Document:

EXHIBIT 10.7

 

EMPLOYMENT
AGREEMENT

 

THIS AGREEMENT is entered into as of February 26, 2004 by and
between GARDENBURGER, INC. an Oregon
Corporation (the “Company”) and Lori Luke (the “Executive”).  In consideration of the mutual covenants and
the other terms and conditions set forth in this Agreement, the parties agree
as follows:

 

I.                                         DEFINITIONS.

 

As used herein:

 

“Cause” for termination of Executive’s employment means
(i) any fraud or dishonesty by Executive involving the Company;
(ii) willful misconduct or gross negligence by Executive in connection
with Executive’s performance of his duties for the Company;
(iii) Executive’s conviction for having committed a felony; (iv) the
commission by Executive of any act in direct competition with or materially
detrimental to the best interests of the Company; or (v) willful and
continued failure by Executive substantially to perform his/her duties provided
herein after a written demand for substantial performance is delivered to
Executive by the CEO of the Company, which demand identifies with reasonable
specificity the manner in which Executive has not substantially performed
his/her duties.

 

“Change in Control” shall
mean any of the following:

 

(a)                                  The acquisition by
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 (the “Exchange Act”))
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (i) the then outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that the following acquisitions
shall not constitute a Change in Control: 
(w) any acquisition directly from the Company (excluding an acquisition
by virtue of the exercise of a conversion privilege, other than a conversion
privilege in existence as of the date of this agreement), (x) any acquisition
by the Company, (y) any acquisition by any Employee Benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section are satisfied; or

 

(b)                                 Individuals who, as of
the date of this Agreement, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,

 

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however, that any individual becoming a director subsequent to the date
of this Agreement whose election, or nomination for election by the Company’s
shareholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office as a director
of the Company occurs as a result of either an actual or a threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or

 

(c)                                  Approval by the
shareholders of the Company of a reorganization, merger or consolidation, in
each case, unless, following such reorganization, merger or consolidation,
(i) more than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions, as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding the Company, any Employee Benefit
plan (or related trust) of the Company or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 50% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or

 

(d)                                 Approval by the
shareholders of the Company of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which following
such sale or other disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding the Company and any Employee benefit
plan (or related trust) of the Company or such corporation and any Person
beneficially owning,

 

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immediately prior to such sale or other disposition, directly or
indirectly, 50% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then outstanding shares of common
stock or such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time
of the execution of the initial agreement or action of the Board providing for
such sale or other disposition of assets of the Company.

 

No Change of Control shall be
deemed to have occurred as a result of any acquisition, reorganization, merger,
consolidation or other transaction described above unless, as a result of such
transaction, the subordinated debt and preferred stock of the Company
outstanding as of the date of this Agreement, as the same may be amended or
modified, shall be retired for cash.

 

“Confidential Information” is all nonpublic information relating to the
Company or its business that is disclosed to Executive, that Executive
produces, or that Executive otherwise obtains during employment.  “Confidential Information” also includes
information received from third parties that the Company has agreed to treat as
confidential.  Examples of Confidential
Information are:  marketing plans,
customer lists, product design and manufacturing information, and financial
information.

 

“Confidential Information” does not include
information which (a) is or becomes generally available to the public
other than as a result of a disclosure by Executive; (b) becomes available
to Executive on a nonconfidential basis from a source other than the Company or
its representatives, provided that such source is not known by Executive to be
bound by a confidentiality agreement with the Company or its representatives or
otherwise prohibited from transmitting the information to Executive by a
contractual, legal, or fiduciary obligation; (c) can be demonstrated by
written or other convincing evidence to have been known by Executive on a
nonconfidential basis prior to its disclosure to Executive by the Company or
one of its representatives; or (d) can be demonstrated by written or other
convincing evidence to have been developed by Executive in good faith and
independent of the use of Confidential Information.

 

“Disability” has the meaning in the Company’s then current
disability plan or program or, if no such plan or program is then in effect,
Disability means the condition of being permanently unable to perform Executive’s
duties for the Company by reason of a medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can be
reasonably expected to last for a continuous period of at least 12 months.

 

 “Good Reason” means the
undertaking of any of the following without Executive’s consent:  (i) relocation of Executive’s place of
employment more than 25 miles from the location Executive is performing duties
as of the date hereof, (ii) the reduction by more than 10% of Executive’s base
compensation not related to a reduction in the salaries of all executive
officers of the Company, or (iii) the significant change or reduction of
Executive’s duties that results in any diminution or adverse change of
Executive’s position, status or circumstances.

 

3

 

“Sale Transaction” for
purposes of the Sale Bonus means a single transaction or a series of related
transactions approved by the Board of Directors of the Company resulting in:

 

(a)          A sale of other disposition by the Company of
all or substantially all of its assets;

 

(b)         A sale, stock exchange,
or other disposition of all or substantially all the capital stock of the
Company;

 

(c)          A merger, consolidation
or other corporate transaction with a third party in which the Company’s
shareholders receive cash, stock, securities, or any other consideration (or
any combination of the foregoing) in exchange for their stock in the Company.

 

(d)         No Sale Transaction shall
be deemed to have occurred as a result of any sale, stock exchange,
acquisition, reorganization, merger, consolidation or other transaction
described above unless, as a result of such transaction, the subordinated debt
and preferred stock of the Company outstanding as of the date of this
Agreement, as the same may be amended or modified, shall be retired for cash.

 

“Total Consideration” for
purposes of the Sale Bonus, in connection with a Sale Transaction, means:

 

(a)          The amount of cash and
the aggregate market value of all other consideration received by the Company
in connection with a sale or other disposition of its assets (exclusive of any
indebtedness or liabilities of the Company to which the assets taken are
subject or which are assumed by the purchaser or other acquirer of the Company’s
assets); or

 

(b)         The aggregate amount of
cash and the aggregate market value of all other consideration received by the
Company’s shareholders in any sale, share exchange, or other disposition of the
Company’s stock or any merger, consolidation, or similar transaction.

 

II.                                     EMPLOYMENT.

 

The Company agrees to continue to employ Executive as the Vice
President of Marketing, and Executive agrees to continue such employment.  Executive shall devote substantially the
whole of his/her business time to the business and affairs of, and to advance
the best interests of, the Company, shall have such powers and duties
appropriate to his/her office as may be provided by the articles and/or bylaws
of the Company and as determined by the Board of Directors of the Company from
time to time.  Executive will at all
times discharge his/her duties in consultation with and under the supervision
and direction of the President & CEO of the Company or designee.  Executive’s duties may be changed from time
to time at the sole discretion of the Board of Directors of the Company.  Executive and the Company understand and
acknowledge that Executive’s employment with the Company constitutes “at-will”
employment and that subject to the Company’s obligation to provide severance
benefits as specified herein, the employment relationship and compensation may
be terminated at any time, upon written notice to the other party, with or
without Cause or Good Reason and for any or no cause or reason, at the option
of either the Company or Executive.

 

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III.                                 COMPENSATION
AND BENEFITS.

 

(a)                                  Base Salary.

 

As compensation for services under this Agreement, the Company will pay
to Executive an annual salary of $200,000 (the “Base Salary”) payable in
accordance with the usual payroll practices of the Company.  During Executive’s employment under this
Agreement, the CEO and Compensation Committee will review Executive’s Base
Salary at least annually.  The Board of
Directors of the Company may in its sole discretion adjust Executive’s Base
Salary from time to time.

 

(b)                                 Benefit Plans.

 

To the extent eligible Executive will be entitled to receive or
participate in all such other benefits, including without limitation pension
plans, stock option plans and health and welfare plans as may from time to time
be made available to other senior management employees of the Company, all in
accordance with the terms thereof as in effect from time to time.

 

(c)                                  Vacation.

 

Executive will be entitled to three weeks annual vacation payable in
accordance with the standard policies of the Company.

 

IV.                                SALE
BONUS

 

After the completion of a Sale Transaction, and subject to the
provisions of Section XVII, the Company will pay Executive a Sale Bonus,
as described below, provided Executive remains as Vice President of Marketing
of the Company during the negotiation of and through the closing of the Sale
Transaction.  The Sale Bonus will be
payable to Executive after all post-closing adjustments in connection with the
Sale Transaction have been determined.

 

The “Sale Bonus” is an amount equal to the sum of  0.25% of the “Total Consideration.”

 

Executive will have the right, in his/her sole discretion, to waive
receipt of the whole or any portion of the Sale Bonus otherwise due to
Executive pursuant to this Agreement if and to the extent that Executive
determines that reduction in the amount of the Sale Bonus or waiver of the Sale
Bonus would give Executive an income tax benefit.  Any reduction by Executive of the amount of
Sale Bonus received as provided in this Agreement will not affect Executive’s other
rights to the Sale Bonus.  Any waiver or
reduction in the amount of the Sale Bonus will not affect Executive’s rights to
other provisions of this Agreement.

 

All amounts payable by the Company to Executive pursuant to this
Agreement, including without limitation all cash compensation, any Sale Bonus,
and any settlement of stock options, are subject to and will be reduced by
amounts the Company is required to withhold for all applicable federal, state,
and local income, payroll and other taxes.

 

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V.                                    TERMINATION RELATED TO A CHANGE
IN CONTROL.

 

If a Change in Control occurs while this Agreement is in effect, and at
any time during the nine month period beginning on the date of the first
occurrence of such Change in Control either (i.) Executive’s employment is
terminated by the Company for any reason other than Cause or the Executive’s
Death or Disability, or (ii.) Executive terminates his or her employment for
Good Reason, , the Company will pay
Executive a Change in Control Severance Benefit as follows PROVIDED THAT
Executive first fulfills the requirements of Section XVII:

 

(a)                                  An amount equal to Executive’s annual base salary
as in effect on the date of termination or, if higher, the annual base salary as
in effect prior to any reduction within the twelve (12) months preceding
termination, payable as a lump sum on the later of the closing date on
which a Change in Control transaction is completed, or 48 hours after the termination;

 

(b)                                 Continuation (or reimbursement for the cost of)
all health and welfare benefits for Executive and his/her dependents for a
period of 12 months following termination at the same or comparable levels of
coverage.

 

VI.                                TERMINATION
OTHER THAN IN CONNECTION WITH A CHANGE IN CONTROL.

 

For any termination other than a termination
related to a Change in Control, the Company shall pay Executive a Severance
Benefit as follows PROVIDED THAT Executive first fulfill the requirements of Section XVII.

 

Severance Payment.

 

Upon an involuntary termination by the
Company of Executive’s employment (other than for “Cause,” or in connection
with Executive’s Death or Disability) the Company will pay Executive his/her
Base Salary through the date of termination and will pay Executive:

 

(a)                                  An amount equal to Executive’s annual base salary
as in effect on the date of termination payable over a 12-month period in
accordance with the Company’s normal payroll practices.

 

(b)                                 Continuation (or reimbursement for the cost of)
all health and welfare benefits for Executive and his/her dependents for a
period of 12 months following termination at the same or comparable levels of
coverage.

 

VII.                            MATERIALS PREPARED AND INVENTIONS MADE DURING EMPLOYMENT

 

The Company shall be the exclusive owner of
all materials, concepts, and inventions Executive prepares, develops, or makes
(whether alone or jointly with others) within the scope of his employment, and
of all related rights (including copyrights, trademarks, and patents) and
proceeds.  Without limitation, materials,
concepts, and inventions that (a) relate to the

 

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Company’s business or actual or demonstrably
anticipated research or development, or (b) result from any work performed
by Executive for the Company, shall be considered within the scope of Executive’s
employment.  Executive shall promptly
disclose all such materials, concepts, and inventions to the Company.  Executive shall take all action reasonably
requested by the Company to vest ownership of such materials, consents, and
inventions in the Company and to permit the Company to obtain copyright,
trademark, patent, or similar protection in its name.  Notwithstanding anything herein, this
obligation is subject to the provisions of s. 2870 of the California Labor Code
and does not apply to any invention that qualifies fully as an excluded
invention under s. 2870.

 

VIII.                        CONFIDENTIAL INFORMATION.

 

(a)                                  Access to Information.

 

Executive acknowledges that in the course of
his employment he will have access to Confidential Information, that such
information is a valuable asset of the Company, and that its disclosure or
unauthorized use will cause the Company substantial harm.

 

(b)                                 Ownership.

 

Executive acknowledges that all Confidential
Information shall continue to be the exclusive property of the Company (or the
third party that disclosed it to the Company), whether or not prepared in whole
or in part by Executive and whether or not disclosed to Executive or entrusted
to his/her custody in connection with his/her employment by the Company.

 

(c)                                  Nondisclosure and Nonuse.

 

Unless authorized or instructed in writing by
the Company, or required by legally constituted authority, Executive will not,
except as required in the course of the Company’s business, during or after
his/her employment, disclose to others or use any Confidential Information,
unless and until, and then only to the extent that, such items become available
to the public through no fault of Executive.

 

(d)                                 Return of Confidential Information.

 

Upon request by the Company during or after
his employment, and without request upon termination of employment pursuant to
this Agreement, Executive will deliver immediately to the Company all written
or tangible materials containing Confidential Information without retaining any
excerpts or copies.

 

(e)                                  Duration.

 

The obligations set forth in this Section will
continue beyond the term of employment of Executive by the Company and for so
long as Executive possesses Confidential Information.

 

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IX.                                EFFECT
OF AGREEMENT.

 

This Agreement supersedes and replaces any and all prior agreements and
understandings concerning Executive’s employment relationship with the Company
entered into prior to the date hereof, but not any written agreements entered
into simultaneous with this Agreement or thereafter.

 

X.                                    ASSIGNMENT.

 

This Agreement
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective executors, administrators, heirs, personal representatives and
successors, but, except as hereinafter provided, neither this Agreement nor any
right hereunder may be assigned or transferred by either party hereto, or by
any beneficiary or any other person, nor be subject to alienation, anticipation
sale, pledge, encumbrance, execution, levy or other legal process of any kind
against Employee, Employee’s beneficiary or any other person.  Notwithstanding the foregoing, any person or
business succeeding to all or substantially all of the business of the Company
by stock purchase, merger, consolidation, purchase of assets or otherwise,
shall be bound by and shall adopt and assume this Agreement, and the Company
shall obtain the express assumption of this Agreement by such successor.

 

XI.                                NO
OBLIGATION TO FUND.

 

The agreement
of the Company (and/or its successor) to make payments to Executive hereunder
shall represent the unsecured obligation of the Company (and/or its successor),
except to the extent (i) the terms of any other agreement, plan or arrangement
pertaining to the parties provide for funding; or (ii) the Company (or its
successor) in its sole discretion elects in whole or in part to fund the
Company’s obligations under this Agreement pursuant to a trust arrangement or
otherwise.

 

XII.                            GOVERNING
LAW.

 

This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Utah, except to the extent otherwise expressly provided in this
Agreement.  The parties hereto expressly
consent to the personal jurisdiction of the state and federal courts located in
Utah for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.

 

XIII.                        CONSULTNG
AND SUBSEQUENT EMPLOYMENT.

 

Nothing in
this Agreement shall preclude the Company or its successors from employing
Executive in a consulting or regular employment capacity following termination
of employment or other periods in which Executive provides consulting services
under this or any other agreement.

 

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XIV.                       AMENDMENT.

 

This Agreement
may only be amended by a written instrument signed by the parties hereto, which
makes specific reference to this Agreement.

