III. The Proposed Transaction

On December 12, 2005, New Edge Holding, New Edge Merger Corporation (MergerCo), and EarthLink executed an agreement and Plan of Merger (Agreement). Pursuant to the Agreement, MergerCo, a wholly-owned subsidiary of EarthLink, will merge with New Edge Holding, the parent of New Edge, with New Edge Holding continuing as the surviving corporation. After the proposed transaction is effected, New Edge will remain a separate company and a wholly-owned subsidiary of New Edge Holding, which in turn will be a wholly-owned subsidiary of EarthLink. New Edge will continue to operate as a separate company under its current name as a wholly-owned indirect subsidiary of EarthLink, in substantially the same manner as it has in the past. Upon completion of the merger, EarthLink will control New Edge through the ownership of 100 percent of the outstanding common stock of new Edge Holding. Thus, after the proposed transaction, New Edge will have a different capital structure and a new controlling stockholder. The structure of the proposed transaction is shown in the diagram in Exhibit 3 to the application.