1
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
dated as of
SEPTEMBER 22, 1999
among
EARTHLINK NETWORK, INC.,
MINDSPRING ENTERPRISES, INC.
and
WWW HOLDINGS, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Definitions. . . . . . . . . . . . . . . . . 2
ARTICLE II THE MERGERS . . . . . . . . . . . . . . . . . . . . 9
Section 2.1. The EarthLink Merger. . . . . . . . . . . . . 9
Section 2.2. The MindSpring Merger. . . . . . . . . . . .10
Section 2.3. Cancellation of Newco Common Stock. . . . . 10
Section 2.4. Exchange of Certificates. . . . . . . . . . 11
ARTICLE III STOCKHOLDER APPROVAL; CLOSING . . . . . . . . . . 12
Section 3.1. Stockholder Approval. . . . . . . . . . . . 12
Section 3.2. Time and Place of Closing. . . . . . . . . 13
ARTICLE IV NEWCO . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.1. No Conduct of Business by Newco; Restated
Articles and Bylaws. . . . . . . . . . . . . . . . 13
Section 4.2. Board of Directors. . . . . . . . . . . . . 13
Section 4.3. Management. . . . . . . . . . . . . . . . . 14
Section 4.4. Headquarters of Newco. . . . . . . . . . . 14
Section 4.5. Indemnification and Insurance. . . . . . . 14
Section 4.7. MindSpring Notes. . . . . . . . . . . . . . 15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF EARTHLINK . . . . 15
Section 5.1. Corporate Existence and Power. . . . . . . 15
Section 5.2. Corporate Authorization. . . . . . . . . . 16
Section 5.3. Governmental Authorization. . . . . . . . . 16
Section 5.4. Non-Contravention. . . . . . . . . . . . . 16
Section 5.5. Capitalization. . . . . . . . . . . . . . . 17
Section 5.6. Subsidiaries. . . . . . . . . . . . . . . . 17
Section 5.7. EarthLink SEC Documents. . . . . . . . . . 18
Section 5.8. Financial Statements, No Material Undisclosed
Liabilities. . . . . . . . . . . . . . . . . . . . 19
Section 5.9. Information to Be Supplied. . . . . . . . . 19
Section 5.10. Absence of Certain Changes. . . . . . . . 20
Section 5.11. Litigation. . . . . . . . . . . . . . . . 20
Section 5.12. Taxes. . . . . . . . . . . . . . . . . . . 20
Section 5.13. Employee Benefits. . . . . . . . . . . . . 21
Section 5.14. Compliance with Laws; Licenses, Permits and
Registrations. . . . . . . . . . . . . . . . . . . 22
Section 5.15. Title to Properties. . . . . . . . . . . . 23
Section 5.16. Intellectual Property. . . . . . . . . . . 23
Section 5.17. Environmental Matters. . . . . . . . . . . 23
Section 5.18. Finders' Fees; Opinions of Financial
Advisor. . . . . . . . . . . . . . . . . . . . . . 24
Section 5.19. Required Vote, Board Approval. . . . . . . 24
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Section 5.20. State Takeover Statutes. . . . . . . . . . 24
Section 5.21. Pooling Matters; Tax Treatment. . . . . . 25
Section 5.22. Certain Agreements. . . . . . . . . . . . 25
Section 5.23. Year 2000 Compliance. . . . . . . . . . . 25
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF MINDSPRING . . . 26
Section 6.1. Corporate Existence and Power. . . . . . . 26
Section 6.2. Corporate Authorization. . . . . . . . . . 26
Section 6.3. Governmental Authorization. . . . . . . . . 26
Section 6.4. Non-Contravention. . . . . . . . . . . . . 27
Section 6.5. Capitalization. . . . . . . . . . . . . . . 27
Section 6.6. Subsidiaries. . . . . . . . . . . . . . . . 28
Section 6.7. MindSpring SEC Documents. . . . . . . . . . 28
Section 6.8. Financial Statements, No Material Undisclosed
Liabilities. . . . . . . . . . . . . . . . . . . . 28
Section 6.9. Information to Be Supplied. . . . . . . . . 29
Section 6.10. Absence of Certain Changes. . . . . . . . 29
Section 6.11. Litigation. . . . . . . . . . . . . . . . 30
Section 6.12. Taxes. . . . . . . . . . . . . . . . . . . 30
Section 6.13. Employee Benefits. . . . . . . . . . . . . 30
Section 6.14. Compliance with Laws; Licenses, Permits and
Registrations. . . . . . . . . . . . . . . . . . . 32
Section 6.15. Title to Properties. . . . . . . . . . . . 32
Section 6.16. Intellectual Property. . . . . . . . . . . 33
Section 6.17. Environmental Matters. . . . . . . . . . . 33
Section 6.18. Finders' Fees; Opinions of Financial
Advisor. . . . . . . . . . . . . . . . . . . . . . 33
Section 6.19. Required Vote, Board Approval. . . . . . . 34
Section 6.20. State Takeover Statutes. . . . . . . . . . 34
Section 6.21. Pooling Matters; Tax Treatment. . . . . . 34
Section 6.22. Certain Agreements. . . . . . . . . . . . 34
Section 6.23. Year 2000 Compliance. . . . . . . . . . . 35
ARTICLE VII COVENANTS OF EARTHLINK . . . . . . . . . . . . . 35
Section 7.1. EarthLink Interim Operations. . . . . . . . 35
Section 7.2. Acquisition Proposals; Board
Recommendation. . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII COVENANTS OF MINDSPRING . . . . . . . . . . . . 39
Section 8.1. MindSpring Interim Operations. . . . . . . 39
Section 8.2. Acquisition Proposals; Board Recommendation. 42
ARTICLE IX COVENANTS OF MINDSPRING, NEWCO AND EARTHLINK . . . 44
Section 9.1. Reasonable Best Efforts. . . . . . . . . . 44
Section 9.2. Certain Filings; Cooperation in Receipt of
Consents; Listing. . . . . . . . . . . . . . . . . 44
Section 9.3. Public Announcements. . . . . . . . . . . . 45
Section 9.4. Access to Information, Notification of
Certain Matters. . . . . . . . . . . . . . . . . . 45
Section 9.5. Further Assurances. . . . . . . . . . . . . 46
Section 9.6. Tax and Accounting Treatment. . . . . . . . 46
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Section 9.7. Affiliate Letters. . . . . . . . . . . . . 47
Section 9.8. Confidentiality. . . . . . . . . . . . . . 47
Section 9.9. MindSpring Standstill. . . . . . . . . . . 49
Section 9.10. EarthLink Standstill. . . . . . . . . . . 50
Section 9.11. ASR 135. . . . . . . . . . . . . . . . . . 52
Section 9.12. Benefit Matters. . . . . . . . . . . . . . 52
Section 9.13. Antitrust Matters. . . . . . . . . . . . . 52
Section 9.14. Exemption from Liability under
Section 16(b). . . . . . . . . . . . . . . . . . . 53
ARTICLE X CONDITIONS TO THE MERGERS . . . . . . . . . . . . . 54
Section 10.1. Conditions to the Obligations of Each
Party. . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.2. Conditions to the Obligations of
EarthLink. . . . . . . . . . . . . . . . . . . . . 55
Section 10.3. Conditions to the Obligations of
MindSpring. . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI TERMINATION . . . . . . . . . . . . . . . . . . . 57
Section 11.1. Termination. . . . . . . . . . . . . . . . 57
Section 11.2. Effect of Termination. . . . . . . . . . . 58
Section 11.3. Fees and Expenses. . . . . . . . . . . . . 58
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . 59
Section 12.1. Notices. . . . . . . . . . . . . . . . . . 59
Section 12.2. Survival of Representations, Warranties and
Covenants after the Effective Time. . . . . . . . . 60
Section 12.3. Amendments: No Waivers. . . . . . . . . . 60
Section 12.4. Successors and Assigns. . . . . . . . . . 61
Section 12.5. Governing Law. . . . . . . . . . . . . . . 61
Section 12.6. Counterparts; Effectiveness; Third Party
Beneficiaries. . . . . . . . . . . . . . . . . . . 61
Section 12.7. Jurisdiction. . . . . . . . . . . . . . . 61
Section 12.8. Waiver of Jury Trial. . . . . . . . . . . 62
Section 12.9. Enforcement. . . . . . . . . . . . . . . . 62
Section 12.10. Entire Agreement. . . . . . . . . . . . . 62
Section 12.11. Severability. . . . . . . . . . . . . . . 62
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EXHIBITS
Exhibit 1. Stock Option Agreements
Exhibit 2. Stockholders Agreements
Exhibit 3. EarthLink Certificate of Merger
Exhibit 4. MindSpring Certificate of Merger
Exhibit 5. Restated Certificate of Incorporation of Newco
Exhibit 6. Bylaws of Newco
Exhibit 7. Nominating Committee
Exhibit 8. Director Designees
Exhibit 9. Principal Officers of Newco
Exhibit 10. Indemnification Agreements
Exhibit 11-A. Form of EarthLink Affiliate Letter
Exhibit 11-B. Form of MindSpring Affiliate Letter
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 22, 1999, by
and among WWW HOLDINGS, INC., a Delaware corporation ("Newco"), EARTHLINK
NETWORK, INC., a Delaware corporation ("EarthLink"), and MINDSPRING
ENTERPRISES, INC., a Delaware corporation ("MindSpring").
RECITALS
WHEREAS, the respective Boards of Directors of EarthLink and MindSpring
have determined that a combination of the business and operations of EarthLink
and MindSpring is advisable and in the best interests of their respective
stockholders and presents an opportunity for their respective companies to
achieve long-term strategic and financial benefits; and
WHEREAS, the respective Boards of Directors of EarthLink and MindSpring
have determined that the combination should be effected by causing EarthLink
and MindSpring to be merged with and into Newco; and
WHEREAS, pursuant to the EarthLink Merger (as hereinafter defined), each
outstanding share of EarthLink Common Stock (as hereinafter defined) will be
converted into 1.615 shares of Newco Common Stock (as hereinafter defined) each
outstanding share of EarthLink Series A Preferred (as hereinafter defined)
shall be converted into 1.615 shares of Newco Series A Preferred (as
hereinafter defined) and each outstanding share of EarthLink Series B Preferred
(as hereinafter defined) shall be converted into 1.615 shares of Newco Series B
Preferred (as hereinafter defined); and pursuant to the MindSpring Merger (as
hereinafter defined) each outstanding share of MindSpring Common Stock (as
hereinafter defined) will be converted into one (1) share of Newco Common
Stock; and
WHEREAS, for Federal income tax purposes, it is intended that the
transactions contemplated by this Agreement shall constitute transactions
described in section 368 of the Internal Revenue Code of 1986, as amended (a
"368 Reorganization"), and the regulations thereunder; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to EarthLink's and MindSpring's willingness
to enter into this Agreement, EarthLink and MindSpring have entered into stock
option agreements of even date herewith (collectively, the "Stock Option
Agreements", in the form attached as Exhibit 1 hereto) providing for the
granting: (i) by EarthLink to MindSpring of an option to purchase from
EarthLink up to 19.9% of the outstanding shares of EarthLink Common Stock,
subject to the terms and conditions set forth therein and (ii) by MindSpring to
EarthLink of an option to purchase from MindSpring up to 19.9% of the
outstanding shares of MindSpring Common Stock, subject to the terms and
conditions set forth therein; and
WHEREAS, simultaneously with the execution and delivery of this Agreement:
(i) MindSpring has entered into an agreement (the "EarthLink Stockholders
Agreement") with certain stockholders of EarthLink pursuant to which such
EarthLink stockholders have agreed to
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vote the shares of EarthLink Common Stock owned by them in favor of the
EarthLink Merger under certain circumstances; and (ii) EarthLink has entered
into an agreement (the "MindSpring Stockholders Agreement" and, together with
the EarthLink Stockholders Agreement, the "Stockholders Agreements," each in
the form attached as Exhibit 2 hereto) with certain stockholders of MindSpring
pursuant to which such MindSpring stockholders have agreed to vote the shares
of MindSpring Common Stock owned by them in favor of the MindSpring Merger
under certain circumstances.
NOW, THEREFORE, in consideration of the premises, which are incorporated
into and made part of this Agreement, and of the mutual representations,
warranties, covenants, agreements and conditions set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
(a) As used herein, the following terms have the following
meanings:
"Acquisition Proposal for EarthLink" means any offer or proposal for, or
indication of interest in, a merger, consolidation, share exchange, business
combination, reorganization, recapitalization, liquidation, dissolution, tender
offer or exchange offer or other similar transaction involving, or any purchase
of 10% or more of the assets or any class of equity securities of, EarthLink or
any Significant Subsidiary of EarthLink, other than the transactions
contemplated by this Agreement or by Sprint or the Affiliated Equity Holders as
defined in and pursuant to Sections 3.01, 4.02 and 4.03 of the Sprint
Governance Agreement.
"Acquisition Proposal for MindSpring" means any offer or proposal for, or
indication of interest in, a merger, consolidation, share exchange, business
combination, reorganization, recapitalization, liquidation, dissolution, tender
offer or exchange offer or other similar transaction involving, or any purchase
of 10% or more of the assets or any class of equity securities of, MindSpring
or any Significant Subsidiary of MindSpring, other than the transactions
contemplated by this Agreement.
"Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative terms "controlling", "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
"Business Day" means any day other than a Saturday, Sunday or one on which
banks are authorized by law to close in New York, New York.
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"Certificates of Merger" means the EarthLink Certificate of Merger and the
MindSpring Certificate of Merger.
"Closing" means the conference held pursuant to Section 3.2.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"DGCL" means the Delaware General Corporation Law, as amended.
"EarthLink Balance Sheet" means EarthLink's consolidated balance sheet
included in the EarthLink 10-K relating to its fiscal year ended on December
31, 1998.
"EarthLink Certificate of Merger" means the certificate of merger of
EarthLink with and into Newco, in substantially the form attached hereto as
Exhibit 3.
"EarthLink Common Stock" means the common stock of EarthLink, par value
$0.01 per share.
"EarthLink Exchange Ratio" means, collectively, the conversion formulas
described in Section 2.1(c) and 2.1(f) hereof.
"EarthLink Preferred Stock" means the EarthLink Series A Preferred and the
EarthLink Series B Preferred.
"EarthLink SEC Documents" means (i) EarthLink's annual report on Form 10-K
for its fiscal year ended December 31, 1998 (the "EarthLink 10-K"), (ii)
EarthLink's quarterly report on Form 10-Q (the "EarthLink 10-Q") for its fiscal
quarter ended June 30, 1999, (iii) EarthLink's proxy or information statements
relating to meetings of, or actions taken without a meeting by, EarthLink's
stockholders held since December 31, 1998, and (iv) all other reports, filings,
registration statements and other documents filed by it with the SEC since
December 31, 1998.
"EarthLink Series A Preferred" means the Series A Convertible Preferred
Stock of EarthLink, par value $0.01 per share.
"EarthLink Series B Preferred" means the Series B Convertible Preferred
Stock of EarthLink, par value $0.01 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange Agent" means the agent to be agreed upon by EarthLink and
MindSpring and engaged by Newco to effect the exchange of the Certificates
pursuant to Section 2.4 of this Agreement.
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"Governmental Entity" means any federal, state or local governmental
authority, any transgovernmental authority or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
"Joint Proxy Statement/Prospectus" means the joint proxy statement/
prospectus included in the Registration Statement relating to the Special
Meetings, together with any amendments or supplements thereto.
"Knowledge" means, with respect to the matter in question, if any of the
executive officers of EarthLink or MindSpring, as the case may be, has actual
knowledge of such matter.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
provided, however, that the term "Lien" shall not include (i) liens for water
and sewer charges and current taxes not yet due and payable or being contested
in good faith and (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens arising or incurred in
the ordinary course of business.
"Material Adverse Effect" means a material adverse effect on the financial
condition, business or results of operations of a Person and its Subsidiaries,
taken as a whole, but shall exclude any material adverse effect arising out of
any change or development relating to (i) U.S. or global economic or industry
conditions (including, without limitation, conditions applicable generally to
the Internet service business), (ii) changes in U.S. or global financial
markets or conditions, (iii) any generally applicable change in law, rule or
regulation or GAAP or interpretation of any thereof, (iv) the announcement of
this Agreement or the transactions contemplated hereby, (v) a change in market
price or trading volume of any securities of EarthLink or MindSpring and/or
(vi) stockholder litigation arising in connection with this Agreement.
"EarthLink Material Adverse Effect" means a Material Adverse Effect in respect
of EarthLink and "MindSpring Material Adverse Effect" means a Material Adverse
Effect in respect of MindSpring and "Newco Material Adverse Effect" means a
Material Adverse Effect in respect of Newco.
"Mergers" means the EarthLink Merger and the MindSpring Merger.
"MindSpring Balance Sheet" means MindSpring's balance sheet included in
the MindSpring 10-K relating to its fiscal year ended on December 31, 1998.
"MindSpring Certificate of Merger" means the certificate of merger of
MindSpring with and into Newco, in substantially the form attached hereto as
Exhibit 4.
"MindSpring Common Stock" means the common stock of MindSpring, $0.01 par
value per share.
"MindSpring Exchange Ratio" means the conversion formula described in
Section 2.2(c) hereof.
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"MindSpring Indenture" means, collectively, the Indenture, as supplemented
by the First Supplemental Indenture, each dated as of April 14, 0000, xxxxxxx
XxxxXxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York as Trustee, pursuant to
which the MindSpring Notes were issued.
"MindSpring Notes" means the 5% Convertible Subordinated Notes due 2006 of
MindSpring.
"MindSpring Preferred Stock" means the Serial Preferred Stock of
MindSpring, $0.01 par value per share.
"MindSpring SEC Documents" means (i) the annual report on Form 10-K of
MindSpring (the "MindSpring 10-K") for its fiscal year ended December 31, 1998,
(ii) the quarterly report on Form 10-Q of MindSpring (the "MindSpring 10-Q")
for its fiscal quarter ended June 30, 1999, (iii) MindSpring's proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the MindSpring stockholders, held since December 31, 1998, and (iv)
all other reports filings, registration statements and other documents filed by
MindSpring with the SEC since December 31, 1998.
"Newco Common Stock" means the common stock of Newco, $0.01 par value per
share.
