Document:

EXHIBIT 10.1

 

AMERICAN EXPRESS COMPANY

2007 INCENTIVE COMPENSATION PLAN

PORTFOLIO GRANT 2009-2010

TO

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name of Employee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  January 26, 2009

  	
   

  	
  December 31, 2010

  
	
  Award Date

  	
   

  	
  Expiration Date

  
	
   

  	
   

  	
   

  
	
   

  	
  $

  	
   

  
	
   

  	
  Total Target Value

  	
   

  

 

We
are pleased to inform you that, pursuant to the Company’s 2007 Incentive
Compensation Plan, as amended (the “Plan”), the Compensation and Benefits
Committee (the “Committee”) of the Board of Directors (the “Board”) of American
Express Company (the “Company”), made an award of a portfolio grant to you as
hereinafter set forth (the “Award”) under the Plan as of the award date
specified above (the “Award Date”).  The
Award is subject to the Detrimental Conduct Provisions established by the
Committee, and as from time to time amended.

 

1.             General.  You have been
granted the Award subject to the provisions of the Plan and the terms,
conditions and restrictions set forth in this agreement (this “Agreement”).  The Award consists of two separate
performance periods:  January 1,
2009 through December 31, 2009 (the “2009 Performance Period”) and January 1,
2010 through December 31, 2010 (the “2010 Performance Period”) (the 2009
Performance Period and the 2010 Performance Period each, a “Performance Period”
and collectively, the “Performance Periods”). 
The Total Target Value of the Award is allocated 50% to the 2009
Performance Period and 50% to the 2010 Performance Period (each, a “Total
Annual Target Value”).  Each Total Annual
Target Value consists of the Target Values of four components:  the Target Value of the Annual EPS Incentive
Component (the “Annual EPS Target Value”); the Target Value of the Annual Net
Revenue Incentive Component (the “Annual Net Revenue Target Value”); the Target
Value of the Annual ROE Incentive Component (the “Annual ROE Target Value”);
and the Target Value of the Relative Total Shareholder Return Component (the “Relative
TSR Target Value”).  Each component’s
Target Value is 25% of the Total Annual Target Value.  The period beginning January 1, 2009 and
ending on the expiration date specified above (the “Expiration Date”) is the “Award
Period.”  The Total Target Value, or any
of its components, may be reduced by the Committee in its sole discretion,
which may include but need not be limited to, situations where on the last day
of a Performance Period you are engaged in Related Employment, as that term is
defined in the Plan.  The Schedule A
Value (as that term is defined below), if any, for a Performance Period of each
component will be determined as specified in Paragraph 3.  There

 

 

shall be a
separate Schedule A for each Performance Period, which shall be established
within the first 90 days of the applicable Performance Period.

 

2.             Requirement of Employment. 
Except as otherwise provided in Paragraphs 4 and 6, your rights to
the Cash Value and the Number of Restricted Shares or Restricted Stock Units
(as those terms are defined below), if any, for a Performance Period under
Paragraph 5 shall be provisional and shall be canceled in whole or in part, as
determined by the Committee in its sole discretion if your continuous
employment with the Company and its Affiliates (as that term is defined in the
Plan) or your Related Employment (as that term is defined in the Plan)
(hereinafter collectively referred to as “employment with the American Express
companies”), terminates for any reason on or before the Payment Date for such
Performance Period set forth in Paragraph 5. 
Whether and as of what date your employment with the American Express
companies shall terminate if you are granted a leave of absence or commence any
other break in employment intended by your employer to be temporary, shall be
determined by the Committee in its sole discretion.

 

3.             Determination of the Schedule A Values, Initial Value,
Final Value, Cash Value and the Number of Restricted Shares or Restricted Stock
Units.

 

(a)           For each Performance
Period, except as otherwise provided in this Paragraph 3 and in Paragraphs 2, 4
and 6, there shall be paid to you with respect to such Performance Period in accordance
with Paragraph 5, the sum, as may be adjusted by the Committee pursuant to
Subparagraph 3(i), of:

 

(i)            the applicable
Schedule A Value of the Annual EPS Incentive Component (the “Annual EPS
Schedule A Value”), if any, as of the last day of such Performance Period, as
provided in Subparagraph 3(b);

 

(ii)           the Schedule A
Value of the Annual Net Revenue Incentive Component (the “Annual Net Revenue
Schedule A Value”), if any, as of the last day of such Performance Period, as
provided in Subparagraph 3(c);

 

(iii)          the Schedule A
Value of the Annual ROE Incentive Component (the “Annual ROE Schedule A Value”),
if any, as of the last day of such Performance Period, as provided in
Subparagraph 3(d); and

 

(iv)          the Schedule A Value
of the Relative Total Shareholder Return Component (the “Relative TSR Schedule
A Value”), if any, as of the last day of such Performance Period, as provided
in Subparagraph 3(e).

 

(b)           Annual EPS
Schedule A Value.  Except as
otherwise provided in this Paragraph 3, the Annual EPS Schedule A Value as of
the last day of a Performance Period will be equal to (Xb) times (Yb),
where (Xb) equals the Annual EPS Incentive Payout
Percentage, if any, determined by the Committee in its sole discretion based on
the Annual EPS (as that term is defined below) of the Company or of a unit of
the Company, as the case may be, pursuant to the formula provided in the
applicable Schedule A for such Performance Period, and where (Yb) is the Annual EPS Target Value such Performance
Period.  However, in no event will (Xb) be greater than the Maximum Annual EPS Value, which
equals the maximum Annual EPS 

 

2

 

Incentive Payout
Percentage set forth in the applicable Schedule A for such Performance Period,
times the Annual EPS Target Value such Performance Period.

 

(c)           Annual Net
Revenue Schedule A Value.  Except as
otherwise provided in this Paragraph 3, the Annual Net Revenue Schedule A Value
as of the last day of a Performance Period will be equal to (Xc) times (Yc),
where (Xc) equals the Annual Net Revenue Incentive
Payout Percentage, if any, determined by the Committee in its sole discretion
based on the Annual Net Revenue (as that term is defined below) of the Company
or of a unit of the Company, as the case may be, pursuant to the formula
provided in the applicable Schedule A for such Performance Period, and where (Yc) is the Annual Net Revenue Target Value such
Performance Period.  However, in no event
will (Xc) be greater than the Maximum Annual Net
Revenue Value, which equals the maximum Annual Net Revenue Incentive Payout
Percentage set forth in the applicable Schedule A for such Performance Period,
times the Annual Net Revenue Target Value such Performance Period.

 

(d)           Annual ROE
Schedule A Value.  Except as otherwise
provided in this Paragraph 3, the Annual ROE Schedule A Value as of the
last day of a Performance Period will be equal to (Xd)
times (Yd), where (Xd)
equals the Annual ROE Incentive Payout Percentage, if any, determined by the
Committee in its sole discretion based on the Annual ROE (as that term is
defined below) of the Company or of a unit of the Company, as the case may be,
pursuant to the formula provided in the applicable Schedule A for such
Performance Period, and where (Yd)
is the Annual ROE Target Value such Performance Period.  However, in no event will (Xd) be greater than the Maximum Annual ROE Value, which
equals the maximum Annual ROE Incentive Payout Percentage set forth in the
applicable Schedule A for such Performance Period, times the Annual ROE Target
Value such Performance Period.

 

(e)           Relative TSR
Schedule A Value.  Except as
otherwise provided in this Paragraph 3, the Relative TSR Schedule A Value as of
the last day of a Performance Period will be equal to (Xe) times (Ye),
where (Xe) equals the Relative TSR Incentive
Payout Percentage, if any, determined by the Committee in its sole discretion
based on a comparison of the Amex TSR and the S&P 500 TSR, pursuant to the
formula provided in the applicable Schedule A for such Performance Period, and
where (Ye) is the Relative TSR Target Value such
Performance Period.  However, in no event
will (Xe) be greater than the Maximum TSR Value,
which equals the maximum Relative TSR Incentive Payout Percentage set forth in
the applicable Schedule A for such Performance Period, times the Relative TSR
Target Value such Performance Period.

 

(f)            Calculation.  In the application of the applicable Schedule
A for a Performance Period, after the end of such Performance Period, for
purposes of determining the Schedule A Values for such Performance Period
pursuant to Subparagraphs 3(b), (c), (d) and (e):

 

(i)            if the Annual EPS
is less than the level needed to have some Annual EPS Schedule A Value, there
shall be no Annual EPS Schedule A Value; and if the Annual EPS is equal to or
greater than the level to have some Annual EPS Schedule A Value, but less than
or equal to the maximum level, and the Annual EPS actually attained is not
represented in the table set forth on the applicable Schedule A for such Performance
Period, then the Annual EPS Schedule A Value shall be determined by
straight-line interpolation from the 

 

3

 

amounts specified
in such table immediately less than and greater than the Annual EPS actually
attained;

 

(ii)           if the Annual Net
Revenue is less than the level needed to have some Annual Net Revenue Schedule
A Value, there shall be no Annual Net Revenue Schedule A Value; and if the
Annual Net Revenue is equal to or greater than the level to have some Annual
Net Revenue Schedule A Value, but less than or equal to the maximum level, and
the Annual Net Revenue actually attained is not represented in the table set
forth on the applicable Schedule A for such Performance Period, then the
Annual Net Revenue Schedule A Value shall be determined by straight-line
interpolation from the amounts specified in such table immediately less than
and greater than the Annual Net Revenue actually attained;

 

(iii)          if the Annual ROE
is less than the level needed to have some Annual ROE Schedule A Value, there
shall be no Annual ROE Schedule A Value; and if the Annual ROE is equal to or
greater than the level to have some Annual ROE Schedule A Value, but less than
or equal to the maximum level, and the Annual ROE actually attained is not
represented in the table set forth on the applicable Schedule A for such
Performance Period, then the Annual ROE Schedule A Value shall be determined by
straight-line interpolation from the amounts specified in such table
immediately less than and greater than the Annual ROE actually attained; and

 

(iv)          if the difference
between the Amex TSR and the S&P 500 TSR is less than the level needed to
have some Relative TSR Schedule A Value, there shall be no Relative TSR
Schedule A Value; and if the difference between the Amex TSR and the S&P
500 TSR is equal to or greater than the level to have some Relative TSR
Schedule A Value, but less than or equal to the maximum level, and the actual
difference between the Amex TSR and the S&P 500 TSR is not represented in
the table set forth on the applicable Schedule A for such Performance Period,
then the Relative TSR Schedule A Value shall be determined by straight-line
interpolation from the amounts specified in such table immediately less than
and greater than the actual difference between the Amex TSR and the S&P 500
TSR.

