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EARTHLINK HOLDINGS CORP.
FORM 10-K
(Annual Report)
Filed 02/25/14 for the Period Ending 12/31/13
Address 1375 PEACHTREE STREET
SUITE 400
ATLANTA, GA 30309
Telephone 4048150770
CIK 0001102541
Symbol ELNK
SIC Code 7370 - Computer Programming, Data Processing, And
Industry Computer Services
Sector Technology
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2014, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...-K (Annual Report) Filed 02/25/14 for the Period Ending 12/31/13 Address 1375 PEACHTREE STREET SUITE 400 ATLANTA, GA 30309 4048150770 0001102541 ELNK 7370 - Computer Programming, Data Processing, And Computer Services Technology 12/31 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year http...

  • Page 2
    ... of incorporation or organization) 46-4228084 (I.R.S. Employer Identification No.) 1375 Peachtree St., Atlanta, Georgia 30309 (Address of principal executive offices) (Zip Code) (404) 815-0770 (Registrant's telephone number, including area code) _____ Securities registered pursuant to Section 12...

  • Page 3

  • Page 4
    ...Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services...

  • Page 5
    SIGNATURES 105

  • Page 6
    ... IT services customer scale, expanded IT support center resources and complementary products and capabilities. Our corporate offices are located at 1375 Peachtree St., Atlanta, Georgia 30309, and our telephone number at that location is (404) 8150770. Our website address is www.earthlink.net. 1

  • Page 7
    ... services and offering solutions to address the evolving business and infrastructure needs of our customers. In 2012 and 2013, we expanded our IT solutions footprint with four additional data centers and invested capital to extend our core fiber IP network. We also acquired CenterBeam in July 2013...

  • Page 8
    ... Services Data Services. We offer a broad range of data and Internet services to business customers, including high-speed Internet access, dedicated Internet access and MPLS services. We offer a full range of access types, including DSL, T-1 and DS3 lines, Ethernet and wireless broadband, at speeds...

  • Page 9
    ...-based local and long distance services in markets by using our switches in other locations as hosts. Using our fiber optic network and leased facilities to connect our remote equipment to our switches, colocation provides cost-efficient access to last mile facilities to connect to customers. Switch...

  • Page 10
    ...and expand their communications and network infrastructures more quickly, to adapt more swiftly to new or emerging technologies and changes in customer requirements, to increase prices that we pay for wholesale inputs to our services and to devote greater resources to the marketing and sale of their...

  • Page 11
    ... engine marketing, affinity marketing partners, resellers and marketing alliances such as our relationships with Time Warner Cable and Dish Network. Customer Service and Retention Our customer support is available by chat and phone as well as through help sites and Internet guide files on our web...

  • Page 12
    ... to speed, and dial-up Internet access services no longer have a significant, if any, price advantage over certain broadband services. Most of the largest providers of broadband services, such as cable and telecommunications companies, control their own networks and offer a wider variety of services...

  • Page 13
    ... provide competitive local telephone services. FCC rules define the scope of the facilities that incumbent carriers must make available as UNEs to competitive carriers such as us at rates based on the Total Element Long Run Incremental Cost, or TELRIC, standard. Incumbent carriers must offer access...

  • Page 14
    ... the public switched telephone network ("PSTN") are now subject to a number of regulatory requirements, including rules relating to Universal Service Fund ("USF") contributions, Customer Proprietary Network Information rules, the provisioning of network access to authorized law enforcement personnel...

  • Page 15
    ... may contain minimum revenue commitments and other restrictive terms. In October 2013, AT&T notified special access customers that it will no longer offer new term plans longer than 36 months for tariffed special access TDM (i.e. DS1 and DS3) services. AT&T filed its proposed tariff changes with the...

  • Page 16
    ...incumbent carrier must pay a USF contribution on its special access revenues, which these carriers as a matter of course pass through to the special access customer. This in turn increases our cost of purchasing special access service and using it as an input in providing broadband Internet services...

  • Page 17
    ... FCC filing, reporting, record-keeping and fee payment requirements. The FCC has the authority generally to condition, modify, cancel, terminate, revoke or decline to renew licenses and operating authority for failure to comply with federal laws and the FCC's rules, regulations and policies. Fines...

  • Page 18
    ...are adopted, our cost of providing Internet access services could be increased and our business could be adversely affected. Consumer Protection. Federal and state governments have adopted consumer protection laws and undertaken enforcement actions to address advertising and user privacy. As part of...

  • Page 19
    ...with the SEC. The public can obtain any documents that we file with the SEC at http://www.sec.gov. We also make available free of charge on or through our Internet web site (http://www.earthlink.net) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if...

  • Page 20
    ... communications and IT services provider for mid-market and enterprise customers. This strategy has historically been focused on small and medium-sized businesses. During 2012 and 2013, we invested capital to extend our core fiber IP network, expand our IT services footprint with additional data...

  • Page 21
    ...acquisitions, ITC^DeltaCom and One Communications, and several smaller acquisitions, including our acquisitions of STS Telecom and CenterBeam. Our management has been and continues to be involved in integrating these acquisitions into our business. Our ability to achieve the benefits of acquisitions...

  • Page 22
    ... related to severance, employee benefit costs, retention costs for executive officers and key employees, asset impairment charges, integration costs, charges from the elimination of duplicative facilities and contracts, unexpected liabilities, legal, accounting and financial advisory fees. Adverse...

  • Page 23
    ... business customers, primarily single location customers using traditional voice and data products, including traditional voice, lower-end broadband and web hosting. Many of these customers were coming out of contract term. Our customers have no obligation to renew their agreements for our services...

  • Page 24
    ... the access rates charged by local carriers to interexchange carriers for the origination and termination of long distance traffic. These access rates make up a significant portion of the cost of providing long distance service. In late 2011, the FCC adopted policy changes that over time are...

  • Page 25
    ...traditional long distance voice minutes and FCC and state regulations compelling a reduction of switched access and reciprocal compensation rates. In late 2011, the FCC adopted policy changes that over time are reducing carriers' terminating access rates. We have modified our applicable state access...

  • Page 26
    ... communications companies and local exchange carriers, such as AT&T, CenturyLink , Verizon and Windstream; cable companies providing broadband access, including Charter Communications, Inc., Comcast, Cox Communications, Inc. and Time Warner Cable; local and regional ISPs; established online services...

  • Page 27
    ... to speed, and dial-up Internet access services no longer have a significant, if any, price advantage over certain broadband services. Most of the largest providers of broadband services, such as cable and telecommunications companies, control their own networks and offer a wider variety of services...

  • Page 28
    ...with direct access to our information systems so that they can manage the services that they purchase from us, generally through on-line customer portals; and billing for services. To effectively manage our information technology infrastructure, we will need to continue to maintain our data, billing...