"Newco Preferred Stock" means the Newco Series A Preferred and the Newco
Series B Preferred.
"Newco Series A Preferred" means the Series A Convertible Preferred Stock
of Newco, par value $0.01 per share.
"Newco Series B Preferred" means the Series B Convertible Preferred Stock
of Newco, par value $0.01 per share.
"Person" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or organization,
including any Governmental Entity.
"Registration Statement" means the Registration Statement on Form S-4
registering under the Securities Act the Newco Common Stock issuable in
connection with the Mergers.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Significant Subsidiary" means any Subsidiary that constitutes a
"significant subsidiary" of such Person within the meaning of Rule 1-02 of
Regulation S-X of the Exchange Act.
"Sprint" means Sprint Corporation, a Kansas corporation.
"Sprint Credit Agreement" means the Credit Agreement, dated as of February
10, 1998, by and among EarthLink, Sprint and Dolphin, Inc.
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"Sprint Governance Agreement" means the governance agreement, dated as of
February 10, 1998, by and among EarthLink, Sprint, Sprint L.P. and Dolphin,
Inc.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are directly or indirectly owned by such Person. "EarthLink
Subsidiary" means a Subsidiary of EarthLink and "MindSpring Subsidiary" means a
Subsidiary of MindSpring.
"Tax" or "Taxes" means any federal, state, county, local or foreign taxes,
charges, levies, imposts, duties, other assessments or similar charges of any
kind whatsoever, including any interest, penalties and addition imposed thereon
or with respect thereto.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Terms Section
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Acquisition Proposal for EarthLink 1.1(a)
Acquisition Proposal for MindSpring 1.1(a)
Affiliate 1.1(a)
Business Day 1.1(a)
Certificates 2.4(a)
Closing 1.1(a)
Closing Date 1.1(a)
Code 1.1(a)
Confidential Material 9.8(a)
DGCL 1.1(a)
Delivering Company 9.8(a)
EarthLink Preamble
EarthLink 10-K 1.1(a)
EarthLink 10-Q 1.1(a)
EarthLink Balance Sheet 1.1(a)
EarthLink Certificate of Merger 1.1(a)
EarthLink Common Stock 1.1(a)
EarthLink Counter Proposal 8.2(c)
EarthLink Designees 4.2
EarthLink Employee Plans 5.13(a)
EarthLink Equity Securities 7.2(e)
EarthLink Exchange Ratio 1.1(a)
EarthLink Insider 9.14(d)
EarthLink Intellectual Property 5.16
EarthLink Material Adverse Effect 1.1(a)
EarthLink Merger 2.1(b)
EarthLink Preferred Stock 1.1(a)
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EarthLink Recommendation 3.1
EarthLink Returns 5.12
EarthLink SEC Documents 1.1(a)
EarthLink Securities 5.5(b)
EarthLink Series A Preferred 1.1(a)
EarthLink Series B Preferred 1.1(a)
EarthLink Stockholders Agreement Recitals
EarthLink Stockholder Approval 5.19(a)
EarthLink Subsequent Alternate Transaction 11.3(b)
EarthLink Subsidiary 1.1(a)
EarthLink Superior Proposal 7.2(d)
Effective Time 3.1
End Date 11.1(b)(i)
Environmental Laws 5.17(b)
Terms Section
----- -------
ERISA 5.13(a)
ERISA Affiliate 5.13(a)
Exchange Act 1.1(a)
Exchange Agent 1.1(a)
GAAP 5.8(a)
Governmental Entity 1.1(a)
HSR Act 5.3
Joint Proxy Statement/Prospectus 1.1(a)
Knowledge 1.1(a)
Lien 1.1(a)
Material Adverse Effect 1.1(a)
Mergers 1.1(a)
MindSpring Preamble
MindSpring 10-K 1.1(a)
MindSpring 10-Q 1.1(a)
MindSpring Balance Sheet 1.1(a)
MindSpring Certificate of Merger 1.1(a)
MindSpring Common Stock 1.1(a)
MindSpring Counter Proposal 7.2(c)
MindSpring Designees 4.2(a)
MindSpring Employee Plans 6.13(a)
MindSpring Equity Securities 8.2(e)
MindSpring Exchange Ratio 1.1(a)
MindSpring Indenture 1.1(a)
MindSpring Insider 9.14(d)
MindSpring Intellectual Property 6.16
MindSpring Material Adverse Effect 1.1(a)
MindSpring Merger 2.2(b)
MindSpring Notes 1.1(a)
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MindSpring Preferred Stock 1.1(a)
MindSpring Recommendation 3.1
MindSpring Returns 6.12
MindSpring SEC Documents 1.1(a)
MindSpring Securities 6.5(b)
MindSpring Stockholders Agreement Recitals
MindSpring Stockholder Approval 6.19
MindSpring Subsequent Alternate Transaction 11.3(b)
MindSpring Subsidiary 1.1(a)
MindSpring Superior Proposal 8.2(d)
Multiemployer Plan 5.13(b)
Newco Preamble
Newco Common Stock 1.1(a)
Newco Material Adverse Effect 1.1(a)
Newco Preferred Stock 1.1(a)
Newco Series A Preferred 1.1(a)
Newco Series B Preferred 1.1(a)
Terms Section
----- -------
Person 1.1(a)
Registration Statement 1.1(a)
Receiving Company 9.8(a)
Representatives 9.8(a)
Retirement Plan 5.13(b)
SEC 1.1(a)
Section 16 Information 9.14(c)
Securities Act 1.1(a)
Significant Subsidiary 1.1(a)
Special Meetings 3.1
Sprint 1.1(a)
Sprint Credit Agreement 1.1(a)
Spring Designees 4.2(a)
Sprint Governance Agreement 1.1(a)
Stock Option Agreements Recitals
Stockholders Agreements Recitals
Subsidiary 1.1(a)
Taxes 1.1(a)
Termination Fee 11.3(b)
368 Reorganization Recitals
Year 2000 Problem 5.23
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ARTICLE II
THE MERGERS
Section 2.1. The EarthLink Merger.
(a) EarthLink agrees to submit this Agreement to its stockholders
for approval in accordance with Section 3.1 hereof.
(b) Subject to the terms and conditions of this Agreement and the
EarthLink Certificate of Merger, at the Effective Time, immediately prior to
the MindSpring Merger (as hereinafter defined), EarthLink shall be merged with
and into Newco in accordance with the provisions of, and with the effects
provided in, Subchapter IX of the DGCL (the "EarthLink Merger"). Newco shall
be the surviving corporation resulting from the EarthLink Merger, shall
continue to be governed by the laws of the State of Delaware, shall at the
Effective Time amend Article I of its Certificate of Incorporation to change
its name to "EarthLink Network, Inc.," and shall adopt the Nasdaq ticker symbol
"ELNK."
(c) Pursuant to the EarthLink Merger, each share of EarthLink Common
Stock outstanding immediately prior to the Effective Time shall be converted
into and become 1.615 shares of Newco Common Stock, and each outstanding
option, warrant and other right to purchase, or which is convertible into,
EarthLink Common Stock shall be converted into an option, warrant or other
right, as the case may be, to purchase or be convertible into a number of
shares of Newco Common Stock equal to the number of shares of EarthLink Common
Stock subject to such option, warrant or other right multiplied by 1.615 and
otherwise having substantially identical terms and conditions, except that the
exercise or purchase price shall be divided by 1.615.
(d) Each share of EarthLink Common Stock held by EarthLink as
treasury stock or owned by MindSpring immediately prior to the Effective Time
shall be canceled.
(e) No fraction of a share of Newco Common Stock shall be issued in
connection with the conversion of EarthLink Common Stock in the EarthLink
Merger and the distribution of Newco Common Stock in respect thereof, but in
lieu of such fraction, the Exchange Agent shall make a cash payment (without
interest and subject to the payment of any applicable withholding Taxes) equal
to the same fraction of the market value of a full share of Newco Common Stock,
computed on the basis of the mean of the high and low sales prices of Newco
Common Stock as reported on NASDAQ on the first full day on which the Newco
Common Stock is traded on the Nasdaq Stock Market after the Effective Time.
(f) Each share of EarthLink Series A Preferred and each share of
EarthLink Series B Preferred shall be converted into 1.615 shares of newly
created Newco Series A Preferred and 1.615 shares of newly created Newco Series
B Preferred, having terms, conditions, rights, preferences and designations
substantially similar to the EarthLink Series A Preferred and the EarthLink
Series B Preferred, respectively.
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(g) EarthLink agrees to use its best efforts to cause the EarthLink
Merger to be consummated in accordance with the terms of this Agreement and the
EarthLink Certificate of Merger.
Section 2.2. The MindSpring Merger.
(a) MindSpring agrees to submit this Agreement to its stockholders
for approval in accordance with Section 3.1 hereof.
(b) Subject to the terms and conditions of this Agreement and the
MindSpring Certificate of Merger, at the Effective Time, immediately following
the EarthLink Merger, MindSpring shall be merged with and into Newco in
accordance with the provisions of, and with the effects provided in, Subchapter
IX of the DGCL (the "MindSpring Merger"). Newco shall be the surviving
corporation resulting from the MindSpring Merger and shall continue to be
governed by the laws of the State of Delaware.
(c) Pursuant to the MindSpring Merger, each share of MindSpring
Common Stock outstanding immediately prior to the Effective Time shall be
converted into and become one (1) share of Newco Common Stock, and each
outstanding option, warrant and other right to purchase, or which is
convertible into, MindSpring Common Stock shall be converted into an option,
warrant or right, as the case may be, to purchase or be convertible into a
number shares of Newco Common Stock equal to the number of shares of Newco
Common Stock subject to such option, warrant or other right multiplied by one
(1) and otherwise having substantially identical terms and conditions, except
that the exercise or purchase price shall be divided by one (1).
(d) Each share of MindSpring Common Stock held by MindSpring as
treasury stock or owned by EarthLink immediately prior to the Effective Time
shall be canceled.
(e) The parties will take such action as may be necessary to cause
Newco, and Newco agrees, to execute a supplemental indenture to the MindSpring
Indenture, which shall comply with the requirements of the MindSpring
Indenture, for the purpose of assuming all of MindSpring's obligations with
respect to the MindSpring Notes, and to reserve out of its authorized Newco
Common Stock a sufficient number of shares of Newco Common Stock to permit
conversion of the MindSpring Notes on or after the Effective Time pursuant to
the terms thereof and the MindSpring Indenture.
(f) MindSpring agrees to use its best efforts to cause the
MindSpring Merger to be consummated in accordance with the terms this Agreement
of the MindSpring Certificate of Merger.
Section 2.3. Cancellation of Newco Common Stock.
Pursuant to the Mergers, the shares of Newco Common Stock held by
EarthLink and MindSpring, respectively, immediately prior to the Mergers will
be canceled in the Mergers.
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Section 2.4. Exchange of Certificates.
(a) Prior to the Effective Time, EarthLink and MindSpring shall
cause Newco, and Newco agrees, to appoint the Exchange Agent to act as the
exchange agent in connection with the Mergers. Except as otherwise provided in
Section 2.1 and Section 2.2, from and after the Effective Time, each holder of
a certificate that immediately prior to the Effective Time represented
outstanding shares of MindSpring Common Stock or EarthLink Common Stock (the
"Certificates") shall be entitled to receive in exchange therefor, upon
surrender thereof to the Exchange Agent, a certificate or certificates
representing the number of whole shares of Newco Common Stock into which such
holder's shares were converted in the MindSpring Merger or the EarthLink
Merger, as the case may be. Immediately prior to the Effective Time, Newco
will deliver to the Exchange Agent, in trust for the benefit of the holders of
EarthLink Common Stock and MindSpring Common Stock, (i) certificates
representing shares of Newco Common Stock and (ii) cash in an amount sufficient
for payment in lieu of fractional shares necessary to make the exchanges
contemplated by Section 2.1 and Section 2.2 hereof on a timely basis.
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each record holder of EarthLink Common Stock and MindSpring Common Stock as
of the Effective Time, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of Certificates in exchange for
certificates representing shares of Newco Common Stock. Upon surrender to the
Exchange Agent of a Certificate, together with such letter of transmittal duly
executed, and any other required documents, the holder of such Certificate
shall be entitled to receive in exchange therefor certificates representing
shares of Newco Common Stock as set forth in this Article II, and such
Certificate shall forthwith be canceled. No holder of a Certificate or
Certificates shall be entitled to receive any dividend or other distribution
from Newco until the surrender of such holder's Certificate for a certificate
or certificates representing shares of Newco Common Stock. Upon such
surrender, there shall be paid to the holder the amount of any dividends or
other distributions (without interest) that theretofore became payable, but
that were not paid by reason of the foregoing, with respect to the number of
whole shares of Newco Common Stock represented by the certificates issued upon
surrender, which amount shall be delivered to the Exchange Agent by Newco from
time to time as such dividends or other distributions are declared. If
delivery of certificates representing shares of Newco Common Stock is to be
made to a person other than the person in whose name the Certificate
surrendered is registered or if any certificate for shares of Newco Common
Stock is to be issued in a name other than that in which the Certificate
surrendered therefor is registered, it shall be a condition of such delivery or
issuance that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
delivery or issuance shall pay any transfer or other Taxes required by reason
of such delivery or issuance to a person other than the registered holder of
the Certificate surrendered or establish to the satisfaction of Newco that such
Tax has been paid or is not applicable. Until surrendered in accordance with
the provisions of this Section 2.4, each Certificate shall represent for all
purposes only the right to receive shares
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of Newco Common Stock (and cash in lieu of fractional shares) as provided in
Section 2.1 and Section 2.2 hereto, without any interest thereon.
(c) After the Effective Time, there shall be no transfers on the
stock transfer books of Newco, as the surviving corporation in the Mergers, of
the shares of EarthLink Common Stock or MindSpring Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to Newco for transfer, they shall be canceled
and exchanged for shares of Newco Common Stock as provided in Section 2.1 and
Section 2.2 hereof, in accordance with the procedures set forth in this Section
2.4.
(d) Any shares of Newco Common Stock (and any accrued dividends and
distributions thereon), and any cash held by the Exchange Agent for payment in
lieu of fractional shares, that remains unclaimed by the former stockholders of
EarthLink or MindSpring on the first anniversary of the Effective Time shall be
delivered by the Exchange Agent to Newco. Any former stockholders of EarthLink
or MindSpring who have not theretofore complied with this Section 2.4 shall
thereafter look only to Newco for satisfaction of their claim for the
consideration set forth in this Article II, without any interest thereon.
Notwithstanding the foregoing, Newco shall not be liable to any holder of
shares of MindSpring Common Stock or EarthLink Common Stock for any shares of
Newco Common Stock (or dividends or distributions with respect thereto)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) Upon delivery of certificates representing shares of EarthLink
Preferred Stock to Newco by Sprint Communications Company L.P. after the
Effective Time, Newco shall deliver promptly to Sprint certificates
representing shares of Newco Preferred Stock in appropriate denominations.
ARTICLE III
STOCKHOLDER APPROVAL; CLOSING
Section 3.1. Stockholder Approval.
This Agreement shall be submitted for consideration and approval to the
holders of shares of MindSpring Common Stock at a special meeting of
stockholders duly held for such purpose by MindSpring, and this Agreement shall
be submitted for consideration and approval to the holders of shares of
EarthLink Common Stock at a special meeting of stockholders duly held for such
purpose by EarthLink (collectively, the "Special Meetings"). MindSpring and
EarthLink shall coordinate and cooperate with respect to the timing of the
Special Meetings and shall endeavor to hold the Special Meetings on the same
day and as soon as practicable after the date hereof. MindSpring and EarthLink
shall each recommend that their respective stockholders approve this Agreement
and the transactions contemplated hereby, and such recommendations shall be
contained in the Joint Proxy Statement/Prospectus (the "EarthLink
Recommendation" and the "MindSpring Recommendation," respectively). On the
first business day on or by which (a) this Agreement has been duly approved by
the requisite vote of the holders of shares of MindSpring Common Stock, and (b)
this Agreement has been duly approved by the requisite vote of the holders of
shares of EarthLink Common Stock and (c) the Closing of the transactions
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contemplated by this Agreement shall have occurred, or such later date as shall
be agreed upon by MindSpring and EarthLink, the Certificates of Merger shall be
filed in accordance with the DGCL, and the Mergers shall become effective in
accordance with the terms of this Agreement and the Certificates of Merger at
the time and date contemplated therein (such time and date being referred to
herein as the "Effective Time").
Section 3.2. Time and Place of Closing.
The Closing of the transactions contemplated by this Agreement will take
place at 11:00 A.M. on a date mutually agreed upon by the parties hereto, which
shall be no later than the third business day following the date on which all
of the conditions to the obligations of the parties hereunder set forth in
Article X hereof have been satisfied or waived. The place of Closing shall be
at such place as may be mutually agreed upon by the parties hereto.
ARTICLE IV
NEWCO
Section 4.1. No Conduct of Business by Newco; Restated Articles and
Bylaws.
(a) Prior to the Effective Time, Newco shall not (i) conduct any
business operations whatsoever or (ii) enter into any contract or agreement of
any kind or acquire any assets or incur any liability, except as may be
specifically contemplated by this Agreement or as the parties may otherwise
agree. In the event this Agreement is terminated prior to the Effective Time,
Newco shall be dissolved.
(b) MindSpring and EarthLink shall cause Newco, and Newco agrees, to
file, immediately prior to the filing of the Certificates of Merger pursuant to
Section 3.1 hereof, a Restated Certificate of Incorporation of Newco,
substantially in the form attached hereto as Exhibit 5. MindSpring and
EarthLink shall cause Newco, and Newco agrees, to adopt effective as of the
Effective Time, By-laws substantially in the form attached hereto as Exhibit 6.
Section 4.2. Board of Directors.
