and conditions:

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## (a)                                  ExpirationDate.  This Award shall expire at11:59 p.m. on               ,         (the “ExpirationDate”).

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## (b)                                 Vestingof Award.

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### (i)                                     InGeneral.  Except as otherwiseprovided below, one hundred percent (100%) of the outstanding Restricted StockUnits shall become nonforfeitable and payable on the first annual anniversaryof the Date of Award, provided the Participant is still serving as aNon-Employee Director at such time.

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### (ii)                                  Change in Control.  Outstanding Restricted Stock Units that arenot then nonforfeitable and payable shall become nonforfeitable and payableimmediately before the consummation of a Change in Control, provided theParticipant is still serving as a Non-Employee Director at such time.

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### (iii)                               VestingDate.  Outstanding Restricted StockUnits shall be forfeitable until they become nonforfeitable and payable asdescribed above.  The date upon 

 

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### whichRestricted Stock Units become nonforfeitable and payable shall be referred toas the “Vesting Date” with respect to such number of Restricted Stock Units.

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## (c)                                Settlementof Award.  Subject to the terms ofthis Section 2 and Section 3 below and except to the extent theParticipant defers receipt of such shares of Common Stock pursuant to Section 9below,******the Company shall issue tothe Participant one share of Common Stock for each Restricted Stock Unit thatbecomes nonforfeitable and payable under Section 2(b) above and shalldeliver to the Participant certificates representing such Shares as soon aspracticable after the Vesting Date.  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 Board.  TheCompany may allow the Participant to satisfy any such applicable withholdingtaxes (i) by allowing the Participant to deliver shares of Common Stockthat the Participant already owns and, if necessary to avoid adverse accountingconsequences, has held for at least six months valued at their Fair MarketValue by a “net” settlement procedure on the day preceding such date (but onlyfor the minimum required withholding), (ii) through a cashless exercisethrough a broker, (iii) by such other medium of payment as the Companyshall authorize, or (iv) by any combination of the allowable methods ofpayment set forth herein.

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# 3.                                        Terminationof Award.  Outstanding RestrictedStock Units that have not become nonforfeitable and payable prior to theExpiration Date shall expire and may not become nonforfeitable and payableafter such time.  Additionally, anyRestricted Stock Units that have not become nonforfeitable and payable on orbefore the termination of the Participant’s service as a director of theCompany shall expire and may not become nonforfeitable and payable after suchtime.

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# 4.                                        Shareholder Rights.  The Participant shall not have any rights asa shareholder with respect to shares of Common Stock subject to any RestrictedStock Units until issuance of the certificates representing such shares ofCommon Stock.  The Company may include onany certificates representing shares of Common Stock issued pursuant to thisAward such legends referring to any representations, restrictions or any otherapplicable statements as the Company, in its discretion, shall deemappropriate.

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# 5.                                        Nontransferability.  Except as described below, 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 a Permitted Transferee.  In that event, the Permitted Transferee willbe entitled to all the rights of the Participant with respect to thetransferred Award (except that such Permitted Transferee may not assign theAward other than by will or the laws of descent and distribution), and suchportion of the Award shall continue to be subject to all of the terms,conditions and restrictions applicable to the Award as set forth herein and inthe Plan immediately prior to the effective date of the transfer.  Any such transfer will be permitted only if (i) theParticipant does not receive any consideration for the transfer and (ii) theBoard expressly approves the transfer. Any such transfer shall be evidenced by an appropriate written documentthat the Participant executes and the Participant shall deliver a copy thereofto the Board on or prior to the effective date of the 

 

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# transfer.  No right or interest of the Participant inthis Award shall be liable for, or subject to, any lien, liability orobligation of the Participant.

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# 6.                                        Representation.  In connection with the acquisition of thisAward, the Participant represents and warrants that it is the Participant’sintent to continue to serve as a director of the Company for the remainder ofParticipant’s term as a director during which this Award is granted.