 

(g)           Definitions.  For purposes of this Award, the following
terms shall have the following meanings (which will take into account, in each
case, the expenses and other financial effect for the applicable year(s) of
portfolio grants under the Plan except as adjusted by the application of
Subparagraphs 3(h) and 3(i)).

 

(i)            “Annual Net Revenue”
means, for any given year, the total
managed revenue net of interest expense of the Company or of a segment or other
part of the Company, as the case may be, for such year, as reported by the
Company.

 

(ii)           “Net Income” means,
for any given Performance Period, the after-tax net income (or loss) of the
Company or of a segment or other part of the Company, as the case may be, for
such Performance Period, as reported by the Company and as adjusted below.  The calculation of Net Income for any given
Performance Period will be adjusted to exclude:

 

·                  reported cumulative effect of accounting changes;

 

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·                  reported income and losses from discontinued
operations; and

 

·                  reported extraordinary gains and losses as determined
under generally accepted accounting principles.

 

(iii)          “Annual EPS” means,
for any given Performance Period, the diluted earnings (or loss) per share of
the Company for such Performance Period, as determined by the Company.  The calculation of Annual EPS, for any given
Performance Period, will be adjusted in the same fashion as Net Income for such
Performance Period.

 

(iv)          “Average Annual
Shareholders’ Equity” means, for any given Performance Period, the sum of the
total shareholders’ equity of the Company or of a segment or other part of the
Company, as the case may be, as of the first day of such Performance Period and
as of the end of each month during such Performance Period (each as reported by
the Company), divided by 13.

 

(v)           “Annual ROE” means,
for any given Performance Period, the Net Income for such Performance Period
divided by the Average Annual Shareholders’ Equity for such Performance Period.

 

(vi)          “Amex Total
Shareholder Return” or “Amex TSR” means, for any given Performance Period, the
annual growth rate, expressed as a percentage with one decimal point, in the
value of a share of common stock in the Company due to stock appreciation and
dividends, assuming dividends are reinvested, during such Performance
Period.  For this purpose, the “Beginning
Stock Price” shall mean the average closing sales prices of the Company’s
common stock on the New York Stock Exchange Composite Transaction Tape for the
trading days in the month immediately preceding the beginning of the
Performance Period; and, the “Ending Stock Price” shall mean the average
closing sales prices of the Company’s common stock on the New York Stock
Exchange Composite Transaction Tape for the trading days in the month
immediately preceding the end of the Performance Period.  Where “Y” is the number of fractional Shares
resulting from the deemed reinvestment of dividends paid during the Performance
Period, the Amex TSR is calculated as follows:

 

	
  (

  	
  Ending Stock Price x (1 + Y)

  	
  )

  	
  -1

  
	
  Beginning Stock Price

  

 

(vii)         “S&P 500 Total
Shareholder Return” or “S&P 500 TSR” means, for any given Performance
Period, the annual growth rate, expressed as a percentage with one decimal
point, in the value of the S&P 500 Index during such Performance Period, as
determined from information publicly reported by Standard & Poors
Company (or the entity that publishes such other index, as the case may be).

 

(h)           To
the extent permissible for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), in the event of any change in
the corporate capitalization of the Company, such as by reason of any stock
split, or a material corporate transaction, such as any merger of the Company
into another corporation, any consolidation of the Company and one or more
corporations into another corporation, any separation of the 

 

5

 

Company (including
a spin-off or other distribution of stock or property by the Company), any
reorganization of the Company (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code), or any partial or
complete liquidation by the Company, other than a normal cash dividend, if the
Committee shall determine that such a change equitably requires an adjustment
in the calculation or terms of the Annual ROE, the Annual Net Revenue, the
Annual EPS or the Relative Total Shareholder Return Component under this Award,
on the grounds that any such change would produce an unreasonable value, such
equitable adjustment will be made by the Committee.  Any such determination by the Committee under
this Subparagraph 3(h) shall be final, binding and conclusive.

 

(i)            As soon as
practicable after the last day of each Performance Period, the Committee may
determine, in its sole discretion, that the sum of the Schedule A Values (as
initially determined in Subparagraphs 3(b), (c), (d) and (e)) for such
Performance Period be adjusted downward (that is, to a value of zero), but in
no event upward, as follows:

 

(i)            Your Unit’s
Results.  Downward by a percentage
(ranging from 0-100%) of such initially determined sum, based on such criteria
as the Committee shall deem appropriate relating to your unit’s results, with
such resultant sum being the “Initial Value” for such Performance Period;
provided that any such determination by the Committee need not be made in a
uniform manner and may be made selectively among holders of awards of portfolio
grants in your unit, whether or not such award holders are similarly situated.

 

(ii)           Your Individual
Results.  The Initial Value for a
Performance Period may be adjusted further downward by a percentage (ranging
from 0-100%) of such Initial Value after the application of Subparagraph
3(i)(i), based on such criteria as the Committee shall deem appropriate
relating to your individual results, with such final resultant sum being the “Final
Value” (except as otherwise provided by Paragraph 8) for such Performance
Period; provided that any such determination by the Committee need not be made
in a uniform manner and may be made selectively among holders of awards of
portfolio grants, whether or not such award holders are similarly situated.

 

(j)            In no event may the
Committee amend any provision hereof so as to increase or otherwise adjust
upward the Schedule A Value of any component. 
In addition, in no event shall the Final Value of an Award for any
Performance Period exceed 125% of the Total Annual Target Value for such
Performance Period.

 

(k)           For each Performance
Period, subject to the limitations set forth in Paragraph 8, the Committee
shall determine the Schedule A Values, the Initial Value and the Final Value
for such Performance Period pursuant to this Agreement, and such determinations
by the Committee shall be final, binding and conclusive upon you and all
persons claiming under or through you.

 

(l)            The Committee shall
determine in its own discretion what portion, if any, of the Final Value for a
Performance Period shall be payable in cash (the “Cash Value”), and what
portion shall be denominated in Restricted Shares or Restricted Stock Units of
the Company (“the RSA” or “the RSU”), in accordance with Paragraph 5
below.  The RSA or the RSU shall have the
terms substantially as set forth in the form of Restricted Share or Restricted 

 

6

 

Stock Unit awards
granted generally under the Plan, or its successor, except that the RSA or the
RSU shall vest pursuant to a period determined in the Committee’s discretion,
except that such vesting period shall not be less than one year from date of
grant, and (B) be forfeitable only if your employment with the American
Express companies terminates by reason of voluntary resignation or terminates
for cause (that is, violation of the Code of Conduct as in effect from time to
time) prior to the applicable vesting dates. 
The number of restricted shares or restricted stock units of the Company
comprising the RSA or the RSU (the “Number of Restricted Shares” or the “Number
of Restricted Stock Units”) shall be determined by dividing such portion of the
Final Value so designated by the Committee, if any, by the closing price of the
shares on the date that the Committee approves payout of the Awards for such
Performance Period, and shall be payable in the form of an RSA or an RSU in
accordance with Paragraph 5 below.

 

4.             Death, Disability or Retirement.

 

(a)           If, on or before a
Payment Date set forth in Subparagraph 5(b), but during a period when you have
been in continuous employment with the American Express companies since the
Award Date, you terminate your employment with the American Express companies
by reason of disability (as that term is defined in the Plan) at any time
following the Award Date or you die at any time following the Award Date, you
will be entitled to that proportion of the Final Value for the Performance
Period in which you terminate your employment with the American Express
companies by reason of disability or death as the number of full months which
have elapsed between the first day of such Performance Period and the end of
the month in which your termination of employment by reason of death or such
disability occurs (not to exceed 12) bears to 12, and for this purpose, to the
extent not otherwise previously determined by the Committee, in the event of
your disability or death, the Final Value for such Performance Period shall be
calculated by applying the rate at which the expense for the Award was being
accrued for purposes of the Company’s annual audited financial statement at the
end of the last completed calendar quarter prior to your disability or death,
as applicable.  In the event of your
death or your disability (if such disability qualifies as a “disability” for
purposes of Section 409A of the Code), such amount, if any, shall be
payable as soon as practicable thereafter, but in no event later than 90 days
from the date of your disability or death, and unless otherwise determined by
the Committee, in cash, common shares of the Company, or other property, or any
combination thereof, and you and all others claiming under or through you shall
not be entitled to receive any other amounts under this Award.  In the event of your disability (if such
disability does not qualify as a “disability” for purposes of Section 409A
of the Code), such amount, if any, for a Performance Period shall be payable on
the Payment Date for such Performance Period in accordance with Paragraph 5(b),
and unless otherwise determined by the Committee, in cash, common shares of the
Company, or other property, or any combination thereof, and you and all others
claiming under or through you shall not be entitled to receive any other
amounts under this Award.