At the Effective Time, the Board of Directors of Newco shall consist of
thirteen (13) persons. Of the thirteen persons initially elected to the Board
of Directors of Newco, four (4) (the "EarthLink Designees") shall be persons
named by the Board of Directors of EarthLink, four (4) (the "MindSpring
Designees") shall be persons named by the Board of Directors of MindSpring, two
(2) (the "Sprint Designees") shall be the persons named by the Board of
Directors of Sprint, three (3) (the "Outside Directors") shall be nominated by
the nominating committee to be comprised of the persons named on Exhibit 7
attached hereto and in accordance with the terms set forth thereon prior to
Closing (the "Nominating Committee") and subsequently elected by the Newco
Board of Directors; provided, however, the number of Outside Directors shall be
reduced to two (2) in the event that Sprint fails to exercise its rights to
maintain its Higher Threshold as defined in and as pursuant to the Sprint
Governance Agreement and, as a result thereof and in accordance with section
7(b) of the Certificates of Designation for each of the Series A Preferred
Stock and Series B Preferred Stock, and section 2.01(d) of the Sprint
Governance Agreement, as the case
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may be, the number of Sprint Designees sitting on the Board of Directors is
reduced to one(1). In the event the number of Outside Directors and Sprint
Designees is reduced as described in the immediately preceding sentence, the
size of the Board of Directors of Newco shall be reduced by two (2) members.
The Board of Directors of Newco shall be divided into three classes, with the
initial terms of office of the first, second and third classes expiring at the
first, second and third annual meetings of the stockholders of Newco,
respectively. The EarthLink Designees, the MindSpring Designees and the Sprint
Designees are each listed by class on Exhibit 8 attached hereto. If, prior to
the Effective Time, (i) any of the individuals named by EarthLink, MindSpring
or Sprint to serve on the Board of Directors of Newco following the Effective
Time resigns, retires or otherwise ceases to serve as a director of EarthLink,
MindSpring or Sprint, as the case may be, or otherwise becomes unable or
unwilling to serve as a director of Newco, or (ii) EarthLink, MindSpring or
Sprint shall determine to replace an individual named by such party to serve on
the Board of Directors of Newco, the party that designated such individual may
name a replacement to become a director of Newco. Any such replacement of an
EarthLink Designee or a MindSpring Designee shall be subject to the approval of
the Chief Executive Officer of Newco, which approval shall not be unreasonably
withheld, conditioned or delayed.
(a) The persons named as members of the Board of Directors of Newco
pursuant to Section 4.2 shall be named in the Joint Proxy Statement/Prospectus
and the Registration Statement, subject to receipt of the consent of such
individuals to be so named.
Section 4.3. Management.
The principal officers of Newco at the Effective Time shall be as listed
on Exhibit 9. All other management positions of Newco shall be determined by
Newco's Chief Executive Officer and President.
Section 4.4. Headquarters of Newco.
The headquarters of Newco shall be located in Atlanta, Georgia.
Section 4.5. Indemnification and Insurance.
(a) Newco agrees to assume the agreements listed in Exhibit 10,
which agreements will survive the Mergers and will continue in full force and
effect for a period of not less than six (6) years from the Effective Time. In
the event any claim is asserted or made within such six-year period, all rights
to indemnification in respect of any such claim will continue until final
disposition thereof. An "Indemnified Party" shall mean any Person who is at
the Effective Time or prior thereto has been an employee, agent, director or
officer of either MindSpring or EarthLink as provided in their respective
charters, Bylaws or resolutions.
(b) From and after the Effective Time, Newco shall indemnify all
Indemnified Parties to the fullest extent permitted by the DGCL with respect to
all acts and omissions arising out of such individuals' services as officers,
directors, employees or agents of either MindSpring or EarthLink or as trustees
or fiduciaries of any plan for the benefit of employees, or otherwise on behalf
of, either MindSpring or EarthLink, occurring at or prior to the Effective
Time,
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including the transactions contemplated by this Agreement. In the event any
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any such matter occurring at or
prior to the Effective Time, Newco will pay as incurred such Indemnified
Party's legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith. Newco will pay all expenses,
including attorneys' fees, that may be incurred by any Indemnified Party in
enforcing the indemnity and other obligations provided for in this Section 4.5.
(c) Newco will cause to be maintained in effect for not less than
six (6) years from the Effective Time directors' and officers' liability
insurance covering the directors and officers of MindSpring and EarthLink
similar in scope and coverage to the directors' and officers' liability
insurance maintained by MindSpring and EarthLink for their directors and
officers.
(d) The provisions of this Section 4.5 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Newco.
Section 4.6. [Intentionally Omitted]
Section 4.7. MindSpring Notes.
Newco shall redeem in cash only any MindSpring Notes presented for
redemption as a result of the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EARTHLINK
Except as disclosed in (i) the EarthLink Disclosure Schedule delivered to
MindSpring separately prior to, or contemporaneously with, the date hereof
(which disclosure schedule shall make a specific reference to the particular
Section or subsection of this Agreement to which exception is being taken but
once made shall be deemed made for all purposes of the EarthLink Disclosure
Schedule) or (ii) (except with respect to the third sentence of Section 5.5(b)
hereof) the EarthLink SEC Documents filed or made prior to the date hereof,
EarthLink represents and warrants to MindSpring that:
Section 5.1. Corporate Existence and Power.
EarthLink is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all corporate powers
required to carry on its business as now conducted. EarthLink is duly
qualified to do business as a foreign corporation 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, except where
the failure to be so qualified, individually or in the aggregate, would not be
reasonably likely to have an EarthLink Material Adverse Effect. EarthLink has
heretofore made available to MindSpring true and complete copies of EarthLink's
certificate of incorporation and bylaws as currently in effect.
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Section 5.2. Corporate Authorization.
The execution, delivery and performance by EarthLink of this Agreement and
the consummation by EarthLink of the transactions contemplated hereby are
within EarthLink's corporate powers and, except for the EarthLink Stockholder
Approval (as defined herein), have been duly authorized by all necessary
corporate action. Assuming that this Agreement constitutes the valid and
binding obligation of MindSpring and Newco, this Agreement constitutes a valid
and binding agreement of EarthLink, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws,
now or hereafter in effect, relating to or affecting creditors' rights and
remedies and to general principles of equity.
Section 5.3. Governmental Authorization.
The execution, delivery and performance by EarthLink of this Agreement and
the consummation by EarthLink of the transactions contemplated hereby require
no action by or in respect of, or filing with, any Governmental Entity other
than (a) the filing of (i) a certificate of merger in accordance with the DGCL
and (ii) appropriate documents with the relevant authorities of other states or
jurisdictions in which EarthLink or any EarthLink Subsidiary is qualified to do
business; (b) compliance with any applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"); (c)
compliance with any applicable requirements of the Securities Act and the
Exchange Act; (d) such as may be required under any applicable state securities
or blue sky laws; and (e) such other consents, approvals, actions, orders,
authorizations, registrations, declarations and filings that, if not obtained
or made, would not, individually or in the aggregate, (x) be reasonably likely
to have an EarthLink Material Adverse Effect or (assuming for this purpose that
the Effective Time had occurred) a Newco Material Adverse Effect, or (y)
prevent or materially impair the ability of EarthLink to consummate the
transactions contemplated by this Agreement.
Section 5.4. Non-Contravention.
The execution, delivery and performance by EarthLink of this Agreement and
the consummation by EarthLink of the transactions contemplated hereby do not
and will not (a) contravene or conflict with EarthLink's certificate of
incorporation or bylaws, (b) assuming compliance with the matters referred to
in Section 5.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to EarthLink or any EarthLink Subsidiary, (c) constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of EarthLink or any EarthLink
Subsidiary or to a loss of any benefit or status to which EarthLink or any
EarthLink Subsidiary is entitled under any provision of any agreement, contract
or other instrument binding upon EarthLink or any EarthLink Subsidiary or any
license, franchise, permit or other similar authorization held by EarthLink or
any EarthLink Subsidiary, or (d) result in the creation or imposition of any
Lien on any asset of EarthLink or any EarthLink Subsidiary other than, in the
case of each of (b), (c) and (d), any such items that would not, individually
or in the aggregate (x) be reasonably likely to have an EarthLink Material
Adverse Effect or (y) prevent or
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materially impair the ability of EarthLink to consummate the transactions
contemplated by this Agreement.
Section 5.5. Capitalization.
(a) The authorized capital stock of EarthLink consists of
200,000,000 shares of EarthLink Common Stock, 25,000,000 shares of EarthLink
Series A Preferred and 625,000 shares of EarthLink Series B Preferred. As of
September 21, 1999, there were outstanding (w) 32,554,382 shares of EarthLink
Common Stock, (x) 4,102,941 shares of EarthLink Series A Preferred, (y) 606,155
shares of EarthLink Series B Preferred and (z) stock options and warrants to
purchase an aggregate of 4,853,377 shares of EarthLink Common Stock (of which
options and warrants to purchase an aggregate of 1,465,629 shares of EarthLink
Common Stock were exercisable). All outstanding shares of capital stock of
EarthLink have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) As of the date hereof, except (i) as set forth in this Section
5.5, and (ii) for changes since September 21, 1999, resulting from the exercise
of stock options or warrants outstanding on such date, there are no outstanding
(x) shares of capital stock or other voting securities of EarthLink, (y)
securities of EarthLink convertible into or exchangeable for shares of capital
stock or voting securities of EarthLink, or (z) options or other rights to
acquire from EarthLink, and no obligation of EarthLink to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of EarthLink (the items in clauses (x), (y)
and (z) being referred to collectively as the "EarthLink Securities"). There
are no outstanding obligations of EarthLink or any EarthLink Subsidiary to
repurchase, redeem or otherwise acquire any EarthLink Securities. If fully
converted as of the date hereof, assuming that all conditions or limitations to
such conversion have been satisfied or waived, EarthLink Series A Preferred and
the EarthLink Series B Preferred would be convertible into 7,335,833 shares of
EarthLink Common Stock and 541,886 shares of EarthLink Common Stock,
respectively. There are no outstanding contractual obligations of EarthLink to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person other than in the ordinary
course of business consistent with past practice. There are no stockholder
agreements, voting trusts or other agreements or understandings to which
EarthLink is a party, or of which EarthLink is aware, relating to voting,
registration or disposition of any shares of capital stock of EarthLink 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 EarthLink.
Section 5.6. Subsidiaries.
(a) Each Significant Subsidiary of EarthLink 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,
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individually or in the aggregate, would not be reasonably likely to have, an
EarthLink Material Adverse Effect. EarthLink Operations, Inc., the only
Significant Subsidiary of EarthLink, is incorporated in Delaware and is a
wholly-owned subsidiary of EarthLink.
(b) All of the outstanding shares of capital stock of, or other
ownership interest in, each Significant Subsidiary of EarthLink has been
validly issued and is fully paid and nonassessable. All of the outstanding
capital stock of, or other ownership interest in, each of EarthLink's
Significant Subsidiaries, that is owned, directly or indirectly, by EarthLink,
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, an EarthLink Material Adverse Effect. There are no outstanding
(i) securities of EarthLink or any of its Significant Subsidiaries convertible
into or exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any of its Significant Subsidiaries, (ii)
options, warrants or other rights to acquire from EarthLink or any of its
Significant Subsidiaries, and no other obligation of EarthLink or any of its
Significant 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 Significant Subsidiaries or (iii)
obligations of EarthLink or any of its Significant Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding securities of any of its
Significant Subsidiaries or any capital stock of, or other ownership interests
in, any of its Significant Subsidiaries.
Section 5.7. EarthLink SEC Documents.
(a) EarthLink has made available to MindSpring the EarthLink SEC
Documents. EarthLink has filed all reports, filings, registration statements
and other documents required to be filed by it with the SEC since December 31,
1997. No EarthLink Subsidiary is required to file any form, report,
registration statement or prospectus or other document with the SEC.
(b) As of its filing date, each EarthLink SEC Document complied as
to form in all material respects with the applicable requirements of the
Securities Act and/or the Exchange Act, as the case may be.
(c) No EarthLink SEC Document filed pursuant to the Exchange Act
contained, as of its filing date, any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No EarthLink SEC Document, as amended or supplemented, if
applicable, filed pursuant to the Securities Act contained, as of the date such
document or amendment became effective, any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
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Section 5.8. Financial Statements, No Material Undisclosed Liabilities.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of EarthLink included in the
EarthLink 10-K and the EarthLink 10-Q fairly present in all material respects,
in conformity with generally accepted accounting principles applied on a
consistent basis ("GAAP") (except as may be indicated in the notes thereto and
except that financial statements on Form 10-Q do not contain all GAAP notes to
such financial statements), the consolidated financial position of EarthLink
and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
(b) There are no liabilities of EarthLink or any EarthLink
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, in each case, that are required by GAAP
to be set forth on a consolidated balance sheet of EarthLink, other than:
(i) liabilities or obligations disclosed or provided for in the
EarthLink Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations under this Agreement or incurred
in connection with the transactions contemplated hereby; and
(iii) other liabilities or obligations that individually or
in the aggregate, would not be reasonably likely to have an EarthLink
Material Adverse Effect.
Section 5.9. Information to Be Supplied.
(a) The information to be supplied by EarthLink expressly for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus
will (i) in the case of the Registration Statement, at the time it becomes
effective, not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading and (ii) in the case of the remainder of
the Joint Proxy Statement/Prospectus, at the time of the mailing thereof, and
at the time of the Special Meetings, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply (with respect to information relating to
EarthLink) as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, EarthLink makes no representation
or warranty with respect to any statements made or incorporated by reference in
the Joint Proxy Statement/Prospectus based on information supplied by
MindSpring or Newco.
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Section 5.10. Absence of Certain Changes.
Since December 31, 1998, except as otherwise expressly contemplated by
this Agreement, EarthLink and the EarthLink Subsidiaries have conducted their
business in the ordinary course consistent with past practice and there has not
been (a) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of EarthLink or any EarthLink
Subsidiary that, individually or in the aggregate, has had or would be
reasonably likely to have an EarthLink Material Adverse Effect, (b) 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
an EarthLink Material Adverse Effect or (c) any incurrence, assumption or
guarantee by EarthLink of any material indebtedness for borrowed money other
than in the ordinary course and in amounts and on terms consistent with past
practices.
Section 5.11. Litigation.
There is no action, suit, investigation, arbitration or proceeding pending
against, or to the Knowledge of EarthLink threatened against, EarthLink or any
EarthLink Subsidiary or any of their respective assets or properties before any
arbitrator or Governmental Entity that, individually or in the aggregate, would
be reasonably likely to have, an EarthLink Material Adverse Effect. There are
no outstanding judgments, decrees, injunctions, awards or orders against
EarthLink that would be reasonably likely to have, individually or in the
aggregate, an EarthLink Material Adverse Effect.
Section 5.12. Taxes.
(a) All Tax returns, statements, reports and forms (collectively,
the "EarthLink Returns") required to be filed with any taxing authority by, or
with respect to, EarthLink and the EarthLink Subsidiaries have been filed in
substantial compliance with all applicable laws.
(b) EarthLink and the EarthLink Subsidiaries have timely paid all
Taxes shown as due and payable on the EarthLink Returns that have been so
filed, and all other Taxes not subject to reporting obligations, and, as of the
time of filing, the EarthLink Returns correctly reflected the facts regarding
the income, business, assets, operations, activities and the status of
EarthLink and the EarthLink Subsidiaries (other than Taxes that are being
contested in good faith and for which adequate reserves are reflected on the
EarthLink Balance Sheet).
(c) EarthLink and the EarthLink Subsidiaries have made provision for
all Taxes payable by them for which no EarthLink Return has yet been filed.
(d) The charges, accruals and reserves for Taxes with respect to
EarthLink and the EarthLink Subsidiaries reflected on the EarthLink Balance
Sheet are adequate under GAAP to cover the tax liabilities accruing through the
date thereof.
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(e) There is no action, suit, proceeding, audit or claim now
proposed or pending against or with respect to EarthLink or any of the
EarthLink Subsidiaries in respect of any Tax that would be reasonably likely to
have an EarthLink Material Adverse Effect
(f) Neither EarthLink nor any of the EarthLink Subsidiaries has been
a member of an affiliated, consolidated, combined or unitary group other than
one of which EarthLink was the common parent.
(g) Neither EarthLink nor any of the EarthLink Subsidiaries holds
any asset subject to a consent under Section 341(f) of the Code.
Section 5.13. Employee Benefits.
(a) Section 5.13(a) of the EarthLink Disclosure Schedule contains a
correct and complete list identifying each material "employee benefit plan", as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), each employment, severance or similar contract, plan, arrangement or
policy and each other plan or arrangement (written or oral) providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance benefits)
that is maintained, administered or contributed to by EarthLink or any ERISA
Affiliate (as defined below) and covers any employee or former employee of
EarthLink or any EarthLink Subsidiary. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished, or will be made available upon
request, to MindSpring together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan. Such plans are referred to collectively herein as the "EarthLink
Employee Plans". For purposes of this Section 5.13, "ERISA Affiliate" of any
Person means any other Person which, together with such Person, would be
treated as a single employer under Section 414 of the Code.
(b) Schedule 5.13(b) of the EarthLink Disclosure Schedule separately
identifies each EarthLink Employee Plan that constitutes a "multiemployer
plan", as defined in Section 3(37) of ERISA (a "Multiemployer Plan"), or any
other plan subject to Title IV of ERISA (a "Retirement Plan"). No "accumulated
funding deficiency", as defined in Section 412 of the Code, has been incurred
with respect to any EarthLink Employee Plan that is a Retirement Plan, whether
or not waived. To the Knowledge of EarthLink, no condition exists and no event
has occurred that would be reasonably likely to constitute grounds for
termination of any EarthLink Employee Plan that is a Retirement Plan or, with
respect to any EarthLink Employee Plan that is a Multiemployer Plan, presents a
material risk of a complete or partial withdrawal under Title IV of ERISA and
neither EarthLink nor any of its ERISA Affiliates has incurred any liability
under Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA that would be reasonably likely to have an EarthLink Material
Adverse Effect. To the Knowledge of
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EarthLink, nothing has been done or omitted to be done and no transaction or
holding of any asset under or in connection with any EarthLink Employee Plan
has occurred that will make EarthLink or any EarthLink Subsidiary, or any
officer or director of EarthLink or any EarthLink Subsidiary, subject to any
liability under Title I of ERISA or liable for any tax pursuant to Section 4975
of the Code (assuming the taxable period of any such transaction expired as of
the date hereof) that would be reasonably likely to have an EarthLink Material
Adverse Effect.