 

XV.                           SEVERABILITY.

 

The Parties agree that any provision of this Agreement that is held to
be illegal, invalid, or unenforceable under present or future laws shall be
fully severable.  The Parties further
agree that this Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had never been a part of this Agreement and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement.  Furthermore, a provision as similar to the
illegal, invalid, or unenforceable provision as is possible and legal, valid,
and enforceable shall be automatically added to this Agreement in lieu of the
illegal, invalid, or unenforceable provision.

 

XVI.                       OTHER BENEFITS.

 

Except as set
forth herein, nothing in this Agreement shall limit or replace the compensation
or benefits payable to Executive, or otherwise adversely affect Executive’s
rights, under any other benefit plan, program or agreement to which Executive
is a party.

 

XVII.                   RELEASE OF
CLAIMS REQUIRED FOR CERTAIN BENEFITS.

 

As an express prerequisite to receipt of any Severance or other
post-termination Benefits provided in this Agreement, Executive acknowledges
and understands that he/she must sign a Separation Agreement, including a
release of claims.  Such Agreement shall
be substantially similar to the Agreement attached as Addendum A.  Executive understands that he/she will not be
entitled to receive any payments until he/she executes and delivers the signed
Agreement, and the revocation period set forth in the Waiver and Release of
Claims Agreement has run.

 

XVIII.               ARBITRATION.

 

Any dispute between the Parties concerning the interpretation,
application, or claimed breach of this Agreement shall be submitted to binding,
confidential arbitration.  Such
arbitration shall be conducted pursuant to the rules of the American
Arbitration Association governing employment disputes, before an arbitrator
licensed to practice law in Utah and familiar with employment law
disputes.  Prior to submitting the matter
to arbitration, the parties shall first attempt to resolve the matter by the
claimant notifying the other party in writing of the claim; by giving the other
party the opportunity to respond in writing to the claim within ten (10) days
of receipt of the claim; and by giving the other party the opportunity to meet
and confer.  If the matter is not
resolved in this manner, the dispute may then proceed to arbitration at the request
of either party.  The parties shall bear
equally the arbitrator’s fees and expenses, as well as the administrative
costs, if any, assessed by the American Arbitration Association.  The prevailing party in any such proceeding
shall be entitled to recover costs, expenses, and attorney’s fees incurred as a
result of such arbitration or as awarded by the arbitrator including all
arbitration costs.  Should any party
institute any court action against the other with respect to any claim released
by this Agreement, or pursue any arbitrable dispute by any method other than
arbitration as provided for in this paragraph, the responding party shall be
entitled to recover from the initiating party all damages, costs, expenses, and
attorney’s fees incurred as a result of such action.

 

	
   

  	
  GARDENBURGER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Lori Luke

  	
   

  	
    /s/ Scott Wallace

  	
   

  
	
  Lori Luke

  	
  Scott Wallace

  
	
   

  	
  President & Chief Executive Officer

  
				

 

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Addendum A

SEPARATION
AGREEMENT

 

THIS
Separation Agreement and Release (this “Agreement”) is made and entered into
this       day of                   
and between GARDENBURGER, INC., an Oregon corporation (the “Company”), and                      
(“Executive”) in order to provide for an orderly separation of employment and
establish the terms and conditions of Executive’s separation from
employment.  This Agreement also fully
and completely resolves any and all issues that Executive might have in
connection with his/her employment with the Company or the termination of that
employment.  This is a negotiated
agreement establishing the terms and conditions of Executive’s separation from
employment with the Company and it terminates, extinguishes and supersedes the
benefits, terms and conditions of employment between Executive and the Company
except to the extent prohibited by law.

 

NOW,
THEREFORE, in consideration of the mutual promises and conditions contained
herein, the parties agree as follows:

 

1.                                       Separation.

 

Executive’s
employment will end effective            
(the “Termination Date”).  Executive
shall simultaneously resign from employment and tender a resignation from
his/her position as an officer of the Company. 
Executive acknowledges that he/she has been and is subject to certain
laws governing trading by corporate insiders, and will engage in no trading
activities in violation of those laws. 
Nothing herein shall affect any right Executive may have to
indemnification for acts as an officer of the Company available to him/her
under applicable law, the Company’s bylaws, and/or Company acquired liability
coverage for directors and officers to the extent that coverage was or is in
place at the time this Agreement is signed.

 

2.                                       Acknowledgement
that Wages Received.

 

Executive
acknowledges that the payments made to the date of this Agreement, and payments
identified in this Agreement, represent timely and full payment of all wages
and compensation owing to him/her as a result of his/her employment including
but not limited to accrued vacation pay, bonuses, and other forms of accrued
compensation excepting amounts owing under a deferred compensation plan, and
include sums in addition to that amount.

 

3.                                       Severance
Pay.

 

In
consideration for Executive’s execution and non-revocation of this Separation
Agreement, the Company will provide Executive the sum of $           
(gross) as severance pay, to be paid in accordance with the Company’s usual and
customary payroll practices commencing upon expiration of the right to revoke
this Agreement provided that Executive has not exercised the right to
revoke.  This amount shall be subject to
required withholding for federal, state and local

 

10

 

taxes, and
usual and customary payroll deductions. Executive agrees and acknowledges that
but for this Separation Agreement he/she is not entitled to these sums.

 

4.                                       Stock
Options.

 

To the extent Executive is a participant in the Company’s Stock Option
Plan, his/her rights under that Plan shall be determined by the terms of the
Plan and not otherwise.  Nothing in this
Agreement is intended to affect any vested rights he/she may have, or in any
way alter the rights and obligations specified in the Option Agreements and
Plan.

 

5.                                       Benefit
Plans.

 

Executive’s participation in all employee benefit plans and programs of
the Company shall end effective the Termination Date.  Executive’s entitlement to any benefits
afforded by any Company benefit plans are governed solely by the applicable
plans and policies, which are incorporated herein by this reference.

 

6.                                       Group
Health Care.

 

Executive
shall be entitled to continue his/her current group health care coverage in
accordance with the provisions of the Consolidated Omnibus Reconciliation Act (“COBRA”).  As consideration for this Agreement, the
Company shall reimburse Executive the cost of continuing these benefits for a
period of twelve (12) months.

 

7.                                       Outplacement.

 

As
consideration for this Agreement and upon Executive’s request, Executive will
be afforded outplacement assistance through a provider mutually acceptable to
Executive and the Company at a cost to the Company not to exceed $25,000,
provided that Executive commences outplacement assistance no later than thirty
(30) days following the Termination Date.

 

8.                                       Confidential
Information.

 

Executive is a
party to an Employment Agreement dated            
which imposes certain obligations to preserve the confidentiality of Company
information; Executive acknowledges that he/she remains bound by the obligation
notwithstanding his/her separation from employment.

 

9.                                       Release
of Claims.

 

Executive hereby releases and forever discharges the Company, its
predecessors, successors and assigns, and its past, present, and future
insurers, representatives, officers, trustees, shareholders, directors, agents,
attorneys, and employees, and their respective successors, assigns, executors,
and administrators (collectively, the “Releases”), of and from any and all
claims, charges, complaints, actions, causes of action, liability, damages,
costs, attorney fees, expenses of whatever nature, and demands of any kind
(including without limitation those based in tort,

 

11

 

contract, or statue, including without limitation, applicable state
civil rights laws, Title VII of the Civil Rights Act of 1964, the Post-Civil
War Rights Act, the Age Discrimination in Employment Act, 29, USC 621 et seq,
the Americans with Disabilities Act, the Rehabilitation Act of 1973, the Equal
Pay Act of 1963, and any regulations under such laws) up to and including the
date set forth below, whether known or unknown, foreseen or unforeseen,
asserted or unasserted.

 

Without limitation on the foregoing, Executive hereby accepts the
payments set forth herein in full settlement and satisfaction of all claims,
charges, complaints, actions, causes of action, and demands against the Company
or any of the Releases of every nature and kind whatsoever, known or unknown,
suspected or unsuspected, past, present, or future on account of or in any way
related to or arising from the employment relationship existing between them or
the termination of that relationship. 
Executive agrees that he/she is lawfully entitled to no payments, wages,
compensation, or benefits from the Company except as set forth in this Agreement,
and except for any amounts to which he/she is entitled under the terms of the
Company 401(k) plan and under the stock option agreements entered into between
the Company and Executive.

 

Executive expressly waives all rights under Section 1542 of the
Civil Code of the State of California, which provides as follows:  “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially affected
his settlement with the debtor.” 
Notwithstanding the provisions of Section 1542, and for the
purposes of implementing a full and complete release and discharge of the
Releasees, Executive expressly acknowledges that this Agreement is intended to
include and does include in its effect all claims which Executive does not know
or suspect to exist in Executive’s favor at the time Employee signed this
Agreement.  Executive intends this
Agreement to extinguish such claims.

 

Executive represents that he/she has no claims against or relating to
the Company pending or filed with any local, state, or federal agency as of the
date this Agreement is signed; and that if any such claims are pending or
filed, they will be immediately withdrawn or dismissed.  Except where prohibited by law, Executive
agrees that he/she will not assert any court action, lawsuit, or any amendment
to his/her claims against the Company or any other Releasees arising out of or
in connection with any of the foregoing released claims, including without
limitation any action, lawsuit, or claim arising out of or in connection with
the employment relationship existing between the Company and Executive or the
termination of that relationship other than one based upon an alleged violation
of this Agreement.  Where permitted by
operation of law, Executive agrees that his/her sole monetary relief for any
claim permitted to be made following execution of this Agreement shall be the
monetary relief already provided.

 

The Company hereby releases and forever discharges Executive and his/her
heirs, successors, beneficiaries, agents and attorneys, and their respective
successors, assigns, executors, and administrators, of and from any and all
charges, complaints, actions, causes of action, liability, damages, costs,
attorney fees, expenses of whatever nature and demands of any kind (including
without limitation those based in tort, contract, or statue) arising from or
based on claims of which any current member of the Company’s Board of Directors
has actual knowledge as of the date of this Agreement.

 

12

 

10.                                 Right
to enforce agreement according to terms.

 

Notwithstanding anything herein, the parties retain all rights to
enforce this Agreement according to its terms.

 

11.                                 Older
Worker Benefit Protection Act.

 

This Agreement is subject to the terms of the Older Workers Benefit
Protection Act of 1990 (“OWBPA”).  The
OWBPA provides that an individual cannot waive a right or claim under the Age
Discrimination in Employment Act (“ADEA”) unless the waiver is knowing and
voluntary.  Pursuant to the terms of the
OWBPA, Executive acknowledges and agrees that he/she has executed this
Agreement voluntarily, and with full knowledge of its consequences.  In addition, Executive hereby acknowledges
and agrees as follows:

 

a.                                       This
Agreement has been written in a manner that is calculated to be understood, and
is understood, by Executive;

 

b.                                      The
release provisions of this Agreement apply to any rights Executive may have
under the ADEA;

 

c.                                       The
release provisions of this Agreement do not apply to any rights or claims
Executive may have under the ADEA that arise after the date he/she executes
this Agreement;

 

d.                                      The
Company hereby advises Executive to consult with an attorney prior to executing
this Agreement;

 

e.                                       The
Company is giving Executive a period of up to twenty-one (21) days to consider
this Agreement.  Executive may accept and
sign this Agreement before the expiration of the twenty-one (21) day
time-period, but he is not required to do so by the Company; and

 

f.                                         For
a period of seven (7) days following the signing of this Agreement, Executive
may revoke this Agreement.  Executive
will provide written notice of any such revocation to the Company.  This Agreement shall become effective on the
eighth day after Executive signs it, if it has not been revoked during the
revocation period.

 

12.                                 Assistance
with Litigation and other Business.

 

The parties recognize that Executive may have specialized information
and knowledge that is or may be important to the Company in the event it is
involved in disputes, claims or litigation, or may have been involved in
incidents or events which relate to disputes, claims or litigation.  For the twelve months following the execution
of this Agreement, Executive agrees that he/she will make himself/herself
reasonably available to consult or assist the Company in any such matters.  The Company will reimburse any reasonable
expenses Executive incurs.  Thereafter,
the Company will reimburse Executive for any reasonable expenses and compensate
him/her for any

 

13

 

time reasonably spent at his/her usual and customary fee for consulting
work, and shall provide such indemnification for that work as is available
under applicable law, the Company’s bylaws, and the Company’s liability
coverage.

 

13.                                 Nondisparagement.

 

The parties agree not to make any derogatory remarks of any nature
whatsoever at any time about each other, about past or present employees or the
Company’s products, publicly or privately, unless required by law.  Nothing here shall limit any party in the
giving of truthful testimony or information, where the party is under legal
compulsion to do so.

 

14.                                 Confidentiality
of Agreement.

 

Executive agrees that he/she will not disclose, disseminate, or
publicize, or cause or permit to be disclosed, disseminated, or publicized any
of the terms of this Agreement, subject to the following exceptions only: (i)
to the extent necessary to represent the Company’s interests in claims or
litigation where the Company authorizes disclosure; (ii) to the extent
necessary to report income to appropriate taxing authorities, provided any
person to whom the information is disclosed shall also be bound by this
confidentiality provision; (iii) in response to an order or subpoena of a court
or governmental agency of competent jurisdiction, provided, however, that
notice of receipt of such order or subpoena shall be immediately communicated
to the Company telephonically and in writing, so that the Company shall have an
opportunity to intervene and assert what rights it has to nondisclosure prior
to Executive’s response to such order or subpoena; (iv) to the extent necessary
to enforce this Agreement.  Executive may
also disclose the terms of this Agreement to his/her lawyers, accountants and
financial advisers, and as required to lenders or lending institutions for
consideration in applications for loans or credit.

 

The Company agrees that, except on a business need-to-know basis, it
will not disclose, disseminate or publicize, or cause or permit to be
disclosed, disseminated or publicized, any of the terms of this Agreement.  These obligations are subject to the
following exceptions only (i) to the extent necessary to represent its
interests in claims or litigation, (ii) to the extent necessary to comply with
government reporting obligations, including but not limited to the Company’s
proxy statements where required, (iii) in response to an order or subpoena of a
court or governmental agency of competent jurisdiction, provided, however, that
notice of receipt of such order or subpoena shall be immediately communicated
to Executive telephonically and in writing so that Executive shall have an
opportunity to intervene and assert what rights he/she has to nondisclosure
prior to the Company’s response to such order or subpoena; (iv) to the extent
necessary to enforce this Agreement.

 

15.                                 Return
of Property.

 

Executive is a party to an Employment Agreement which requires him/her
immediately upon termination to return Confidential Information to the
Company.  Executive acknowledges his/her
continuing obligations under that Agreement and represents that as of the
Termination Date he/she has complied fully with the obligation to return Company’s
Confidential Information.

 

14

 

16.                                 Non-Competition.

 

Executive will not, throughout North America, Europe or Asia either
individually or as a director, officer, partner, employee, agent,
representative, or consultant with any business, directly or indirectly for
three years following the Termination Date:

 

(a)                                  Engage or prepare to
engage in the business of frozen or refrigerated products which contain
Imitation Meat products exclusively or as a primary ingredient.  Notwithstanding anything herein, Executive
shall not be restricted from engaging or preparing to engage in activities for
a business that has a separate product line or division that manufactures or
markets products that contain Imitation Meat products as described above, so long
as Executive does not personally work in that division or with that product
line;

 

(b)                                 Induce or attempt to
induce any person who is an employee of the Company to leave the employ of the
Company; or

 

(c)                                  Solicit, divert, or
accept orders for products or services that are substantially competitive with
the products or services sold by the Company from any customer of the Company,
or suggest, request, or encourage any suppliers or customers of the Company to
curtail, reduce, or cancel their business done with the Company, or otherwise
solicit for himself/herself or any other person or entity any business of the
Company.

