EXHIBIT 2.6
PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 4, 2000
BETWEEN
EARTHLINK NETWORK, INC.
AND
APPLE COMPUTER, INC. LIMITED
TABLE OF CONTENTS
PAGE
SECTION 1 AGREEMENT TO PURCHASE AND SELL PREFERRED STOCK..............................................................1
1.1 Agreement to Purchase and Sell Preferred Stock......................................................1
1.2 Per Share Purchase Price............................................................................1
SECTION 2 CLOSING DATE; DELIVERY; ESCROW..............................................................................2
2.1 Closing Date........................................................................................2
2.2 Delivery............................................................................................2
2.3 Escrow..............................................................................................2
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................................3
3.1 Organization........................................................................................3
3.2 Authorization.......................................................................................3
3.3 No Conflict.........................................................................................3
3.4 SEC Documents; Absence of Undisclosed Liabilities...................................................4
3.5 Absence of Certain Changes or Events................................................................4
3.6 Governmental Consent, etc...........................................................................5
3.7 Litigation..........................................................................................5
3.8 Capitalization......................................................................................5
3.9 Subsidiaries........................................................................................6
3.10 Compliance With Laws, Licenses, Permits and Registrations...........................................6
3.11 Title to Properties.................................................................................7
3.12 Intellectual Property...............................................................................7
3.13 Year 2000 Compliance................................................................................8
3.14 Successors..........................................................................................8
3.15 Finders' Fees.......................................................................................8
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................................................8
4.1 Organization........................................................................................8
4.2 Authority...........................................................................................8
4.3 Investment..........................................................................................9
4.4 Disclosure of Information...........................................................................9
4.5 Investment Experience...............................................................................9
4.6 Accredited Investor Status..........................................................................9
4.7 Restricted Securities...............................................................................9
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TABLE OF CONTENTS
(CONTINUED) PAGE
SECTION 5 CONDITIONS TO OBLIGATION OF THE PURCHASER..................................................................10
5.1 Representations and Warranties.....................................................................10
5.2 Covenants..........................................................................................10
5.3 No Order Pending...................................................................................10
5.4 No Law Prohibiting or Restricting Sale of the Shares...............................................10
5.5 Investor Rights Agreement..........................................................................10
5.6 Internet Services Agreement........................................................................10
5.7 Nasdaq Listing.....................................................................................10
5.8 Escrow Agreement...................................................................................10
SECTION 6 CONDITIONS TO OBLIGATION OF THE COMPANY....................................................................11
6.1 Representations and Warranties.....................................................................11
6.2 Covenants..........................................................................................11
6.3 No Order Pending...................................................................................11
6.4 No Law Prohibiting or Restricting the Sale of the Shares...........................................11
6.5 Investor Rights Agreement..........................................................................11
6.6 Internet Services Agreement........................................................................11
6.7 Escrow Agreement...................................................................................11
SECTION 7 COVENANTS..................................................................................................11
7.1 Compliance with HSR Requirements...................................................................11
SECTION 8 MISCELLANEOUS..............................................................................................12
8.1 Best Efforts.......................................................................................12
8.2 Governing Law......................................................................................12
8.3 Survival...........................................................................................12
8.4 Successors and Assigns.............................................................................12
8.5 Entire Agreement; Amendment........................................................................12
8.6 Notices............................................................................................13
8.7 Brokers............................................................................................13
8.8 Fees, Costs and Expenses...........................................................................14
8.9 Severability.......................................................................................14
8.10 Initial Public Announcement........................................................................14
Exhibit A Investor Rights Agreement
Exhibit B Certificate of Designations
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TABLE OF CONTENTS
(CONTINUED) PAGE
Exhibit C Escrow Agreement
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PREFERRED STOCK PURCHASE AGREEMENT
This PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of this 4th day of January, 2000, between Earthlink Network, Inc., a Delaware
corporation (the "Company"), and Apple Computer, Inc. Limited, a corporation
organized under the laws of the Republic of Ireland (the "Purchaser").