(c) Each EarthLink Employee Plan that is intended to be qualified
under Section 401 (a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. EarthLink
has furnished, or will make available upon request, to MindSpring copies of the
most recent Internal Revenue Service determination letters with respect to each
such EarthLink Employee Plan. Each EarthLink Employee Plan has been maintained
in substantial compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, which are applicable to such EarthLink Employee
Plan.
(d) There is no contract, agreement, plan or arrangement that, as a
result of the EarthLink Merger, would be reasonably likely to obligate
EarthLink to make any payment of any amount that would not be deductible
pursuant to the terms of Section 162(m) or Section 280G of the Code.
(e) Except as disclosed in writing to MindSpring prior to the date
hereof, there has been no amendment to, written interpretation or announcement
(whether or not written) relating to, or change in employee participation or
coverage under, any EarthLink Employee Plan that would increase materially the
expense of maintaining such EarthLink Employee Plan above the level of the
expense incurred in respect thereof for the fiscal year ended December 31,
1998.
(f) No EarthLink Employee Plan promises or provides post-retirement
medical, life insurance or other benefits due now or in the future to current,
former or retired employees of EarthLink or any subsidiary.
Section 5.14. Compliance with Laws; Licenses, Permits and Registrations.
(a) To the Knowledge of EarthLink, neither EarthLink nor any
EarthLink Subsidiary 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 an
EarthLink Material Adverse Effect.
(b) Each of EarthLink and the EarthLink Subsidiaries has all
permits, licenses, approvals, authorizations of and registrations with and
under all federal, state, local and foreign laws, and from all Governmental
Entities required by EarthLink and the EarthLink 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 an
EarthLink Material Adverse Effect.
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Section 5.15. Title to Properties.
(a) EarthLink and each EarthLink Subsidiary have good and marketable
title to, or valid leasehold interests in, all 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 similar
Liens, encumbrances or impediments that, in the aggregate, do not materially
interfere with the ability of EarthLink 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 EarthLink or any
EarthLink Subsidiary has leasehold interests, are free and clear of all Liens,
except for Liens that, in the aggregate, do not and will not materially
interfere with the ability of EarthLink and the EarthLink 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 an EarthLink Material Adverse Effect, (i) EarthLink and each
EarthLink Subsidiary are 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) EarthLink and each EarthLink Subsidiary enjoy
peaceful and undisturbed possession under all such leases.
Section 5.16. Intellectual Property.
Except as would not be reasonably likely to have an EarthLink Material
Adverse Effect or a Newco Material Adverse Effect, individually or in the
aggregate, EarthLink and the EarthLink 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 "EarthLink
Intellectual Property") necessary to carry on the business of EarthLink and the
EarthLink Subsidiaries, taken as a whole, as currently conducted or as proposed
to be conducted by Newco. Neither EarthLink nor any EarthLink Subsidiary has
received any written notice of infringement of or challenge to, and there are
no claims pending or, to EarthLink's Knowledge, threatened with respect to the
rights of others to the use of, any EarthLink Intellectual Property that, in
any such case, individually or in the aggregate, would be reasonably likely to
have an EarthLink Material Adverse Effect or a Newco Material Adverse Effect.
Section 5.17. Environmental Matters.
(a) With such exceptions as, individually or in the aggregate, would
not be reasonably likely to have an EarthLink Material Adverse Effect, to the
Knowledge of EarthLink, (i) no written notice, notification, demand, request
for information, citation, summons, complaint or order has been received by,
and no investigation, action, claim, suit, proceeding or review is pending or
threatened by any Person against EarthLink or any EarthLink Subsidiary with
respect to any applicable Environmental Law and (ii) EarthLink and the
EarthLink Subsidiaries are and have been in compliance with all applicable
Environmental Laws.
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(b) For purposes of this Section 5.17 and Section 6.17, the term
"Environmental Laws" means any federal, state, local and foreign statutes, laws
(including, without limitation, common law), judicial decisions, regulations,
ordinances, rules, judgments, orders, codes, injunctions, permits or
governmental agreements relating to human health and safety, the environment or
to pollutants, contaminants, wastes, or chemicals.
Section 5.18. Finders' Fees; Opinions of Financial Advisor.
(a) Except for Credit Suisse First Boston Corporation, there is no
investment banker, broker, finder or other intermediary that has been retained
by, or is authorized to act on behalf of, EarthLink or any EarthLink Subsidiary
who might be entitled to any fee or commission from MindSpring or any of its
Affiliates upon consummation of the transactions contemplated by this
Agreement.
(b) EarthLink has received the opinion of Credit Suisse First Boston
Corporation, dated as of the date hereof, to the effect that, as of such date,
the EarthLink Exchange Ratio is fair, from a financial point of view, to the
holders of shares of EarthLink Common Stock and EarthLink Preferred Stock
(other than MindSpring and any MindSpring Subsidiary).
Section 5.19. Required Vote, Board Approval.
(a) The only votes of the holders of any class or series of capital
stock of EarthLink required by law, rule or regulation to approve this
Agreement and/or any of the other transactions contemplated hereby are the
affirmative vote of the holders of more than fifty percent of the outstanding
EarthLink Common Stock (the "EarthLink Stockholder Approval").
(b) EarthLink's Board of Directors has unanimously (i) determined
that this Agreement and the transactions contemplated hereby, including the
EarthLink Merger, are advisable and in the best interests of EarthLink and its
stockholders, (ii) approved this Agreement and the transactions contemplated
hereby and (iii) resolved to recommend to such stockholders that they vote in
favor of adopting and approving this Agreement in accordance with the terms
hereof.
Section 5.20. State Takeover Statutes.
EarthLink has taken all actions required to be taken by it in order to
exempt this Agreement and the transactions contemplated hereby from the
provisions of Section 203 of the DGCL, and accordingly, such Sections do not
apply to the EarthLink Merger or any of such transactions. No other "control
share acquisition," "fair price" or other anti-takeover laws or regulations
enacted under state or federal laws in the United States apply to this
Agreement or any of the transactions contemplated hereby.
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Section 5.21. Pooling Matters; Tax Treatment.
(a) EarthLink intends that the EarthLink Merger be accounted for
under the "pooling of interests" method under the requirements of Opinion No.
16 (Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the rules and regulations of the SEC. EarthLink will request a
letter addressed to it from PricewaterhouseCoopers LLP dated as of the Closing
Date, and (if and when obtained) a copy of it will be delivered to MindSpring.
Such letter (which may contain customary qualifications and assumptions) shall
state that PricewaterhouseCoopers LLP concurs with EarthLink's management's
conclusion that no conditions exist that would preclude Newco from accounting
for the Mergers as a "pooling of interests," as described in the first sentence
of this Section 5.21(a).
(b) Neither EarthLink nor any of its Affiliates has taken or agreed
to take, or will take, any action or is aware of any fact or circumstance that
would prevent the EarthLink Merger from qualifying (i) for "pooling of
interests" accounting treatment as described in Section 5.21(a) above or (ii)
as a 368 Reorganization.
Section 5.22. Certain Agreements.
None of EarthLink, any EarthLink Subsidiary or any of their respective
Affiliates (i) are parties to or otherwise bound by any agreement or
arrangement that limits or otherwise restricts EarthLink, any EarthLink
Subsidiary or Newco or any of their respective Affiliates from engaging or
competing in any line of business or in any locations, which agreement or
arrangement is material to the business of EarthLink and the EarthLink
Subsidiaries or would be material to the business of Newco (assuming the
Mergers had taken place), in either case taken as a whole and (ii) except in
the ordinary course of business, have amended, modified or terminated any
material contract, agreement or arrangement of EarthLink or any EarthLink
Subsidiary or otherwise waived, released or assigned any material rights,
claims or benefits of EarthLink or any EarthLink Subsidiary thereunder.
Section 5.23. Year 2000 Compliance.
EarthLink has reviewed its operations and has made reasonable inquiries of
any third parties with which EarthLink has a material relationship to evaluate
the extent to which the business or operations of EarthLink will be affected by
the Year 2000 Problem. As a result of such review, except as otherwise
described in the EarthLink SEC documents, EarthLink has no reason to believe,
and does not believe, that the Year 2000 Problem will have an EarthLink
Material Adverse Effect or result in any material loss or interference with
EarthLink'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.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MINDSPRING
Except as disclosed in (i) the MindSpring Disclosure Schedule delivered to
EarthLink separately prior to, or contemporaneously with, the date hereof
(which disclosure schedule shall make a specific reference to the particular
Section or subsection of this Agreement to which exception is being taken but
once made shall be deemed made for all purposes of the MindSpring Disclosure
Schedule) or (ii) the MindSpring SEC Documents filed or made prior to the date
hereof, MindSpring represents and warrants to EarthLink that:
Section 6.1. Corporate Existence and Power.
MindSpring is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all corporate
powers required to carry on its business as now conducted. MindSpring is duly
qualified to do business as a foreign corporation 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, except where
the failure to be so qualified, individually or in the aggregate, would not be
reasonably likely to have an MindSpring Material Adverse Effect. MindSpring
has heretofore made available to EarthLink true and complete copies of
MindSpring's certificate of incorporation and bylaws as currently in effect.
Section 6.2. Corporate Authorization.
The execution, delivery and performance by MindSpring of this Agreement
and the consummation by MindSpring of the transactions contemplated hereby are
within MindSpring's corporate powers and, except for the MindSpring Stockholder
Approval (as defined herein), have been duly authorized by all necessary
corporate action. Assuming that this Agreement constitutes the valid and
binding obligation of EarthLink and Newco, this Agreement constitutes a valid
and binding agreement of MindSpring, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws,
now or hereafter in effect, relating to or affecting creditors' rights and
remedies and to general principles of equity.
Section 6.3. Governmental Authorization.
The execution, delivery and performance by MindSpring of this Agreement
and the consummation by MindSpring of the transactions contemplated hereby
require no action by or in respect of, or filing with, any Governmental Entity
other than (a) the filing of (i) a certificate of merger in accordance with the
DGCL and (ii) appropriate documents with the relevant authorities of other
states or jurisdictions in which MindSpring or any MindSpring Subsidiary is
qualified to do business; (b) compliance with any applicable requirements of
the HSR Act; (c) compliance with any applicable requirements of the Securities
Act and the Exchange Act; (d) such as may be required under any applicable
state securities or blue sky laws; and (e) such other consents, approvals,
actions, orders, authorizations, registrations, declarations and filings that,
if not obtained or made, would not, individually or in the aggregate, (x) be
reasonably likely to have a MindSpring Material Adverse Effect or (assuming for
this purpose that the Effective Time had
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occurred) an EarthLink Material Adverse Effect, or (y) prevent or materially
impair the ability of MindSpring to consummate the transactions contemplated by
this Agreement.
Section 6.4. Non-Contravention.
The execution, delivery and performance by MindSpring of this Agreement
and the consummation by MindSpring of the transactions contemplated hereby do
not and will not (a) contravene or conflict with MindSpring's certificate of
incorporation or bylaws, (b) assuming compliance with the matters referred to
in Section 6.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to MindSpring or any MindSpring Subsidiary, (c) constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of MindSpring or any MindSpring
Subsidiary or to a loss of any benefit or status to which MindSpring or any
MindSpring Subsidiary is entitled under any provision of any agreement,
contract or other instrument binding upon MindSpring or any MindSpring
Subsidiary or any license, franchise, permit or other similar authorization
held by MindSpring or any MindSpring Subsidiary, or (d) result in the creation
or imposition of any Lien on any asset of MindSpring or any MindSpring
Subsidiary other than, in the case of each of (b), (c) and (d), any such items
that would not, individually or in the aggregate (x) be reasonably likely to
have a MindSpring Material Adverse Effect or (y) prevent or materially impair
the ability of MindSpring to consummate the transactions contemplated by this
Agreement.
Section 6.5. Capitalization.
(a) The authorized capital stock of MindSpring consists of
400,000,000 shares of MindSpring Common Stock and 1,000,000 shares of
MindSpring Preferred Stock. As of September 21, 1999, there were outstanding
(x) 63,504,352 shares of MindSpring Common Stock, (y) no shares of MindSpring
Preferred Stock and (z) stock options to purchase an aggregate of 5,542,579
shares of MindSpring Common Stock (of which options to purchase an aggregate of
1,054,346 MindSpring Common Stock were exercisable). All outstanding shares of
capital stock of MindSpring have been duly authorized and validly issued and
are fully paid and nonassessable.
(b) As of the date hereof, except (i) as set forth in this Section
6.5, (ii) the MindSpring Notes and (iii) for changes since September 21, 1999,
resulting from the exercise of stock options outstanding on such date, there
are no outstanding (x) shares of capital stock or other voting securities of
MindSpring, (y) securities of MindSpring convertible into or exchangeable for
shares of capital stock or voting securities of MindSpring, or (z) options or
other rights to acquire from MindSpring, and no obligation of MindSpring to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of MindSpring (the items in
clauses (x), (y) and (z) being referred to collectively as the "MindSpring
Securities"). If a Change of Control, as defined in the MindSpring Indenture,
had occurred as of September 21, 1999, the MindSpring Notes would have been
convertible into 2,879,600 shares o MindSpring Common Stock. There are no
outstanding obligations of MindSpring or any MindSpring Subsidiary to
repurchase, redeem or otherwise acquire any
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MindSpring Securities. There are no outstanding contractual obligations of
MindSpring to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person other than in the
ordinary course of business consistent with past practice. There are no
stockholder agreements, voting trusts or other agreements or understandings to
which MindSpring is a party, or of which MindSpring is aware, relating to
voting, registration or disposition of any shares of capital stock of
MindSpring 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
MindSpring.
Section 6.6. Subsidiaries.
There are no MindSpring Subsidiaries.
Section 6.7. MindSpring SEC Documents.
(a) MindSpring has made available to EarthLink the MindSpring SEC
Documents. MindSpring has filed all reports, filings, registration statements
and other documents required to be filed by it with the SEC since December 31,
1997. No MindSpring Subsidiary is required to file any form, report,
registration statement or prospectus or other document with the SEC.
(b) As of its filing date, each MindSpring SEC Document complied as
to form in all material respects with the applicable requirements of the
Securities Act and/or the Exchange Act, as the case may be.
(c) No MindSpring SEC Document filed pursuant to the Exchange Act
contained, as of its filing date, any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No MindSpring SEC Document, as amended or supplemented, if
applicable, filed pursuant to the Securities Act contained, as of the date such
document or amendment became effective, any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Section 6.8. Financial Statements, No Material Undisclosed Liabilities.
(a) The audited financial statements and unaudited interim financial
statements of MindSpring included in the MindSpring 10-K and the MindSpring
10-Q fairly present in all material respects, in conformity with GAAP (except
as may be indicated in the notes thereto and except that financial statements
on Form 10-Q do not contain all GAAP notes to such financial statements), the
financial position of MindSpring and its Subsidiaries as of the dates thereof
and their results of operations and changes in financial position for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
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(b) There are no liabilities of MindSpring or any MindSpring
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, in each case, that are required by GAAP
to be set forth on a balance sheet of MindSpring, other than:
(i) liabilities or obligations disclosed or provided for in the
MindSpring Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations under this Agreement or incurred
in connection with the transactions contemplated hereby; and
(iii)other liabilities or obligations that individually or
in the aggregate, would not be reasonably likely to have a MindSpring
Material Adverse Effect.
Section 6.9. Information to Be Supplied.
(a) The information to be supplied by MindSpring expressly for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus
will (i) in the case of the Registration Statement, at the time it becomes
effective, not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading and (ii) in the case of the remainder of
the Joint Proxy Statement/Prospectus, at the time of the mailing thereof, and
at the time of the Special Meetings, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply (with respect to information relating to
MindSpring) as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, MindSpring makes no
representation or warranty with respect to any statements made or incorporated
by reference in the Joint Proxy Statement/Prospectus based on information
supplied by EarthLink or Newco.
Section 6.10. Absence of Certain Changes.
Since December 31, 1998, except as otherwise expressly contemplated by
this Agreement, MindSpring and the MindSpring Subsidiaries have conducted their
business in the ordinary course consistent with past practice and there has not
been (a) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of MindSpring or any MindSpring
Subsidiary that, individually or in the aggregate, has had or would be
reasonably likely to have a MindSpring Material Adverse Effect, (b) 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 MindSpring Material Adverse Effect or (c) any incurrence, assumption or
guarantee by MindSpring of any material indebtedness for borrowed money other
than in the ordinary course and in amounts and on terms consistent with past
practices.
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Section 6.11. Litigation.
There is no action, suit, investigation, arbitration or proceeding pending
against, or to the Knowledge of MindSpring threatened against, MindSpring or
any MindSpring Subsidiary or any of their respective assets or properties
before any arbitrator or Governmental Entity that, individually or in the
aggregate, would be reasonably likely to have a MindSpring Material Adverse
Effect. There are no outstanding judgments, decrees, injunctions, awards or
orders against MindSpring that would be reasonably likely to have, individually
or in the aggregate, a MindSpring Material Adverse Effect.
Section 6.12. Taxes.
(a) All Tax returns, statements, reports and forms (collectively,
the "MindSpring Returns") required to be filed with any taxing authority by, or
with respect to, MindSpring and the MindSpring Subsidiaries have been filed in
substantial compliance with all applicable laws.
(b) MindSpring and the MindSpring Subsidiaries have timely paid all
Taxes shown as due and payable on the MindSpring Returns that have been so
filed, and all other Taxes not subject to reporting obligations, and as of the
time of filing, the MindSpring Returns correctly reflected the facts regarding
the income, business, assets, operations, activities and the status of
MindSpring and the MindSpring Subsidiaries (other than Taxes that are being
contested in good faith and for which adequate reserves are reflected on the
MindSpring Balance Sheet).
(c) MindSpring and the MindSpring Subsidiaries have made provision
for all Taxes payable by them for which no MindSpring Return has yet been
filed.
(d) The charges, accruals and reserves for Taxes with respect to
MindSpring and its Subsidiaries reflected on the MindSpring Balance Sheet are
adequate under GAAP to cover the Tax liabilities accruing through the date
thereof.
(e) There is no action, suit, proceeding, audit or claim now
proposed or pending against or with respect to MindSpring or any of the
MindSpring Subsidiaries in respect of any Tax that would be reasonably likely
to have a MindSpring Material Adverse Effect.
