Exhibit 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
ii
iii
EXHIBITS AND
SCHEDULES
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Exhibit A
|
|
Initial Business Plan
|
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Exhibit B
|
|
Form of Brand License and Marketing
Agreement
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Exhibit C
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Form of EarthLink Master Software Development,
Software License and Services Agreement
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Exhibit D
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Form of Operating Company Agreement
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Exhibit E
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Form of Registration Rights Agreement
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Exhibit F
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Form of SKT Master Software Development,
Software License and Services Agreement
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Exhibit G
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Form of Stockholders’ Agreement
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Exhibit H
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Form of Certificate of Incorporation of
Management Company
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Exhibit I
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Form of By-laws of Management Company
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Exhibit J
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Form of Certificate of Formation of Operating
Company
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Exhibit K
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Form of EarthLink Conveyance
Agreement
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Exhibit L
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Form of EarthLink Assignment and Assumption
Agreement
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Exhibit M
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Form of Confidentiality Agreement
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Schedule 1.1(a)
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EarthLink Assets
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Schedule 2.2
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Capital Contribution Schedule
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Schedule 2.3(a)
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EarthLink Permitted Encumbrances
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Schedule 2.3(b)
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FMV/Tax Basis of EarthLink Assets
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Schedule 3.1.2
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SKT Governmental Filings
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Schedule 3.1.3
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SKT Third Party Consents
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Schedule 3.2.2
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EarthLink Governmental Filings
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Schedule 3.2.3
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EarthLink Third Party Consents
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Schedule 3.2.8
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EarthLink Title to Assets
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Schedule 4.2.1
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SKT Conduct of Business
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Schedule 4.2.2
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EarthLink Conduct of Business
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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:
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.
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“ 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 .
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“ 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.
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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.
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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
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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, thr
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