RECITALS
WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, shares of the Company's Series C
Convertible Preferred Stock, par value $0.01 per share (the "Preferred Stock"),
convertible into the Company's common stock, par value $0.01 per share (the
"Common Stock"), on the terms and conditions set forth in this Agreement;
WHEREAS, concurrently with this Agreement, the Company and Apple
Computer, Inc., a California corporation and the parent company of Purchaser,
are entering into an Internet Services Agreement (the "Internet Services
Agreement").
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1
AGREEMENT TO PURCHASE AND SELL PREFERRED STOCK
1.1 AGREEMENT TO PURCHASE AND SELL PREFERRED STOCK.
Upon the terms and subject to the conditions of this Agreement, the Company
hereby agrees to sell to the Purchaser at the Closing (as defined below), and
the Purchaser agrees to purchase from the Company at the Closing, $200,000,000
aggregate purchase price of Preferred Stock having the terms and conditions set
forth in the Certificate of Designation, Preferences and Rights of Series C
Convertible Preferred Stock (the "Certificate) in the form attached hereto as
Exhibit B (the "Shares") at a price per share (the "Per Share Purchase Price")
set forth in Section 1.2 below.
1.2 PER SHARE PURCHASE PRICE.
The Per Share Purchase Price shall be $45.60 (which is equal to the average of
the closing prices of the Common Stock on the Nasdaq Stock Market for the ten
(10) trading days immediately preceding the date hereof).
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SECTION 2
CLOSING DATE; DELIVERY; ESCROW
2.1 CLOSING DATE.
The Closing of the purchase and sale of the Shares hereunder (the "Closing")
shall be held at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, at 10:00 a.m. (Pacific
time), on a date mutually agreed on by the parties hereto, which shall be no
later than the second business day after the satisfaction or waiver of the
conditions to the obligations of the parties set forth in Sections 5 and 6
hereof (the date of the Closing being hereinafter referred to as the "Closing
Date").
2.2 DELIVERY.
At the Closing, the Company will deliver to the Escrow Agent (as defined below)
a certificate or certificates representing the 4,385,965 Shares against payment
of the aggregate purchase price of $200,000,000 (the "Aggregate Purchase Price")
by wire transfer of immediately available funds to an account designated by the
Escrow Agent. The certificate or certificates representing the Shares and the
shares of Common Stock issuable upon conversion of the Shares shall be subject
to a legend restricting transfer under the Securities Act of 1933, as amended
(the "Securities Act"), and referring to restrictions on transfer herein, such
legend to be substantially as follows:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933, as
amended. Such shares may not be sold or transferred in the absence of such
registration or an opinion of counsel reasonably satisfactory to the Company as
to the availability of an exemption from registration."
The Company agrees to remove the legend set forth in the preceding
paragraph upon receipt of an opinion of counsel in form and substance reasonably
satisfactory to the Company that the Shares and the shares of Common Stock
issuable upon conversion of the Shares are eligible for transfer without
registration under the Securities Act.
2.3 ESCROW.
The Shares and the Aggregate Purchase Price will be held in escrow for the
benefit of the Company and the Purchaser by U.S. Bank Trust, N.A., acting as
escrow agent (the "Escrow Agent") pursuant to the terms of the Escrow Agreement
in the form attached hereto as Exhibit C, between the Company, the Purchaser and
the Escrow Agent. Upon the expiration or early termination of the applicable
waiting periods under the HSR Act (as defined below), the Escrow Agent will (i)
release the Aggregate Purchase Price, with interest earned thereon, by wire
transfer of immediately available funds to an account designated by the Company
and (ii) deliver the Shares to the Purchaser, as provided in the Escrow
Agreement. In the event that the expiration or early termination of the
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applicable waiting periods under the HSR Act shall not have occurred for any
reason prior to 5:00 p.m., Eastern time, on March 31, 2000, the Escrow Agent
will (i) return the Aggregate Purchase Price, with interest earned thereon, by
wire transfer of immediately available funds to an account designated by the
Purchaser and (ii) return the Shares to the Company, as provided in the Escrow
Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
3.1 ORGANIZATION.
The Company is a corporation duly organized and validly existing under the
laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power and authority to own and operate
its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted. The Company is qualified to do
business as a foreign corporation in each jurisdiction in which the ownership
of its property or the nature of its business requires such qualification,
except where the failure to be so qualified would not have a materially
adverse effect on the Company and its subsidiaries, taken as a whole.