(f) Neither MindSpring nor any of the MindSpring Subsidiaries has
been a member of an affiliated, consolidated, combined or unitary group other
than one of which MindSpring was the common parent.
(g) Neither MindSpring nor any of the MindSpring Subsidiaries holds
any asset subject to a consent under Section 341(f) of the Code.
Section 6.13. Employee Benefits.
(a) Section 6.13(a) of the MindSpring Disclosure Schedule contains a
correct and complete list identifying each material "employee benefit plan", as
defined in Section 3(3) of
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the ERISA, each employment, severance or similar contract, plan, arrangement or
policy and each other plan or arrangement (written or oral) providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance benefits)
that is maintained, administered or contributed to by MindSpring or any ERISA
Affiliate and covers any employee or former employee of MindSpring or any
MindSpring Subsidiary. Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations thereof have
been furnished, or will be made available upon request, to EarthLink together
with the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto) prepared in connection with any such plan. Such plans are
referred to collectively herein as the "MindSpring Employee Plans".
(b) Section 6.13(b) of the MindSpring Disclosure Schedule separately
identifies each MindSpring Employee Plan that constitutes a Multiemployer Plan
or a Retirement Plan. No "accumulated funding deficiency", as defined in
Section 412 of the Code, has been incurred with respect to any MindSpring
Employee Plan that is a Retirement Plan, whether or not waived. To the
Knowledge of MindSpring, no condition exists and no event has occurred that
would be reasonably likely to constitute grounds for termination of any
MindSpring Employee Plan that is a Retirement Plan or, with respect to any
MindSpring Employee Plan that is a Multiemployer Plan, presents a material risk
of a complete or partial withdrawal under Title IV of ERISA and neither
MindSpring nor any of its ERISA Affiliates has incurred any liability under
Title IV of ERISA arising in connection with the termination of, or complete or
partial withdrawal from, any plan covered or previously covered by Title IV of
ERISA that would be reasonably likely to have a MindSpring Material Adverse
Effect. To the Knowledge of MindSpring, nothing has been done or omitted to be
done and no transaction or holding of any asset under or in connection with any
MindSpring Employee Plan has occurred that will make MindSpring or any
MindSpring Subsidiary, or any officer or director of MindSpring or any
MindSpring Subsidiary, subject to any liability under Title I of ERISA or
liable for any tax pursuant to Section 4975 of the Code (assuming the taxable
period of any such transaction expired as of the date hereof) that would be
reasonably likely to have a MindSpring Material Adverse Effect.
(c) Each MindSpring Employee Plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. MindSpring
has furnished, or will make available upon request, to EarthLink copies of the
most recent Internal Revenue Service determination letters with respect to each
such MindSpring Employee Plan. Each MindSpring Employee Plan has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, which are applicable to such MindSpring
Employee Plan.
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(d) There is no contract, agreement, plan or arrangement that, as a
result of the MindSpring Merger, would be reasonably likely to obligate
MindSpring to make any payment of any amount that would not be deductible
pursuant to the terms of Section 162(m) or Section 280G of the Code.
(e) Except as disclosed in writing to EarthLink prior to the date
hereof, there has been no amendment to, written interpretation or announcement
(whether or not written) relating to, or change in employee participation or
coverage under, any MindSpring Employee Plan that would increase materially the
expense of maintaining such MindSpring Employee Plan above the level of the
expense incurred in respect thereof for the fiscal year ended December 31,
1998.
(f) No MindSpring Employee Plan promises or provides post-retirement
medical, life insurance or other benefits due now or in the future to current,
former or retired employees of MindSpring or any subsidiary.
Section 6.14. Compliance with Laws; Licenses, Permits and Registrations.
(a) To the Knowledge of MindSpring, neither MindSpring nor any
MindSpring Subsidiary 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
MindSpring Material Adverse Effect.
(b) Each of MindSpring and the MindSpring Subsidiaries has all
permits, licenses, approvals, authorizations of and registrations with and
under all federal, state, local and foreign laws, and from all Governmental
Entities required by MindSpring and the MindSpring 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
MindSpring Material Adverse Effect.
Section 6.15. Title to Properties.
(a) MindSpring and each MindSpring Subsidiary have good and
marketable title to, or valid leasehold interests in, all 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 similar
Liens, encumbrances or impediments that, in the aggregate, do not materially
interfere with the ability of MindSpring 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 MindSpring or any
MindSpring Subsidiary has leasehold interests, are free and clear of all Liens,
except for Liens that, in the aggregate, do not and will not materially
interfere with the ability of MindSpring and the MindSpring Subsidiaries to
conduct their business, taken as a whole, as currently conducted.
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(b) Except as would not be reasonably likely, individually or in the
aggregate, to have a MindSpring Material Adverse Effect, (i) MindSpring and
each MindSpring Subsidiary are 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) MindSpring and each MindSpring
Subsidiary enjoy peaceful and undisturbed possession under all such leases.
Section 6.16. Intellectual Property.
Except as would not be reasonably likely to have a MindSpring Material
Adverse Effect or a Newco Material Adverse Effect, individually or in the
aggregate, MindSpring and the MindSpring 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 "MindSpring
Intellectual Property") necessary to carry on the business of MindSpring and
the MindSpring Subsidiaries, taken as a whole, as currently conducted or as
proposed to be conducted by Newco. Neither MindSpring nor any MindSpring
Subsidiary has received any written notice of infringement of or challenge to,
and there are no claims pending or, to MindSpring's Knowledge, threatened with
respect to the rights of others to the use of, any MindSpring Intellectual
Property that, in any such case, individually or in the aggregate, would be
reasonably likely to have a MindSpring Material Adverse Effect or a Newco
Material Adverse Effect.
Section 6.17. Environmental Matters.
With such exceptions as, individually or in the aggregate, would not be
reasonably likely to have a MindSpring Material Adverse Effect, to the
Knowledge of MindSpring, (i) no written notice, notification, demand, request
for information, citation, summons, complaint or order has been received by,
and no investigation, action, claim, suit, proceeding or review is pending or
threatened by any Person against, MindSpring or any MindSpring Subsidiary, with
respect to any applicable Environmental Law and (ii) MindSpring and the
MindSpring Subsidiaries are and have been in compliance with all applicable
Environmental Laws.
Section 6.18. Finders' Fees; Opinions of Financial Advisor.
(a) Except for Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation,
there is no investment banker, broker, finder or other intermediary that has
been retained by, or is authorized to act on behalf of, MindSpring or any
MindSpring Subsidiary who might be entitled to any fee or commission from
EarthLink or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.
(b) MindSpring has received the opinion of Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation, dated as of the date hereof, to the effect
that, as of such date, the MindSpring Exchange Ratio is fair, from a financial
point of view, to the holders of shares of MindSpring Common Stock (other than
EarthLink and any EarthLink Subsidiary).
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Section 6.19. Required Vote, Board Approval.
(a) The only vote of the holders of any class or series of capital
stock of MindSpring required by law, rule or regulation to approve this
Agreement and/or any of the other transactions contemplated hereby is the
affirmative vote (the "MindSpring Stockholder Approval") of the holders of more
than fifty percent of the outstanding shares of MindSpring Common Stock in
favor of the adoption of this Agreement.
(b) MindSpring's Board of Directors has unanimously (i) determined
that this Agreement and the transactions contemplated hereby, including the
MindSpring Merger, are advisable and in the best interests of MindSpring and
its stockholders, (ii) approved this Agreement and the transactions
contemplated hereby and (iii) resolved to recommend to such stockholders that
they vote in favor of adopting and approving this Agreement in accordance with
the terms hereof.
Section 6.20. State Takeover Statutes.
MindSpring has taken all actions required to be taken by it in order to
exempt this Agreement and the transactions contemplated hereby from the
provisions of Section 203 of the DGCL, and accordingly, such Sections do not
apply to the Merger or any of such transactions. No other "control share
acquisition," "fair price" or other anti-takeover laws or regulations enacted
under state or federal laws in the United States apply to this Agreement or any
of the transactions contemplated hereby.
Section 6.21. Pooling Matters; Tax Treatment.
(a) MindSpring intends that the MindSpring Merger be accounted for
under the "pooling of interests" method under the requirements of Opinion No.
16 (Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the rules and regulations of the SEC. MindSpring will request a
letter addressed to it from Xxxxxx Xxxxxxxx LLP dated as of the Closing Date,
and (if and when obtained) a copy of it will be delivered to EarthLink. Such
letter (which may contain customary qualifications and assumptions) shall state
that Xxxxxx Xxxxxxxx LLP concurs with MindSpring's management's conclusion that
no conditions exist with respect to MindSpring that would preclude Newco from
accounting for the Mergers as a "pooling of interests" as described in the
first sentence of Section 6.21(a).
(b) Neither MindSpring nor any of its Affiliates has taken or agreed
to take, or will take, any action or is aware of any fact or circumstance that
would prevent the MindSpring Merger from qualifying (i) for "pooling of
interests" accounting treatment as described in Section 6.21(a) above or (ii)
as a 368 Reorganization.
Section 6.22. Certain Agreements.
None of MindSpring, any MindSpring Subsidiary or any of their respective
Affiliates (i) are parties to or otherwise bound by any agreement or
arrangement that limits or otherwise
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restricts MindSpring, any MindSpring Subsidiary or Newco or any of their
respective Affiliates from engaging or competing in any line of business or in
any locations, which agreement or arrangement is material to the business of
MindSpring and the MindSpring Subsidiaries or would be material to the business
of Newco (assuming the Mergers had taken place), in either case taken as a
whole and (ii) except in the ordinary course of business, have amended,
modified or terminated any material contract, agreement or arrangement of
MindSpring or any MindSpring Subsidiary or otherwise waived, released or
assigned any material rights, claims or benefits of MindSpring or any
MindSpring Subsidiary thereunder.
Section 6.23. Year 2000 Compliance.
MindSpring has reviewed its operations and has made reasonable inquiries
of any third parties with which MindSpring has a material relationship to
evaluate the extent to which the business or operations of MindSpring will be
affected by the Year 2000 Problem. As a result of such review, except as
otherwise described in the MindSpring SEC documents, MindSpring has no reason
to believe, and does not believe, that the Year 2000 Problem will have an
MindSpring Material Adverse Effect or result in any material loss or
interference with MindSpring's business or operations.
ARTICLE VII
COVENANTS OF EARTHLINK
EarthLink agrees that:
Section 7.1. EarthLink Interim Operations.
Except as set forth in the EarthLink Disclosure Schedule or as otherwise
expressly contemplated hereby, without the prior consent of MindSpring (which
consent shall not be unreasonably withheld or delayed), from the date hereof
until the Effective Time, EarthLink shall, and shall cause each of the
EarthLink Subsidiaries to, conduct their business in all material respects in
the ordinary course consistent with past practice and shall use commercially
reasonable efforts to (i) preserve intact its present business organization,
(ii) maintain in effect all material foreign, federal, state and local
licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required for EarthLink or any EarthLink
Subsidiary to carry on its business and (iii) preserve existing relationships
with its material customers, lenders, suppliers and others having material
business relationships with it. Without limiting the generality of the
foregoing, except as set forth in the EarthLink Disclosure Schedule or as
otherwise expressly contemplated by this Agreement, from the date hereof until
the Effective Time, without the prior consent of MindSpring (which consent
shall not be unreasonably withheld or delayed), EarthLink shall not, nor shall
it permit any EarthLink Subsidiary to:
(a) amend its certificate of incorporation or by-laws;
(b) split, combine or reclassify any shares of capital stock of
EarthLink or any less-than-wholly-owned EarthLink Subsidiary or declare, set
aside or pay any dividend or other
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distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem, repurchase or otherwise acquire or
offer to redeem, repurchase, or otherwise acquire any of its securities or any
securities of any EarthLink Subsidiary;
(c) (i) issue, deliver or sell, or authorize the issuance, delivery
or sale of, any shares of its capital stock of any class or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such capital stock or any such convertible securities, other than
(A) options to purchase up to an aggregate of 500,000 shares of its capital
stock, plus an additional number of shares of capital stock equal to that
number of shares underlying options forfeited prior to the Closing by former
EarthLink employees, pursuant to the EarthLink Employee Plans; (B) EarthLink
Common Stock upon the exercise of stock options or warrants in accordance with
their present terms or upon exercise of options issued pursuant to clause (A)
above of this Section 7.1(c)(i); or (C) EarthLink Common Stock upon the
conversion of the EarthLink Preferred Stock or in accordance with the Sprint
Governance Agreement, all in accordance with the present terms of such
instruments and agreements; or (ii) amend in any material respect any material
term of any outstanding security of EarthLink or any EarthLink Subsidiary;
(d) other than in connection with transactions not prohibited by
Section 7.1(e), incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (i) contemplated by the
capital expenditure budgets for EarthLink and the EarthLink Subsidiaries made
available to MindSpring, or (ii) incurred in the ordinary course of business of
EarthLink and the EarthLink Subsidiaries;
(e) acquire (whether pursuant to cash merger, stock or asset
purchase or otherwise) in one transaction or series of related transactions (i)
any assets (including any equity interests) having a fair market value in
excess of $5 million (which amount shall exclude any amounts for such
transactions set forth in the capital expenditure budget described in Section
7.1(d) hereof), or (ii) all or substantially all of the equity interests of any
Person or any business or division of any Person having a fair market value in
excess of $5 million (which amount shall exclude any amounts for such
transactions set forth in the capital expenditure budget described in Section
7.1(d) hereof);
(f) sell, lease, encumber or otherwise dispose of any assets, other
than (i) sales in the ordinary course of business consistent with past
practice, (ii) equipment and property no longer used in the operation of
EarthLink's business and (iii) assets related to discontinued operations of
EarthLink or any EarthLink Subsidiary;
(g) incur (which shall not be deemed to include entering into credit
agreements, lines of credit or similar arrangements until EarthLink or any
EarthLink Subsidiary becomes liable with respect to any indebtedness for
borrowed money or guarantees thereof under such arrangements) any indebtedness
for borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of EarthLink or
any EarthLink Subsidiary or guarantee any debt securities of others, except in
the ordinary course of business consistent with past practice (which shall
include, without limitation,
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borrowings under EarthLink's existing credit agreements and overnight
borrowings); provided, however, that, notwithstanding the foregoing neither
EarthLink nor any EarthLink Subsidiary shall incur any borrowings whatsoever
under the Credit Agreement dated as of February 10, 1998, between EarthLink, as
borrower, and Sprint, as lender;
(h) (i) enter into any agreement or arrangement that limits or
otherwise restricts EarthLink, any EarthLink Subsidiary or any of their
respective Affiliates or any successor thereto or that would, after the
Effective Time, limit or restrict EarthLink, any EarthLink Subsidiary or Newco,
or any of their respective Affiliates, from engaging or competing in any line
of business or in any location, which agreement or arrangement would be
material to the business of EarthLink and the EarthLink Subsidiaries or the
business of Newco (assuming the Mergers had taken place), in either case taken
as a whole or (ii) except in the ordinary course of business, amend, modify or
terminate any material contract, agreement or arrangement of EarthLink or any
EarthLink Subsidiary or otherwise waive, release or assign any material rights,
claims or benefits of EarthLink or any EarthLink Subsidiary thereunder;
(i) (i) except in the ordinary course of business consistent with
past practice or as required by law or an existing agreement, increase the
amount of compensation of any director or executive officer or make any
increase in or commitment to increase any employee benefits, (ii) except as
required by law, an agreement existing on the date hereof or an EarthLink
severance policy as of the date hereof, grant any severance or termination pay
to any director, officer or employee of EarthLink or any EarthLink Subsidiary,
(iii) adopt any additional employee benefit plan or, except in the ordinary
course of business, make any contribution to any such existing plan or (iv)
except as may be required by law, amend in any material respect any EarthLink
Employee Plan;
(j) change EarthLink's (x) methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP or by Regulation S-X
of the Exchange Act, as concurred with by its independent public accountants or
(y) fiscal year;
(k) (i) settle, or propose to settle, any litigation, investigation,
arbitration, proceeding or other claim that is material to the business of
EarthLink and the EarthLink Subsidiaries, taken as a whole, other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice of liabilities (x) recognized or disclosed in the
most recent consolidated financial statements (or the notes thereto) of
EarthLink included in the EarthLink SEC Documents or (y) incurred since the
date of such financial statements in the ordinary course of business consistent
with past practice, or (ii) other than in the ordinary course of business
consistent with past practice, make any tax election or enter into any
settlement or compromise of any tax liability that in either case is material
to the business of EarthLink and the EarthLink Subsidiaries, taken as a whole;
or
(l) agree, resolve or commit to do any of the foregoing.
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Section 7.2. Acquisition Proposals; Board Recommendation.
(a) EarthLink agrees that it shall not, nor shall it permit any
EarthLink Subsidiary to, nor shall it authorize or knowingly permit any
officer, director, employee, investment banker, attorney, accountant, agent or
other advisor or representative of EarthLink or any EarthLink Subsidiary,
directly or indirectly, to (i) solicit, initiate or knowingly facilitate or
encourage the submission of any Acquisition Proposal for EarthLink, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to or take any other action knowingly to
facilitate any inquiries or the making of any proposal that constitutes an
Acquisition Proposal for EarthLink, (iii) grant any waiver or release under any
standstill or similar agreement with respect to any class of EarthLink's equity
securities or (iv) enter into any agreement with respect to an Acquisition
Proposal for EarthLink. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence by any
officer, director, investment banker, attorney, accountant, agent or other
advisor or representative of EarthLink or any EarthLink Subsidiary, whether or
not such individual is purporting to act on behalf of EarthLink or any
EarthLink Subsidiary or otherwise, shall be deemed to be a breach of this
Section 7.2 by EarthLink. EarthLink shall cease and cause to be terminated
immediately all existing discussions or negotiations with any Persons conducted
heretofore with respect to, or that could be reasonably expected to lead to,
any Acquisition Proposal for EarthLink.