  • Page 29
    ... different categories of traffic (for example, traffic originated or terminated on wireless or VoIP), the jurisdiction of traffic for intercarrier compensation purposes, the wholesale services and facilities available to us, the prices we will pay for those services and facilities and the regulatory...

  • Page 30
    ... customer service and technical support, web hosting services, certain billing and collection services and E911 service for our VoIP services. Our Consumer Services segment relies primarily on one customer service and technical support vendor. We may have to increase the price we pay or find a new...

  • Page 31
    ... Revenue Code of 1986, as amended) could place significant limitations, on an annual basis, on the use of such net operating losses to offset future taxable income we may generate. In general, future stock transactions and the timing of such transactions could cause an "ownership change" for income...

  • Page 32
    ... capital to roll out additional data centers and to extend our fiber network. We may require additional capital to support our business growth, including the need to develop new services and products, enhance our operating infrastructure or acquire complementary businesses and technologies. We may...

  • Page 33
    ... expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management's attention and resources, which could adversely affect our business. Finally, volatility or a lack of positive performance in our stock price may adversely affect our ability to...

  • Page 34
    ...sales offices, data centers, switch sites and other facilities across our nationwide service area. These leases have various expiration dates through 2024. We believe our facilities are suitable and adequate for our business operations. Office space. Our corporate headquarters is in Atlanta, Georgia...

  • Page 35
    ... on January 31, 2014. Dividends During 2009, we began paying quarterly cash dividends. During the years ended December 31, 2011, 2012 and 2013, cash dividends declared were $0.20, $0.20 and $0.20 per common share, respectively, and total dividend payments were $22.9 million, $21.1 million and $20...

  • Page 36
    ... paid per share for each month in the three months ended December 31, 2013 are as follows: Total Number of Shares Repurchased (1) Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Program (2) Maximum Dollar Value that May Yet be Purchased Under the Program...

  • Page 37
    ...included elsewhere in this Annual Report on Form 10-K. Year Ended December 31, 2009 2010 (1) 2011 (1) 2012 2013 (in thousands, except per share amounts) Statement of operations data: Revenues Operating costs and expenses (2)(3) Income (loss) from operations Income (loss) from continuing operations...

  • Page 38
    ... assets of New Edge Holding Company in our Business Services segment were impaired in conjunction with our annual tests of goodwill and intangible assets. During 2010, we decided to re-brand the New Edge name as EarthLink Business and wrote off our New Edge trade name. During 2013, we performed...

  • Page 39
    ... provides nationwide Internet access and related valueadded services to residential customers. We operate an extensive network including more than 28,000 route miles of fiber, 90 metro fiber rings and eight secure enterprise-class data centers that provide data and voice IP service coverage across...

  • Page 40
    ..., managed solutions and support services. Revenues generally consist of recurring monthly charges for such services; usage fees; installation fees; termination fees; and administrative fees. Consumer Services . Our Consumer Services segment earns revenue by providing nationwide Internet access and...

  • Page 41
    ... reduced the number of vendors from which we may purchase network elements that we leverage to operate our business. Traditional business services revenues . Our traditional voice and data business service revenues, specifically traditional voice and lower-end, single site broadband services, have...

  • Page 42
    ..., corporate downsizing and tightened credit have had, and may continue to have, an adverse effect on our results of operations, including longer sales cycles and increased customer demands for price reductions in connection with contract renewals. Additionally, our consumer access services are...

  • Page 43
    ... Telecom, Logical Solutions and Business Vitals, LLC, among others, and our CenterBeam transaction completed during 2013. The following table sets forth statement of operations data for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands) 2013 Revenues...

  • Page 44
    ...via DSL and cable and VoIP). Access service revenues consist of recurring monthly charges for narrowband and broadband access services; usage fees; installation fees; termination fees; and fees for equipment. The decreases in consumer access revenues during the years ended December 31, 2012 and 2013...

  • Page 45
    ...31, 2012 and 2013 compared to the prior years were due primarily to a decrease in revenues from our security and home networking services and a decrease in search and advertising revenues. These decreases were attributable to the overall decline in the average number of consumer subscribers. Cost of...

  • Page 46
    ... voice, lower-end, single site broadband services and web hosting, partially offset by sales of growth products which include MPLS and hosted VoIP. Consumer Services Cost of revenues for our Consumer Services segment primarily consists of telecommunications fees and network operations costs...

  • Page 47
    ...of definite-lived intangible assets acquired in purchases of businesses and purchases of customer bases from other companies. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the various asset classes. Customer installation and acquisition costs...

  • Page 48
    ... 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 2013 2012 vs 2011 $ Change % Change (dollars in thousands) 2013 vs 2012 $ Change % Change Integration-related costs $ Severance, retention and other employee costs Transaction-related costs Facility-related costs Legacy plan restructuring...

  • Page 49
    ... sales early in 2013 to enable focus on our hosted VoIP platform for new voice customers, which resulted in a small number of position eliminations. Interest expense and other, net The following table presents our interest expense and other, net, for the years ended December 31, 2011, 2012 and 2013...

  • Page 50
    ...of operations related to discontinued operations for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands) 2013 Revenues Operating costs and expenses Income tax benefit Loss from discontinued operations, net of tax $ $ 13,561 $ (18,096) 1,829 (2,706...

  • Page 51
    ... and allocating resources. Our Business Services segment earns revenue by providing a broad range of data, voice and IT services to businesses and communications carriers. Our Consumer Services segment provides nationwide Internet access and related value-added services to residential customers. We...

  • Page 52
    ...by the average number of subscribers for the period. Average monthly revenue used to calculate ARPU includes recurring service revenue as well as nonrecurring revenues associated with equipment and other one-time charges associated with initiating or discontinuing services. (d) Churn rate is used to...

  • Page 53
    ... require less customer service and technical support and have a lower frequency of non-payment. Liquidity and Capital Resources The following table sets forth summarized cash flow data for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 2013 2012 vs 2011 $ Change...

  • Page 54
    ... efforts and resources required to support our business services, including investments in search engine marketing campaigns and advertising to increase brand awareness. Dividends . During the years ended December 31, 2011, 2012 and 2013 , cash dividends declared were $0.20 per common share. The...

  • Page 55
    ..., the costs required to maintain our network infrastructure, the outcome of various telecommunications-related disputes and proceedings, the pricing of our services and the level of resources used for our sales and marketing activities, among others. In addition, our use of cash in connection with...

  • Page 56
    ... through maturity and commitment fees and borrowing costs under our senior secured revolving credit facility. (3) Purchase commitments represent non-cancellable contractual obligations for services and equipment; minimum commitments under network access agreements with several carriers; and certain...