 

While Executive acknowledges that the restrictions contained herein are
reasonable, if any term or condition of this Noncompetition provision is
determined to be unenforceable because of its scope, duration, geographical
area or similar factor, the court or arbitrator making such determination will
have the power to reduce or limit such scope, duration, area, or other factor,
and such covenant will then be enforceable in its reduced or limited form.

 

17.                                 No
Admission.

 

The Parties agree that, by entering into this Agreement, neither party
admits, and each Party specifically denies, any violation of any local, state,
or federal law, common or statutory.  The
Parties recognize that this Agreement has been entered into in order to achieve
an orderly separation and nothing contained herein shall be construed to be an
admission of liability or a concession of any kind.

 

17.                                 Consequences
of Breach.

 

If Executive materially breaches this Agreement, the Company shall be
relieved of any obligation to make any payment not yet made provided that an
arbitrator in a proceeding duly commenced by the Company pursuant to this
Agreement shall have determined that Executive has materially breached the
Agreement.  The Company may suspend any
payments due under the Agreement during the pendency of the Arbitration
proceeding but if the Arbitrator concludes there was no material breach, the
Company shall forthwith discharge all arrears together with interest accrued
from the date the payment was suspended payable at prime.

 

15

 

18.                                 Integration.

 

The Parties agree that this Agreement (together with the documents
incorporated by reference) states the entire agreement of the Parties and
except as expressly provided, referenced or incorporated herein, supersedes all
prior and contemporaneous negotiations and agreements, oral or written.  Each Party expressly acknowledges that the
other Party did not, directly or indirectly, make any promises,
representations, or warranties whatsoever, express or implied, other than those
contained in this Agreement.  The Parties
further agree that this Agreement may be amended only by a subsequent writing
signed by both of the Parties.

 

19.                                 Waiver.

 

No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver. 
No waiver shall be binding unless executed in writing by the party
making the waiver.

 

20.                                 Binding
Effect.

 

All rights, remedies and liabilities herein given to or imposed upon
the parties shall extend to, inure to the benefit of and bind, as the
circumstances may require, the parties and their respective heirs, personal
representatives, administrators, successors and permitted assigns; provided,
however, that the obligations of Executive are personal and shall not be
assigned by him/her.

 

21.                                 Severability.

 

The Parties agree that any provision of this Agreement that is held to
be illegal, invalid, or unenforceable under present or future laws shall be
fully severable.  The Parties further
agree that this Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had never been a part of this Agreement and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement.  Furthermore, a provision as similar to the
illegal, invalid, or unenforceable provision as is possible and legal, valid,
and enforceable shall be automatically added to this Agreement in lieu of the
illegal, invalid, or unenforceable provision.

 

22.                                 Arbitration.

 

The parties agree that any dispute relating to this Separation
Agreement shall be resolved in accordance with the provisions governing
arbitration set forth in the Employment Agreement.

 

23.                                 Knowing
and Voluntary Agreement; No Pressure or Coercion.

 

Executive acknowledges and
agrees that the only consideration for this Agreement is the consideration
expressly described herein, that he/she has carefully read the entire
Agreement, that he/she has had the opportunity to review this Agreement and to
have it reviewed and explained to him/her by an attorney and financial counsel
of her choosing, that he/she fully understands its final and binding effect,
and that he/she is signing this Agreement voluntarily, with the full intent of
releasing the Company from all claims, without any undue pressure or coercion
from the Company.

 

	
   

  	
  GARDENBURGER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lori Luke

  	
  Scott Wallace

  	
   

  
	
   

  	
  President & Chief Executive Officer

  
				

 

16Exhibit 10.1

 

 

 

CONTRIBUTION AND FORMATION AGREEMENT

 

AMONG

 

SK TELECOM INTERNATIONAL, INC.

 

SK TELECOM CO., LTD.

 

AND

 

EARTHLINK, INC.

 

Dated as of January 26, 2005

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Other
  Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Other Definitional
  Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  FORMATION
  AND CONTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Formation
  of Operating Company and Management Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  SKT Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  EarthLink Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Assumed Liabilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Excluded Liabilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.7

  	
  Apportionment
  of Subscriber Revenue

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Representations
  and Warranties of the SKT Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Representations
  and Warranties of EarthLink

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  CERTAIN
  COVENANTS AND AGREEMENTS OF SKT PARTIES AND EARTHLINK

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Access and Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Conduct of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Registrations,
  Filings and Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Control of Operations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Consent of Third Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  CONDITIONS TO
  CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Conditions
  to Each Party’s Obligation to Effect the Transaction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Conditions to
  Obligation of EarthLink

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Conditions
  to Obligations of SKT and SKTI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  SURVIVAL
  AND INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Survival
  of Representations, Warranties, Covenants and Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Indemnification by
  EarthLink

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Indemnification
  by the SKT Parties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Indemnification
  as Sole Remedy; Specific Performance

  	
   

  

 

ii

 

	
   

  	
  7.5

  	
  Method of Asserting
  Claims, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.6

  	
  Calculation of Losses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.7

  	
  Disclaimer of Certain
  Damages

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.8

  	
  Assignment of Claims

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Entire
  Agreement; Amendment and Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Public Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Fulfillment of
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Third Party Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8

  	
  Section Headings

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.9

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.10

  	
  Governing
  Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.11

  	
  Dispute Resolution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.12

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.13

  	
  Guarantee
  of Subsidiaries’ Performance

  	
   

  

 

iii

 

EXHIBITS AND SCHEDULES

 

	
  Exhibit A

  	
   

  	
  Initial Business Plan

  
	
  Exhibit B

  	
   

  	
  Form of Brand License
  and Marketing Agreement

  
	
  Exhibit C

  	
   

  	
  Form of EarthLink
  Master Software Development, Software License and Services Agreement

  
	
  Exhibit D

  	
   

  	
  Form of Operating
  Company Agreement

  
	
  Exhibit E

  	
   

  	
  Form of Registration
  Rights Agreement

  
	
  Exhibit F

  	
   

  	
  Form of SKT Master
  Software Development, Software License and Services Agreement

  
	
  Exhibit G

  	
   

  	
  Form of Stockholders’
  Agreement

  
	
  Exhibit H

  	
   

  	
  Form of Certificate of
  Incorporation of Management Company

  
	
  Exhibit I

  	
   

  	
  Form of By-laws of
  Management Company

  
	
  Exhibit J

  	
   

  	
  Form of Certificate of
  Formation of Operating Company

  
	
  Exhibit K

  	
   

  	
  Form of EarthLink
  Conveyance Agreement

  
	
  Exhibit L

  	
   

  	
  Form of EarthLink
  Assignment and Assumption Agreement

  
	
  Exhibit M

  	
   

  	
  Form of Confidentiality
  Agreement

  
	
  Schedule 1.1(a)

  	
   

  	
  EarthLink Assets

  
	
  Schedule 2.2

  	
   

  	
  Capital Contribution
  Schedule

  
	
  Schedule 2.3(a)

  	
   

  	
  EarthLink Permitted
  Encumbrances

  
	
  Schedule 2.3(b)

  	
   

  	
  FMV/Tax Basis of
  EarthLink Assets

  
	
  Schedule 3.1.2

  	
   

  	
  SKT Governmental
  Filings

  
	
  Schedule 3.1.3

  	
   

  	
  SKT Third Party
  Consents

  
	
  Schedule 3.2.2

  	
   

  	
  EarthLink Governmental
  Filings

  
	
  Schedule 3.2.3

  	
   

  	
  EarthLink Third Party
  Consents

  
	
  Schedule 3.2.8

  	
   

  	
  EarthLink Title to
  Assets

  
	
  Schedule 4.2.1

  	
   

  	
  SKT Conduct of Business

  
	
  Schedule 4.2.2

  	
   

  	
  EarthLink Conduct of
  Business

  
					

 

iv

 

THIS
CONTRIBUTION AND FORMATION AGREEMENT (this “Agreement”), dated as of January 26, 2005,
is among SK Telecom Co., Ltd., a corporation with limited liability organized
under the laws of The Republic of Korea (“SKT”),
SK Telecom International, Inc., a Delaware corporation (“SKTI”
and, collectively with SKT, the “SKT Parties”),
and EarthLink, Inc., a Delaware corporation (“EarthLink”).

 

WHEREAS,
the SKT Parties and EarthLink wish to enter into a joint venture for the
purpose of developing and marketing branded wireless telecommunications
services, including, but not limited to, handsets, voice services, data
services (including CDMA laptop cards and related software), stand-alone and
other wireless services within the United States, to be conducted through SK-EarthLink
LLC, a limited liability company to be formed as a Delaware limited liability
company (“Operating Company”);

 

WHEREAS,
the Operating Company will be managed by SK-EarthLink Management Corp., a
corporation to be formed as a Delaware corporation (“Management Company”);

 

WHEREAS,
the Parties are entering into this Agreement to set forth their agreement as to
the creation of Operating Company and Management Company and the contribution
of certain assets to Operating Company and the conditions to such contributions;

 

WHEREAS,
in connection with the closing of the transactions contemplated by this
Agreement, SKTI, EarthLink and Operating Company will be entering into the
Operating Company Agreement and SKT, EarthLink and Management Company will be
entering into the Stockholders’ Agreement, both in accordance with the terms
hereof; and

 

WHEREAS,
the Parties intend that for federal income tax purposes the SKT Contribution
and the EarthLink Contribution shall qualify as a transfer of assets under the
provisions of Section 721 of the Internal Revenue Code of 1986, as amended
(the “Code”);

 

NOW,
THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                               Certain Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:

 

“Account” shall have the meaning set forth in Section 2.6.2.

 

“Affiliates” shall mean with respect to any
Person, any Person directly or indirectly Controlling, Controlled by, or under common
Control with such other Person at any time during the period for which the
determination of affiliation is being made.

 

 

“Agreement” shall mean this Contribution and
Formation Agreement, the Schedules hereto, and the Exhibits hereto, as the same
may be amended or supplemented from time to time in accordance with the terms
hereof.

 

“Ancillary Agreements” shall mean,
collectively, the Operating Company Agreement, the Registration Rights
Agreement, the Stockholders’ Agreement, the EarthLink Conveyance Agreement, the
EarthLink Assignment and Assumption Agreement, the Confidentiality Agreement
and the Commercial Contracts.

 

“Bankruptcy and Equity Exception” shall have
the meaning set forth in Section 3.1.4.

 

“Books and Records” shall mean the EarthLink
Books and Records or the SKT Books and Records, as the context requires.

 

“Brand License and Marketing Agreement” shall mean that certain Brand
License and Marketing Agreement among EarthLink, SKT and Operating Company,
substantially in the form of Exhibit B
attached hereto.

 

“Business Day” shall mean any day other than
a Saturday, a Sunday or a day on which banks in New York City are authorized or
obligated by law or executive order to close.

 

“Business Plan” shall have the meaning set forth in the Operating Company
Agreement.  The initial Business Plan is
attached hereto as Exhibit A.

 

“Certificate of Formation” shall have the
meaning set forth in Section 2.1.2.

 

“Certificate of Incorporation” shall have
the meaning set forth in Section 2.1.1.

 

“Claim Notice” shall have the meaning set
forth in Section 7.5.

 

“Closing” shall have the meaning set forth
in Section 2.6.1.

 

“Closing Date” shall have the meaning set
forth in Section 2.6.1.

 

“Code” shall have the meaning set forth in
the Recitals.

 

“Commercial Contracts” shall mean the SKT Master Software
Development, Software License and Services Agreement, the EarthLink Master
Software Development, Software License and Services Agreement, the Brand
License and Marketing Agreement and the SKT Employee Services Agreement.

 

“Confidentiality Agreement” shall mean the Confidentiality
Agreement among EarthLink, SKT, SKTI, Management Company and Operating Company,
substantially in the form of Exhibit M
attached hereto.

 

2

 

“Contracts” shall mean all agreements,
contracts, leases and subleases, purchase orders, arrangements, commitments,
non-governmental licenses, notes, mortgages, indentures or other obligations.

 

“Contribution Breach” shall have the meaning set forth
in the Stockholders’ Agreement.

 

“Control” as used with respect to any Entity,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management policies of such Entity through the ownership
of voting securities or by contract.

 

“CPR” shall have the meaning set forth in Section 8.11.2.

 

“EarthLink” shall have the meaning set forth
in the Preamble.

 

“EarthLink Assets” shall mean all right,
title and interest of EarthLink in and to those assets set forth on Schedule 1.1(a) attached hereto.

 

“EarthLink Assignment and Assumption Agreement”
shall have the meaning set forth in Section 2.4.

 

“EarthLink Assumed Liabilities” shall
have the meaning set forth in Section 2.4.

 

“EarthLink Conveyance Agreement” shall have
the meaning set forth in Section 2.3.

 

“EarthLink Books and Records” shall mean all
books, ledgers, files, reports, plans and operating records of, or maintained
for EarthLink and its Subsidiaries and relating to the EarthLink Assets, the
Brand License and Marketing Agreement, the Commercial Contracts, the Operating
Company or the Management Company.

 

“EarthLink Cash Contribution” shall
have the meaning set forth in Section 2.3.

 

“EarthLink Contributed Contracts” shall mean those Contracts
constituting EarthLink Assets.

 

“EarthLink Contribution” shall have the
meaning set forth in Section 2.3.

 

“EarthLink Deductible” shall have the
meaning set forth in Section 7.2.2.

 

“EarthLink Governmental Filings” shall have
the meaning set forth in Section 3.2.2.

 

“EarthLink Initial Cash Contribution” shall
have the meaning set forth in Section 2.3.

 

“EarthLink Master Software Development, Software
License and Services Agreement” shall mean that certain Master Software Development, Software
License and

 

3

 

Services Agreement
between EarthLink and Operating Company substantially in the form of Exhibit C attached hereto.

 

“EarthLink/Operating Company Indemnified Parties”
shall have the meaning set forth in Section 7.3.1.

 

“Encumbrances” shall mean liens, charges,
encumbrances, pledges, security interests, options, or any other restrictions
or third party rights.

 

“Entity” shall mean any corporation, firm,
unincorporated organization, association, partnership, limited partnership,
limited liability company, limited liability partnership, business trust, joint
stock company, joint venture organization, entity or business.

 

“Extended Termination Date” shall have the
meaning set forth in Section 6.1.

 

“Final Order” shall have the meaning set
forth in Section 5.1.1.

 

“GAAP” shall mean United States generally
accepted accounting principles.

 

“Governmental Entity” shall mean any
governmental or regulatory authority, court, agency, commission, body or other
similar entity.

 

“ICC” shall have the meaning set forth in Section 8.11.3.

 

“Indemnified Parties” shall mean either the
SKT/Operating Company Indemnified Parties or the EarthLink/Operating Company
Indemnified Parties, as applicable.

 

“Indemnifying Party” shall have the meaning
set forth in Section 7.5.

 

“Knowledge” or any similar phrase shall
mean, with respect to either SKT Party, the actual knowledge (without any duty
of inquiry) of Jin Woo So, J.H. Ka, Young Gwang Kim, or Jae Hwan Lee and, with
respect to EarthLink, the actual knowledge (without any duty of inquiry) of
Charles (Garry) Betty, Michael Lunsford or William Tolpegin.