(b) Notwithstanding the foregoing, nothing contained in this Section
7.2 shall prohibit the Board of Directors of EarthLink from (i) to the extent
applicable, complying with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal for EarthLink; and (ii) prior to the
EarthLink Special Meeting, furnishing information to or entering into
discussions or negotiations with, any Person that makes a bona fide proposal or
offer with respect to EarthLink that constitutes an Acquisition Proposal for
EarthLink, if (A) the Board of Directors of EarthLink determines in good faith,
taking into account the advice of outside counsel, that such action is
reasonably likely to be required for the Board of Directors to comply with its
fiduciary duties to stockholders under applicable law; (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
Person, EarthLink provides written notice to MindSpring of the identity of the
Person making the Acquisition Proposal for EarthLink and that it intends to
furnish information to, or intends to enter into discussions or negotiations
with, such Person; (C) EarthLink enters into a confidentiality agreement with
such Person on terms in the aggregate not more favorable to such Person than
the terms of the letter agreement, dated August 17, 1999, between EarthLink and
MindSpring; (D) EarthLink keeps MindSpring informed on a timely basis of the
status of such negotiations and all material terms and conditions thereof and
promptly provides MindSpring with copies of any and all written inquiries or
proposals relating thereto; and (E) such Acquisition Proposal was not solicited
in violation of Section 7.2(a) hereof.
(c) Notwithstanding any other provision of this Agreement, in the
event that an Acquisition Proposal for EarthLink constitutes an EarthLink
Superior Proposal (as defined below), the Board of Directors of EarthLink may
withdraw its recommendation of this Agreement as required under Section 3.1
hereof and recommend such EarthLink Superior
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Proposal to its stockholders (i) if, but only if, EarthLink (A) complies fully
with this Section 7.2 and (B) provides MindSpring with at least four (4)
Business Days' prior written notice of its intent to withdraw its
recommendation of this Agreement and (ii) if, in the event that during such
four (4) Business Days MindSpring makes a counter proposal to such EarthLink
Superior Proposal (the "MindSpring Counter Proposal"), the EarthLink Board of
Directors in good faith, taking into account the advice of its outside
financial advisors, determines that the MindSpring Counter Proposal is not at
least as favorable to EarthLink's stockholders as the EarthLink Superior
Proposal (taking into account all financial and strategic considerations and
other relevant factors, including relevant legal, financial, regulatory and
other aspects of such proposals, and the conditions, prospects and time
required for completion of such proposal).
(d) For the purposes of this Agreement, an "EarthLink Superior
Proposal" means a bona fide Acquisition Proposal, having no financing
contingency, for more than seventy-five percent (75%) of the aggregate voting
power of the EarthLink Equity Securities and made by a Person other than an
affiliate of EarthLink that the Board of Directors of EarthLink believes in
good faith, (x) taking into account the advice of its outside financial
advisors, to be superior, from a financial point of view, to the stockholders
of EarthLink than the proposal set forth in this Agreement and (y) to be more
favorable generally to the stockholders of EarthLink (taking into account all
financial and strategic considerations and other relevant factors, including
relevant legal, financial, regulatory and other aspects of such proposals, and
the conditions, prospects and time required for completion of such proposal);
provided that the Board of Directors of EarthLink has determined in good faith,
taking into account the advice of its outside legal counsel, that it is
reasonably likely to be required to recommend such proposal to the EarthLink
stockholders to comply with its fiduciary duties to stockholders under
applicable law.
(e) For the purposes of this Agreement, "EarthLink Equity
Securities" means (i) any EarthLink common stock; (ii) any EarthLink preferred
stock; (iii) any debt or equity securities of EarthLink convertible into or
exchangeable for EarthLink common stock or preferred stock (on a
fully-converted basis); and (iv) any options, warrants or rights (or any other
similar securities) issued by EarthLink to acquire EarthLink common stock or
preferred stock (on a fully-converted basis).
(f) Nothing in this Section 7.2 shall (i) permit EarthLink to
terminate this Agreement (except as specifically provided in Article XI hereof)
or (ii) affect any other obligation of EarthLink under this Agreement.
ARTICLE VIII
COVENANTS OF MINDSPRING
MindSpring agrees that:
Section 8.1. MindSpring Interim Operations.
Except as set forth in the MindSpring Disclosure Schedule or as otherwise
expressly
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contemplated hereby, without the prior consent of EarthLink (which consent
shall not be unreasonably withheld or delayed), from the date hereof until the
Effective Time, MindSpring shall and shall cause each of the MindSpring
Subsidiaries to, conduct their business in all material respects in the
ordinary course consistent with past practice and shall use commercially
reasonable efforts to (i) preserve intact its present business organization,
(ii) maintain in effect all material foreign, federal, state and local
licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required for MindSpring or any
MindSpring Subsidiary to carry on its business and (iii) preserve existing
relationships with its material customers, lenders, suppliers and others having
material business relationships with it. Without limiting the generality of
the foregoing, except as otherwise expressly contemplated by this Agreement,
from the date hereof until the Effective Time, without the prior consent of
EarthLink (which consent shall not be unreasonably withheld or delayed),
MindSpring shall not, not shall it permit any MindSpring Subsidiary to:
(a) amend its certificate of incorporation or by-laws;
(b) split, combine or reclassify any shares of capital stock of
MindSpring or any less-than-wholly-owned MindSpring Subsidiary or declare, set
aside or pay any dividend or other distribution (whether in cash, stock or
property, or any combination thereof) in respect of its capital stock or
redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities or any securities of any MindSpring
Subsidiary;
(c) (i) issue, deliver or sell, or authorize the issuance, delivery
or sale of, any shares of its capital stock of any class or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such capital stock or any such convertible securities, other than
(A) options to purchase up to an aggregate of 500,000 shares of its capital
stock, plus an additional number of shares of capital stock equal to that
number of shares underlying options forfeited prior to the Closing by former
MindSpring employees, pursuant to the MindSpring Employee Plans, (B) MindSpring
Common Stock upon the exercise of stock options or warrants in accordance with
their present terms or upon exercise of options issued pursuant to clause (A)
of this Section 8.1(c)(i); or (C) MindSpring Common Stock upon the conversion
of the MindSpring Notes; or (ii) amend in any material respect any material
term of any outstanding security of MindSpring or any MindSpring Subsidiary;
(d) other than in connection with transactions not prohibited by
Section 8.1(e), incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (i) contemplated by the
capital expenditure budgets for MindSpring and the MindSpring Subsidiaries made
available to EarthLink, or (ii) incurred in the ordinary course of business of
MindSpring and the MindSpring Subsidiaries;
(e) acquire (whether pursuant to cash merger, stock or asset
purchase or otherwise) in one transaction or series of related transactions (i)
any assets (including any equity interests) having a fair market value in
excess of $5 million (which amount shall exclude any amounts for such
transactions set forth in the capital expenditure budget described in Section
8.1(d) hereof), or (ii) all or substantially all of the equity interests of any
Person or any business
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or division of any Person having a fair market value in excess of $5 million
(which amount shall exclude any amounts for such transactions set forth in the
capital expenditure budget described in Section 8.1(d) hereof);
(f) sell, lease, encumber or otherwise dispose of any assets, other
than (i) sales in the ordinary course of business consistent with past
practice, (ii) equipment and property no longer used in the operation of
MindSpring's business and (iii) assets related to discontinued operations of
MindSpring or any MindSpring Subsidiary;
(g) incur (which shall not be deemed to include entering into credit
agreements, lines of credit or similar arrangements until MindSpring or any
MindSpring Subsidiary becomes liable with respect to any indebtedness for
borrowed money or guarantees thereof under such arrangements) any indebtedness
for borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of MindSpring
or any MindSpring Subsidiary or guarantee any debt securities of others, except
in the ordinary course of business consistent with past practice (which shall
include, without limitation, borrowings under MindSpring's existing credit
agreements and overnight borrowings).
(h) (i) enter into any agreement or arrangement that limits or
otherwise restricts MindSpring, any MindSpring Subsidiary or any of their
respective Affiliates or any successor thereto or that would, after the
Effective Time, limit or restrict MindSpring, any MindSpring Subsidiary or
Newco, or any of their respective Affiliates, from engaging or competing in any
line of business or in any location, which agreement or arrangement would be
material to the business of MindSpring and the MindSpring Subsidiaries or the
business of Newco (assuming the Mergers had taken place), in either case taken
as a whole or (ii) except in the ordinary course of business, amend, modify or
terminate any material contract, agreement or arrangement of MindSpring or any
MindSpring Subsidiary or otherwise waive, release or assign any material
rights, claims or benefits of MindSpring or any MindSpring Subsidiary
thereunder;
(i) (i) except in the ordinary course of business consistent with
past practice or as required by law or an existing agreement, increase the
amount of compensation of any director or executive officer or make any
increase in or commitment to increase any employee benefits, (ii) except as
required by law, an agreement existing on the date hereof or MindSpring
severance policy as of the date hereof, grant any severance or termination pay
to any director, officer or employee of MindSpring or any MindSpring
Subsidiary, (iii) adopt any additional employee benefit plan or, except in the
ordinary course of business, make any contribution to any existing such plan or
(iv) except as may be required by law, amend in any material respect any
MindSpring Employee Plan;
(j) change MindSpring's (x) methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP or by Regulations S-X
of the Exchange Act, as concurred with by its independent public accountants or
(y) fiscal year;
(k) (i) settle, or propose to settle, any litigation, investigation,
arbitration, proceeding or other claim that is material to the business of
MindSpring and the MindSpring
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Subsidiaries, taken as a whole, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
of liabilities (x) recognized or disclosed in the most recent consolidated
financial statements (or the notes thereto) of MindSpring included in the
MindSpring SEC Documents or (y) incurred since the date of such financial
statements in the ordinary course of business consistent with past practice, or
(ii) other than in the ordinary course of business consistent with past
practice, make any tax election or enter into any settlement or compromise of
any tax liability that in either case is material to the business of MindSpring
and the MindSpring Subsidiaries, taken as a whole; or
(l) agree, resolve or commit to do any of the foregoing.
Section 8.2. Acquisition Proposals; Board Recommendation.
(a) MindSpring agrees that it shall not, nor shall it permit any
MindSpring Subsidiary to, nor shall it authorize or knowingly permit any
officer, director, employee, investment banker, attorney, accountant, agent or
other advisor or representative of MindSpring or any MindSpring Subsidiary,
directly or indirectly, to (i) solicit, initiate or knowingly facilitate or
encourage the submission of any Acquisition Proposal for MindSpring, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action knowingly to
facilitate any inquiries or the making of any proposal that constitutes an
Acquisition Proposal for MindSpring, (iii) grant any waiver or release under
any standstill or similar agreement with respect to any class of MindSpring
equity securities or (iv) enter into any agreement with respect to any
Acquisition Proposal for MindSpring. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any officer, director, investment banker, attorney, accountant,
agent or other advisor or representative of MindSpring or any MindSpring
Subsidiary, whether or not such individual is purporting to act on behalf of
MindSpring or any MindSpring Subsidiary, or otherwise, shall be deemed to be a
breach of this Section 8.2 by MindSpring. MindSpring shall cease and cause to
be terminated immediately all existing discussions or negotiations with any
Persons conducted heretofore with respect to, or that could be reasonably
expected to lead to, any Acquisition Proposal for MindSpring.
(b) Notwithstanding the foregoing, nothing contained in this Section
8.2 shall prohibit the Board of Directors of MindSpring from (i) to the extent
applicable, complying with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal for MindSpring; and (ii) prior to
the MindSpring Special Meeting, furnishing information to or entering into
discussions or negotiations with, any Person that makes a bona fide proposal or
offer with respect to MindSpring that constitutes an Acquisition Proposal for
MindSpring, if: (A) the Board of Directors of MindSpring determines in good
faith, taking into account the advice of outside counsel, that such action is
reasonably likely to be required for the Board of Directors to comply with its
fiduciary duties to stockholders under applicable law; (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
Person, MindSpring provides written notice to EarthLink of the identity of the
Person making the Acquisition Proposal for MindSpring and that it intends to
furnish information to, or intends to enter into discussions or negotiations
with, such Person; (C) MindSpring enters into a
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confidentiality agreement with such Person on terms in the aggregate not more
favorable to such Person than the terms of the letter agreement, dated August
17, 1999, between MindSpring and EarthLink; (D) MindSpring keeps EarthLink
informed on a timely basis of the status of such negotiations and all material
terms and conditions thereof and promptly provides EarthLink with copies of any
and all written inquiries or proposals relating thereto; and (E) such
Acquisition Proposal was not solicited in violation of Section 8.2(a).
(c) Notwithstanding any other provision of this Agreement, in the
event that an Acquisition Proposal for MindSpring constitutes a MindSpring
Superior Proposal (as defined below), the Board of Directors of MindSpring may
withdraw its recommendation of this Agreement as required under Section 3.1
hereof and recommend such MindSpring Superior Proposal to its stockholders (i)
if, but only if, MindSpring (A) complies fully with this Section 8.2 and (B)
provides EarthLink with at least four (4) Business Days' prior written notice
of its intent to withdraw its recommendation of this Agreement and (ii) if, in
the event that during such four (4) Business Days EarthLink makes a counter
proposal to such MindSpring Superior Proposal (the "EarthLink Counter
Proposal"), the MindSpring Board of Directors in good faith, taking into
account the advice of its outside financial advisors, determines that the
EarthLink Counter Proposal is not at least as favorable to MindSpring's
stockholders as the MindSpring Superior Proposal (taking into account all
financial and strategic considerations and other relevant factors, including
relevant legal, financial, regulatory and other aspects of such proposals, and
the conditions, prospects and time required for completion of such proposal).
(d) For the purposes of this Agreement, a "MindSpring Superior
Proposal" means a bona fide Acquisition Proposal, having no financing
contingency, for more than seventy-five percent (75%) of the aggregate voting
power of the MindSpring Equity Securities and made by a Person other than an
affiliate of MindSpring that the Board of Directors of MindSpring believes in
good faith, (x) taking into account the advice of its outside financial
advisors, to be superior, from a financial point of view, to the stockholders
of MindSpring than the proposal set forth in this Agreement and (y) to be more
favorable generally to the stockholders of MindSpring (taking into account all
financial and strategic considerations and other relevant factors, including
relevant legal, financial, regulatory and other aspects of such proposals, and
the conditions, prospects and time required for completion of such proposal);
provided that the Board of Directors of MindSpring has determined in good
faith, taking into account the advice of its outside legal counsel, that it is
reasonably likely to be required to recommend such proposal to the MindSpring
stockholders to comply with its fiduciary duties to stockholders under
applicable law.
(e) For the purposes of this Agreement, "MindSpring Equity
Securities" means: (i) any MindSpring common stock; (ii) any MindSpring
preferred stock; (iii) any debt or equity securities of MindSpring convertible
into or exchangeable for MindSpring common stock or preferred stock (on a
fully-converted basis); and (iv) any options, warrants or rights (or any other
similar securities) issued by MindSpring to acquire MindSpring common stock or
preferred stock (on a fully-converted basis).
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(f) Nothing in this Section 8.2 shall (i) permit MindSpring to
terminate this Agreement (except as specifically provided in Article XI hereof)
or (ii) affect any other obligation of MindSpring under this Agreement.
ARTICLE IX
COVENANTS OF MINDSPRING, NEWCO AND EARTHLINK
The parties hereto agree that:
Section 9.1. Reasonable Best Efforts.
Subject to the terms and conditions hereof, each party will use reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement as
promptly as practicable. In furtherance of the parties' undertakings pursuant
to this Section 9.1, the parties shall cooperate in good faith to take such
actions as they deem necessary to satisfy the closing conditions set forth in
Section 10.2(d) hereof.
Section 9.2. Certain Filings; Cooperation in Receipt of Consents;
Listing.
Promptly after the date hereof, MindSpring, EarthLink and Newco shall
prepare and Newco shall file with the SEC the Registration Statement, in which
the Joint Proxy Statement/Prospectus will be included as Newco's prospectus.
Each of MindSpring and EarthLink shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and to keep the Registration Statement
effective as long as is necessary to consummate the Mergers. Each of
MindSpring and EarthLink shall mail the Joint Proxy Statement/Prospectus to
their respective stockholders as promptly as practicable after the Registration
Statement is declared effective under the Securities Act and, if necessary,
after the Joint Proxy Statement/Prospectus shall have been so mailed, promptly
circulate amended, supplemental or supplemented proxy material, and, if
required in connection therewith, resolicit proxies. EarthLink and MindSpring
shall cause Newco to take any action required to be taken under any applicable
state securities or blue sky laws in connection with the issuance of shares of
Newco Common Stock in the Mergers.
(a) No amendment or supplement to the Joint Proxy
Statement/Prospectus will be made by Newco, MindSpring or EarthLink without the
approval of the other parties, which will not be unreasonably withheld or
delayed. Each party will advise the other parties, promptly after it receives
notice thereof, of (i) the time when the Registration Statement has become
effective or any supplement or amendment has been filed, (ii) the issuance of
any stop order, (iii) the suspension of the qualification of the shares of
Newco Common Stock issuable in connection with the Mergers for offering or sale
in any jurisdiction, or (iv) any request by the SEC for amendment of the Joint
Proxy Statement/Prospectus or comments thereon and responses thereto or
requests by the SEC for additional information. If at any time prior to the
Effective Time, MindSpring or EarthLink discovers any information relating to
either party, or any of their respective Affiliates, officers or directors,
that should be set forth in an amendment or
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supplement to the Joint Proxy Statement/Prospectus, so that such document would
not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party that discovers such
information shall promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law or regulation, disseminated to
the stockholders of MindSpring or EarthLink.
(b) MindSpring and EarthLink shall cooperate with one another in (i)
determining whether any other action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated hereby, (ii)
seeking any such other actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith and
seeking promptly to obtain any such actions, consents, approvals or waivers and
(iii) setting a mutually acceptable date for the Special Meetings, so as to
enable them to occur, to the extent practicable, on the same date. Each party
shall permit the other party to review any communication given by it to, and
consult with each other in advance of any meeting or conference with, any
Governmental Entity or, in connection with any proceeding by a private party,
with any other Person, and to the extent permitted by the applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences, in each case in
connection with the transactions contemplated hereby.
(c) Newco, EarthLink and MindSpring agree to use their respective
reasonable best efforts to cause the shares of Newco Common Stock to be issued
upon conversion of shares of EarthLink Common Stock and MindSpring Common Stock
in accordance with this Agreement and the Certificates of Merger to be approved
for listing upon issuance on the Nasdaq Stock Market with the ticker symbol
"ELNK."