  • Page 57
    ... measure reported under GAAP for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands) 2013 Net income (loss) Interest expense and other, net Income tax provision (benefit) Depreciation and amortization Stock-based compensation expense Impairment...

  • Page 58
    ... measure reported under GAAP for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands) 2013 Net income (loss) Interest expense and other, net Income tax provision (benefit) Depreciation and amortization Stock-based compensation expense Impairment...

  • Page 59
    ... of revenue recognition would not affect net income. Judgments and Uncertainties Effect if Actual Results Differ From Assumptions Sales Credit Reserves We make estimates for potential future sales credits to be issued related to billing errors, service interruptions and customer disputes...

  • Page 60
    ...new information becomes available. Judgments and Uncertainties Effect if Actual Results Differ From Assumptions Our cost of revenues methodology contains uncertainties We have not made any material changes in the accounting because it requires management to make assumptions and methodology we use...

  • Page 61
    ...the impairment was a change in the discount rate and market multiples as a result of the change in these market conditions, both key assumptions used in the determination of fair value. We did not record any impairment of goodwill during the years ended 2011 or 2012. As of December 31, 2013, we had...

  • Page 62
    ... contain uncertainties because they material impairment charges for our long-lived assets require management to make assumptions and apply during the past three years. judgment to estimate future cash flows and asset fair values including, subscriber additions, churn, prices, We do not believe there...

  • Page 63
    ... incumbent carriers on acceptable terms, our ability to offer competitively priced local telephone services will be adversely affected; (13) that our operating performance will suffer if we are not offered competitive rates for the access services we need to provide our long distance services; (14...

  • Page 64
    ...-term rating of A1/P1 or a minimum long-term rating of A/A2. In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate. As of December 31, 2012, net unrealized losses on investments in marketable securities were...

  • Page 65
    ... Data. EARTHLINK HOLDINGS CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2012 and 201 3 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2011, 2012...

  • Page 66
    ... 31, 2013, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), EarthLink Holdings Corp.'s internal control over financial reporting as of December 31, 2013, based...

  • Page 67
    ...December 31, 2013 and $8,593,887 and $566,448 of revenues and net loss, respectively, for the year then ended. Our audit of internal control over financial reporting of EarthLink Holdings Corp. also did not include an evaluation of the internal control over financial reporting of CenterBeam, Inc. In...

  • Page 68
    ... lease obligations Long-term deferred income taxes, net Other long-term liabilities Total liabilities Commitments and contingencies (See Note 16) Stockholders' equity: Preferred stock, $0.01 par value, 100,000 shares authorized, 0 shares issued and outstanding as of December 31, 2012 and 2013 Common...

  • Page 69
    ... STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, 2011 2012 (in thousands, except per share data) 2013 Revenues Operating costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately below) Selling, general and administrative (exclusive of...

  • Page 70
    ...Stock-based compensation expense Issuance of common stock in connection with acquisition of One Communications Return of One Communications escrow shares Change in deferred tax asset Repurchases of common stock Unrealized holding losses, net of tax Net income Balance as of December 31, 2011 Exercise...

  • Page 71
    ...deferred revenue Net cash provided by operating activities Cash flows from investing activities: Purchases of property and equipment Purchases of marketable securities Sales and maturities of marketable securities Purchase of businesses, net of cash acquired Purchase of customer relationships Change...

  • Page 72
    ... provides nationwide Internet access and related value-added services to residential customers. The Company operates an extensive network including more than 28,000 route fiber miles, 90 metro fiber rings and eight enterprise-class data centers that provide d ata and voice IP service coverage across...

  • Page 73
    ...Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and...

  • Page 74
    ... to its Business Services customers to the extent they are recoverable. Customer installation costs represent nonrecurring fees paid to other telecommunications carriers for services performed by the carriers when the Company orders last mile facilities in connection with new customers acquired by...

  • Page 75
    ... been delivered, the sales price is fixed or determinable and collectibility is reasonably assured. EarthLink's customers generally pay in advance for their services, and revenue is recognized ratably over the service period. Advance payments from customers for invoiced services that have not yet...

  • Page 76
    recurring monthly charges for such services; usage fees; installation fees; equipment fees; termination fees; and administrative fees. 70

  • Page 77
    ... to EarthLink's Internet access services, such as security products, premium email only, home networking and email storage; search revenues; and advertising revenues. Revenues generally consist of recurring monthly charges for such services; usage fees; installation fees; termination fees; and fees...

  • Page 78
    71

  • Page 79
    ...sales and marketing, customer service, network operations, information technology, regulatory, billing and collections, corporate administration, and legal and accounting. Such costs include salaries and related employee costs (including stock-based compensation), outsourced labor, professional fees...

  • Page 80
    both probable and reasonably estimable. 72

  • Page 81
    ... awards. Comprehensive Income (Loss) Comprehensive income (loss) as presented in the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2011, 2012 and 2013 includes unrealized gains and losses, net of tax, on certain investments classified as available-for-sale.

  • Page 82
    73

  • Page 83
    ... 31, 2012 and 2013 , no customer accounted for more than 10% of gross accounts receivable. Supply Risk . The Company's business depends on the capacity, affordability, reliability and security of third-party network service providers. Only a small number of providers offer the network services the...

  • Page 84
    ... following table sets forth the computation for basic and diluted net income (loss) per share for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands, except per share data) 2013 Numerator Income (loss) from continuing operations Loss from discontinued...

  • Page 85

  • Page 86
    ...'s Business Services segment. Approximately 59% of the goodwill is deductible for income tax purposes. The following table summarizes the components of intangible assets acquired in connection with the One Communications acquisition (in thousands): Fair Value Useful Life Customer relationships...

  • Page 87
    ... acquired Saturn Telecommunication Services Inc. and affiliates ("STS Telecom"), a privately-held provider of IP communication and information technology services to small and medium-sized businesses primarily in Florida. STS Telecom operates a sophisticated Voice-over-Internet Protocal ("VoIP...

  • Page 88
    ... costs incurred in connection with integrating operating support systems, networks and certain billing systems. Restructuring, acquisition and integration-related costs recorded during the year ended December 31, 2013 includes costs incurred to restructure the Company's sales organization to better...

  • Page 89
    ...of operations related to discontinued operations for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands) 2013 Revenues Operating costs and expenses Income tax benefit Loss from discontinued operations, net of tax $ $ 13,561 $ (18,096) 1,829 (2,706...

  • Page 90

  • Page 91
    ... of December 31, 2013 (in thousands) Communications and fiber optic networks Computer equipment and software Land and buildings Leasehold improvements Office and other equipment Work in progress Property and equipment, gross Less accumulated depreciation Property and equipment, net $ $ 461,750...

