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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
(INCLUDING REGISTRATION OF SHARES FOR RESALE
UNDER A FORM S-3 PROSPECTUS)
UNDER
THE SECURITIES ACT OF 1933
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AT HOME CORPORATION
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 77-0408542
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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425 BROADWAY STREET
REDWOOD CITY, CALIFORNIA 94063
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
1998 NARRATIVE EQUITY INCENTIVE PLAN
1995 NARRATIVE STOCK OPTION PLAN
(FULL TITLES OF THE PLANS)
KENNETH A. GOLDMAN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
AT HOME CORPORATION
425 BROADWAY STREET
REDWOOD CITY, CALIFORNIA 94063
(650) 569-5000
(NAME, ADDRESS AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
GORDON K. DAVIDSON, ESQ.
THOMAS J. HALL, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
(650) 494-0600
(COUNSEL TO THE REGISTRANT)
CALCULATION OF REGISTRATION FEE
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PROPOSED
AMOUNT MAXIMUM PROPOSED
TITLE OF SECURITIES TO BE TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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Series A common stock, $.01 par
value......................... 35,324(1) $49.50(2) $1,748,538(2) $487
Series A common stock, $.01 par
value......................... 1,143,790(3) $28.2524(4) $32,314,903(5) $8,984(5)
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Total................. 1,179,114 $34,063,441 $9,471
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(1) Represents 16,000 shares reserved for issuance upon the exercise of stock
options that may be granted under the Narrative 1998 Equity Incentive Plan,
and 19,324 shares issued by the Registrant pursuant to the exercise of
options granted under the Narrative 1995 Stock Option Plan.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) of the Securities Act of
1933, as amended (the "Securities Act"), based on the average of the high
and low prices of the Registrant's Series A common stock as reported by the
Nasdaq National Market on June 17, 1999.
(3) Represents the aggregate of 884,000 shares subject to options outstanding
under the Narrative 1998 Equity Incentive Plan and 259,790 shares subject to
options outstanding under the Narrative 1995 Stock Option Plan.
(4) Weighted average per share exercise price for such outstanding options.
(5) Calculated based on the weighted average per share exercise price, pursuant
to Rule 457(h)(1) of the Securities Act.
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PROSPECTUS
EXCITE@HOME
AT HOME CORPORATION
19,324 Shares of Series A Common Stock
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Excite@Home's Series A common stock trades on the Nasdaq National Market.
Last reported sale price on June 23, 1999: $56.4375 per share.
Trading symbol: ATHM
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THE OFFERING
Under this prospectus, the selling stockholders named in this prospectus or
in prospectus supplements may offer and sell shares of our Series A common stock
that they acquired upon the exercise of options originally granted under the
Narrative Communications Corp. 1995 Stock Option Plan and assumed by us upon our
acquisition of Narrative.
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INVESTING IN OUR SERIES A COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PLEASE CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is June 24, 1999
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TABLE OF CONTENTS
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Prospectus Summary.................. 3
Risk Factors........................ 4
Use of Proceeds..................... 13
Dividend Policy..................... 14
Selling Stockholders................ 14
Plan of Distribution................ 15
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Legal Matters....................... 16
Experts............................. 16
Forward-Looking Statements.......... 16
Where You Can Find More
Information....................... 17
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all the information you should
consider before buying shares in this offering. You should read the entire
prospectus carefully. Unless the context otherwise requires, the terms we, our,
us, the company and Excite@Home refer to At Home Corporation, a Delaware
corporation. Each of the share numbers in this prospectus, including those dated
as of a date prior to June 16, 1999, have been adjusted to reflect the
two-for-one split of our common stock on June 16, 1999.
AT HOME CORPORATION
We are the leading provider of broadband Internet services, content and
advertising over the cable television infrastructure. Our primary offering, the
@Home service, allows residential subscribers to connect their personal
computers through cable television wiring infrastructures to our high-speed
Internet backbone network. For businesses, our @Work services provide a platform
for Internet, intranet and extranet connectivity solutions and networked
business applications over both cable infrastructures and digital
telecommunications lines.
Our Excite subsidiary operates two Internet portal sites, www.excite.com
and www.webcrawler.com, which are currently accessible on the World Wide Web.
Our @Media group has established the @Home launch screen as the leading
broadband Internet portal, providing a gateway to compelling multimedia and
electronic commerce offerings on the Internet.
Excite's MatchLogic division and our Enliven business unit provide us with
the capabilities to offer advertisers a unified way to target, measure and
report advertising on all devices on which the @Home service is offered.
Our principal executive offices are located at 425 Broadway Street, Redwood
City, California 94063. The primary telephone number for our principal executive
offices is (650) 569-5000.
THE OFFERING
Each of the shares that may be offered under this prospectus were issued by
us upon the exercise of options originally granted under the Narrative
Communications Corp. 1995 Stock Option Plan. We assumed these options as part of
our acquisition of Narrative in December 1998. These shares are being offered on
a continuous basis under Rule 415 of the Securities Act.
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Series A common stock that may be offered by
selling stockholders............................. 19,324 shares
Series A common stock to be outstanding after this
offering......................................... 331,178,234 shares*
Use of proceeds.................................... We will not receive
any proceeds.
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* Based on the number of shares outstanding as of June 16, 1999, and adjusted to
reflect the two-for-one stock split.
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RISK FACTORS
An investment in our Series A common stock involves a high degree of risk.
You should carefully consider the following risk factors and the other
information in this prospectus before investing in our Series A common stock.
Our business and results of operations could be seriously harmed by any of the
following risks. The trading price of our Series A common stock could decline
due to any of these risks, and you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
WE HAVE INCURRED AND EXPECT TO INCUR SUBSTANTIAL LOSSES
We were incorporated in March 1995, commenced operations in August 1995,
and have incurred net losses from operations in each fiscal period since our
inception. As of March 31, 1999, we had an accumulated deficit of $245.3
million. In addition, we currently intend to increase capital expenditures and
operating expenses in order to expand our network and to market and provide our
services to a growing number of potential subscribers. As a result, we expect to
incur additional net losses before cost and amortization of distribution
agreements and amortization of goodwill and other intangible assets for at least
the next two quarters.
OUR BUSINESS IS UNPROVEN, AND WE MAY NOT ACHIEVE PROFITABILITY
The profit potential of our business model is unproven. The @Home service
was available only in portions of 68 geographic markets as of March 31, 1999 and
may not achieve broad consumer or commercial acceptance. Although approximately
2,200 primarily small- and medium-sized business organizations have agreed to
utilize @Work services as of March 31, 1999, the @Work services may not achieve
broad commercial acceptance and the current rate of deployment for @Work
services may not be sustained. We have difficulty predicting whether the pricing
models for our Internet services will prove to be viable, whether demand for our
Internet services will materialize at the prices our cable partners charge for
the @Home service or the prices we or our cable partners charge for @Work
services, or whether current or future pricing levels will be sustainable. If
these pricing levels are not achieved or sustained or if our services do not
achieve or sustain broad market acceptance, our business, operating results and
financial condition will be significantly harmed. We may never achieve favorable
operating results or profitability.
GROWTH OF THE @HOME SERVICE MAY BE INHIBITED BY FACTORS BEYOND OUR CONTROL
As of March 31, 1999, we had in excess of 460,000 cable modem subscribers,
including recently acquired Internet subscribers that are being converted to the
@Home service. Our ability to increase the number of subscribers to the @Home
service to achieve our business plans and generate future revenues will depend
on many factors which are beyond our control. For instance, some of our cable
partners have not achieved the subscriber levels that we had originally
anticipated. Other factors include:
- the rate at which our current and future cable partners upgrade their
cable infrastructures for two-way data services
- our ability and the ability of our cable partners to coordinate timely
and effective marketing campaigns with the availability of cable
infrastructure upgrades
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- the success of our cable partners in marketing and installing the @Home
service in their local cable areas
- the prices that our cable partners set for the @Home service and for its
installation
- the speed at which our cable partners can complete the installations
required to initiate service for new subscribers
- the commercial availability of self-installable, two-way modems that
comply with the recently adopted interface standards known as DOCSIS, and
the success of our roll-out of these products with the @Home service
- the quality of customer and technical support provided by us and our
cable partners and
- the quality of content on the @Home service.