3.2 AUTHORIZATION.
All corporate action on the part of the Company necessary for the authorization,
execution, delivery and performance of this Agreement and the Investor Rights
Agreement by the Company, the authorization, sale, issuance and delivery of the
Shares hereunder, the issuance and delivery of the shares of Common Stock
issuable upon conversion of the Shares and the performance of the Company's
obligations hereunder and under the Investor Rights Agreement has been taken.
This Agreement and the Investor Rights Agreement (as defined below) constitute
legal, valid and binding obligations of the Company enforceable in accordance
with their respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy as they may apply to Section 4.5 of the Investor
Rights Agreement. The Preferred Stock has the terms and conditions set forth in
the Certificate. Upon their issuance and delivery pursuant to this Agreement the
Shares will be, and upon their issuance and delivery upon conversion of the
Shares pursuant to the Certificate the shares of Common Stock issuable upon
conversion of the Shares will be, validly issued, fully paid and nonassessable.
The issuance and sale of the Shares and the issuance of the shares of Common
Stock upon conversion of the Shares will not give rise to any preemptive rights
or rights of first refusal on behalf of any person in existence on the date
hereof, except for the rights of the "Affiliated Equity Holders" (as defined in
the Governance Agreement referred to in this sentence) pursuant to Article III
of that certain Governance Agreement, dated as of February 10, 1998, among
Sprint Corporation, Sprint Communications Company L.P., the Company and
Earthlink Operations, Inc. (the "Governance Agreement").
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3.3 NO CONFLICT.
Subject to compliance with the HSR Act, the execution and delivery of this
Agreement and the Investor Rights Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under, any provision of the
Certificate of Incorporation or By-laws of the Company or any mortgage,
indenture, lease or other agreement (including the Governance Agreement and the
Agreement and Plan of Reorganization dated September 22, 1999, by and among WWW
Holdings, Inc., a Delaware corporation, Earthlink Network, Inc., a Delaware
corporation, and Mindspring Enterprises, Inc., a Delaware corporation (as
amended, the "Merger Agreement")), or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company, its properties or assets, the effect of which could
have a material adverse effect on the Company and its subsidiaries, taken as a
whole, or materially impair or restrict the Company's power to perform its
obligations as contemplated under said Agreements.
3.4 SEC DOCUMENTS; ABSENCE OF UNDISCLOSED LIABILITIES.
The Company has filed all required reports, schedules, forms, statements and
other documents with the Securities and Exchange Commission (the "SEC") since
January 21, 1997 including the preliminary proxy materials filed with the SEC on
October 14, 1999, as amended December 15, 1999 in connection with the proposed
transactions contemplated by the Merger Agreement (the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicted in the notes thereto) and fairly
present the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended in accordance with GAAP
(subject, in the case of the unaudited statements, to normal year-end audit
adjustments). Except as set forth in the SEC Documents, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto and which could reasonably be expected to
have a material adverse effect on the Company and its subsidiaries taken as a
whole.
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3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in the SEC Documents since the date of the most recent
audited financial statements included in the SEC Documents, there has not been
(i) any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iii) any damage, destruction or loss of property, whether or not
covered by insurance, that has or could reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a whole,
(iv) any change in accounting methods, principles or practices by the Company
materially affecting its assets, liabilities, or business, except insofar as may
have been required by a change in GAAP, (v) any incurrence, assumption or
guarantee by the Company of any material indebtedness for borrowed money other
than in the ordinary course and in amounts and on terms consistent with past
practices, or (vi) any action, event, occurrence, development or state of
circumstances or facts that, individually or in the aggregate, has had or would
be reasonably likely to have a material adverse effect on the financial
condition, business or results of operations of the Company and its
subsidiaries, taken as a whole.
