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This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated February 18, 1998 and the related Letter of Transmittal and is
being made to all holders of Shares. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer
or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws
require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to
be made on behalf of Sprint Corporation
by SBC Warburg Dillon Read or one or
more registered brokers or dealers
licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
1,250,000 SHARES OF COMMON STOCK
OF
EARTHLINK NETWORK, INC.
AT
$45.00 NET PER SHARE
BY
SPRINT CORPORATION
Sprint Corporation, a Kansas corporation (the "Purchaser"), is offering to
purchase 1,250,000 shares of Common Stock, par value $0.01 per share (the
"Shares"), of EarthLink Network, Inc., a Delaware corporation (the "Company"),
at $45.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated February 18, 1998 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
MARCH 20, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON (1) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) 1,250,000 SHARES, (2)
THE CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER, SPRINT COMMUNICATIONS
COMPANY L.P., A DELAWARE LIMITED PARTNERSHIP ("SPRINT L.P."), DOLPHIN, INC., A
DELAWARE CORPORATION ("NEWCO"), DOLPHIN SUB, INC., A DELAWARE CORPORATION
("NEWCO SUB") AND THE COMPANY TO CONSUMMATE THE OFFER AS DESCRIBED IN THE OFFER
TO PURCHASE HAVING BEEN SATISFIED OR WAIVED AND (3) THE EXPIRATION OR
TERMINATION OF ALL WAITING PERIODS IMPOSED UPON CONSUMMATION OF THE OFFER AND
THE OTHER TRANSACTIONS DESCRIBED IN THE OFFER TO PURCHASE BY THE XXXX-XXXXX-
XXXXXX ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS
THEREUNDER, AS WELL AS THE OTHER CONDITIONS DESCRIBED IN THE OFFER TO PURCHASE.
The Purchaser and the Company have determined to enter into a strategic
alliance to provide Internet access and related services on a collaborative
basis. The purpose of the Offer and the related investments being made by the
Purchaser pursuant to the Investment Agreement is to benefit from the enhanced
capabilities for growth and financial and strategic success by joining forces
with the Company, but not to acquire or influence control of the Company's
business.
The Offer is being made pursuant to an Investment Agreement, dated as of
February 10, 1998 among the Purchaser, Sprint L.P., Newco, Newco Sub and the
Company (the "Investment Agreement"). Upon consummation of the transactions
contemplated by the Investment Agreement, including the Offer, the Purchaser
will own approximately 11.1% of the total number of issued and outstanding
Shares (based on the number of Shares outstanding as of February 13, 1998).
Immediately following consummation of the Offer, Newco Sub will merge into
the Company (the "Merger") and all of the Company's outstanding Shares will be
converted into common stock, par value $.01 per share of Newco ("Newco Common
Stock"), except for Shares receivable upon the exercise of warrants and certain
other rights to acquire Shares which are not amended prior to the Merger to
become exercisable only for Newco Common Stock (which are not expected to
exceed 8% of the outstanding Shares after the Merger). In connection with the
Merger, Sprint L.P. will transfer all of its Internet subscribers and certain
other assets in exchange for convertible preferred stock of Newco which, upon
conversion, would result in the Purchaser and its affiliates owning, together
with the Shares acquired in the Offer and converted in the Merger into Newco
Common Stock, approximately 26.6% of the shares of Newco Common Stock on a
fully diluted basis (increasing to 28.8%, in the aggregate, on fully diluted
basis upon payment of all payment-in-kind dividends on such convertible
preferred stock and subsequent conversion of Newco Common Stock). As used
herein, "fully diluted basis" takes into account the conversion or exercise of
all outstanding options and other warrants and securities exercisable and
convertible into shares of Newco Common Stock. The Purchaser has also agreed to
loan Newco and the Company up to $100 million over the next three years, which
indebtedness will be convertible into Newco Common Stock at the rate of 130% of
the average market price of Newco Common Stock for the 30 trading days
preceding the applicable loan.