WE NEED TO ADD SUBSCRIBERS AT A RAPID RATE FOR OUR BUSINESS TO SUCCEED, BUT WE
MAY NOT ACHIEVE OUR SUBSCRIBER GROWTH GOALS
Our actual revenues or the rate at which we will add new subscribers may
differ from our forecasts. We may not be able to increase our subscriber base
enough to meet our internal forecasts or the forecasts of industry analysts or
to a level that meets the expectations of investors. The rate at which
subscribers have increased in the past does not necessarily indicate the rate at
which subscribers may be expected to grow in the future. In particular, while we
have forecast that our number of subscribers could grow to over 1.0 million by
December 31, 1999 from in excess of 460,000 subscribers at March 31, 1999, we
may not achieve this level of subscriber growth.
OUR SUBSCRIBER GROWTH DEPENDS ON THE ACTIONS OF OUR CABLE PARTNERS, AND IS
LIMITED BY PRICE AND INSTALLATION CONSTRAINTS
We believe subscriber growth has been constrained, and will continue to be
constrained, by the cost and time required to install the @Home service for each
residential consumer. In addition, our growth has been constrained by the rate
at which our cable partners have upgraded their systems, and most of our cable
partners are not obligated to upgrade their cable infrastructures or market the
@Home service. Moreover, the @Home service is currently priced at a premium to
many other online services, and large numbers of subscribers may not be willing
to pay a premium for the @Home service.
IF WE CANNOT MAINTAIN THE SCALABILITY, SPEED AND SECURITY OF OUR NETWORK,
CUSTOMERS WILL NOT ACCEPT OUR SERVICES
Due to the limited deployment of our services, the ability of our network
to connect and manage a substantial number of online subscribers at high
transmission speeds is unknown. Therefore, we face risks related to our
network's ability to be scaled up to its expected subscriber levels while
maintaining superior performance. Our network may be unable to achieve or
maintain a high speed of data transmission, especially as our subscribers
increase. In recent periods, the performance of our network has experienced some
deterioration in some markets as a result of subscriber abuse of the @Home
service. While we seek to eliminate this abuse by limiting users' upstream
bandwidth, our failure to achieve or maintain high-speed data transmission would
significantly reduce consumer
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demand for our services. In addition, while we have taken steps to prevent users
from sharing files via the @Home service and to protect against bulk unsolicited
e-mail, public concerns about security, privacy and reliability of the cable
network, or actual problems with the security, privacy or reliability of our
network, may inhibit the acceptance of our Internet services.
IF NEW TWO-WAY CABLE MODEMS ARE NOT DEPLOYED TIMELY AND SUCCESSFULLY, WE MAY NOT
BE ABLE TO GROW OUR SUBSCRIBER BASE AS QUICKLY
Each of our subscribers currently must obtain a cable modem from a cable
partner to access the @Home service. The North American cable industry has
recently adopted interface standards known as DOCSIS for hardware and software
to support the delivery of data services over the cable infrastructure utilizing
compatible cable modems. Some of our cable partners have chosen to delay some
deployments of the @Home service until the widespread commercial availability of
DOCSIS-compliant cable modems. Our subscriber growth could be constrained and
our business could be significantly harmed if our cable partners choose to slow
the deployment of the @Home service further. Cable modems that are
DOCSIS-compliant are not expected to be available in significant quantities
until at least the second quarter of 1999. If our cable partners are not able to
obtain a sufficient quantity of DOCSIS-compliant modems, our growth will be
limited.
WE COULD LOSE SUBSCRIBERS, DISTRIBUTION RELATIONSHIPS AND REVENUES TO OUR
COMPETITORS
The markets for consumer and business Internet services and online content
are extremely competitive, and we expect that competition will intensify in the
future. Our most direct competitors in these markets include the following:
- Providers of cable-based Internet services. For example, Time Warner Inc.
and Media One Group have deployed high-speed Internet access services
over their local cable networks through their own cable-based Internet
service, Road Runner. We currently compete with Road Runner to establish
distribution arrangements with cable system operators, but we may compete
for subscribers in the future if and when our cable partners cease to be
subject to their exclusivity obligations.
- Telecommunications providers. We compete with national long-distance and
local exchange carriers that offer high-speed, Internet access services
such as integrated services digital network and asymmetric digital
subscriber line. If the advanced services offered by these companies are
deregulated, this would further enhance the ability of these companies to
compete against our services.
- Internet and online service providers. We compete with Internet service
providers that provide basic Internet access services and with online
service providers such as America Online.
- Internet content aggregators. We compete with content aggregators and
Internet portals that seek to capture audience flow by providing
ease-of-use and offering content that appeals to a broad audience,
including America Online, Yahoo! Inc. and Lycos, Inc.
Many of our competitors and potential competitors have substantially
greater financial, technical and marketing resources, larger subscriber bases,
longer operating histories,
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greater name recognition and more established relationships with advertisers and
content and application providers than we do. These competitors may be able to
undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and devote more resources to developing Internet services or online
content than we could. We may not be able to compete successfully against
current or future competitors, and competitive pressures could significantly
harm our subscriber base, our ability to renew and enter into new distribution
agreements and our revenues.
OUR DEPENDENCE ON OUR NETWORK EXPOSES US TO A SIGNIFICANT RISK OF SYSTEM FAILURE
Our operations are dependent upon our ability to support our highly complex
network infrastructure and avoid damage from fires, earthquakes, floods, power
losses, telecommunications failures and similar events. The occurrence of a
natural disaster or other unanticipated problem at our network operations center
or at a number of our regional data centers could cause interruptions in our
services. Additionally, failure of our cable partners or companies from which we
obtain data transport services to provide the data communications capacity that
we require, for example as a result of natural disaster, or operational
disruption, could cause interruptions in the services we provide. Any damage or
failure that causes interruptions in our operations could harm our business.
OUR LIMITED EXPERIENCE WITH INTERNATIONAL EXPANSION MAY PREVENT US FROM GROWING
OUR BUSINESS OUTSIDE THE UNITED STATES
A key component of our strategy is expansion into international markets. To
date, we have developed distribution relationships only with United States,
Canadian and Dutch cable system operators. We have extremely limited experience
in developing localized versions of our products and services and in developing
relationships with international cable system operators. We may not be
successful in expanding our product and service offerings into foreign markets.
In addition to the uncertainty regarding our ability to generate revenues from
foreign operations and expand our international presence, we face specific risks
related to providing Internet services in foreign jurisdictions, including:
- regulatory requirements, including the regulation of Internet access
- legal uncertainty regarding liability for information retrieved and
replicated in foreign jurisdictions and
- potential inability to use European customer information due to new
European governmental regulations.
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OUR BUSINESS MAY BE IMPACTED BY CABLE UNBUNDLING PROPOSALS AND OTHER GOVERNMENT
REGULATION
Currently, our services are not directly subject to regulations of the
Federal Communication Commission or any other federal, state or local
communications regulatory agency. However, changes could develop in the
regulatory environment relating to the Internet, cable or telecommunications
markets which could require regulatory compliance by us or which could impact
our exclusivity arrangements, subscribers and revenues, including:
- Federal regulation. Regulatory changes that affect telecommunications
costs, limit usage of subscriber-related information or increase
competition from telecommunications companies could affect our pricing or
ability to market our services successfully. For example, regulation of
cable television rates may affect the speed at which our cable partners
upgrade their cable systems to carry our services.
- Regulation by local franchise authorities. Many of our United States
cable partners' local cable affiliates have elected to classify the
provision of the @Home service as additional cable services under their
local franchise agreements, and to pay franchise fees under those
agreements. Local franchise authorities may attempt to subject cable
systems to higher or different franchise fees, taxes or requirements in
connection with their distribution of the @Home service. There are
thousands of franchise authorities, and it would be difficult or
impossible for us or our cable partners to operate under a unified set of
franchise requirements.
- Third-party access. The FCC or local agencies could require our cable
partners to grant our competitors access to their cable systems. America
Online, MindSpring Enterprises, Inc., Consumers Union and other parties
have requested the FCC to require cable operators to provide Internet and
online service providers with unbundled access to their cable systems. If
we or our cable partners are classified as common carriers of Internet
services, or if the FCC otherwise requires third-party access to their
cable infrastructures, Internet and online service providers could
provide services over our cable partners' systems that compete with our
services. Our cable partners could also be subject to tariffs for the
amounts they could charge for our services.
In local government proceedings, Portland and Multnomah County, Oregon
have imposed third-party access requirements on TCI as a condition of its
merger with AT&T, and other municipalities such as Los Angeles are
considering imposing similar requirements. In June 1999, a U.S. District
Court upheld the third-party access requirement imposed on TCI by
Portland and Multnomah County. This decision has been appealed to the
U.S. Court of Appeals for the Ninth Circuit.