3.6 GOVERNMENTAL CONSENT, ETC.
No consent, approval or authorization of or designation, declaration or filing
with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, or the
offer, sale or issuance of the Shares, the issuance of the shares of Common
Stock upon conversion of the Shares, or the consummation of any other
transaction contemplated hereby, except the filing of such forms as shall be
required by the HSR Act and the expiration of any waiting periods thereunder and
such filings as may be required to be made with the SEC, the Securities
Regulation Division - Department of Corporations of the State of California and
the National Association of Securities Dealers, Inc., and the filing of the
Certificate in the office of the Secretary of State of Delaware.
3.7 LITIGATION.
Except as is disclosed in the SEC Documents, there is no suit, action or
proceeding pending or affecting the Company or any of its subsidiaries that,
individually or in the aggregate, could (i) have a material adverse effect on
the Company and its subsidiaries taken as a whole, (ii) impair the ability of
the Company to perform its obligations under this Agreement, the Investor Rights
Agreement or any other agreement that is material to the Company, or (iii)
prevent the consummation of any of the transactions contemplated by said
Agreements, nor is there any judgment, decree, injunction, rule or order of any
governmental entity or arbitrator outstanding against the Company or any of its
subsidiaries having, or which could reasonably be expected to have, any such
effect.
3.8 CAPITALIZATION.
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(a) The authorized capital stock of the Company consists of 200,000,000
shares of Common Stock and 25,000,000 shares of preferred stock, including
10,000,000 shares of Series A Convertible Preferred Stock, 625,000 shares of
Series B Convertible Preferred Stock, and 4,385,965 shares of Series C
Convertible Preferred Stock. As of December 31, 1999, there were outstanding
(v) 32,929,992 shares of Common Stock, (w) 4,102,941 shares of Series A
Convertible Preferred Stock, (x) 606,155 shares of Series B Convertible
Preferred Stock, (y) no shares of Preferred Stock and (z) stock options and
warrants to purchase an aggregate of 4,972,772 shares of Common Stock (of
which options and warrants to purchase an aggregate of 1,402,632 shares of
Common Stock were exercisable). All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and nonassessable.
(a) As of the date hereof, except (i) as set forth in this Section 3.8,
(ii) for changes since December 31, 1999, resulting from the exercise of
stock options or warrants outstanding on such date, and (iii) the obligations
set forth in the Governance Agreement, there are no outstanding (x) shares of
capital stock or other voting securities of the Company, (y) securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, or (z) options or other rights to acquire
from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses (x),
(y) and (z) being referred to collectively as the "Company Securities").
There are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities. If fully converted as of the date hereof, assuming that all
conditions or limitations to such conversion have been satisfied or waived
and that certain accretion dividends have not been accelerated, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock
would be convertible into 7,390,852 shares of Common Stock and 545,951 shares
of Common Stock, respectively. There are no outstanding contractual
obligations of the Company to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any other person
or entity other than in the ordinary course of business consistent with past
practice. Other than the Governance Agreement, there are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party, or of which the Company is aware, relating to voting,
registration or disposition of any shares of capital stock of the Company or
granting to any person or group of persons the right to elect, or to
designate or nominate for election, a director to the board of directors of
the Company.
3.9 SUBSIDIARIES.
The Company has no subsidiaries other than Earthlink Operations, Inc. Each of
the Company's subsidiaries is a corporation duly incorporated or an entity duly
organized, and is validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all powers and authority and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and is duly qualified to do
business as a foreign entity and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, in each case with such exceptions
as, individually or in the aggregate, would not be reasonably likely to have, a
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material adverse effect on the Company and its subsidiaries, taken as a whole.