As a condition and inducement to the Offer, the Merger and the other
transactions contemplated by the Investment Agreement, certain stockholders of
the Company owning 35.3% of the outstanding Shares have agreed to tender their
Shares into the Offer and certain stockholders of the Company owning 61.4% of
the outstanding Shares have agreed to vote their Shares in favor of the Merger
and such other transactions.
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE OF ALL
DIRECTORS, APPROVED THE OFFER AND THE OTHER TRANSACTIONS DESCRIBED IN THE OFFER
TO PURCHASE AND DETERMINED THAT THE TERMS OF THE OFFER AND SUCH OTHER
TRANSACTIONS, TAKEN TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT ALL STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
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For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares that have been validly tendered and not
properly withdrawn as, if and when the Purchaser gives oral or written notice
to American Stock Transfer & Trust Company (the "Depositary") of the
Purchaser's acceptance for payment of such Shares. Upon the terms and subject
to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from the Purchaser and transmitting such payment
to tendering stockholders. In all cases, payment for shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares (or timely confirmation of book-
entry transfer of such Shares into the Depositary's account at The Depository
Trust Company pursuant to the procedures described in Section 2 of the Offer to
Purchase), (ii) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message (as defined in Section 2 of the
Offer to Purchase)), and (iii) any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid on the purchase
price, regardless of any extension of the Offer or any delay in making such
payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, March 20, 1998, unless and until the Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as so
extended by the Purchaser, shall expire. The Purchaser expressly reserves the
right, in its sole discretion (but subject to the terms of the Investment
Agreement), at any time or from time to time, to extend the period of time
during which the Offer is open and thereby delay acceptance for payment of, and
the payment for, any Shares, by giving oral or written notice of such extension
to the Depositary. The Purchaser shall not have any obligation to pay interest
on the purchase price for tendered Shares in the event the period of time
during which the Offer is open is extended for any reason. Due to the need for
a special meeting of the Company's stockholders to be held to obtain approval
of the Merger and related matters, it is anticipated that the Purchaser will
extend the period of time in which the Offer is open. However, there can be no
assurance that the Purchaser will exercise its right to extend the Offer (other
than as required by the Investment Agreement). Any extension of the Offer will
be followed by a public announcement thereof no later than 9:00 a.m. New York
City time, on the next business day after the previously scheduled Expiration
Date. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares.
If more than 1,250,000 Shares are validly tendered prior to the Expiration
Date and not properly withdrawn, the Purchaser will, upon the terms and subject
to the conditions of the Offer, accept such Shares for payment on a pro rata
basis, with adjustments to avoid purchases of fractional Shares, based upon the
number of Shares validly tendered prior to the Expiration Date and not properly
withdrawn. Because of the difficulty of determining precisely the number of
Shares validly tendered and not properly withdrawn, if proration is required,
the Purchaser would not expect to announce the final results of proration
immediately after the Expiration Date. The Purchaser will announce the
preliminary results of proration by press release as promptly as practicable
after the Expiration Date, and expects to be able to announce the final results
of proration approximately three Nasdaq National Market trading days after the
Expiration Date. Holders of Shares may obtain such preliminary information and
final results from the Depositary or the Information Agent, and also may be
able to obtain such information from their brokers.
Except as otherwise provided in this paragraph, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date, and, unless theretofore accepted for payment and
paid for by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after April 20, 1998. For a withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution (as defined in Section 2 of the Offer
to Purchase), the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry transfers as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
any purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 of the Offer to Purchase
at any time prior to the Expiration Date. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be
determined by the Purchaser in its sole discretion, whose determination will be
final and binding.
The Company has agreed to furnish the Purchaser with copies of the Company's
stockholder lists and security position listings. The Offer to Purchase and the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares and furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's stockholders lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be directed to the Information Agent or
the Dealer Manager as set forth below, and copies will be furnished promptly at
the Purchaser's expense.
Questions or requests for assistance may be directed to the Information Agent
or the Dealer Manager.
THE INFORMATION AGENT FOR THE OFFER IS:
X.X. XXXX & CO., INC.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Toll-free 0-000-000-0000
or
Call Collect (000) 000-0000
THE DEALER MANAGER FOR THE OFFER IS:
SBC WARBURG DILLON READ INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
February 18, 1998
