<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1/A
(AMENDMENT NO. 3)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
and
SCHEDULE 13D/A
(AMENDMENT NO. 3)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EARTHLINK NETWORK, INC.
(NAME OF SUBJECT COMPANY)
----------------
SPRINT CORPORATION
(BIDDER)
----------------
COMMON STOCK, $.01 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
270322100
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
DON A. JENSEN, ESQ.
SPRINT CORPORATION
2330 SHAWNEE MISSION PARKWAY
WESTWOOD, KANSAS 66205
(913) 624-3326
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPIES TO:
JOHN A. GRANDA, ESQ.
STINSON, MAG & FIZZELL, P.C.
1201 WALNUT STREET
KANSAS CITY, MISSOURI 64106
(816) 842-8600
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- ------------------------------------------------------------------------------
<S> <C>
$56,250,000 $11,250
</TABLE>
================================================================================
* For purposes of calculating the amount of the filing fee only. The amount
assumes the purchase of 1,250,000 shares of Common Stock, $.01 par value
per share, of Earthlink Network, Inc. at $45.00 per share.
** 1/50th of 1% of Transaction Valuation.
[XCHECK] BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULES 0-11(a)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR
SCHEDULE AND THE DATE OF ITS FILING.
Amount previously paid: $11,250 Filing party: Sprint Corporation
Form or registration no.: Schedule 14D-1 Date filed: February 18, 1998
================================================================================
<PAGE>
CUSIP NO. 270322100 14D-1 AND 13D Page 2 of 7 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS: I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
SPRINT CORPORATION
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(A)[X]
(B)[_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS:
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(E) OR 2(F):
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
KANSAS
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
6,939,496*
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7):
57.4%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON*:
CO
- --------------------------------------------------------------------------------
* Reflects highest number of shares as to which voting power or dispositive
power is shared by virtue of membership in the groups described in Item 2(a)-
(d); (g).
2
<PAGE>
14D-1 AND 13D Page 3 of 7 Pages
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is EarthLink Network, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive
offices is 3100 New York Drive, Pasadena, CA 91107.
(b) This Schedule 14D-1 relates to the offer by Sprint Corporation (the
"Purchaser") to purchase 1,250,000 shares of common stock of the Company, par
value $.01 per share (the "Shares" or "Common Stock"), at a price of $45 per
Share, net to the seller in cash (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated February
18, 1998 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"), copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. There were 12,089,176 Shares outstanding as
of May 28, 1998.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales price of the Shares for each quarterly
period since the Company became publicly traded is set forth in Section 6
("Price Range of the Shares; Dividends on the Shares") of the Offer to
Purchase and is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The Purchaser is a Kansas corporation. The information set
forth in Section 11 ("Certain Information Concerning the Purchaser") of the
Offer to Purchase is incorporated herein by reference. The name, business
address, present principal occupation or employment, the material occupations,
positions, offices or employments for the past five years and citizenship of
each executive officer and director of the Purchaser, and the name, principal
business and address of any corporation or other organization in which such
occupations, positions, offices and employments are or were carried on are set
forth in Schedule I to the Offer to Purchase and is incorporated herein by
reference.
In order to induce Sprint and Sprint L.P. to enter into the Investment
Agreement dated February 10, 1998 among the Purchaser, Sprint Communications
Company L.P. ("Sprint L.P."), the Company, Dolphin, Inc. ("Newco") and Dolphin
Sub, Inc. ("Newco Sub") (the "Investment Agreement") and perform the
transactions contemplated thereby (as described under the caption
"Introduction" and in Section 12 ("Purpose of the Offer, The Investment
Agreement; Ancillary Agreements") of the Offer to Purchase which is
incorporated herein by reference), the following members of management and
other stockholders (the "Granting Stockholders") entered into an Agreement to
Vote and Tender Stock dated February 10, 1998 ("Agreement to Vote and Tender
Stock"): Sky D. Dayton, Chairman of the Board of the Company, 1,500,000; Kevin
M. O'Donnell, a director of the Company, 944,614; Gregory Abbott, 427,212;
Robert S. London, 392,032; George Abbott, 203,364; and Storie Partners LP,
521,892. That agreement obligates the Granting Stockholders to tender all of
the 3,989,114 Shares (representing 33% of the outstanding Shares) which they
own into the Offer, and to vote those Shares in favor of (i) the Merger, (ii)
the issuance of the Convertible Preferred Stock (as defined under the caption
"Introduction" in the Offer to Purchase), the Convertible Notes (as defined
under the caption "Introduction" in the Offer to Purchase) and the Newco
Common Stock (as defined under the caption "Introduction" in the Offer to
Purchase) issuable upon conversion thereof, (iii) the other transactions
contemplated by the Investment Agreement, and (iv) any related matter that
must be approved by the holders of Common Stock or Newco Common Stock in order
for the transactions contemplated by the Investment Agreement to be
consummated (the matters referred to in (i), (ii), (iii) and (iv) are referred
to collectively as the "Company Stockholder Vote Matters"). In addition, the
following stockholders (the "Voting Stockholders") entered into an Agreement
to Vote Stock dated February 10, 1998 ("Agreement to Vote Stock") which
obligates them to vote all of the 2,950,382 Shares (representing 24.4% of the
outstanding Shares) in favor of the Company Stockholder Vote Matters: George
Soros, 214,545 Shares; Quantum Industrial Partners LDC, 1,456,480; Reed
Slatkin, a director of the Company (through Reed Slatkin & Associates),
1,042,473 Shares; and Sidney Azeez, a director of the Company, 236,884 Shares.
Simultaneously with the execution of the Investment Agreement, the Purchaser
and the following stockholders (the "SA Stockholders") entered into a
Stockholders Agreement (the "Stockholders Agreement", which will not become
effective until the Closing of the transactions contemplated by the Investment
Agreement
<PAGE>
14D-1 AND 13D Page 4 of 7 Pages
and then only if the Offer is consummated and the conditions to the Closing
are satisfied or waived on or prior to the Closing) covering all of the Shares
or other equity securities of Newco they now own of record or beneficially or
which they will receive in the Merger, or are convertible into Newco Common
Stock or are receivable in respect thereof ("Covered Shares"): Sky Dayton,
Chairman of the Board of the Company, 1,500,000 Shares; Quantum Industrial
Partners LDC, 1,456,480 Shares; Kevin M. O'Donnell, a director of the Company,
944,614 Shares; Reed Slatkin, a director of the Company (through Reed Slatkin
& Associates) 1,042,473 Shares; George Soros, 214,545 Shares; and Sidney
Azeez, a director of the Company, 236,884 Shares. The Stockholders Agreement
obligates the SA Stockholders to (i) vote all of the 5,394,996 Covered Shares
in favor of a Sprint Offer or Qualified Offer (as the terms Sprint Offer and
Qualified Offer are defined in Section 12 of the Offer to Purchase under the
subcaptions "Purchases of Additional Equity Securities; Business Combinations"
and "Third Party Offers", respectively) involving a business combination or
related matter, and (ii) to tender all of the Covered Shares into a tender
offer initiated by Sprint to effect a Sprint Offer or a Qualified Offer.
The Purchaser and Sprint L.P. may be deemed to be members of a group with
the Granting Stockholders with respect to the agreements to vote and tender
the 3,989,114 Shares contemplated by the Agreement to Vote and Tender Stock,
and thus may be viewed as sharing voting and dispositive power for those
purposes with respect to the Shares covered thereby. The Purchaser and Sprint
L.P. may also be deemed to be members of a group with the Voting Stockholders
with respect to the agreements to vote the 2,950,382 Shares contemplated by
the Agreement to Vote Stock, and thus may be viewed as sharing voting power
for that purpose with respect to the Shares covered thereby. Finally, the
Purchaser and Sprint L.P. may be deemed to be members of a group with the SA
Stockholders with respect to the agreements to vote and tender the 5,394,996
covered shares of Newco Common Stock contemplated by the Stockholders
Agreement, and thus may be viewed as sharing voting and dispositive power with
respect to the Covered Shares.