All of the outstanding shares of capital stock of, or other ownership interest
in, each of the Company's subsidiaries has been validly issued and is fully paid
and nonassessable. All of the outstanding capital stock of, or other ownership
interest in, each of the Company's subsidiaries, that is owned, directly or
indirectly, by the Company, is owned free and clear of any Lien and free of any
other limitation or restriction (including any limitation or restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests) with such exceptions as, individually or in the aggregate,
would not be reasonably likely to have, a material adverse effect on the Company
and its subsidiaries, taken as a whole. There are no outstanding (i) securities
of the Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or ownership
interests in any of its subsidiaries, (ii) options, warrants or other rights to
acquire from the Company or any of its subsidiaries, and no other obligation of
the Company or any of its subsidiaries to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any of its subsidiaries or (iii) obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any outstanding securities of any of its subsidiaries or any capital stock of,
or other ownership interests in, any of its subsidiaries.
3.10 COMPLIANCE WITH LAWS, LICENSES, PERMITS AND REGISTRATIONS.
To the knowledge of the Company, neither the Company nor any of its subsidiaries
is in violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances, regulations, judgments, injunctions, orders or consent
decrees, except for any such violations that, individually or in the aggregate,
would not be reasonably likely to have a material adverse effect on the Company
and its subsidiaries, taken as a whole. Each of the Company and its subsidiaries
has all permits, licenses, approvals, authorizations of and registrations with
and under all federal, state, local and foreign laws, and from each federal,
state or local governmental authority, transgovernmental authority or court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign, required by the Company and its
subsidiaries to carry on their respective businesses as currently conducted,
except where the failure to have any such permits, licenses, approvals,
authorizations or registrations, individually or in the aggregate, would not be
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
3.11 TITLE TO PROPERTIES.
(a) The Company and each of its subsidiaries have good and marketable
title to, or valid leasehold or license interests in, all of their properties
and assets except for such as are no longer used or useful in the conduct of
their businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants
and any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind (collectively, "Liens") that, in the aggregate, do not materially
interfere with the ability of the Company and its subsidiaries to conduct
their business, taken as a whole, as currently conducted. All such assets and
properties, other than assets and properties in which the Company or any of
its subsidiaries has leasehold interests, are free and clear of all Liens,
except for Liens that, in the aggregate, do not and will not materially
interfere
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with the ability of the Company and its subsidiaries to conduct their business,
taken as a whole, as currently conducted.
(b) Except as would not be reasonably likely, individually or in the
aggregate, to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, (i) the Company and each of its subsidiaries is
in compliance with the terms of all leases to which they are a party and under
which they are in occupancy, and all such leases are in full force and effect
and (ii) the Company and each of its subsidiaries enjoy peaceful and undisturbed
possession under all such leases.
3.12 INTELLECTUAL PROPERTY.
Except as would not be reasonably likely to have a material adverse effect on
the Company and its subsidiaries, taken as a whole, the Company and its
subsidiaries own or have a valid license to use each trademark, service xxxx,
trade name, mask work, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "Company Intellectual Property") necessary to carry on the
business of the Company and its subsidiaries, taken as a whole, as currently
conducted or as proposed to be conducted. Neither the Company nor any of its
subsidiaries has received any written notice of infringement of or challenge to,
and there are no claims pending or, to the Company's knowledge, threatened with
respect to the rights of others to the use of, any the Company Intellectual
Property that, in any such case, individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
3.13 YEAR 2000 COMPLIANCE.
The Company has reviewed its operations and has made reasonable inquiries of any
third parties with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company will be affected by
the Year 2000 Problem (as defined below). As a result of such review, except as
otherwise described in the SEC Documents, the Company has no reason to believe,
and does not believe, that the Year 2000 Problem will have a material adverse
effect on the Company and its subsidiaries, taken as a whole or result in any
material loss or interference with the Company's business or operations. The
"Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
3.14 DISCLOSURE.
The Company has fully provided Purchaser with all the information that Purchaser
has requested for deciding whether to purchase the Preferred Stock. To the best
of its knowledge, neither this Agreement nor any other statements, documents or
certificates made or delivered in connection
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herewith or therewith (when read together) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading.