WE COULD FACE LIABILITY FOR DEFAMATORY OR INDECENT CONTENT
Claims could be made against Internet and online service providers under
both United States and foreign law for defamation, negligence, copyright or
trademark infringement, or other theories based on the nature and content of the
materials disseminated through their networks. Several private lawsuits seeking
to impose this liability are currently pending. In addition, legislation has
been proposed that imposes liability for or prohibits the transmission over the
Internet of indecent content. The imposition upon Internet and online service
providers of potential liability for information carried on or disseminated
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through their systems could require us to implement measures to reduce our
exposure to this liability. This may require that we expend substantial
resources or discontinue service or product offerings. The increased attention
focused upon liability issues as a result of these lawsuits and legislative
proposals could impact the growth of Internet use. Furthermore, some foreign
governments, such as Germany, have enacted laws and regulations governing
content distributed over the Internet that are more strict than those currently
in place in the United States. One or more of these factors could significantly
harm our business.
RISKS RELATED TO OUR RELATIONSHIPS WITH OUR CABLE PARTNERS
Our agreements with our cable partners are complex. For a summary of some
of the key aspects of these agreements, you should refer to our annual report on
Form 10-K.
WE DEPEND ON OUR CABLE PARTNERS TO UPGRADE TO THE TWO-WAY CABLE INFRASTRUCTURE
NECESSARY TO SUPPORT THE @HOME SERVICE; THE AVAILABILITY AND TIMING OF THESE
UPGRADES ARE UNCERTAIN
Transmission of the @Home service and cable-based @Work services depends on
the availability of high-speed two-way hybrid fiber coaxial cable
infrastructure. However, only a portion of existing cable plant in the United
States and in some international markets has been upgraded to two-way hybrid
fiber coaxial cable, and even less is capable of high-speed two-way
transmission. As of March 31, 1999, approximately 25% of our North American
cable partners' cable infrastructure is capable of delivering the @Home service.
Our cable partners have announced and begun to implement major infrastructure
investments in order to deploy two-way hybrid fiber coaxial cable. However,
these investments have placed a significant strain on the financial, managerial,
operating and other resources of our cable partners, most of which are already
highly leveraged. Therefore, these infrastructure investments have been, and we
expect will continue to be, subject to change, delay or cancellation. Although
our commercial success depends on the successful and timely completion of these
infrastructure upgrades, most of our cable partners are under no obligation to
upgrade systems or to introduce, market or promote our services. The failure of
our cable partners to complete these upgrades in a timely and satisfactory
manner, or at all, would prevent us from delivering high-performance Internet
services and would significantly harm our business.
OUR CABLE PARTNERS ARE NOT GENERALLY OBLIGATED TO CARRY OUR SERVICES, AND THE
EXCLUSIVITY OBLIGATIONS THAT PREVENT THEM FROM CARRYING COMPETING SERVICES MAY
BE TERMINATED
Our cable partners are subject to exclusivity obligations that prohibit
them from obtaining high-speed, greater than 128 kilobits per second,
residential consumer Internet services from any source other than us. However,
most of our cable partners are under no affirmative obligation to carry any of
our services. Also, the exclusivity obligations of our principal cable partners,
TCI, Comcast, Cox and Cablevision, expire on June 4, 2002, and may be terminated
sooner under some circumstances, including:
- Our principal cable partners may terminate all their exclusivity
obligations upon a change in law that materially impairs some of their
rights.
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- Comcast or Cox may terminate all exclusivity obligations of our principal
cable partners at any time if there is a change of control of TCI that
results within twelve months in the incumbent TCI directors no longer
constituting a majority of TCI's board. AT&T, TCI, Comcast and Cox have
agreed, however, that AT&T's acquisition of TCI did not constitute a
change of control under the terms of the original agreement.
- Cox or Comcast may terminate the exclusivity provisions of our principal
cable partners if AT&T and its affiliates do not meet @Home subscriber
penetration levels. On June 4, 1999, Cox had this right, but Cox waived
this right for 1999.
- Comcast may terminate its own exclusivity obligations if it allows us to
repurchase a portion of Comcast's equity interest in us. Comcast has
informed us that it entered into an agreement with Microsoft Corporation
under which Microsoft can require Comcast to terminate its exclusivity
obligations.
In consideration for Cox's agreement to waive its right to terminate
exclusivity as of June 4, 1999, our board approved changes to our corporate
governance on April 16, 1999. Our stockholders approved these changes on May 28,
1999. These governance changes generally require board action to be approved by
a majority of our board, including the board representatives of AT&T and either
Cox or Comcast. In addition, as further consideration for Cox's waiver, AT&T
agreed to increase its subscriber acquisition goal for the next twelve months
above its current goal for that period.
If the exclusivity obligations of our cable partners are terminated, this
could significantly harm our business and cause an immediate drop in our stock
price.
WE ARE CONTROLLED BY TCI AND AT&T
TCI controls approximately 58% of our voting power. AT&T owns TCI and
therefore controls us. Currently, four of our eleven directors are directors,
officers or employees of TCI, AT&T or its affiliates. TCI currently owns all
outstanding shares of our Series B common stock, 30,800,000 shares, each of
which carries ten votes per share. This Series B common stock ownership gives
TCI the right to elect five Series B directors, one of which is designated by
Comcast and one of which is designated by Cox. So long as TCI owns at least
15,400,000 shares of our Series B common stock and holds a majority of our
voting power, our board may take action only if approved by the board and by at
least 75%, or four of the five, of our Series B directors. As a result,
corporate actions generally require the approval of TCI's three Series B
directors and one, or in some cases both, of the directors designated by Comcast
and Cox. Therefore, Comcast and Cox, acting together, may veto any board action.
Notwithstanding these provisions, all of our directors owe fiduciary duties to
our stockholders.
WE DEPEND ON TCG FOR LOCAL TELECOMMUNICATIONS SERVICES FOR OUR @WORK SERVICES
We depend on TCG, which is owned by AT&T, to provide local
telecommunications services and co-location within TCG's facilities on favorable
economic terms. This relationship enables us to provide @Work services to an
entire metropolitan area in which TCG has facilities. If we were required to
obtain comparable telecommunications services from local exchange carriers, we
would effectively be limited to providing @Work services to commercial customers
within a ten-mile radius of one of our points of presence. As a
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result, we would be required to build multiple points of presence to service an
entire metropolitan area, which would substantially increase our capital costs
to enter new markets and which could make market entry uneconomical. If we were
required to pay standard local exchange carrier rates, the ongoing operating
costs for our @Work services would be substantially higher. The loss of our
strategic relationship with TCG would significantly harm our ability to deploy
our @Work services. In addition, TCG has acquired a provider of Internet-related
services to businesses and corporate customers and will compete directly with
the @Work Internet service. To the extent TCG acquires or enters into strategic
relationships with other Internet service providers, TCG may reduce its support
of the @Work services. Although there are alternative suppliers for TCG's
services, it could take a significant period of time for us to establish similar
relationships, and equivalent terms might not be available.
WE MAY FACE ADDITIONAL COMPETITION FROM AT&T
AT&T operates businesses that could compete with our services,
notwithstanding any exclusivity obligations that may apply to it due to its
ownership of TCI:
- AT&T operates a consumer Internet service known as AT&T WorldNet.
Although AT&T WorldNet is currently a telephone dial-up service that does
not utilize broadband technologies, AT&T may be able to use
non-cable-based data transport mechanisms to offer high-speed residential
Internet services that compete with the @Home service.
- AT&T owns TCG, which operates an Internet service for business customers
that competes with the @Work service. The @Work business depends to a
significant extent on our agreement with TCG for local access
telecommunications services. If TCG ceases to cooperate with us, the
@Work business would be harmed. Because the @Work business is not subject
to the cable partners' exclusivity obligations, AT&T or TCG are not
limited in their ability to compete with the @Work business.
- AT&T and Time Warner recently announced the formation of a significant
strategic relationship that will include a joint venture to offer
AT&T-branded cable telephony service to residential and small business
customers over Time Warner's existing cable television systems in 33
states. The relationship between AT&T and Time Warner could ultimately
extend to other broadband services, including cable Internet services,
that compete with the @Home service.
AT&T may take actions that benefit TCG, WorldNet or other services of AT&T
or other parties to our detriment.
WARRANTS ISSUED TO OUR CABLE PARTNERS MAY RESULT IN ADDITIONAL DILUTION TO OUR
STOCKHOLDERS
We have entered into agreements with Cablevision Systems Corporation,
Rogers, Shaw and other cable partners under which warrants to purchase
46,213,444 shares of our Series A common stock were outstanding as of March 31,
1999. Under these agreements, warrants to purchase 20,863,180 shares of our
Series A common stock at an average exercise price of $0.38 per share were
exercisable as of March 31, 1999. To the extent that these cable partners become
eligible to and choose to exercise their warrants, our stockholders would
experience substantial dilution. We also may issue additional stock, or
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warrants to purchase stock, at prices less than fair market value in connection
with efforts to expand distribution of the @Home service.