 

(b)           If, on or before a
Payment Date set forth in Subparagraph 5(b) but during a period when you
have been in continuous employment with the American Express companies since
the Award Date, you terminate your employment with the American Express
companies by reason of retirement (as that term is defined by the Committee),
and such event occurs more than one year after the Award Date, then:

 

7

 

(i)            if you have not
received payment of the Final Value for the 2009 Performance Period before the
date of your retirement, you generally will be entitled to receive that
proportion of the Final Value for the 2009 Performance Period as the number of
full months which have elapsed between January 1, 2009 and the end of the
month in which your termination of employment by reason of such retirement
occurs (not to exceed 12) bears to 12, unless such termination occurs following
the attainment of age 60, in which case you will be entitled to receive 50% of
the Final Value for the 2009 Performance Period you would otherwise forfeit
under the above formula, or, unless such termination occurs following
attainment of age 62, in which case you will be entitled to 100% of the Final
Value for the 2009 Performance Period.  The
Final Value for the 2009 Performance Period for this purpose shall be
determined after the last day of the 2009 Performance Period in the normal
course in accordance with Paragraph 3. 
Such amount, if any, shall be payable in cash, Restricted Shares or Restricted
Stock Units, as described in Paragraph 3(l) above, or other property, or
any combination thereof, after the 2009 Performance Period in accordance with
Paragraphs 5 and 6, and you and all others claiming under or through you shall
not be entitled to receive any other amounts under this Award; and

 

(ii)           if you retire after
January 1, 2010, you generally will be entitled to receive that proportion
of the Final Value for the 2010 Performance Period as the number of full months
which have elapsed between January 1, 2010 and the end of the month in
which your termination of employment by reason of such retirement occurs (not
to exceed 12) bears to 12, unless such termination occurs following the
attainment of age 60, in which case you will be entitled to receive 50% of the
Final Value for the 2010 Performance Period you would otherwise forfeit under
the above formula, or, unless such termination occurs following attainment of
age 62, in which case you will be entitled to 100% of the Final Value for the 2010
Performance Period.  The Final Value for
the 2010 Performance Period for this purpose shall be determined after the last
day of the 2010 Performance Period in the normal course in accordance with
Paragraph 3.  Such amount, if any, shall
be payable in cash, Restricted Shares or Restricted Stock Units, as described
in Paragraph 3(l) above, or other property, or any combination thereof,
after the 2010 Performance Period in accordance with Paragraphs 5 and 6, and
you and all others claiming under or through you shall not be entitled to
receive any other amounts under this Award.

 

5.             Payment of Award.

 

(a)           As soon as
practicable after the last day of a Performance Period, or the earlier date
your continuous employment with American Express companies terminates by reason
of disability or death in accordance with Paragraph 4, but prior to payment in
respect of the Award for such Performance Period, the Committee shall determine
whether the conditions of Paragraph 2, and Paragraph 3 or 4, have been met and,
if so, shall ascertain the Final Value, Cash Value and the Number of Restricted
Shares or the Number of Restricted Stock Units, if any, for such Performance
Period, in accordance with Paragraph 3 or 4, as the case may be.

 

(b)           If the Committee
determines that there is no Annual EPS Schedule A Value, no Annual Net Revenue
Schedule A Value, no Annual ROE Schedule A Value and no Relative TSR Schedule A
Value for a Performance Period, then this Award will be canceled with respect
to such Performance Period.  If the Committee
determines that there is some Annual EPS Schedule A Value, Annual Net Revenue
Schedule A Value, Annual ROE Schedule A Value or

 

8

 

Relative TSR Schedule A Value for such Performance Period, however, the
Cash Value for such Performance Period as determined pursuant to Paragraph 3
shall become payable to you in cash, and the Number of Restricted Shares or the
Number of Restricted Stock Units for such Performance Period shall be issued to
you in the form of a Restricted Share or Restricted Stock Unit award under the
Plan, or its successor (except that the RSA or the RSU shall vest pursuant to a
period determined in the Committee’s discretion, and such vesting period shall
not be less than one year from date of grant), or other property, or any
combination thereof, as soon as practicable following February 1st of the
calendar year immediately following such Performance Period, but in no event
later than 90 days thereafter (for each respective Performance Period, the “Payment
Date”).

 

6.             Other Termination of Employment.

 

(a)           If, after the last day of a Performance
Period and on or before the Payment Date for such Performance Period, but during
a period when you have been in continuous employment with the American Express
companies since the Award Date, your employment terminates with the American
Express companies for any reason other than death, disability or retirement as
set forth in Paragraph 4, then you and all others claiming under or through you
shall not be entitled to receive any amounts under this Award for such
Performance Period or any subsequent Performance Period, except as otherwise
determined by the Committee in its sole discretion.

 

(b)           If, after the Payment Date for the 2009
Performance Period and on or before the Payment Date for the 2010 Performance
Period, your employment terminates with the American Express companies for any
reason other than death, disability, retirement or involuntary termination
without cause, then within five days of the termination of your employment with
the American Express companies, you shall be required to repay to the Company
the amount, if any, of the Final Value for the 2009 Performance Period that was
paid to you, except as otherwise determined by the Committee in its sole
discretion.

 

7.             Deferral or Acceleration of Payment of
Award.  Any payments to be made under this Award may
be deferred or accelerated in such manner as the Committee shall determine;
provided, however, that any such deferral or acceleration must comply with the
applicable requirements of Section 409A of the Code.  As to such a deferral of payment, any amount
paid in excess of the amount that was originally payable to you under this
Agreement will be based on a reasonable interest rate as determined by the
Committee, and as to such an acceleration of payment to you under this
Agreement, any amount so paid will be discounted to reasonably reflect the time
value of money as determined by the Committee.

 

8.             Change in Control.

 

(a)           Notwithstanding anything in this
Agreement to the contrary (except for the provision dealing with a limitation
under Section 280G of the Code, and except as otherwise provided by
Paragraph 8(b) below), if there is a Change in Control (as defined below)
prior to the payment of the Award for either or both Performance Periods under
the Agreement, your Final Value of the Award determined under Section 3(i)(ii) of
the Agreement for the Performance Period in which the Change in Control occurs
and for any subsequent Performance 

 

9

 

Period may not be less
than the Annual Total Target Value of the Award for such Performance Period
multiplied by the Average Payout Percentage (as defined below).

 

(b)           Notwithstanding anything in this
Agreement to the contrary (except for the provision dealing with a limitation
under Section 280G of the Code), if you have not received payment for a
Performance Period under the Agreement and, within two years after the date of
a Change in Control (as defined below), you experience a separation from
service (as that term is defined for purposes of Section 409A of the Code)
that would otherwise entitle you to receive the payment of severance benefits
under the provisions of the severance plan that is in effect and in which you
participate as of the date of such Change in Control, then:

 

(i)            you shall immediately be 100% vested in
the Award for the Performance Period in which you experience a separation from
service and for any subsequent Performance Period;

 

(ii)           (A)          if
the separation from service occurs during the 2009 Performance Period, the
Final Value of the Award will equal the Total Target Value of the Award
multiplied by the Average Payout Percentage (as defined below), but prorated
based on (a) the total number of full and partial months of the Award
Period which have elapsed between (X) the beginning of the 2009
Performance Period, and (Y) the date of such separation from service (not
to exceed 12), divided by (b) the total number of months in the Award
Period; and

 

(B)           if the separation from service occurs
during the 2010 Performance Period, the Final Value of the Award for the 2010
Performance Period will equal the Annual Total Target Value of the Award for
the 2010 Performance Period multiplied by the Average Payout Percentage (as
defined below), but prorated based on (a) the total number of full and
partial months of the 2010 Performance Period which have elapsed between (X) the
beginning of the 2010 Performance Period, and (Y) the date of such
separation from service (not to exceed 12), divided by (b) the total
number of months in the 2010 Performance Period; and

 

(iii)          such
value of the Award shall be paid to you in cash within five days after the date
of such separation from service.

 

(c)           “Average Payout Percentage” means the
average of the payout percentages for you under the two portfolio grant awards
that were paid by the Company immediately preceding the date of such Change in
Control; provided, however, if you only received one portfolio grant award
payment immediately preceding the date of the Change of Control, then such
payout percentage and the payout percentage for your unit for the portfolio
grant award that immediately preceded the portfolio grant for which you
received payment shall be used to determine your Average Payout Percentage; and
provided further, if you have not received any portfolio grant award payment
prior to the date of the Change in Control, then your Average Payout Percentage
shall be the average of the payout percentages for your unit under the two
portfolio grant awards that were paid by the Company immediately preceding the
date of such Change in Control.  For purposes
of this Paragraph 8(c), the prior payout for the 2009 Performance Period shall
be considered a payout under a separate prior portfolio grant award.  For purposes of this Paragraph 8(c), for
awards preceding Portfolio Grant 2009-2010, the payout percentage shall be
deemed to equal 50% of the actual payout percentage of the award.

 

10

 

(d)           A “Change in Control” has that meaning as
defined in American Express Senior Executive Severance Plan, as amended from
time to time.

 

(e)           The Committee may not amend or delete
this Paragraph 8 of this Agreement in a manner that is detrimental to you,
without your written consent.

 

9.             Tax Withholding and Furnishing of
Information.  There shall be withheld from any payment of
cash or vesting of restricted shares or restricted stock units under this
Award, such amount, if any, as the Company and/or your employer determines is
required by law, including, but not limited to, U.S. federal, state, local or
foreign income, employment or other taxes incurred by reason of making of the
Award or of such payment.  It shall be a
condition to the obligation of the Company to make payments under this Award
that you (or those claiming under or through you) promptly provide the Company
and/or your employer with all forms, documents or other information reasonably
required by the Company and/or your employer in connection with the Award.

