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As filed with the Securities and Exchange Commission on October 17, 2000
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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EARTHLINK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 58-2511877
(State of Organization) (I.R.S. Employer Identification Number)
1430 West Peachtree Street, Suite 400
Atlanta, Georgia 30309
(404) 815-0770
(Address and telephone number of principal executive offices)
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Charles G. Betty, CEO
EarthLink, Inc.
1430 West Peachtree Street, Suite 400
Atlanta, Georgia 30309
(404) 815-0770
(Name, address and telephone number of agent for service)
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COPIES TO:
Daniel O. Kennedy, Esq.
Hunton & Williams
600 Peachtree Street, Suite 4100
Atlanta, Georgia 30308
(404) 888-4000
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Approximate date of commencement of proposed sale to the public: From time to
time upon the exercise of warrants after this registration statement becomes
effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock, $.01 par value 164,388 shares $6.9375 $1,140,441.75 $301.08
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS
EARTHLINK, INC.
164,388 SHARES OF COMMON STOCK
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This prospectus relates to shares of our common stock issuable to
holders of warrants to purchase a total of 164,388 shares of our common stock
upon the exercise of such warrants. These warrants were issued on September
12, 2000 in connection with our purchase of OneMain.com, Inc.
The section of this prospectus entitled "Warrants" sets forth
information concerning the warrants and the holders of the warrants. The
warrant holders will receive all of the net proceeds from their sale of the
shares and EarthLink will not receive any proceeds from the sale of the
shares by the warrant holders.
Our common stock is listed for trading on The Nasdaq Stock Market's
National Market under the symbol "ELNK." On October 16, 2000, the last reported
sale price of our common stock on the Nasdaq National Market was $6.9375.
You should read this prospectus and any prospectus supplement carefully
before you decide to invest. You should consider carefully the risk factors
beginning on page 1 of this prospectus before purchasing any of the common stock
offered hereby.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE OFFERED SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL
YOU OTHERWISE.
----------------------
The date of this prospectus is October 17, 2000.
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TABLE OF CONTENTS
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PROSPECTUS PAGE
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS.......................1
WHERE YOU CAN FIND MORE INFORMATION........................................1
RISK FACTORS...............................................................3
ABOUT EARTHLINK...........................................................10
UNAUDITED PRO FORMA FINANCIAL INFORMATION.................................13
USE OF PROCEEDS...........................................................19
WARRANTS..................................................................19
PLAN OF DISTRIBUTION......................................................19
LEGAL MATTERS.............................................................20
EXPERTS...................................................................20
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS, ANY PROSPECTUS SUPPLEMENT AND THE INFORMATION
INCORPORATED BY REFERENCE, MAY INCLUDE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE
ACT. WE INTEND THE FORWARD-LOOKING STATEMENTS TO BE COVERED BY THE SAFE HARBOR
PROVISIONS FOR FORWARD-LOOKING STATEMENTS IN THESE SECTIONS. ALL STATEMENTS
REGARDING OUR EXPECTED FINANCIAL POSITION AND OPERATING RESULTS, OUR BUSINESS
STRATEGY AND OUR FINANCING PLANS ARE FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS CAN SOMETIMES BE IDENTIFIED BY OUR USE OF FORWARD-LOOKING WORDS SUCH
AS "MAY," "WILL," "ANTICIPATE," "ESTIMATE," "EXPECT," OR "INTEND." KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS COULD CAUSE THE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE STATEMENTS. THE FORWARD-LOOKING
INFORMATION IS BASED ON VARIOUS FACTORS AND WAS DERIVED USING NUMEROUS
ASSUMPTIONS.
ALTHOUGH WE BELIEVE THAT OUR EXPECTATIONS THAT ARE EXPRESSED IN THESE
FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT PROMISE THAT OUR
EXPECTATIONS WILL TURN OUT TO BE CORRECT. OUR ACTUAL RESULTS COULD BE MATERIALLY
DIFFERENT FROM AND WORSE THAN OUR EXPECTATIONS. IMPORTANT RISKS AND FACTORS THAT
COULD CAUSE OUR ACTUAL RESULTS TO BE MATERIALLY DIFFERENT FROM OUR EXPECTATIONS
INCLUDE, WITHOUT LIMITATION, (1) THAT THE COMPANY'S SERVICE OFFERINGS MAY FAIL
TO BE COMPETITIVE WITH EXISTING AND NEW COMPETITORS, (2) THAT THE COMPANY MAY
NOT RETAIN OR GROW ITS MEMBER BASE, (3) THAT THE SPRINT AND/OR THE APPLE
ALLIANCE MAY NOT BE AS BENEFICIAL TO THE COMPANY AS MANAGEMENT ANTICIPATES, (4)
CUSTOMER ATTRITION RATES MAY NOT IMPROVE TO EXPECTED LEVELS, (5) THE EXPECTED
RATE OF GROWTH IN ADVERTISING, CONTENT AND COMMERCE MAY NOT BE ACHIEVED, (6) THE
COMPANY MAY NOT ADEQUATELY RESPOND TO TECHNOLOGICAL DEVELOPMENTS IMPACTING THE
INTERNET, (7) THAT NEEDED FINANCING MAY NOT BE AVAILABLE TO THE COMPANY IF AND
AS NEEDED, (8) THAT A SIGNIFICANT CHANGE IN THE GROWTH RATE OF THE OVERALL U.S.
ECONOMY MAY OCCUR, SUCH THAT CONSUMER AND CORPORATE SPENDING ARE MATERIALLY
IMPACTED, (9) THAT A SIGNIFICANT REVERSAL IN THE TREND TOWARD INCREASED USAGE OF
THE INTERNET MAY OCCUR, (10) THAT A DRASTIC NEGATIVE CHANGE IN THE MARKET
CONDITIONS MAY OCCUR, AND (11) THAT SOME OTHER UNFORESEEN DIFFICULTIES MAY
OCCUR. THIS LIST IS INTENDED TO IDENTIFY SOME OF THE PRINCIPAL FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE
FORWARD-LOOKING STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THESE FACTORS ARE
NOT INTENDED TO REPRESENT A COMPLETE LIST OF ALL RISKS AND UNCERTAINTIES
INHERENT IN EARTHLINK'S BUSINESS, AND SHOULD BE READ IN CONJUNCTION WITH THE
MORE DETAILED CAUTIONARY STATEMENTS INCLUDED IN THIS PROSPECTUS AND/OR ANY
PROSPECTUS SUPPLEMENT UNDER THE CAPTION "RISK FACTORS."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
filed with the SEC, including the registration statement, at the following SEC
public reference rooms:
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450 Fifth Street, N.W 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
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Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.
Our common stock is quoted on the Nasdaq National Market under the
symbol "ELNK," and our SEC filings can also be read at the following Nasdaq
address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our SEC filings are also available to the public on the SEC's Web Site
at http://www.sec.gov.
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The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below that we have filed with the SEC (File
No. 001-15605):
- Our Annual Report on Form 10-K for the year ended December 31,
1999, including information incorporated by reference in the
Form 10-K from the definitive proxy statement for the 2000
annual meeting of stockholders of EarthLink held on June 1,
2000, which was filed May 1, 2000;
- Our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2000 and June 30, 2000;
- Our Current Reports on Form 8-K, which were filed with the SEC
on February 16, 2000, June 21, 2000, July 6, 2000, July 10,
2000, August 14, 2000 and September 19, 2000;
- The description of our common stock contained in our
registration statement on Form S-4 (Registration No.
333-94177) filed with the SEC on January 6, 2000;
- Earthlink Network's Current Report on Form 8-K which was
filed with the SEC on October 14, 1999.
- OneMain.com, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1999;
- OneMain's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2000 and June 30, 2000; and
- Any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until we have sold all of the offered securities to which this
prospectus (and any accompanying prospectus supplement)
relates or the offering is otherwise terminated.
You may request a copy of these filings, at no cost, by writing to us
at the following address or telephoning us at (404) 815-0770 between the hours
of 9:00 a.m. and 4:00 p.m., Atlanta, Georgia local time:
Investor Relations
EarthLink, Inc.
1430 West Peachtree Street, Suite 400
Atlanta, Georgia 30309
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RISK FACTORS
Prospective investors should carefully consider the following risk
factors prior to making an investment in EarthLink's stock.
INCREASED COMPETITION IN THE INTERNET SERVICE INDUSTRY MAY MAKE IT DIFFICULT
FOR EARTHLINK TO ATTRACT AND RETAIN MEMBERS AND TO MAINTAIN CURRENT PRICING
LEVELS, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION.
EarthLink operates in the Internet services market, which is extremely
competitive. Our current and prospective competitors include many large
companies that have substantially greater market presence, financial, technical,
marketing and other resources than EarthLink. We compete directly or indirectly
with the following categories of companies:
- established online service providers, such as America Online, Inc., the
Microsoft Network and Prodigy Communications Corporation;
- local, regional and national Internet service providers, such as
RMI.NET, Inc. and Internet America, Inc.;
- national telecommunications companies, such as AT&T Corp. and GTE
Corporation;
- regional Bell operating companies, such as BellSouth Corporation and SBC
Communications Inc.;
- personal computer manufacturers with Internet service provider businesses
such as Gateway, Inc. and Dell Computer Corporation;
- "free access" Internet service providers, such as NetZero, Inc.; and
- online cable services, such as Excite@Home Corporation and Roadrunner
Computer Systems, Inc.
We also face competition from companies that provide broadband and other
high-speed connections to the Internet, including local and long-distance
telephone companies, cable television companies, electric utility companies, and
wireless communications companies. These companies may use broadband
technologies to include Internet access or web hosting in their basic bundle of
services or may offer Internet access or web hosting services for a nominal
additional charge. Broadband technologies enable consumers to transmit and
receive print, video, voice and data in digital form at significantly faster
access speeds than existing dial-up modems.
These companies may also prevent us from delivering Internet access through
their systems. If the owners of these high-speed, broadband facilities
increasingly use them to provide Internet access and we are unable to gain
access to these facilities on reasonable terms, our business, financial
condition and results of operations could be materially adversely affected.
Our competition is likely to increase. We believe this will probably happen
as large diversified telecommunications and media companies acquire Internet
service providers, as Internet service providers consolidate into larger, more
competitive companies and as providers who offer free access to the Internet
grow in number and size. Diversified competitors may bundle other services and
products with Internet connectivity services, potentially placing us at a
significant competitive disadvantage. In addition, competitors may charge less
than we do for Internet services, or may charge nothing at all in some
circumstances, causing us to reduce, or preventing us from raising our fees. As
a result, our business may suffer, and the value of our common stock may
decrease.
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EARTHLINK'S RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED BY
FLUCTUATIONS IN THE USE OF THE INTERNET FOR E-COMMERCE TRANSACTIONS.
Use of the Internet for retail transactions is a relatively recent
development and the continued demand and growth of a market for services and
products via the Internet is uncertain. The Internet may ultimately prove not to
be a viable commercial marketplace for a number of reasons, including:
- unwillingness of consumers to shift their purchasing from traditional
retailers to online-purchases;
- lack of acceptable security for data and concern for privacy of personal
information;
- limitations on access and ease of use;
- congestion leading to delayed or extended response times;
- inadequate development of the web infrastructure to keep pace with
increased levels of use; and
- increased or excessive government regulation.
If use of the Internet for commercial transactions declines or does not
increase, and if other uses, such as e-mail and personal web sites do not
increase, this could have a materially adverse affect on EarthLink's business
and results of operations through a decrease in new members and portal related-
revenue, and could result in a decrease in the value of EarthLink common stock.
ANY DISRUPTION IN THE INTERNET ACCESS PROVIDED BY EARTHLINK COULD ADVERSELY
AFFECT EARTHLINK'S BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
EarthLink's systems and infrastructure is susceptible to natural and
man-made disasters such as earthquakes, fires, floods, power loss and
sabotage. EarthLink's systems also are vulnerable to disruptions from
computer viruses and attempts by hackers to penetrate EarthLink's network
security.