The Purchaser is making a separate filing to report its shared beneficial
ownership of Shares and Newco Common Stock resulting from its membership in
the three groups described in the three immediately preceding paragraphs.
Sprint does not have knowledge of the information called for by Instruction C
to Schedule 13D and Schedule 14D-1 with respect to the other members of such
groups and therefore is not required to report such information in this
combined Schedule 13D and 14D-1 pursuant to Rule 13d-1(k)(2), except for the
information set forth under the caption "Beneficial Ownership of Common Stock"
in the Company's Proxy Statement dated January 23, 1998.
(e); (f) During the last five years, neither the Purchaser, nor, to the best
of the Purchaser's knowledge, any of the executive officers or directors of
the Purchaser has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under the caption "Introduction" and in
Sections 11 ("Contacts with the Company; Background of the Offer") and 12
("Purpose of the Offer; The Investment Agreement; Ancillary Agreements") of
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in Section 10 ("Source and Amount of Funds")
of the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
<PAGE>
14D-1 AND 13D Page 5 of 7 Pages
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth under the caption "Introduction" and in
Sections 7 ("Effect of the Offer on the Market for Common Stock; Stock
Quotation; and Exchange Act Registration") and 12 ("Purpose of the Offer, The
Investment Agreement; Ancillary Agreements") of the Offer to Purchase is
incorporated herein by reference.
The purpose of the Offer is merely to serve as one step in acquiring an
equity interest in the Company that is linked by the Investment Agreement with
the other transactions contemplated thereby since the Offer cannot be
consummated unless all such other transactions will be consummated immediately
thereafter. The Offer, together with such other transactions, are motivated by
the Purchaser's and the Company's desire to provide Internet access services
on a collaborative basis and the Purchaser's common underlying purpose of
benefitting from the enhanced capabilities for growth and financial and
strategic success by joining forces with the Company.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under the caption "Introduction", and in
Section 9 ("Certain Information Concerning the Purchaser"), and Section 12
("Purpose of the Offer; The Investment Agreement; Ancillary Agreements") of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under the caption "Introduction", and in Section 9
("Certain Information Concerning the Purchaser"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Investment Agreement; Ancillary Agreements") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under the caption "Introduction" and in Section 10
("Source and Amount of Funds") and Section 16 ("Fees and Expenses") of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser") of the Offer to Purchase is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under the caption "Introduction" and in
Section 12 ("Purpose of the Offer; The Investment Agreement; Ancillary
Agreements") of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters") of
the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and each of the other exhibits hereto, to the extent not otherwise
set forth herein, is incorporated herein by reference.
<PAGE>
14D-1 AND 13D Page 6 of 7 Pages
On March 20, 1998, the Purchaser issued a press release, a copy of which is
attached as Exhibit (a)(9) and incorporated herein by reference, relating to the
extension of the Offer until 6:00 p.m., New York City time, on June 1, 1998. The
Offer was originally scheduled to expire at 12:00 midnight, New York City time,
on March 20, 1998. On May 29, 1998, the Purchaser issued a press release, a copy
of which is attached as Exhibit (a)(10) and incorporated herein by reference,
relating to the extension of the Offer until 1:30 p.m. New York City time, on
June 5, 1998, unless further extended in the manner described in the related
Offer to Purchase. Prior to this latest extension, the Offer was scheduled to
expire at 6:00 p.m., New York City time, on June 1, 1998. All of the conditions
set forth in Section 14 of the Offer to Purchase must be satisfied or waived
prior to the Expiration Date and before the Offer and the other transactions
contemplated by the Investment Agreement can be consummated. The conditions are
presented in three separate groups in Section 14 of the Offer to Purchase to
differentiate among the parties that possess the power to waive them. The first
set of conditions is for the mutual benefit of all parties to the Investment
Agreement and requires either satisfaction of all such conditions or waiver by
all parties of all such conditions that are not satisfied. The second set of
conditions is for the benefit of the Purchaser and Sprint L.P. and requires
satisfaction of all such conditions or waiver by the Purchaser and Sprint L.P.
of all such conditions that are not satisfied. The third set of conditions is
for the benefit of the Company, Newco and Newco Sub and requires satisfaction of
all such conditions or waiver by the Company, Newco and Newco Sub of all such
conditions that are not satisfied.
The legal opinions called for by condition (v) in the second set of
conditions, which are for the benefit of the Purchaser and Sprint L.P., and by
condition (iv) in the third set of conditions, which are for benefit of the
Company, Newco and Newco Sub, are expected to cover the following matters: (1)
due organization, valid existence and good standing under the laws of the
state of incorporation, (2) requisite power and authority to own, lease and
operate its respective properties and conduct its respective business, (3) due
qualification or licensing to do business as a foreign corporation and good
standing in each jurisdiction in which the nature of its respective business
or the ownership or leasing of its respective properties makes such
qualification or licensing necessary, other than jurisdictions where the
failure to be so qualified or licensed would not have a material adverse
effect, (4) requisite corporate power and authority to execute, deliver and
perform its respective obligations under the Investment Agreement and the
Ancillary Agreements and to consummate the contemplated transactions, due
authorization therefor by all necessary corporate action and due execution and
delivery thereof, (5) the absence of conflict, violation, default or
termination under or with other agreements or the certificate (articles) of
incorporation or bylaws, as a result of the execution, delivery or performance
of the Investment Agreement or the Ancillary Agreements, (6) the absence of
consents, approvals, orders, registrations or filings with governmental
authorities needed with respect to the Investment Agreement or the Ancillary
Agreements, other than those contemplated by the Investment Agreement, (7) the
absence of suits, actions, proceedings, injunctions, legislation or orders
that would have a material adverse effect on the respective parties or that
would adversely affect any of the transactions contemplated by the Investment
Agreement or the Ancillary Agreements or the validity of the Convertible
Preferred Stock or the Convertible Notes, (8) the vote required by the holders
of Shares to approve the Investment Agreement, the Ancillary Agreements and
the transactions contemplated thereby, (9) compliance with applicable laws and
governmental permits, (10) the filings required to effect the Merger, and (11)
due authorization of the Convertible Preferred Stock and the Convertible Notes
and the Shares issuable upon conversion thereof as well as the valid issuance,
full payment and nonassessability of such Shares and the Convertible Preferred
Stock upon issuance thereof.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated February 18, 1998.*
(a)(2) Letter of Transmittal.*
(a)(3) Letter, dated February 18, 1998 from the Dealer Manager to brokers,
dealers, commercial banks, trust companies and nominees.*
(a)(4) Letter, dated February 18, 1998 to be sent by brokers, dealers,
commercial banks, trust companies and nominees to their clients.*
(a)(5) Notice of Guaranteed Delivery.*
(a)(6) IRS Guidelines for Certification of Taxpayer Identification Number
Substitute Form W-9.*
<PAGE>
14D-1 AND 13D Page 7 of 7 Pages
(a)(7) Text of Press Release, dated February 10, 1998 issued by Purchaser
and the EarthLink Network, Inc.*
(a)(8) Summary newspaper advertisement, dated February 18, 1998.*
(a)(9) Text of Press Release issued by Sprint Corporation on March 20,
1998.**
(a)(10) Text of Press Release issued by Sprint Corporation on May 29, 1998.