RISKS ASSOCIATED WITH OUR ACQUISITION OF EXCITE AND EXCITE'S BUSINESS
WE FACE SEVERAL TRANSITORY RISKS ASSOCIATED WITH OUR ACQUISITION OF EXCITE
On May 28, 1999, we acquired Excite, Inc. Although this transaction is
complete, the following risks associated with this acquisition remain:
- Our pro forma accounting for the merger may changed pending a final
analysis of the fair values of the assets acquired and liabilities
assumed. The impact of these changes could be material to our future
operating results.
- We may encounter substantial difficulties, costs and delays associated
with integrating the operations of our companies. This process may
disrupt our business if not completed in a timely and efficient manner.
- Present and potential relationships of us and Excite with sponsors,
content providers, advertisers, users and subscribers may be harmed by
the merger.
- We and Excite may lose the right to use intellectual property or other
contractual rights if we or Excite cannot obtain third party consent,
waiver or approval of the merger where required under existing
agreements.
- The merger may result in conflicts associated with exclusive rights that
both we and Excite have granted to third parties with regard to content,
sponsorship or other strategic relationships, and failure to resolve
these conflicts could harm our business.
EXCITE HAS NOT BEEN AND MAY NEVER BE PROFITABLE
Excite has incurred significant operating expenses since it was formed. As
of December 31, 1998, Excite had an accumulated deficit of $135.6 million.
Although Excite has had significant revenue growth in recent periods, it may not
be able to sustain this growth in future periods. Excite may never achieve
profitability.
EXCITE COULD LOSE USERS, ADVERTISERS AND REVENUES TO COMPETITORS
Excite competes with a number of companies both for users and advertisers,
and therefore for revenues. We expect this competition will intensify,
particularly because there are few barriers to entry in Excite's market.
Excite's competitors include:
- Web portal companies such as Infoseek's Go Network, Lycos, Netscape's
Netcenter and Yahoo!
- service providers such as America Online and Microsoft's MSN service
- large media companies such as CBS, NBC, Time-Warner and USA Networks,
Inc., who have announced initiatives to develop Web services or partner
with Web companies and
- providers of Web-based advertising solutions, including AdForce,
advertising management software, including NetGravity, Inc., advertising
supported content and traditional advertising media.
12
<PAGE> 14
EXCITE DEPENDS ON SPONSORSHIP AGREEMENTS FOR REVENUES
Excite derived approximately 25% of its 1998 advertising revenues from
third parties to provide sponsored services and placements on Excite's Web
sites. These sponsorships typically last for a longer period of time than
traditional banner advertisement purchases. If these sponsorship arrangements do
not meet the advertisers' expectations as to new customers or increased sales or
brand awareness, the sponsors may not renew their arrangements with Excite. It
may also be difficult for Excite to obtain additional sponsors if potential new
sponsors compete with existing sponsors. If Excite does not renew its existing
sponsorships or obtain new sponsors, our business would be harmed.
EXCITE DEPENDS ON SEVERAL THIRD PARTY RELATIONSHIPS FOR USERS, ADVERTISERS AND
REVENUES
Excite depends on a number of third party relationships to provide users
and content for its services, including agreements for links to Excite's
services to be placed on high-traffic Web sites and agreements for third parties
to provide content, games and e-mail for Excite's Web sites. If these
relationships terminate and Excite is not able to replace them, it could lose
users or advertisers, and this could harm our revenues.
PRIVACY CONCERNS REGARDING THE USAGE OF DEMOGRAPHIC INFORMATION COULD PREVENT US
AND EXCITE FROM BENEFITING FROM SELLING TARGETED ADVERTISING
Excite's and some of our services, as well as those of Excite's subsidiary
MatchLogic, use cookies to help deliver targeted advertising and help compile
demographic information about users. Cookies are bits of information on a user's
drive and are passed between a Web server and the user's Web browser. These
cookies can be placed on a user's hard drive without the user's consent or
knowledge. Due to privacy concerns, some commentators and governmental bodies
have suggested that the use of cookies be limited. In addition, many versions of
Web browsers permit users to block or delete cookies. Any reduction or
limitation in the use of cookies could prevent Excite or MatchLogic from
utilizing their ad targeting capabilities, which could result in lower
advertising rates.
POTENTIAL LITIGATION WITH RESPECT TO INTELLECTUAL PROPERTY RIGHTS COULD HARM
EXCITE'S BUSINESS
Many parties, including competitors of Excite, are actively developing
search, indexing and related Internet technologies. Some of these parties have
taken steps to protect these technologies, and we believe that others will
follow. Therefore, we believe that disputes regarding the ownership of these
technologies are likely to arise in the future. We may not be able to defend any
litigation successfully. Even if successful, defending litigation can be costly
and divert management resources.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Series A common stock
by the selling stockholders under this prospectus.
13
<PAGE> 15
DIVIDEND POLICY
We have never paid any cash dividends on our stock. We anticipate that we
will continue to retain any earnings for use in the operation of our business
and we do not currently intend to pay dividends.
SELLING STOCKHOLDERS
The following table sets forth information with respect to the selling
stockholders and the shares of our Series A common stock that they may offer
under this prospectus. Each of the selling stockholders named below was formerly
an option holder of Narrative who acquired options to purchase shares of our
Series A common stock as a result of our acquisition of Narrative. To our
knowledge, none of the selling stockholders has, or within the past three years
has had, any position, office or other material relationship with us or any of
our predecessors or affiliates.
The share information provided in the table below is based on information
provided to us by each of the selling stockholders as of June 9, 1999. We
calculated beneficial ownership according to Rule 13d-3 of the Exchange Act as
of this date. Each of the selling stockholders beneficially owns less than 1% of
our outstanding Series A common stock, based on 331,178,234 shares of Series A
common stock outstanding as of June 16, 1999. We may update, amend or supplement
this prospectus from time to time to update the disclosure in this section.
The selling stockholders may from time to time offer and sell any or all of
the shares under this prospectus. Because the selling stockholders are not
obligated to sell their shares, and because selling stockholders may also
acquire publicly traded shares of our Series A common stock, we cannot estimate
how many shares each selling stockholder will beneficially own after this
offering.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED SHARES THAT
NAME BEFORE THE OFFERING MAY BE OFFERED
---- ------------------- --------------
<S> <C> <C>
Greg White...................... 38,552 400
Thomas Middleton................ 31,618 550
Jamie Bertasi................... 14,912 1,102
Lori Dustin..................... 11,104 11,104
Grant Schneider................. 3,308 1,852
Alexandra Trevelyan............. 3,308 826
John Roswech.................... 2,984 1,070
William J. Kennedy.............. 2,138 1,490
Three other selling stockholders
who each own less than 1,000
shares of our Series A common
stock......................... 1,136 930
------- ------
TOTALS................ 109,060 19,324
</TABLE>
14
<PAGE> 16
PLAN OF DISTRIBUTION
Who may sell and applicable restrictions. The selling stockholders will be
offering and selling all shares offered and sold under this prospectus.
Alternatively, the selling stockholders may from time to time offer the shares
through brokers, dealers or agents that may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of the shares for whom they may act as agent. In effecting sales,
broker-dealers that are engaged by the selling stockholders may arrange for
other broker-dealers to participate. The selling stockholders and any brokers,
dealers or agents who participate in the distribution of the shares may be
deemed to be underwriters. Any profits on the sale of the shares by them and any
discounts, commissions or concessions received by any broker, dealer or agent
might be deemed to be underwriting discounts and commissions under the
Securities Act. To the extent the selling stockholders may be deemed to be
underwriters, the selling stockholders may be subject to certain statutory
liabilities, including, but not limited to, Sections 11, 12 and 17 of the
Securities Act and Rule 10b-5 under the Exchange Act.
Manner of sales. The selling stockholders will act independently of us in
making decisions with respect to the timing, manner and size of each sale. Sales
may be made over the Nasdaq National Market or other over-the-counter markets.
The shares may be sold at then prevailing market prices, at prices related to
prevailing market prices or at negotiated prices. Selling stockholders may also
resell all or a portion of the shares in open market transactions in reliance
upon Rule 144 under the Securities Act, provided they meet the criteria and
conform to the requirements of this rule. The selling stockholders may decide
not to sell any of the shares offered under this prospectus, and selling
stockholders may transfer, devise or gift these shares by other means.
