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As filed with the Securities and Exchange Commission on March 2, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AT HOME CORPORATION
(Exact name of the Registrant as specified in its charter)
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<S> <C>
Delaware 77-0408542
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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450 Broadway Street
Redwood City, California 94063
(650) 569-5000
(Address, including zip code, and telephone number, including area code, of
the Registrant's principal executive offices)
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Kenneth A. Goldman
Chief Financial Officer
At Home Corporation
450 Broadway Street
Redwood City, California 94063
(650) 569-5000
(Name, address, including zip code, and telephone number, including area code,
of the Registrant's agent for service)
Copies to:
Jeffrey R. Vetter, Esq.
Tram T. Phi, Esq.
Benjamin G. Hadary, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
(650) 494-0600
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other then securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed Proposed
Maximum Maximum Amount of
Title of each class of Amounts to be Aggregate Aggregate Registration
securities to be registered Registered Price Per Unit Offering Price Fee
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<S> <C> <C> <C> <C>
Series A common stock, $0.01 par value per
share.................................... 5,285,600 $33.4688(/1/) $176,902,425(/1/) $46,702.24
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</TABLE>
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933, as amended (the "Securities Act"), based upon the average of the
high and low prices of the Registrant's Series A common stock as reported
by the Nasdaq National Market on February 28, 2000.
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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
files a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
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PROSPECTUS
[LOGO APPEARS HERE]
At Home Corporation
5,285,600 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 March 1, 2000: $33.8125 per share.
Trading Symbol: ATHM
The Offering
Under this prospectus, the selling stockholders named under the section
entitled "Selling Stockholders" of this prospectus may offer and sell shares of
our Series A common stock that they acquired upon our acquisitions of Kendara,
Inc. and upon payment of the earnout in connection with our acquisition of
Hartford House, Ltd.
The selling stockholders may sell their shares of Series A common stock in
the open market at prevailing market prices, or in private transactions at
negotiated prices. They may sell the shares directly, or may sell them through
underwriters, brokers or dealers. Underwriters, brokers or dealers may receive
discounts, concessions or commissions from the selling stockholders or from the
purchaser, and this compensation might be in excess of the compensation
customary in the type of transaction involved. See "Plan of Distribution."
We will not receive any of the proceeds from the sale of these shares.
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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 March , 2000.
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TABLE OF CONTENTS
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Forward-Looking Statements.................................................. 2
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 4
Use of Proceeds............................................................. 19
Dividend Policy............................................................. 19
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Selling Stockholders........................................................ 20
Plan of Distribution........................................................ 23
Legal Matters............................................................... 25
Experts..................................................................... 25
Where You Can Find More Information......................................... 25
</TABLE>
FORWARD-LOOKING STATEMENTS
We make many statements in this prospectus under the caption "Risk Factors"
and elsewhere that are forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. These statements
relate to our future plans, objectives, expectations and intentions. We may
identify these statements by the use of words such as "believe," "expect,"
"anticipate," "intend" and "plan" and similar expressions. These forward-
looking statements involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of various factors, including those we discuss in "Risk Factors" and
elsewhere in this prospectus. These forward-looking statements speak only as of
the date of this prospectus, and we caution you not to rely on these statements
without also considering the risks and uncertainties associated with these
statements and our business.
@Home, Excite, Excite@Home, Excite Network, MatchLogic and the @ball logo
are trademarks of At Home Corporation and are registered in certain
jurisdictions. Other trademarks and tradenames appearing in this prospectus are
the property of their respective holders.
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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 and Excite@Home refer to At Home Corporation, a Delaware
corporation.
Excite@Home
Excite@Home is a global media company offering broadband Internet
connectivity, personalized web-based content and targeted advertising services.
Our @Home service provides broadband Internet access from consumers' homes over
the cable television infrastructure and offers end-to-end managed connectivity
services for businesses over both cable and digital telecommunications lines.
Our media services include the Excite Network, a leading consumer Internet
portal and MatchLogic, our targeted advertising service. The Excite Network
offers search, content, community, communications services and commerce
functionality to Internet users. Excite's media services focus on comprehensive
navigation, global reach and personalization technology to attract and retain
users and achieve market share. MatchLogic provides advertisers with targeted
ad campaign management and other advertising-related services designed to
improve the effectiveness of their advertising campaigns.
At Home Corporation was incorporated under the laws of the State of Deleware
in March 1995. Our principal executive offices are located at 450 Broadway
Street, Redwood City, California 94063. The primary telephone number for our
principal executive offices is (650) 556-5000.