(b) Not applicable.
(c)(1) Investment Agreement, dated February 10, 1998, between Sprint
Corporation, Sprint Communications Company L.P., EarthLink Network,
Inc., Dolphin, Inc. and Dolphin Sub, Inc.*
(c)(2) Governance Agreement, dated February 10, 1998, between Sprint
Corporation, Sprint Communications Company L.P., EarthLink Network,
Inc. and Dolphin, Inc.*
(c)(3) Stockholders' Agreement, dated February 10, 1998, between Sprint
Corporation, Sprint Communications Company L.P., the Company, Dolphin,
Inc. and the SA Stockholders (as defined in Section 2).*
(c)(4) Agreement and Plan of Merger, dated February 10, 1998, between
EarthLink Network, Inc., Dolphin, Inc., Dolphin Sub, Inc.*
(c)(5) Credit Agreement, dated February 10, 1998, between Sprint
Corporation, EarthLink Network, Inc. and Dolphin, Inc.*
(c)(6) Registration Rights Agreement, dated February 10, 1998, between
Sprint Corporation, Sprint Communications Company L.P., EarthLink
Network, Inc. and Dolphin, Inc.*
(c)(7) Proposed Form of Certificate of Designation, Preferences and Rights
of Series A Convertible Preferred Stock Dolphin, Inc.
(c)(8) Agreement to Vote and Tender Stock, dated February 10, 1998, between
Sprint Corporation, Sprint Communications Company L.P. and the
Granting Stockholders (as defined in Section 2).*
(c)(9) Agreement to Vote Stock, dated February 10, 1998, between Sprint
Corporation, Sprint Communications Company L.P. and the Voting
Stockholders (as defined in Section 2).*
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
- --------
* Filed with combined Schedule 14D-1 and Schedule 13D dated February 18,
1998.
** Filed with Amendment No. 1 to Schedule 14D-1/A and Schedule 13D/A dated
March 20, 1998.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: May 29, 1998
Sprint Corporation
By: /s/ Don A. Jensen
---------------------------------
Name: Don A. Jensen
Title: Vice President
<PAGE>
14D-1 AND 13D
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated February 18, 1998.*
(a)(2) Letter of Transmittal.*
(a)(3) Letter, dated February 18, 1998 from the Dealer Manager to
brokers, dealers, commercial banks, trust companies and
nominees.*
(a)(4) Letter, dated February 18, 1998 to be sent by brokers,
dealers, commercial banks, trust companies and nominees to
their clients.*
(a)(5) Notice of Guaranteed Delivery.*
(a)(6) IRS Guidelines for Certification of Taxpayer Identification
Number Substitute Form W-9.*
(a)(7) Press Release, dated February 18, 1998.*
(a)(8) Summary newspaper advertisement, dated February 18, 1998.*
(a)(9) Text of Press Release issued by Sprint Corporation on March
20, 1998.**
(a)(10) Text of Press Release issued by Sprint Corporation on May 29,
1998.
(b) Not applicable.
(c)(1) Investment Agreement, dated February 10, 1998, between Sprint
Corporation, Sprint Communications Company L.P., EarthLink
Network, Inc., Dolphin, Inc. and Dolphin Sub, Inc.*
(c)(2) Governance Agreement, dated February 10, 1998, between Sprint
Corporation, Sprint Communications Company L.P., EarthLink
Network, Inc. and Dolphin, Inc.*
(c)(3) Stockholders' Agreement, dated February 10, 1998, between
Sprint Corporation, Sprint Communications Company L.P., the
Company, Dolphin, Inc. and the SA Stockholders (as defined in
Section 2).*
(c)(4) Agreement and Plan of Merger, dated February 10, 1998, between
EarthLink Network, Inc., Dolphin, Inc., Dolphin Sub, Inc.*
(c)(5) Credit Agreement, dated February 10, 1998, between Sprint
Corporation, EarthLink Network, Inc. and Dolphin, Inc.*
(c)(6) Registration Rights Agreement, dated February 10, 1998,
between Sprint Corporation, Sprint Communications Company
L.P., EarthLink Network, Inc. and Dolphin, Inc.*
(c)(7) Proposed Form of Certificate of Designation, Preferences and
Rights of Series A Convertible Preferred Stock Dolphin, Inc.
(c)(8) Agreement to Vote and Tender Stock, dated February 10, 1998,
between Sprint Corporation, Sprint Communications Company L.P.
and the Granting Stockholders (as defined in Section 2).*
(c)(9) Agreement to Vote Stock, dated February 10, 1998, between
Sprint Corporation, Sprint Communications Company L.P. and the
Voting Stockholders (as defined in Section 2).*
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
- --------
* Filed with combined Schedule 14D-1 and Schedule 13D dated February 18, 1998.
** Filed with combined Schedule 14D-1/A and Schedule 13D/A dated March 20, 1998.
<PAGE>
Exhibit (a)(10)
Media Relations
1850 M Street, N.W.
Suite 1100
Washington, D.C. 20036
Telephone: (202) 828-7410
FOR IMMEDIATE RELEASE
Contact:
Bill White, Sprint (O) 913-624-2226; (H) 913-681-9099
E-Mail: [email protected]
SPRINT EXTENDS TENDER OFFER
FOR 1,250,000 SHARES OF EARTHLINK NETWORK, INC.
KANSAS CITY, Mo., May 29, 1998 -- Sprint announced today that it is
extending its $45.00 per share cash tender offer for 1,250,000 shares of common
stock of EarthLink Network, Inc. (NASDAQ:ELNK). The offer, which commenced on
February 18, 1998, and was scheduled to expire on June 1, 1998, has been
extended through 1:30 p.m., New York City time (EDT), on June 5, 1998. As of
midnight, on Wednesday, May 27, 1998, 4,701,812 shares of EarthLink's
outstanding common stock had been tendered under the terms of the offer. The
shares tendered represent approximately 39 percent of EarthLink's outstanding
common stock. All of the conditions in Section 14 of the Offer to Purchase must
be satisfied or waived prior to the Expiration Date and before the offer and the
other transactions contemplated by the Investment Agreement among Sprint,
EarthLink and the other parties can be consummated. EarthLink will hold a
special meeting of its stockholders, on June 5, 1998, at 12:00 p.m. (EDT) at
which its stockholders will consider the approval of certain transactions
contemplated by the Investment Agreement.
<PAGE>
EXHIBIT (c)(7)
DOLPHIN, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
-----------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------------------
Dolphin, Inc. (the "Corporation"), certifies that pursuant to the authority
contained in Article IV of its Certificate of Incorporation, and in accordance
with the provisions of Section 151 of the General Corporation Law of the State
of Delaware, its Board of Directors has adopted the following resolution
creating a series of the Preferred Stock, $.01 par value, designated as Series A
Convertible Preferred Stock:
RESOLVED, that a series of the class of Preferred Stock, $.01 par value, of
the Corporation be hereby created, and that the designation and amount thereof
and the voting powers, preferences, and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are set forth in this Certificate of
Designation, Preferences and Rights of Series A Convertible Preferred Stock (the
"Certificate of Designation") as follows:
1. Designation and Amount. Preferred Stock of the Corporation created and
authorized for issuance hereby shall be designated as "Series A Convertible
Preferred Stock" (herein referred to as "Series A Preferred Stock"), having a
par value per share equal to $.01, and the number of shares constituting such
series shall be 10,000,000. The Corporation shall only originally issue shares
of Series A Preferred Stock to Sprint Corporation, a Kansas corporation
("Sprint"), and its successors and Affiliates.