 

10.           Rights Not Assignable. 
Except as otherwise determined by the Committee in its sole discretion,
your rights and interests under the Award and the Plan may not be sold,
assigned, transferred, or otherwise disposed of, or made subject to any
encumbrance, pledge, hypothecation or charge of any nature, except that you may
designate a beneficiary pursuant to Paragraph 11.  If you (or those claiming under or through
you) attempt to violate this Paragraph 10, such attempted violation shall
be null and void and without effect, and the Company’s obligation to make any
further payments to you (or those claiming under or through you) hereunder
shall terminate.

 

11.           Beneficiary Designation. 
Subject to the provisions of the Plan, you may, by completing a form
acceptable to the Company and returning it to the Corporate Secretary’s Office,
at 200 Vesey Street, New York, New York 10285, name a beneficiary or beneficiaries
to receive any payment to which you may become entitled under this Agreement in
the event of your death.  You may change
your beneficiary or beneficiaries from time to time by submitting a new form to
the Corporate Secretary’s Office at the same address.  If you do not designate a beneficiary, or if
no designated beneficiary is living on the date any amount becomes payable
under this Agreement, such payment will be made to the legal representatives of
your estate, which will be deemed to be your designated beneficiary under this
Agreement.

 

12.           Administration. 
Any action taken or decision made by the Company, the Board or the
Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may
be, and shall be final, conclusive and binding upon you and all persons
claiming under or through you.  By
accepting this Award or other benefit under the Plan, you and each person
claiming under or through you shall be conclusively deemed to have indicated
acceptance and ratification of, and consent to, any action taken or decision
made under the Plan by the Company, the Board or the Committee or its delegates.

 

13.           Change in Control Payments. 
This Paragraph shall apply in the event of Change in Control (as defined
in the American Express Senior Executive Severance Plan, as amended from time
to time).

 

11

 

(a)           In the event that any
payment or benefit received or to be received by you hereunder in connection
with a Change in Control or termination of your employment (such payments and
benefits, excluding the Gross-Up Payment (as hereinafter defined), being hereinafter
referred to collectively as the “Payments”), will be subject to the excise tax
referred to in Section 4999 of the Code (the “Excise Tax”), then (i) in
the case you are classified in Band 70 (or its equivalent) or above immediately
prior to such Change in Control (a “Tier 1 Employee”), the Company shall pay to
you, within five days after the
expiration of the written-statement period referred to in Subparagraph
13(d) below, an additional amount (the “Gross-Up Payment”) such that the
net amount retained by you, after deduction of any Excise Tax on the Payments
and any federal, state and local income and employment taxes and Excise Tax
upon the Gross-Up Payment, shall be equal to the Payments and (ii) in the
case you are other than a Tier 1 Employee, the Payments shall be reduced to the
extent necessary so that no portion of the Payments is subject to the Excise
Tax but only if (A) the net amount of all Total Payments (as hereinafter
defined), as so reduced (and after subtracting the net amount of federal, state
and local income and employment taxes on such reduced Total Payments), is
greater than or equal to (B) the net amount of such Total Payments without
any such reduction (but after subtracting the net amount of federal, state and
local income and employment taxes on such Total Payments and the amount of
Excise Tax to which you would be subject in respect of such unreduced Total
Payments); provided, however, that you may elect in writing to
have other components of your Total Payments reduced prior to any reduction in
the Payments hereunder.

 

(b)           For purposes of determining
whether the Payments will be subject to the Excise Tax, the amount of such
Excise Tax and whether any Payments are to be reduced hereunder: (i) all
payments and benefits received or to be received by you in connection with such
Change in Control or the termination of your employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with
the Company, any Person (as such term is defined in the Company’s Senior
Executive Severance Plan) whose actions result in such Change in Control or any
Person affiliated with the Company or such Person (all such payments and
benefits, excluding the Gross-Up Payment and any similar gross-up payment to
which a Tier 1 Employee may be entitled under any such other plan, arrangement
or agreement, being hereinafter referred to as the “Total Payments”), shall be
treated as “parachute payments” (within the meaning of Section 280G(b)(2) of
the Code) unless, in the opinion of the firm serving, immediately prior to the
Change in Control, as the Company’s independent auditors, or if that firm
refuses to serve, by another qualified firm, whether or not serving as
independent auditors, designated by the Administration Committee under the
American Express Senior Executive Severance Plan (the “Firm”), such payments or
benefits (in whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(2)(A) or Section 280G(b)(4)(A) of
the Code; (ii) no portion of the Total Payments the receipt or enjoyment
of which you shall have waived at such time and in such manner as not to
constitute a “payment” within the meaning of Section 280G(b) of the
Code shall be taken into account; (iii) all “excess parachute payments”
within the meaning of Section 280G(b)(l) of the Code shall be treated
as subject to the Excise Tax unless, in the opinion of the Firm, such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of Section 280G(b)(4)(B) of
the Code) in excess of the Base Amount (within the meaning of Section 280G(b)(3) of
the Code) allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax; and (iv) the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Firm in accordance
with 

 

12

 

the principles of Sections 280G(d)(3) and
(4) of the Code and regulations or other guidance thereunder.  For purposes of determining the amount of
your Gross-Up Payment and whether your Payments shall be reduced, you shall be
deemed to pay federal income tax at the highest marginal rate of federal income
taxation (and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes) in the calendar year in which the Gross-Up Payment
is to be made (if you are a Tier 1 Employee) or in which the Payments are made
(if you are other than a Tier 1 Employee). 
The Firm will be paid reasonable compensation by the Company for its
services.

 

(c)           In the event that the Excise
Tax is finally determined to be less than the amount taken into account
hereunder in calculating the Gross-Up Payment, then you will be required to
repay to the Company within five business days of such determination an amount
equal to the excess of the earlier payment over the redetermined amount (the “Excess
Amount”), together with interest on such amount at the lowest applicable
federal rate (as defined in Section 1274(d) of the Code or any
successor provision thereto), compounded semi-annually (the “Section 1274
Rate”), from the date of your receipt of such Excess Amount until the date of
such repayment (or such lesser rate (including zero) as may be designated by
the Firm such that the Excess Amount and such interest will not be treated as a
parachute payment as previously defined). 
In the event that the Excise Tax is finally determined to exceed the
amount taken into account hereunder in calculating the Gross-Up Payment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), within five business days of
such determination, but not later than the December 31st of the year
following the year in which you remit the related taxes, the Company will pay
to you an additional amount, together with interest thereon from the date such
additional amount should have been paid to the date of such payment, at the Section 1274
Rate (or such lesser rate (including zero) as may be designated by the Firm
such that the amount of such deficiency and such interest will not be treated
as a parachute payment as previously defined). 
You and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings concerning the
amount of any Gross-Up Payment.

 

(d)           As soon as practicable
following a Change in Control, but
in no event later than 30 days thereafter, the Company shall provide
to you if you are a Tier 1 Employee or it is proposed that your Payments be
reduced, a written statement setting forth the manner in which your Total
Payments were calculated and the basis for such calculations, including,
without limitation, any opinions or other advice the Company has received from
the Firm or other advisors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement).

 

14.           Miscellaneous. 
Neither you nor any person claiming under or through you shall have any
right or interest, whether vested or otherwise, in the Plan or the Award,
unless and until all of the terms, conditions and provisions of the Plan and
this Agreement shall have been complied with. 
In addition, neither the adoption of the Plan nor the execution of this
Agreement shall in any way affect the rights and powers of any person to
dismiss or discharge you at any time from employment with the American Express
companies.  Notwithstanding anything
herein to the contrary, neither the Company nor any of its Affiliates (as that
term is defined in the Plan) nor their respective officers, directors,
employees or agents shall have any liability to you (or 

 

13

 

those claiming under or
through you) under the Plan, this Agreement or otherwise on account of any
action taken, or decision not to take any action made, by any of the foregoing
persons with respect to the business or operations of the Company or any of its
Affiliates (as that term is defined in the Plan), despite the fact that any
such action or decision may adversely affect in any way whatsoever Average
Annual Shareholders’ Equity, Annual EPS, Annual Net Income or other financial
measures or amounts which are accrued or payable or any of your other rights or
interests under this Agreement.

 

15.           Governing Law. 
The validity, construction, interpretation, administration and effect of
this Agreement shall be governed by the substantive laws, but not the choice of
law rules, of the State of New York.

 

16.           Section 409A Compliance. 
This Agreement and the payment of the Award hereunder are intended to
comply with Section 409A of the Code and the Treasury Regulations
promulgated and other official guidance issued thereunder, and this Agreement
shall be administered and interpreted consistent with such intent and the
American Express Section 409A Compliance Policy, as amended from time to
time, and any successor policy thereto.

 

17.           TARP Compliance. 
This Agreement and the payment of the Award hereunder are subject to the
executive compensation and corporate governance requirements of the Emergency
Economic Stabilization Act of 2008, as amended by the American Reinvestment and
Recovery Act of 2009, and as implemented by guidance or regulation thereunder
(including the United States Treasury interim final regulations (31 CFR Part 30)
published in the Federal Register on October 20, 2008) (collectively, “EESA”).  This Agreement and the payment of the Award
hereunder are intended to comply with EESA and this Agreement shall be
administered and interpreted consistent with such intent and the American
Express Company TARP Capital Purchase Program Senior Executive Officer
Compensation Policy, as amended from time to time, and any successor policy
thereto.

 

	
   

  	
  AMERICAN
  EXPRESS COMPANY

  
	
   

  	
  By
  the Compensation and Benefits

  
	
   

  	
  Committee
  of the Board of Directors:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  S.P. Norman, Secretary

  

 

Notwithstanding any contrary
provision in the American Express Company 2007 Incentive Compensation Plan
Master Agreement, the Company reserves the right to correct nonmaterial
clerical errors in, and make subsequent nonmaterial clarifications to, any
Award Agreement in the future, without prior notification to participants.