  • Page 92
    ... Statements of Comprehensive Income (Loss), for the years ended December 31, 2011, 2012 and 2013 was as follows: Year Ended December 31, 2011 2012 (in thousands) 2013 Amortization expense $ 59,219 $ 70,676 $ 66,370 Based on the current amount of definite-lived intangible assets, the...

  • Page 93
    ... for evaluating goodwill for the 2013 annual impairment test, which were Business Services and Consumer Services. Each of these reporting units constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results. The Company...

  • Page 94
    ... following as of December 31, 2012 and 2013 : As of December 31, 2012 As of December 31, 2013 (in thousands) EarthLink senior secured notes due June 2020 EarthLink senior notes due May 2019 Unamortized discount on EarthLink senior notes due May 2019 ITC^DeltaCom senior secured notes due April 2016...

  • Page 95
    ... with affiliates, issue or sell stock of subsidiaries, engage in sale-leaseback transactions and create restrictions on dividends or other payments by restricted subsidiaries. Upon a change of control (as defined in the indenture), the Company may be required to make an offer to repurchase...

  • Page 96
    ... to make Restricted Payments varies over time, and is determined, in part, by the extent that the Company's cumulative EBITDA exceeds 300% of its cumulative interest expense. ITC^DeltaCom Senior Secured Notes due April 2016 General . In connection with the EarthLink's acquisition of ITC^DeltaCom in...

  • Page 97
    ... mergers, acquisitions or divestitures, pay dividends or make other distributions, voluntarily prepay certain other indebtedness (including certain prepayments of the Company's existing notes), enter into transactions with affiliates, make investments, and change the nature of their businesses...

  • Page 98
    ... Company to acquire any specific number of shares and may be terminated by the Board of Directors at any time. The following table presents repurchases under the Company's share repurchase program for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands...

  • Page 99
    ... during the years ended December 31, 2011, 2012 and 2013 , respectively. The Company has classified stock-based compensation expense within selling, general and administrative expense, the same operating expense line item as cash compensation paid to employees. Stock Incentive Plans The Company...

  • Page 100
    ... 31, 2011, 2012 and 2013 was $0.1 million , $0.1 million and $0.0 million , respectively. The intrinsic value of stock options exercised represents the difference between the market value of Company's common stock at the time of exercise and the exercise price, multiplied by the number of stock...

  • Page 101
    ... during the years ended December 31, 2011, 2012 and 2013 was $15.6 million , $7.4 million and $5.7 million , respectively, which represents the closing price of the Company's common stock on the vesting date multiplied by the number of restricted stock units that vested. 14. Profit Sharing Plans The...

  • Page 102
    ... purposes for the years ended December 31, 2011, 2012 and 2013 : Year Ended December 31, 2011 2012 (in thousands) 2013 Federal income tax (provision) benefit at statutory rate (35%) State income taxes, net of federal benefit Non-deductible expenses Net change to valuation allowance Change in state...

  • Page 103
    ... minimum tax carryforward Accrued liabilities and reserves Subscriber base and other intangible assets Other Valuation allowance Non-current deferred tax liabilities: Subscriber base and other intangible assets Accrued liabilities and reserves Indefinite lived intangible assets Other Total net...

  • Page 104
    ... Revenue Code Section 382 in 2012 and 2013. As of December 31, 2012 and 2013, the Company had net NOLs for state income tax purposes totaling approximately $23.4 million and $32.6 million , respectively, which started to expire in 2013. Under the Tax Reform Act of 1986, the Company's ability to use...

  • Page 105
    ... generally require the Company to pay operating costs, including property taxes, insurance and maintenance, and generally contain annual escalation provisions as well as renewal options. Total rent expense (including operating expenses) during the years ended December 31, 2011, 2012 and 2013 for...

  • Page 106
    ... quarter of 2012, the Company recorded an $8.3 million charge as cost of revenue to increase its reserves for regulatory audits, primarily an audit that was conducted by the Universal Service Administrative Company on previous ITC^DeltaCom Universal Service Fund assessments and payments, because the...

  • Page 107
    ... network access charges that it is assessed by other companies with which the Company interconnects. The Company maintains adequate reserves for anticipated exposure associated with these billing disputes. The reserves are subject to changes in estimates and management judgment as new information...

  • Page 108
    ... 31, 2011 2012 (in thousands) 2013 Cash paid during the year for interest Cash paid during the year for income taxes $ 59,170 4,375 $ 66,513 2,910 $ 62,309 1,316 19. Segment Information The Company reports segment information along the same lines that its chief executive officer reviews its...

  • Page 109
    ... Segment operating income Consolidated Revenues Cost of revenues Gross margin Direct segment operating expenses Segment operating income Depreciation and amortization Impairment of goodwill Restructuring, acquisition and integration-related costs Corporate operating expenses Income (loss) from...

  • Page 110
    ... to EarthLink's Internet access services, such as security products, premium email only, home networking and email storage; search revenues; and advertising revenues. Revenues generally consist of recurring monthly charges for such services; usage fees; installation fees; termination fees; and fees...

  • Page 111
    ...'s telecom systems business acquired as part of ITC^DeltaCom have been separately presented as discontinued operations for all periods presented. On August 2, 2013, the Company sold its telecom systems business. (3) Net loss for the three months ended December 31, 2013 includes a non-cash charge of...

  • Page 112
    ... in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management's Report on...

  • Page 113
    ...includes shares available by plan as follows: Securities Available for Future Issuance Plan EarthLink Holding Corp. 2011 Equity and Cash Incentive Plan EarthLink Holdings Corp. Equity Plan for Non-Employee Directors 14,880,751 169,852 15,050,603 (4) Pursuant to our merger agreement with New Edge...

  • Page 114
    connection with our acquisition of New Edge that qualified under the "inducement grant exception" 99

  • Page 115
    ...of New Edge Holding Company. The Leadership and Compensation Committee then granted options to purchase 657,000 shares of our Common Stock to these New Edge employees in accordance with this plan. As of December 31, 2013 , 150,948 of these options were outstanding. The options have an exercise price...

  • Page 116
    ... filed as part of this Annual Report on Form 10-K (1) Financial Statements 1. Reports of Independent Registered Public Accounting Firm 2. Consolidated Balance Sheets as of December 31, 2012 and 2013 3. Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2011, 2012...

  • Page 117
    ... of New Edge Holding Company (incorporated by reference to Exhibit 10.1 to EarthLink, Inc.'s Report on Form 8-K dated April 14, 2006-File No. 001-15605). EarthLink Holding Corp. 2011 Equity and Cash Incentive Plan (incorporated herein by reference to Annex D to EarthLink, Inc.'s Definitive Proxy...