2. Rank. The Series A Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, winding up or dissolution, whether voluntary
or involuntary, rank prior to the Common Stock (as defined in Section 10 hereof)
and all classes or series of preferred stock, preference stock or any other
capital stock or equity securities of the Corporation, whether now issued or
hereafter created. All equity securities of the Corporation to which the Series
A Preferred Stock ranks prior, including the Common Stock, are collectively
referred to herein as the "Junior Securities."
<PAGE>
3. Dividend Provisions.
(a) Dividends.
(i) Mandatory PIK Dividends. On and before the fifth anniversary
of the Purchase Date, the Corporation shall pay, and the holders of
outstanding shares of Series A Preferred Stock ("Holders") shall be
entitled to receive on each Dividend Payment Date, a dividend on each
share of Series A Preferred Stock at a rate per annum equal to three
percent (3.00%) of the Liquidation Value (as then increased, as
provided in Section 4(a)) per share of Series A Preferred Stock,
accruable and compounded quarterly on each of the Dividend Accrual
Dates, which dividend shall be in the form of an increase in the
Liquidation Value in such amount (each such increase is referred to as
a "Liquidation Accretion Dividend"). All dividends shall accrue
quarterly in arrears and shall compound on each Dividend Accrual Date,
commencing on the first Dividend Accrual Date after the date of
issuance of the applicable shares of Series A Preferred Stock. The
Board of Directors shall declare and pay such accrued dividends on
each Dividend Payment Date and the Corporation shall take all further
actions necessary to cause such dividend to be paid to the Holders in
the form and manner prescribed herein. Notwithstanding the foregoing,
upon the first date of the consummation of a Business Combination, or
an Optional Redemption by the Corporation pursuant to Section 6(a),
the Corporation shall pay, and the Holders of outstanding shares of
Series A Preferred Stock shall be entitled to receive, a dividend on
each share of Series A Preferred Stock in the form of an aggregate
increase in the Liquidation Value in an amount equal to the amount by
which the Liquidation Value would have increased pursuant to this
Section 3(a)(i) if such Holder had held such shares of Series A
Preferred Stock, until the first Dividend Payment Date on or following
the fifth anniversary of the Purchase Date.
(ii) Cash Dividends. After the fifth anniversary of the Purchase
Date, the Corporation shall pay, and the Holders of outstanding shares
of Series A Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors, out of funds legally available
therefor, cumulative dividends on each share of Series A Preferred
Stock at a rate per annum equal to three percent (3.00%) of the
Liquidation Value per share of Series A Preferred Stock, accruable
quarterly on each of the Dividend Accrual Dates, payable only in cash;
provided, however, that after the twentieth anniversary of the
Purchase Date, the Corporation shall pay, and the Holders of
outstanding shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, cumulative dividends on each share
of Series A Preferred Stock at a rate per annum equal to 8% of the
Liquidation Value per share of Series A Preferred Stock, accruable
quarterly on each of the Dividend Accrual Dates, payable only in cash,
which rate shall increase by 200 basis points on each anniversary of
the Closing Date thereafter, but not to exceed a maximum rate of 12%.
All cash dividends shall be
2
<PAGE>
cumulative, whether or not declared, on a daily basis from the fifth
anniversary of the Purchase Date or the date of issuance, whichever is
later, and shall accrue quarterly in arrears on each Dividend Accrual
Date, commencing on the first Dividend Accrual Date after the fifth
anniversary of the Purchase Date or the date of issuance, whichever is
later. The Board of Directors shall declare and pay such accrued
dividends at such time and to the extent permitted by law.
(iii) General Provisions. Each distribution in the form of a cash
dividend shall be payable to Holders of record as they appear on the
stock books of the Corporation on such record date, not less than 10
nor more than 60 days preceding the relevant Dividend Payment Date, as
shall be fixed by the Board of Directors of the Corporation. For any
period during which any share of Series A Preferred Stock is
outstanding less than a full quarterly dividend period ending on a
Dividend Accrual Date, the dividends payable shall be computed on the
basis of a 360 day year consisting of twelve 30-day months and the
actual number of days elapsed in the period for which the dividends
are payable. If any Dividend Payment Date for a dividend payable in
cash occurs on a day that is not a Business Day, any accrued dividends
otherwise payable on such Dividend Payment Date shall be paid on the
next succeeding Business Day.
(b) Certain Other Non-Cash Distributions. If the Corporation shall at
any time, or from time to time, after the Purchase Date, declare, order,
pay or make a dividend or other distribution (including, without
limitation, any distribution or issuance of stock or other securities or
property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or spinoff or
rights to purchase Common Stock or other Junior Securities) on its Common
Stock, other than (i) dividends payable in cash in an aggregate amount in
any fiscal year which, when declared, are not expected to exceed the net
income of the Corporation during such year from continuing operations
before extraordinary items, as determined in accordance with generally
accepted accounting principles consistently applied in accordance with past
practice, or (ii) any dividend or distribution described in Section
5(c)(i), Section 5(c)(ii) or Section 5(c)(iii), then, and in each such case
(a "Triggering Distribution"), each Holder of shares of Series A Preferred
Stock shall be entitled to receive from the Corporation, with respect to
the shares of Series A Preferred Stock held by such Holder, the same
dividend or distribution that such Holder would have received if
immediately prior to the earlier of such Triggering Distribution or any
record date therefor (i) a Business Combination had occurred causing the
last sentence of Section 3(a)(i) to be effected, and (ii) such Holder
converted all of such Holder's shares of Series A Preferred Stock into
shares of Common Stock. Any such dividend, distribution or issuance shall
be declared, ordered, paid or made on the Series A Preferred Stock at the
same time such dividend, distribution or issuance is declared, ordered,
paid or made on the Common Stock.
(c) Limitation on Dividends and Other Distributions. Unless full
cumulative dividends, if any, accrued on all outstanding shares of the
Series A Preferred Stock have been
3
<PAGE>
or contemporaneously are declared and paid for all periods prior to and
ending on the most recent Dividend Accrual Date, no dividend shall be
declared or paid or set aside for payment or other distribution declared or
made upon the Junior Securities (other than a dividend or distribution paid
solely in shares of, or warrants, rights or options solely exercisable for
or convertible into, Junior Securities), nor shall any Junior Securities be
redeemed, purchased or otherwise acquired for any consideration, nor may
any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such securities, by the Corporation (other
than redemptions and purchases pursuant to or in accordance with agreements
between the Corporation and its or its subsidiaries' directors, officers
and key employees), except by conversion into or exchange for Junior
Securities.
4. Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation ("Liquidation Event"), the
Holders of Series A Preferred Stock then outstanding shall be entitled to
receive, prior and in preference to any distribution of any of the assets
of the Corporation to the holders of Common Stock and other Junior
Securities by reason of their ownership thereof, an amount per share equal
to the sum of (i) the average of the Closing Price per share of Common
Stock for the 30 Trading Days immediately preceding the Purchase Date (the
"Average Stock Price") for each outstanding share of Series A Preferred
Stock, (ii) the amount of all Liquidation Accretion Dividends that have
been paid pursuant to Section 3(a)(i) (including an amount equal to a
prorated dividend pursuant to Section 3(a)(i) for the period from the
Dividend Accrual Date immediately preceding the date of the Liquidation
Event through the date of the Liquidation Event), and (iii) all
accumulations of accrued but unpaid dividends payable in cash pursuant to
Section 3(a)(ii) on each share of Series A Preferred Stock (including an
amount equal to a prorated dividend pursuant to Section 3(a)(ii) for the
period from the Dividend Accrual Date immediately prior to the receipt of
such sum to the date of receipt of such sum), with the sum of the amounts
referred to in clauses (i), (ii) and (iii) referred to herein as the
"Liquidation Value". The schedule of (i) the amount of the applicable
Liquidation Accretion Dividend for each Share of Series A Preferred Stock
for each Dividend Payment Date therefor, and (ii) the cumulative amount of
the Liquidation Value for each Share of Series A Preferred Stock, as of
each Dividend Payment Date, is as follows:
<TABLE>
<CAPTION>
Amount of Applicable Quarterly Liquidation
Dividend Payment Date for Accretion Dividend for Each Share of Cumulative Liquidation Value for
Quarter Series A Preferred Stock Each Share of Series A Preferred Stock
- ------------------------- ------------------------------------------ --------------------------------------
<C> <S> <C>
1
2
3
4
5
6
7
8
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amount of Applicable Quarterly Liquidation
Dividend Payment Date for Accretion Dividend for Each Share of Cumulative Liquidation Value for
Quarter Series A Preferred Stock Each Share of Series A Preferred Stock
- ------------------------- ------------------------------------------ --------------------------------------
<C> <S> <C>
9
10
11
12
13
14
15
16
17
18
19
20
</TABLE>
If upon the occurrence of such Liquidation Event, the assets and funds
are not sufficient to pay in full the liquidation payments payable to the
Holders of the Series A Preferred Stock, then the Holders of outstanding
shares of Series A Preferred Stock shall share ratably in such distribution
of assets. Except as provided in this Section 4(a), Holders of Series A
Preferred Stock shall not be entitled to any additional distribution upon
the occurrence of a Liquidation Event.
(b) After the distribution described in Section 4 (a) has been paid,
the remaining assets of the Corporation available for distribution to
shareholders shall be distributed among the holders of Junior Securities in
accordance with their respective rights thereto.
(c) Neither the consolidation, merger, Business Combination or any
other form of business combination of the Corporation with or into any
other person or entity, nor the sale, lease, exchange, conveyance or
disposition of all or substantially all of the assets of the Corporation to
persons or entities other than the holders of Junior Securities shall be
deemed to be a Liquidation Event for purposes of this Section 4.
5. Conversion. The Holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Optional Conversion Rights and Automatic Conversion.
(i) Each share of Series A Preferred Stock shall be convertible,
at the option of the Holder thereof, at any time after the first
anniversary of the Purchase Date, at the office of the Corporation or
any transfer agent for the Series A Preferred Stock, into such number
of validly issued, fully paid and nonassessable shares of Common
Stock, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever,
as is determined by dividing the Liquidation Value by the Conversion
Price at the time in effect for such share;
5
<PAGE>
provided, however, that, notwithstanding any other provision hereof to
the contrary, conversion of all outstanding shares of Series A
Preferred Stock shall be required in the event of consummation of a
Business Combination. The Conversion Price per share for shares of
Series A Preferred Stock shall be (i) for the period from the Purchase
Date through the Dividend Accrual Date immediately after the fifth
anniversary of the Purchase Date, the product of (A) the Average Stock
Price, times (B) 116.118%, and (ii) thereafter, the Conversion Price
then in effect shall be increased at a rate per annum equal to six
percent (6%) thereof, accruable quarterly, and in each case the
Conversion Price shall be subject to adjustment, from time to time as
set forth in Section 5(c).
(ii) Upon conversion of any Series A Preferred Stock, payment
shall be made for (A) dividends under Section 3(a)(i) on each
converted share of Series A Preferred Stock in an amount equal to a
prorated Liquidation Accretion Dividend for the period from the
Dividend Accrual Date immediately prior to the date of conversion to
such conversion date, and (B) unpaid dividends under Section 3(b)
resulting from events described therein and occurring prior to the
date of conversion.
(b) Mechanics of Conversion. If the Holder of shares of Series A
Preferred Stock desires to exercise such right of conversion, such Holder
shall give written notice to the Corporation (the "Conversion Notice") of
that Holder's election to convert a stated whole number of shares of Series
A Preferred Stock (the "Conversion Shares") into shares of Common Stock,
and surrender to the Corporation, at its principal office or at such other
office or agency maintained by the Corporation for such purpose, such
Holder's certificate or certificates evidencing such Conversion Shares. The
Conversion Notice shall also contain a statement of the name or names (with
addresses) in which the certificate or certificates for Common Stock shall
be issued. Notwithstanding the foregoing, the Corporation shall not be
required to issue any certificates to any person other than the Holder
thereof unless the Corporation has obtained reasonable assurance that such
transaction is exempt from the registration requirements of, or is covered
by an effective registration statement under, the Securities Act of 1933,
as amended (the "Act"), and all applicable state securities laws,
including, if necessary in the reasonable judgment of the Corporation or
its legal counsel, receipt of an opinion to such effect from counsel
reasonably satisfactory to the Corporation. In no event would such opinion
be required if the shares of Common Stock could, upon conversion, be resold
pursuant to Rule 144 or Rule 144A under the Act. As promptly as
practicable, and in any event within five business days, after the receipt
of the Conversion Notice and the surrender of the certificate or
certificates representing the Conversion Shares, the Corporation shall
issue and deliver, or cause to be delivered, to the Holder of the
Conversion Shares or his nominee or nominees, (i) a certificate or
certificates for the number of shares of Common Stock issuable upon the
conversion of such Conversion Shares and (ii) if less than the full number
of shares of Series A Preferred Stock evidenced by the surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, evidencing the number of shares evidenced by
such surrendered certificate or
6
<PAGE>
certificates less the number of Conversion Shares. Such conversion shall be
deemed to have been effected as of the close of business on the date the
Corporation received the Conversion Notice and the certificate or
certificates representing the Conversion Shares, and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the holder or holders of record of
such shares of Common Stock as of the close of business on such date,
provided, however, that if such conversion by a Holder of Series A
Preferred Stock would give rise to the waiting period of the HSR Act, such
conversion shall not be effective and shall be contingent upon (i) the
expiration or termination of such waiting period, and (ii) the absence of
any action taken or instituted by the Department of Justice, the Federal
Trade Commission or any other governmental entity by the expiration or
termination of such waiting period to delay, enjoin or place conditions on
such conversion.
(c) Conversion Price Adjustments of Preferred Stock.
(i) If the Corporation should at any time or from time to time
after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common
Stock, then, as of such record date (or, if no record date is fixed,
as of the close of business on the date on which the Board of
Directors adopts the resolution relating to such dividend,
distribution, split or subdivision), the Conversion Price shall be
decreased to equal the product of the Conversion Price in effect
immediately prior to such date multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding
immediately prior thereto and the denominator of which shall be the
number of shares of Common Stock outstanding immediately thereafter.
(ii) If the number of shares of Common Stock outstanding at any
time or from time to time after the Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then following
such combination, the Conversion Price shall be increased to equal the
product of the Conversion Price in effect immediately prior thereto
multiplied by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior thereto and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately thereafter. So long as any shares of Series A
Preferred Stock are outstanding, the Corporation shall not combine any
shares of Common Stock unless it likewise combines all shares of
Common Stock.
(iii) If the Corporation shall at any time and from time to time
after the Purchase Date issue rights or warrants to all holders of the
Common Stock entitling such holders to subscribe for or purchase
Common Stock at a price per share less than the Current Market Price
per share of the Common Stock on the record date for the
7
<PAGE>
determination of stockholders entitled to receive such rights or
warrants, then, and in each such case, the number of shares of Common
Stock into which each share of Series A Preferred Stock is convertible
shall be adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying the number of shares of
Common Stock into which such share was convertible on the day
immediately prior to such record date by a fraction, (A) the numerator
of which is the sum of (1) the number of shares of Common Stock
outstanding on such record date and (2) the number of additional
shares of Common Stock which such rights or warrants entitle holders
of Common Stock to subscribe for or purchase ("Offered Shares"), and
(B) the denominator of which is the sum of (1) the number of shares of
Common Stock outstanding on the record date and (2) a fraction, (x)
the numerator of which is the product of the number of Offered Shares
multiplied by the subscription or purchase price of the Offered Shares
and (y) the denominator of which is the Current Market Price per share
of Common Stock on such record date. Such adjustment shall become
effective immediately after such record date.
