AGREEMENT AND PLAN OF MERGER
AMONG EARTHLINK NETWORK, INC.,
A DELAWARE CORPORATION
DOLPHIN, INC.,
A DELAWARE CORPORATION, AND
DOLPHIN SUB, INC.,
A DELAWARE CORPORATION
THIS AGREEMENT AND PLAN OF MERGER DATED AS OF FEBRUARY 10, 1998 (THE
'AGREEMENT') IS AMONG EARTHLINK NETWORK, INC., A DELAWARE CORPORATION
('EARTHLINK'), DOLPHIN, INC., A DELAWARE CORPORATION ('NEWCO'), AND DOLPHIN SUB
INC., A DELAWARE CORPORATION AND A WHOLLY-OWNED SUBSIDIARY OF DOLPHIN ('NEWCO
SUB'). EARTHLINK AND NEWCO SUB ARE SOMETIMES REFERRED TO HEREIN AS THE
'CONSTITUENT CORPORATIONS.'
R E C I T A L S
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A. EarthLink is a corporation duly organized and existing under the laws
of the State of Delaware and has an authorized capital of sixty million
(60,000,000) shares, fifty million (50,000,000) of which are designated as
common stock, $.01 par value per share (the 'EarthLink Common Stock'), and ten
million (10,000,000) of which are designated as preferred stock, $.01 par value
per share.
B. Newco is a corporation duly organized and existing under the laws of
the State of Delaware and has an authorized capital of seventy-five million
(75,000,000) shares, fifty million (50,000,000) of which are designated as
common stock, $.01 par value per share (the 'Newco Common Stock'), and twenty-
five million (25,000,000) of which are designated as preferred stock, $.01 par
value per share (the 'Newco Preferred Stock'). As of February 10, 1998, ten
(10) shares of Newco Common Stock were issued and outstanding (the 'Newco
Subscription Shares') and no shares of Newco Preferred Stock were issued and
outstanding.
C. Newco Sub is a corporation duly organized and existing under the laws
of the State of Delaware and has an authorized capital of sixty million
(60,000,000) shares, fifty million (50,000,000) of which are designated as
common stock, $.01 par value per share (the 'Newco Sub Common Stock'), and ten
million (10,000,000) of which are designated as preferred stock, $.01 par value
per share. As of February 10, 1998, ten (10) shares of Newco Sub Common Stock
were issued and outstanding, all of which were held by Newco.
D. The Boards of Directors of EarthLink and Newco Sub have determined that
it is advisable and in the best interests of EarthLink and Newco Sub,
respectively, that Newco Sub merge with and into EarthLink upon the terms and
conditions herein provided.
E. The Boards of Directors of each of EarthLink, Newco and Newco Sub have
approved this Agreement and the transactions contemplated hereby and directed
that this Agreement be executed by the respective undersigned officers of each
of those corporations.
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F. The Boards of Directors of EarthLink and Newco Sub have directed that
this Agreement be submitted to a vote of their respective stockholders with the
recommendation that such stockholders approve the Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, EarthLink, Newco and Newco Sub hereby agree, subject to the terms
and conditions hereinafter set forth, as follows:
I. MERGER
1.1 Merger. In accordance with the provisions of this Agreement and the
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Delaware General Corporation Law, Newco Sub shall be merged with and into
EarthLink (the 'Merger'), the separate existence of Newco Sub shall cease and
EarthLink shall be, and is herein sometimes referred to as, the 'Surviving
Corporation,' and the name of the Surviving Corporation shall be EarthLink
Operations, Inc. Upon the Effective Date of the Merger (as defined below),
Newco shall file a change of name amendment to its Certificate of Incorporation,
whereby it shall assume the name 'EarthLink Network, Inc.'
1.2 Filing and Effectiveness. The Merger shall become effective when the
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following actions shall have been completed:
(a) This Agreement and Merger shall have been adopted and approved by the
stockholders of each of the Constituent Corporations in accordance with the
requirements of the Delaware General Corporation Law; and
(b) An executed Certificate of Merger or an executed counterpart of this
Agreement meeting the requirements of the Delaware General Corporation Law shall
have been filed with the Secretary of State of the State of Delaware.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the 'Effective Time of the Merger.'
1.3 Effect of the Merger. Upon the Effective Time of the Merger, the
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separate existence of Newco Sub shall cease and EarthLink, as the Surviving
Corporation, (i) shall continue to possess all of its assets, rights, powers and
property as constituted immediately prior to the Effective Time of the Merger,
(ii) shall be subject to all actions previously taken by its and Newco Sub's
Board of Directors, (iii) shall succeed, without other transfer, to all of the
assets, rights, powers and property of Newco Sub in the manner more fully set
forth in Section 259 of the Delaware General Corporation Law, (iv) shall
continue to be subject to all of the debts, liabilities and obligations of Newco
Sub in the same manner as if EarthLink had itself incurred them, all as more
fully provided under the applicable provisions of the Delaware General
Corporation Law.