 

“Laws” shall have the meaning set forth in Section 3.1.6.

 

“Losses” shall have the meaning set forth in
Section 7.2.1.

 

“Management Company” shall have the meaning
set forth in the Recitals.

 

“Material Adverse Effect” shall
mean, (i) with respect to SKT or SKTI, a material adverse change in the
financial condition, properties, business or results of operations of SKT or
SKTI and their respective Subsidiaries taken as a whole that has had or is
reasonably likely to have a material adverse effect on the performance of its
obligations under this Agreement or any Ancillary Agreement or on Operating
Company or Management Company, an event that would prevent, materially delay or
materially impair SKT’s or SKTI’s ability to consummate the transactions
contemplated by this Agreement; or an event that would prevent the performance
by SKT or SKTI of any material obligation under this Agreement or any

 

4

 

Ancillary
Agreement; (ii) with respect to EarthLink, a material adverse change in the
financial condition, properties, business or results of operations of EarthLink
and its Subsidiaries taken as a whole that has had or is reasonably likely to
have a material adverse effect on its performance of its obligations under this
Agreement or any Ancillary Agreement or on Operating Company or Management
Company; an event that would prevent, materially delay or materially impair
EarthLink’s ability to consummate the transactions contemplated by this
Agreement; or an event that would prevent the performance by EarthLink of any
material obligation under this Agreement or any Ancillary Agreement; and (iii)
with respect to Operating Company or Management Company, a material adverse
effect on the financial condition, properties, business, results of operations
or business prospects of Operating Company or Management Company, assuming for
such purposes the completion of the transactions contemplated hereunder in each
case.

 

“Membership Unit” shall have the meaning
ascribed to such term in the Operating Company Agreement.

 

“Nondisclosure Agreement” shall have the meaning set forth in
Section 4.1.3.

 

“Notice Period” shall have the meaning set
forth in Section 7.5.

 

“Obligations”
shall have the meaning set forth in Section 8.13.

 

“Operating Company” shall have the meaning
set forth in the Recitals.

 

“Operating Company Agreement” shall mean the
Limited Liability Company Agreement of Operating Company, by and among SKTI,
EarthLink and Management Company substantially in the form attached hereto as Exhibit D.

 

“Order” shall have the meaning set forth in Section 5.1.2.

 

“Parties” shall mean collectively EarthLink,
SKT and SKTI and “Party” shall mean each of EarthLink, SKT and SKTI.

 

“Permits” shall have the meaning set forth
in Section 3.1.6.

 

“Permitted Encumbrances” shall mean, as to
any Person, (i) mechanics’, carriers’, workers’, materialmen’s, warehousemen’s
and other similar liens arising or incurred in the ordinary course of business
for sums not yet due and payable or such liens as are being contested by such
Person in good faith, (ii) liens for Taxes not yet due and payable or which are
being contested in good faith by such Person, and (iii) covenants,
restrictions, reservations, rights, liens, easements and other matters affecting
title which do not individually or in the aggregate materially impair the value
or marketability of the assets subject thereto or materially interfere with the
use of such assets in the conduct of the business of such Person as it is
currently conducted or proposed to be conducted thereon.

 

“Person” shall mean any natural person or
Entity.

 

“PGP”
shall have the meaning set forth in Section 3.2.7.

 

5

 

“Potential Contributor” shall have the
meaning set forth in Section 7.8.

 

“Registration Rights Agreement” shall mean
the Registration Rights Agreement to be entered into at the Closing among
Management Company, SKT and EarthLink, substantially in the form of Exhibit E attached hereto.

 

“SKT” shall have the meaning set forth in
the Preamble.

 

“SKTI” shall have the meaning set forth in the Preamble.

 

“SKT Parties” shall have the meaning set forth in the
Preamble.

 

“SKT Books and Records” shall mean all books, ledgers, files, reports, plans and
operating records of, or maintained for, SKT, SKTI and their respective
Subsidiaries and relating to the Brand License and Marketing Agreement, the Commercial
Contracts, the Operating Company or Management Company.

 

“SKT Cash Contribution” shall have the meaning set forth
in Section 2.2.

 

“SKT Contribution” shall have the meaning
set forth in Section 2.2.

 

“SKT Deductible” shall have the meaning set
forth in Section 7.3.2.

 

“SKT Employee Services Agreement” shall mean that certain Employee Services
Agreement to be entered into at Closing between SKT and Operating Company,
pursuant to which Operating Company will lease certain employees from SKT
and/or its Subsidiaries.

 

“SKT Governmental Filings” shall have the
meaning set forth in Section 3.1.2.

 

“SKT Initial Cash Contribution” shall
have the meaning set forth in Section 2.2.

 

“SKT Master Software Development, Software License and
Services Agreement” shall mean that certain Master Software
Development, Software License and Services Agreement between SKT and Operating
Company substantially in the form of Exhibit
F attached hereto.

 

“SKT/Operating Company Indemnified Parties”
shall have the meaning set forth in Section 7.2.1.

 

“Stockholders’ Agreement” shall mean the
Stockholders’ Agreement to be entered into at Closing by and among SKT,
EarthLink and Management Company, substantially in the form set forth in Exhibit G.

 

“Subsidiary” shall mean, as to any Person,
any Entity (i) of which such Person, directly or indirectly, owns securities or
other equity interests representing fifty percent (50%) or more of the
aggregate voting power or (ii) of which such Person possesses the right to
elect fifty

 

6

 

percent (50%) or
more of the directors or Persons holding similar positions.  The Operating Company shall be deemed to be a
Subsidiary of the Management Company.

 

“Taxes” shall mean all federal, state, local
and foreign income, profits, franchise, gross receipts, environmental, customs
duty, capital stock, severance, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions.

 

“Termination Date” shall have the meaning
set forth in Section 6.1.

 

“Transfer Taxes” shall mean all federal,
state, local or foreign sales, use, value added, documentary, stamp or similar
Taxes that may be imposed in connection with the transfers contemplated by this
Agreement, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions.

 

1.2                               Other Terms.  Other terms may be defined elsewhere in this
Agreement and, unless otherwise indicated, shall have such meaning throughout
this Agreement.

 

1.3                               Other Definitional Provisions.  The words “hereof,”
“herein,” and “hereunder”
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.

 

(a)                                  The terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa.

 

(b)                                 The terms “dollars” and “$”
shall mean United States dollars.

 

(c)                                  References herein to a
specific Section, Subsection or Schedule shall refer, respectively,
to Sections, Subsections or Schedules of this Agreement, unless the express
context otherwise requires.

 

(d)                                 The words “include,” “includes,”
and “including” when used in this Agreement, shall be deemed to be followed by
the words “without limitation.”

 

(e)                                  Any reference herein to any
law, rule, regulation, order or other act of a Governmental Entity, or to any
Ancillary Agreement between the Parties hereto or their Subsidiaries, shall be
deemed to include a reference to any such law, rule, regulation, order or other
act or any such agreement, in each case as it may be amended or supplemented
from time to time, and any reference to a form under the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as amended, shall include any successor
forms thereto.

 

7

 

ARTICLE II

FORMATION AND CONTRIBUTIONS

 

2.1                               Formation
of Operating Company and Management Company.

 

2.1.1                                        Formation of Management Company.  Prior
to Closing SKT and EarthLink shall file a certificate of incorporation of
Management Company substantially in the form attached hereto as Exhibit H (the “Certificate of
Incorporation”) with the Secretary of State of the State of Delaware
for Management Company.  The initial
bylaws of Management Company shall be substantially in the form attached hereto
as Exhibit I.  Promptly following the incorporation of
Management Company and prior to the Closing, one share of Class B common stock,
par value $0.01 per share, of Management Company shall be issued to SKT (or at
SKT’s election, to a Subsidiary of SKT) and one share of Class B common stock,
par value $0.01 per share, of Management Company shall be issued to
EarthLink.  At the Closing, subject to
the terms and conditions set forth herein, EarthLink and SKT shall, and shall
cause Management Company to, enter into the Stockholders’ Agreement.

 

2.1.2                                        Formation of Operating Company.  After the incorporation of Management Company
and prior to the Closing, the Parties shall, or shall cause Management Company
to, form Operating Company and shall, or shall cause Management Company to,
file a certificate of formation with the Secretary of State of the State of
Delaware, substantially in the form attached hereto as Exhibit J
(the “Certificate of Formation”).  At the Closing, (a) in exchange for the SKT
Contribution, the Parties (directly or through Management Company) shall cause
Operating Company to issue 50,000,000 Membership Units to SKT (or at SKT’s
election, to a Subsidiary of SKT), (b) in exchange for the EarthLink
Contribution, the Parties (directly or through Management Company) shall cause
Operating Company to issue 50,000,000
Membership Units to EarthLink, and (c) the Parties shall cause Operating
Company to issue 2 Membership Units to Management Company.  At the Closing, EarthLink and SKT (or at SKT’s
election, a Subsidiary of SKT) shall, and shall cause Operating Company to,
enter into the Operating Company Agreement.

 

2.1.3                                        Agreements in Favor of Operating Company.  All
agreements and obligations of SKT and/or SKTI in this Agreement in favor of
EarthLink, and of EarthLink in favor of SKT and/or SKTI, shall be deemed in
each case to have also been made in favor of Operating Company whether such
agreements or obligations relate to periods prior to or after the Closing.

 

2.1.4                                        Obligations of Management Company and Operating Company.  Neither Management Company nor Operating
Company, upon formation, shall have any assets, liabilities or obligations of
any nature other than those incident to their formation and any acquired under
or pursuant to this Agreement or any of the Ancillary Agreements.

 

2.2                               SKT Contributions.  On the terms and subject to the conditions
set forth herein, SKT shall contribute to Operating Company an aggregate amount
of Two Hundred Twenty Million Dollars
($220,000,000) (the “SKT Cash Contribution” or the “SKT
Contribution”).  Eighty Three Million Dollars ($83,000,000) of
the SKT Cash Contribution shall be paid at the Closing (the “SKT Initial Cash
Contribution”). The remainder of the SKT Cash Contribution shall be paid
in accordance with Schedule 2.2.

 

2.3                               EarthLink Contributions.  On the terms and subject to the conditions
set forth herein, at the Closing, EarthLink shall convey, transfer and assign
to Operating Company all of its right, title and interest in and to the
EarthLink Assets, free and clear of all

 

8

 

Encumbrances
except for the Permitted Encumbrances and the Encumbrances set forth on Schedule 2.3(a).  The
sale, conveyance, transfer, assignment and delivery of the EarthLink Assets by
EarthLink to Operating Company shall be effected by a bill of sale
substantially in the form attached hereto as Exhibit K
(the “EarthLink  Conveyance
Agreement”) and such deeds, endorsements, assignments, transfers and
other instruments of transfer and conveyance in such form, including, without
limitation, warranties of title, as SKT shall reasonably request.  The fair market value and tax basis of each
EarthLink Asset are set forth on Schedule 2.3(b).  On the terms and subject to the conditions
set forth herein, EarthLink shall contribute to Operating Company an aggregate
amount of One Hundred Eighty Million Dollars
($180,000,000) (the “EarthLink Cash Contribution”; together with the EarthLink Assets, the “EarthLink Contribution”). 
Forty Three Million Dollars ($43,000,000)
of the EarthLink Cash Contribution shall be paid at the Closing (the “EarthLink Initial Cash Contribution”). 
The remainder of the EarthLink Cash Contribution shall be paid in
accordance with Schedule 2.2.

 

2.4                               Assumed Liabilities.  At the
Closing, the Parties (directly or through Management Company) shall cause
Operating Company to enter into an assignment and assumption agreement
substantially in the form attached hereto as Exhibit L
(the “EarthLink  Assignment
and Assumption Agreement”), pursuant to which Operating Company
shall agree to assume, pay, and perform in accordance with their terms all liabilities and obligations arising under the
EarthLink Contributed Contracts that are first required to be performed after
the Closing and arise out of the written terms of such EarthLink Contributed
Contracts, but specifically excluding liabilities and obligations for breaches
of such EarthLink Contributed Contracts, if any, resulting from acts or
omissions of EarthLink prior to or as of the Closing including, without
limitation, any liability arising from any transfer or assignment pursuant to
this Agreement in contravention of such EarthLink Contributed Contracts (the “EarthLink Assumed Liabilities”).

 

2.5                               Excluded Liabilities.  Except for the EarthLink Assumed Liabilities,
Operating Company shall not assume or become liable for (and nothing contained
in this Agreement shall be construed as an assumption by Operating Company of)
the payment of any debts, liabilities, losses, accounts payable, bank
indebtedness, mortgages or other obligations of either SKT, SKTI, EarthLink or
any of their respective Affiliates, whether the same are known or unknown, now
existing or hereafter arising, of whatever nature or character, whether
absolute or contingent, liquidated or disputed. 
The SKT Parties shall be responsible for any and all liabilities,
obligations and undertakings of SKT or SKTI, and such liabilities shall remain
the sole liabilities of the SKT Parties. 
EarthLink shall be responsible for any and all liabilities, obligations
and undertakings of EarthLink not expressly assumed by Operating Company
pursuant to Section 2.4 hereof, and such
liabilities shall remain the sole liabilities of EarthLink.

 

2.6                               Closing.

 

2.6.1                                        Time and Location of Closing.  The consummation of the transactions
contemplated hereby (the “Closing”) shall
take place at 600 Peachtree Street, Atlanta, Georgia, as promptly as is
practicable on the third Business Day following the day on which the conditions
set forth in Article V hereof have been
satisfied or are duly waived (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the

 

9

 

satisfaction
or waiver of those conditions), or at such other time and place as the Parties
may mutually agree.  The date on which
the Closing occurs is called the “Closing Date.”

 

2.6.2                                        Closing Deliveries.  At the Closing:

 

(a)                                  SKT shall deliver the SKT Initial Cash
Contribution to Operating Company by wire transfer of immediately available
federal funds to an account opened at the bank selected by the Parties for
Operating Company and identified in writing by the Parties not less than three
(3) Business Days prior to the Closing (the “Account”);

 

(b)                                 EarthLink shall deliver the
EarthLink Initial Cash Contribution to Operating Company by wire transfer of
immediately available federal funds to the Account;

 

(c)                                  EarthLink shall deliver or cause to be
delivered to Operating Company the EarthLink Conveyance Agreement conveying the
EarthLink Assets to Operating Company, free and clear of all Encumbrances,
except as provided in Section 2.3;

 

(d)                                 The SKT Parties and EarthLink shall cause the
issuance of the Membership Units by Operating Company in the amounts specified
in Section 2.1.2, free and clear of
all Encumbrances, other than those Encumbrances contained in the Operating
Company Agreement;

 

(e)                                  The SKT Parties and EarthLink shall cause to
be delivered the documents set forth in Sections 5.2
and 5.3, respectively; and

 

(f)                                    The SKT Parties and
EarthLink shall cause Operating Company to issue two Membership Units to
Management Company.