EarthLink will be covered by insurance from loss of income from some of
the events listed above, but this insurance may not be adequate to cover all
instances of system failure. EarthLink has insurance from loss of income due
to earthquakes, but the amount of such insurance may be insufficient,
especially given the frequency and magnitude of earthquakes in California,
where a number of EarthLink's facilities are located.
Any of the events described above could cause interference, delays, service
interruptions or suspensions and adversely affect EarthLink's business and
results of operations.
EarthLink must continue to expand and adapt its system infrastructure to
keep pace with the increase in the number of members who use the services it
expects to provide. Demands on infrastructure that exceed EarthLink's current
forecasts could result in technical difficulties with its servers. Continued or
repeated system failures could impair EarthLink's reputation and brand names and
reduce EarthLink's revenues.
If, in the future, EarthLink cannot modify these systems to accommodate
increased traffic, EarthLink could suffer slower response times, problems with
customer service and delays in reporting accurate financial information. Any of
these factors could significantly and adversely affect the results of
EarthLink's operations and cause a decrease in the value of our common stock.
EARTHLINK MUST CONTINUE TO ENHANCE ITS PRODUCTS AND SERVICES AND DEVELOP NEW
ONES TO BE SUCCESSFUL IN THE RAPIDLY EVOLVING MARKET FOR INTERNET SERVICES, AND
WE CANNOT BE CERTAIN THAT EARTHLINK WILL BE ABLE TO DO SO COST-EFFECTIVELY.
Rapid technological change, changing customer needs, frequent new product
and service introductions and evolving industry standards characterize the
Internet market. These market characteristics could render EarthLink's services,
technology and systems obsolete. EarthLink must continually improve the
performance, features and reliability of its services to respond to evolving
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market demands and competition. EarthLink's business, operating results and
financial condition would be materially adversely affected and the value of our
common stock could decline if we are unable to respond in a cost-effective and
timely manner to changing market conditions or customer requirements.
IF EARTHLINK'S THIRD PARTY NETWORK PROVIDERS ARE UNABLE OR UNWILLING TO
PROVIDE INTERNET ACCESS TO OUR MEMBERS ON COMMERCIALLY REASONABLE TERMS,
EARTHLINK MAY SUFFER A LOSS OF CUSTOMERS, HIGHER COSTS AND LOWER OVERALL
REVENUES.
EarthLink provides dial-up access through company-owned points of
presence and through the networks of Worldcom/UUNet, PSINet, Level 3 and
Sprint. OneMain provides dial-up access through company-owned points of
presence and through the networks of Sprint, Level 3, Worldcom/ UUNet,
GTE/BBN and PSINet. Approximately 94% of the members of EarthLink live in a
geographic area served by two or more network providers. EarthLink will be
able to serve its members through the combination of network providers that
it deems most efficient. Only approximately 6% of the members of EarthLink
live in a geographic area served by only one network provider. Our ability to
provide Internet access to our members will be limited if our third-party
network providers are unable or unwilling to provide access to our members,
we are unable to secure alternative arrangements upon termination of
third-party network provider agreements or there is a loss of access to
third-party providers for other reasons. These events could also limit our
ability to further expand nationally, which could have a material adverse
affect on our business. If we lose access to third-party providers under
current arrangements, we may not be able to make alternative arrangements on
terms acceptable to us, or at all. We do not currently have any plans or
commitments with respect to alternative third-party provider arrangements in
areas served by only one network provider. Moreover, while the contracts with
the third-party providers require them to provide commercially reliable
service to our members with a significant assurance of accessibility to the
Internet, the performance of third-party providers may not meet our
requirements, which could materially adversely affect our business, financial
condition and results of operations.
EARTHLINK MAY NOT BE ABLE TO MAINTAIN OR INCREASE ITS MEMBERSHIP LEVELS IF
IT DOES NOT HAVE UNINTERRUPTED AND REASONABLY PRICED ACCESS TO THE LOCAL AND
LONG-DISTANCE TELECOMMUNICATIONS LINES NECESSARY FOR IT TO PROVIDE INTERNET
ACCESS TO ITS MEMBERS.
EarthLink relies on local telephone companies and other firms to provide
data communications capacity through local telecommunications lines and
leased long-distance lines. We may experience disruptions or capacity
constraints in these telecommunications services. If disruptions or capacity
constraints occur, we may have no means of replacing these services on a
timely basis, or at all. In addition, local phone service is sometimes
available only from the local monopoly telephone company in each of the
markets we serve. We believe that the Federal Telecommunications Act of 1996
generally will lead to increased competition in the provision of local
telephone services, but we cannot predict when or to what extent this will
occur or the effect of increased competition on pricing or supply.
EARTHLINK'S REVENUES AND RESULTS OF OPERATIONS ARE DEPENDENT UPON ITS
PROPRIETARY TECHNOLOGY AND EARTHLINK MAY NOT BE SUCCESSFUL IN PROTECTING ITS
PROPRIETARY RIGHTS OR AVOIDING CLAIMS THAT IT INFRINGES UPON THE PROPRIETARY
RIGHTS OF OTHERS.
Our success depends in part upon our software and related documentation.
We principally rely upon copyright, trade secret and contract laws to protect
our proprietary technology. We cannot be certain that we have taken adequate
steps to prevent misappropriation of our technology or that our competitors
will not independently develop technologies that are substantially equivalent
or superior to our technology.
We have permission and, in some cases, licenses from each manufacturer of
the software that we bundle in our front-end software product for members.
Although we do not believe that the software or the trademarks we use or any
of the other elements of our business
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infringe on the proprietary rights of any third parties, third parties may
assert claims against us for infringement of their proprietary rights and these
claims may be successful.
We could incur substantial costs and diversion of management resources in
the defense of any claims relating to proprietary rights, which could materially
adversely affect our business, financial condition, and results of operations.
Parties making these claims could secure a judgment awarding substantial damages
as well as injunctive or other equitable relief that could effectively block our
ability to license our products in the United States or abroad. Such a judgment
could have a material adverse effect on our business, financial condition and
results of operations. If a third party asserts a claim relating to proprietary
technology or information against us, we may seek licenses to the intellectual
property from the third party. We cannot be certain, however, that third parties
will extend licenses to us on commercially reasonable terms, or at all. If we
fail to obtain the necessary licenses or other rights, it could materially
adversely affect EarthLink's business, financial condition and results of
operations.
DIFFICULTIES EARTHLINK MAY ENCOUNTER WITH OUR GROWTH AND EXPANSION COULD
ADVERSELY AFFECT THE RESULTS OF EARTHLINK'S OPERATIONS.
EarthLink's strategy will be to grow its membership at a rapid pace. This
strategy is likely to place a significant strain on EarthLink's resources
because of:
- the need to manage relationships with various strategic partners,
technology licensors, members and other third parties;
- difficulties in hiring and retaining skilled personnel necessary to
support EarthLink's business;
- increased demand on customer service and technical support;
- pressures for the continued development of EarthLink's financial and
information management systems; and
- potential challenges associated with strategic acquisitions of
complementary member accounts and businesses, if any, including systems
integration difficulties and infrastructure strains on our ongoing
business.
Difficulties EarthLink may encounter in dealing successfully with the above
risks could adversely affect the results of EarthLink's operations.
THE ABILITY OF EARTHLINK STOCKHOLDERS TO EFFECT CHANGES IN CONTROL OF
EARTHLINK IS LIMITED.
There are provisions in EarthLink's certificate of incorporation, bylaws,
and the Delaware General Corporation Law ("DGCL") that could delay or impede
the removal of incumbent directors and could make more difficult a merger,
tender offer, or proxy contest involving EarthLink or could discourage a
third party from attempting to acquire control of EarthLink, even if these
events would be beneficial to the interests of the stockholders. In
particular, the board of directors could delay a change in control of
EarthLink. In addition, certificate of incorporation authorizes our board to
provide for the issuance of shares of preferred stock of EarthLink, in one or
more series, which the board of directors could issue without further
stockholder approval and with terms and conditions and rights, privileges and
preferences determined by the board of directors. Pursuant to our contractual
obligations with Sprint, we issue convertible preferred stock to Sprint
periodically in connection with Sprint's rights to purchase stock in order to
maintain its percentage interest in EarthLink. Other than such periodic
issuances to Sprint, EarthLink has no current plans to issue any shares of
preferred stock. Furthermore, EarthLink is governed by Section 203 of the
DGCL. In general, Section 203 prohibits a publicly held Delaware corporation
from engaging in a "business combination" with an "interested stockholder"
for a period of three years after the date of the transaction in which the
person became an interested stockholder, unless specified conditions are met.
These factors could have the effect of delaying, deferring, or preventing a
change of control of EarthLink.
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SPRINT CORPORATION IS ONE OF OUR PRINCIPAL STOCKHOLDERS, AND IT CAN EXERCISE
SIGNIFICANT INFLUENCE OVER EARTHLINK.
Sprint Corporation owns approximately 9.6% of the common stock of
EarthLink, and it also owns EarthLink preferred stock that if converted would
cause its ownership percentage to increase to approximately 25.2%, on a
fully-diluted basis. Assuming that Sprint fully exercises its right to
maintain its current ownership levels after dilution caused by our
acquisition of OneMain, Sprint will own approximately 26.5% of EarthLink,
including approximately 10.25% of our common stock. As a result, Sprint is
able to exercise significant influence over most matters requiring
stockholder approval, including the election of directors and the approval of
significant corporate matters, such as some types of change-of-control
transactions. For example, the approval by both of Sprint's representatives
on the EarthLink board of directors was required for EarthLink to go forward
with the merger. To the extent that EarthLink engages in significant
transactions in the future, we may be required to seek Sprint's prior
approval.
Sprint's ownership of EarthLink preferred stock permits it to elect two of
EarthLink's directors, whose approval will be required for EarthLink to
undertake various activities. Also, without Sprint's consent, EarthLink will not
be able to enter into certain commercial relationships with competitors of
Sprint such as AT&T or any regional bell operating company. This may reduce or
eliminate opportunities for revenue growth. Further, Sprint's competitors may
choose not to engage in commercial relationships with us because of our close
relationship with Sprint, potentially significantly reducing our opportunities
for revenue growth.
WE MAY BECOME REGULATED BY THE FEDERAL COMMUNICATIONS COMMISSION OR OTHER
GOVERNMENT AGENCIES, WHICH COULD SIGNIFICANTLY INCREASE OUR OVERHEAD COSTS AND
REQUIRE US TO MODIFY OUR GROWTH STRATEGIES AND OPERATING PLANS.
As an Internet service provider EarthLink is not currently directly
regulated by the Federal Communications Commission or any other agency, other
than regulations applicable to businesses and publicly-traded companies
generally. In a report to Congress on April 10, 1998, the Federal
Communications Commission reaffirmed that Internet service providers should
be classified as unregulated "information service providers" other than
regulated "telecommunications providers" under the terms of the Federal
Telecommunications Act of 1996.
Nevertheless, Internet-related regulatory policies are continuing to
develop, and it is possible that we could be exposed to regulation in the
future. For example, in the same report to Congress, the Federal Communications
Commission stated its intention to consider whether to regulate voice and fax
telephony services provided over the Internet as "telecommunications" even
though Internet access itself would not be regulated. We cannot predict whether
in the future the Federal Communications Commission will modify its current
policies regarding the regulation of Internet service providers.
ACCESS CHARGES. EarthLink also could be affected by any change in the
ability of customers to reach our network through a dial-up telephone call
without any additional charges. This practice has allowed Internet service
providers to offer flat-rate, non-usage sensitive pricing, and has been an
important reason for the growth in Internet use. Recently, the Federal
Communications Commission ruled that connections linking end users to their
Internet service providers are jurisdictionally interstate rather than local,
but the Federal Communications Commission did not subject such calling to the
access charges that apply to traditional telecommunications companies. Local
telephone companies assess access charges to long distance companies for the use
of the local telephone network to originate and terminate long-distance calls,
generally on a per-minute basis. EarthLink could be adversely affected by any
regulatory change that would result in application of access charges to Internet
service because this would substantially increase the cost of using the
Internet. However, the FCC Chairman has stated that he opposes Internet-related
access charges, and we believe that this development is
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unlikely, with one possible exception that is not currently relevant to our
business. Specifically, there is substantial debate as to whether carrier access
charges should apply to Internet-based telephone services that substitute for
conventional telephony. We have no current plans to install gateway equipment
and other telephony, thus we believe we would not be directly affected by these
developments were they to occur.