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# 7.                                        CashDividends.  For so long as theParticipant holds outstanding Restricted Stock Units, if the Company pays anycash dividends on its Common Stock, then the Company in its discretion (a) maypay the Participant in cash for each outstanding Restricted Stock Unit coveredby this Award as of the record date for such dividend, less any requiredwithholding taxes, the per share amount of such dividend or (b) mayincrease the number of outstanding Restricted Stock Units covered by this Awardby the number of Restricted Stock Units, rounded down to the nearest wholenumber, equal to (i) the product of the number of the Participant’soutstanding Restricted Stock Units as of the record date for such dividendmultiplied by the per share amount of the dividend divided by (ii) theFair Market Value of a share of Common Stock on the payment date of suchdividend.  In the event the Companyawards additional Restricted Stock Units pursuant to this Section 7, suchRestricted Stock Units shall be subject to the same terms and conditions setforth in the Plan and herein as the outstanding Restricted Stock Units withrespect to which they were granted. Notwithstanding the foregoing, the Company in its sole discretion maychoose not to pay the cash amounts described above and not to increase thenumber of outstanding Restricted Stock Units covered by this Award, and this Section 7shall not constitute any agreement or commitment that the Company take any suchactions.

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# 8.                                        Changein Capital Structure.  The terms ofthis Award shall be adjusted in accordance with the terms and conditions of thePlan if the Company effects one or more stock dividends or stock splits.  If there is a subdivision or consolidation ofshares or other similar change in capitalization other than as a result ofstock dividends or stock splits, the Board may adjust the terms of this Awardto the extent the Board in its discretion may consider appropriate.

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# 9.                                        Deferralof Common Stock.  If the Participantis eligible to participate in the Deferred Compensation Program, then theParticipant may elect to defer the receipt of Common Stock issuable pursuant tothis Award in accordance with rules the Board prescribes for the DeferredCompensation Program.  If the Participantelects to defer the receipt of Common Stock hereunder, the shares of CommonStock shall be deferred and credited under the Deferred Compensation Programand shall become payable and issuable pursuant to the terms and at such time ortimes as set forth in the Deferred Compensation Program, but will be paid, ifat all, only in shares of Common Stock.

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# 10.                                  GoldenParachute Provisions.

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## (a)                                Ifany payment to the Participant hereunder or in conjunction with any otherpayment pursuant to any other agreement, policy, plan or program would subjectthe Participant to an excise tax imposed by Code Section 4999 or to anysimilar tax imposed by state or local law or any related interest or penalties(such tax or taxes, together with any such interest or penalties, being hereinaftercollectively referred to as the “Excise Tax”), then the payments 

 

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## provided underthis Agreement shall be reduced (but not below zero) if, and only to the extentthat, such reduction will allow the Participant to receive a greater “Net AfterTax Amount” than the Participant would receive absent any such reduction.  “Net After Tax Amount” means the amount ofany Parachute Payments (as defined in (b) below) or Capped Payments (asdefined in (c) below), as applicable, net of taxes imposed under CodeSections 1, 3101(b) and 4999 and any State or local income taxesapplicable to the Participant on the date of payment.  The determination of the Net After Tax Amountshall be made using the highest combined effective rate imposed by theforegoing taxes on income of the same character as the Parachute Payments orCapped Payments, as applicable, in effect on the date of payment.

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## (b)                                 Theindependent accounting firm that the Company, in its sole discretion, engages(the “Accounting Firm”) will first determine the amount of any “ParachutePayments” that are payable to the Participant. “Parachute Payment” means a payment that is described in Code Section 280G(b)(2),determined in accordance with Code Section 280G and the regulationspromulgated or proposed thereunder.  TheAccounting Firm also will determine the Net After Tax Amount attributable tothe Participant’s total Parachute Payments.

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## (c)                                  TheAccounting Firm will next determine the largest amount of payments that may bemade to the Participant without subjecting the Participant to the Excise Tax(the “Capped Payments”).  Thereafter, theAccounting Firm will determine the Net After Tax Amount attributable to theCapped Payments.

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## (d)                                 TheParticipant then will receive the total Parachute Payments or the CappedPayments, whichever provides the Participant with the higher Net After TaxAmount.  If the Participant will receivethe Capped Payments (i.e. some amount less than the total Parachute Payments),the total Parachute Payments will be adjusted by first reducing the amount ofany benefits under this Agreement or the noncash benefits under any other plan,agreement or arrangement (with the source of the reduction to be directed bythe Participant) and then by reducing the amount of any cash benefits under anyother plan, agreement or arrangement (with the source of the reduction to bedirected by the Participant).  TheAccounting Firm will notify the Participant and the Company if it determinesthat the Parachute Payments must be reduced and will send the Participant andthe Company a copy of its detailed calculations supporting that determination.