  • Page 118
    ..., 2012 -File No. 001-15605). EarthLink Shared Services, LCC 2013 Short-Term Incentive Bonus Plan. EarthLink Holding Corp. Board of Directors Compensation Plan, effective February 2014. EarthLink Shared Services, LLC Change-in-Control Accelerated Vesting and Severance Plan. EarthLink Shared Services...

  • Page 119
    ...as amended, is deemed not filed for purposes of section 18 of the Securities and Exchanges Act of 1934, as amended, and otherwise is not subject to liability under these sections. (b) Exhibits The response to this portion of Item 15 is submitted as a separate section of this Annual Report on Form 10...

  • Page 120
    ...the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EARTHLINK HOLDINGS CORP. By: /s/ JOSEPH F. EAZOR Joseph F. Eazor, Chief Executive Officer and President...

  • Page 121
    ... 25, 2014 /s/ JOSEPH F. EAZOR Joseph F. Eazor, Chief Executive Officer and President (principal executive officer) /s/ BRADLEY A. FERGUSON Bradley A. Ferguson, Chief Financial Officer (principal financial and accounting officer) /s/ SUSAN D. BOWICK Susan D. Bowick, Lead Director /s/ S. MARCE...

  • Page 122
    Exhibit 10.22 EARTHLINK SHARED SERVICES, LLC 2013 SHORT-TERM INCENTIVE BONUS PLAN THIS 2013 SHORT-TERM INCENTIVE BONUS PLAN (this "Plan") of EarthLink Shared Services, LLC, a Delaware limited liability company (the "Company"), for the benefit of the eligible employees described herein, is adopted ...

  • Page 123
    ...any compensation expense attributable to the Bonus Awards paid in shares of Common Stock. " Affiliate " means any entity that is part of a controlled group of corporations or is under common control with HoldCo within the meaning of Code Sections 1563(a), 414(b) or 414(c), except that, in making any...

  • Page 124
    ... employee benefit plan (or related trust) sponsored or maintained by HoldCo or any of its Affiliates or (z) by any person pursuant to a Business Combination that would not cause a Change in Control under clauses (i) and (ii) of subsection (b) above. " Code " means the Internal Revenue Code of 1986...

  • Page 125
    ... to continue to meet the requirements of Section 162(m) of the Code for deductibility to the extent intended to constitute qualified performance-based compensation. " Corporate Priorities " means the established goals of HoldCo to (i) instill a culture of relentless customer service in every part of...

  • Page 126
    ... Revenue Service or any other authority ultimately determines such classification to be correct or incorrect as a matter of law or (iii) any person who is classified other than as "exempt" on the Employer's payroll, personnel or tax records. " Employer " means HoldCo, the Company and any Affiliate...

  • Page 127
    ...means this EarthLink Shared Services, LLC 2013 Short-Term Incentive Bonus Plan, in its current form and as it may be hereafter amended. " Revenue " means gross revenue from operations. " Target Aggregate Bonus " means the Bonus Award that would be earned (i) for a Participant other than a Management...

  • Page 128
    ... Participation . Each Employee whose position in the Employer's compensation structure 4.1 entitles him or her to participate in the Plan shall participate in the Plan for the applicable Bonus Period except that (a) the Committee must approve the members of Management, if any, who shall be entitled...

  • Page 129
    ... of the foregoing as the Committee may designate. The Corporate Performance Objectives may, but need not, be based upon an increase or positive result under the aforementioned business criteria and could include, for example and not by way of limitation, maintaining the status quo or limiting the...

  • Page 130
    ... the meaning of Section 162 (m) of the Code were based. The Bonus Awards payable under this Plan are intended to constitute Awards (as defined therein) under HoldCo's 2011 Equity and Cash Incentive Plan or under any other plan under which Bonus Awards may be paid (as the Committee shall designate...

  • Page 131
    ... the 2014 fiscal year. Shares of Common Stock to be delivered under this Plan shall be paid under HoldCo's 2011 Equity and Cash Incentive Plan or under any other plan under which shares of Common Stock are otherwise available for payment of Bonus Awards, as the Committee shall designate. 6.4 Taxes...

  • Page 132
    ... 8. TERMINATION OF EMPLOYMENT 8.1 Payment after Termination of Employment . If before a Change in Control occurs the Participant's employment with all Employers is terminated by an Employer, such that the Participant is entitled to receive benefits under any severance plan maintained by an Employer...

  • Page 133
    ... contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant or any former Participant any right to be retained in the employ of an Employer or receive or continue to receive any rate of pay or other compensation, nor shall it...

  • Page 134
    ... other provision of the Plan. 9.9 Notice . Any notice or filing required or permitted to be given to the Committee shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of HoldCo, directed to the attention of the President and CEO of...

  • Page 135
    ... required under applicable law or any clawback or compensation recoupment policy that the Employer may adopt as long as such requirement to reimburse or return is triggered by action of the Committee or the Board that is taken prior to a Change in Control. 10. AMENDMENT AND TERMINATION OF THE PLAN...

  • Page 136
    ... denial of the claim. In connection therewith, the Participant or his duly authorized representative may request a review of the denied claim, may review pertinent documents and may submit issues and comments in writing. Upon receipt of an appeal, the Committee shall make a decision with respect to...

  • Page 137
    an Employer may pay a Discretionary Bonus, or other types of compensation, inside or outside the Plan, which may or may not be deductible. In no event, however, may any Management Participant be entitled to a Discretionary Bonus under the Plan under two arrangements, where payment of the ...

  • Page 138
    ... vesting date for the applicable annual RSU grant. Meeting Expenses a. EarthLink reimburses directors for their expenses incurred in attending Board of Directors and Committee meetings. Education Expenses a. EarthLink will pay reasonable program fees and associated travel expenses for each director...

  • Page 139
    ... INC. AMENDED AND RESTATED CHANGE-IN-CONTROL ACCELERATED VESTING AND SEVERANCE PLAN (this "Plan"), of EarthLink, Inc., a Delaware corporation ("Employer"), and its Affiliates (as defined below) for the benefit of the eligible employees described herein, is effective as of the 21 st day of July, 2009...

  • Page 140
    ... in the Bronze Benefit Category, the one year, beginning in each case on the Employee's Termination of Employment. (f) " Bonus Target " shall mean the annual incentive bonus payable to the Employee at the greater of the rate in effect on (1) the date the Change in Control of the Employer occurs or...

  • Page 141
    ...the good faith opinion of the applicable executive officer or person in charge of the Human Resources function or a direct report to the Chief Executive Officer to whom such responsibility was delegated, that the Employee committed the conduct set forth above in clauses (1) or (2) of this definition...

