Exhibit 10.4


 


EARTHLINK, INC.


 


Retention Incentive Award Agreement


 


Stated
Dollar Value of Retention Incentive Award


Granted
Hereunder:  $2,200,000


 


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


 


1.                                       Grant of Incentive
Award.  Pursuant to the Plan, the
Company, on February 3 2009 (the “Date of Grant”), granted to the
Participant an Incentive Award (as defined in the Plan) with a stated dollar
value of $2,200,000 (this “Award”). 
Subject to the terms and conditions of the Plan, this Award represents
an unsecured promise of the Company to pay, and the right of the Participant to
receive, up to $2,200,000, payable in cash, shares of the Common Stock of the
Company or a combination thereof, at the time and on the terms and conditions
set forth herein.  As the holder of the Award,
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)                                  Vesting of
Award.


 


(i)                                     In General.


 


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


 


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


 


(ii)                                  Termination of Employment On
or After a Change in Control Event.


 


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


 

















 


Company or an Affiliate for any reason other
than Cause and other than on account of “Total Disability” (as such term is
defined in the Employment Agreement) or death or (2) by the Participant
for “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, one
hundred percent (100%) of the remaining stated dollar value of the outstanding Award
shall become earned and payable in full as of the end of the year in which
occurs the termination of the Participant’s employment.


 


(iii)                               Termination of
Employment Other Than On or After a Change in Control Event.


 


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


 


(B)                                Notwithstanding the foregoing,
if at any time before a Change in Control Event and during 2010, the
Participant’s employment is terminated (1) by the Company or an Affiliate
for any reason other than Cause and other than on account of Total Disability
or death or (2) by the Participant for Good Reason, the Award shall become
earned and payable, as of the end of 2010, with respect to that percentage of
its stated dollar value that equals the remaining fifty percent (50%)
multiplied by a fraction, the numerator of which is the number of full or
partial months of 2010 during which the Participant remained continuously
employed by, or providing services to, the Company or an Affiliate and the
denominator of which is twelve (12). Notwithstanding the immediately preceding
sentence, however, if the Participant’s employment is terminated (1) by
the Company or an Affiliate for any reason other than Cause and other than on
account of Total Disability or death or (2) by the Participant for Good Reason
and a Change in Control Event occurs thereafter and before the end of 2010, one
hundred percent (100%) of the remaining stated dollar value of the Award shall
become earned and payable in full as of the end of 2010.


 


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


 


(b)                                 Settlement of
Award.  Subject to the terms of this Section 2
and Sections 3 and 15 below, the Company shall pay to the Participant the stated
dollar value of the Award that has become earned and payable under Section 2(a) above
as the Company may determine within the 90 days following the applicable
Vesting Date.  Payment shall be made in a
single lump sum in cash, shares of Common Stock of the Company (to the extent
available for payment) or any combination thereof, as the Company in its sole
discretion shall determine.  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 by any
other medium of payment as the Committee shall authorize.


 


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


 


4.                                       Shareholder
Rights.  The Participant shall not have
any rights as a shareholder with respect to shares of Common Stock that may be
delivered with respect to the Award until issuance of the shares of Common
Stock that are to be paid with respect to such Award.  The Company may include on any certificates
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 and the
transferee execute 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 


 


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or any transferee in this Award shall be
liable for, or subject to, any lien, liability or obligation of the Participant
or transferee.


 


6.                                       Restrictive
Covenants.


 


(a)                                  In return for
this Award, the Participant agrees that during Participant’s employment, and
for a period of eighteen (18) calendar months following Participant’s
termination of employment, that Participant will not, directly or indirectly, (i)(A) solicit,
induce, recruit, or cause any employee of the Company or its Affiliates to
resign employment with the Company or its Affiliates, or (B) participate
in making hiring decisions, encourage the hiring of, or aid in the hiring
process of any such employee on behalf of any employer other than the Company
and its Affiliates, or (ii) solicit any actual or prospective customers of
the Company and its Affiliates with whom Participant had material business-related
contact while performing services for the Company and its Affiliates for the
purpose of selling products or services that compete with the business of the
Company.


 


(b)                                 This Award is conditioned
upon the Participant’s compliance with the provisions of this Section 6.  In the event the Participant shall materially
breach the provisions of this Section 6 and not cure or cease (as
appropriate) such material breach within ten (10) days of receipt of
notice thereof from the Company, the vesting and payments above shall terminate
and Participant shall return to the Company the gross amount of all cash
payments paid in connection with this Award. Termination of such vesting and
payments shall not be the Company’s sole and exclusive remedy for a breach of
this Section 6.  In addition, the
Company shall be entitled to damages and injunctive relief to enforce this Section 6
in the event of a breach by the Participant.


 


7.                                       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:                                                                                       Rolla P. Huff


                                                                                                                                                                                                14 Moraine
Point


                                                                                                                                                                                                Victor, New York
14564


 


8.                                       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.


 


9.                                       Agreement to
Terms of Plan and Agreement.  The applicable terms of the Plan are hereby
incorporated by reference.  The
Participant has received a copy of the Plan, has read and 


 


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understands the terms of the Plan and this
Agreement, and agrees to be bound by their terms and conditions with respect to
this Award.


 


10.                                 Tax
Consequences.  The
Participant acknowledges that (i) there may be tax consequences upon payment
of the Award and upon any acquisition or disposition of shares of Common Stock
issued pursuant to this Award and (ii) Participant should consult a tax
adviser regarding the tax consequences of this Award.  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).


 


11.                                 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.


 


12.                                 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.


 


13.                                 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.


 


14.                                 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.


 


15.                                 Section 409A.  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.  For purposes of this Agreement,
termination of employment shall be construed consistently with a “Termination
of Employment” (as defined in the Employment Agreement).  Additionally, if the Participant is a
Specified Employee (as defined in the Employment Agreement) as of Participant’s
Termination of Employment, and if the amounts that Participant is entitled to
receive hereto are not otherwise exempt from Section 409A of the Code,
then to the extent necessary to comply with Section 409A of the Code no
payment that is triggered on the Participant’s Termination of Employment (such
as those under Sections 2(a)(ii) and (iii) above) may be made
hereunder until after the date which is six (6) months after the
Participant’s Termination of Employment or, if earlier, the Participant’s date
of death.  Any such amount that would
otherwise have been required to be paid during such six (6) months after
the Participant’s Termination of Employment or, if earlier, until the
Participant’s date of death shall be paid in one lump sum payment as soon as
administratively feasible after the date which is six (6) months after the
Participant’s Termination of Employment or, if earlier, the Participant’s date
of death.  Any remaining amount shall be
paid as otherwise scheduled.  This
Agreement is intended to comply with the applicable requirements of Section 409A
of the Code and shall be construed and interpreted in accordance
therewith.  The Company may at any time
amend, suspend or terminate this Agreement, or any payments to be made
hereunder, as 


 


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


 


16.                                 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:

  	
  Susan Bowick

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chair, Leadership &
  Compensation Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Rolla P. Huff