Prospectus delivery. Because selling stockholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, they
will be subject to the prospectus delivery requirements of the Securities Act.
At any time a particular offer of the shares is made, a revised prospectus or
prospectus supplement, if required, will be distributed which will set forth:
- the name of the selling stockholder and of any participating
underwriters, broker-dealers or agents
- the aggregate amount and type of shares being offered
- the price at which the shares were sold and other material terms of the
offering
- any discounts, commissions, concessions and other items constituting
compensation from the selling stockholders and any discounts, commissions
or concessions allowed or paid to dealers and
- that any participating broker-dealers did not conduct any investigation
to verify the information set out or incorporated in this prospectus by
reference.
The prospectus supplement or a post-effective amendment will be filed with the
Securities and Exchange Commission to reflect the disclosure of additional
information with respect to the distribution of the shares. In addition, if we
receive notice from a selling stockholder that a donee or pledgee intends to
sell more than 500 shares, a supplement to this prospectus will be filed.
15
<PAGE> 17
Expenses associated with registration. We have agreed to pay the expenses
of registering the shares under the Securities Act, including registration and
filing fees, printing and duplication expenses, administrative expenses and
legal and accounting fees. Each selling stockholder will pay its own brokerage
and legal fees, if any.
Indemnification. In the rights agreement dated December 30, 1998 between us
and the selling stockholders, we and the selling stockholders agreed to
indemnify each other and specified other persons against some liabilities in
connection with the offering of the shares, including liabilities arising under
the Securities Act. The selling stockholders may also agree to indemnify any
broker-dealer or agent that participates in transactions involving sales of the
shares against some liabilities, including liabilities arising under the
Securities Act.
Suspension of this offering. We may suspend the use of this prospectus if
we learn of any event that causes this prospectus to include an untrue statement
of a material fact or to omit to state a material fact required to be stated in
the prospectus or necessary to make the statements in the prospectus not
misleading in the light of the circumstances then existing. If this type of
event occurs, a prospectus supplement or post-effective amendment, if required,
will be distributed to each selling stockholder.
LEGAL MATTERS
The validity of the issuance of the shares of Series A common stock offered
under this prospectus will be passed upon for us by Fenwick & West LLP, Two Palo
Alto Square, Palo Alto, California 94306.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our annual report on Form 10-K for the year
ended December 31, 1998, as amended, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements are incorporated by reference in reliance on
the report of Ernst & Young LLP given on their authority as experts in
accounting and auditing.
The financial statements of Narrative incorporated in this prospectus by
reference to the audited historical financial statements included as Exhibit
99.01 of our Form 8-K/A filed on February 19, 1999 have been incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on their authority as experts in auditing and accounting.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act relating
to future events or financial results. These forward-looking statements include
statements indicating that we believe, we expect or we anticipate that events
may occur or trends may continue, and similar statements relating to future
events or financial results. These forward-looking statements are subject to
material risks and uncertainties as indicated under the caption "Risk Factors."
Actual results could vary materially as a result of a number of factors
including those disclosed in "Risk Factors" and elsewhere in this prospectus.
16
<PAGE> 18
WHERE YOU CAN FIND MORE INFORMATION
The following documents that we have filed with the Securities and Exchange
Commission are incorporated into this prospectus by reference:
- the registration statement on Form S-8 of which this prospectus is a
part, and the exhibits filed with this registration statement and
incorporated into this registration statement by reference
- our annual report on Form 10-K for the year ended December 31, 1998, as
amended on March 31, 1999 and on April 27, 1999
- the registration of our Series A common stock on Form 8-A filed on June
13, 1997
- all other reports filed under Section 13(a) or 15(d) of the Exchange Act
since December 31, 1998, including: (1) our quarterly reports on Form
10-Q for the quarters ended March 31, June 30 and September 30, 1998,
each as amended on February 8, 1999; (2) our quarterly report on Form
10-Q for the quarter ended March 31, 1999; (3) our current report on Form
8-K filed on January 14, 1999, as amended on February 19, 1999; (4) our
two current reports on Form 8-K filed on January 21, 1999; (5) our
current report on Form 8-K filed on February 19, 1999; (6) our current
report on Form 8-K filed on April 8, 1999; and (7) our current report on
Form 8-K filed on June 14, 1999; and
- all other information that we file with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the termination of this offering.
To the extent that any statement in this prospectus is inconsistent with
any statement that is incorporated by reference, the statement in this
prospectus shall control. The incorporated statement shall not be deemed, except
as modified or superceded, to constitute a part of this prospectus or the
registration statement.
Because we are subject to the informational requirements of the Exchange
Act, we file reports and other information with the Commission. Reports,
registration statements, proxy and information statements and other information
that we have filed can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain copies of this material from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at rates prescribed by the Commission. The public may obtain information
on the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements and other information that is
filed electronically with the Commission. This web site can be accessed at
http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-8
under the Securities Act with respect to the Series A common stock offered under
this prospectus. This prospectus does not contain all of the information in the
registration statement, parts of which we have omitted, as allowed under the
rules and regulations of the Commission. You should refer to the registration
statement for further information with respect to us and our Series A common
stock. Statements contained in this prospectus as to the contents of any
contract or other document are not necessarily complete and, in each instance,
we refer you to the copy of each contract or document filed as an exhibit to the
17
<PAGE> 19
registration statement. Copies of the registration statement, including
exhibits, may be inspected without charge at the Commission's principal office
in Washington, D.C., and you may obtain copies from this office upon payment of
the fees prescribed by the Commission.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the information
that has been incorporated by reference into this prospectus (except exhibits,
unless they are specifically incorporated by reference into this prospectus).
You should direct any requests for copies to At Home Corporation, 425 Broadway
Street, Redwood City, California 94063, Attention: David G. Pine, Vice President
and General Counsel, telephone: (650) 569-5000.
18
<PAGE> 20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AT HOME CORPORATION
19,324 SHARES OF
SERIES A COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN OR INCORPORATED INTO THIS PROSPECTUS BY REFERENCE IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 21
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
For the purposes of this registration statement, the terms "we," "our" and
"us" refer to At Home Corporation, a Delaware corporation.
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated into
this registration statement by reference:
(a) our annual report on Form 10-K for the fiscal year ended December
31, 1998, as amended on March 31, 1999 and on April 27, 1999;
(b) all other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since
December 31, 1998, including: (1) our quarterly reports on Form 10-Q for
the quarters ended March 31, June 30 and September 30, 1998, each as
amended on February 8, 1999; (2) our quarterly report on Form 10-Q for the
quarter ended March 31, 1999; (3) our current report on Form 8-K filed on
January 14, 1999, as amended on February 19, 1999; (4) our two current
reports on Form 8-K filed on January 21, 1999; (5) our current report on
Form 8-K filed on February 19, 1999; (6) our current report on Form 8-K
filed on April 8, 1999; and (7) our current report on Form 8-K filed on
June 14, 1999 and
(c) the description of our Series A common stock contained in the
Registrant's registration statement on Form 8-A filed under Section 12(g)
of the Exchange Act, including any amendment or report filed for the
purpose of updating such description
All documents subsequently filed by us pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities registered hereby have been sold
or which deregisters all securities then remaining unsold, shall be deemed
incorporated into this registration statement by reference and to be a part
hereof from the date of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-1
<PAGE> 22
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS AND LIMITATION OF LIABILITY
The following documents are incorporated by reference:
<TABLE>
<CAPTION>
DOCUMENT
--------
<S> <C>
1 The Registrant's Fifth Amended and Restated Certificate of
Incorporation, as filed with the Delaware Secretary of State
on May 28, 1999 (see Exhibit 4.01).
2 Form of Indemnification Agreement entered into by us with
each of our directors and executive officers (incorporated
by reference to Exhibit 10.09 to our registration statement
on Form S-1, File No. 333-27323, declared effective by the
Commission on July 11, 1997).
</TABLE>
Under the following agreements related to our acquisition of Narrative
Communications Corp., third parties have agreed to indemnify us and our
directors, officers and employees against some liabilities, including losses by
us and our directors, officers and employees arising out of misrepresentations
or breaches by Narrative regarding our business, and some liabilities of us and
our directors, officers and employees arising under the Securities Act, the
Exchange Act or other federal or state laws:
<TABLE>
<CAPTION>
DOCUMENT
--------
<S> <C>
1 Agreement and Plan of Merger dated December 17, 1998 among
us, Transitory Corporation (our subsidiary) and Narrative
(incorporated by reference to Exhibit 2.1 to our current
report on Form 8-K filed with the Commission on January 14,
1999).