Section 9.3. Public Announcements.
The parties shall consult with each other before issuing any press release
or making any public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable
law or any listing agreement with any national securities exchange association,
will not issue any such press release or make any such public statement prior
to such consultation.
Section 9.4. Access to Information, Notification of Certain Matters.
(a) From the date hereof until the Effective Time and subject to
applicable law, MindSpring and EarthLink shall (i) give to the other party, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of such party,
(ii) furnish or make available to the other party, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Persons may reasonably request and
(iii) instruct its employees, counsel, financial advisors, auditors and other
authorized representatives to cooperate with the
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reasonable requests of the other party in its investigation. Any investigation
pursuant to this Section 9.4 shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of the other party.
Unless otherwise required by law, each of EarthLink and MindSpring will hold,
and will cause its respective officers, employees, counsel, financial advisors,
auditors and other authorized representatives to hold, any nonpublic
information obtained in any such investigation in confidence in accordance with
Section 9.8. No information or knowledge obtained in any investigation
pursuant to this Section 9.4 shall affect or be deemed to modify any
representation or warranty made by any party hereunder.
(b) Each party hereto shall give prompt notice to each other party
hereto of:
(i) any communication received by such party from, or given by
such party to, any Governmental Entity in connection with any of the
transactions contemplated hereby; and
(ii) any actions, suits, claims, investigations or proceedings
commenced or, to its Knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its Subsidiaries
that, if pending on the date of this Agreement, would have been required
to have been disclosed pursuant to this Agreement or that relate to the
consummation of the transactions contemplated by this Agreement
provided, however, that the delivery of any notice pursuant to this Section
9.4(b) shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 9.5. Further Assurances.
At and after the Effective Time, the officers and directors of Newco will
be authorized to execute and deliver, in the name and on behalf of EarthLink or
MindSpring, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of EarthLink or MindSpring, any other actions and
things to vest, perfect or confirm of record or otherwise in Newco any and all
right, title and interest in, to and under any of the rights, properties or
assets of MindSpring or EarthLink acquired or to be acquired by Newco as a
result of, or in connection with the Mergers.
Section 9.6. Tax and Accounting Treatment.
(a) Prior to the Effective Time, each party shall use its best
efforts to cause each of the Mergers to qualify as a 368 Reorganization, and
will not take any action reasonably likely to cause the Mergers not so to
qualify. Newco shall not take any action after the Effective Time reasonably
likely to cause either of the Mergers not to qualify as a 368 Reorganization.
(b) Each party will use its best efforts to cause the Mergers to
qualify for "pooling of interest" accounting treatment as described in Section
5.21 and Section 6.21, and will not take any action reasonably likely to cause
the Mergers not so to qualify.
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(c) Each party shall use its best efforts to obtain the opinions
referred to in Section 10.1(f).
Section 9.7. Affiliate Letters.
(a) Within 30 days following the date hereof, EarthLink shall
cause to be delivered to Newco a letter identifying, to the best of EarthLink's
Knowledge, all Persons who may be deemed to be "affiliates" of EarthLink for
purposes of Rule 145(c) under the Securities Act. EarthLink shall use
commercially reasonable efforts to cause each such Person who is so identified
to deliver to Newco on or prior to the Effective Time a letter agreement
substantially in the form of Exhibit 11-A to this Agreement.
(b) Within 30 days following the date hereof, MindSpring shall cause
to be delivered to Newco a letter identifying, to the best of MindSpring's
Knowledge, all Persons who may be deemed to be "affiliates" of MindSpring for
purposes of Rule 145(c) under the Securities Act. MindSpring shall use
commercially reasonable efforts to cause each such Person who is so identified
to deliver to Newco on or prior to the Effective Time a letter agreement
substantially in the form of Exhibit 11-B to this Agreement.
Section 9.8. Confidentiality.
(a) Prior to the Effective Time and after any termination of this
Agreement each party hereto will hold, and will use its best efforts to cause
its officers, directors, employees, accountants, counsel, consultants,
advisors, affiliates (as such term is used in Rule 12b-2 under the Exchange
Act) and representatives (collectively, the "Representatives"), to hold, in
confidence all confidential documents and information concerning the other
parties hereto and the Subsidiaries furnished to such party in connection with
the transactions contemplated by this Agreement, including, without limitation,
all analyses, compilations, studies or records prepared by the party receiving
the information or by such party's Representatives, that contain or otherwise
reflect or are generated from such information (collectively, the "Confidential
Material"). The party furnishing any Confidential Material is herein referred
to as the "Delivering Company" and the party receiving any Confidential
Material is herein referred to as the "Receiving Company."
(b) The Receiving Company agrees that the Confidential Material will
not be used other than for the purpose of the transaction contemplated by this
Agreement, and that such information will be kept confidential by the Receiving
Company and its Representatives; provided, however, that (i) any of such
information may be disclosed to the Representatives who need to know such
information for the purpose described above (it being understood that (a) each
such Representative shall be informed by the Receiving Company of the
confidential nature of such information, shall be directed by the Receiving
Company to treat such information confidentially and not to use it other than
for the purpose described above and shall agree to be bound by the terms of
this Section 9.8, and (b) in any event, the Receiving Company shall be
responsible for any breach of this Agreement by any of its Representatives),
and (ii) any other disclosure of such information may be made if the Delivering
Company has, in advance, consented to such disclosure in writing. The
Receiving Company will make all reasonable,
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necessary and appropriate efforts to safeguard the Confidential Material from
disclosure to anyone other than as permitted hereby.
(c) Notwithstanding the foregoing, if the Receiving Company or any
of its Representatives is requested or required (by oral question or request
for information or documents in legal proceedings, interrogatories, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Material, the Receiving Company will promptly notify the Delivering Company of
such request or requirement so that the Delivering Company may seek an
appropriate protective order and/or waive the Receiving Company's compliance
with the provisions or this Agreement. If, in the absence of a protective
order or the receipt of a waiver hereunder, the Receiving Company or any of its
Representatives is nonetheless, in the reasonable written opinion of the
Receiving Company's counsel, compelled to disclose Confidential Material to any
tribunal, the Receiving Company or such Representative, after notice to the
Delivering Company, may disclose such information to such tribunal. The
Receiving Party shall exercise reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded the Confidential Material so
disclosed. The Receiving Company or such Representative shall not be liable
for the disclosure of Confidential Material hereunder to a tribunal compelling
such disclosure unless such disclosure to such tribunal was caused by or
resulted from a previous disclosure by the Receiving Company or any of its
Representatives not permitted by this Agreement.
(d) This Section 9.8 shall be inoperative as to particular portions
of the Confidential Material if such information (i) is or becomes generally
available to the public other than as a result of a disclosure by the Receiving
Company or its Representatives, (ii) was available to the Receiving Company on
a non-confidential basis prior to its disclosure to the Receiving Company by
the Delivering Company or the Delivering Company's Representatives, or (iii)
becomes available to the Receiving Company on a non-confidential basis from a
source other than the Delivering Company or the Delivering Company's
Representatives, provided that such source is not known by the Receiving
Company, after reasonable inquiry, to be bound by a confidentiality agreement
with the Delivering Company or the Delivering Company's Representatives and is
not otherwise prohibited from transmitting the information to the Receiving
Company by a contractual, legal or fiduciary obligation. The fact that
information included in the Confidential Material is or becomes otherwise
available to the Receiving Company or its Representatives under clauses (i)
through (iii) above shall not relieve the Receiving Company or its
Representatives of the prohibitions of the confidentiality provisions of this
Section 9.8 with respect to the balance of the Confidential Material.
(e) If this Agreement is terminated, each party hereto will, and
will use its best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver
to the party from whom such Confidential Material was obtained, upon request,
all documents and other materials, and all copies thereof, obtained by such
party or on its behalf from any such other parties in connection with this
Agreement that are subject to such confidence.
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Section 9.9. MindSpring Standstill.
If this Agreement is terminated, then, for two years after the date of
such termination, MindSpring and each of its successors or assigns will not,
and will cause its Affiliates not to:
(i) except pursuant to a Stock Option Agreement, acquire, offer
or propose or otherwise seek to acquire, or agree to acquire, directly or
indirectly, by merger, purchase or otherwise, beneficial ownership of any
assets or in excess of 5% of any class of securities of EarthLink or its
Affiliates or any direct rights or options to acquire (through purchase,
exchange, conversion or otherwise) any assets or in excess of 5% of any
class of securities of EarthLink or its Affiliates;
(ii) make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1
of Regulation 14A promulgated by the SEC as of the date hereof,
disregarding clause (iv) of Rule 14a-1 (1)(2), but including any
solicitation exempted pursuant to Rule 14a-2(b)(1) to vote (including by
the execution of actions by written consent)), or seek to advise,
encourage or influence any person or entity with respect to the voting of,
any voting securities of EarthLink;
(iii) call, or in any way participate in a call for, any
meeting of stockholders of EarthLink (or take any action with respect to
stockholders acting by written consent);
(iv) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
voting securities of EarthLink;
(v) effect or seek, offer or propose (whether publicly or
otherwise) to effect, cause or participate in or in any way assist any
other Person to effect or seek, offer or propose (whether publicly or
otherwise) to effect or participate in any tender or exchange offer or
merger or other business combination involving EarthLink or any EarthLink
Subsidiary; or
(vi) otherwise act, alone or in concert, to control or
influence, or seek to control or influence, EarthLink or the management,
Board of Directors, policies or affairs of EarthLink, including without
limitation, (A) making any offer or proposal to acquire any securities or
assets of EarthLink or any of its Affiliates or soliciting or proposing to
effect or negotiate any form of business combination, restructuring,
recapitalization or other extraordinary transaction involving EarthLink,
its Affiliates or any of their respective securities or assets, (B)
seeking board representation or the removal of any directors or a change
in the composition or size of the Board of Directors of EarthLink, (C)
making any request to amend or waive any provision of this Section 9.9,
including, without limitation, this Subsection (C), (D) disclosing any
intent, purpose, plan or proposal with respect to matters covered by this
Section 9.9 or EarthLink, its Affiliates or the boards of directors,
management, policies or affairs or securities or assets
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of EarthLink or its Affiliates that is inconsistent with this Section 9.9,
including an intent, purpose, plan or proposal that is conditioned on, or
would require, waiver, amendment, nullification or invalidation of any
provision of this Section 9.9; or take any action that could require
EarthLink or any of its Affiliates to make any public disclosure relating
to any such intent, purpose, plan, proposal or condition, or (E)
assisting, advising or encouraging any person with respect to, or seeking
to do, any of the foregoing;
provided, however, that this Section 9.9 shall not apply if EarthLink does not
pay any portion of the Termination Fee when due or if MindSpring terminates
this Agreement as a result of a willful breach of this Agreement by EarthLink;
provided, further, that, if this Section 9.9 is effective against MindSpring
(and each of its successors and their respective Affiliates) during any such
two-year period after the date of any such termination, and either (x)
EarthLink shall have entered into an agreement with respect to any transaction
that constitutes an Acquisition Proposal for EarthLink (assuming for this
purpose that this Agreement had been effective at such time) for at least a
majority of either the voting securities of EarthLink then outstanding or the
assets of EarthLink and the EarthLink Subsidiaries, taken as a whole, or (y)
any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act)
(other than EarthLink or any of its Affiliates, excluding, for this purpose,
EarthLink's management acting independently of EarthLink)) shall have commenced
any tender or exchange offer that constitutes an Acquisition Proposal for
EarthLink (assuming for this purpose that this Agreement had been effective at
such time) for at least a majority of the voting securities of EarthLink then
outstanding which offer is recommended by EarthLink's Board of Directors to its
stockholders, then at the time of the public announcement of such agreement or
of the commencement of such offer, as applicable, this Section 9.9 shall
terminate and have no further force or effect and there shall be no rights,
liabilities or obligations under this Section 9.9 on the part of MindSpring,
EarthLink, Newco or any of their respective officers, directors, stockholders,
agents or Affiliates.
Section 9.10. EarthLink Standstill.
If this Agreement is terminated, then, for two years after the date of
such termination, EarthLink and each of its successors or assigns will not, and
will cause its Affiliates not to:
(i) except pursuant to a Stock Option Agreement, acquire, offer
or propose or otherwise seek to acquire, or agree to acquire, directly or
indirectly, by merger, purchase or otherwise, beneficial ownership of any
assets or in excess of 5% of any class of securities of MindSpring or its
Affiliates or any direct rights or options to acquire (through purchase,
exchange, conversion or otherwise) any assets or in excess of 5% of any
class of securities of MindSpring or its Affiliates;
(ii) make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1
of Regulation 14A promulgated by the SEC as of the date hereof,
disregarding clause (iv) of Rule 14a-1(1)(2), but including any
solicitation exempted pursuant to Rule 14a-2(b)(1) to vote (including by
the execution of actions by written consent)), or seek to advise,
encourage
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or influence any person or entity with respect to the voting of, any
voting securities of MindSpring;
(iii) call, or in any way participate in a call for, any meeting
of stockholders of MindSpring (or take any action with respect to
stockholders acting by written consent);
(iv) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
voting securities of MindSpring;
(v) effect or seek, offer or propose (whether publicly or
otherwise) to effect, cause or participate in or in any way assist any
other Person to effect or seek, offer or propose (whether publicly or
otherwise) to effect or participate in any tender or exchange offer or
merger or other business combination involving MindSpring or any
MindSpring Subsidiary; or
(vi) otherwise act, alone or in concert, to control or
influence, or seek to control or influence, MindSpring or the management,
Board of Directors, policies or affairs of MindSpring, including without
limitation, (A) making any offer or proposal to acquire any securities or
assets of MindSpring or any of its Affiliates or soliciting or proposing
to effect or negotiate any form of business combination, restructuring,
recapitalization or other extraordinary transaction involving MindSpring,
its Affiliates or any of their respective securities or assets, (B)
seeking board representation or the removal of any directors or a change
in the composition or size of the Board of Directors of MindSpring, (C)
making any request to amend or waive any provision of this Section 9.10,
including, without limitation, this Subsection (C), (D) disclosing any
intent, purpose, plan or proposal with respect to matters covered by this
Section 9.10 or MindSpring, its Affiliates or the boards of directors,
management, policies or affairs or securities or assets of MindSpring or
its Affiliates that is inconsistent with this Section 9.10, including an
intent, purpose, plan or proposal that is conditioned on, or would
require, waiver, amendment, nullification or invalidation of any provision
of this Section 9.10, or take any action that could require MindSpring or
any of its Affiliates to make any public disclosure relating to any such
intent, purpose, plan, proposal or condition, or (E) assisting, advising
or encouraging any person with respect to, or seeking to do, any of the
foregoing;
provided, however, that this Section 9.10 shall not apply if MindSpring does
not pay any portion of the Termination Fee when due or if EarthLink terminates
this Agreement as a result of a willful breach of this Agreement by MindSpring;
provided, further, that, if this Section 9.10 is effective against EarthLink
(and each of its successors and their respective Affiliates) during any such
two-year period after the date of any such termination, and either (x)
MindSpring shall have entered into an agreement with respect to any transaction
that constitutes an Acquisition Proposal for MindSpring (assuming for this
purpose that this Agreement had been effective at such time) for at least a
majority of either the voting securities of MindSpring then outstanding or the
assets
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of MindSpring and the MindSpring Subsidiaries, taken as a whole, or (y) any
Person or "group" (as defined in Section 13(d)(3) of the Exchange Act) (other
than MindSpring or any of its Affiliates, excluding, for this purpose,
MindSpring's management acting independently of MindSpring)) shall have
commenced any tender or exchange offer that constitutes an Acquisition Proposal
of MindSpring (assuming for this purpose that this Agreement had been effective
at such time) for at least a majority of the voting securities of MindSpring
then outstanding which offer is recommended by MindSpring's Board of Directors
to its stockholders, then at the time of the public announcement of such
agreement or of the commencement of such offer, as applicable, this Section
9.10 shall terminate and have no further force or effect and there shall be no
rights, liabilities or obligations under this Section 9.10 on the part of
EarthLink, MindSpring, Newco or any of their respective officers, directors,
stockholders, agents or Affiliates.
Section 9.11. ASR 135.
Newco shall use its best efforts to publish as promptly as reasonably
practical, but in no event later than 90 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Mergers
combined operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
Section 9.12. Benefit Matters.
EarthLink and MindSpring will work together to design benefit plans to be
adopted by Newco for the benefit of its employees as soon as practicable
following the Mergers. Until such adoption, Newco shall cause all EarthLink
Employee Plans and all MindSpring Employee Plans to be maintained in full force
and effect.
Section 9.13. Antitrust Matters.
(a) The parties hereto promptly will complete all documents required
to be filed with the Federal Trade Commission and the Department of Justice in
order to comply with the HSR Act and, together with the Persons who are
required to join in such filings, will file the same with the appropriate
Governmental Entities. The parties hereto promptly will furnish all materials
thereafter required by any of the Governmental Entities having jurisdiction
over such filings and will take all reasonable actions and file and use all
reasonable efforts to have declared effective or approved all documents and
notifications with any such Governmental Entities, as may be required under the
HSR Act for the consummation of the Mergers.
(b) The parties hereto will use their best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade
regulatory laws, rules or regulations of any domestic or foreign Governmental
Entity ("Antitrust Laws"). If any suit is threatened or instituted challenging
the Mergers as violating any Antitrust Law, the parties hereto will take such
action as may be required (i) by the applicable Governmental Entity in order to
resolve such objections as such Governmental Entity may have to such
transactions under such Antitrust Law or (ii) by any domestic or foreign court
or similar tribunal, in any suit brought by a private party or
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governmental authority challenging the Mergers as violating any Antitrust Law,
in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order that has the effect of
preventing the consummation of the Mergers. The entry by a court, in any suit
brought by a private party or Governmental Entity challenging the Mergers as
violating any Antitrust Law, of an order or decree permitting the Mergers but
requiring that any of the businesses or assets of any party hereto be divested
or held separate by Newco, or that would otherwise limit Newco's freedom of
action with respect to, or its ability to retain, both MindSpring and EarthLink
or any portion thereof, will not be deemed a failure to satisfy the conditions
specified in Section 10.1(e).