 

14

 

SCHEDULE A

 

AXP PORTFOLIO GRANT PERFORMANCE/PAYOUT GRID FOR EXECUTIVE OFFICERS

(subject to award agreement and discretionary downward adjustment)

 

	
  Performance Measure

  	
   

  	
  Weighting

  	
   

  	
  Threshold

  (-0- payout)

  	
   

  	
  Target

  (Maximum payout level:

  150% of target value)

  	
   

  	
  Maximum

  (Maximum payout level:

  300% of target value)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Earnings per Share

  	
   

  	
  25

  	
  %

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  
	
  Annual Net Revenue

  	
   

  	
  25

  	
  %

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  
	
  Annual Return on Equity

  	
   

  	
  25

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
  Company Total Shareholder Return relative to S&P 500

  Total Shareholder Return

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  Notwithstanding payout levels described
above, in no event shall Final Value of an Award for any Performance Period
exceed 125% of Total Annual Target Value for such Performance Period.Exhibit 10.1

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “Agreement”) between EARTHLINK, INC., a Delaware
corporation (the “Company”), and ROLLA HUFF (referred to herein as “You”) is
entered into on December 30, 2008. 
This Agreement amends, restates and supersedes the Employment Agreement
between the Company and You dated June 25, 2007 (the “Previous Agreement”).

 

RECITALS

 

1.                                       The Company is engaged in the business of providing
integrated communication services and related value added services to
individual consumers and business customers throughout the States of the United
States; and

 

2.                                       The Company previously determined that, in view of Your
knowledge, expertise and experience in the integrated communication services
and related value-added services industries, Your services as the Chief
Executive Officer and President of the Company would be of great value to the
Company, and accordingly, the Company desired to enter into the Previous
Agreement with You on the terms set forth therein in order to secure Your
services; and

 

3.                                       You desired to serve as the Chief Executive Officer and
President of the Company on the terms set forth in the Previous Agreement; and

 

4.                                       The Company and You now desire to amend and restate the
Previous Agreement, as set forth herein, to address Section 409A of the
Code (as defined below) and the final regulations issued thereunder.

 

NOW,
THEREFORE, in consideration of Your employment by the Company,
the above premises and the mutual agreements hereinafter set forth, You and the
Company agree as follows:

 

1.                      Definitions.

 

(a)                                                  “Affiliate” means any trade or business with whom the
Company would be considered a single employer under Sections 414(b) or 414(c) of
the Code (except that, for purposes of determining Your Termination of
Employment, the language “at least fifty percent (50%)” shall be used instead
of “at least eighty percent (80%)” each place it appears in Sections 414(b) or
414(c) of the Code).

 

(b)                                                 “Beneficial Ownership” means beneficial ownership as
that term is used in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended.

 

(c)                                                  “Business Combination” means a reorganization, merger
or consolidation of the Company.

 

 

(d)                                                 “Business of the Company” means the business of
providing integrated communication services and related value added services to
individual consumers and business customers.

 

(e)                                                  “Cause” means (i) Your commission of any act of
fraud or dishonesty relating to and adversely affecting the business affairs of
the Company; (ii) Your conviction of any felony; or (iii) Your
willful and continued failure to perform substantially Your duties owed to the
Company after written notice specifying the nature of such non-performance and
a reasonable opportunity to cure such non-performance.  No act or omission shall be considered “willful”
unless it is done or omitted in bad faith or without reasonable belief that the
action or omission was in the best interests of the Company.

 

(f)                                                    “Change in Control Event” of the Company means the
occurrence of any of the following events:

 

(1)                                  The
accumulation in any number of related or unrelated transactions by any Person
of Beneficial Ownership of more than fifty percent (50%) of the combined voting
power of the Company’s Voting Stock; provided that for purposes of this
subparagraph (1), a Change in Control Event will not be deemed to have occurred
if the accumulation of more than fifty percent (50%) of the voting power of the
Company’s Voting Stock results from any acquisition of Voting Stock (a) by
the Company, (b) by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Affiliate, or (c) by any Person
pursuant to a Business Combination that complies with clauses (a) and (b) of
subparagraph (2) below; or

 

(2)                                  Consummation of
a Business Combination, unless, immediately following that Business
Combination, (a) all or substantially all of the Persons who were the
beneficial owners of Voting Stock of the Company immediately prior to that
Business Combination beneficially own, directly or indirectly, more than fifty
percent (50%) of the then outstanding shares of common stock and more than
fifty percent (50%) of the combined voting power of the then outstanding Voting
Stock entitled to vote generally in the election of directors of the entity
resulting from that Business Combination (including, without limitation, an
entity that as a result of that transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions relative to each other
as their ownership, immediately prior to that Business Combination, of the
common stock and Voting Stock of the Company, and (b) at least sixty
percent (60%) of the members of the Board of Directors of the entity resulting
from that Business Combination holding at least sixty percent (60%) of the
voting power of such Board of Directors were members of the Incumbent Board at
the time of the execution of the initial agreement or of the action of the
Board of Directors providing for that Business Combination and as a result of
or in connection with such Business Combination, no Person has a right to
dilute either of such 

 

2

 

percentages by appointing additional members to the
Board of Directors or otherwise without election or other action by the
stockholders; or

 

(3)                                  A sale or other
disposition of all or substantially all of the assets of the Company, except
pursuant to a Business Combination that complies with clauses (a) and (b) of
subparagraph (2) above; or

 

(4)                                  Approval by the shareholders
of the Company of a complete liquidation or dissolution of the Company, except
pursuant to a Business Combination that complies with clauses (a) and (b) of
subparagraph 2 above.

 

(g)                                                 “Code” means the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.

 

(h)                                                 “Company” shall mean EarthLink, Inc.

 

(i)                                                     “Confidential Information” means any and all
non-public information concerning, relating to and/or in the possession of the
Company and/or its Affiliates and/or the Business of the Company treated as
confidential or secret by the Company and/or its Affiliates (that is, such
business information is subject to efforts by the Company and/or its Affiliates
that are reasonable under the circumstances to maintain its secrecy) that does
not constitute a Trade Secret, including, without limitation, information
concerning the Company’s or an Affiliate’s financial position and results of
operations (including revenues, assets, net income, etc.), annual and long
range business plans, product and service plans, marketing plans and methods,
employee lists and information, in whatever form and whether or not computer or
electronically accessible.

 

(j)                                                     “Eligible Earnings” has the same meaning given to
that term in the Company’s bonus plan and payroll policies.

 

(k)                                                  “Good Reason” means, with respect to Your Termination
of Employment, any of the following acts or omissions that are not cured within
thirty (30) days after written notice of such act or omission is delivered to
the Company, the Chairman of the Board of Directors and the Chairman of the
Leadership and Compensation Committee of the Board of Directors (which notice
must be given no later than ninety (90) days after the initial occurrence of
such event):

 

(1)                                  without Your
express written consent (i) the assignment to You of any duties materially
inconsistent in any respect with Your position, authority, duties or
responsibilities as contemplated by Section 2, (ii) the requirement
by the Company that You report to any officer or employee other than directly
to the Board of Directors of the Company, or (iii) any other action by the
Company that results in a significant diminution in such position, authority,
duties or responsibilities, provided, however, that, without limiting the
foregoing, the occurrence of a Non-Public Change in Control Event
(regardless of your consent thereto) shall in and of itself be deemed to result
in a significant diminution in 

 

3

 

your position, authority, duties and/or
responsibilities as contemplated by Section 2;

 

(2)                                  without Your
express written consent, any failure by the Company to comply in any material
respect with any of the provisions of Section 4(a), (b) and (d) of
this Agreement;

 

(3)                                  any requirement
that You relocate outside of, or any relocation of the Company’s principal
executive office outside of, the metropolitan area of Atlanta, Georgia; or

 

(4)                                  any breach by
the Company of any other material provision of this Agreement.

 

A termination by You shall not constitute termination for Good Reason
unless You resign within two (2) years after the initial occurrence of
such uncured event.

 

(l)                                                     “Incumbent Board” means a Board of Directors
consisting of individuals who either are (a) members of the Company’s
Board of Directors on the date hereof or (b) members who become members of
the Company’s Board of Directors subsequent to the date hereof whose election,
or nomination for election by the Company’s shareholders, was approved by a
vote of at least sixty percent (60%) of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy statement
of the Company in which that person is named as a nominee for director, without
objection to that nomination), but excluding, for that purpose, any individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest (within the meaning of Rule 14a-11 of the
Securities Exchange Act of 1934, as amended) with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors.

 

(m)                                               “Non-Public Change in Control Event” means any
Change in Control Event that is not a Public Change in Control Event.

 

(n)                                                 “Person” means any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended.

 

(o)                                                 “Public Change in Control Event” means any Change in
Control Event as defined in clause (f) above where (i) the Person that
accumulates Beneficial Ownership of more than fifty percent (50%) of the
combined voting power of the Company’s Voting Stock has, or such Person is a
direct or indirect subsidiary of a Person that has, a class of common stock (or
depositary receipts or other certificates representing common equity interests)
traded on a U.S. national securities exchange or quoted on NASDAQ or another
established over-the-counter trading market in the United States or which will
be so traded or quoted when issued or exchanged in connection with such Change
in Control Event or (ii) upon the consummation of such Change in Control
Event, the Voting Stock of the Company will remain trading 

 

4

 

on a U.S.
national securities exchange or quoted on NASDAQ or another established
over-the-counter trading market in the United States.