 

2.7                               Apportionment of Subscriber Revenue.  Notwithstanding any
provision to the contrary in this Agreement, if the Closing occurs on a date
other than the first day of a calendar month, monthly subscriber revenues from
the wireless platform subscribers contributed by EarthLink to Operating Company
shall be apportioned between EarthLink and Operating Company pro rata on a per
diem basis as of 12:01 a.m. (EST) on the Closing Date so that all such revenues
attributable to the period prior to the applicable Closing Date are for the
account of EarthLink, and all such revenues, attributable to the period from
and after the applicable Closing Date are for the account of Operating Company.  If EarthLink receives any unapportioned
revenues from such subscribers subsequent to the Closing Date and any portion
of the amount of such revenues relates to any period of time subsequent to the
Closing Date, EarthLink shall immediately pay to Operating Company that portion
of the amounts received by EarthLink attributable to the period of time
subsequent to the Closing Date.  If
Operating Company receives any unapportioned revenues from such subscribers
subsequent to the Closing Date and any portion of the amount of such revenues
relates to any period of time prior to the Closing Date, Operating Company
shall immedately pay to EarthLink that portion of the amounts received by
Operating Company attributable to the period of time prior to the Closing Date.

 

10

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

3.1                               Representations and Warranties of the SKT Parties.  The SKT Parties hereby jointly and severally
represent and warrant to EarthLink as of the date hereof and as of the Closing
that:

 

3.1.1                                        Organization, Good Standing and Qualification.  SKT is a limited liability corporation duly
organized, validly existing and in good standing under the laws of The Republic
of Korea and SKTI is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. 
Each has all requisite corporate or similar power and authority to own
and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on SKT,
SKTI, Operating Company or Management Company.

 

3.1.2                                        Governmental Filings; No Violations.

 

(a)                                  Other than the necessary notices and
approvals of Governmental Entities identified on Schedule 3.1.2
(such filings and/or notices being the “SKT Governmental Filings”),
no notices, reports or other filings are required to be made by either SKT
Party or its Subsidiaries with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by either SKT Party or its
Subsidiaries from, any Governmental Entity in connection with the execution and
delivery of this Agreement by it and the consummation by it of the SKT
Contribution, except those that the failure to make or obtain would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on SKT, SKTI, Operating Company or Management Company.

 

(b)                                 The execution, delivery and performance by
the SKT Parties of this Agreement and the Ancillary Agreements to which they
are respective parties do not, and the consummation by such SKT Party of the
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, or a default under, its certificate of incorporation or
by-laws or other comparable governing documents, or (B) a breach or violation
of, or a default under, the acceleration of any obligations or the creation of
a lien, pledge, security interest or other Encumbrance on its assets or the
assets of any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to any Contract binding upon it or any of its Subsidiaries or
any Law or governmental or non-governmental permit or license to which it or
any of its Subsidiaries is subject, except, in the case of clause (B) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect on SKT, SKTI, Operating Company or Management Company.

 

3.1.3                                        Required Third Party Consents.  Except
as set forth on Schedule 3.1.3, no consent or
approval of any third party is required by virtue of the execution hereof by
SKT or SKTI or the consummation of any of the transactions contemplated herein
by

 

11

 

SKT
or SKTI to avoid the violation or breach of, or the default under, any
agreement to which SKT or SKTI is a party or by which it is bound, except for
consents and approvals which if not obtained, would not have a Material Adverse
Effect on SKT, SKTI, Operating Company or Management Company.

 

3.1.4                                        Corporate Authority; Approval.  Each SKT Party has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and the
Ancillary Agreements to which such SKT Party is a party.  This Agreement and each of the Ancillary
Agreements to which such SKT Party is a party are, or will be when executed,
legal, valid and binding agreements of such SKT Party, enforceable against it
in accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles (the “Bankruptcy and Equity Exception”).

 

3.1.5                                        Litigation.  There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings pending
or, to the Knowledge of SKT or SKTI, threatened against either SKT Party or any
of its Affiliates which would have a Material Adverse Effect on SKT or SKTI,
Operating Company or Management Company; or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise that are required to be
disclosed under GAAP, or any other facts or circumstances, in either such case,
of which SKT or SKTI has Knowledge that are reasonably likely to result in any
claims against or obligations or liabilities of it or any of its Affiliates,
except for those that have not had and are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on SKT, SKTI,
Operating Company or Management Company.

 

3.1.6                                        Compliance with Laws.  The businesses of SKT, SKTI and their
Subsidiaries have not been, and are not being, conducted in violation of any
federal, state, local or foreign law, statute, ordinance, regulation, judgment,
order, decree, injunction, arbitration award, franchise, license,
authorization, opinion, agency requirement or permit of any Governmental Entity
or common law (collectively, “Laws”), except
for violations or possible violations that have not had and would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on SKT, SKTI, Operating Company or Management Company.  No investigation or review by any
Governmental Entity with respect to SKT, SKTI or any of their respective
Subsidiaries is pending or, to the Knowledge of SKT or SKTI, threatened, nor
has any Governmental Entity indicated an intention to conduct the same, except
for those the outcome of which have not had and would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect on SKT, SKTI,
Operating Company or Management Company. 
Each of SKT, SKTI and their respective Subsidiaries has all permits,
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals (collectively, “Permits”)
necessary to conduct their respective businesses as presently conducted, except
for those Permits the absence of which has not had and would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
SKT, SKTI, Operating Company or Management Company.

 

3.1.7                                        Brokers and Finders.  None of SKT, SKTI or their respective
Subsidiaries nor any of their respective officers, directors or employees has
employed any broker

 

12

 

or
finder, except for Lehman Brothers, or incurred any liability for any brokerage
fees, commissions or finders’ fees in connection with the transactions
contemplated in this Agreement or any Ancillary Agreement, except for fees
payable to Lehman Brothers.  SKT
acknowledges and agrees that SKT shall be solely responsible for any and all
payments of such fees to Lehman Brothers.

 

3.1.8                                        No Other Representations and Warranties.  Except for representations and warranties
contained in this Agreement, none of the SKT Parties nor any of their
respective Subsidiaries or Affiliates, nor any other Person makes any express
or implied representation or warranty on behalf of SKT or SKTI with respect to
the subject matter of this Agreement.

 

3.2                               Representations and Warranties of EarthLink.  EarthLink hereby represents and warrants to
SKT and SKTI as of the date hereof and as of the Closing that:

 

3.2.1                                        Organization, Good Standing and Qualification.  It is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and
is qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on EarthLink, Operating Company or
Management Company.

 

3.2.2                                        Governmental Filings; No Violations.

 

(a)                                  Other than the necessary notices and
approvals of Governmental Entities identified on Schedule 3.2.2
(such filings and/or notices being the “EarthLink  Governmental Filings”), no notices, reports or other filings
are required to be made by it or its Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
it or its Subsidiaries from, any Governmental Entity in connection with the
execution and delivery of this Agreement by it and the consummation by it of
the EarthLink Contribution, except those that the failure to make or obtain
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on EarthLink, Operating Company or Management Company.

 

(b)                                 The execution, delivery and performance of
this Agreement and the Ancillary Agreements by EarthLink do not, and the
consummation by it of the transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default under, its certificate
of incorporation or by-laws, (B) a breach or violation of, or a default under,
the acceleration of any obligations or the creation of a lien, pledge, security
interest or other Encumbrance on its assets or the assets of any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to any
Contract binding upon it or any of its Subsidiaries or any Law or governmental
or non-governmental permit or license to which it or any of its Subsidiaries is
subject, or (C) any change in the rights or obligations of any party under the
EarthLink Contributed Contracts, except, in the case of clauses (B) and (C)
above, for any breach, violation,

 

13

 

default, acceleration,
creation or change that, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on EarthLink, Operating
Company or Management Company.

 

3.2.3                                        Required Third Party Consents.  Except
as set forth on Schedule 3.2.3, no consent or
approval of any third party is required by virtue of the execution hereof by
EarthLink or the consummation of any of the transactions contemplated herein by
EarthLink to avoid the violation or breach of, or the default under, any
EarthLink Contributed Contract or the
creation of a Lien on any of the EarthLink Assets, or under any agreement to
which EarthLink is a party or by which it is bound, except for consents and
approvals which if not obtained, would not have a Material Adverse Effect on
EarthLink, Operating Company or Management Company.

 

3.2.4                                        Corporate Authority; Approval.  EarthLink has all requisite corporate power
and authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and the Ancillary
Agreements.  This Agreement and each of
the Ancillary Agreements are, or will be when executed, legal, valid and
binding agreements of EarthLink, enforceable against EarthLink in accordance
with their respective terms, subject to the Bankruptcy and Equity Exception.

 

3.2.5                                        Litigation.  There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the Knowledge of EarthLink, threatened against EarthLink or any
of its Affiliates which would have a Material Adverse Effect on EarthLink,
Operating Company or Management Company, or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise that are required to be
disclosed under GAAP, or any other facts or circumstances, in either such case,
of which EarthLink has Knowledge that are reasonably likely to result in any claims
against or obligations or liabilities of it or any of its Affiliates, except
for those that have not had and are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on EarthLink, Operating
Company or Management Company.

 

3.2.6                                        Compliance with Laws.  The businesses of EarthLink and its
Subsidiaries have not been, and are not being, conducted in violation of any
Laws, except for violations or possible violations that have not had and would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on EarthLink, Operating Company or Management Company.  No investigation or review by any
Governmental Entity with respect to EarthLink or any of its Subsidiaries is
pending or, to the Knowledge of EarthLink, threatened, nor has any Governmental
Entity indicated an intention to conduct the same, except for those the outcome
of which have not had and would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on EarthLink, Operating
Company or Management Company.  Each of
EarthLink and its Subsidiaries has all Permits necessary to conduct their
respective businesses as presently conducted, except for those Permits the
absence of which has not had and would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect on EarthLink, Operating
Company or Management Company.

 

14

 

3.2.7                                        Brokers and Finders.  Neither EarthLink nor any of its Subsidiaries
nor any of their respective officers, directors or employees has employed any
broker or finder, except for Pacific Gemini Partners, LLC (“PGP”), or incurred
any liability for any brokerage fees, commissions or finders’ fees in connection
with the transactions contemplated in this Agreement or any Ancillary
Agreement, except for fees payable to PGP. 
EarthLink acknowledges and agrees that EarthLink shall be solely
responsible for any and all payments of such fees to PGP.

 

3.2.8                                        Title to EarthLink Assets.  Except as set forth on Schedule 3.2.8,
EarthLink has good and valid title to the EarthLink Assets and owns the
EarthLink Assets free and clear of all Encumbrances and the EarthLink Assets
are not bound by or subject to: (i) any Contract with any Affiliate of
EarthLink; (ii) any Contract containing a covenant materially limiting the
freedom of: (x) EarthLink to contribute such EarthLink Asset to the Operating
Company; (y) Operating Company to use such EarthLink Asset; or (z) Operating
Company to conduct its business; or (iii) any Contract entitling any Person to
(x) any profits, revenues or cash flows generated by or through the use of such
EarthLink Asset; or (y) payment, fees or other remuneration for the use of such
EarthLink Asset.  Each EarthLink
Contributed Contract is valid, binding, enforceable and in full force and
effect.  Neither EarthLink nor, to
EarthLink’s Knowledge, any other party thereto, is in breach or default in any
material respect under the terms of such EarthLink Contributed Contract, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a material breach or default, or permit termination,
modification or acceleration under such EarthLink Contributed Contract.

 

3.2.9                                        No Other Representations and Warranties.  Except for representations and warranties
contained in this Agreement, neither EarthLink nor any of its Subsidiaries or
Affiliates, nor any other Person makes any express or implied representation or
warranty on behalf of EarthLink with respect to the subject matter of this
Agreement.

 

ARTICLE IV

CERTAIN COVENANTS AND AGREEMENTS OF SKT PARTIES AND EARTHLINK

 

4.1                               Access and Information.

 

4.1.1                                        Access to Book and Records.  Prior to the Closing, the SKT Parties and
EarthLink shall each permit the other and the other’s representatives to have
reasonable access to its Books and Records, and its officers and employees and
the officers and employees of its Subsidiaries, in each case (i) during regular
business hours and upon reasonable advance notice to the other, (ii) to the
extent that such access does not unreasonably interfere with the business of
the SKT Parties or their respective Subsidiaries or EarthLink or its
Subsidiaries, as the case may be and (iii) solely for the purpose of and to the
extent reasonably necessary to evaluate the EarthLink Assets or the other Party’s
ability to perform its obligations under this Agreement or the Ancillary
Agreements; provided that any such representatives shall comply with the
confidentiality obligations contained herein and in the Nondisclosure Agreement
and Confidentiality Agreement, as applicable; and provided, further, that the
foregoing shall not (i) require the SKT Parties or EarthLink to permit any
inspection, or to disclose any information, that in its reasonable judgment
would result in the disclosure of any trade secrets of third parties or trade
secrets of SKT or EarthLink unrelated to the transactions

 

15

 

contemplated
by this Agreement or any Ancillary Agreement or violate any of SKT’s, SKTI’s,
EarthLink’s, or any of their respective Subsidiaries’ legal obligations or
obligations with respect to confidentiality, provided  that SKT,
SKTI or EarthLink, as the case may be, shall have (x) used reasonable best
efforts to obtain the consent of such third party to such inspection or
disclosure, and (y) informed the other Party in writing that notwithstanding
such efforts, it is prohibited from disclosing such information (specifying the
nature of such non-disclosed information) or (ii) require any disclosure by
such SKT Party, EarthLink, or any of their respective Subsidiaries that would
be reasonably likely to, as a result of such disclosure, have the effect of
causing the waiver of any attorney-client privilege; provided, that SKT, SKTI
or EarthLink, as the case may be, shall have used its commercially reasonable
efforts to effect disclosure without the waiver of attorney-client privilege.

 

4.1.2                                        Return of Information.  In the event of the termination of this
Agreement, the SKT Parties and EarthLink, each at its own expense, shall
promptly deliver (without retaining any copies thereof) to EarthLink or the SKT
Parties, as the case may be, or confirm to the other in writing that it has
destroyed, all information furnished to it or its representatives by the other
or any of the other’s Subsidiaries or any of their respective agents, employees
or representatives as a result hereof or in connection herewith, whether so
obtained before or after the execution hereof, and all analyses, compilations,
forecasts, studies or other documents prepared by it or its representatives
which contain or reflect any such information. 
The SKT Parties and EarthLink shall, and shall cause their respective
employees, agents, officers, directors and Subsidiaries and the employees,
officers, agents, and directors of their Subsidiaries to, subject to any
exceptions set forth in the Nondisclosure Agreement and Confidentiality
Agreement, as applicable, cause any information so obtained to be kept
confidential and will not use, or permit the use of, such information in its
business or in any other manner or for any other purpose except as contemplated
hereby.

 

4.1.3                                        Confidentiality Oligations.  In addition to the confidentiality
arrangements set forth in this Section 4.1,
prior to the Closing all information provided or obtained in connection with
the transactions contemplated by this Agreement and the Ancillary Agreements
(including pursuant to Section 4.1.1
above) shall be held in accordance with and subject to the terms of the Mutual
Non-Disclosure Agreement, dated February 5, 2004, between SKT and
EarthLink (the “Nondisclosure Agreement”).  Following the Closing, all information
provided or obtained in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements (including pursuant to Section 4.1.1 above) shall be held in
accordance with and subject to the terms of the Confidentiality Agreement.  In the event of a conflict or inconsistency
between the terms of this Agreement and the Nondisclosure Agreement, the terms
of this Agreement shall govern.  In the
event of a conflict or inconsistency between the terms of this Agreement and
the Confidentiality Agreement after Closing, the terms of this Agreement shall
govern.  In the event of a conflict or
inconsistency between the terms of the Nondisclosure Agreement and the
Confidentilaity Agreement, the terms of the Confidentiality Agreement shall
govern.