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## (e)                                  Asa result of the uncertainty in the application of Code Sections 280G and 4999at the time that the Accounting Firm makes its determinations under this Section 10,it is possible that amounts will have been paid or distributed to theParticipant that should not have been paid or distributed under this Section 10(“Overpayments”), or that additional amounts should be paid or distributed tothe Participant under this Section 10 (“Underpayments”).  If the Accounting Firm determines, based oneither the assertion of a deficiency by the Internal Revenue Service againstthe Company or the Participant, which assertion the Accounting Firm believeshas a high probability of success or controlling precedent or substantialauthority, that an Overpayment has been made, that Overpayment will be treatedfor all purposes as a loan that the Participant must repay to the Companytogether with interest at the applicable federal rate under Code Section 7872(f)(2);provided, however, that no loan will be deemed to have been made and no amountwill be payable by the Participant to the Company unless, and then only to theextent that, the deemed loan and payment would either reduce the amount onwhich the 

 

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## Participant issubject to tax under Code Sections 1, 3101 or 4999 or generate a refund of suchtaxes.  If the Accounting Firm determines,based upon controlling precedent or other substantial authority, that anUnderpayment has occurred, the Accounting Firm will notify the Participant andthe Company of that determination and the amount of that Underpayment will bepaid to the Participant promptly by the Company.

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## (f)                                    Thefees and expenses of the Accounting Firm for its services in connection withthe determinations and calculations contemplated by the preceding subsectionsshall be borne by the Company.  If suchfees and expenses are initially paid by Participant, the Company shallreimburse Participant the full amount of such fees and expenses within fivebusiness days after receipt from Participant of a statement therefor andreasonable evidence of Participant’s payment thereof.

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## (g)                                 TheCompany and Participant shall each provide the Accounting Firm access to andcopies of any books, records and documents in the possession of the Company orParticipant, as the case may be, reasonably requested by the Accounting Firm,and otherwise cooperate with the Accounting Firm in connection with thepreparation and issuance of the determinations and calculations contemplated bythe preceding subsections.  Anydetermination by the Accounting Firm shall be binding upon the Company and theParticipant.

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## (h)                                 Thefederal, state and local income or other tax returns filed by the Participantshall be prepared and filed on a consistent basis with the determination of theAccounting Firm with respect to the any such Excise Tax payable by Participant.  The Participant, at the request of theCompany, shall provide the Company true and correct copies (with anyamendments) of the Participant’s federal income tax returns as filed with theInternal Revenue Service and corresponding state and local tax returns, ifrelevant, as filed with the applicable taxing authority, and such otherdocuments reasonably requested by the Company, evidencing such conformity.

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# 11.                                  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 30309

Attention:  General Counsel

 

If to the Participant:                                                                                                                                             

                                                      

                                                      

 

# 12.                                  NoRight to Continued Service.  Neitherthe Plan, the granting of this Award nor any other action taken pursuant to thePlan or this Award constitutes or is evidence of any 

 

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# agreement orunderstanding, express or implied, that the Company will retain the Participantas a director for any period of time or at any particular rate of compensation.

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# 13.                                  ParticipantBound by Plan.  The Participanthereby acknowledges receipt of a copy of the Plan and agrees to be bound by allthe terms and provisions of the Plan.

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# 14.                                  BindingEffect.  Subject to the limitationsstated above and in the Plan, this Agreement shall be binding upon and inure tothe benefit of the distributees, legatees and personal representatives of theParticipant and the successors of the Company.

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# 15.                                  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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# 16.                                  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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# 17.                                  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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# 18.                                  GoverningLaw.  This Agreement shall begoverned by the laws of the State of Delaware, except to the extent federal lawapplies.

 

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IN WITNESSWHEREOF, 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:                      |   |
|   | Rolla  P. Huff           |
|   | Chief  Executive Officer |
|   |                     |
|   |                     |
|   | PARTICIPANT:             |
|   |                     |
|   |                     |

 

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