 

(p)                                                 “Specified Employee” means an employee who is (i) an
officer of the Company or an Affiliate having annual compensation greater than
$145,000 (with certain adjustments for inflation after 2008), (ii) a
five-percent owner of the Company or (iii) a one-percent owner of the
Company having annual compensation greater than $150,000.  For purposes of this Section, no more than 50
employees (or, if lesser, the greater of three or 10 percent of the employees)
shall be treated as officers.  Employees
who (i) normally work less than 17 1/2 hours per week, (ii) normally
work not more than 6 months during any year, (iii) have not attained age
21, (iv) are included in a unit of employees covered by an agreement which
the Secretary of Labor finds to be a collective bargaining agreement between
employee representatives and the Company or an Affiliate (except as otherwise
provided in regulations issued under the Code) or (v) who have not
completed six months of service shall be excluded for purposes of determining
the number of officers for this determination. 
For purposes of this Section, the term “five-percent owner” (“one-percent
owner”) means any person who owns more than five percent (one percent) of the
outstanding stock of the Company or stock possessing more than five percent
(one percent) of the total combined voting power of all stock of the
Company.  For purposes of determining
ownership, the attribution rules of Section 318 of the Code shall be
applied by substituting “five percent” for “50 percent” in Section 318(a)(2) and
the rules of Sections 414(b), 414(c) and 414(m) of the Code
shall not apply.  For purposes of this
Section, the term “compensation” has the meaning given such term by Section 414(q)(4) of
the Code.  The determination of whether You
are a Specified Employee will be based on a December 31 identification
date such that if You satisfy the above definition of Specified Employee at any
time during the 12-month period ending on December 31, You will be treated
as a Specified Employee if You have a Termination of Employment during the
12-month period beginning on the first day of the fourth month following the
identification date.  This definition is
intended to comply with the “specified employee” rules of Section 409A(a)(2)(B)(i) of
the Code and shall be interpreted accordingly.

 

(q)                                                 “Termination of Employment” means the termination of
Your employment and service with the Company and all Affiliates.  You will not be considered as having had a
Termination of Employment if (i) You continue to provide services to the
Company or any Affiliate as an employee or independent contractor at an annual
rate that is more than 20 percent of the services rendered, on average, during
the immediately preceding 36 months of employment (or, if employed less than 36
months, such lesser period) or (ii) You are on military leave, sick leave
or other bona fide leave of absence so long as the period of such leave does
not exceed six months, or if longer, so long as Your right to reemployment with
the Company or any Affiliate is provided either by statute or by contract.  If the period of leave (i) ends or (ii) exceeds
six months and Your right to reemployment is not provided either by statute or
by contract, the Termination of Employment will be deemed to occur on the first
date immediately following such six-month period if not reemployed by the
Company or any Affiliate before such time and eligibility for 

 

5

 

payments
and benefits hereunder will be determined as of that time.  Termination of Employment shall be construed
consistent with the meaning of a “separation from service” under Section 409A
of the Code.

 

(r)                                                    “Total Disability” means Your inability, through
physical or mental illness or accident, to perform the majority of Your usual
duties and responsibilities hereunder (as such duties are constituted on the
date of the commencement of such disability) in the manner and to the extent
required under this Agreement for a period of at least ninety (90) consecutive
days.  Total Disability shall be deemed
to have occurred on the first day following the expiration of such ninety (90)
day period.

 

(s)                                                  “Trade Secrets”
means any and all information concerning, relating to and/or in the possession
of, the Company and/or its Affiliates and/or the Business of the Company that
qualifies as a trade secret as defined by the laws of the State of Georgia on
the date of this Agreement and as such laws are amended from time to time
thereafter.

 

(t)                                                    “Voting Stock” means the then outstanding securities
of an entity entitled to vote generally in the election of members of that
entity’s Board of Directors.

 

2.                      Employment; Duties.

 

(a)                                                  The Company agrees to employ You as Chief Executive Officer
and President of the Company with the duties and responsibilities generally
associated with such position and such other reasonable additional
responsibilities and positions as may be added to Your duties from time to time
by the Board of Directors consistent with Your position.

 

(b)                                                 During Your employment hereunder, You shall (i) diligently
follow and implement all Company employee policies and all management policies
and decisions communicated to You by the Board of Directors; and (ii) timely
prepare and forward to the Board of Directors all reports and accountings as
may be reasonably requested of You.

 

3.                     Term.  The term hereof commenced on June 25, 2007, shall
continue for a period of three (3) years from such date and shall be
automatically extended from year-to-year thereafter unless terminated in
accordance with Section 6 hereof (the “Term”).

 

4.                      Compensation.

 

(a)                                                  (1)  You shall be paid an annual base salary of not
less than Eight Hundred Thousand Dollars ($800,000) per year (the “Base Salary”).  The Base Salary shall accrue and be due and payable
in equal, or as nearly equal as practicable, biweekly installments and the
Company may deduct from each such installment all amounts required to be
deducted and withheld in accordance with applicable federal and state income,
FICA and other withholding tax requirements.

 

6

 

(2)  The Base Salary shall be reviewed
by the Board of Directors at least once during each year of the Term and may be
increased from time to time and at any time by the Board of Directors.  The Base Salary shall in no event be reduced
or decreased below the highest level attained at any time by You, unless You
and the Board of Directors agree to implement a salary reduction program for
cost abatement purposes.

 

(3)  As the Term begins on other than
the first business day of a calendar month and as the Term hereof shall
terminate on other than the last day of a calendar month, Your compensation for
such month shall be prorated according to the number of days during such month
that occur within the Term.

 

(b)                                                 For each fiscal year of the Company, You shall be entitled
to receive an annual target bonus opportunity in an amount equal to one hundred
percent (100%) of Your Eligible Earnings (the “Annual Target Bonus”), with the
ability to earn 50 percent (50%) (threshold) to One Hundred Fifty Percent
(150%) (maximum) of Your Annual Target Bonus if the bonus criteria for such
annual period, as set by the Board of Directors of the Company, are satisfied
(the “Target Bonus Payment”); provided that if such bonus criteria are not
satisfied, no Annual Target Bonus shall be payable.  The criteria to earn Your Annual Target Bonus
and other levels between the threshold and maximum for each year of the Term
shall be based upon good faith negotiations between You and the Board of
Directors.  All Target Bonus Payments
that become payable shall be paid to You in accordance with the applicable
bonus plan but in no event later than 21⁄2 months after the end of the fiscal year
of the Company to which Your Target Bonus Payments relate.

 

(c)                                                  While You are performing the services described herein, the
Company shall reimburse You for all reasonable and necessary expenses incurred
by You in connection with the performance of Your duties of employment
hereunder in accordance with the Company’s expense reimbursement policy, as
applied to the Company’s executive officers, as soon as administratively
practicable but no later than 2 1⁄2 months after the end of the year in which You
incur the reimbursable expense.

 

(d)                                                 Pursuant to this Section 4(d), You shall participate in
the Change-In-Control Accelerated Vesting and Severance Plan amended and
restated effective December 15, 2008 and any plan(s) or program(s) that
supersede, replace and/or supplement such plan, as in effect from time to time
(the “AV/SP”), at the highest and most beneficial level of participation
provided under the AV/SP.  With respect
to each individual benefit, or category of similar benefit, provided to You
under each of the AV/SP and this Agreement, the two (2) benefits shall not
be cumulative, and You shall be entitled to receive each such benefit, or
category of benefit, under the terms of the AV/SP or the terms of this
Agreement, whichever would be the greater amount or value to You, except that
the timing and manner of payment of such benefits shall be consistent with the
terms of this Agreement, regardless of whether the amount or value of the
benefits You are entitled to receive are determined under the AV/SP or this
Agreement.  The restrictions on cumulation
of benefits in this Section 4(d), and the application of the terms of the
AV/SP to 

 

7

 

benefits
provided thereunder, shall not apply to Your right to qualify for and
participate in the AV/SP at the highest and most beneficial level of
participation.

 

(e)                                                  You shall receive paid vacation during each twelve (12)
month period of Your employment in accordance with the Company’s vacation
policy.  To the extent that You do not
use Your accrued vacation during such twelve (12) month period, any remaining
accrued vacation shall be subject to the carryover restrictions applicable in
the Company’s normal vacation policies.

 

5.                     Equity Rights.

 

(a)                                                  Upon execution of the Previous Agreement, You received
100,000 RSUs which shall vest in accordance with the terms of the EarthLink, Inc.
2006 Equity and Cash Incentive Plan, with 50,000 RSUs vesting on June 25,
2009, 25,000 RSUs vesting on June 25, 2010 and 25,000 RSUs vesting on June 25,
2011, assuming Your continued employment until each such time, or as otherwise
vested pursuant to Section 6.  Upon execution of the Previous
Agreement, You also received (1) 700,000 stock options which vested as of September 30,
2007 and (ii) 800,000 stock options which vest over a period of four years
in accordance with the terms of the EarthLink, Inc. 2006 Equity and Cash
Incentive Plan, with 300,000 stock options vesting on December 31, 2008
and the remaining 500,000 stock options vesting on a monthly basis between January 1,
2009 and June 25, 2011, assuming Your continued employment until each such
time, or as otherwise vested pursuant to Section 6.

 

(b)                                                 The stock options and restricted stock units granted by the
Company to You from time to time are hereinafter collectively called the “Stock
Options and RSUs.”  You shall be given
the period permitted under Your respective Stock Option agreements, which shall
contain the material terms provided in the form attached to this Agreement, to
exercise Your Stock Options after Your termination of employment.

 

(c)                                                  Vested Stock Options shall be exercisable for ninety (90)
days following termination of employment, provided that if You are prohibited
from exercising vested stock options during such ninety (90) day period due to
having material non-public information about the Company, such exercise period
shall be extended until ten (10) days following the date that You no
longer have material non-public information about the Company, but in no event
shall the vested Stock Options be exercisable beyond their latest expiration
date as set forth in the respective Stock Option agreements.