The Offering
Of the 5,285,600 shares that may be offered under this prospectus, 1,800,130
are held by former stockholders of Kendara, Inc. and 3,485,470 are held by
former stockholders of Hartford House, Ltd. 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
the selling stockholders................ 5,285,600 shares
Series A common stock to be outstanding
after this offering..................... 366,351,215 shares*
Use of proceeds.......................... We will not receive any proceeds.
</TABLE>
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* Based on the number of shares outstanding as of February 15, 2000.
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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. The
risks described below are not the only ones facing our company. Additional
risks not presently known to us or that we currently deem immaterial may also
impair our business operations. Our business, financial condition or results of
operations could be seriously harmed by any of these 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 Excite@Home's Business
We may fail to integrate our business and technologies with the business and
technologies of Excite, Bluemountain.com and the other companies we have
recently acquired or may acquire.
We have completed several acquisitions recently, including our recent
acquisitions of Excite, Inc. in May 1999, iMALL, Inc. in October 1999 and
Bluemountain.com in December 1999. We intend to pursue additional acquisitions
in the future. If we fail to integrate these businesses, our quarterly and
annual results may be adversely affected. Integrating acquired organizations
and products and services could be expensive, time-consuming and a strain on
our resources. Risks we could face with respect to acquisitions include:
. the difficulty of integrating acquired technology or content and rights
into our services;
. the difficulty of assimilating the personnel of the acquired companies;
. the difficulty of coordinating and integrating geographically-dispersed
operations;
. our ability to retain customers of an acquired company;
. the potential disruption of our ongoing business and distraction of
management;
. the maintenance of brand recognition of acquired businesses;
. the failure to successfully develop acquired in-process technology,
resulting in the impairment of amounts currently capitalized as
intangible assets;
. unanticipated expenses related to technology integration;
. the maintenance of uniform standards, corporate cultures, controls,
procedures and policies;
. the impairment of relationships with employees and customers as a result
of any integration of new management personnel; and
. the potential unknown liabilities associated with acquired businesses.
Our inability to address any of these risks successfully could harm our
business.
In particular, a current challenge is to integrate the technology platform
of the @Home network broadband services with Excite's Internet services and the
advertising services of Excite's subsidiary, MatchLogic. Currently, the Excite
narrowband services are operated from Excite's network operations centers.
Integration of the Excite and MatchLogic services to the @Home network
broadband platform poses a number of technical challenges, including
difficulties associated with providing regularly updated and personalized
content over Excite@Home's broadband services and the difficulties associated
with applying the advertising services and targeting technologies from Excite's
MatchLogic subsidiary with the Excite@Home broadband services. This is
particularly challenging because it is more difficult to provide regularly
updated and personalized information from distributed regional data centers,
which we rely upon to deliver our broadband services, than it is to deliver
services from a central data center, as Excite and MatchLogic currently do, in
delivering their narrowband services.
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With respect to any future acquisitions, we may be unable to identify future
acquisition targets and we may be unable to complete future acquisitions on
reasonable terms. Even if we complete an acquisition, we may have difficulty in
integrating it with our current organization, technology and product and
services offerings, and any acquired features, functions, products or services
may not achieve market acceptance.
Recently-acquired businesses may not be successful.
We have recently acquired companies in an early stage of development and
with unproven business models.
iMALL. Prior to August 1998, substantially all of iMALL's revenues were
attributable to its seminar business. This business was discontinued in August
1998. iMALL has yet to achieve any significant revenue from its current
business of providing turnkey electronic commerce services to online merchants
or its other shopping-oriented web sites. A market for iMALL's services may not
develop, and iMALL's services may not become widely accepted.
Bluemountain.com. The acquisition of Bluemountain.com also involves a number
of risks. For example, the Bluemountain.com electronic greeting card service
currently does not sell advertising on its web sites. Bluemountain.com users
may not accept a service that displays advertising. Bluemountain.com users may
not continue to use the Bluemountain.com service for other reasons. For
instance, competitive electronic greeting card sites have increased in
popularity. Also, the popularity of electronic greeting card services could
decline generally. Additionally, advertisers may not choose to advertise on the
Bluemountain.com service if users do not accept advertising or purchase goods
or services on Bluemountain.com in sufficient quantities.
We have incurred and expect to continue to incur substantial losses.