(iv) If the Corporation shall be a party to any transaction,
including any capital reorganization, reclassification or
recapitalization involving the Common Stock of the Corporation (other
than (A) a transaction described in clauses (i) and (ii) of this
Section 5(c) or in Section 3(b) or (B) a consummated Business
Combination), or some other form of transaction (other than a
consummated Business Combination) in which the previously outstanding
shares of Common Stock shall be changed into or, pursuant to the
operation of law or the terms of the transaction to which the
Corporation is a party, exchanged, or would have been changed or
exchanged as required by the Certificate of Incorporation if such
Common Stock were outstanding, for different securities of the
Corporation or common stock or other securities of another corporation
or interests in a non-corporate entity (such other corporation or non-
corporate entity is referred to herein as the "Surviving Entity") or
other property (including cash) or any combination of the foregoing,
then, as a condition to the consummation of such transaction, lawful
and adequate provision shall be made whereby the Holders of the Series
A Preferred Stock shall thereafter have the right to receive, in lieu
of the shares of Common Stock of the Corporation immediately
theretofore receivable with respect to the conversion of such shares
of Series A Preferred Stock, such shares of stock or securities (such
stock and securities are referred to herein as the "Surviving Entity
Securities") or assets as would have been issued or payable with
respect to or in exchange for the shares of Common Stock which such
holders would have held had the shares of Series A Preferred Stock
been converted immediately prior to such transaction. In any such
case, appropriate provisions shall be made with respect to the rights
and interests of the Holders of the Series A Preferred Stock to the
end that such conversion rights (including, without limitation,
provisions for adjustment of the Conversion Price) shall thereafter be
8
<PAGE>
applicable, as nearly as may be practicable in relation to any shares
of Surviving Entity Securities or assets thereafter deliverable upon
the exercise thereof.
(d) Stock Transfer Taxes. The issuance of stock certificates upon the
conversion of the Series A Preferred Stock shall be made without charge to
the converting Holder for any tax in respect of such issuance. The
Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
shares in any name other than that of the Holder of such shares of Series A
Preferred Stock converted, and the Corporation shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issuance thereof shall have paid to the Corporation
the amount of such tax, if any.
(e) No Fractional Shares: Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion of the
Series A Preferred Stock, and the number of shares of Common Stock to
be issued shall be rounded to the nearest whole share.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this
Section 5, the Corporation, at its expense, shall promptly compute
such adjustment or readjustment in accordance with the terms hereof
and prepare and furnish to each Holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of
any Holder of Series A Preferred Stock, furnish or cause to be
furnished to such Holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Price at the time in
effect, and (C) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of a share of Series A Preferred Stock.
(f) Notices of Record Date. In the event of any taking by the
Corporation of a record of the Holders of any class of securities for the
purpose of determining the Holders thereof who are entitled to receive any
dividend (other than a cash dividend or a Liquidation Accretion Dividend)
or other distribution, any right or warrant to subscribe for, purchase or
otherwise acquire any shares of stock or any class of any other securities
or property, or to receive any other right (including, without limitation,
making a dividend or other distribution of any rights under a stockholder
rights plan (sometimes known as a "poison pill" plan), whether now existing
or hereafter created), the Corporation shall mail to each Holder of Series
A Preferred Stock, at least 20 days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution, right or warrant, and the amount
and character of such dividend, distribution, right or warrant. The
Corporation shall not issue such dividend, distribution, right or warrant
9
<PAGE>
described herein or in Section 5(c)(iii), or consummate any Business
Combination, or any reorganization, reclassification or recapitalization
described in Section 5(c)(iv), unless it provides the Holders of the Series
A Preferred Stock at least 20 days advance written notice thereof.
(g) Reservation of Securities Issuable upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock,
free from any preemptive right or other obligation, such number of its
shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, in addition to such
other remedies as shall be available to the Holder of such Series A
Preferred Stock, the Corporation will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes. The
Corporation shall prepare and shall use commercially reasonable efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all
requirements as to registration, qualification or listing of the Common
Stock in order to enable the Corporation to lawfully issue and deliver to
each Holder of record of Series A Preferred Stock such number of shares of
its Common Stock as shall from time to time be sufficient to effect the
conversion of all Series A Preferred Stock then outstanding and convertible
into shares of Common Stock, including, without limitation, compliance with
the filing and waiting period requirements of the HSR Act.
(h) Notices. Any notice required by the provisions of this Section 5
to be given to the Holders of shares of Series A Preferred Stock shall only
be effective upon receipt and may be given by personal delivery, U.S.
certified mail, return receipt requested, or by a nationally recognized
overnight delivery service (e.g., United Parcel Service or Federal
Express), delivery or postage prepaid and addressed to each Holder of
record at his address appearing on the books of this Corporation (and, in
the case of any Holder that is a corporation ore other entity, to the
attention of the President).
6. Redemption.
(a) Optional Redemption. The Series A Preferred Stock may be redeemed
(subject to (i) the right of any or all shares of Series A Preferred Stock
to be converted into Common Stock at any time prior to the Redemption Date
(as defined in Section 6(b)), and (ii) subject to the restrictions
described in this Section 6(a) and the legal availability of funds
therefor) at any time after the third anniversary of the Purchase Date, at
the Corporation's option, in whole or in part, in the manner provided in
Section 6(b), at a redemption price per share of Series A Preferred Stock
(expressed as a percentage of the Liquidation Value, which
10
<PAGE>
includes the full accelerated amount of the Liquidation Accretion Dividends
as prescribed by Section 3(a)(i)) set forth above), if redeemed during the
12-month period beginning on the anniversary date of the Purchase Date of
each of the years set forth below:
Year Percentage
---- ----------
2001 103%
2002 102%
2003 101%
Thereafter 100%
In the event a redemption of less than all of the outstanding shares of
Series A Preferred Stock pursuant to this Section 6(a), the Corporation
shall effect such redemption either prorata according to the number of
shares held by each Holder of shares of Series A Preferred Stock, or by
lot, in each case, as may be determined by the Corporation in its sole
discretion.
(b) Procedures for Redemption.
-------------------------
(i) At least 30 days and not more than 60 days prior to the date
fixed for any redemption of the Series A Preferred Stock, written
notice (the "Redemption Notice") shall be given by first-class mail,
postage prepaid, to each Holder of record on the record date fixed for
such redemption (the "Redemption Date") of the Series A Preferred
Stock at such Holder's address as the same appears on the stock
register of the Corporation, provided that no failure to give such
notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Series A Preferred Stock
to be redeemed except as to the Holder or Holders to whom the
Corporation has failed to give said notice or except as to the Holder
or Holders whose notice was defective; provided, further, that the
Corporation may withdraw such Redemption Notice and thereby have no
obligation to consummate the redemption described therein at any time
prior to the third day prior to the Redemption Date set forth therein
by providing written notice of such withdrawal to each Holder who
received such Redemption Notice. The Redemption Notice shall state:
(1) the redemption price;
(2) whether all or less than all the outstanding shares of
the Series A Preferred Stock are to be redeemed and the total
number of shares of the Series A Preferred Stock being redeemed;
(3) the number of shares of Series A Preferred stock held,
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
11
<PAGE>
(4) the Redemption Date;
(5) that the Holder is to surrender to the Corporation, at
the place or places where certificates for shares of Series A
Preferred Stock are to be surrendered for redemption, in the
manner and at the price designated, Holder's certificate or
certificates representing the shares of Series A Preferred Stock
to be redeemed; and
(6) that cash dividends on the shares of the Series A
Preferred Stock to be redeemed shall cease to accrue on such
Redemption Date unless the Corporation defaults in the payment of
the redemption price.