  • Page 142
    ...Control the Employer. " Code " means the Internal Revenue Code of 1986, amended, and any successor thereto. " Control " means the possession, direct or indirect, of the power to direct or cause the direction of the (l) management and policies of the Employer (a) through the ownership of securities...

  • Page 143
    ... unless and until he or she waives and releases any and all rights to benefits and coverage he or she has under the EarthLink, Inc. Accelerated Vesting and Compensation Continuation Plan. (n) " Exchange Act " means the Securities Exchange Act of 1934, including amendments, or successor statutes of...

  • Page 144
    ...or an Affiliate to continue in effect any material retirement or compensation plan, performance share plan, stock option plan, life insurance plan, health and accident plan, disability plan or another benefit plan in which the Employee is participating immediately prior to a Change in Control of the...

  • Page 145
    ... to a Change in Control of the Employer, except in connection with the Employee's Termination of Employment for Cause or On Account of Disability or as a result of his or her death or by the Employee other than For Good Reason; or (ii) With respect to an Employee in the Bronze Benefit Category, the...

  • Page 146
    ...Change in Control of the Employer occurs or (2) the date of the Employee's Termination of Employment under circumstances described in Section 2(a). (v) " Specified Employee " means an employee (as that term is used in Code Section 416) who is (i) an officer of the Employer having annual compensation...

  • Page 147
    ...of ERISA, currently made available by the Employer or an Affiliate in which an Employee participates. 2. Benefits Upon Termination of Employment. (a) The following provisions will apply if and only if, at any time within eighteen (18) months after a Change in Control of the Employer occurs, (i) the...

  • Page 148
    ...continuation coverage that the Employee elects under any Welfare Plan of the Employer or an Affiliate for him or her or his or her spouse or dependents through the Benefits Severance Period, including all attendant administrative fees and expenses, however described or denominated. All such payments...

  • Page 149
    ...within eighteen (18) months after a Change in Control of the Employer occurs under the circumstances described in Section 2(a) above. (d) The Employer or Affiliate that employs the Employee on his or her Termination of Employment will fund the payments to be made under the Plan to such Employee from...

  • Page 150
    ...'s Termination of Employment on or after a Change in Control occurs, all outstanding stock options that the Employer or any Affiliate previously granted to an Employee in the Bronze Benefit Category shall be exercisable, in accordance with the terms of such options and the applicable plans pursuant...

  • Page 151
    ...its successor in connection with the Change in Control of the Employer of outstanding restricted stock units the Employer or an Affiliate granted before the Change in Control of the Employer, then on the Employee's Termination of Employment on or after a Change in Control of the Employer occurs, all...

  • Page 152
    ...) months after a Change in Control of the Employer occurs, (A) the Employee has a Termination of Employment by the Employer or any Affiliate for any reason other than Cause, On Account of Disability or death, or (B) the Employee voluntarily has a Termination of Employment For Good Reason. 4. Release...

  • Page 153
    ...to Employer or any Affiliate. Notwithstanding any other provision of this Plan, no payments shall be made or benefits provided pursuant to this Plan during the first 30 days (60 days in the event of a group termination) after the Employee's Termination of Employment and any payments or benefits that...

  • Page 154
    .... The claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits. The Employer's review will take into account all such written comments, documents, records and other...

  • Page 155
    ... or desirable in connection with administration of the Plan. The Employer is entitled to rely conclusively on any opinions from its accountants or counsel. The Employer will keep all books of account, records and other data necessary for proper administration of the Plan. 8. Employee Assignment. No...

  • Page 156
    ...all benefits that become payable under the Plan are paid in full. An amendment may be made retroactively to the Plan if it is necessary to make this Plan conform to applicable law. Upon termination of the Plan, the Plan shall no longer be of any further force or effect, and neither the Employer, any...

  • Page 157
    ... Suite 7 North Atlanta, Georgia 30309-2935 Attention: Chief People Officer If to an Employee: The address last indicated on the records of Employer. 16. Excise Tax. Despite any other provisions of this Plan to the contrary, if the receipt of any payments or benefits under this Plan would subject an...

  • Page 158
    ...payment under this Plan net of all taxes imposed on the Employee with respect thereto under Code Sections 1, 3101 and 4999, determined by applying the highest marginal rate under Code Section 1 which applies to the Employee's taxable income for the applicable taxable year; (ii) "Present Value" means...

  • Page 159
    ... Employer's 401(k) Plan or any other benefit program. (g) This Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be construed and interpreted in accordance therewith. The Employer may at any time amend, suspend or terminate this Plan, or any payments...

  • Page 160
    ... AND SEVERANCE PLAN SUMMARY PLAN DESCRIPTION NAME OF PLAN: EarthLink, Inc. Change-in-Control Accelerated Vesting and Severance Plan NAME, ADDRESS, AND TELEPHONE NUMBER OF SPONSOR AND PLAN ADMINISTRATOR: EarthLink, Inc. ("Employer") 1375 Peachtree Street, N.W. Suite 7 North Atlanta, Georgia 30309...

  • Page 161
    ... Income Security Act of 1974, as amended ("ERISA"). ERISA provides that all Plan participants shall be entitled to: Examine, without charge, at the Employer's office and at other specified location, such as worksites, all Plan documents and a copy of the latest Annual Report (Form 5500 series) filed...

  • Page 162
    ... Severance Gold and Silver Benefit Category Lump sum cash payment of 1.5 times the sum of employee's salary plus bonus target, if within 18 months after a change in control the company terminates employee's employment without cause or employee voluntarily terminates his or her employment for good...

  • Page 163
    ... vested, on termination of employee's employment, if within 18 months of the change in control the company terminates employee's employment without cause or employee voluntarily terminates his or her employment for good reason; no such vesting if the termination of employment is on account of the...

  • Page 164
    Exhibit 10.25 EARTHLINK SHARED SERVICES, LLC SEVERANCE PLAN AND SUMMARY PLAN DESCRIPTION (Effective as of January 1, 2014)

  • Page 165
    ... adopts the EarthLink Shared Services, LLC Severance Plan (f/k/a the EarthLink, Inc. Severance Plan) (the "Plan"), effective as of January 1, 2014, to provide eligible employees with certain severance pay and benefits in the event their employment is terminated by the Company and its Affiliates due...

  • Page 166
    ...' compensation; the employee is eligible for long-term disability benefits and/or Social Security benefits; the employee is on an approved leave of absence; • the employee becomes eligible under the Plan as the direct result of the acquisition by the Company or any Affiliate of the business...

  • Page 167
    ...the Company or an Affiliate; • the termination of the employee's employment entitles the employee to benefits under the Company's Change-in-Control Accelerated Vesting and Severance Plan, the EarthLink Network, Inc. Key Employee Compensation Continuation Plan, the EarthLink Accelerated Vesting and...