 

4.2                               Conduct of Business.

 

4.2.1                                        Conduct of SKT Parties’ Business.  During the period from the date hereof until
the Closing, except (x) as otherwise expressly contemplated by this

 

16

 

Agreement
or any Ancillary Agreement in effect prior to the Closing, (y) as set forth on Schedule 4.2.1, or (z) as EarthLink shall otherwise
agree in writing (such agreement not to be unreasonably withheld or delayed),
and subject to fiduciary duties to third parties, each of the SKT Parties shall
use commercially reasonable efforts to operate its business, so that such SKT
Party’s ability to consummate the transactions contemplated by this Agreement,
or perform its obligations under this Agreement or the Ancillary Agreements,
will not be prevented, materially delayed or materially impaired.  Without limiting the foregoing, none of SKT,
SKTI nor their respective Subsidiaries shall:

 

(a)                                  grant any increase in the compensation or
benefits of any SKT or SKTI employee that will be employed by or leased to
Operating Company (excluding any increase specifically provided for in the
terms of, or legally required by, any bonus, pension, profit sharing or other
plan or commitment) or any increase in the compensation or benefits payable, or
to become payable, to any such employee, except for (A) increases to all SKT
employees in terms of proportion and timing, (B) other changes that are
required by applicable Law, (C) increases and changes which SKT, SKTI or
their respective Subsidiaries are obligated to provide as of the date hereof,
(D) grants of awards to newly hired officers and employees, and (E)  other
changes in the ordinary course of SKT’s business, consistent with SKT’s
customary past practices.

 

(b)                                 enter into any Contract or participate in any
transaction which conflicts with any material obligation of SKT or SKTI under
this Agreement; or

 

(c)                                  authorize or enter into an agreement to do
any of the foregoing.

 

4.2.2                                        Conduct of EarthLink’s Business. 
During the period from the date hereof until the Closing, except (x) as
otherwise expressly contemplated by this Agreement or any Ancillary
Agreement in effect prior to the Closing, (y) as set forth on Schedule 4.2.2, or (z) as SKT shall otherwise agree in
writing (such agreement not to be unreasonably withheld or delayed), and
subject to fiduciary duties to third parties, EarthLink covenants and agrees
that it shall use commercially reasonable efforts to operate its business in
order to preserve the value and condition of the EarthLink Assets and so that
EarthLink’s ability to consummate the transactions contemplated by this
Agreement, or perform its obligations under this Agreement or the Ancillary
Agreements, will not be prevented, materially delayed or materially
impaired.  Without limiting the foregoing,
neither EarthLink nor its Subsidiaries shall:

 

(a)                                  dispose of any EarthLink Asset, other than
wireless-platform subscribers who terminate their wireless services, or whose
wireless service EarthLink terminates, in the ordinary course of business
consistent with past practice;

 

(b)                                 place an Encumbrance on any EarthLink Asset
that is not released on or prior to the Closing;

 

(c)                                  grant any increase in the compensation or
benefits of any EarthLink employee that will be employed by or leased to
Operating Company (excluding any increase specifically provided for in the
terms of, or legally required by, any bonus, pension,

 

17

 

profit sharing or other plan
or commitment) or any increase in the compensation or benefits payable, or to
become payable, to any such employee, except for (A) increases to all EarthLink
employees in terms of proportion and timing, (B) other changes that are
required by applicable Law, (C) increases and changes which EarthLink or its
Subsidiaries is obligated to provide as of the date hereof, (D) grants of
awards to newly hired officers and employees, and (E) other changes in the
ordinary course of EarthLink’s business, consistent with EarthLink’s customary
past practices;

 

(d)                                 materially amend or modify or knowingly waive
or fail to enforce any material rights under any of the EarthLink Contributed
Contracts;

 

(e)                                  enter into any Contract or participate in any
transaction which conflicts with any material obligation of EarthLink under
this Agreement; or

 

(f)                                    authorize or enter into an agreement to do
any of the foregoing.

 

4.3                               Registrations, Filings and Consents.

 

4.3.1                                        Governmental Filings.  Each of the SKT Parties and EarthLink shall
cooperate with each other and use (and shall cause their respective
Subsidiaries to use) commercially reasonable efforts to take or cause to be
taken all actions, and do or cause to be done all things, necessary, proper or
advisable on its part under this Agreement and applicable Laws to consummate
and make effective the transactions contemplated by this Agreement as soon as
reasonably practicable, including preparing and filing as promptly as
reasonably practicable all documentation to effect all necessary applications,
notices, petitions, filings and other documents and to obtain as promptly as reasonably
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the transactions contemplated by
this Agreement.  In addition to the
foregoing, each of the SKT Parties and EarthLink shall use commercially
reasonable efforts to file or cause to be filed within thirty (30) days
following the date of this Agreement (or such shorter period as may be required
by applicable law) all documentation, filings and other documents necessary in
connection with any required application, report or other filing or request for
approval or notifications with any domestic or foreign Governmental Entity from
which consent, approval or clearance is required to be obtained in connection
with the transactions contemplated by this Agreement.  Subject to applicable Laws relating to the
exchange of information, the SKT Parties and EarthLink shall have the right to
review in advance, and to the extent practicable each will consult the other
on, all the information relating to either SKT Party or EarthLink, as the case
may be, with respect to the contents of any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the transactions contemplated by this Agreement.  In exercising the foregoing right, each of
the SKT Parties and EarthLink shall act reasonably and as promptly as
reasonably practicable.

 

4.3.2                                        Information Necessary for Filings.  Each of the SKT Parties and EarthLink shall,
upon request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such other
matters as may be

 

18

 

reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of either SKT Party and EarthLink or any of
their respective Subsidiaries or Affiliates to any third party and/or any Governmental
Entity in connection with the transactions contemplated by this Agreement.

 

4.3.3                                        Status of Filings.  Each of the SKT Parties and EarthLink shall
keep the other apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by either SKT Party,
EarthLink or any of their respective Subsidiaries, as the case may be, from any
third party and/or any Governmental Entity with respect to the transactions
contemplated by this Agreement.

 

4.4                               Taxes.

 

4.4.1                                        EarthLink Liability for Pre-Closing Taxes.  EarthLink shall be liable for and indemnify
Operating Company for all Taxes imposed on the EarthLink Assets for any taxable
year or period that ends on or before the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date, the
portion of such taxable year ending on and including the Closing Date.

 

4.4.2                                        Taxes for Short Taxable Year.  For purposes of Section 4.4.1,
whenever it is necessary to determine the liability for Taxes for a portion of
a taxable year or period that begins before and ends after the Closing Date,
the determination of the Taxes of the relevant entity for the portion of the
year or period ending on, and the portion of the year or period beginning
after, the Closing Date shall be determined by assuming that the relevant
entity had a taxable year or period which ended at the close of the Closing
Date, except that exemptions, allowances or deductions that are calculated on
an annual basis, such as the deduction for depreciation and Taxes on real or
personal property, shall be apportioned on a daily basis.

 

4.4.3                                        Transfer Taxes.  The SKT Parties shall pay any Transfer Taxes
imposed with respect to the SKT Contribution, and EarthLink shall pay any
Transfer Taxes imposed with respect to the EarthLink Contribution.

 

4.5                               Control of Operations.  Nothing contained in this Agreement shall
give SKT or SKTI, directly or indirectly, the right to control or direct the
operations of EarthLink or its Affiliates with respect to the EarthLink Assets
prior to the Closing.  Nothing contained
in this Agreement shall give EarthLink, directly or indirectly, the right to
control or direct the operations of SKT, SKTI or their respective Affiliates
with respect to the SKT Contribution prior to the Closing.

 

4.6                               Consent of Third Parties.  If any third party consent or approval is not
obtained prior to or on the Closing Date, and such consent or approval relates
to the transfer or assignment to Operating Company of an EarthLink Contributed
Contract, EarthLink shall continue to hold and act under such contract for the
use and benefit of Operating Company so long as Operating Company fully cooperates
with EarthLink and promptly reimburses EarthLink for all payments made by
EarthLink (with the prior approval of Operating Company) in

 

19

 

connection
therewith and shall take such other action as may be reasonably requested by
SKT or Operating Company in order to place Operating Company in the same
position as if such consents or approvals had been obtained.

 

4.7                               Further Assurances.  At any time following the Closing Date, each
of the SKT Parties and EarthLink shall, and shall cause Operating Company to,
promptly execute, acknowledge and deliver any other assurances or documents
reasonably requested by Operating Company, the SKT Parties or EarthLink, as the
case may be, and necessary for such SKT Party, EarthLink or Operating Company,
as the case may be, to satisfy its obligations under this Agreement or obtain
the benefits contemplated by this Agreement.

 

ARTICLE V

CONDITIONS TO CLOSING

 

5.1                               Conditions to Each Party’s Obligation to Effect the Transaction.  The respective obligations of the Parties to
consummate the transactions contemplated under Article II are subject to the satisfaction or waiver
prior to the Closing Date of each of the following conditions:

 

5.1.1                                        Governmental Filings.  All SKT Governmental Filings (if any) and
EarthLink Governmental Filings, the failure of which to be made or obtained
would be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on Operating Company or prevent or materially delay or
impair the consummation of the transactions contemplated hereby, in each case
shall have been made or obtained (as the case may be) pursuant to a Final
Order, free of any conditions (other than conditions that would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on Operating Company following the Closing, and would not be reasonably
likely to be material and adverse to the EarthLink Assets).  For the purposes of this Agreement, “Final Order” means an action or decision that has been
granted as to which (i) no request for a stay or any similar request is
pending, no stay is in effect, the action or decision has not been vacated,
reversed, set aside, annulled or suspended and any deadline for filing such a
request that may be designated by statute or regulation has passed, (ii) no
petition for rehearing or reconsideration or application for review is pending
and the time for the filing of any such petition or application has passed,
(iii) no Governmental Entity has undertaken to reconsider the action on its own
motion and the time within which it may initiate such reconsideration has
passed, and (iv) no appeal is pending or in effect and any deadline for filing
any such appeal that may be specified by statute or rule has passed.

 

5.1.2                                        No Injunction.  No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law (whether temporary, preliminary or permanent) that is in effect and enjoins
or otherwise prohibits consummation of the transactions contemplated by this
Agreement (an “Order”), no Governmental Entity
shall have instituted any proceeding seeking any such Order and no third party
shall have instituted any proceeding seeking any such Order that is reasonably
likely to be enacted, issued or promulgated.

 

20

 

5.1.3                                        Charter
Documents.  The Parties shall
have filed the Certificate of Incorporation with the Secretary of State of the
State of Delaware and shall have filed, or shall have caused Management Company
to file, the Certificate of Formation with the Secretary of State of the State
of Delaware.

 

5.1.4                                        Class B Common
Stock.  The Parties shall have caused the issuance of the Class B
common stock described in Section 2.1.1
by Management Company.

 

5.1.5                                        Election of Directors and Officers.  The Parties shall have elected the initial
officers and directors of Management Company and the initial officers of
Operating Company.

 

5.2                               Conditions to Obligation of EarthLink.  The obligation of EarthLink to consummate the
transactions contemplated under Article II
is further subject to the satisfaction or due waiver by EarthLink at or prior
to the Closing of each of the following conditions:

 

5.2.1                                        Representations and Warranties.  The representations and warranties of the SKT
Parties contained herein that are qualified by reference to Material Adverse
Effect or another materiality qualifier shall be true and correct as of the
date hereof and as of the Closing Date as if made as of the Closing Date, and
all other representations and warranties of the SKT Parties shall be true and
correct as of the date hereof and as of Closing as if made as of the Closing
Date, except for such inaccuracies as would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the SKT
Parties or Operating Company (except in each case that representations and
warranties that are made as of a specific date or as of the date hereof need be
true and correct only as of such date), and EarthLink shall have received a
certificate to such effect dated the Closing Date and executed by duly
authorized officers of SKT and SKTI.

 

5.2.2                                        Covenants.  The covenants and agreements of SKT and SKTI
to be performed or complied with on or prior to the Closing shall have been
duly performed or complied with, as the case may be, in all material respects,
and EarthLink shall have received a certificate to such effect dated the
Closing Date and executed by duly authorized officers of SKT and SKTI.

 

5.2.3                                        Delivery of Ancillary Agreements. 
Each of the SKT Parties shall have executed and delivered each of the
Ancillary Agreements to which it is a party, and any Ancillary Agreements in
effect prior to the Closing shall not have been terminated.

 

5.2.4                                        Third Party Consents. 
Each of the SKT Parties shall have obtained and made available to
EarthLink the consent or approval (in form and substance reasonably
satisfactory to EarthLink) of each Person whose consent or approval shall be
required in order to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements, except those for which the failure to obtain such
consent or approval is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on Operating Company or the Management
Company.

 

21

 

5.2.5                                        Material Adverse
Effect.  Since the date
hereof, no event shall have occurred which has had or is reasonably likely to
have a Material Adverse Effect on SKT, SKTI, Operating Company or
Management Company.

 

5.2.6                                        SKT Initial Cash Contribution.  SKT shall have
delivered the SKT Initial Cash Contribution to Operating Company by wire
transfer of immediately available federal funds.

 

5.3                               Conditions to Obligations of SKT and SKTI.  The obligations of SKT and SKTI to consummate
the transactions contemplated under Article II
are further subject to the satisfaction or due waiver by SKT and SKTI on or
prior to the Closing Date of each of the following conditions:

 

5.3.1                                        Representations and Warranties.  The
representations and warranties of EarthLink contained herein that are qualified
by reference to Material Adverse Effect or another materiality qualifier shall
be true and correct as of the date hereof and as of the Closing Date as if made
as of the Closing Date, and all other representations and warranties of
EarthLink shall be true and correct as of the date hereof and as of the Closing
as if made as of the Closing Date, except for such inaccuracies as would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on EarthLink or Operating Company (except that in each case
representations and warranties that are made as of a specific date or as of the
date hereof need be true and correct only as of such date), and SKT and SKTI
shall have received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of EarthLink.

 

5.3.2                                        Covenants.  The covenants and agreements of EarthLink to
be performed or complied with on or prior to the Closing shall have been duly
performed or complied with, as the case may be, in all material respects, and
SKT and SKTI shall have received a certificate to such effect dated the Closing
Date and executed by a duly authorized officer of EarthLink.

 

5.3.3                                        Delivery of Ancillary Documents.  EarthLink shall have executed and delivered
each of the Ancillary Agreements to which it is a party, and any Ancillary
Agreements in effect prior to the Closing shall not have been terminated.

 

5.3.4                                        Third Party Consents.  Subject to Section 4.6,
EarthLink shall have obtained and made available to SKT and SKTI the consent or
approval (in form and substance reasonably satisfactory to SKT and SKTI) of
each Person whose consent or approval shall be required in order to consummate
the transactions contemplated by this Agreement and the Ancillary Documents
under any EarthLink Contributed Contract, except those for which the failure to
obtain such consent or approval is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on Operating Company or
Management Company.  Without limiting the
foregoing, EarthLink shall have obtained and made available to the SKT Parties
the consent of each of EarthLink’s wireless carriers to the assignment of
EarthLink’s wireless carrier agreements with such carrier, in form and
substance reasonably satisfactory to SKT and SKTI.