 

6.                      Termination.

 

(a)                                                  A Termination of Employment shall occur only as follows:

 

(1)                                  For Cause immediately by the
Company; or

 

(2)                                  At Your option for Good
Reason; or

 

8

 

(3)                                  At Your option upon thirty
(30) days prior written notice of termination delivered by You to the Company;
or

 

(4)                                  For any reason by the
Company upon three (3) calendar months prior written notice of termination
delivered to You, except during a period of Your disability that may qualify as
the period for qualification for Your Termination of Employment due to Your
Total Disability as set forth in Section 6(a)(6); or

 

(5)                                  By the Company upon Your
death; or

 

(6)                                  By the Company because of
Your Total Disability upon thirty (30) days prior written notice of termination
delivered to You.

 

(b)                                                 If You have a Termination of Employment that is (i) by
the Company for other than “Cause,” Your death or Your Total Disability, or (ii) by
You for “Good Reason,” You shall be paid an amount equal to (a) two
hundred percent (200%) of the sum of (i) Your Base Salary as of the
effective date of Your Termination of Employment and
(ii) Your Annual Target Bonus for the year in which Your Termination of
Employment occurs, less (b) the amount of the Non-Compete Payment.  Subject to Section 19
below, such amount shall be paid in a lump sum as
soon as administratively practicable (and within thirty (30) days) after Your Termination of Employment.  In the event of such Termination of
Employment, You shall become immediately vested in all Your outstanding Stock
Options and RSUs, and for eighteen (18) months following Termination of
Employment the Company shall pay, no less frequently than monthly, all costs of
health care continuation coverage for which You and Your spouse and dependents
are eligible under the Consolidated Omnibus Budget Reconciliation Act of 1986.

 

(c)                                                  If You have a Termination of Employment on account of Your
death or Your Total Disability, You shall be paid (i) one hundred percent
(100%) of Your Base Salary as of the effective date of Your Termination of
Employment, such amount to be paid in a lump sum as
soon as administratively practicable (and within thirty (30) days) after Your Termination of Employment (subject to any delay in
payments that may be required by Section 19), and (ii) Your Annual
Target Bonus for the year in which Your Termination of Employment occurs, such
Annual Target Bonus to be determined in accordance with Section 4(b) and
to be payable in accordance with the last sentence of Section 4(b).

 

(d)                                                 If You have a Termination of Employment by the Company for
Cause or by You for reasons other than for “Good Reason,” the Company will have
no obligations to pay You any amount beyond the effective date of such
Termination of Employment whether as Base Salary, Annual Target Bonus or
otherwise or to provide You with any benefits arising hereunder or otherwise
except as required by law.

 

9

 

7.                     Confidential Information and
Trade Secrets.  You
acknowledge that the nature of Your engagement by the Company is such that You
shall have access to the Confidential Information and the Trade Secrets, each
of which has great value to the Company, provides the Company a competitive
advantage, and constitutes the foundation upon which the Business of the
Company is based.  You agree to hold all
of the Confidential Information and the Trade Secrets in confidence and to not
use, disclose, publish or otherwise disseminate any of such Confidential
Information and the Trade Secrets to any other person, except to the extent
such disclosure is (i) necessary to the performance of this Agreement and
in furtherance of the Company’s best interests, (ii) required by applicable
law, (iii) as a result of portions of the Confidential Information and/or
the Trade Secrets becoming lawfully obtainable from other sources, (iv) authorized
in writing by the Company, or (v) necessary to enforce this
Agreement.  The restrictions set forth in
this Section 7 shall remain in full force and effect (a) with respect
to the Confidential Information, for the three (3) year period following
the effective date of Your Termination of Employment, and with respect to the
Trade Secrets, until the Trade Secrets no longer retain their status or qualify
as trade secrets under applicable law. 
Upon Your Termination of Employment, You shall deliver to the Company
all documents, records, notebooks, work papers, and all similar material
containing Confidential Information and Trade Secrets, whether prepared by You,
the Company or anyone else.

 

8.                      Inventions and Patents.  All inventions, designs, improvements, patents, copyrights
and discoveries conceived by You during the term of this Agreement which are
useful in or directly or indirectly relate to the business of the Company or to
any experimental work carried on by the Company, shall be the property of the
Company.  You agree to promptly and fully
disclose to the Company all such inventions, designs, improvements, patents,
copyrights and discoveries (whether developed individually or with other
persons) and at the Company’s expense, to take all steps necessary and
reasonably required to assure the Company’s ownership thereof and to assist the
Company in protecting or defending the Company’s proprietary rights therein.

 

9.                      Restrictive Covenants.

 

(a)                                                  Non-Competition.  You agree that during Your employment, and
for a period of eighteen (18) calendar months following Termination of
Employment, You shall not perform within the 50 states of the United States of
America any services which are in competition with the Business of the Company
during Your employment, or following Your Termination of Employment any
services which are in competition with a Material line of Business engaged in
by the Company at the time of Your Termination of Employment, and which are the
same as or similar to those services You performed for the Company under this
Agreement; provided, however, if the other business competitive with the
Business of the Company has multiple lines, divisions, segments or units, some
of which are not competitive with the Business of the Company, nothing herein
shall prevent You from being employed by or providing services to such line,
division, segment or unit that is not competitive with the Business of the
Company.  For purposes of this Section 9(a),
“Material” means a line of Business that represents 20% or more of the Company’s
consolidated revenues or adjusted EBITDA for the four fiscal quarters immediately
preceding Your Termination of Employment.

 

10

 

(b)                                                 Non-Recruitment.  You agree that during Your employment and for
a period of eighteen (18) calendar months following Termination of Employment,
You will not, directly or indirectly:  (1) solicit,
induce, recruit, or cause a Restricted Employee to resign employment with the
Company or its Affiliates, or (2) participate in making hiring decisions,
encourage the hiring of, or aid in the hiring process of a Restricted Employee
on behalf of any employer other than the Company and its Affiliates.  As used herein, “Restricted Employee” means
any employee of the Company or its Affiliates with whom You had material
business-related contact while performing services under this Agreement, and
who is:  (1) a member of executive
management; (2) a corporate officer of the Company or any of its
Affiliates, or (3) any employee of the Company or any of its Affiliates
engaged in product or service development or product or service management.

 

(c)                                                  Effect of Breach.  The obligation of the Company to continue to
fulfill its payment and benefit obligations to You pursuant to Sections 6(b), 6(c) and
9(d) is conditioned upon Your compliance with the provisions of this Section 9
and Sections 7 and 8.  Accordingly,
in the event that You shall materially breach the provisions of this Section 9
and/or Sections 7 and/or 8 and not cure or cease (as appropriate) such
material breach within ten (10) days of receipt of notice thereof from the
Company (the “Default Date”), the Company’s obligations under Sections 6(b), 6(c) and
9(d) shall terminate and You shall promptly (within thirty (30) days after
the Default Date) refund to the Company a prorata portion of the amounts
previously paid to You pursuant to Sections 6(b), 6(c) and 9(d) equal
to a fraction, the numerator of which is the number of full months from the
Default Date to the eighteen-month (18-month) anniversary of Your Termination
of Employment, and the denominator of which is eighteen (18).  Termination of the Company’s obligations
under Sections 6(b), 6(c) or 9(d) shall not be the Company’s sole and
exclusive remedy for a breach of this Section 9 and/or Sections 7
and/or 8.  In addition to the remedy
provided in this Section 9(c), the Company shall be entitled to seek
damages and injunctive relief to enforce this Section 9 and
Sections 7 and 8, in the event of a breach by You of this Section 9
and/or Sections 7 and/or 8.

 

(d)                                                 Compensation for Restrictive Covenants.  In consideration of
Your obligations under this Section 9, upon Your Termination of Employment
other than on account of Your death or Total Disability or by the Company for “Cause”
or by You for reasons other than “Good Reason,” You shall be paid an amount
equal to one million five hundred thousand dollars ($1,500,000) (the “Non-Compete
Payment”).  Subject to Section 19
below, such amount shall be paid in a lump sum as
soon as administratively practicable (and within thirty (30) days) after Your Termination of Employment.

 

10.               Remedies.

 

(a)                                                  The parties hereto agree that the services to be rendered by
You pursuant to this Agreement, and the rights and privileges granted to the
Company pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value; the loss of which
cannot be reasonably 

 

11

 

or
adequately compensated in damages in any action at law, and that a breach by
You of any of the terms of this Agreement will cause the Company great and
irreparable injury and damage.  You
hereby agree that the definition of the Business of the Company set forth in Section 1
is correct, that the Company and its Affiliates conduct business throughout the
50 states of the United States of America and beyond, and that these
restrictions are reasonably necessary to protect the legitimate business
interests of the Company.  You hereby
expressly agree that the Company shall be entitled to the remedies of
injunction, specific performance and other equitable relief to prevent a breach
of this Agreement by You.  This Section 10
shall not be construed as a waiver of any other rights or remedies which the
Company may have for damages or otherwise.

 

(b)                                                 In the event of any dispute over the interpretation or
application of this Agreement, the Company shall reimburse You for Your
reasonable attorneys’ fees and costs incurred in connection with that dispute
unless the Company is determined, by final judgment of a court of competent jurisdiction,
to be the prevailing party on all or substantially all of the issues in
dispute, which reimbursement shall be made promptly (and within thirty (30)
days) following final judgment.

 

11.               Construction and Severability.  The parties hereto agree that the provisions of this
Agreement shall be presumed to be enforceable, and any reading causing
unenforceability shall yield to a construction permitting enforcement.  In the event a court should determine not to
enforce a provision of this Agreement due to overbreadth, violation of public
policy, or similar reasons, the parties specifically authorize such reviewing
court to enforce said covenant to the maximum extent reasonable, whether said
revisions be in time, territory, scope of prohibited activities, or other
respects.  If any single covenant,
provision, word, clause or phrase in this Agreement shall be found
unenforceable, it shall be severed and the remaining covenants and provisions
enforced in accordance with the tenor of the Agreement.