POTENTIAL LIABILITY. The law relating to the liability of Internet
service providers and on-line services companies for information carried on,
stored on, or disseminated through their network is unsettled, even with the
recent enactment of the Digital Millennium Copyright Act. While no one has
ever filed a claim against EarthLink relating to information carried on,
stored on, or disseminated through their network, someone may file a claim of
that type in the future and may be successful in imposing liability on us. If
that happens, we may have to spend significant amounts of money to defend
ourselves against these claims and, if we are not successful in our defense,
the amount of damages that we will have to pay may be significant. Any costs
that we incur as a result of defending these claims or the amount of
liability that we may suffer if our defense is not successful could
materially adversely affect our business, financial condition and results of
operations.
If, as the law in this area develops, we become liable for information
carried on, stored on, or disseminated through our network, we may decide to
take actions to reduce our exposure to this type of liability. This may require
us to spend significant amounts of money for new equipment and may also require
us to discontinue offering some of our products or services.
OTHER ISSUES. Due to the increasing popularity and use of the Internet, it
is possible that additional laws and regulations may be adopted with respect to
the Internet, covering issues such as:
- content;
- privacy;
- access to some types of content by minors;
- pricing;
- bulk e-mail or "spam;"
- encryption standards;
- consumer protection;
- electronic commerce;
- taxation;
- copyright infringement; and
- other intellectual property issues.
We cannot predict the impact, if any, that any future regulatory changes or
developments may have on our business, financial condition, and results of
operations. Changes in the regulatory environment relating to the Internet
access industry, including regulatory changes that directly or indirectly affect
telecommunication costs or increase the likelihood or scope of competition from
regional telephone companies or others, could have a material adverse effect on
our business, financial condition and results of operations.
8
<PAGE>
EARTHLINK'S STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY REGARDLESS OF
EARTHLINK'S ACTUAL OPERATING PERFORMANCE.
EarthLink common stock is listed for trading on the Nasdaq National
Market. The trading price of EarthLink's common stock is highly volatile.
EarthLink's stock price could be subject to wide fluctuations in response to
a variety of factors, including:
- actual or anticipated variations in quarterly operating results and
announcements of technological innovations;
- new products or services offered by EarthLink or its competitors;
- changes in financial estimates by securities analysts;
- conditions or trends in the Internet services industry and the portal and
community services segment in particular;
- EarthLink's announcement of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
- additions or departures of key personnel;
- sales of common stock; and
- other events that may be beyond EarthLink's control.
In addition, the Nasdaq National Market, where most publicly-held Internet
companies are traded, has recently experienced extreme price and volume
fluctuations. These fluctuations often have been unrelated or disproportionate
to the operating performance of these companies. The trading prices of many
Internet companies' stocks are, or recently have been, at or near historical
highs and these trading prices and multiples are substantially above historical
levels. These trading prices and multiples may not be sustainable. These broad
market and industry factors may materially adversely affect the market price of
EarthLink's common stock, regardless of EarthLink's actual operating
performance. In the past, following periods of volatility in the market price of
an individual company's securities, securities class action litigation often has
been instituted against that company. This type of litigation, if instituted,
could result in substantial costs and a diversion of management's attention and
resources.
9
<PAGE>
ABOUT EARTHLINK
EarthLink, based in Atlanta, Georgia is one of the leading Internet
service providers in the world, providing reliable nationwide Internet access
and related value-added services to approximately 3.5 million individual and
business customers. We provide a full range of access, hosting and e-commerce
solutions to thousands of communities from more than 5,000 points of presence.
We were formed in February 2000 as a result of the merger of EarthLink Network,
Inc. and MindSpring Enterprises, Inc.
In September 2000, EarthLink completed its acquisition of
OneMain.com, a Reston, Virginia based Internet service provider. OneMain,
which offered a full range of dial-up, dedicated access, broadband, hosting
and wireless Internet services, had approximately subscribers in 35
states.
EarthLink's growth has resulted from strategic acquisitions as well as
traditional marketing channels and alliances. Our organic growth is a product of
our efforts to enhance our members' Internet experience through (1) simple,
rapid and reliable access to the Internet, (2) superior member service and
technical support, and (3) member education and support. As a result, we believe
that we have a high member retention rate for our industry.
Our corporate offices are located at 1430 West Peachtree St., Suite
400, Atlanta, Georgia 30309 and our telephone number at that address is (404)
815-0770.
SERVICES
Our primary service offerings include:
- dial-up Internet access,
- high speed access via dedicated circuits, DSL or cable modem,
- web hosting,
- content, commerce, and advertising;
- domain name registration; and
- e-commerce solutions.
These services are offered in various competitively priced plans
designed to meet the needs of our members. Our Internet access software
incorporates a telephone dialer and email program with several leading
third-party Internet access tools, including our own proprietary browser as well
as the latest browsers from Netscape and Microsoft. This software provides a
functional, easy-to-use Internet access solution for Windows and Macintosh
platforms. The software automatically installs these and other software
applications on member computers. The simple point-and-click functionality of
our software, combined with its easy-to-use multimedia registration and
installation system, permits online credit card registration, allowing both our
novice and experienced members to quickly set up access to the Internet.
In October 1999, we introduced our new access software and online
interface, EarthLink 5.0. EarthLink 5.0 is designed to provide members with an
intuitive, all-in-one Internet environment. It allows for customization and
personalization, letting EarthLink members take advantage of the power, speed
and scope of a direct Internet connection through one fully-integrated user
interface. Members need only click a button to access the Web, email, chat or
other Internet applications. In addition to a one-stop Internet environment,
EarthLink 5.0's feature set includes an intuitive multimedia-aided account setup
process, full management of user profiles and locations, seamless setup multiple
personalization and productivity options.
KEY BUSINESS AREAS
Our key business areas are as follows:
NARROWBAND ACCESS
As of June 30, 2000 we had approximately 3.5 million narrowband
members. Narrowband access revenues consist primarily of monthly fees charged
to members for dial-up Internet access. Narrowband revenues were $582.9
million or 87% of our total revenues in 1999 and $381.8 million or 85% of our
total revenues in the six months ended June 30, 2000.
WEB HOSTING
We lease server space and provide web services to companies and
individuals wishing to have a web or e-commerce presence. As of June 30, 2000,
we hosted approximately 135,000 web sites compared to 109,000 as of December 31,
1999, a 24% increase. EarthLink's web hosting revenues were $47.4 million or 7%
of total revenues in 1999 and $32.3 million or 7% of revenues in the six months
ended June 30, 2000.
BROADBAND ACCESS
Broadband access revenues consist of fees charged for high-speed,
high-capacity access services including cable, dedicated circuits and DSL
services. In 1999 our main broadband focus became DSL. As of June 30, 2000, we
serviced 55 broadband markets nationwide. As of June 30, 2000, we had
approximately 80,000 broadband members. Broadband revenues were $23.5 million or
4% of our total revenues in 1999 and $19.3 million or 4% of our total revenues
during the six months ended June 30, 2000.
CONTENT, COMMERCE AND ADVERTISING
We generate content, commerce and advertising revenues by leveraging
the value of our member base and user traffic. The principal component of our
strategy is our Premier Partnership Program, through which we offer and sell
promotional packages that provide advertisers with access to the multiple points
of contact we have with our members. The Premier Partnership Program focuses on
third parties having a natural affinity to and benefit for our member base. The
program generates revenues through (1) sales of banner and other online ads; (2)
fees generated
10
<PAGE>
through revenue sharing arrangements with online retailers who are accessed
through our properties; and, (3) payments for placing links from our
properties to third-party content. We also sell advertising and content space
on our various online properties, such as the Personal Start Page, the Mall
and our online magazine eLink, and through our news magazine, bLink. Content,
commerce and advertising revenues were $16.6 million or 2% if total revenues
for 1999 and $17.2 million or 4% if total revenues for the six months ended
June 30, 2000.
MEMBER AND TECHNICAL SUPPORT
We believe that reliable member and technical support are critical to
retaining existing members and attracting new members. We provide the following
member and technical support services:
- toll-free, live telephone assistance available seven days a
week, 24 hours a day,
- email-based assistance available seven days a week, 24 hours a
day,
- help sites and Internet guide files on the EarthLink Web site,
- automated "fax back" and "fax on demand" assistance, and
- printed reference material.
We also provide dedicated support for business members. In addition, we
maintain newsgroups on the Internet where subscribers can post requests for help
and other subscribers, as well as our own support personnel, can respond.
We currently handle an average of over 60,000 member and technical
support calls a day through our call centers located in Pasadena, California;
Atlanta, Georgia; Harrisburg, Pennsylvania; Phoenix, Arizona; Seattle,
Washington; Sacramento, California; San Jose, California; and Dallas, Texas. We
also contract with call center services vendors whose EarthLink-trained
employees provide additional technical support assistance. We believe the call
centers' technology and systems are scaleable to accommodate call volume growth.
We actively evaluate our call center facilities in order to deliver more
effective and efficient services to our members.
MARKETING CHANNELS
Our sales and marketing efforts consist of the following programs:
ADVERTISING. We advertise our services in print, billboards, electronic
and broadcast media. We maintain a presence at national trade shows such as
Internet World and MacWorld, as well as local and regional trade shows. DIRECT
MARKETING. EarthLink promotes its services directly to members in the form of
disk and coupon distribution through the mail, and through promotional inserts
in packages, periodicals and newspapers.
ORIGINAL EQUIPMENT MANUFACTURER CHANNELS. We have marketing
arrangements with a number of leading hardware and software manufacturers to
include our Internet access software pre-installed on or included with their
products.
AFFINITY MARKETING PROGRAM. Affinity marketing partners such as
Discover Card and AAA of Southern California typically bundle our Internet
access software with their own goods or services to create a package that
promotes EarthLink to potential members.
SPRINT ALLIANCE. Our alliance with Sprint includes a marketing and
distribution arrangement that provides us access to Sprint's branded marketing
and distribution channels in the United States, the right to use Sprint's brand
for a minimum of ten years and a five-year commitment from Sprint to deliver a
minimum of 150,000 new members annually through Sprint's channels. Additionally,
Sprint promotes EarthLink as Sprint's exclusive consumer Internet access
provider. See "Strategic Alliances" below.
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<PAGE>
APPLE ALLIANCE. Although we have been the default ISP in Apple's setup
software on its Macintosh branded line of computers, our new January 5, 2000
Internet services agreement extends the time of our relationship through January
4, 2005. This new agreement also makes us the exclusive default ISP for dial-up,
ISDN and DSL services on Macintosh computers sold in the United States for a
minimum of two years.
MEMBER REFERRAL PROGRAM. We believe that our existing members are among
our most important marketing tools. We currently waive one month of standard
access service fees or grant credit for each member who refers a new member to
our service. These referrals generate a significant percentage of our new
membership.
STRATEGIC ALLIANCES
In June 1998, we entered into a strategic alliance with Sprint
Corporation ("Sprint"). As a part of this alliance, Sprint transferred
approximately 130,000 members to us and is committed to generating at least
150,000 new members for us during each of the succeeding 5 years through their
channels. Additionally, we are co-branded as Sprint's exclusive consumer
Internet access provider, and we have exclusive access to certain dial-up modem
ports in Sprint's network. We also have access to Sprint's marketing and
distribution channels and the right to use Sprint's widely recognized brand
name. In May 2000, pursuant to its `top-up' rights under our strategic alliance
agreements, Sprint purchased approximately $431 million of our stock and
modified certain aspects of our marketing and co-branding arrangements. As the
business relationship between Sprint and EarthLink evolves, we continue to
explore additional and alternative arrangements that will better leverage our
strengths in products and services and better align our business interests and
capabilities.