 

22

 

5.3.5                                        Material Adverse
Effect.  Since the date
hereof, no event shall have occureed which has had or is reasonably likely to
have a Material Adverse Effect on EarthLink, Operating Company or Management
Company.

 

5.3.6                                        EarthLink Employees.  An adequate number
of EarthLink employees shall have agreed to be employed by the Operating
Company so that in combination with the roles and responsibilities to be
assumed or performed by SKT, SKTI and their respective employees, the Operating
Company will have adequate staffing to initiate the Business Plan.

 

5.3.7                                        EarthLink Initial Cash Contribution.  EarthLink shall have delivered the EarthLink
Initial Cash Contribution to Operating Company by wire transfer of immediately
available federal funds.

 

ARTICLE VI

TERMINATION

 

6.1                               Termination.  This Agreement may be terminated at any time
prior to the Closing:

 

(a)                                  by mutual written agreement
of SKT, SKTI and EarthLink; or

 

(b)                                 by either the SKT Parties or
EarthLink, by giving written notice of such termination to the other Party, if
such other Party shall have breached any of its material obligations or
agreements under this Agreement and such breach shall be incapable of cure or
has not been cured within 90 days following the giving of written notice by the
non-breaching Party to the breaching Party of such breach; provided that the cure period may be extended for an additional thirty
(30) days if the breach is capable of being cured and the breaching party is
actively and diligently exerting good faith efforts to cure the breach; or

 

(c)                                  by either the SKT Parties or
EarthLink, by giving written notice of such termination to the other Party, if
any order permanently enjoining or otherwise prohibiting consummation of the
transactions contemplated hereby shall become final and non-appealable; or

 

(d)                                 by either the SKT Parties or
EarthLink, by giving written notice of such termination to the other, if the
Closing shall not have occurred on or prior to three (3) months following the
date hereof (the “Termination Date”);
provided that a Party will not have the right to terminate this Agreement
pursuant to this Section 6.1(d)
for so long as such Party is in material breach of its obligations under this
Agreement; and provided, further, that the Termination Date shall be extended
to four (4) months following the date hereof (the “Extended Termination Date”) if either Party provides written
notice thereof to the other on or prior to two (2) months following the date
hereof that such Party has reasonably determined that additional time is
necessary in connection with obtaining required consent or approval from any
Governmental Entity; or

 

23

 

(e)                                  by EarthLink, by giving
written notice of such termination to the SKT Parties, if there has been a
breach of the representations and warranties of the SKT Parties contained in
this Agreement which (x) would result in the failure of the conditions set
forth in Section 5.2.1 and (y) cannot be or
is not cured prior to the Termination Date, or, if extended, the Extended
Termination Date; or

 

(f)                                    by the SKT Parties, by
giving written notice of such termination to EarthLink, if there has been a
breach of the representations and warranties of EarthLink contained in this
Agreement which (x) would result in the failure of the conditions set forth in Section 5.3.1 and (y) cannot be or is not cured prior
to the Termination Date, or, if extended, the Extended Termination Date.

 

6.2                               Effect of Termination.  In the event of the termination of this
Agreement in accordance with Section 6.1
hereof, this Agreement shall thereafter become void and have no effect, and no Party hereto or its Affiliates or their
respective directors, officers, employees, agents or advisors shall have any
liability to the other Party hereto or
its Affiliates or their respective directors, officers or employees, except for
the obligations of the parties hereto contained in this Section 6.2
and in Sections 8.2 (Expenses), 8.3 (Public Disclosure), 8.9
(Notices), 8.10 (Governing Law) and 8.11 (Dispute Resolution) hereof, and except that nothing
herein will relieve any Party from
liability for any breach of this Agreement prior to such termination.

 

ARTICLE VII

SURVIVAL AND INDEMNIFICATION

 

7.1                               Survival of Representations, Warranties, Covenants and Agreements.  Except as set forth in this Section 7.1, the representations and warranties
contained in this Agreement shall survive the Closing and expire on the first
anniversary of the Closing Date.  The
representations and warranties included or provided for in Sections
3.1.1 and 3.2.1
(Organization, Good Standing and Qualification), 3.1.4
and 3.2.4 (Corporate Authority and
Approval), 3.1.7 and 3.2.7
(Brokers and Finders), and 3.2.8 (Title to
EarthLink Assets) shall have no expiration date.  In the event that any Claim Notice or any
other written notice of a claim shall be given hereunder within the applicable
survival period, the representations and warranties that are the subject of
such indemnity claim shall survive until such claim is finally resolved but
only with respect to such claim and any directly related matters.  The covenants and other agreements contained
in this Agreement shall survive the Closing until the date or dates specified
therein or the expiration of the applicable statute of limitations (including any
waivers or extensions thereof) with respect to such matters, whichever is
later.

 

7.2                               Indemnification by EarthLink.

 

7.2.1                                        Indemnification.  For the period commencing on the Closing Date
and ending upon the expiration of the applicable periods specified in Section 7.1, EarthLink shall, subject to the
limitations set forth in Section 7.1
and this Section 7.2, indemnify, defend and
hold harmless Operating Company, SKT and SKTI, and their respective directors,
officers, employees, shareholders and agents (the “SKT/Operating
Company Indemnified Parties”) against and in respect of all losses,
damages (except as set forth in Section 7.7),
liabilities, costs

 

24

 

and
expenses (including reasonable attorneys’ fees and expenses incurred in
investigating, preparing or defending any claims covered hereby) (collectively,
“Losses”) sustained or incurred arising
out of, in connection with or relating to any breaches of any of EarthLink’s
representations and warranties set forth in this Agreement (disregarding for
purposes of this Article VII
all qualifications and exceptions contained therein relating to materiality
(including Material Adverse Effect)); provided that no individual Loss or
series of related Losses arising out of, in connection with or relating to any
breaches of any of EarthLink’s representations and warranties set forth in this
Agreement shall be deemed to be a Loss until the amount of such Loss or series
of related Losses exceeds One Hundred Thousand Dollars ($100,000) and then only
the amount in excess of One Hundred Thousand Dollars ($100,000) shall be deemed
a Loss.  The foregoing limitation shall
not apply to any Losses resulting from a breach of the representations and
warranties set forth in Sections 3.2.7
(Brokers and Finders), and 3.2.8 (Title to
EarthLink Assets).

 

7.2.2                                        Limitations.  EarthLink shall not be liable for any Losses
(other than Losses resulting from a breach of the representations and
warranties set forth in Sections 3.2.7
(Brokers and Finders), and 3.2.8 (Title to
EarthLink Assets), for which there shall be no deductible) arising in
connection with a breach of EarthLink’s representations and warranties set
forth in this Agreement unless and until the amount of such Losses sustained or
incurred by the SKT/Operating Company Indemnified Parties arising out of, in
connection with or relating to any breaches of EarthLink’s representations and
warranties set forth in this Agreement exceeds One Million Dollars ($1,000,000)
in the aggregate (the “EarthLink  Deductible”).  If the
aggregate amount of such Losses exceeds the EarthLink Deductible, EarthLink
shall be liable only for the amount by which such Losses exceed the EarthLink
Deductible.  In addition, except for
breaches of Sections 3.2.7 (Brokers and
Finders), and 3.2.8 (Title to EarthLink Assets),
for which there shall be no limit, any payments under this Section 7.2
by EarthLink to the SKT/Operating Company Indemnified Parties for Losses
arising out of any breaches of representations or warranties shall not exceed
in the aggregate Forty Million Dollars ($40,000,000), it being understood and
agreed that such limitation shall not apply to Losses arising out of any other
breaches of this Agreement.

 

7.2.3                                        Indemnification for Liabilities Not Assumed.  EarthLink further agrees to indemnify, defend and hold
harmless the SKT/Operating Company Indemnified Parties against and in respect
of all Losses sustained or incurred by the SKT/Operating Company Indemnified
Parties arising out of, in connection with or relating to any
and all liabilities and obligations of EarthLink, including without limitation,
liabilities and obligations with respect to the ownership, operation and
maintenance of the EarthLink Assets prior to the Closing, whether accrued,
absolute, contingent, known, unknown or otherwise, other than the EarthLink
Assumed Liabilities.  The indemnity
contained in this Section 7.2.3
is not subject to the limitations set forth in Sections 7.1,
7.2.1 and 7.2.2
above.

 

7.3                               Indemnification by the SKT Parties.

 

7.3.1                                        Indemnification.  For the period commencing on the Closing Date
and ending upon the expiration of the applicable periods specified in Section 7.1, the SKT Parties shall, subject to the
limitations set forth in Section 7.1
and this Section 7.3, jointly and severally
indemnify, defend and hold harmless Operating Company and EarthLink, and their

 

25

 

respective
directors, officers, employees, shareholders and agents (the “EarthLink/Operating Company Indemnified Parties”) against
and in respect of all Losses sustained or incurred arising out of, in
connection with or relating to any breaches of any of the SKT Parties’
representations and warranties set forth in this Agreement (disregarding for
purposes of this Article VII
all qualifications and exceptions contained therein relating to materiality
(including Material Adverse Effect)); provided that no individual Loss or
series of related Losses arising out of, in connection with or relating to any
breaches of any of the SKT Parties’ representations and warranties set forth in
this Agreement shall be deemed to be a Loss until the amount of such Loss or
series of related Losses exceeds One Hundred Thousand Dollars ($100,000) and
then only the amount in excess of One Hundred Thousand Dollars ($100,000) shall
be deemed a Loss.  The foregoing
limitation shall not apply to any Losses resulting from a breach of the
representations and warranties set forth in Section 3.1.7
(Brokers and Finders).

 

7.3.2                                        Limitations.  Neither SKT Party shall be liable for any
Losses (other than Losses resulting from a breach of the representations and
warranties set forth in Section 3.1.7
(Brokers and Finders), for which there shall be no deductible) arising in
connection with a breach of SKT’s or SKTI’s representations and warranties set
forth in this Agreement unless and until the amount of such Losses sustained or
incurred by the EarthLink/Operating Company Indemnified Parties arising out of,
in connection with or relating to any breaches of the SKT Parties’ representations
and warranties set forth in this Agreement exceeds One Million Dollars
($1,000,000) in the aggregate (the “SKT  Deductible”).  If the
aggregate amount of such Losses exceeds the SKT Deductible, the SKT Parties
shall be liable only for the amount by which such Losses exceed the SKT
Deductible.  In addition, except for
breaches of Section 3.1.7 (Brokers and
Finders), for which there shall be no limit, any payments under this Section 7.3 by the SKT Parties to the
EarthLink/Operating Company Indemnified Parties for Losses arising out of any
breaches of any representations or warranties shall not exceed in the aggregate
Forty Million Dollars ($40,000,000), it being understood and agreed that such
limitation shall not apply to Losses arising out of any other breaches of this
Agreement.

 

7.3.3                                        Indemnification for Liabilities Not Assumed.  The SKT Parties
further jointly and severally agree to indemnify, defend and hold harmless the
EarthLink/Operating Company Indemnified Parties against and in respect of all
Losses sustained or incurred by the EarthLink/Operating Company Indemnified
Parties arising out of, in connection with or relating to any
and all liabilities and obligations of SKT or SKTI, whether accrued, absolute,
contingent, known, unknown or otherwise. 
The indemnity contained in this Section 7.3.3
is not subject to the limitations set forth in Sections 7.1,
7.3.1 and 7.3.2
above.

 

7.4                               Indemnification as Sole Remedy; Specific Performance.  Following the Closing, the indemnities
provided in this Article VII and in Section 4.4 shall be the sole and exclusive remedy of
the Parties hereto, Operating Company, their Affiliates, successors and assigns
with respect to any and all claims for Losses sustained or incurred arising out
of, in connection with or relating to any breaches of a Party’s representations
and warranties set forth in this Agreement. 
The indemnities provided in this Article VII and
in Section 4.4 shall not apply to
damages for breach of any covenants, agreements or willful or fraudulent breach
of the representations and warranties set forth in this Agreement or any of the
other agreements contemplated hereby. 
EarthLink, SKT, SKTI and Operating Company may seek specific performance
of the obligations set forth in Article II
of this Agreement or pursue any other

 

26

 

remedies
available at law or in equity; provided however, that if a non-breaching Party
elects the put and call rights set forth in Section 5.6 of the
Stockholders’ Agreement upon a Contribution Breach by the other Party, such
exercise shall be the exclusive remedy available to the non-breaching Party and
the Operating Company with respect to the Contribution Breach.

 

7.5                               Method of Asserting Claims, Etc.  All claims for
indemnification by the Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 7.5.  In the event that any written claim or demand
for which the SKT Parties or EarthLink, as the case may be (an “Indemnifying Party”), may be liable to any Indemnified Party
hereunder is asserted against or sought to be collected from any Indemnified
Party by a third party, such Indemnified Party shall promptly, but in no event
later than 15 days following such Indemnified Party’s receipt of such claim or
demand, notify in writing the Indemnifying Party of such claim or demand (the “Claim  Notice”).  The failure by any Indemnified Party to
notify the Indemnifying Party in accordance with this Section 7.5
shall not relieve any Indemnifying Party from any liability which it may have
to such Indemnified Party with respect to any claim made pursuant to this Section 7.5, except to the extent such failure actually
prejudices the Indemnifying Party.  The
Indemnifying Party shall have 30 days after the personal delivery or mailing of
the Claim Notice, whichever is later, (the “Notice
Period”) to notify the Indemnified Party whether or not it desires
to defend the Indemnified Party against such claim or demand and shall during
the Notice Period and thereafter be provided by the Indemnified Party with such
information relating to the claim or demand as the Indemnifying Party shall
request.  All costs and expenses incurred
by the Indemnifying Party in defending such claim or demand shall be borne by
the Indemnifying Party.  Except as
hereinafter provided, in the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, the Indemnifying Party shall
have the sole power to direct and control such defense.  If the Indemnifying Party so elects to assume
the defense of such claim, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses subsequently incurred by the
Indemnified Party, except as hereinafter provided.  The Indemnifying Party shall be liable for
the reasonable fees and expenses of the Indemnified Party in connection with
the defense of a claim if the Indemnified Party shall have been advised in
writing by outside counsel that there are actual conflicts of interests between
the Indemnified Party and the Indemnifying Party in connection with the defense
of such claim; provided, however, that the Indemnifying Party shall not be
responsible for the fees and expenses of more than one separate firm of
attorneys at any time for all Indemnified Parties.  If any Indemnified Party desires to
participate in, but not control, any such defense it may do so at its sole cost
and expense (except as provided in the preceding sentence), provided that in any
action seeking an injunction or decree which would restrict the future activity
or conduct of the Indemnified Party or any Subsidiary or Affiliate thereof, the
Indemnified Party shall be entitled to participate in the defense of such
action at the expense of the Indemnifying Party.  The Indemnified Party shall not settle,
compromise or discharge a claim or demand for which it is indemnified by the
Indemnifying Party or admit to any liability with respect to such claim or
demand without the prior written consent of the Indemnifying Party.  The Indemnifying Party shall not, without the
prior written consent of the Indemnified Party, settle, compromise or offer to
settle or compromise any such claim or demand on a basis which would result in
the imposition of a consent order, injunction or decree that would restrict the
future activity or conduct of the Indemnified Party or any Subsidiary or
Affiliate thereof.  To the extent the
Indemnifying Party shall direct, control or participate in the defense or
settlement of any third party claim or demand,

 

27

 

the
Indemnified Party will provide the Indemnifying Party and its counsel access to
all relevant business records and other documents, and shall use its reasonable
best efforts to assist, and to cause the employees and counsel of the
Indemnified Party to assist, in defense of such claim.  If the Indemnifying Party elects not to
defend the Indemnified Party or if the foregoing prohibits the Indemnifying
Party from defending the Indemnified Party, the Indemnified Party shall have
the right and the obligation to defend the claim or demand by appropriate
proceedings and shall have the sole power to direct and control such defense.