  • Page 168
    ...employee's current location of employment. If the employee accepts the new position, the employee's employment relationship with the Company or an Affiliate continues. If the employee declines the position offered, the employee will not be entitled to any severance pay or benefits under the Plan. II...

  • Page 169
    ... employees' premiums for those plans, plus the two percent COBRA administration fee, for twelve (12) months of COBRA benefits coverage. The Company will make this payment in a single lump sum as soon as administratively practicable following termination of the employee's employment but no later than...

  • Page 170
    ... employees' premiums for those plans, plus the two percent COBRA administration fee, for six (6) months of COBRA benefits coverage. The Company will make this payment in a single lump sum as soon as administratively practicable following termination of the employee's employment but no later than the...

  • Page 171
    ... Vice President, Executive Officer, Senior Vice President or Vice President positions will receive, after any applicable notice period, the following severance pay and benefits, except as otherwise set forth below: • The weeks of base salary set forth below paid in either (i) equal installments...

  • Page 172
    ... an amount equal to the employer portion of the employees' premiums for those plans, plus the two percent COBRA administration fee, for the number of months of COBRA benefits coverage set forth below. The Company will make this payment in either (i) equal installments in accordance with the Company...

  • Page 173
    ... salary and COBRA benefits to be paid to any eligible employee who is not in an Executive Vice President, Executive Officer, Senior Vice President or Vice President position (i) exceed two times the lesser of (a) the employee's annual compensation for the preceding calendar year (adjusted for any...

  • Page 174
    ... an amount equal to the employer portion of the employees' premiums for those plans, plus the two percent COBRA administration fee, for the number of months of COBRA benefits coverage set forth below. The Company will make this payment in either (i) equal installments in accordance with the Company...

  • Page 175
    ... under the applicable Company bonus plan in which they participated for that year. • Employees participating in sales commission or sales bonus plans will be paid any commissions or bonuses that have been earned prior to their termination date. The Company will make such payments in a single lump...

  • Page 176
    ... Executives' Position Elimination and Severance Plan, (ii) Position and Elimination and Severance Plan for Eligible Employees Whose Current Employment Started on or after January 1, 2008, (iii) Change-in-Control Accelerated Vesting and Severance Plan, (iv) Key Employee Compensation Continuation Plan...

  • Page 177
    ...deferred compensation subject to Code Section 409A, these Specified Employee six-month delay provisions should only be applicable if it is subsequently determined that the amounts to be paid pursuant to this Plan are not exempt from Section 409A. For purposes of this Plan, "Specified Employee" means...

  • Page 178
    ... continue and shall be paid to the employee's designated beneficiary or estate. Waiver and Release Agreement In order to receive the severance pay and benefits available under the Plan, an eligible employee must submit a signed Waiver and Release Agreement, in a form acceptable to the Company, to...

  • Page 179
    ... state or local law requires the Company or Affiliate to provide notice and/or make a payment to an eligible employee because of involuntary termination of employment, or in accordance with a plant closing law, such as the WARN Act, the severance pay and benefits available under the Plan for periods...

  • Page 180
    .... 1 Authority of Plan Administrator The Plan Administrator shall have sole discretionary power to administer the Plan, subject to applicable requirements of law. The Plan Administrator shall have the authority to interpret the Plan and to determine all questions arising under or in connection with...

  • Page 181
    ...liabilities arising out of his or their actions on behalf of the Company in connection with the administration of the Plan, except expenses, claims and liabilities arising out of such person's own gross negligence or bad faith or for which applicable law does not permit such indemnification. 2 Claim...

  • Page 182
    ... claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits. The Plan Administrator's review will take into account all such written comments, documents, records and other...

  • Page 183
    ... employees do not have any vested right to severance pay and benefits under the Plan. The Company reserves the right, in its sole discretion, to amend or terminate the Plan at any time by written action of its Chief Executive Officer or Chief Financial Officer or any of their designees or by such...

  • Page 184
    ... on termination of service, (iii) whether an employee whose employment is terminated but who is offered work by the Company or an Affiliate as an independent contractor or consultant qualifies for severance pay and benefits under any of the position elimination categories set forth under the Plan...

  • Page 185
    ... Information 12 Plan Name EarthLink Shared Services, LLC Severance Plan 13 Plan Sponsor EarthLink Shared Services, LLC 1375 Peachtree Street, Level A Atlanta, Georgia 30309 (404) 748-7317 14 Employer Identification Number (EIN) 51-0553722 15 Plan Number 508 16 Plan Type The Plan is a welfare benefit...

  • Page 186
    ... Plan, including collective bargaining agreements, and a copy of the latest Annual Report (Form 5500 series), if any, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration (f/k/a the Pension Welfare Benefits...

  • Page 187
    from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor,...

  • Page 188
    ... metrics), and such annual bonus to be paid, in a single lump sum on the same date as bonus awards for the Company's fiscal year ending December 31, 2013 are paid to the other participants in the Company's annual bonus plan (but in no event later than 2½ months after December 31, 2013). Page 1 of...

  • Page 189
    ...the terms of the applicable Company health plans, and you will be required to pay any sums that are required to be paid for such COBRA continuation coverage. You, or after your death, your beneficiary, will receive a COBRA payment in the amount of $25,812.00 in a single lump sum payment on the first...

  • Page 190
    ...Directors meeting planning; 2014 budgeting and longer-term planning; 2014 compensation program development; 2013 officer incentive compensation and performance reviews; and investor and customer communications. As sole compensation for your services as Chairman, you shall be paid at the rate of your...

  • Page 191
    ...to which you may be entitled under your Employment Agreement. You also acknowledge that you are not entitled to receive any payments or benefits under any severance plan, arrangement, program or policy of the Company or any parent, subsidiary or affiliate of the Company. Except as otherwise provided...

  • Page 192
    ... Act or other federal or state wage and hour laws, the Employee Retirement Income Security Act, claims for breach of contract, infliction of emotional distress, claims under any other federal or state law pertaining to employment or employment benefits, and any other claims of any kind based on...

  • Page 193
    ... the Company's standard expense reimbursement policy. You further agree not to make any statement or take any action that criticizes or disparages the (b) Company, any Released Party or their parents, subsidiaries or affiliates, their employees, officers, directors, representatives and agents, their...

  • Page 194
    ... and the remainder of this letter agreement valid, enforceable, and lawful. 13. Taxes . You shall be responsible for any tax consequences of any payments made or benefits delivered pursuant to this letter agreement, except for any applicable taxes that the Company withholds and except as provided...