 

12.               Assignment.  This Agreement and the rights and obligations of the
hereunder may not be assigned by either party hereto without the prior written
consent of the other party hereto.

 

13.               Notices.  Except as otherwise specifically provided herein, any notice
required or permitted to be given to You pursuant to this Agreement shall be
given in writing, and personally delivered or mailed to You by certified mail,
return receipt requested, at the address set forth below Your signature on this
Agreement or at such other address as You shall designate by written notice to
the Company given in accordance with this Section 13, and any notice
required or permitted to be given to the Company, the Chairman of the Board of
Directors or the Chairman of the Leadership and Compensation Committee of the
Board of Directors shall be given in writing, and personally delivered or
mailed to that recipient by certified mail, return receipt requested, addressed
to the appropriate recipient at the address set forth under the signature of the
Executive Vice President of the Company or his designee on this Agreement or at
such other address as the Company shall designate by written notice to You
given in accordance with this Section 13. 
Any notice complying with this Section 13 shall be deemed received
upon actual receipt by the addressee.

 

12

 

14.              Waiver.  The waiver by either party hereto of any breach of this
Agreement by the other party hereto shall not be effective unless in writing,
and no such waiver shall operate or be construed as the waiver of the same or
another breach on a subsequent occasion.

 

15.              Governing Law.  This Agreement and the rights of the parties hereunder shall
be governed by and construed in accordance with the laws of the State of
Georgia.

 

16.              Beneficiary.  All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, heirs, executors, administrators and
permitted assigns.

 

17.              Entire Agreement.  This Agreement embodies the entire agreement of the parties
hereto relating to Your employment by the Company in the capacity herein stated
and, except as specifically provided herein, no provisions of any employee manual,
personnel policies, Company directives or other agreement or document shall be
deemed to modify the terms of this Agreement. 
No amendment or modification of this Agreement shall be valid or binding
upon You or the Company unless made in writing and signed by the parties
hereto.  All prior understandings and
agreements relating to Your employment by the Company, in whatever capacity,
are hereby expressly terminated.

 

18.               Excise Tax.

 

(a)                                                  If any payment or distribution by the Company and/or any
Affiliate of the Company to or for Your benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such tax (such tax or taxes, together with any such interest
and penalties, being hereafter collectively referred to as the “Excise Tax”),
then the payments and benefits payable or provided under this Agreement (or
other Payments as described below) shall be reduced (but not below the amount
of the payments or benefits provided under this Agreement) if, and only to the
extent that, such reduction will allow You to receive a greater Net After Tax
Amount than You would receive absent such reduction.

 

(b)                                                 The Accounting Firm will first determine the amount of any
Parachute Payments (as defined below) that are payable to You.  The Accounting Firm also will determine the
Net After Tax Amount (as defined below) attributable to Your total Parachute
Payments.

 

(c)                                                  The Accounting Firm will next determine the largest amount
of Payments that may be made to You without subjecting You to the Excise Tax
(the “Capped Payments”).  Thereafter, the
Accounting Firm will determine the Net After Tax Amount attributable to the
Capped Payments.

 

13

 

(d)                                                 You then will receive the total Parachute Payments or the
Capped Payments or such other amount less than the total Parachute Payments,
whichever provides You with the higher Net After Tax Amount, but in no event
will any such reduction imposed by this Section 18 be in excess of the
amount of payments or benefits payable or provided under this Agreement.  If You will receive the Capped Payments or
some other amount lesser than the total Parachute Payments, the total Parachute
Payments will be adjusted by first reducing the amount of any noncash benefits
under this Agreement or any other plan, agreement or arrangement on a pro rata
basis and then by reducing the amount of any cash benefits under this Agreement
or any other plan, agreement or arrangement on a pro rata basis.  The Accounting Firm will notify You and the
Company if it determines that the Parachute Payments must be reduced and will
send You and the Company a copy of its detailed calculations supporting that
determination.

 

(e)                                                  As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time that the Accounting Firm makes its
determinations under this Section 18, it is possible that amounts will
have been paid or distributed to You that should not have been paid or
distributed under this Section 18 (“Overpayments”), or that additional
amounts should be paid or distributed to You under this Section 18 (“Underpayments”).  If the Accounting Firm determines, based on
either the assertion of a deficiency by the Internal Revenue Service against
the Company or You, which assertion the Accounting Firm believes has a high
probability of success or controlling precedent or substantial authority, that
an Overpayment has been made, that Overpayment will be treated for all purposes
as a debt ab initio that You must
repay to the Company together with interest at the applicable Federal rate
under Code Section 7872; provided, however, that no debt will be deemed to
have been incurred by You and no amount will be payable by You to the Company
unless, and then only to the extent that, the deemed debt and payment would either
reduce the amount on which You are subject
to tax under Code Section 4999 or generate a refund of tax imposed under
Code Section 4999.  If the Accounting Firm determines, based upon
controlling precedent or substantial authority, that an Underpayment has
occurred, the Accounting Firm will notify You and the Company of that
determination and the amount of that Underpayment will be paid to You promptly
(and no later than thirty (30) days after the final determination of the
Underpayment) by the Company.

 

(f)                                                    For purposes of this Section 18, the following terms
shall have their respective meanings:

 

(i)                                     “Accounting Firm” means the·
independent accounting firm engaged by the Company in the Company’s sole
discretion.

 

(ii)                                  “Net After Tax Amount” means
the amount of any Parachute Payments, Capped Payments or other payments
described in this Section 18, as applicable, net of taxes imposed under
Code Sections 1, 3101(b) and 4999 and any State or local income taxes
applicable to You on the date of payment. 
The determination of the Net After Tax Amount shall be made using the
highest 

 

14

 

combined effective rate imposed by the foregoing taxes on income of the
same character as the Parachute Payments or Capped Payments, as applicable, in
effect on the date of payment.

 

(iii)                               “Parachute Payment” means a
payment that is described in Code Section 280G(b)(2), determined in
accordance with Code Section 280G and the regulations promulgated or
proposed thereunder.

 

(g)                                                 The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
the preceding subsections shall be borne by the Company.  If such fees and expenses are initially paid
by You, the Company shall reimburse You the full amount of such fees and
expenses within five business days after receipt from You of a statement
therefore and reasonable evidence of Your payment thereof but in no event later
than the end of the year immediately following the year in which You incur such
reimbursable fees and expenses.

 

(h)                                                 The Company and You shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or You, as the case may be, reasonably requested by the Accounting
Firm, and otherwise cooperate with the Accounting Firm in connection with the
preparation and issuance of the determinations and calculations contemplated by
the preceding subsections.  Any determination
by the Accounting Firm shall be binding upon the Company and You.

 

(i)                                                     The federal, state and local income or other tax returns
filed by You shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
You.  You, at the request of the Company,
shall provide the Company true and correct copies (with any amendments) of Your
federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested by
the Company, evidencing such conformity.

 

(j)                                                     All payments to be made to You under this Section 18
must be paid no earlier than when the applicable taxes are to be remitted and
by the end of Your taxable year next following the year in which the taxes that
are the subject of the audit or litigation are remitted to the taxing
authorities or, where no such taxes are remitted, the end of Your taxable year
following the year in which the audit is completed or there is a final and
non-appealable settlement or the resolution of the litigation.

 

19.               Tax Liabilities and Code Section 409A.  Any payments or benefits that You receive
pursuant to this Agreement shall be subject to reduction for any applicable
employment or withholding taxes. 
Notwithstanding any other provision of this Plan, if You are a Specified
Employee as of Your Termination of Employment, and if the amounts that You are
entitled to receive pursuant to Section 6 or Section 9 are not
otherwise exempt from Section 409A of the 

 

15

 

Code, then to
the extent necessary to comply with Section 409A, no payments for such
amounts may be made under this Agreement (including, if necessary, any payments
for welfare or other benefits in which case You may be required to pay for such
coverage or benefits and receive reimbursement when payment is no longer
prohibited) before the date which is six (6) months after Your Termination
of Employment or, if earlier, Your date of death.  All such amounts, which would have otherwise
been required to be paid over such six (6) months after Your Termination
of Employment or, if earlier, until Your date of death, shall be paid to You in
one lump sum payment as soon as administratively feasible after the date which
is six (6) months after Your Termination of Employment or, if earlier,
Your date of death.  All such remaining
payments shall be made as if they had begun as set forth in this
Agreement.  For purposes of this
Agreement, Your rights to payments shall be treated as rights to receive a
series of separate payments to the fullest extent allowable under Section 409A
of the Code.  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 necessary to
be in compliance with Section 409A of the Code to avoid the imposition on
You of any potential excise taxes relating to Section 409A.  To the extent that You incur liability for
excise taxes, penalties or interest under Section 409A of the Code because
any nonqualified deferred compensation plan of the Company fails to comply with
Section 409A, the Company will make a special reimbursement payment to You
equal to the sum of (i) Your liability for excise taxes, penalties or
interest under Section 409A and (ii) all taxes attributable to the
special reimbursement payment, at the time such taxes, penalties and interest
are required to be remitted to the applicable authorities.

 

IN WITNESS WHEREOF, You and the
Company have executed and delivered this Agreement as of the date first shown
above.

 

	
  YOU:

  	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  	
   

  
	
  ROLLA
  HUFF

  	
   

  	
  EARTHLINK,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Rolla P. Huff

  	
   

  	
  By:

  	
  /s/
  Susan D. Bowick

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  1375
  Peachtree Street

  	
   

  	
  Name:

  	
  Susan
  D. Bowick

  
	
   

  	
  7-North
  Atlanta, GA 30309

  	
   

  	
  Title:

  	
  Chairperson
  - Leadership and  Compensation
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  1375
  Peachtree Street

  
	
   

  	
   

  	
   

  	
  7-North
  Atlanta, GA 30309

  
							

 

16

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