 

7.6                               Calculation of Losses.  The amount of any Losses payable by the
Indemnifying Party to the Indemnified Party shall be (i) net of any amounts
recovered or recoverable by the Indemnified Party under applicable insurance
policies, (ii) increased by the amount of any Tax cost incurred by the Indemnified
Party arising from the receipt of indemnity payments and (iii) net of any Tax
benefit realized by the Indemnified Party arising from the incurrence or
payment of any such Loss, but only to the extent of such Loss.  In computing the amount of any such Tax cost
or Tax benefit, the Indemnified Party shall be deemed to fully utilize all Tax
items arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss. 
Nothing in this Section 7.6
shall require SKT, SKTI or EarthLink to disclose any information regarding the
calculation of Taxes (including, without limitation, any Tax return), other
than to the extent such information relates directly to the computation of Tax
cost or Tax benefit for these purposes.

 

7.7                               Disclaimer of Certain Damages.  Except as may be
payable to a third party pursuant to an Indemnifying Party’s defense obligation
under Section 7.5, in no event shall the
term “Losses” include any consequential, incidential or indirect, special, punitive
or exemplary loss or damage to an Indemnified Party, including without
limitation for lost profits, whether or not based upon events giving rise to
indemnification hereunder.

 

7.8                               Assignment of Claims.  If the Indemnified Party receives any payment
from an Indemnifying Party in respect of any Losses and the Indemnified Party
could have recovered all or a part of such Losses from a third party (a “Potential Contributor”) based on the underlying claim or
demand asserted against the Indemnifying Party, the Indemnified Party shall, to
the extent permitted by Law or any applicable contractual arrangement, assign
such of its rights to proceed against the Potential Contributor as are
necessary to permit the Indemnifying Party to recover from the Potential Contributor
the amount of such payment.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1                               Entire Agreement; Amendment and Waiver.  This Agreement (including any Exhibits and
Schedules hereto) and the Ancillary Agreements (including any exhibits and
schedules thereto), supersede all prior agreements, written or oral, among the
Parties with respect to the subject matter hereof and thereof and contain the
entire agreement among the Parties with respect to the subject matter hereof
and thereof.  This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by SKT, SKTI and
EarthLink.  No waiver of any provisions
hereof by any Party shall be deemed a waiver of any other provisions hereof by any

 

28

 

such
Party, nor shall any such waiver be deemed a continuing waiver of any provision
hereof by such Party.

 

8.2                               Expenses.  Except as otherwise expressly provided in
this Agreement, whether or not the transactions contemplated by this Agreement
are consummated, the Parties shall bear their own respective expenses
(including, but not limited to, Transfer Taxes and all compensation and
expenses of counsel, financial advisors, consultants, actuaries and independent
accountants) incurred in connection with this Agreement and the transactions
contemplated hereby.

 

8.3                               Public Disclosure.  Each Party hereby agrees with the other Party
that prior to the Closing, except as may be required to comply with the requirements
of applicable Law or the rules and regulations of any national securities
exchange upon which the securities of one of the Parties or its Affiliates is
listed, no press release or similar public announcement or communication will
be made or caused to be made concerning the execution or performance of this
Agreement unless specifically approved in advance by the Parties; provided,
however, that to the extent that either Party to this Agreement is required by
Law or the rules and regulations of any stock exchange upon which the
securities of one or more of the Parties or its Affiliates is listed to make
such a public disclosure, such public disclosure shall only be made after prior
consultation with and delivery of a copy of the proposed disclosure substantially
in the form it will be disclosed to the public to the other Party, if
consultation and delivery is reasonably practicable.

 

8.4                               Assignment.  No Party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party and Operating Company; provided that any Party may assign this Agreement
to an Affiliate so long as the Party assigning this Agreement agrees to
guarantee, without restriction, the performance of all such Affiliate’s
obligations hereunder.  Notwithstanding
the foregoing, SKTI may assign its rights and obligations under this Agreement
to a direct or indirect wholly-owned Subsidiary of SKT.

 

8.5                               Fulfillment of Obligations.  Any obligation of
any Party to any other Party under this Agreement, which obligation is
performed, satisfied or fulfilled by an Affiliate of such Party, shall be
deemed to have been performed, satisfied or fulfilled by such Party.

 

8.6                               Third Party Beneficiaries.  This Agreement shall
inure to the benefit of and be binding upon the Parties, Operating Company and
Management Company and their respective successors and permitted assigns.  Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than SKT, SKTI, EarthLink,
Operating Company or their respective successors any rights or remedies under
or by reason of this Agreement.  Without
limiting the foregoing, under no circumstances will any third party (including
without limitation any creditors of any Party, of Management Company or of
Operating Company) be entitled to rely upon the contribution schedule set
forth in Schedule 2.2 or any
covenant of any Party hereto to make any capital contribution hereunder.

 

8.7                               Counterparts.  For the convenience of the Parties hereto,
this Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which shall together constitute
the same agreement.

 

29

 

8.8                               Section Headings.  The section and paragraph headings and
table of contents contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.

 

8.9                               Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given
(i) on the first calendar day following the date of delivery in person or by
telecopy (in each case with telephonic confirmation of receipt by the
addressee), (ii) on the first calendar day following timely deposit with an
overnight courier service, if sent by overnight courier specifying next day
delivery or (iii) on the first calendar day that is at least five (5) days following deposit in the mails, if
sent by registered or certified mail, to the Parties at the following addresses
(or at such other address for a party as shall be specified by like notice):

 

If to SKTI:

 

SK Telecom International, Inc.

The Concourse IV

1735 Technology Drive

8th Floor

San Jose, CA 
95110

Attention: 
Brian Kim

Facsimile: 
(408) 975-9222

 

with a copy to:

 

SK Telecom Co., Ltd.

11, Euljiro2-ga, Jung-gu

Seoul 100-999, Korea

Attention: 
Mr. Seung-Kook Synn

Facsimile: (822) 6100-7966

 

with a copy to:

 

Paul Hastings Janofsky & Walker LLP

21-22/F Bank of China Tower

1 Garden Road

Bank of China

Hong Kong

Attention: 
Jong Han Kim

Facsimile: 
(852) 2524-2131

 

If to SKT:

 

SK Telecom Co., Ltd.

11, Euljiro2-ga, Jung-gu

Seoul 100-999, Korea

 

30

 

Attention: 
Mr. Seung-Kook Synn

Facsimile: (822) 6100-7966

 

with a copy to:

 

Paul Hastings Janofsky & Walker LLP

21-22/F Bank of China Tower

1 Garden Road

Bank of China

Hong Kong

Attention: 
Jong Han Kim

Facsimile: 
(852) 2524-2131

 

If to EarthLink:

 

EarthLink, Inc.

1375 Peachtree Street, N.E.

Atlanta, Georgia  30309

Attention: 
Chief Executive Officer

Facsimile: 
(404) 892-7616

Copy to: 
General Counsel

 

with a copy to:

 

Hunton & Williams LLP

600 Peachtree Street, N.E.,
Suite 4100

Atlanta, Georgia 30308

Attention:  W. Tinley Anderson, III

Facsimile:  (404) 602-9050

 

If to Operating Company:

 

SK-EarthLink LLC

1375 Peachtree Street, N.E.

Atlanta, Georgia  30309

Attention: 
CEO

Facsimile:

 

with a copy to:

 

SK-EarthLink Management Corp.

1375 Peachtree Street, N.E.

Atlanta, Georgia  30309

Attention: 
Legal Department

Facsimile:

 

Any notice given by mail
shall be effective when received.

 

31

 

8.10                        Governing Law.  This Agreement and the rights and obligations
of the Parties shall be governed by and construed in accordance with and
subject to the laws of the State of New York.

 

8.11                        Dispute Resolution. 
Any dispute arising out of or relating to this Agreement shall be
resolved in accordance with the procedures specified in this Section 8.11, which shall be the sole and exclusive
procedure for the resolution of any such dispute.

 

8.11.1                                 Negotiation Between Executives. 
EarthLink and the SKT Parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by direct negotiation
between executives who have authority to settle the controversy and who are at
a higher level of management than the persons with direct responsibility for
administration of this Agreement, unless there is no executive of a higher
level.  Any Party may give the other Party
written notice of any dispute not resolved in the normal course of
business.  Within fifteen (15) days after
delivery of the notice, the receiving Party
shall submit to the other a written response. 
The notice and the response shall include:  (a) a statement of each Party’s position
and a summary of arguments supporting that position; and, (b) the name and
title of the executive who will represent that Party
and of any other person who will accompany the executive.  Within thirty (30) days after delivery of the
disputing Party’s notice, the executives of each of SKT, or SKTI, as
applicable, and EarthLink shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to attempt to resolve
the dispute.  All reasonable requests for
information made by one Party to the
other will be honored.  All negotiations
pursuant to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of applicable rules of evidence.

 

8.11.2                                 Mediation With Mutually Agreed-Upon Neutral. 
If the dispute has not been resolved by negotiation within forty-five
(45) days of the disputing Party’s notice, or if SKT or SKTI, as applicable,
and EarthLink fail to meet within twenty (20) days, SKT or SKTI, as applicable,
and EarthLink shall submit the dispute to non-binding mediation under the
then-current CPR Institute for Dispute Resolution’s (“CPR”) Model Mediation Procedure for
Business Disputes, and endeavor (but not be obligated) to settle the dispute in
such mediation.  CPR’s address at the
time of this Agreement is 366 Madison Avenue, 14th Floor, New York,
New York 10017 (212-949-6490) and its website is “www.cpradr.org.”  SKT or SKTI, as applicable, and EarthLink
agree to use their best efforts and good faith to agree mutually on a mediator,
to be selected from the CPR Technology Panel of Neutrals.  If SKT or SKTI, as applicable, and EarthLink
fail to select a mutually acceptable mediator within thirty (30) days after
either party’s notice to the other party that they request non-binding
mediation pursuant to this subsection, CPR will appoint a mediator from the
Technology Panel.

 

8.11.3                                 Arbitration.  All disputes arising out of or relating to
this Agreement not resolved pursuant to non-binding mediation within thirty
(30) days or as this time period may be extended by written agreement of the
Parties shall be settled finally in an arbitration conducted under the Rules of
Arbitration of the International Chamber of Commerce (“ICC”)
and as provided in this Section 8.11.3.

 

(a)                                  The arbitration proceedings shall be
conducted in New York, New York, U.S.A.

 

32

 

(b)                                 The arbitration proceedings shall be governed
by the laws of the State of New York.

 

(c)                                  The language of the arbitration proceedings
shall be English.

 

(d)                                 The arbitral tribunal shall consist of three
(3) arbitrators, one (1) of which shall be selected by the SKT Parties and one
(1) of which shall be selected by EarthLink. 
The third arbitrator shall be selected by the two arbitrators appointed
by the SKT Parties and EarthLink.

 

(e)                                  The International Bar Association’s Rules on
the Taking of Evidence in International Commercial Arbitration shall apply
together with the ICC Rules governing any submission to arbitration
incorporated in this Agreement.

 

(f)                                    Every award shall be binding on each of SKT,
SKTI and EarthLink.  By submitting the
dispute to arbitration under the ICC Rules, the Parties undertake to carry out
any award without delay and shall be deemed to have waived their right to any
form of recourse insofar as such waiver can validly be made.

 

(g)                                 This agreement to arbitrate shall be binding
on the Parties and their respective successors, assigns and Affiliates.

 

(h)                                 The prevailing Party in any arbitration proceeding conducted pursuant to this
Agreement may recover its reasonable fees both for legal representation and
related costs in any action to enforce this Agreement in any judicial or
arbitration proceeding.

 

(i)                                     The Parties waive any right or claim to
punitive or exemplary damages and agree that punitive or exemplary damages are not
within the contemplation of this Agreement. 
No arbitral tribunal may order an award consisting in whole or in part
of punitive or exemplary damages.

 

8.11.4                                 Tolling of Statutes of Limitation.  All applicable statutes of limitation and
defenses based on the passage of time shall be tolled while the procedures
specified in Section 8.11 are
pending.  SKT, SKTI and EarthLink shall
take such action, if any, required to effectuate such tolling.

 

8.11.5                                 Right to Injunctive Relief Before Appointment of Arbitrators.  With respect to any violations of this
Agreement that would cause or might cause irreparable injury to any one of the Parties to this Agreement (and any time periods
and notice periods specified thereon), such Party may, in addition to any other
rights under this Agreement or any Ancillary Agreement and notwithstanding the
dispute resolution procedures including, particularly, the mediation provisions
and arbitration agreement contained in this Section 8.11 (and any time periods and notice periods
specified thereon), seek specific performance of this Agreement and
injunctive relief in any court of competent jurisdiction against any ongoing
violation of this Agreement.  Prior to
the appointment of the arbitrators pursuant to the arbitration agreement, any
Party hereto may seek provisional or interim measures from any court

 

33

 

of
competent jurisdiction.  After the
appointment of the arbitrators, the arbitrators shall have exclusive power to
consider and grant requests for provisional or interim measures.

 

8.12                        Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the
application thereof to any Party or any circumstance, is invalid or
unenforceable, (i) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (ii) the
remainder of this Agreement and the application of such provision to other
Parties or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.

 

8.13                        Guarantee of Subsidiaries’ Performance.  Each Party absolutely,
unconditionally and irrevocably guarantees to the other Party and its
successors and permitted assigns the present and future payment and performance
by any Subsidiary of such Party of all obligations of such Subsidiary under
this Agreement and the Ancillary Agreements to which such Subsidiary is a party
(the “Obligations”).  Such guaranty is a guaranty of payment and
performance, and not of collection. 
Accordingly, no guaranteed Party will be required to seek payment or
performance from the primary obligor in order to exercise or enforce its rights
against a Party under this Section 8.13.  Each Party’s guaranty shall not be
compromised, waived, released, novated or otherwise altered or affected by any
changes, modifications and other amendments to this Agreement or any Ancillary
Agreement, any interpretations of this Agreement or any Ancillary Agreement,
any consents, approvals, releases, waivers, extensions and other forbearances,
and any settlements, compromises and judgments made or entered into by or
binding upon the other Party with respect to this Agreement or any Ancillary
Agreement, all of which shall be binding upon the Parties and each of them.  Each Party hereby waives notice of acceptance
of this guaranty and of any obligation to which it applies or may apply.

 

34

 

IN WITNESS WHEREOF, this
Agreement has been signed on behalf of each of the parties hereto as of the date
first written above.

 

	
   

  	
  SK TELECOM CO., LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Shin-Bae Kim

  
	
   

  	
  Name:

  	
  Shin-Bae
  Kim

  
	
   

  	
  Title:

  	
  President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SK TELECOM
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Byung Moo Kim

  
	
   

  	
  Name:

  	
  Byung Moo Kim

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EARTHLINK, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles G. Betty

  
	
   

  	
  Name:

  	
  Charles
  G. Betty

  
	
   

  	
  Title:

  	
  Chief Executive Officer

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