(ii) Each Holder of Series A Preferred Stock shall surrender
the certificate or certificates representing such shares of Series A
Preferred Stock to the Corporation, duly endorsed, in the manner and
at the place designated in the Redemption Notice and on the Redemption
Date. The full redemption price for such shares of Series A Preferred
Stock shall be payable in cash to the person whose name appears on
such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired. In the event
that less than all of the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(iii) Unless the Corporation defaults in the payment in full of
the applicable redemption price, cash dividends on the shares of
Series A Preferred Stock called for redemption shall cease to accrue
and accumulate on the Redemption Date, and the Holders of such
redeemed shares shall cease to have any further rights with respect
thereto from and after the Redemption Date, other than the right to
receive the redemption price on the Redemption Date, without interest.
7. Voting Rights. (a) The Holders of shares of Series A Preferred Stock
shall not be entitled to any voting rights, except as hereinafter provided in
Section 7(b) and Section 8 or as otherwise provided by law or by that certain
Governance Agreement between the Corporation, Sprint, Sprint L.P. and Dolphin,
Inc., a Delaware corporation, dated the Purchase Date (the "Governance
Agreement"). Notwithstanding any other provision of this Section 7 or Section
8, the Holders of shares of Series A Preferred Stock shall not be entitled to
any voting rights hereunder with respect to a Business Combination which is not
a Discriminatory Transaction.
(b) Election of Directors.
---------------------
(i) Except as otherwise provided herein, at all times from and
after the Purchase Date, the Holders of shares of Series A Preferred
Stock shall have the right to elect two (2) of the directors of the
Corporation (the "Investor Directors"). If the
12
<PAGE>
Corporation or any Significant Subsidiary of the Corporation shall
have a Strategic and Business Planning Committee (or other committee
responsible for strategic and business planning) or a Finance
Committee (or other committee responsible for finance) during the time
that the Holders of Series A Preferred Stock shall have the right to
elect one or more Investor Directors under this Section 7(b)(i), such
Investor Directors may appoint one of the Investor Directors to each
such committee. If there is no such committee, the Holders of Series
A Preferred Stock shall have a reasonable opportunity to review and
discuss the Corporation's strategic and business plans and financing
plans with management of the Corporation prior to the submission of
any such plans to the Board of Directors of the Corporation or any
Significant Subsidiary of the Corporation. The Investor Directors
shall also have the right to appoint one Investor Director to each of
the other committees of the Board of Directors, except as otherwise
provided in this Section 7(b) and except for appointments to any
existing committee of the Board of Directors if the scope of authority
of such committee is not hereafter expanded. The Holders of Series A
Preferred Stock shall receive copies of all information and materials
provided to the directors of the Corporation and any Signifanct
Subsidiary of the Corporation or to committee members, except for
information and materials provided to a committee that an Investor
Director is prohibited from participating in as set forth in this
Section 7(b)(i), at the time such information and materials are
provided to such directors. Notwithstanding the foregoing, nothing
set forth herein shall entitle any Investor Director to participate on
any committee of the Board of Directors of the Corporation or any
Significant Subsidiary of the Corporation created for the purpose of
considering a Business Combination, an Acquisition Proposal, a Sprint
Offer or a Qualified Offer, or to participate in the Board's
deliberations with respect to any of the foregoing.
(ii) Notwithstanding anything in the Section 7(b)(i) to the
contrary, if at the end of any three consecutive months, (A) Sprint's
Percentage Interest shall be less than the Higher Threshold, the
Holders shall promptly take action to cause one of its Investor
Directors to resign from the Board, or (B) Sprint's Percentage
Interest shall be less than the Lower Threshold, the Holders shall
promptly take action to cause any and all remaining Investor Directors
to resign from the Board; and, upon resignation of each respective
Investor Director, the Holders of shares of Series A Preferred Stock
shall forever cease to have any voting rights with respect to the
election of that director.
(iii) Except as otherwise provided in Section 7(b)(ii), the
Holders of Series A Preferred Stock shall have the right to elect any
replacement for an Investor Director designated for nomination or
nominated in accordance with this Section 7(b) upon the death,
resignation, retirement, disqualification or removal from office for
other cause of such Director.
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(iv) Until the date the Governance Agreement is terminated in
accordance with Section 7.01 thereof, and for the duration of any
period in which Sprint's Percentage Interest is greater than the Lower
Threshold, the Investor Directors shall have the approval rights set
forth in Section 2.06 of the Governance Agreement.
8. Protective Provisions.
---------------------
(a) Class Voting. So long as shares of Series A Preferred Stock are
outstanding, this Corporation shall not, without first obtaining the
approval (by vote or written consent) of the Holders of sixty-six and two-
thirds percent (66 2/3%) of the then outstanding shares of Series A
Preferred Stock (voting as a class):
(i) alter or change the rights, preferences or privileges of
the shares of Series A Preferred Stock so as to affect adversely the
shares;
(ii) increase the number of authorized shares of Series A
Preferred Stock, or create any new series of stock or any other
securities convertible into equity securities of the Corporation
having a preference over, or being on a parity with, the Series A
Preferred Stock with respect to voting, dividends, distribution of
assets upon liquidation, dissolution, winding up or otherwise or
conversion rights;
(iii) amend the Certificate of Incorporation, Bylaws or other
organizational documents of the Corporation or take any action or
enter into any other agreements which, prohibit or materially conflict
with the Corporation's obligations hereunder with respect to the
Holders of Series A Preferred Stock; or
(iv) engage in a Liquidation Event.
(b) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation, Bylaws or other organizational documents or
through any reorganization, reclassification, recapitalization, Liquidation
Event, issue or sale of securities or any other voluntary action by the
Corporation, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but will
at all times in good faith assist in the carrying out of all the provisions
of this Certificate of Designation, and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion and
other rights of the Holders of the Series A Preferred Stock against
impairment; provided, however, that the protection provided by this Section
8(b) shall not apply to a Business Combination in which (i) neither the
Liquidation Value nor the Conversion Price of the Series A Preferred Stock
is changed, and (ii) the Holders of Series A Preferred Stock shall be
entitled to receive consideration at the same time, and in the same amount
and in the same form per share, as if each share of Series A Preferred
Stock had been converted into Common Stock immediately prior to such
Business Combination, after giving effect to the acceleration of the full
amount of all of the Liquidation Accretion Dividends as
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contemplated by the last sentence of Section 3(a)(i). Without limiting the
foregoing, but subject to the proviso in the immediately preceding
sentence, the Corporation will not effect any transaction described in this
Section 8(b), the result of which is to adversely affect any of the rights
of Holders of Common Stock relative to the rights of Holders of any other
securities other than the Series A Preferred Stock.