2 Escrow Agreement dated December 30, 1998 among us, Charles
M. Hazard, Jr. as representative of the Narrative
stockholders and State Street Bank and Trust Company of
California, N.A., as escrow agent (incorporated by reference
to Exhibit 2.3 to our current report on Form 8-K filed with
the Commission on January 14, 1999).
3 Rights Agreement dated December 30, 1998 between us and each
of the Narrative stockholders (incorporated by reference to
Exhibit 2.4 to our current report on Form 8-K filed with the
Commission on January 14, 1999).
4 Letter Agreement dated February 9, 1999 between us and
Carlyle Venture Coinvestment LLC (incorporated by reference
to Exhibit 99.02 to our registration statement on Form S-3,
File No. 333-72669, declared effective by the Commission on
May 20, 1999).
5 Letter Agreement dated February 9, 1999 between us and
Greylock Equity Limited Partnership (incorporated by
reference to Exhibit 99.03 to our registration statement on
Form S-3, File No. 333-72669, declared effective by the
Commission on May 20, 1999).
</TABLE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
We issued a total of 19,324 shares of our Series A common stock to eleven
investors upon their exercise of options that they acquired in connection with
our acquisition of Narrative. These shares were issued in a private transaction
that was exempt from registration under the Securities Act by virtue of
Regulation D/Section 4(2) of the Securities Act.
II-2
<PAGE> 23
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
4.01 At Home Fifth Amended and Restated Certificate of
Incorporation, as filed with the Delaware Secretary of State
on May 28, 1999 (incorporated by reference to Exhibit 4.01
to our registration statement on Form S-8, File No.
333-79883, filed with the Commission on June 3, 1999).
4.02 At Home Second Amended and Restated Bylaws, as adopted July
16, 1997 (incorporated by reference to Exhibit 3.05 to our
registration statement on Form S-1, File No. 333-27323,
declared effective by the Commission on July 11, 1997).
4.03 Narrative 1998 Equity Incentive Plan, as adopted December
29, 1998.
4.04 Narrative 1995 Stock Option Plan (incorporated by reference
to Exhibit 10.12 to our annual report on Form 10-K, filed
with the Commission on February 19, 1999).
4.05 At Home 1997 Equity Incentive Plan, as amended through April
16, 1999.
5.01 Opinion of Fenwick & West LLP regarding the legality of the
securities to be offered.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP, Independent Auditors.
24.01 Power of Attorney (see page II-5).
</TABLE>
ITEM 9. UNDERTAKINGS
The Registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) 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 the registration statement; and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to the information in the registration
statement;
provided, however, that paragraphs (1)(a) and (1)(b) above do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new
registration statement
II-3
<PAGE> 24
relating to the securities offered in the registration statement, and
the offering of the securities at that time shall be deemed to be the
initial bona fide offering of those securities.
(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.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered in the
registration statement, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of those
securities.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions discussed in Item 6 hereof,
or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission this indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. If a claim for indemnification against these 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
the director, officer or controlling person in connection with the
securities being registered under this registration statement, 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 indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of this issue.
II-4
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant, At Home
Corporation, certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Redwood City, State of California, on this 23rd day of June,
1999.
AT HOME CORPORATION
By: /s/ THOMAS A. JERMOLUK
-----------------------------------
Thomas A. Jermoluk
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Thomas A. Jermoluk, Kenneth A. Goldman
and David G. Pine, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement on Form S-8, and to
file the same with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
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 and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ THOMAS A. JERMOLUK Chairman and Chief June 23, 1999
- --------------------------------------------- Executive Officer
Thomas A. Jermoluk
PRINCIPAL FINANCIAL OFFICER:
/s/ KENNETH A. GOLDMAN Senior Vice President and June 23, 1999
- --------------------------------------------- Chief Financial Officer
Kenneth A. Goldman
</TABLE>
II-5
<PAGE> 26
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL ACCOUNTING OFFICER:
/s/ ROBERT A. LERNER Corporate Controller June 23, 1999
- ---------------------------------------------
Robert A. Lerner
ADDITIONAL DIRECTORS
/s/ WILLIAM R. HEARST III Director June 23, 1999
- ---------------------------------------------
William R. Hearst III
/s/ C. MICHAEL ARMSTRONG Director June 23, 1999
- ---------------------------------------------
C. Michael Armstrong
/s/ GEORGE BELL Director June 23, 1999
- ---------------------------------------------
George Bell
Director
- ---------------------------------------------
L. John Doerr
/s/ LEO J. HINDERY Director June 23, 1999
- ---------------------------------------------
Leo J. Hindery
/s/ JOHN C. MALONE Director June 23, 1999
- ---------------------------------------------
John C. Malone
/s/ JOHN C. PETRILLO Director June 23, 1999
- ---------------------------------------------
John C. Petrillo
/s/ BRIAN L. ROBERTS Director June 23, 1999
- ---------------------------------------------
Brian L. Roberts
/s/ JAMES R. SHAW Director June 23, 1999
- ---------------------------------------------
James R. Shaw
/s/ DAVID M. WOODROW Director June 23, 1999
- ---------------------------------------------
David M. Woodrow
</TABLE>
II-6
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
4.03 Narrative 1998 Equity Incentive Plan, as adopted December
29, 1998.
4.05 At Home 1997 Equity Incentive Plan, as amended through April
16, 1999.
5.01 Opinion of Fenwick & West LLP regarding the legality of the
securities to be offered.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP, Independent Auditors.
24.01 Power of Attorney (see page II-5).
</TABLE>
<PAGE> 1
EXHIBIT 4.03
NARRATIVE COMMUNICATIONS CORP.
1998 EQUITY INCENTIVE PLAN
As Adopted December 29, 1998
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 2,309,050 Shares. Subject to Sections 2.2 and 18 hereof,
Shares that are subject to issuance upon exercise of an option granted under
this Plan that cease to be subject to such option for any reason other than
exercise of such option will again be available for grant and issuance in
connection with future Awards under this Plan.
At all times the Company shall reserve and keep available a
sufficient number of Shares as shall be required to satisfy the requirements of
all outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
The sum of (a) Restricted Stock Awards, (b) Stock Bonus Awards,
or (c) Options with a Purchase Price or Exercise Price, as the case may be,
below Fair Market Value issued under this Plan may not exceed 20% of the total
number of Shares reserved for grant and issuance pursuant to this Plan as of any
date.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
<PAGE> 2
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 1,000,000 Shares in
any calendar year under this Plan or any other equity incentive plan of the
Company pursuant to the grant of Awards hereunder, other than new employees of
the Company or of a Parent or Subsidiary of the Company (including new employees
who are also officers and directors of the Company or any Parent or Subsidiary
of the Company) who are eligible to receive up to a maximum of 2,000,000 Shares
in the calendar year in which they commence their employment. A person may be
granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent or
Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
<PAGE> 3
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will
be evidenced by an Award Agreement which will expressly identify the Option as
an ISO or an NQSO ("STOCK Option Agreement"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the date
on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less
<PAGE> 4
than 100% of the Fair Market Value of the Shares on the date of grant; and (ii)
the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be
less than 110% of the Fair Market Value of the Shares on the date of grant.
Payment for the Shares purchased may be made in accordance with Section 8 of
this Plan.
5.5 Method of Exercise. Options may be exercised only by delivery to the
Company of a written stock option exercise agreement (the "EXERCISE AGREEMENT")
in a form approved by the Committee (which need not be the same for each
Participant), stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price for the number of Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three (3)
months after a Termination other than because of Participant's
death or disability), then Participant's Options may be
exercised only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or
longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (a)
three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's
death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant's
death or Disability, deemed to be an NQSO), but in any event
no later than the expiration date of the Options.
<PAGE> 5
(c) If a Participant is terminated for Cause, then the Participant
may exercise such Participant Options only to the extent that
such Options would have been exercisable upon the Termination
Date no later than one (1) month after the Termination Date
(or such shorter period as may be determined by the
Committee), but in any event, no later than the expiration
date of the Options. In making such determination, the Board
shall give the Participant an opportunity to present to the
Board evidence on his behalf. For the purpose of this
paragraph, termination of service shall be deemed to occur on
the date when the Company dispatches notice or advice to the
Participant that his service is terminated.