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II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation. The Certificate of Incorporation of
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Newco Sub as in effect immediately prior to the Effective Time of the Merger
shall continue in full force and effect as the Certificate of Incorporation of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law. The Certificate of Incorporation of Newco Sub is
attached hereto as Appendix A.
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2.2 Bylaws. The Bylaws of Newco Sub as in effect immediately prior to the
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Effective Time of the Merger shall continue in full force and effect as the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law. The Bylaws of Newco Sub are attached
hereto as Appendix B.
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2.3 Directors and Officers. The directors and officers of EarthLink
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immediately prior to the Effective Time of the Merger shall be the directors and
officers of each of Newco and the Surviving Corporation until their successors
shall have been duly elected and qualified or until as otherwise provided by
law, the Certificate of Incorporation or the Bylaws of Newco or of the Surviving
Corporation, respectively.
III. MANNER OF CONVERSION OF STOCK
3.1 Newco Sub Common Stock. Upon the Effective Time of the Merger, the
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shares of Newco Sub Common Stock issued and outstanding immediately prior
thereto shall, by virtue of the Merger and without any action by the Constituent
Corporations, the holder of such shares or any other person, be converted into
and exchanged for such number of fully paid and nonassessable shares of common
stock of the Surviving Corporation as is equal to the number of shares of
EarthLink Common Stock outstanding at the Effective Time of the Merger.
3.2 EarthLink Common Stock. Upon the Effective Time of the Merger, each
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share of EarthLink Common Stock issued and outstanding immediately prior thereto
shall by virtue of the Merger and without any action by the Constituent
Corporations, the holder of such shares or any other person, be converted into
and exchanged for one fully paid and nonassessable share of Newco Common Stock.
3.3 Newco Subscription Shares. Upon the Effective Time of the Merger, the
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Newco Subscription Shares shall be canceled and thereafter held as treasury
stock of Newco.
3.4 EarthLink Options, Stock Purchase Rights and Convertible Securities.
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(a) Upon the Effective Time of the Merger, to the extent permitted by the
terms of such instruments as in effect at the Effective Time of the Merger,
Newco shall assume the obligations of EarthLink under any and all securities,
warrants, calls, rights to purchase, rights of first refusal, securities
convertible into or exchangeable for voting securities, commitments, agreements,
arrangements or undertakings of any kind to which EarthLink is a party or by
which it is bound obligating EarthLink to issue, deliver or sell or create, or
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cause to be issued, delivered or sold or created, additional shares of the
capital stock of or other voting securities or phantom stock or other
contractual rights the value of which is determined in whole or in part by the
value of any capital stock of EarthLink, or obligating EarthLink to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement, or undertaking (collectively, the 'Dilutive
Securities') on the same terms and conditions as were in effect immediately
prior to the Merger; thereafter, each such Dilutive Security shall become,
subject to the provisions in paragraph (c) hereof, an option, right to purchase
or a security convertible into Newco Common Stock on the basis of one share of
Newco Common Stock for each one share of EarthLink Common Stock issuable
pursuant to any such Dilutive Security, on the same terms and conditions and at
an exercise price equal to the exercise price applicable to any such Dilutive
Security at the Effective Time of the Merger.
(b) A number of shares of Newco Common Stock shall be reserved for issuance
upon the exercise of options, stock purchase rights and convertible securities
equal to the number of shares of EarthLink Common Stock so reserved immediately
prior to the Effective Date of the Merger.
(c) The assumed Rights shall not entitle any holder thereof to a fractional
share upon exercise or conversion (unless the holder was entitled to a
fractional interest immediately prior to the Merger). In lieu thereof, any
fractional share interests to which a holder of an assumed Right (other than an
option issued pursuant to EarthLink's 1995 Stock Option Plan, as amended) would
otherwise be entitled upon exercise or conversion shall be aggregated (but only
with other similar Rights which have the same per share terms). To the extent
that after such aggregation the holder would still be entitled to a fractional
share with respect thereto upon exercise or conversion, the holder shall be
entitled, upon the exercise or conversion of all such assumed Rights pursuant to
their terms (as modified herein), to one full share of common stock in lieu of
such fractional share. With respect to each class of such similar Rights, no
holder will be entitled to more than one full share in lieu of a fractional
share upon exercise or conversion.
