Earthlink 2014 Annual Report Download - page 31

Table of Contents
During the third quarter of 2014, we were restricted from repurchasing our common stock because we did not maintain a consolidated net
leverage ratio of not greater than 3.0 to 1.0 during the twelve months ended June 30, 2014. While as of December 31, 2014 we maintained a
consolidated net leverage ratio of not greater than 3.0 to 1.0, there are no assurances that this ratio will not increase over this level in the future.
Risks Related to Ownership of Our Common Stock
We may reduce, or cease payment of, quarterly cash dividends.
The payment of future quarterly dividends is discretionary and is subject to determination by our Board of Directors each quarter following its
review of our financial condition, results of operations, cash requirements and such other factors as are deemed relevant by our Board of
Directors. Changes in our business needs, including funding for acquisitions, capital expenditures, debt servicing and working capital, or a
change in tax laws relating to dividends, among other factors, could cause our Board of Directors to decide to reduce, or cease the payment of,
dividends in the future. In addition, the agreements governing our Senior Secured Notes, Senior Notes and senior secured revolving credit
facility contain restrictions on the amount of dividends we can pay. There can be no assurance that we will not decrease or discontinue quarterly
cash dividends, and if we do, our stock price could be negatively impacted.
Our stock price may be volatile.
The trading price of our common stock may be subject to fluctuations in response to certain events and factors, such as quarterly variations in
results of operations; entry into business combinations or other major transactions; changes in our business strategy; changes in financial
estimates; changes in recommendations or reduced coverage by securities analysts; the operating and stock price performance of other
companies that investors may deem comparable to us; news reports relating to trends in the markets in which we operate; market trends
unrelated to our performance; and general economic conditions. A significant drop in our stock price could also expose us to the risk of
securities class action lawsuits, which could result in substantial costs and divert management's attention and resources, which could adversely
affect our business. Finally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key
employees, many of whom have been granted stock incentive awards.
Provisions of our certificate of incorporation, bylaws and other elements of our capital structure could limit our share price and delay a
change of control of the company.
Our certificate of incorporation and bylaws contain provisions that could make it more difficult or even prevent a third party from acquiring us
without the approval of our incumbent Board of Directors. These provisions, among other things, limit the right of stockholders to call special
meetings of stockholders and authorize the Board of Directors to issue preferred stock in one or more series without any action on the part of
stockholders. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock and
significantly impede the ability of the holders of our common stock to change control of the company. These provisions that inhibit or
discourage takeover attempts could reduce the market value of our common stock.
Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and
proceedings that may be initiated by our stockholders, which could limit our stockholders
’ flexibility in obtaining a judicial forum for
disputes with us or our directors, officers or employees.
Our bylaws provide that, unless we
consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach
of a fiduciary duty owed by any of our current or former directors, officers or other employees or agents to us or our stockholders, (iii) any
action asserting a claim against us or any of our directors or officers or other employees arising
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incur or guarantee additional indebtedness or issue preferred stock;
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pay dividends or make other distributions to stockholders;
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purchase or redeem capital stock or subordinated indebtedness;
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make investments;
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create liens or use assets as security;
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enter into agreements restricting such restricted subsidiaries' ability to pay dividends, make loans or transfer assets to us or other
restricted subsidiaries;
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engage in transactions with affiliates; and
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consolidate or merge with or into other companies or transfer all or substantially all of our or their assets.