3.15 FINDERS' FEES.
There is no investment banker, broker, finder or other intermediary that has
been retained by, or is authorized to act on behalf of, the Company or any its
subsidiaries who might be entitled to any fee or commission from the Purchaser
or any of its affiliates upon consummation of the transactions contemplated by
this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
4.1 ORGANIZATION.
The Purchaser is a corporation duly organized and validly existing and in good
standing under the laws of the State of California, with all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business as now being conducted.
4.2 AUTHORITY.
All corporate action on the part for the Purchaser necessary of the
authorization, execution, delivery and performance of this Agreement and the
Investor Rights Agreement by the Purchaser has been taken. This Agreement and
the Investor Rights Agreement have been duly executed and delivered by the
Purchaser and constitute legal, valid and binding obligations of the Purchaser,
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy as they may apply to
Section 4.5 of the Investor Rights Agreement. Subject to compliance with the HSR
Act, the execution and delivery of said Agreements do not, and the consummation
of the transactions contemplated hereby and thereby will not, conflict with or
result in any violation of any obligation under any provision of the Articles of
Incorporation or By-laws of the Purchaser or any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Purchaser.
4.3 INVESTMENT.
The Purchaser is acquiring the Shares for investment for its own account, not as
a nominee or agent, and not with a view to, or for resale in connection with,
any distribution thereof. The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Purchaser's representations and warranties contained herein.
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4.4 DISCLOSURE OF INFORMATION.
The Purchaser has had full access to all information it considers necessary or
appropriate to make an informed investment decision with respect to the Shares
to be purchased by the Purchaser under this Agreement. The Purchaser further has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Shares and to obtain
additional information necessary to verify any information furnished to the
Purchaser or to which the Purchaser had access.
4.5 INVESTMENT EXPERIENCE.
The Purchaser understands that the purchase of the Shares involves substantial
risk. The Purchaser has experience as an investor in securities of companies and
acknowledges that it is able to fend for itself, can bear the economic risk of
its investment in the Shares and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of
this investment in the Shares and protecting its own interests in connection
with this investment.
4.6 ACCREDITED INVESTOR STATUS.
The Purchaser is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act.
4.7 RESTRICTED SECURITIES.
The Purchaser understands that the Shares to be purchased by the Purchaser
hereunder are characterized as "restricted securities" under the Securities Act
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations thereunder such securities may be resold without registration under
the Securities Act only in certain limited circumstances. The Purchaser is
familiar with Rule 144 of the SEC, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act. The Purchaser
understands that the Company is under no obligation to register any of the
Shares sold hereunder except as provided in the Investor Rights Agreement.
4.8 IRISH SECURITIES LAWS.
The purchase of the Shares by Purchaser is not subject to, and will not cause
the Company to become subject to, any applicable securities laws of the Republic
of Ireland requiring any action by or on behalf of the Company.
SECTION 5
CONDITIONS TO OBLIGATION OF THE PURCHASER
The Purchaser's obligation to purchase the Shares at the Closing is, at
the option of the
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Purchaser, which may waive any such conditions, subject to the fulfillment on or
prior to the Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties of the Company contained in Section 3
will be true and correct on and as of the date hereof and on and as of the
Closing Date with the same effect as though such representations and warranties
had been made as of the Closing Date. The Purchaser shall have received a
certificate signed by an officer of the Company to such effect on the Closing
Date.
5.2 COVENANTS.
All covenants, agreements and conditions contained in this Agreement to be
performed by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects. The Purchaser shall have
received a certificate signed by an officer of the Company to such effect on the
Closing Date.
5.3 NO ORDER PENDING.
There shall not then be in effect any order enjoining or restraining the
transactions contemplated by this Agreement.