3.5 Stock Certificates.
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(a) Upon the Effective Time of the Merger, each outstanding
certificate theretofor representing shares of EarthLink Common Stock shall be
deemed for all purposes to represent the number of shares of Newco Common Stock
into which such shares of EarthLink Common Stock were converted in the Merger.
The registered owner of shares of EarthLink Common Stock on the books and
records of EarthLink shall be entitled, as of the Effective Time of the Merger,
to exercise any voting and other rights with respect to, and receive dividends
and other distributions upon, the shares of Newco Common Stock represented by
such outstanding certificate as provided above.
(b) Upon the Effective Time of the Merger, Newco, the sole stockholder
of Newco Sub, shall surrender the outstanding certificate representing shares of
Newco Sub to the Surviving Corporation in exchange for a certificate or
certificates representing the number of shares of common stock of the Surviving
Corporation into which the surrendered shares were converted as herein provided.
Such certificate for shares of common stock of the Surviving
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Corporation shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificate of Newco Sub so converted and
given in exchange therefor, unless otherwise determined by the Board of
Directors of the Surviving Corporation in compliance with applicable laws.
IV. GENERAL
4.1 Assurances. From time to time, as and when required by the parties
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hereto or by their successors or assigns, there shall be executed and delivered
on behalf of the parties hereto such deeds and other instruments, and there
shall be taken or caused to be taken by it such further and other actions as
shall be appropriate or necessary in order to vest or perfect in or conform of
record or otherwise by the parties hereto the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of the parties hereto and otherwise to carry out the purposes of
this Agreement, and the officers and directors of the parties hereto are fully
authorized in the name and on behalf of such parties or otherwise to take any
and all such action and to execute and deliver any and all such deeds and other
instruments.
4.2 Abandonment. At any time before the Effective Time of the Merger,
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this Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of any of EarthLink, Newco or Newco Sub,
notwithstanding the approval of this Agreement by the stockholders of EarthLink
or by the sole stockholder of Newco or Newco Sub.
4.3 Amendment. Subject to the Investment Agreement dated February 10,
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1998, by and among EarthLink, Newco, Newco Sub, Sprint Corporation and Sprint
Communications Company L.P., the Boards of Directors of the Constituent
Corporations may amend this Agreement at any time prior to the filing of this
Agreement (or certificate in lieu thereof) with the Secretary of State of the
State of Delaware, provided that an amendment made subsequent to the adoption of
this Agreement by the stockholders of either Constituent Corporation shall not:
(i) alter or change the amount or kind of shares, securities, cash, property
and/or rights to be received in exchange for or in conversion of all or any of
the shares of any class or series thereof of either of the Constituent
Corporations, (ii) alter or change any term of the Certificate of Incorporation
of the Surviving Corporation to be effected by the Merger, or (iii) alter or
change any of the terms and conditions of this Agreement if such alteration or
change would adversely affect the holders of any class or series of capital
stock of either of the Constituent Corporations.
4.4 Registered Office. The registered office of the Surviving Corporation
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in the State of Delaware is 1209 Orange Street, Wilmington, DE 19801 and The
Corporation Trust Company is the registered agent of the Surviving Corporation
at such address.
4.5 Agreement. Executed copies of this Agreement will be on file at the
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principal place of business of the Surviving Corporation at 3100 New York Drive,
Suite 201, Pasadena, California 91107, and copies thereof will be furnished to
any stockholder of either Constituent Corporation, upon request and without
cost.
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4.6 Governing Law. This Agreement shall in all respects be construed,
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interpreted and enforced in accordance with and governed by the laws of the
State of Delaware.
4.7 Counterparts. In order to facilitate the filing and recording of this
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Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of EarthLink Network, Inc., a Delaware
corporation, Dolphin, Inc., a Delaware corporation, Dolphin Sub, Inc., a
Delaware corporation, and is hereby executed on behalf of each such corporations
and attested by their respective officers thereunto duly authorized.
EARTHLINK NETWORK, INC.
a Delaware corporation
By:_______________________________
Sky D. Dayton, Chairman
ATTEST:
___________________________
Kirsten Hansen, Secretary
DOLPHIN, INC.
a Delaware corporation
By:_______________________________
Sky D. Dayton, Chairman
ATTEST:
_______________________________
Kirsten Hansen, Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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DOLPHIN SUB, INC.
a Delaware corporation
By:_______________________________
Sky D. Dayton, Chairman
ATTEST:
_______________________________
Kirsten Hansen, Secretary
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Agreement and Plan of Merger - EarthLink Network Inc.
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