5.7 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISO are exercisable for
the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company, Parent or Subsidiary
of the Company) will not exceed $100,000. If the Fair Market Value of Shares on
the date of grant with respect to which ISO are exercisable for the first time
by a Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISO and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422
<PAGE> 6
of the Code or, without the consent of the Participant affected, to disqualify
any ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. These restrictions
may be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the payment of
any Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.
6.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the
<PAGE> 7
extent earned as of the date of Termination in accordance with the Restricted
Stock Purchase Agreement, unless the Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number
of Shares to be awarded to the Participant. If the Stock Bonus is being earned
upon the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
<PAGE> 8
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares); or
(2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the
Shares;
(d) by waiver of compensation due or accrued to the Participant
for services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects
to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer
irrevocably commits
<PAGE> 9
upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's original Purchase Price pursuant to Section
12.
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each
<PAGE> 10
Participant annually during the period such Participant has Awards outstanding;
provided, however, the Company will not be required to provide such financial
statements to Participants whose services in connection with the Company assure
them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
<PAGE> 11
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which
<PAGE> 12
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 18.1, the vesting of all Awards will accelerate and the Options will
become exercisable in full prior to the consummation of such event at such times
and on such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate in accordance with the provisions of this Plan.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.
18.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date on which the Company's Board of Directors approves this Plan (the
"EFFECTIVE DATE"). This Plan shall be approved by the stockholders of the
Company (excluding Shares issued pursuant to this Plan), consistent with
applicable laws, within twelve (12) months before or after the date this Plan is
adopted by the Board. Upon the Effective Date, the Committee may grant Awards
pursuant to this Plan; provided, however, that: (a) no Option may be exercised
prior to initial stockholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares subject to this Plan approved by
the Board will be exercised prior to the time such increase has been approved by
the stockholders of the Company; and (c) in the event that stockholder approval
of such increase is not obtained within the time period
<PAGE> 13
provided herein, all Awards granted hereunder will be canceled, any Shares
issued pursuant to any Award will be canceled, and any purchase of Shares
hereunder will be rescinded.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of California.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means the commission of an act of theft, embezzlement,
fraud, dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board.
"COMPANY" means Narrative Communications Corp. or any successor
corporation.
<PAGE> 14
"DISABILITY" means a disability, whether temporary or permanent,
partial or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Series A Common Stock (if any, and if not, then a share of the
Company's common stock) determined as follows:
(a) if such common stock is not publicly traded, the price of an
equivalent number of shares of At Home Corporation's Series A
Common Stock pursuant to the Conversion Ratio defined in the
Agreement and Plan of Merger dated December 17, 1998, by and
among At Home Corporation, a Delaware corporation, the Company
and Transitory Corporation, a Delaware corporation and wholly
owned subsidiary of At Home Corporation;
(b) if such Series A Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq National
Market on the date of determination as reported in The Wall
Street Journal;
(c) if such Series A Common Stock is publicly traded and is then
listed on a national securities exchange, its closing price on
the date of determination on the principal national securities
exchange on which the Series A Common Stock is listed or
admitted to trading as reported in The Wall Street Journal;
(d) if such Series A Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or admitted to
trading on a national securities exchange, the average of the
closing bid and asked prices on the date of determination as
reported in The Wall Street Journal;
(e) if none of the foregoing is applicable, by the Committee in
good faith.
"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company
<PAGE> 15
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this Plan.
"PERFORMANCE FACTORS" means the factors selected by the Committee
from among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total shareholder return and/or total shareholder return
growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"PLAN" means this At Home Corporation 1997 Equity Incentive Plan, as
amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's common stock reserved for
issuance under this Plan or any other compensatory arrangement of the Company,
as adjusted pursuant to Sections 2 and 18, and any successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last
<PAGE> 16
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
<PAGE> 1
EXHIBIT 4.05
AT HOME CORPORATION
1997 EQUITY INCENTIVE PLAN
As Adopted May 15, 1997 and
Amended May 13, 1998
and April 16, 1999
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 33,850,000 Shares, less: (a) the total number of Shares issued
by the Company under (i) restricted stock purchase agreements entered into prior
to the Effective Date of this Plan with employees, officers, directors,
consultants, independent contractors or advisors of the Company and (ii) the
Company's 1996 Incentive Stock Option Plan or 1996 Incentive Stock Option Plan
No. 2 (the "PRIOR PLANS") pursuant to the exercise of options granted on or
before the Effective Date; (b) Shares that are issuable as of the Effective Date
upon exercise of options granted under the Prior Plans; and (c) Shares issued as
of any date under the Company's 1997 Employee Stock Purchase Plan adopted
contemporaneously with this Plan.
Subject to Sections 2.2 and 18 hereof, Shares that: (a) are subject
to issuance upon exercise of an option granted under the Prior Plans or under
this Plan that cease to be subject to such option for any reason other than
exercise of such option; (b) are subject to an award granted under restricted
stock purchase agreements entered into prior to the Effective Date of this Plan
with employees, officers, directors, consultants, independent contractors or
advisors of the Company, the Prior Plans, or this Plan, that are forfeited or
are repurchased by the Company at the original issue price; or (c) are subject
to any other award granted under the Prior Plans or under this Plan that
otherwise terminates without Shares being issued, will again be available for
grant and issuance in connection with future Awards under this Plan.
At all times the Company shall reserve and keep available a
sufficient number of Shares as shall be required to satisfy the requirements of
all outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
<PAGE> 2
The sum of (a) Restricted Stock Awards, (b) Stock Bonus
Awards, or (c) Options with a Purchase Price or Exercise Price, as the case may
be, below Fair Market Value issued under this Plan may not exceed 20% of the
total number of Shares reserved for grant and issuance pursuant to this Plan as
of any date.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 1,000,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company) who are eligible to receive
up to a maximum of 2,000,000 Shares in the calendar year in which they commence
their employment. A person may be granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan or any Award;
(c) select persons to receive Awards;
<PAGE> 3
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent or
Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will
be evidenced by an Award Agreement which will expressly identify the Option as
an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the date
on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
<PAGE> 4
5.3 Exercise Period. Options may be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set forth in
the Stock Option Agreement, exercise of an Option will always be subject to the
following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three (3)
months after a Termination other than because of Participant's
death or disability), then Participant's Options may be
exercised only to the extent that such Options would have been
<PAGE> 5
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or
longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (a)
three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's
death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant's
death or Disability, deemed to be an NQSO), but in any event
no later than the expiration date of the Options.
(c) If a Participant is terminated for Cause, then the Participant
may exercise such Participant Options only to the extent that
such Options would have been exercisable upon the Termination
Date no later than one (1) month after the Termination Date
(or such shorter period as may be determined by the
Committee), but in any event, no later than the expiration
date of the Options. In making such determination, the Board
shall give the Participant an opportunity to present to the
Board evidence on his behalf. For the purpose of this
paragraph, termination of service shall be deemed to occur on
the date when the Company dispatches notice or advice to the
Participant that his service is terminated.
5.7 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISO are exercisable for
the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company, Parent or Subsidiary
of the Company) will not exceed $100,000. If the Fair Market Value of Shares on
the date of grant with respect to which ISO are exercisable for the first time
by a Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISO and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding
<PAGE> 6
ISO that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise Price
may not be reduced below the minimum Exercise Price that would be permitted
under Section 5.4 of this Plan for Options granted on the date the action is
taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. These restrictions
may be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure
<PAGE> 7
performance goals, if any; and (c) determine the number of Shares that may be
awarded to the Participant. Prior to the payment of any Restricted Stock Award,
the Committee shall determine the extent to which such Restricted Stock Award
has been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Restricted Stock Awards that are
subject to different Performance Periods and having different performance goals
and other criteria.
6.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number
of Shares to be awarded to the Participant. If the Stock Bonus is being earned
upon the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
<PAGE> 8
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares); or
(2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the
Shares;
(d) by waiver of compensation due or accrued to the Participant
for services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects
to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer
<PAGE> 9
in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's original Purchase Price pursuant to Section
12.
<PAGE> 10
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
<PAGE> 11
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or
<PAGE> 12
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (d)
the sale of substantially all of the assets of the Company, or (e) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, any or all outstanding Awards
may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all Participants.
In the alternative, the successor corporation may substitute equivalent Awards
or provide substantially similar consideration to Participants as was provided
to stockholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares or
other property subject to repurchase restrictions no less favorable to the
Participant. In the event such successor corporation (if any) refuses to assume
or substitute Awards, as provided above, pursuant to a transaction described in
this Subsection 18.1, the vesting of all Awards will accelerate and the Options
will become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines, and if such Options
are not exercised prior to the consummation of the corporate transaction, they
shall terminate in accordance with the provisions of this Plan.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.