In January 2000, we entered into a strategic alliance with Apple
Computer, Inc., which we expect to accelerate our member growth. In
connection with this alliance, we expanded our existing commercial
relationship with Apple so that we will serve as the default ISP for Apple's
Macintosh line of computers for a minimum of two years and our overall
commercial relationship has been extended through January 4, 2005. In
connection with creating this alliance, Apple purchased $200 million of our
newly created Series C convertible preferred stock.
TECHNICAL DEVELOPMENT AND SERVICE ENHANCEMENT
We place significant emphasis on expanding and refining our services to
enhance member Internet experience. Our technical staff is engaged in a variety
of technical development and service enhancement activities and continuously
reviews new third-party software products and technology for potential
incorporation into our systems and services. EarthLink 5.0 is a recent product
of these efforts. We also regularly update and expand the online services
provided through the EarthLink Web site, organize Web content and develop online
guides, help screens and other user services and resources.
POPS AND NETWORK INFRASTRUCTURE
We provide our members with Internet access primarily through both
Company managed network and third-party network POPs. Over 90% of the U.S.
population can access our Internet service through a local telephone call. We
have access to third-party provider POPs through network services agreements
with UUNet, PSINet, Level 3, Sprint, Worldcom Advanced Networks (formerly
Gridnet International, L.L.C.), GTE Internetworking Incorporated (formerly BBN
Planet Corporation) and ICG Netahead.
We believe that using a combination of EarthLink-owned POPs and leased
third-party POPs enables us to provide Internet access services on a nationwide
basis while managing the timing and magnitude of our capital expenditures. We
employ a strategy of leasing POPs from third-party providers in locations where
it is more economical to do so. These are typically geographic areas where we
have lower market penetration than areas we serve through EarthLink-owned POPs.
We periodically reevaluate the economics of this strategy and, if warranted, may
install an EarthLink POP to replace or overlap with a third-party POP. Members
located in a geographic area not currently serviced by a local POP can access
the Internet through an 800 service.
12
<PAGE>
We have invested in measures to minimize the effects of damage from
fire, earthquake, power loss, telecommunications failure, computer viruses,
security breaches and similar events or backup Internet services or backbone
facilities or other redundant computing or telecommunications facilities.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On September 12, 2000, Earthlink acquired OneMain. The following
unaudited pro forma condensed combined financial statements give effect to
the acquisition by EarthLink of OneMain in a transaction to be accounted for
as a purchase. The unaudited pro forma condensed combined financial
statements are based on the historical consolidated combined financial
statements and related notes of EarthLink and OneMain, which are incorporated
by reference to this prospectus. The unaudited pro forma condensed combined
balance sheet has been prepared to reflect the acquisition by EarthLink of
OneMain as of June 30, 2000. The unaudited pro forma condensed combined
statements of operations combine the results of operations of EarthLink and
of OneMain for the year ended December 31, 1999 and the six months ended June
30, 2000 as if the acquisition occurred on January 1, 1999. These unaudited
pro forma condensed combined financial statements should be read together
with the financial statements and related notes of EarthLink and OneMain,
both incorporated by reference into this prospectus. The historical financial
statements of OneMain are not necessarily indicative of the financial
condition or results of operations of such operations on a prospective
combined basis.
EarthLink agreed to purchase OneMain for cash and stock valued at
approximately $262 million or approximately $10.06 per share for each of
OneMain's approximately 26 million common shares outstanding plus options and
warrants. The purchase price consists of approximately $155.6 million in cash
and approximately 9.3 million shares of EarthLink common stock valued at
$106.7 million at the Nasdaq closing price of $11.50 on September 11, 2000
(the date prior to the merger).
For purposes of this pro forma information, the purchase price has been
allocated to the assets of OneMain. The excess of the purchase price over the
fair value of the assets acquired has been allocated to goodwill. The final
allocation may differ from that used in the unaudited pro forma condensed
combined financial statements.
The unaudited pro forma condensed combined financial statements are based on
the estimates and assumptions set forth in the notes to such statements, which
are preliminary and have been made solely for purposes of developing such pro
forma information. The unaudited pro forma condensed combined financial
statements are not necessarily indicative of the results that would have been
achieved had such transactions been consummated as of the dates indicated, or
that may be achieved in the future, or the results that would have been realized
had the entities been a single entity during these periods. These unaudited pro
forma condensed combined financial statements should be read together with the
audited historical consolidated combined financial statements and related notes
of EarthLink and OneMain, and other financial information pertaining to
EarthLink and OneMain including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors" from their
respective documents incorporated by reference into this prospectus.
13
<PAGE>
EARTHLINK, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
EARTHLINK ONEMAIN ADJUSTMENTS COMBINED
---------- --------- ----------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................................. $1,069,114 $ 1,332 $(155,550)(a) $ 898,563
(16,333)(b)
Accounts receivable, net.................................. 29,034 9,016 -- 38,050
Other assets.............................................. 35,494 7,324 -- 42,818
---------- --------- --------- ----------
Total current assets.................................... 1,133,642 17,672 (171,883) 979,431
LONG-TERM ASSETS
Investments in other companies............................ 11,500 -- -- 11,500
Restricted marketable securities.......................... -- 2,350 -- 2,350
Other long-term assets.................................... 1,089 1,815 (478)(b) 2,426
Property and equipment, net............................... 193,032 74,122 -- 267,154
Intangibles, net.......................................... 177,543 261,814 262,248 (a)(g) 464,985
(238,088)(a)(g)
6,408 (b)(g)
6,000 (c)(g)
(13,654)(d)(g)
3,539 (e)(g)
964 (f)(g)
(1,789)(f)(g)
---------- --------- --------- ----------
$1,516,806 $ 357,773 $(146,733) $1,727,846
========== ========= ========= ==========
CURRENT LIABILITIES
Trade accounts payable.................................... $ 28,997 $ 15,033 $ 6,000 (c) $ 50,030
Other accounts payable and accrued liabilities............ 142,377 16,696 -- 159,073
Restructuring reserve..................................... -- 6,442 -- 6,442
Current portion of capital lease obligations.............. 9,503 11,870 -- 21,373
Convertible notes......................................... -- 825 -- 825
Deferred revenue.......................................... 33,082 24,673 -- 57,755
---------- --------- --------- ----------
Total current liabilities............................... 213,959 75,539 6,000 295,498
LONG-TERM LIABILITIES
Long-term debt, net of current portion.................... -- 15,912 (10,403)(b) 5,509
Deferred income tax liability............................. -- 13,654 (13,654)(d) --
Long-term portion of capital lease obligations............ 5,672 12,393 -- 18,065
Other liabilities......................................... -- 398 -- 398
---------- --------- --------- ----------
Total liabilities..................................... 219,631 117,896 (18,057) 319,470
STOCKHOLDERS' EQUITY
Preferred stock........................................... 368 -- -- 368
Common stock.............................................. 1,250 25 67 (a) 1,342
Additional paid-in capital................................ 1,807,116 395,792 (395,792)(a) 1,917,261
106,606 (a)
3,539 (e)
Warrants to purchase common stock......................... 448 1,789 964 (f) 1,412
(1,789)(a)
Accumulated deficit....................................... (503,893) (157,729) 157,729 (a) (503,893)
Common stock in treasury, at cost......................... (8,114) -- -- (8,114)
---------- --------- --------- ----------
Total stockholders' equity.............................. 1,297,175 239,877 (128,676) 1,408,376
---------- --------- --------- ----------
$1,516,806 $ 357,773 $(146,733) $1,727,846
========== ========= ========= ==========
</TABLE>
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EARTHLINK, INC.
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
Pro forma adjustments are as follows:
a. Based on the per share prices of EarthLink and OneMain and the effective
exchange ratios at September 11, 2000 (the day prior to the merger), the
aggregate purchase price for OneMain is approximately $262 million. The
purchase price consists of $155.6 million in cash and 9.3 million shares
of EarthLink common stock valued at $106.7 million. In addition, OneMain
options and warrants were converted into EarthLink options and warrants
valued at $4.5 million. This entry reflects the value of cash and EarthLink
common stock given in exchange for OneMain common stock and the value of
options and warrants, to purchase EarthLink common stock, granted to former
holders of OneMain options and warrants, respectively.
b. In connection with a purchase and rights agreement OneMain (i) issued
6.75% convertible debentures, due April 27, 2003, in the aggregate
principal amount of $12 million to purchasers and (ii) 277,777 warrants
at $10.80 per share, dated April 27, 2000, (the "debenture warrants").
OneMain repaid the convertible debentures concurrent with the merger with
EarthLink and incurred a termination payment of $4.3 million. This
adjustment represents (i) the repayment of the $12 million, 6.75%
convertible debentures; (ii) a termination payment of $4.3 million
related to the repayment of the $12 million of debt, (iii) $1.6 million
of unaccreted discount on the $12 million of debt and (iv) $478,000 of
unamortized debt issuance costs.
c. This adjustment reflects the accrual of $6.0 million of estimated costs
resulting from the proposed purchase. These charges include direct
transaction costs including estimated investment banking fees, financial
advisory fees and fees for other professional services. These charges
represent a preliminary estimate only and are subject to change.
d. Management has reviewed their combined deferred tax assets and liabilities
and, based on the anticipated reversal of combined temporary differences,
has determined that it is more likely than not that certain deferred tax
assets will be realized. Accordingly, this adjustment gives effect to the
reduction of the combined valuation allowance. The resulting deferred tax
assets have been netted against the deferred tax liabilities in the
accompanying pro forma balance sheet.
e. This adjustment is to account for the fair value of OneMain stock options
that have been converted into EarthLink stock options. In conjunction
with the merger agreement, EarthLink converted the options granted under
any of the stock option plans of OneMain that were vested and had an
exercise price equal to or less than the final per share price of OneMain
common stock on the consummation date of the merger. The conversion of the
OneMain stock options to EarthLink options was based on the exchange ratio
of the total consideration paid for each share of OneMain common stock
divided by the closing price of EarthLink common stock the day prior to the
merger. This adjustment used an exchange ratio of 0.8748 of a share of
EarthLink common stock for each share of OneMain common stock.
f. In connection with a purchase agreement and rights agreement OneMain (i)
issued 6.75% convertible debentures, due April 27, 2003, in the aggregate
principal amount of $12 million to purchasers and (ii) 277,777 warrants
at $10.80 per share, dated April 27, 2000, (the "debenture warrants"). In
conjunction with the purchase agreement, EarthLink agreed to convert the
debenture warrants to warrants to purchase EarthLink common stock. The
conversion of the OneMain warrants to EarthLink warrants is based on an
exchange ratio determined by dividing the total consideration paid for
each share of OneMain common stock by $17. Based on the per share
consideration paid for each share of OneMain on September 12, 2000,
$10.06, the exchange ratio was determined to be 0.5918. Accordingly, the
holders of the debenture warrants will received 0.5918 warrants to
purchase EarthLink shares at $18.25 per share.
g. These adjustments reflect the preliminary estimate of the fair value of the
assets acquired consisting primarily of the tangible assets of OneMain,
customer lists valued at $187,500 and goodwill of $88,942.