5.4 NO LAW PROHIBITING OR RESTRICTING SALE OF THE SHARES.
There shall not be in effect any law, rule or regulation prohibiting or
restricting the sale of the Shares, or requiring any consent or approval of any
Person which shall not have been obtained to issue the Shares with full benefits
afforded the Preferred Stock or the Common Stock into which the Preferred Stock
is convertible (except as otherwise provided in this Agreement).
5.5 INVESTOR RIGHTS AGREEMENT.
The Company shall have executed and delivered the Investor Rights Agreement
substantially in the form attached hereto as Exhibit A (the "Investor Rights
Agreement").
5.6 INTERNET SERVICES AGREEMENT.
The Internet Services Agreement shall have been executed and delivered by the
Company and shall be in full force and effect.
5.7 NASDAQ LISTING.
The shares of Common Stock issuable upon conversion of the Shares shall have
been approved for listing upon issuance on the Nasdaq Stock Market.
5.8 ESCROW AGREEMENT.
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The Company, the Purchaser and the Escrow Agent shall have signed the Escrow
Agreement substantially in the form attached hereto as EXHIBIT C.
SECTION 6
CONDITIONS TO OBLIGATION OF THE COMPANY
The Company's obligation to sell and issue the Shares at the Closing
is, at the option of the Company, which may waive any such conditions, subject
to the fulfillment on or prior to the Closing Date of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in Section 4 will
be true and correct on and as of the date hereof and on and as of the Closing
Date with the same effect as though such representations and warranties had been
made as of the Closing Date. The Company shall have received a certificate
signed on behalf of the Purchaser by an officer of the Purchaser to such effect
on the Closing Date.
6.2 COVENANTS.
All covenants, agreements and conditions contained in this Agreement to be
performed by the Purchaser on or prior to the Closing Date shall have been
performed or complied with in all material respects. The Company shall have
received a certificate signed on behalf of the Purchaser by an officer of the
Purchaser to such effect on the Closing Date.
6.3 NO ORDER PENDING.
There shall not then be in effect any order enjoining or restraining the
transactions contemplated by this Agreement.
6.4 NO LAW PROHIBITING OR RESTRICTING THE SALE OF THE SHARES.
There shall not be in effect any law, rule or regulation prohibiting or
restricting the sale of the Shares, or requiring any consent or approval of any
person which shall not have been obtained to issue the Shares with full benefits
afforded the Preferred Stock or the Common Stock into which the Preferred Stock
is convertible (except as otherwise provided in this Agreement).
6.5 INVESTOR RIGHTS AGREEMENT.
The Purchaser shall have executed and delivered the Investor Rights Agreement
substantially in the form attached hereto as Exhibit A.
6.6 INTERNET SERVICES AGREEMENT.
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The Internet Services Agreement shall have been executed and delivered by the
Purchaser and shall be in full force and effect.
6.7 ESCROW AGREEMENT.
The Company, the Purchaser and the Escrow Agent shall have signed the Escrow
Agreement substantially in the form attached hereto as EXHIBIT C.
SECTION 7
COVENANTS
7.1 COMPLIANCE WITH HSR REQUIREMENTS.
Promptly after the Closing Date, the Company and the Purchaser shall each
complete and file their respective premerger notification report forms under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). After the filing thereof, the Company and the Purchaser shall use their
best efforts to comply with the requirements of the HSR Act in order to permit
the release of the Aggregate Purchase Price, plus accrued interest, to the
Company and the delivery of the Shares to the Purchaser, as provided in the
Escrow Agreement, as soon as practicable following the Closing Date.
Notwithstanding the foregoing, in connection with the HSR Act neither the
Company nor the Purchaser shall be obligated to comply with any request by, or
any requirement of, the Federal Trade Commission, or the Department of Justice,
(i) to disclose information that the Company or the Purchaser, as the case may
be, considers to be confidential and the disclosure of which may likely have a
material adverse effect on the disclosing party, (ii) to dispose of any assets
or operations, or (iii) to comply with any restrictions on the manner in which
they conduct their respective operations.
