OF NOTES ISSUED ON THE DATE HEREOF (THE "INITIAL
NOTES"), WHICH SHALL BE ISSUED AS PART OF THE SAME SERIES AS THE INITIAL NOTES
(THE "ADDITIONAL NOTES" AND, TOGETHER WITH THE INITIAL NOTES, THE "NOTES"). THE
ADDITIONAL NOTES WILL BE IDENTICAL TO THE INITIAL NOTES, EXCEPT THAT INTEREST
WILL BEGIN TO ACCRUE FROM THE DATE THEY ARE ISSUED RATHER THAN THE ISSUE DATE.
THE COMPANY SHALL PROVIDE WRITTEN OR ORAL NOTICE TO THE HOLDERS FIVE BUSINESS
DAYS PRIOR TO AN INTEREST PAYMENT DATE OF WHETHER SUCH INTEREST PAYMENT WILL BE
MADE IN CASH, BY THE ISSUANCE OF ADDITIONAL NOTES OR BY A COMBINATION THEREOF.
IF THE COMPANY FAILS TO DELIVER SUCH NOTICE IN SUCH TIME PERIOD, INTEREST FOR
THE PERIOD FOR WHICH THE NOTICE WAS NOT PROPERLY GIVEN SHALL BE PAID BY THE
ISSUANCE OF ADDITIONAL NOTES. ANY CASH INTEREST PAYMENT WILL BE IN SUCH COIN OR
CURRENCY OF THE UNITED STATES OF AMERICA AS AT THE TIME OF PAYMENT IS LEGAL
TENDER FOR PAYMENT OF PUBLIC AND PRIVATE DEBTS.
(D)
NOTWITHSTANDING, THE FIRST SENTENCE OF SECTION 1(A), IN THE
EVENT THAT: (I) (A) OPERATING ELECTS UNDER SECTION 9.2.4 OF THAT CERTAIN
AGREEMENT FOR XGDSL SERVICES, DATED OF EVEN DATE HEREWITH, BETWEEN OPERATING AND
EARTHLINK, INC. ("EARTHLINK") (THE "SERVICES AGREEMENT") NOT TO PROCEED WITH THE
PHASE II BUILD OUT (AS DEFINED IN THE SERVICES AGREEMENT) BY WRITTEN NOTICE TO
EARTHLINK ("PHASE II NOTICE"), OR (B) OPERATING RECEIVES FROM EARTHLINK NOTICE
OF A SUBSTANTIAL PERFORMANCE FAILURE, AS DEFINED IN AND IN ACCORDANCE WITH THE
TERMS OF, SECTION 4.5 OF THE SERVICES AGREEMENT AND EXHIBIT 2 OF THE SERVICES
AGREEMENT (THE "SUBSTANTIAL PERFORMANCE NOTICE') AND (II) WITH RESPECT TO
SUBSECTION (D)(I)(A), ON THE DATE OF THE PHASE II NOTICE EARTHLINK HOLDS AT
LEAST TWO-THIRDS OF THE OUTSTANDING AGGREGATE PRINCIPAL AMOUNT OF THE NOTES AND
OF THE PRIMARY SHARES, THEN EARTHLINK MAY, IN EITHER CASE AND AT ITS OPTION, AT
ANY TIME
3
DURING THE 30-DAY PERIOD FOLLOWING RECEIPT OF THE PHASE II NOTICE OR THE
SUBSTANTIAL PERFORMANCE NOTICE, AS APPLICABLE, BY WRITTEN NOTICE TO THE COMPANY
(THE "ELECTION NOTICE"), REQUIRE THE COMPANY TO PAY THE REMAINING PRINCIPAL
AMOUNT OF THE NOTES HELD BY EARTHLINK ON THE DATE OF THE ELECTION NOTICE
("AMORTIZED NOTES") IN FOUR EQUAL ANNUAL INSTALLMENTS DUE MARCH 15 OF EACH YEAR,
COMMENCING ON MARCH 15, 2007 AND ENDING ON MARCH 15, 2010 (THE "PRINCIPAL
INSTALLMENTS"); PROVIDED, HOWEVER, THAT IF SUCH ELECTION NOTICE IS MADE AFTER
ANY OF SUCH DATES THE PRINCIPAL ON THE AMORTIZED NOTES WILL BE PAID RATABLY ON
THE REMAINING DATES. ACCRUED INTEREST, IF ANY, ON THE PRINCIPAL INSTALLMENTS
SHALL BE PAID IN ACCORDANCE WITH SECTION 1(B). FROM AND AFTER THE DATE OF THE
ELECTION NOTICE, THE AMORTIZED NOTES SHALL CONTINUE TO BE GOVERNED BY THIS
SECTION 1(D), REGARDLESS OF ANY SUBSEQUENT TRANSFER BY EARTHLINK OF ALL OR ANY
PORTION OF THE AMORTIZED NOTES.
SECTION 2.
METHOD OF PAYMENT. THE COMPANY WILL PAY INTEREST
(EXCEPT DEFAULTED INTEREST) ON THE PRINCIPAL AMOUNT OF THE NOTES AS PROVIDED