15
<PAGE>
EARTHLINK, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
EARTHLINK PRO FORMA PRO FORMA
AS ADJUSTED(A) ONEMAIN ADJUSTMENTS COMBINED
-------------- --------- ----------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues..................................... $ 450,566 $ 80,699 -- $ 531,265
Operating costs and expenses:
Cost of revenues........................... 146,766 31,385 -- 178,151
Selling, general and administrative and
member support........................... 384,006 59,531 -- 443,537
Merger and restructuring charges........... 33,967 7,179 -- 41,146
Depreciation............................... 29,276 11,612 -- 40,888
Acquisition-related costs.................. 47,866 67,987 $(20,080)(c) 95,773
--------- -------- -------- ---------
641,881 177,694 (20,080) 799,495
--------- -------- -------- ---------
Loss from operations....................... (191,315) (96,995) 20,080 (268,230)
Interest income (expense), net............... 23,411 (1,331) (4,666)(d) 17,414
--------- -------- -------- ---------
Loss before taxes.......................... (167,904) (98,326) 15,414 (250,816)
Income tax benefit........................... -- 22,607 (22,607)(e) --
--------- -------- -------- ---------
Net loss................................... (167,904) (75,719) (7,193) (250,816)
Deductions for accretion of dividends........ (7,611) -- -- (7,611)
--------- -------- -------- ---------
Net loss attributable to common
stockholders............................... $(175,515) $(75,719) $ (7,193) $(258,427)
========= ======== ======== =========
Basic and diluted net loss per share......... $ (1.46) $ (3.02) $ (2.00)
========= ======== =========
Weighted average common shares outstanding... 120,128 25,061 (16,134)(f) 129,055
========= ======== ======== =========
</TABLE>
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<PAGE>
EARTHLINK, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
EARTHLINK ONEMAIN PRO FORMA PRO FORMA
AS ADJUSTED(A) AS ADJUSTED(B) ADJUSTMENTS COMBINED
-------------- -------------- ----------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues.................................. $ 670,433 $ 102,266 -- $ 772,699
Operating costs and expenses:
Cost of revenues........................ 225,046 40,581 -- 265,627
Selling, general and administrative and
member support........................ 451,544 69,756 -- 521,300
Depreciation............................ 41,256 8,889 -- 50,145
Acquisition-related costs............... 148,267 97,774 $ (1,960)(c) 244,081
--------- --------- -------- ----------
866,113 217,000 (1,960) 1,081,153
--------- --------- -------- ----------
Loss from operations.................... (195,680) (114,734) 1,960 (308,454)
Interest income (expense), net............ 21,986 2,529 (9,333)(d) 15,182
--------- --------- -------- ----------
Loss before taxes....................... (173,694) (112,205) (7,373) (293,272)
Income tax benefit........................ -- 13,353 (13,353)(e) --
--------- --------- -------- ----------
Net loss................................ (173,694) (98,852) (20,726) (293,272)
Deductions for accretion of dividends..... (14,106) -- -- (14,106)
--------- --------- -------- ----------
Net loss attributable to common
stockholders............................ $(187,800) $ (98,852) $(20,726) $ (307,378)
========= ========= ======== ==========
Basic and diluted net loss per share...... $ (1.65) $ (4.45) $ (2.53)
========= ========= ==========
Weighted average common shares
outstanding............................. 113,637 22,222 (14,307)(f) 121,552
========= ========= ======== ==========
</TABLE>
17
<PAGE>
EARTHLINK, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
a. This column represents the historical results of operations of EarthLink
except that depreciation expense, which is normally allocated to cost of
revenues and operating expense accounts, has been separately disclosed for
purposes of these statements.
b. This column reflects the pro forma results of operations of OneMain for the
periods presented including the acquisitions of the original 17 Internet
service providers (the "IPO Acquisitions") by OneMain as if the IPO
Acquisitions occurred on January 1, 1999.
c. This entry reflects the amortization of the OneMain customer list and the
excess of the purchase price over net assets acquired over a preliminary
estimate of 36 months. Additional costs to provide service to acquired
customers are not considered material.
d. Represents the reduction to interest income based on the assumption that the
$155.6 million cash component of the cost to purchase OneMain was paid on
January 1, 1999.
e. Management has reviewed their combined deferred tax assets and liabilities
and, based on the anticipated reversal of combined temporary differences,
has determined that it is more likely than not that certain deferred tax
assets will be realized. No income tax benefit has been recorded in the
Combined Pro Forma Results of Operations for the Year Ended December 31,
1999 and the Six Months Ended June 30, 2000 because the combined deferred
tax assets exceed the combined deferred tax liabilities on the date of
purchase and future deferred tax benefits are anticipated to be offset by an
increase in the valuation allowance.
f. Pursuant to the terms of the purchase agreement, each share of OneMain
common stock was exchanged for 0.3562 shares of EarthLink common stock.
18
<PAGE>
USE OF PROCEEDS
All of the net proceeds from the sale of our common stock by the
warrant holders will go to those warrant holders upon sale of such shares.
Accordingly, we will not receive any proceeds from the sales of our shares by
the warrant holders.
WARRANTS
In connection with our acquisition of OneMain, we issued two
warrants to purchase a total of 164,388 shares of our common stock. Strong
River Investments, Inc. and Montrose Investments Ltd. each are the holders of
a warrant to purchase 82,194 shares of our common stock, that are the shares
relating to this prospectus and registered by the registration statement of
which this prospectus is a part. Those shares will be issued to such warrant
holders upon their exercise at an exercise price of $18.25 per share, subject
to adjustment pursuant to the warrants.
The shares are being registered to permit public secondary trading
of the shares so the warrant holders may offer the shares for sale from time
to time. If all of these warrants were exercised for cash at the exercise
price, EarthLink would issue 164,388 shares of common stock to the warrant
holders. Each warrant holder also has the right to pay the exercise price
without making any cash payment, in which event, we will issue to such
warrant holder a reduced number of shares.
Neither of the warrant holders are currently EarthLink stockholders.
At no time did EarthLink have, nor do we currently have, any agreement or
understanding, directly or indirectly, with any warrant holder to distribute
the shares underlying the warrants. To the best of our knowledge, neither of
the warrant holders had or currently has any agreement or understanding,
directly or indirectly, with any person to distribute the shares underlying
the warrants. None of the warrant holders is an affiliate of EarthLink.
EarthLink has filed with the SEC, under the Securities Act, a
registration statement on Form S-3 of which this prospectus forms a part, with
respect to the resale of the shares from time to time on the Nasdaq National
Market or in privately-negotiated transactions.
PLAN OF DISTRIBUTION
The warrant holders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The warrant holders may use any one or more of the following
methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
19
<PAGE>
- broker-dealers may agree with the warrant holders to sell a
specified number of such shares at a stipulated price per
share:
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The warrant holders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The warrant holders may also engage in short sales against the box,
puts and calls and other transactions in securities of EarthLink or
derivatives of EarthLink securities and may sell or deliver shares in
connection with thetrades. The warrant holders may pledge their shares to
their broker under the margin provisions of customer agreements. If a warrant
holder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the warrant holders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the warrant holders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated.
The warrant holders do not expect these commissions and discounts to exceed what
is customary in the types of transactions involved.
The warrant holders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
EarthLink is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
warrant holders. Additionally, we have agreed to indemnify the warrant holders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the EarthLink common stock
underlying the warrants will be passed upon for EarthLink by Hunton &
Williams, Atlanta, Georgia.
EXPERTS
The audited consolidated financial statements of EarthLink, Inc. for the
three years ended December 31, 1999 incorporated in this registration
statement by reference to the Current Report on Form 8-K dated July
7, 2000 and the audited supplemental combined financial statements of EarthLink,
Inc. incorporated in this registration statement by reference to the Annual
Report on Form 10-K for the year ended December 31, 1999, except as they relate
to MindSpring Enterprises, Inc., have been audited by PricewaterhouseCoopers
LLP, independent accountants, and, insofar as they relate to MindSpring
Enterprises, Inc. by Arthur Andersen LLP, independent accountants, whose report
thereon is also incorporated by reference. The audited consolidated financial
statements of EarthLink Network, Inc. incorporated in this registration
statement by reference to the Annual Report on Form 10-K for the year
ended December 31, 1999 and the statement of assets acquired and liabilities
assumed of the Sprint Internet Passport Business acquired by EarthLink Network,
Inc. as of June 5, 1998 incorporated in this registration statement by
reference to the Current Report on Form 8-K dated October 14, 1999 have also
been audited by PricewaterhouseCoopers LLP, independent accountants. Such
financial statements have been so included in reliance on the reports of such
independent accountants given on the authority of such firms as experts in
auditing and accounting.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of OneMain.com, Inc. at December 31, 1998 and 1999, and for
the period from its inception on August 19, 1998 to December 31, 1998 and for
the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. OneMain.com, Inc.'s financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of D&E SuperNet, Inc. at December 31 1998, and for each of the two
years in the period ended December 31, 1998 and the three months ended
March 31, 1999, as set forth in their report, which contains an explanatory
paragraph describing conditions that raise substantial doubt about the ability
of D&E SuperNet, Inc. to continue as a going concern as described in Note 2 to
the financial statements, which is incorporated by reference in this prospectus
and elsewhere in the registration statement. D&E SuperNet, Inc's financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of SunLink, Inc. at December 31, 1998, and for the two years in the
period ended December 31, 1998 and the three months ended March 31, 1999, as set
forth in their report, which contains an explanatory paragraph describing
conditions that raise substantial doubt about the ability of SunLink, Inc. to
continue as a going concern as described in Note 2 to the financial statements,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. SunLink, Inc.'s financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of LebaNet, Inc. at December 31, 1998, and for each of the two years
in the period ended December 31, 1998 and the three months ended March 31, 1999,
as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. LebaNet, Inc.'s
financial statements are
20
<PAGE>
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of SouthWind Internet Access, Inc. at December 31, 1998, and for the
year then ended and the three months ended March 31, 1999, as set forth in their
report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. SouthWind Internet Access, Inc.'s financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Grant Thornton LLP, independent auditors, have audited the financial
statements of SouthWind Internet Access, Inc. for the year ended December 31,
1997, as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. SouthWind Internet
Access, Inc.'s financial statements are incorporated by reference in reliance on
Grant Thornton LLP's report, given on their authority as experts in accounting
and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Horizon Internet Technologies, Inc. at December 31, 1998, and for
each of the two years in the period ended December 31, 1998, and for the three
months ended March 31, 1999, as set forth in their report, which is incorporated
by reference in this prospectus and elsewhere in the registration statement.
Horizon Internet Technologies, Inc.'s financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of United States Internet, Inc. at December 31, 1998, and for the
year then ended and for the three months ended March 31, 1999, as set forth in
their report, which contains an explanatory paragraph describing conditions that
raise substantial doubt about the ability of United States Internet, Inc. to
continue as a going concern as described in Note 2 to the financial statements,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. United States Internet, Inc.'s financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
Coulter & Justus, P.C., independent auditors, have audited the financial
statements of United States Internet, Inc. for the year ended December 31, 1997,
as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. United States
Internet, Inc.'s financial statements are incorporated by reference in reliance
on Coulter & Justus, P.C.'s report, given on their authority as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Internet Partners of America, LC at December 31, 1998, and for
each of the two years in the period ended December 31, 1998, and for the three
months ended March 31, 1999, as set forth in their report, which is incorporated
by reference in this prospectus and elsewhere in the registration statement.
Internet Partners of America, LC's financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of ZoomNet, Inc. at December 31, 1998, and for each of the two years
in the period ended December 31, 1998, and for the three months ended March 31,
1999, as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. ZoomNet, Inc.'s
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Palm.Net, Inc. at December 31, 1998, and for each of the two years
in the period ended December 31, 1998, and for the three months ended March 31,
1999, as set forth in their report, which is incorporated by reference
21
<PAGE>
in this prospectus and elsewhere in the registration statement.
Palm.Net, Inc.'s financial statements are incorporated by reference in reliance
on Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Internet Access Group, Inc. at December 31, 1998, and for each of
the two years in the period ended December 31, 1998, and for the three months
ended March 31, 1999, as set forth in their report, which contains an
explanatory paragraph describing conditions that raise substantial doubt about
the ability of Internet Access Group, Inc. to continue as a going concern as
described in Note 2 to the financial statements, which is incorporated by
reference in this prospectus and elsewhere in the registration statement.
Internet Access Group, Inc.'s financial statements are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Midwest Internet, L.L.C. at December 31, 1998, and for each of the
two years in the period ended December 31, 1998, and for the three months ended
March 31, 1999, as set forth in their report, which is incorporated by reference
in this prospectus and elsewhere in the registration statement. Midwest
Internet, L.L.C.'s financial statements are incorporated by reference in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Internet Solutions, LLC at December 31, 1998, and for the year
then ended and the three months ended March 31, 1999, as set forth in their
report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. Internet Solutions, LLC's financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
Kevin J. Tochtrop, independent auditor, has audited the financial statements
of Internet Solutions, LLC for the year ended December 31, 1997, as set forth in
his report, which is incorporated by reference in this prospectus and elsewhere
in the registration statement. Internet Solutions, LLC's financial statements
are incorporated by reference in reliance on Kevin J. Tochtrop's report, given
on his authority as an expert in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of FGInet, Inc. at December 31, 1998, and for each of the two years
in the period ended December 31, 1998, and for the three months ended March 31,
1999, as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. FGInet, Inc.'s financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of SuperHighway, Inc. d/b/a Indynet at December 31, 1998, and for
each of the two years in the period ended December 31, 1998, and for the three
months ended March 31, 1999, as set forth in their report, which is incorporated
by reference in this prospectus and elsewhere in the registration statement.