SECTION 8
MISCELLANEOUS
8.1 BEST EFFORTS.
Each of the Company and the Purchaser shall use its best efforts to take all
actions required under the HSR Act and under any other applicable law, rule or
regulation to ensure that the conditions to the Closing set forth herein are
satisfied on or before the Closing Date.
8.2 GOVERNING LAW.
This Agreement shall be governed in all respects by the internal laws of the
State of California as applied to contracts entered into solely between
residents of, and to be performed entirely within, such state, and without
reference to principles of conflicts of laws or choice of laws.
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8.3 SURVIVAL.
The representations and warranties in Sections 3 and 4 of this Agreement shall
not survive the Closing except for the representations and warranties in
Sections 4.3 and 4.7 hereof which shall continue to survive.
8.4 SUCCESSORS AND ASSIGNS.
This Agreement, the Investor Rights Agreement and the Certificate shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns, including without limitation successors by
merger. The Purchaser may assign any or all of its rights or obligations
hereunder in whole or in part to any of its domestic or foreign subsidiaries or
parent companies.
8.5 ENTIRE AGREEMENT; AMENDMENT.
This Agreement, the Certificate and the Investor Rights Agreement constitute the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among the parties relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
8.6 NOTICES.
All notices, requests, demands or other communications which are required or may
be given pursuant to the terms of this Agreement shall be in writing and shall
be deemed to have been duly given: (i) on the date of delivery if delivered by
hand, (ii) upon the third day after such notice is (a) deposited in the United
States mail, if mailed by registered or certified mail, postage prepaid, return
receipt requested, or (b) sent by a nationally recognized overnight express
courier, or (iii) by facsimile upon written confirmation (other than the
automatic confirmation that is received from the recipient's facsimile machine)
of receipt by the recipient of such notice:
(a) if to the Company, to it at:
Earthlink Network, Inc.
0000 Xxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, CEO
with a copy addressed as set forth above but to the attention
of Director of Legal Affairs;
with a copy to:
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W. Tinley Xxxxxxxx, III
Xxxxxx & Xxxxxxxx
XxxxxxxXxxx Xxxxx, Xxxxx 0000
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
(b) if to the Purchaser, to it at:
Apple Computer, Inc. Limited
0 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Senior Vice President,
General Counsel and Secretary
with a copy to:
Xxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
8.7 BROKERS.
(a) the Company has not engaged, consented to or authorized any broker,
finder or intermediary to act on its behalf, directly or indirectly, as a
broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Company hereby agrees to indemnify and
hold harmless the Purchaser from and against all fees, commissions or other
payments owing to any party acting on behalf of the Company hereunder.
(b) The Purchaser has not engaged, consented to or authorized any broker,
finder or intermediary to act on its behalf, directly or indirectly, as a
broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser hereby agrees to indemnify and
hold harmless the Company from and against all fees, commissions or other
payments owing to any party acting on behalf of the Purchaser hereunder.
8.8 FEES, COSTS AND EXPENSES.
All fees, costs and expenses (including attorneys' fees and expenses) incurred
by either party hereto in connection with the preparation, negotiation and
execution of this Agreement and the Investor Rights Agreement and the
consummation of the transactions contemplated hereby and thereby, shall be the
sole and exclusive responsibility of such party; PROVIDED, HOWEVER, that the
parties shall share equally all fees and expenses, other than attorneys' and
accountants' fees and
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expenses, incurred in connection with the premerger notification and report
forms under the HSR Act.
8.9 SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restriction of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
8.10 INITIAL PUBLIC ANNOUNCEMENT.
The Company and the Purchaser shall agree on the form and content of the initial
public announcement which shall be made concerning this Agreement and the
transactions contemplated hereby, and neither the Company nor the Purchaser
shall make such public announcement without the consent of the other, except as
required by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date set forth above.
EARTHLINK NETWORK, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President & Chief
Executive Officer
APPLE COMPUTER, INC. LIMITED
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Executive V.P. and Chief
Financial Officer
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