(c) Tolling of Automatic Conversion and Other Time periods for HSR
Compliance. Notwithstanding any other provision of this Certificate of
Designation, until such time as the filing and waiting period requirements
of the HSR Act relating to the conversion of any of the shares of Series A
Preferred Stock pursuant to Section 5 shall have been complied with, if
any, and there shall be no action taken or instituted by the United States
Department of Justice or the United States Federal Trade Commission to
delay, enjoin or impose conditions on such conversion, and such waiting
period applicable under the HSR Act shall have expired or received early
termination: (i) there shall be no automatic conversion of the Series A
Preferred Stock into Common Stock, (ii) the Redemption Date shall be
automatically extended for a period of five Business Days beyond the latest
date contemplated by the first sentence of Section 6(b)(i) (as so extended,
the "Extended Redemption Date") and each Holder of shares of Series A
Preferred Stock shall be entitled to convert any or all of such shares into
Common Stock prior to the Extended Redemption Date, and (iii) each other
date or event that would otherwise impair any right to convert the Series A
Preferred Stock into Common Stock or otherwise impair the rights of the
Series A Preferred Stock shall be tolled until 10 days after the expiration
or early termination of all waiting periods under the HSR Act; provided,
however, that no cash dividends shall accrue during the period after the
date originally set for redemption pursuant to Section 6. Any Holder who
is required to comply with the filing and waiting period requirements of
the HSR Act with respect to the conversion of any shares of Series A
Preferred Stock shall use commercially reasonable efforts to cause such
filing to be made as soon as practicable after such Holder has provided
notice of its intention to convert such shares of Series A Preferred Stock
and to diligently and in good faith pursue expiration or termination of
the waiting period of the HRS Act.
9. Stockholder Rights Plan. Notwithstanding any other provision of this
Certificate of Designation to the contrary, if the Corporation shall adopt a
stockholders rights plan (sometimes known as a "poison pill" plan), and shall
declare, order, pay or make a dividend or other distribution of rights
thereunder with respect to the Common Stock (whether or not separate from the
Common Stock), each Holder of shares of Series A Preferred Stock shall be
entitled to receive from the Corporation, upon conversion of such shares of
Series A Preferred Stock into Common Stock pursuant to Section 5, all of the
rights distributed under such plan (but without any limitation or restriction or
the exercise of such rights that are not also applicable to holders of Common
Stock) fully and to the same extent as if immediately prior to the earlier of
such distribution or any record date therefor (i) the Liquidation Value of such
shares of Series A Preferred Stock had then increased by the full amount of all
Liquidation Accretion Dividends payable as if such shares of Series A Preferred
Stock had been held through and including the first Dividend Payment Date on or
following the fifth anniversary of the Purchase Date, and (ii) such Holder had
then converted all of such
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Holder's shares of Series A Preferred Stock into shares of Common Stock. The
preceding sentence shall provide the exclusive protection under this Certificate
of Designation to the Holders of the Series A Preferred Stock (including any
adjustments that would otherwise be required by Section 5(c)) with respect to
the subject matter of the immediately preceding sentence.
10. Status of Converted Stock. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 5 hereof, the shares so
converted shall be canceled and thereupon restored to the status of authorized
but unissued Preferred Stock undesignated as to class or series.
11. Certain Definitions. For purposes of this Certificate of Designation,
Preferences and Rights of Series A Preferred Stock, unless the context otherwise
requires:
(i) "Acquisition Proposal" shall have the meaning set forth in
the Governance Agreement.
(ii) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act
as such Rule is in effect on the Purchase Date.
(iii) A Person shall be deemed to "beneficially own," any
securities:
(A) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise;
(B) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 under the Exchange Act as such Rule is in
effect on the date of this Agreement), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (B) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made by the Corporation pursuant to, and in
accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act; or
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(C) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (B)) or disposing of any
voting securities of the Corporation; provided, however, that
nothing in this subparagraph (C) shall cause a person engaged in
business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm
commitment underwriting under the Act until the expiration of 40
days after the date of such acquisition.
(iv) "Business Combination" shall have the meaning set forth in
the Governance Agreement.
(v) "Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(vi) "Closing Price" per share of Common Stock on any date
shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the Common Stock is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, if such shares of
Common Stock are not listed or admitted to trading on such exchange,
as reported on the Nasdaq National Market, or if not quoted on the
Nasdaq National Market, the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the over-
the-counter market, as reported by Nasdaq or such other system then in
use, or, if on any such date the Common Stock is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors. If the Common Stock is not
publicly held or so listed or publicly traded, "Closing Price" shall
mean the Fair Market Value per share as determined in good faith by
the Board of Directors of the Corporation.
(vii) "Common Stock" shall mean the Corporation's authorized
Common Stock, $.01 par value, as constituted on the Purchase Date, and
any stock into which
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such Common Stock may thereafter be changed or reclassified,
including, without limitation, any Surviving Entity Securities;
provided, however, that if Common Stock is changed or reclassified
into more than one class or series of equity securities, the term
"Common Stock" shall refer to the class or series of such equity
securities having the greatest general voting power in the election of
directors of the Corporation as compared to the other classes or
series of equity securities.
(viii) "Corporation" means Dolphin, Inc., a Delaware
corporation, together with any successors of the Corporation, whether
by merger, consolidation or otherwise, including without limitation a
Surviving Entity.
(ix) "Current Market Price" per share of Common Stock on any
date shall be deemed to be the Closing Price per share of Common Stock
on the Trading Day immediately prior to such date.
(x) "Discriminatory Transaction" shall have the meaning set
forth in the Governance Agreement.
(xi) "Dividend Accrual Date" shall mean each anniversary date
of the Purchase Date and the dates three months, six months and nine
months of each year thereafter, beginning with the date three months
after the Purchase Date, or at such additional times and for such
interim periods, if any, as determined by the Board of Directors.
(xii) "Dividend Payment Date" shall mean with respect to
dividends under Section 3(a)(i), the Dividend Accrual Date, and with
respect to dividends under Section 3(a)(ii), the date established by
the Board of Directors for the payment of all or part of the accrued
dividends on the Series A Preferred Stock.
(xiii) "Equity Security" means (i) any Common Stock, (ii) any
debt or equity securities of the Corporation convertible into or
exchangeable for Common Stock or other Equity Securities of the
Corporation that grant the right to vote generally in the election of
directors ("Voting Equity Securities"), (iii) any options, rights or
warrants (or any other similar securities) issued by the Corporation
to acquire Common Stock or other Voting Equity Securities or (iv) any
security issuable in connection with any stock split, stock dividend,
recapitalization or other similar transaction in which securities are
issued on a proportionate basis to all holders of a class of Equity
Securities.
(xiv) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect on the Purchase Date.
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(xv) "Fair Market Value" means the amount which a willing
buyer would pay a willing seller in an arm's-length transaction.
(xvi) "Higher Threshold" shall have the meaning set forth in
the Governance Agreement.
(xvii) "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations promulgated
thereunder.
(xviii) "Lower Threshold" shall have the meaning set forth in
the Governance Agreement.
(xix) "Person" means any individual, firm, corporation,
partnership, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(xx) "Purchase Date" means the date of the Closing as defined
in the Governance Agreement.
(xxi) "Qualified Offer" shall have the meaning set forth in
the Governance Agreement.
(xxii) "Significant Subsidiary" shall have the meaning set
forth in the Governance Agreement.
(xxiii) "Sprint Offer" shall have the meaning set forth in the
Governance Agreement.
(xxiv) "Sprint's Percentage Interest" shall have the meaning
set forth in the Governance Agreement.
(xxv) "Subsidiary" of any person means any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such person.
(xxvi) "Trading Day" means a day on which the principal
national securities exchange Nasdaq or other securities market on
which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, any day other
than a Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
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IN WITNESS WHEREOF, the Corporation has caused the foregoing certificate to
be signed on ________________________, 1998.
DOLPHIN, INC.
By:
---------------------------------
Charles G. Betty, President
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