SuperHighway, Inc. d/b/a Indynet's financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of LightSpeed Net, Inc. at December 31, 1998, and for each of the two
years in the period ended December 31, 1998, and for the three months ended
March 31, 1999, as set forth in their report, which contains an explanatory
paragraph describing conditions that raise substantial doubt about the ability
of LightSpeed Net, Inc. to continue as a going concern as described in Note 2 to
the financial statements, which is incorporated by reference in this prospectus
and elsewhere in the registration statement. LightSpeed
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<PAGE>
Net, Inc.'s financial statements are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of JPS.Net Corporation at December 31, 1998, and for the period from
its inception on January 31, 1997 to December 31, 1997 and for the year ended
December 31, 1998 and the three months ended March 31, 1999, as set forth in
their report, which contains an explanatory paragraph describing conditions that
raise substantial doubt about the ability of JPS.Net Corporation to continue as
a going concern as described in Note 2 to the financial statements, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. JPS.Net Corporation's financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of TGF Technologies, Inc. for the three months ended March 31, 1999,
as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. TGF
Technologies, Inc.'s financial statements are incorporated by reference in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
The financial statements of TGF Technologies, Inc. at December 31, 1998, and
for each of the two years in the period ended December 31, 1998, incorporated by
reference in this prospectus and registration statement have been audited by
KPMG LLP, independent auditors, as set forth in their report on these financial
statements incorporated by reference in this prospectus and registration
statement, and are included in reliance upon this report given upon the
authority of KPMG as experts in auditing and accounting.
Ernst & Young LLP, independent auditors, have audited the Statement of
Revenues and Direct Expenses of the Consumer Internet Access Services of Sprint
Corporation for the year ended December 31, 1997, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. The Statement of Revenues and Direct Expenses of the
Consumer Internet Access Services of Sprint Corporation is incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses, other
than underwriting discounts and commissions, payable by EarthLink in connection
with the issuance and distribution of the securities being registered:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee...................................... $ 301.08
Printing and Duplicating Expenses..................... $ 2,000
Legal Fees and Expenses............................... $ 10,000
Accounting Fees and Expenses.......................... $ 2,000
Miscellaneous......................................... $ 5,000
TOTAL........................................ $ 19,301.08
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and its
former directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have had
no reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in an action or suit by or in the right of
the corporation, where such person has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that such person fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.
The amended and restated certificate of incorporation EarthLink (the
"Certificate") contains provisions that provide that no director of EarthLink
shall be liable for breach of fiduciary duty as a director except for (1) any
breach of the director's duty of loyalty to EarthLink or its stockholders; (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (3) liability under Section 174 of the DGCL; or
(4) any transaction from which the director derived an improper personal
benefit. EarthLink's Certificate contains provisions that further provide for
the indemnification of directors and officers to the fullest extent permitted by
the DGCL. Under EarthLink's Bylaws, EarthLink is required to advance expenses
incurred by an officer or director in defending any such action if the director
or officer undertakes to repay such amount if it is determined that the director
or officer is not entitled to indemnification. In addition, EarthLink has
entered into indemnity agreements with each of its directors pursuant to which
EarthLink has agreed to indemnify the directors as permitted by the DGCL and has
obtained directors and officers liability insurance.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, EarthLink has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
3.1 -- Amended and Restated Certificate of Incorporation of
EarthLink, as amended (incorporated by reference to
EarthLink's Form S-4 dated January 6, 2000--File No.
333-94177).
3.2 -- Bylaws of EarthLink, as amended (incorporated by reference
to EarthLink's Form S-4 dated January 6, 2000--File No.
333-94177).
4.1 -- Subordinated Debt Indenture (incorporated by reference to
Exhibit 4.3 to MindSpring's Form S-3/A filed on April 7,
1999--File No. 333-74151).
4.2 -- First Supplemental Indenture (incorporated by reference to
Exhibit 4.4 to MindSpring's Form S-3/A filed on April 7,
1999--File No 333-74151).
4.3 -- Second Supplemental Indenture (incorporated by reference
to Exhibit 4.3 to EarthLink's Registration Statement on
Form S-4 -- File No. 333-41064)
5.1 * -- Opinion of Hunton & Williams.
10.1 -- 1995 Stock Option Plan and form of Stock Option Agreement
(incorporated by reference to Exhibit 10.1 to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
10.2 -- (a) Netscape Communications Corporation Internet Service
Provider Navigator Distribution Agreement, dated May 31,
1996, between EarthLink Network, Inc. and Netscape
Communications Corporation (incorporated by reference to
Exhibit 10.6 to EarthLink Network's Registration
Statement on Form S-1--File No. 333-15781).
(b) Amendment No. 1 to Netscape Communications Corporation
Internet Service Provider Agreement (incorporated by
reference to Exhibit 10.6(a) to EarthLink Network's
Registration Statement on Form S-1--File
No. 333-15781).
(c) Amendment No. 2 to Netscape Communications Corporation
Internet Service Provider Agreement (incorporated by
reference to Exhibit 10.6(b) to EarthLink Network's
Registration Statement on Form S-1--File
No. 333-15781).
10.3 -- (a) Network Services Agreement, dated May 31, 1996, between
EarthLink Network, Inc. and UUNET Technologies, Inc.
(incorporated by reference to Exhibit 10.7 to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
(b) Addendum No. 1 to Network Services Agreement
(incorporated by reference to Exhibit 10.7(a) to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
10.4 -- Software Distribution Agreement (MacTCP), dated October 2,
1995, between EarthLink Network, Inc. and Apple Computer,
Inc. (incorporated by reference to Exhibit 10.8 to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
10.5 -- Amended and Restated Employment Agreement (incorporated by
reference to Exhibit 10.8(d) to EarthLink Network's
Registration Statement on Form S-1--File No. 333-53063).
10.6 -- Standard Industrial/Commercial Multi-Tenant Lease, dated
December 1, 1995, between EarthLink Network, Inc. and Becton
Dickinson and Company (incorporated by reference to
Exhibit 10.12 to EarthLink Network's Registration Statement
on Form S-1--File No. 333-15781).
10.7 -- Internet Wizard Sign-Up Agreement, between EarthLink
Network, Inc. and Microsoft Corporation, dated August 16,
1996 (incorporated by reference to Exhibit 10.19 to
EarthLink Network's Registration Statement on
Form S-1--File No. 333-15781).
10.8 -- Network Access Agreement, between EarthLink Network, Inc.
and PSINet, Inc., dated July 22, 1996 and Amendment No. 1 to
Network Access Agreement (incorporated by reference to
Exhibit 10.20 to EarthLink Network's Registration Statement
on Form S-1--File No. 333-15781).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
10.9 -- (a) Office Lease by and between The Mutual Life Insurance
Company of New York, and EarthLink Network, Inc., dated
September 20, 1996 (incorporated by reference to
Exhibit 10.21 to EarthLink Network's Registration
Statement on Form S-1--File No. 333-15781).
(b) Third Amendment to the lease agreement between WHMNY
Real Estate Limited Partnership and EarthLink Network, Inc.
(incorporated by reference to Exhibit 10.1 to EarthLink
Network's Form 10-Q filed on November 16, 1998--File
No. 0-20799).
10.10 -- Amended and Restated Convertible Securities Vesting Plan
(incorporated by reference to Exhibit 10.18 to EarthLink
Network's Report on Form 10-K for the fiscal year ended
December 31, 1997--File No. 0-20799).
10.11 -- (a) Key Employee Compensation Continuation Plan
(incorporated by reference to Exhibit 10.19 to EarthLink
Network's Report on Form 10-K for the fiscal year ended
December 31, 1997--File No. 0-20799).
(b) Amendment to Key Employee Compensation Continuation Plan
(incorporated by reference to Exhibit 10.19(a) to EarthLink
Network's Report on Form 10-K for the fiscal year ended
December 31, 1997--File No. 0-20799).
10.12 -- Governance Agreement, dated as of February 10, 1998,
(incorporated by reference to Exhibit 10.1 to EarthLink
Network's Form 8-K filed on February 10, 1998--File
No. 0-20799).
10.13 -- Credit Agreement, dated as of February 10, 1998, with Sprint
Corporation as the Lender (incorporated by reference to
Exhibit 10.3 to EarthLink Network's Form 8-K filed on
February 10, 1998--File No. 0-20799).
10.14 -- Registration Rights Agreement, dated as of February 10,
1998, with Sprint Corporation, and Sprint Communications
Company L.P. (incorporated by reference to Exhibit 99.1 to
EarthLink Network's Form 8-K filed on February 10,
1998--File No. 0-20799).
10.15 -- Stockholders Agreement, dated as of February 10, 1998, among
EarthLink Network, Inc., Sprint Corporation, Sprint
Communications Company L.P., and the persons identified on
Schedule 1 thereto (incorporated by reference to
Exhibit 99.2 to EarthLink Network's Form 8-K filed on
February 10, 1998--File No. 0-20799).
10.16 -- Marketing and Distribution Agreement, dated as of
February 10, 1998, Sprint Corporation, and Sprint
Communications Company L.P. (incorporated by reference to
Exhibit 10.26 of EarthLink Network's Registration Statement
on Form S-4 filed May 13, 1998--File No. 333-52507).
10.17 -- Lease Agreement, between EarthLink Network Inc. and Prentiss
Properties Natomas, L.P. (incorporated by reference to
Exhibit 10.1 to EarthLink Network's Form 10-Q filed on
September 30, 1999--File No. 0-20799).
10.18 -- Lease Agreement, between Park West E-3 Associates and NETCOM
On-Line Communication Services, Inc., dated February 23,
1996 (incorporated by reference to Exhibit 10.2 to
MindSpring's Form--10-K for the fiscal year ended
December 31, 1998--File No. 0-27890).
10.19 -- Lease Agreement, commencing on November 1, 1995, between
West Peachtree Point Partners, L.P. and MindSpring
Enterprises, Inc. (incorporated by reference to
Exhibit 10(j) to MindSpring's Registration Statement on
Form S-1--File No. 333-108).
10.20 -- First Amendment dated February 6, 1996 to Lease Agreement
dated November 1, 1995 between John Marshall Law School,
Inc. (assignee of West Peachtree Point Partners, L.P.) and
MindSpring Enterprises, Inc. (incorporated by reference to
Exhibit 10(cc) to MindSpring's Registration Statement on
Form S-1--File No. 333-108).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
10.21 -- MindSpring Enterprises, Inc. 1995 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.7 to
MindSpring's Form 10-K for the fiscal year ended
December 31, 1998--File No. 0-27890).
10.22 -- Form of Stock Option Agreement (incorporated by reference to
Exhibit 10(v) to MindSpring's Registration Statement on
Form S-1--File No. 333-108).
10.23 -- MindSpring Enterprises, Inc. 1995 Directors Stock Option
Plan, as amended (incorporated by reference to Exhibit 10.9
to MindSpring's Form 10-K for the fiscal year ended
December 31, 1998--File No. 0-27890).
10.24 -- Form of Director Stock Option Agreement, as amended
(incorporated by reference to Exhibit 10(x) to MindSpring's
Registration Statement on Form S-1--File No. 333-108).
10.25 -- Master Services Agreement, dated July 15, 1996, between
BellSouth Telecommunications, Inc. and MindSpring
Enterprises, Inc. (incorporated by reference to
Exhibit 10(cc) to MindSpring's Form S-1--File
No. 333-10779).
10.26 -- Office Building Lease Agreement, commencing December 15,
1997, between Pennsylvania Dental Service Corporation, a
Pennsylvania corporation d/b/a Delta Dental of Pennsylvania,
and MindSpring Enterprises, Inc. (incorporated by reference
to Exhibit 10.13 to MindSpring's Form 10-K for the fiscal
year ended December 31, 1998--File No. 0-27890).