18.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date on which the registration statement filed by the Company with the
SEC under the Securities Act registering the initial public offering of the
Company's Series A Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"). This Plan shall be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve (12) months before or after the date this Plan is
<PAGE> 13
adopted by the Board. Upon the Effective Date, the Committee may grant Awards
pursuant to this Plan; provided, however, that: (a) no Option may be exercised
prior to initial stockholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares subject to this Plan approved by
the Board will be exercised prior to the time such increase has been approved by
the stockholders of the Company; and (c) in the event that stockholder approval
of such increase is not obtained within the time period provided herein, all
Awards granted hereunder will be canceled, any Shares issued pursuant to any
Award will be canceled, and any purchase of Shares hereunder will be rescinded.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of California.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means the commission of an act of theft, embezzlement,
fraud, dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
<PAGE> 14
"COMMITTEE" means the Compensation Committee of the Board.
"COMPANY" means At Home Corporation or any successor corporation.
"DISABILITY" means a disability, whether temporary or permanent,
partial or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Series A Common Stock determined as follows:
(a) if such Series A Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq National
Market on the date of determination as reported in The Wall
Street Journal;
(b) if such Series A Common Stock is publicly traded and is then
listed on a national securities exchange, its closing price on
the date of determination on the principal national securities
exchange on which the Series A Common Stock is listed or
admitted to trading as reported in The Wall Street Journal;
(c) if such Series A Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or admitted to
trading on a national securities exchange, the average of the
closing bid and asked prices on the date of determination as
reported in The Wall Street Journal;
(d) in the case of an Award made on the Effective Date, the price
per share at which shares of the Company's Series A Common
Stock are initially offered for sale to the public by the
Company's underwriters in the initial public offering of the
Company's Series A Common Stock pursuant to a registration
statement filed with the SEC under the Securities Act; or
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.
<PAGE> 15
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this Plan.
"PERFORMANCE FACTORS" means the factors selected by the Committee
from among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total shareholder return and/or total shareholder return
growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"PLAN" means this At Home Corporation 1997 Equity Incentive Plan, as
amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
<PAGE> 16
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Series A Common Stock
reserved for issuance under this Plan or any other compensatory arrangement of
the Company, as adjusted pursuant to Sections 2 and 18, and any successor
security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
<PAGE> 1
EXHIBIT 5.01
June 22, 1999
At Home Corporation
425 Broadway Road
Redwood City, CA 94063
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-8
(the "REGISTRATION STATEMENT") to be filed by you with the Securities and
Exchange Commission (the "COMMISSION") on or about June 23, 1999 in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 1,179,114 shares of your Series A Common Stock, $0.01 par value
(the "STOCK"). An aggregate of 19,324 shares of Stock are being registered for
resale under the Registration Statement by the stockholders named in the Form
S-3 prospectus associated with the Registration Statement and in subsequent
amendments thereto (the "SELLING STOCKHOLDERS"). The remaining shares of Stock
are subject to issuance as follows:
(a) an aggregate of 259,790 shares of Stock which are issuable upon the
exercise of options originally granted by Narrative under the
Narrative 1995 Plan, which options have been assumed by you and
converted into options to purchase shares of Stock (the "ASSUMED
OPTIONS") pursuant to the Merger Agreement;
(b) an aggregate of 900,000 shares of Stock, subject to issuance by you
upon the exercise of options granted or to be granted by you under
the Narrative 1998 Equity Incentive Plan (the "NARRATIVE 1998
PLAN").
In rendering this opinion, we have examined the following:
(1) your registration statement on Form 8-A filed with the Commission on
June 13, 1997 (File No. 000-22697), together with the order of
effectiveness issued by the Commission therefor on July 11, 1997;
(2) your Annual Report on Form 10-K for the year ended December 31,
1998, as amended;
(3) your Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
(4) your Current Reports on Form 8-K filed with the Commission on
January 14, 1999, January 21, 1999, January 21, 1999, February 19,
1999, April 8, 1999 and June 14, 1999, and your amended Current
Report on Form 8-K filed with the Commission on February
19, 1999;
(4) the Registration Statement, together with the exhibits filed as a
part thereof;
<PAGE> 2
(5) the prospectuses prepared in connection with the Registration
Statement;
(6) the Nasdaq National Market Notification Form for Listing of
Additional Shares prepared in connection with the Registration
Statement;
(7) the Narrative 1998 Plan and related award grant and exercise
agreement forms;
(8) the Narrative 1995 Plan and related award grant and exercise
agreement forms;
(9) the Merger Agreement;
(10) your Fifth Amended and Restated Certificate of Incorporation filed
with the Delaware Secretary of State on May 28, 1999 and your Second
Amended and Restated Bylaws, each of which are listed as exhibits to
the Registration Statement;
(11) the minutes of meetings and actions by written consent of your
stockholders and Board of Directors that are contained in your
minute books that are in our possession;
(12) summary reports from you confirming the number of shares of your
capital stock outstanding as of June 21, 1999 and the number of
options, warrants and any other rights to acquire shares of your
capital stock outstanding as of June 21, 1999;
(13) oral verification from your transfer agent of the number of
outstanding shares of your common stock as of June 21, 1999; and
(14) a Management Certificate addressed to us and dated of even date
herewith executed by you containing certain factual and other
representations.
We have also have confirmed the continued effectiveness of your
registration under the Securities Act of 1934, as amended, by telephone call to
the offices of the Commission and have confirmed your eligibility to use Form
S-8.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and the completeness of all documents
submitted to us as originals, the conformity to originals and completeness of
all documents submitted to us as copies, the legal capacity of all natural
persons executing the same, the lack of any undisclosed termination,
modification, waiver or amendment to any document reviewed by us and the due
authorization, execution and delivery of all documents where due authorization,
execution and delivery are prerequisites to the effectiveness thereof. For
purposes of this opinion, we have also assumed that the Merger
<PAGE> 3
Agreement is duly enforceable in accordance with its terms against, and
constitutes the legal, valid and binding obligations of, each of the parties
thereto.
As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from public officials and
records referred to above. We have made no independent investigation or other
attempt to verify the accuracy of any of such information or to determine the
existence or non-existence of any other factual matters; however, we are not
aware of any facts that would cause us to believe that the opinion expressed
herein is not accurate.
We are admitted to practice law in the State of California, and we express
no opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the United States of America and
the State of California and (without reference to any case law or secondary
sources) the existing Delaware General Corporation Law.
In connection with our opinion expressed below, we have assumed that, at
or prior to the time of the delivery of any shares of Stock, the Registration
Statement will have been declared effective under the Securities Act of 1933, as
amended, that the registration will apply to such shares of Stock and will not
have been modified or rescinded or been made subject to any Commission stop
order and that there will not have occurred any change in law affecting the
validity or enforceability of such shares of Stock.
Based upon the foregoing, it is our opinion that:
(i) the 259,790 shares of Stock that may be issued and sold by you
upon the exercise of the Assumed Options, when issued and sold in
the manner referred to in the Form S-8 prospectus associated with
the Assumed Options and the Registration Statement and in accordance
with the Narrative 1995 Plan pursuant to which the Assumed Options
were granted, will be validly issued, fully paid and non-assessable;
(ii) the 19,324 shares of Stock that may be sold by the Selling
Stockholders pursuant to the Registration Statement, when evidenced
by appropriate certificates that have been properly executed and
delivered and when issued and sold in accordance with and in the
manner referred to in the Form S-3 prospectus associated with the
Registration Statement, will be validly issued, fully paid and
non-assessable; and
(iii) the 900,000 shares of Stock that may be issued and sold by you upon
the exercise of stock options, the purchase of restricted stock or
awards of stock bonuses that have been or may be awarded by you
under the Narrative 1998 Plan, when issued and sold in accordance
with the Narrative 1998 Plan and the stock option, restricted stock
purchase agreement or stock bonus agreements to be entered into
thereunder, and in the manner referred to in the Form S-8 prospectus
associated with the Narrative 1998 Plan and the Registration
Statement, will be validly issued, fully paid and non-assessable.
<PAGE> 4
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be relied
upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
By: /s/ GORDON K. DAVIDSON
--------------------------------------
Gordon K. Davidson, a Partner
<PAGE> 1
EXHIBIT 23.02
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) of At Home Corporation pertaining to the 1998 Equity Incentive Plan
of Narrative Communications Corp. and the 1995 Stock Option Plan of Narrative
Communications Corp. of our report dated January 19, 1999 with respect to the
consolidated financial statements of At Home Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1998, as amended, filed with
the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Jose, California
June 22, 1999