(c) Each party promptly will inform the others of any material
communication from the Federal Trade Commission, the Department of Justice, the
FCC or any other domestic or foreign Governmental Entity regarding any of the
transactions contemplated by this Agreement. If any party or any Affiliate
thereof receives a request for additional information or documentary material
from any such government or authority with respect to the transactions
contemplated by this Agreement, such party will endeavor in good faith to make,
as soon as reasonably practicable and after consultation with the other
parties, an appropriate response to such request. Each party hereto promptly
will advise the other parties hereto in respect of any understandings,
undertakings or agreements which the advising party proposes to make or enter
into with the Federal Trade Commission, the Department of Justice or any other
domestic or foreign Governmental Entity in connection with the transactions
contemplated by this Agreement.
Section 9.14. Exemption from Liability under Section 16(b).
(a) Provided that MindSpring delivers to Newco the Section 16
Information with respect to MindSpring prior to the Effective Time, the Board
of Directors of Newco, or a committee of Non-Employee Directors thereof (as
such term is defined for purposes of Rule 16b-3(d) under the Exchange Act),
shall adopt a resolution in advance of the Effective Time providing that the
receipt by the MindSpring Insiders of Newco Common Stock in exchange for shares
of MindSpring Common Stock, and of options to purchase Newco Common Stock upon
assumption and conversion by Newco of options to purchase MindSpring Common
Stock, in each case pursuant to the transactions contemplated hereby and to the
extent such securities are listed in the Section 16 Information, are intended
to be exempt from liability pursuant to Rule 16b-3 under the Exchange Act.
(b) Provided that EarthLink delivers to Newco the Section 16
Information with respect to EarthLink prior to the Effective Time, the Board of
Directors of Newco, or a committee of Non-Employee Directors thereof (as such
term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall
adopt a resolution in advance of the Effective Time of the Mergers providing
that the receipt by the EarthLink Insiders of Newco Common Stock in exchange
for shares of EarthLink Common Stock, and of options to purchase Newco Common
Stock upon assumption and conversion by Newco of options to purchase EarthLink
Common Stock, in each case pursuant to the transactions contemplated hereby and
to the extent such
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securities are listed in the Section 16 Information, are intended to be exempt
from liability pursuant to Rule 16b-3 under the Exchange Act.
(c) "Section 16 Information" shall mean (i) information accurate in
all respects regarding the MindSpring Insiders, the number of shares of
MindSpring Common Stock or other MindSpring equity securities deemed to be
beneficially owned by each such MindSpring Insider and expected to be exchanged
for Newco Common Stock in connection with the Merger, and (ii) information
accurate in all respects regarding the EarthLink Insiders, the number of shares
of EarthLink Common Stock or other EarthLink equity securities deemed to be
beneficially owned by each such EarthLink Insider and expected to be exchanged
for Newco Common Stock in connection with the Merger.
(d) "MindSpring Insiders" shall mean those officers and directors of
MindSpring who are subject to the reporting requirements of Section 16(a) of
the Exchange Act who are listed in the Section 16 Information. "EarthLink
Insiders" shall mean those officers and directors of EarthLink who are subject
to the reporting requirements of Section 16(a) of the Exchange Act who are
listed in the Section 16 Information.
ARTICLE X
CONDITIONS TO THE MERGERS
Section 10.1. Conditions to the Obligations of Each Party.
The obligations of MindSpring and EarthLink to consummate the Mergers are
subject to the satisfaction of the following conditions:
(a) each of the EarthLink Stockholder Approval and the MindSpring
Stockholder Approval shall have been obtained;
(b) (i) the Joint Proxy Statement/Prospectus shall have become
effective in accordance with the provisions of the Securities Act, no stop
order suspending the effectiveness of the Joint Proxy Statement/Prospectus
shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated by the SEC and not concluded or withdrawn and (ii) all
state securities or blue sky authorizations necessary to carry out the
transactions contemplated hereby shall have been obtained and be in effect;
(c) the shares of Newco Common Stock to be issued in the Mergers
shall have been approved for listing upon issuance on the Nasdaq Stock Market;
(d) (i) any applicable waiting period under the HSR Act relating to
each of the Mergers shall have expired or been earlier terminated and (ii) if
required by applicable law, the parties shall have received a decision from the
European Commission under Regulation 4064/89 that the proposed Mergers and any
matters arising therefrom fall within either Article 6.l(a) or Article 6. l(b)
of such Regulation and that, in any event, neither of the Mergers will be
referred to
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any competent authority or dealt with by the European Commission pursuant to
Article 9.3 of such Regulation;
(e) no Governmental Entity of competent authority or jurisdiction
shall have issued any order, injunction or decree, or taken any other action,
which permanently restrains, enjoins or otherwise prohibits the consummation of
either of the Mergers; and
(f) (i) EarthLink shall have received a letter (which may contain
customary qualifications and assumptions) from PricewaterhouseCoopers LLP dated
as of the Closing Date and addressed to EarthLink, stating that
PricewaterhouseCoopers LLP concurs with EarthLink's management's conclusion
that no conditions exist that would preclude Newco from accounting for the
Mergers as a "pooling of interests" in conformity with GAAP as described in
Accounting Principles Board Opinion No. 16 and applicable rules and regulations
of the SEC and such letter shall not have been withdrawn or modified in any
material respect and (ii) MindSpring shall have received a letter (which may
contain customary qualifications and assumption) from Xxxxxx Xxxxxxxx LLP dated
as of the Closing Date and addressed to MindSpring, stating that Xxxxxx
Xxxxxxxx LLP concurs with MindSpring's management's conclusion that no
conditions exist with respect to MindSpring that would preclude Newco from
accounting for the Mergers as a "pooling of interests" in conformity with GAAP
as described in Accounting Principles Board Opinion No. 16 and applicable rules
and regulations of the SEC and such letter shall not have been withdrawn or
modified in any material respect.
Section 10.2. Conditions to the Obligations of EarthLink.
The obligations of EarthLink to consummate the EarthLink Merger are
subject to the satisfaction of the following further conditions:
(a) (i) MindSpring shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
time of the filing of the Certificate of Merger; (ii) the representations and
warranties of MindSpring in this Agreement that are qualified as to materiality
shall be accurate, and any such representations and warranties that are not so
qualified shall be accurate, in all material respects, as of the date of this
Agreement and as of the Effective Time (except for representations and
warranties that address matters only as of a specific date that shall have been
true and correct as of such date); provided, that for purposes of this Section
10.2(a), such representations and warranties shall be deemed to be accurate
unless all such inaccuracies, taken as a whole, have a MindSpring Material
Adverse Effect; and (iii) EarthLink shall have received a certificate signed by
the Chief Executive Officer or Chief Financial Officer of MindSpring to the
foregoing effect;
(b) EarthLink shall have received an opinion of Hunton & Xxxxxxxx in
form and substance reasonably satisfactory to EarthLink, on the basis of
certain facts, representations and assumptions set forth in such opinion, dated
as of the date of the filing of the Certificate of Merger, to the effect that
the EarthLink Merger will qualify for federal income tax purposes as a 368
Reorganization and that each of EarthLink, Newco and MindSpring will be a party
to the reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion,
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such counsel shall be entitled to rely upon representations of officers of
EarthLink and MindSpring;
(c) the parties shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by Section 5.3 and Section 6.3 which if not obtained or
made (i) would render consummation of the EarthLink Merger illegal or (ii)
(assuming the Effective Time had occurred) would be reasonably likely to have a
Newco Material Adverse Effect; and
(d) the EarthLink Exchange Ratio and the MindSpring Exchange Ratio
shall result in the former stockholders of MindSpring owning less than 50% of
the outstanding Equity Securities of Newco on a Fully-Diluted Basis (as defined
in the Sprint Governance Agreement) at the Effective Time.
Section 10.3. Conditions to the Obligations of MindSpring.
The obligations of MindSpring to consummate the MindSpring Merger are
subject to the satisfaction of the following further conditions:
(a) (i) EarthLink shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
time of the filing of the Certificate of Merger; (ii) the representations and
warranties of EarthLink in this Agreement that are qualified as to materiality
shall be accurate, and any such representations and warranties that are not so
qualified shall be accurate, in all material respects, as of the date of this
Agreement and as of the Effective Time (except for representations and
warranties which address matters only as of a specific date that shall have
been true and correct as of such date); provided, that for purposes of this
Section 10.3(a), such representations and warranties shall be deemed to be
accurate unless all such inaccuracies, taken as a whole, have an EarthLink
Material Adverse Effect; and (iii) MindSpring shall have received a certificate
signed by the Chief Executive Officer or Chief Financial Officer of EarthLink
to the foregoing effect;
(b) MindSpring shall have received an opinion of Xxxxx & Xxxxxxx LLP
in form and substance reasonably satisfactory to MindSpring, on the basis of
certain facts, representations and assumptions set forth in such opinion, dated
as of the date of the filing of the Certificate of Merger, to the effect that
the MindSpring Merger will qualify for federal income tax purposes as a 368
Reorganization and that each of EarthLink, Newco and MindSpring will be a party
to the reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, such counsel shall be entitled to rely upon
representations of officers of EarthLink and MindSpring; and
(c) the parties shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by Section 5.3 and Section 6.3 which if not obtained or
made (i) would render consummation of the MindSpring Merger illegal or (ii)
(assuming the Effective Time had occurred) would be reasonably likely to have a
Newco Material Adverse Effect.
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ARTICLE XI
TERMINATION
Section 11.1. Termination.
This Agreement may be terminated at any time prior to the Effective Time
by written notice by the terminating party to the other party (except if such
termination is pursuant to Section 11.1(a)), notwithstanding approval thereof
by the respective stockholders of EarthLink and MindSpring:
(a) by mutual written agreement of EarthLink and MindSpring;
(b) by either MindSpring or EarthLink, if
(i) the Mergers shall not have been consummated by March 31,
2000 (the "End Date"); provided, however, that the right to terminate this
Agreement under this Section 11.1(b)(i) shall not be available to any
party whose breach of any provision of this Agreement has resulted in the
failure of either of the Mergers to occur on or before the End Date;
(ii) there shall be any law or regulation that makes
consummation of the Mergers illegal or otherwise prohibited or any
judgment, injunction, order or decree of any Governmental Entity having
competent jurisdiction enjoining EarthLink, MindSpring or Newco from
consummating either of the Mergers is entered and such judgment,
injunction, judgment or order shall have become final and nonappealable
and, prior to such termination, the parties shall have used reasonable
best efforts to resist, resolve or lift, as applicable, such law,
regulation, judgment, injunction, order or decree;
(iii) the holders of EarthLink Common Stock do not approve
this Agreement; or
(iv) the holders of MindSpring Common Stock do not approve this
Agreement;
(c) by EarthLink, (i) if MindSpring's Board of Directors shall have
(A) amended, modified, withdrawn, conditioned or qualified the MindSpring
Recommendation in a manner adverse to EarthLink or (B) recommended any
Acquisition Proposal for MindSpring to MindSpring's stockholders; (ii) if there
shall have occurred a willful and material breach of Section 8.2 by MindSpring,
any MindSpring Subsidiary or any of their respective officers, directors,
employees, advisors or agents; or (iii) if a breach of any representation,
warranty, covenant or agreement on the part of MindSpring set forth in this
Agreement shall have occurred that would cause the condition set forth in
Section 10.2(a) not to be satisfied, and such condition shall be incapable of
being satisfied by the End Date;
(d) by EarthLink if EarthLink's Board of Directors shall have
withdrawn its recommendation of this Agreement pursuant to Section 7.2(c);
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(e) by MindSpring, (i) if EarthLink's Board of Directors shall have
(A) amended, modified, withdrawn, conditioned or qualified the EarthLink
Recommendation in a manner adverse to MindSpring or (B) recommended any
Acquisition Proposal for EarthLink to EarthLink's stockholders; (ii) if there
shall have occurred a willful and material breach of Section 7.2 by EarthLink,
any EarthLink Subsidiary or any of their respective officers, directors,
employees, advisors or agents; or (iii) if a breach of any representation,
warranty, covenant or agreement on the part of EarthLink set forth in this
Agreement shall have occurred that would cause the condition set forth in
Section 10.3(a) not to be satisfied, and such condition is incapable of being
satisfied by the End Date;
(f) by MindSpring if MindSpring's Board of Directors shall have
withdrawn its recommendation of this Agreement pursuant to Section 8.2(c); and
(g) automatically if the transactions contemplated herein are
enjoined by a court of competent jurisdiction for a period extending beyond
March 31, 2000.
Section 11.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 11.1, the provisions
of Sections 9.8, 9.9, (except as noted therein), 9.10 (except as noted
therein), 11.2, 11.3, 12.1, 12.4, 12.5, 12.7, 12.8 and 12.10 of this Agreement
shall remain in full force and effect and survive any termination of this
Agreement. Nothing herein shall release any party from liability for a breach
of this Agreement.
Section 11.3. Fees and Expenses.
(a) Except as set forth in this Section 11.3, all fees and expenses
incurred in connection herewith and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Mergers are
consummated.
(b) If this Agreement is terminated pursuant to Section 11.1(b)(i)
or (iii) or 11.1(e)(i) (but only if EarthLink or its stockholders have received
in writing, or there shall have been publicly disclosed, an Acquisition
Proposal for EarthLink on or before the date of such termination and an
agreement or agreements to effect a transaction is entered into within nine
months of such termination pursuant to an Acquisition Proposal (an "EarthLink
Subsequent Alternate Transaction")), EarthLink shall pay to MindSpring a
termination fee equal to $70 million (the "Termination Fee").
(c) If this Agreement is terminated pursuant to Sections 11.1(b)(i)
or (iv) or 11.1(c)(i) (but only if MindSpring or its stockholders have received
in writing, or there shall have been publicly disclosed, an Acquisition
Proposal for MindSpring on or before the date of such termination and an
agreement or agreements to effect a transaction is entered into within nine
months of such termination pursuant to an Acquisition Proposal(a "MindSpring
Subsequent Alternate Transaction")), MindSpring shall pay to EarthLink the
Termination Fee.
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(d) If this Agreement is terminated pursuant to Section 11.1(d),
EarthLink shall pay to MindSpring the Termination Fee.
(e) If this Agreement is terminated pursuant to Section 11.1(f),
MindSpring shall pay to EarthLink the Termination Fee.
(f) Any payment of the Termination Fee pursuant to Section 11.3(b)
or (c) shall be made within one Business Day after entering into the EarthLink
Subsequent Alternate Transaction or the MindSpring Alternate Transaction, as
the case may be (or as otherwise expressly set forth in this Agreement). Any
payment of the Termination Fee pursuant to Sections 11.3(d) or (e) hereof_shall
be made one Business Day after termination of this Agreement pursuant to
Sections 11.1(d) or 11.1(f), respectively. If one party fails to pay to the
other promptly any fee or expense due hereunder (including the Termination
Fee), the defaulting party shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, taken to collect payment, together with interest
on the amount of any unpaid fee and/or expense at the publicly announced prime
rate of Citibank, N.A. from the date such fee was required to be paid to the
date it is paid.
(g) The remedies provided for in this Section 11.3 shall not be
exclusive of any rights at law or in equity that any party may have in the
event of a termination of this Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Notices.
Except as otherwise expressly set forth in Section 7.2(c) or 8.2(c), all
notices, requests and other communications to any party hereunder shall be in
writing, given by registered or certified mail or recognized national overnight
delivery service and shall be given,
if to Newco, to the addressed set forth below for EarthLink and
MindSpring, including copies;
if to EarthLink, to:
EarthLink Network, Inc.
0000 Xxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
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with a copy to:
Hunton & Xxxxxxxx
Bank of America Plaza
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Hobby and
W. Tinley Xxxxxxxx, III
if to MindSpring to:
MindSpring Enterprises, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. X. Xxxxxx
or such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective when delivered at the address specified in
this Section.
Section 12.2. Survival of Representations, Warranties and Covenants after
the Effective Time.
The representations and warranties contained herein and in any certificate
or other writing delivered pursuant hereto shall not survive the Effective Time
or the termination of this Agreement. The covenants contained in Articles II
and III and Section 4.5 shall survive the Effective Time.
Section 12.3. Amendments: No Waivers.
(a) Any provision of this Agreement may be amended or waived prior
to the Effective Time if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by EarthLink, MindSpring and Newco or
in the case of a waiver, by the party against whom the waiver is to be
effective; provided that (i) after the EarthLink Stockholder Approval, no such
amendment or waiver shall, without the further approval of such stockholders,
be made that would require such approval under any applicable law, rule or
regulation and (ii)
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after the MindSpring Stockholder Approval, no such amendment or waiver shall,
without the further approval of such stockholders, be made that would require
such approval under any applicable law, rule or regulation.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 12.4. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of the other
parties hereto. Any purported assignment in violation hereof shall be null and
void.
Section 12.5. Governing Law.
This Agreement shall be construed in accordance with and governed by the
internal laws of the State of Delaware without regard to any principles of
Delaware conflicts of law.
Section 12.6. Counterparts; Effectiveness; Third Party Beneficiaries.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by all of
the other parties hereto. Except as set forth in Section 4.5, no provision of
this Agreement is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 12.7. Jurisdiction.
Except as otherwise expressly provided in this Agreement, the parties
hereto agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in the
United States District Court for the District of Delaware or any other Delaware
State court sitting in Wilmington, Delaware, and each of the parties hereby
consents to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of
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process on such party as provided in Section 12.1 shall be deemed effective
service of process on such party.
Section 12.8. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.9. Enforcement.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms. It is accordingly agreed that the parties shall be
entitled to specific performance of the terms hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 12.10. Entire Agreement.
This Agreement (together with the exhibits and schedules hereto)
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter
hereof (including, without limitation, the Confidentiality Agreement, dated as
of August 17, 1999, by and between EarthLink and MindSpring).
Section 12.11. Severability.
If any term, provision, covenant or restriction set forth in this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
deemed by a party (acting reasonably and in good faith) to be materially
adverse to that party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
EARTHLINK NETWORK, INC.
By: /s/ XXXXXXX X. XXXXX
---------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------
Title: Chief Executive Officer
------------------------
MINDSPRING ENTERPRISES, INC.
By: /s/ XXXXXXX X. XXXXXX
---------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------
Title: Chief Executive Officer
------------------------
WWW HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------
Title: Chief Executive Officer
-------------------------
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