10.27 -- Lease Agreement effective as of January 1, 1997 by and
between CMS Peachtree, L.P. and MindSpring Enterprises, Inc.
(incorporated by reference to Exhibit 10(hh) to MindSpring's
Form 10-K for the fiscal year ended December 31, 1996--File
No. 0-27890).
10.28 -- Amendment dated June 6, 1997 to Master Services Agreement,
dated July 15, 1996, between BellSouth Telecommunications,
Inc. and MindSpring Enterprises, Inc. (incorporated by
reference to Exhibit 10.1 to MindSpring's Form 10-Q for the
quarter ended June 30, 1997--File No. 0-27890).
10.29 -- Special Service Arrangement Agreement, dated June 1997,
between BellSouth Telecommunications, Inc. and MindSpring
Enterprises, Inc. (a substantially identical contract has
been executed for each of Alabama, Florida, Kentucky, North
Carolina, South Carolina and Tennessee) (incorporated by
reference to Exhibit 10.2 to MindSpring's Form 10-Q for the
quarter ended June 30, 1997--File No. 0-27890).
10.30 -- Lease Agreement dated November 16, 1999, between Kingston
Atlanta Partners, L.P. and MindSpring Enterprises, Inc.
(incorporated by reference to Exhibit 10.38 to EarthLink's
Form S-4 dated January 6, 2000--File No. 333-94177).
10.31 -- First Amendment to Lease, dated October 1, 1999, between
Park West E-3 Associates and NETCOM On-line Communication
Services, Inc. (incorporated by reference to Exhibit 10.39
to EarthLink's Form S-4 dated January 6, 2000--File
No. 333-94177).
10.32 -- Lease Agreement, dated June 30, 1998, between Ryan Southbank
II, L.L.C. and MindSpring Enterprises, Inc. (incorporated by
reference to Exhibit 10.32 to EarthLink's Registration
Statement on Form S-4--File No. 333-41064).
10.33 -- Sublease, dated September 14, 1999, between International
Business Machines Corporation and MindSpring Enterprises,
Inc. (incorporated by reference to Exhibit 10.41 to
EarthLink's Form S-4 dated January 6, 2000--File
No. 333-94177).
10.34 -- Fourth Amendment dated June 24, 1998, to Lease Agreement
dated August 11, 1995 by and among 1430 L.L.C. and
MindSpring Enterprises, Inc. (incorporated by reference to
Exhibit 10.42 to EarthLink's Form S-4 dated January 6,
2000--File No. 333-94177).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
10.35 -- Fifth Amendment dated October 26, 1999 to Lease Agreement
dated August 11, 1995 by and among 1430 L.L.C. and
MindSpring Enterprises, Inc. (incorporated by reference to
Exhibit 10.35 to EarthLink's Registration Statement on Form
S-4--File No. 333-41064).
10.36 -- Amendment dated December 20, 1999, to Office Building Lease
Agreement dated December 15, 1997, between Pennsylvania
Dental Service Corporation and MindSpring Enterprises, Inc.
(incorporated by reference to Exhibit 10.36 to EarthLink's
Registration Statement on Form S-4--File No. 333-41064).
10.37 -- EarthLink Centre Standard Modified Gross Office Lease, dated
October 5, 1999, by and between Limar Realty Corp. #6 and
Earthlink Network, Inc. (incorporated by reference to
Exhibit 10.37 to EarthLink's Registration Statement on Form
S-4--File No. 333-41064).
16.1 -- Letter Regarding Change in Certifying Accountant
(incorporated by reference from Exhibit 99 to Form 8-K filed
on July 6, 2000).
21.1 ** -- Subsidiaries of EarthLink.
23.1 * -- Consent of PricewaterhouseCoopers LLP (EarthLink, Inc. and
EarthLink Network, Inc.).
23.2 * -- Consent of Arthur Andersen LLP (MindSpring Enterprises,
Inc.).
23.3 * -- Consent of Ernst & Young LLP, Independent Auditors
(OneMain.com, Inc.).
23.4 * -- Consent of Ernst & Young LLP, Independent Auditors (D&E
SuperNet, Inc.).
23.5 * -- Consent of Ernst & Young LLP, Independent Auditors (SunLink,
Inc.).
23.6 * -- Consent of Ernst & Young LLP, Independent Auditors (LebaNet,
Inc.).
23.7 * -- Consent of Grant Thornton LLP, Independent Auditors
(Southwind Internet Access, Inc.).
23.8 * -- Consent of Ernst & Young LLP, Independent Auditors
(Southwind Internet Access, Inc.).
23.9 * -- Consent of Ernst & Young LLP, Independent Auditors (Horizon
Internet Techologies, Inc.).
23.10* -- Consent of Coulter & Justus, P.C., Independent Auditors
(United States Internet, Inc.).
23.11* -- Consent of Ernst & Young LLP, Independent Auditors (United
States Internet, Inc.).
23.12* -- Consent of Ernst & Young LLP, Independent Auditors (Internet
Partners of America, LLC).
23.13* -- Consent of Ernst & Young LLP, Independent Auditors (ZoomNet,
Inc.).
23.14* -- Consent of Ernst & Young LLP, Independent Auditors
(Palm.Net, USA, Inc.).
23.15* -- Consent of Ernst & Young LLP, Independent Auditors (Internet
Access Group, Inc.).
23.16* -- Consent of Ernst & Young LLP, Independent Auditors (Midwest
Internet, LLC).
23.17* -- Consent of Kevin J. Tochtrop, Certified Public Accountant,
Independent Auditor (Internet Solutions, LLC).
23.18* -- Consent of Ernst & Young LLP, Independent Auditors (Internet
Solutions LLC).
23.19* -- Consent of Ernst & Young LLP, Independent Auditors (FGInet,
Inc.).
23.20* -- Consent of Ernst & Young LLP, Independent Auditors
(Superhighway, Inc. d/b/a Indynet).
23.21* -- Consent of Ernst & Young LLP, Independent Auditors
(Lightspeed Net, Inc.).
23.22* -- Consent of Ernst & Young LLP, Independent Auditors (JPS.Net
Corporation).
23.23* -- Consent of KPMG LLP, Independent Auditors (TGF Technologies,
Inc.).
23.24* -- Consent of Ernst & Young LLP, Independent Auditors (TGF
Technologies, Inc.).
23.25* -- Consent of Ernst & Young LLP, Independent Auditors (Consumer
Internet Access Services of Sprint Corporation).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
23.26* -- Consent of Hunton & Williams (included in Exhibit 5.1).
24.1* -- Powers of Attorney for EarthLink's directors (included on
signature page hereto).
</TABLE>
-------------------------
* Filed herewith.
** To be filed by amendment.
II-6
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in this registration statement; provided, however,
that subparagraphs (i) and (ii) above shall not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in the periodic
reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby further undertakes that, for
the purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned Registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to existing provisions or arrangements
whereby the Registrant may indemnify a director, officer or controlling person
of the Registrant against liabilities
II-7
<PAGE>
arising under the Securities Act of 1933, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(e) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be a part of this registration statement as of the
time it was declared effective; and
(ii) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(f) The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on this
17th day of October, 2000.
EARTHLINK, INC.
By: /s/ CHARLES G. BETTY
-----------------------------
Charles G. Betty
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Charles G. Betty, Samuel R. DeSimone,
Jr. and Michael S. McQuary, jointly and severally, each in his own capacity,
his true and lawful attorneys-in-fact, with full power of substitution, for
him and his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement, and any registration statement relating to the same offering as
this registration statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents with full power and authority to do so and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated below, on this 17th day of October, 2000.
<TABLE>
<CAPTION>
SIGNATURES TITLE
<S> <C>
/s/ CHARLES G. BETTY Chief Executive Officer and Director
-------------------------------------- (principal executive officer)
Charles G. Betty
/s/ LEE ADREAN Executive Vice President-Finance and Administration
-------------------------------------- and Chief Financial Officer
Lee Adrean (principal financial officer)
/s/ D. CARY SMITH Vice President and Controller
-------------------------------------- (principal accounting officer)
D. Cary Smith
/s/ MICHAEL S. MCQUARY President and Director
--------------------------------------
Michael S. McQuary
/s/ SKY D. DAYTON Chairman of the Board of Directors
--------------------------------------
Sky D. Dayton
/s/ LINWOOD A. LACY, JR. Director
--------------------------------------
Linwood A. Lacy, Jr.
II-9
<PAGE>
/s/ CAMPBELL B. LANIER III Director
--------------------------------------
Campbell B. Lanier III
/s/ WILLIAM H. SCOTT, III Director
--------------------------------------
William H. Scott, III
Director
--------------------------------------
William T. Esrey
/s/ REED E. SLATKIN Director
--------------------------------------
Reed E. Slatkin
Director
--------------------------------------
Len J. Lauer
/s/ PHILIP W. SCHILLER Director
--------------------------------------
Philip W. Schiller
</TABLE>
II-10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
3.1 -- Amended and Restated Certificate of Incorporation of
EarthLink, as amended (incorporated by reference to
EarthLink's Form S-4 dated January 6, 2000--File No.
333-94177).
3.2 -- Bylaws of EarthLink, as amended (incorporated by reference
to EarthLink's Form S-4 dated January 6, 2000--File No.
333-94177).
4.1 -- Subordinated Debt Indenture (incorporated by reference to
Exhibit 4.3 to MindSpring's Form S-3/A filed on April 7,
1999--File No. 333-74151).
4.2 -- First Supplemental Indenture (incorporated by reference to
Exhibit 4.4 to MindSpring's Form S-3/A filed on April 7,
1999--File No 333-74151).
4.3 -- Second Supplemental Indenture (incorporated by reference
to Exhibit 4.3 to EarthLink's Registration Statement on
Form S-4 -- File No. 333-41064)
5.1 * -- Opinion of Hunton & Williams.
10.1 -- 1995 Stock Option Plan and form of Stock Option Agreement
(incorporated by reference to Exhibit 10.1 to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
10.2 -- (a) Netscape Communications Corporation Internet Service
Provider Navigator Distribution Agreement, dated May 31,
1996, between EarthLink Network, Inc. and Netscape
Communications Corporation (incorporated by reference to
Exhibit 10.6 to EarthLink Network's Registration
Statement on Form S-1--File No. 333-15781).
(b) Amendment No. 1 to Netscape Communications Corporation
Internet Service Provider Agreement (incorporated by
reference to Exhibit 10.6(a) to EarthLink Network's
Registration Statement on Form S-1--File
No. 333-15781).
(c) Amendment No. 2 to Netscape Communications Corporation
Internet Service Provider Agreement (incorporated by
reference to Exhibit 10.6(b) to EarthLink Network's
Registration Statement on Form S-1--File
No. 333-15781).
10.3 -- (a) Network Services Agreement, dated May 31, 1996, between
EarthLink Network, Inc. and UUNET Technologies, Inc.
(incorporated by reference to Exhibit 10.7 to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
(b) Addendum No. 1 to Network Services Agreement
(incorporated by reference to Exhibit 10.7(a) to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
10.4 -- Software Distribution Agreement (MacTCP), dated October 2,
1995, between EarthLink Network, Inc. and Apple Computer,
Inc. (incorporated by reference to Exhibit 10.8 to EarthLink
Network's Registration Statement on Form S-1--File
No. 333-15781).
10.5 -- Amended and Restated Employment Agreement (incorporated by
reference to Exhibit 10.8(d) to EarthLink Network's
Registration Statement on Form S-1--File No. 333-53063).
10.6 -- Standard Industrial/Commercial Multi-Tenant Lease, dated
December 1, 1995, between EarthLink Network, Inc. and Becton
Dickinson and Company (incorporated by reference to
Exhibit 10.12 to EarthLink Network's Registration Statement
on Form S-1--File No. 333-15781).
10.7 -- Internet Wizard Sign-Up Agreement, between EarthLink
Network, Inc. and Microsoft Corporation, dated August 16,
1996 (incorporated by reference to Exhibit 10.19 to
EarthLink Network's Registration Statement on
Form S-1--File No. 333-15781).