  • Page 195
    ..., it is intended that any payment or benefit provided hereto that is considered nonqualified deferred compensation subject to Section 409A of the Code will be provided and paid in a manner, and at such time and in such form, as complies with the applicable requirements of Section 409A of the...

  • Page 196
    ... such payments or rights are to continue after your death. Please sign and date in the first space below to accept the terms of this letter agreement and return the executed letter agreement to me for the Company's files. Additionally, for purposes of paragraphs 9 and 11 of this Agreement, in order...

  • Page 197
    ... such paragraph 9 in connection with the re-execution of this letter agreement. By: Rolla P. Huff Date: Sworn to and subscribed before me this _____ day of _____ Notary Public [Seal] Exhibit A Company Stock Options Grant Date 2/16/2012 2/16/2012 2/20/2013 Grant Type NQ ISO NQ Granted...

  • Page 198
    ...Date 2/7/2011 2/7/2011 2/16/2012 2/16/2012 2/16/2012 Grant Type Granted RSU PSA PSA PSA PSA 128,572 128,571 124,834 41,611 276,316 Performance or Performance Service Vesting Period Ends Service Performance Performance Performance Performance NA 12/31/2011 12/31/2013 12/31/2014 12/31/2013 Unvested...

  • Page 199
    ... in the appropriate alphabetical order to read as follows: " Borrower Assignment, Assumption and Release " means the Assignment, Assumption and Release dated as of the Reorganization Date substantially in the form of Exhibit A to be executed by EarthLink, Holdings and the Administrative Agent. CHAR1...

  • Page 200
    " EarthLink " means EarthLink, Inc., a Delaware corporation, until such Person is merged with and into Earthlink, LLC, a Delaware limited liability company, at which time and all times thereafter it shall mean EarthLink, LLC, a Delaware limited liability company. " Holdings " means EarthLink ...

  • Page 201
    ... as reasonably requested by the Administrative Agent and (iv) deliver (or cause to be delivered) to the Collateral Agent duly-executed counterparts to an amendment to each of the Mortgages (with each such amendment changing the "Borrower" described therein from EarthLink to Holdings and otherwise in...

  • Page 202
    ...". (h) A new clause (d) is...Security Agreement, the reference to "EarthLink, Inc., a Delaware corporation...Administrative Agent. (b) Resolutions from the board of directors of the Borrower approving the Reorganization, this Amendment, the transactions contemplated herein and authorizing the execution...

  • Page 203
    ... thereof and (c) advise and direct the Administrative Agent to enter into such ...law or in equity). (iii) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution...

  • Page 204
    .... BORROWER: EARTHLINK, INC., a Delaware corporation, as a Borrower By: Name: Bradley A. Ferguson Title: Executive Vice President, Chief Financial Officer GUARANTORS: BTI TELECOM CORP. BUSINESS TELECOM OF VIRGINIA, INC. BUSINESS TELECOM, INC. CHOICE ONE COMMUNICATIONS OF CONNECTICUT INC. CHOICE ONE...

  • Page 205
    ITC^DELTACOM, INC. LIGHTSHIP TELECOM, LLC US XCHANGE INC. US XCHANGE OF ILLINOIS, L.L.C. US XCHANGE OF INDIANA, L.L.C. US XCHANGE OF MICHIGAN, L.L.C. US XCHANGE OF WISCONSIN, L.L.C. By: Name: Bradley A. Ferguson Title: Executive Vice President, Chief Financial ADMINISTRATIVE AGENT AND COLLATERAL ...

  • Page 206
    ... AND RELEASE AGREEMENT (this " Assignment "), dated as of _____, 20___, is by and among EARTHLINK, LLC, a Delaware limited liability company, as assignor (the " Assignor "), EARTHLINK HOLDINGS CORP., a Delaware corporation, as assignee (the " Assignee "), and REGIONS BANK, as administrative agent...

  • Page 207
    ... name, changed its state of formation, been party to a merger, consolidation or other change in structure in the five years preceding the date hereof. (d) Schedule 3 hereto lists each direct Subsidiary of the Assignee, together with (i) jurisdiction of formation, (ii) number of shares of each class...

  • Page 208
    ... purposes of all notices and other communications is the address designated for all Credit Parties in Section 11.1 of the Credit Agreement or such other address as the Assignee or the Assignor, as applicable, may from time to time notify the Administrative Agent in writing. 6. Acknowledgement . Each...

  • Page 209
    Mergers, Consolidations and other Changes in Structure Schedule 3 to Borrower Assignment, Assumption and Release Equity Interests Exhibit B Form of Amendment to Intecreditor Agreement CHAR1\1334255v2 CHAR1\1334255v6

  • Page 210
    ... Corp., a Delaware corporation (" HoldCo "), and EarthLink Shared Services, LLC, a Delaware limited liability company (" Shared Services "). All capitalized terms used in this Amendment and not defined herein have the respective meanings ascribed to them in the Agreement and Plan of Merger, dated as...

  • Page 211
    ... SHARED SERVICES, LLC, a Delaware limited liability company By: /s/ Bradley A. Ferguson Name: Bradley A. Ferguson Title: Executive Vice President, Chief Exhibit B Plans Financial Officer EarthLink, Inc. 2013 Short-Term Incentive Bonus Plan EarthLink, Inc. Second Amended and Restated Change...

  • Page 212
    ... Communications of Virginia, Inc. (VA) DeltaCom, LLC (AL) EarthLink Business Holdings, LLC (DE) EarthLink Business, LLC (DE) EarthLink Carrier, LLC (DE) EarthLink Holdings Corp. (DE) EarthLink Managed Services, LLC (SC) EarthLink Shared Services, LLC (DE) EarthLink, LLC (DE) Lightship Telecom, LLC...

  • Page 213
    ... consolidated financial statements of EarthLink Holdings Corp., and the effectiveness of internal control over financial reporting of EarthLink Holdings Corp., included in this Annual Report (Form 10-K) for the year ended December 31, 2013. /s/ Ernst & Young LLP Atlanta, Georgia February 25, 2014

  • Page 214
    ... OF CEO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Joseph F. Eazor, certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2013 of EarthLink Holdings Corp.; 2. Based on...

  • Page 215
    ... OF CFO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Bradley A. Ferguson, certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2013 of EarthLink Holdings Corp.; 2. Based...

  • Page 216
    ... ACT OF 2002 In connection with the Annual Report on Form 10-K of EarthLink Holdings Corp. (the "Company") for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph F. Eazor, Chief Executive Officer of the Company, certify...

  • Page 217
    ... OF 2002 In connection with the Annual Report on Form 10-K of EarthLink Holdings Corp. (the "Company") for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bradley A. Ferguson, Chief Financial Officer of the Company, certify...