10.8 -- Network Access Agreement, between EarthLink Network, Inc.
and PSINet, Inc., dated July 22, 1996 and Amendment No. 1 to
Network Access Agreement (incorporated by reference to
Exhibit 10.20 to EarthLink Network's Registration Statement
on Form S-1--File No. 333-15781).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
10.9 -- (a) Office Lease by and between The Mutual Life Insurance
Company of New York, and EarthLink Network, Inc., dated
September 20, 1996 (incorporated by reference to
Exhibit 10.21 to EarthLink Network's Registration
Statement on Form S-1--File No. 333-15781).
(b) Third Amendment to the lease agreement between WHMNY
Real Estate Limited Partnership and EarthLink Network, Inc.
(incorporated by reference to Exhibit 10.1 to EarthLink
Network's Form 10-Q filed on November 16, 1998--File
No. 0-20799).
10.10 -- Amended and Restated Convertible Securities Vesting Plan
(incorporated by reference to Exhibit 10.18 to EarthLink
Network's Report on Form 10-K for the fiscal year ended
December 31, 1997--File No. 0-20799).
10.11 -- (a) Key Employee Compensation Continuation Plan
(incorporated by reference to Exhibit 10.19 to EarthLink
Network's Report on Form 10-K for the fiscal year ended
December 31, 1997--File No. 0-20799).
(b) Amendment to Key Employee Compensation Continuation Plan
(incorporated by reference to Exhibit 10.19(a) to EarthLink
Network's Report on Form 10-K for the fiscal year ended
December 31, 1997--File No. 0-20799).
10.12 -- Governance Agreement, dated as of February 10, 1998,
(incorporated by reference to Exhibit 10.1 to EarthLink
Network's Form 8-K filed on February 10, 1998--File
No. 0-20799).
10.13 -- Credit Agreement, dated as of February 10, 1998, with Sprint
Corporation as the Lender (incorporated by reference to
Exhibit 10.3 to EarthLink Network's Form 8-K filed on
February 10, 1998--File No. 0-20799).
10.14 -- Registration Rights Agreement, dated as of February 10,
1998, with Sprint Corporation, and Sprint Communications
Company L.P. (incorporated by reference to Exhibit 99.1 to
EarthLink Network's Form 8-K filed on February 10,
1998--File No. 0-20799).
10.15 -- Stockholders Agreement, dated as of February 10, 1998, among
EarthLink Network, Inc., Sprint Corporation, Sprint
Communications Company L.P., and the persons identified on
Schedule 1 thereto (incorporated by reference to
Exhibit 99.2 to EarthLink Network's Form 8-K filed on
February 10, 1998--File No. 0-20799).
10.16 -- Marketing and Distribution Agreement, dated as of
February 10, 1998, Sprint Corporation, and Sprint
Communications Company L.P. (incorporated by reference to
Exhibit 10.26 of EarthLink Network's Registration Statement
on Form S-4 filed May 13, 1998--File No. 333-52507).
10.17 -- Lease Agreement, between EarthLink Network Inc. and Prentiss
Properties Natomas, L.P. (incorporated by reference to
Exhibit 10.1 to EarthLink Network's Form 10-Q filed on
September 30, 1999--File No. 0-20799).
10.18 -- Lease Agreement, between Park West E-3 Associates and NETCOM
On-Line Communication Services, Inc., dated February 23,
1996 (incorporated by reference to Exhibit 10.2 to
MindSpring's Form--10-K for the fiscal year ended
December 31, 1998--File No. 0-27890).
10.19 -- Lease Agreement, commencing on November 1, 1995, between
West Peachtree Point Partners, L.P. and MindSpring
Enterprises, Inc. (incorporated by reference to
Exhibit 10(j) to MindSpring's Registration Statement on
Form S-1--File No. 333-108).
10.20 -- First Amendment dated February 6, 1996 to Lease Agreement
dated November 1, 1995 between John Marshall Law School,
Inc. (assignee of West Peachtree Point Partners, L.P.) and
MindSpring Enterprises, Inc. (incorporated by reference to
Exhibit 10(cc) to MindSpring's Registration Statement on
Form S-1--File No. 333-108).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
10.21 -- MindSpring Enterprises, Inc. 1995 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.7 to
MindSpring's Form 10-K for the fiscal year ended
December 31, 1998--File No. 0-27890).
10.22 -- Form of Stock Option Agreement (incorporated by reference to
Exhibit 10(v) to MindSpring's Registration Statement on
Form S-1--File No. 333-108).
10.23 -- MindSpring Enterprises, Inc. 1995 Directors Stock Option
Plan, as amended (incorporated by reference to Exhibit 10.9
to MindSpring's Form 10-K for the fiscal year ended
December 31, 1998--File No. 0-27890).
10.24 -- Form of Director Stock Option Agreement, as amended
(incorporated by reference to Exhibit 10(x) to MindSpring's
Registration Statement on Form S-1--File No. 333-108).
10.25 -- Master Services Agreement, dated July 15, 1996, between
BellSouth Telecommunications, Inc. and MindSpring
Enterprises, Inc. (incorporated by reference to
Exhibit 10(cc) to MindSpring's Form S-1--File
No. 333-10779).
10.26 -- Office Building Lease Agreement, commencing December 15,
1997, between Pennsylvania Dental Service Corporation, a
Pennsylvania corporation d/b/a Delta Dental of Pennsylvania,
and MindSpring Enterprises, Inc. (incorporated by reference
to Exhibit 10.13 to MindSpring's Form 10-K for the fiscal
year ended December 31, 1998--File No. 0-27890).
10.27 -- Lease Agreement effective as of January 1, 1997 by and
between CMS Peachtree, L.P. and MindSpring Enterprises, Inc.
(incorporated by reference to Exhibit 10(hh) to MindSpring's
Form 10-K for the fiscal year ended December 31, 1996--File
No. 0-27890).
10.28 -- Amendment dated June 6, 1997 to Master Services Agreement,
dated July 15, 1996, between BellSouth Telecommunications,
Inc. and MindSpring Enterprises, Inc. (incorporated by
reference to Exhibit 10.1 to MindSpring's Form 10-Q for the
quarter ended June 30, 1997--File No. 0-27890).
10.29 -- Special Service Arrangement Agreement, dated June 1997,
between BellSouth Telecommunications, Inc. and MindSpring
Enterprises, Inc. (a substantially identical contract has
been executed for each of Alabama, Florida, Kentucky, North
Carolina, South Carolina and Tennessee) (incorporated by
reference to Exhibit 10.2 to MindSpring's Form 10-Q for the
quarter ended June 30, 1997--File No. 0-27890).
10.30 -- Lease Agreement dated November 16, 1999, between Kingston
Atlanta Partners, L.P. and MindSpring Enterprises, Inc.
(incorporated by reference to Exhibit 10.38 to EarthLink's
Form S-4 dated January 6, 2000--File No. 333-94177).
10.31 -- First Amendment to Lease, dated October 1, 1999, between
Park West E-3 Associates and NETCOM On-line Communication
Services, Inc. (incorporated by reference to Exhibit 10.39
to EarthLink's Form S-4 dated January 6, 2000--File
No. 333-94177).
10.32 -- Lease Agreement, dated June 30, 1998, between Ryan Southbank
II, L.L.C. and MindSpring Enterprises, Inc. (incorporated by
reference to Exhibit 10.32 to EarthLink's Registration
Statement on Form S-4--File No. 333-41064).
10.33 -- Sublease, dated September 14, 1999, between International
Business Machines Corporation and MindSpring Enterprises,
Inc. (incorporated by reference to Exhibit 10.41 to
EarthLink's Form S-4 dated January 6, 2000--File
No. 333-94177).
10.34 -- Fourth Amendment dated June 24, 1998, to Lease Agreement
dated August 11, 1995 by and among 1430 L.L.C. and
MindSpring Enterprises, Inc. (incorporated by reference to
Exhibit 10.42 to EarthLink's Form S-4 dated January 6,
2000--File No. 333-94177).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
10.35 -- Fifth Amendment dated October 26, 1999 to Lease Agreement
dated August 11, 1995 by and among 1430 L.L.C. and
MindSpring Enterprises, Inc. (incorporated by reference to
Exhibit 10.35 to EarthLink's Registration Statement on Form
S-4--File No. 333-41064).
10.36 -- Amendment dated December 20, 1999, to Office Building Lease
Agreement dated December 15, 1997, between Pennsylvania
Dental Service Corporation and MindSpring Enterprises, Inc.
(incorporated by reference to Exhibit 10.36 to EarthLink's
Registration Statement on Form S-4--File No. 333-41064).
10.37 -- EarthLink Centre Standard Modified Gross Office Lease, dated
October 5, 1999, by and between Limar Realty Corp. #6 and
Earthlink Network, Inc. (incorporated by reference to
Exhibit 10.37 to EarthLink's Registration Statement on Form
S-4--File No. 333-41064).
16.1 -- Letter Regarding Change in Certifying Accountant
(incorporated by reference from Exhibit 99 to Form 8-K filed
on July 6, 2000).
21.1 ** -- Subsidiaries of EarthLink.
23.1 * -- Consent of PricewaterhouseCoopers LLP (EarthLink, Inc. and
EarthLink Network, Inc.).
23.2 * -- Consent of Arthur Andersen LLP (MindSpring Enterprises,
Inc.).
23.3 * -- Consent of Ernst & Young LLP, Independent Auditors
(OneMain.com, Inc.).
23.4 * -- Consent of Ernst & Young LLP, Independent Auditors (D&E
SuperNet, Inc.).
23.5 * -- Consent of Ernst & Young LLP, Independent Auditors (SunLink,
Inc.).
23.6 * -- Consent of Ernst & Young LLP, Independent Auditors (LebaNet,
Inc.).
23.7 * -- Consent of Grant Thornton LLP, Independent Auditors
(Southwind Internet Access, Inc.).
23.8 * -- Consent of Ernst & Young LLP, Independent Auditors
(Southwind Internet Access, Inc.).
23.9 * -- Consent of Ernst & Young LLP, Independent Auditors (Horizon
Internet Techologies, Inc.).
23.10* -- Consent of Coulter & Justus, P.C., Independent Auditors
(United States Internet, Inc.).
23.11* -- Consent of Ernst & Young LLP, Independent Auditors (United
States Internet, Inc.).
23.12* -- Consent of Ernst & Young LLP, Independent Auditors (Internet
Partners of America, LLC).
23.13* -- Consent of Ernst & Young LLP, Independent Auditors (ZoomNet,
Inc.).
23.14* -- Consent of Ernst & Young LLP, Independent Auditors
(Palm.Net, USA, Inc.).
23.15* -- Consent of Ernst & Young LLP, Independent Auditors (Internet
Access Group, Inc.).
23.16* -- Consent of Ernst & Young LLP, Independent Auditors (Midwest
Internet, LLC).
23.17* -- Consent of Kevin J. Tochtrop, Certified Public Accountant,
Independent Auditor (Internet Solutions, LLC).
23.18* -- Consent of Ernst & Young LLP, Independent Auditors (Internet
Solutions LLC).
23.19* -- Consent of Ernst & Young LLP, Independent Auditors (FGInet,
Inc.).
23.20* -- Consent of Ernst & Young LLP, Independent Auditors
(Superhighway, Inc. d/b/a Indynet).
23.21* -- Consent of Ernst & Young LLP, Independent Auditors
(Lightspeed Net, Inc.).
23.22* -- Consent of Ernst & Young LLP, Independent Auditors (JPS.Net
Corporation).
23.23* -- Consent of KPMG LLP, Independent Auditors (TGF Technologies,
Inc.).
23.24* -- Consent of Ernst & Young LLP, Independent Auditors (TGF
Technologies, Inc.).
23.25* -- Consent of Ernst & Young LLP, Independent Auditors (Consumer
Internet Access Services of Sprint Corporation).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <C> <S>
23.26* -- Consent of Hunton & Williams (included in Exhibit 5.1).
24.1* -- Powers of Attorney for EarthLink's directors (included on
signature page hereto).
</TABLE>
-------------------------
* Filed herewith.
** To be filed by amendment.