At Home Corporation was incorporated in March 1995, commenced operations in
August 1995, and has incurred net losses in each fiscal period since its
inception. As of December 31, 1999, we had an accumulated deficit of $1,684.8
million. Excite, Inc., which we acquired in May 1999, has never been
profitable. In addition, we currently intend to increase capital expenditures
and operating expenses in order to expand our network and to market and provide
our broadband services to potential subscribers as well as to market our
narrowband services. As a result of the acquisitions of Excite, iMALL and
Bluemountain.com, we anticipate that we will incur substantial non-cash charges
including those relating to the amortization of goodwill and other intangible
assets in future periods. Therefore, we anticipate that we will incur net
losses for the foreseeable future.
Our quarterly operating results may fluctuate because of a number of factors.
Our quarterly operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are outside of our control.
These factors include:
. the level of usage of the Internet in general and portal web sites in
particular;
. subscriber growth rates and prices charged by our cable partners;
. demand for Internet advertising;
. the addition or loss of advertisers;
. the level of user traffic on our websites used for our narrowband
services;
. the mix of types of advertising we sell, such as the mix of targeted
advertising as compared to general rotation advertising;
. the amount and timing of capital expenditures and other costs relating
to the expansion of our operations;
. the introduction of new products or services by us or our competitors;
5
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. pricing changes for Internet-based advertising;
. the timing of marketing expenditures to promote our brands;
. costs incurred with respect to acquisitions; and
. general economic conditions.
Our expense levels are based in part on expectations of future revenue and,
to a large extent, are fixed. We may be unable to adjust spending quickly
enough to compensate for any unexpected revenue shortfall.
Our Internet advertising revenue is subject to seasonal fluctuations.
Historically, advertisers spend less in the first and third calendar quarters,
and user traffic for our narrowband services has historically been lower
during the summer and during year-end vacation and holiday periods.
Due to all of the foregoing factors and the other risks described in this
section, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indication of future performance, particularly in light of
the number of acquisitions we have completed. It is possible that in some
future periods our results of operations may be below the expectations of
public market analysts and investors. In this event, the price of our Series A
common stock may fall.
We have not yet determined the terms of the "tracking stock" that we plan to
issue for our media business, nor the corporate governance structure for our
media business.
In November 1999, we announced that our board of directors had authorized
us to investigate the issuance of a "tracking stock" for our media business.
Our plan to issue the tracking stock has not been finalized, and therefore
this transaction is uncertain. In addition, the issuance of a tracking stock
is subject to stockholder approval, including by our principal cable partner
stockholders. We have not yet determined the terms that would govern this
tracking stock, including the valuation of the tracking stock relative to our
Series A common stock and the voting privileges of the tracking stock. Also,
we have not yet determined the composition of the board of directors of our
media business, what corporate governance provisions will be adopted with
respect to the media business, or whether and how we will modify the corporate
governance provisions that apply to our existing business.
If we do not develop new and enhanced features, products and services for our
narrowband and broadband services, we may not be able to attract and retain a
sufficient number of users.
Because of the competitiveness of our market, we believe it is important to
introduce additional or enhanced features, products and services in the future
in order to differentiate our services and retain our current users and
attract new users. If we introduce a feature, product or service that is not
favorably received by our current users, they may not continue using our
services as frequently and they may choose a competing service.
We must also continually enhance our products and services to incorporate
rapidly changing Internet technologies. We could incur substantial development
costs if we need to modify our products, services or infrastructure to adapt
to changes in Internet technologies. Our business could be harmed if we incur
significant costs to adapt to these changes. If we cannot adapt to these
changes, users may discontinue using our services.
We may also experience difficulties that could delay or prevent us from
introducing new features, products or services. Furthermore, these features,
products or services may contain errors that are discovered after the feature,
product or services are introduced. We may need to modify the design of them
significantly to correct these errors. In addition, we must consult with and
involve our principal cable partners in the development and design of new
features, products or services for our broadband services. Therefore, the
process of introducing new broadband features, products and services is time
consuming and if our principal cable partners object to a new feature, product
or service, we could be prohibited from offering it in particular areas. Our
business could be adversely affected if we experience difficulties in
introducing new products and services or if users do not accept these new
products or services.
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We depend on the sale of advertisements on our services, and if online
advertising does not become accepted, our business would be harmed.
We expect to derive a substantial amount of our revenues from the sale of
advertising on our services for the foreseeable future. No standards have been
widely accepted to measure the effectiveness of online advertising. If
standards do not develop, existing advertisers may not continue their current
levels of online advertising. Furthermore, advertisers that have traditionally
relied upon other advertising media may be reluctant to advertise online.
Advertisers that already have invested substantial resources in other
advertising methods may be reluctant to adopt a new strategy. Our business
would be harmed if the market for online advertising fails to develop or
develops more slowly than expected.
Different pricing models are used to sell online advertising. It is
difficult to predict which, if any, will emerge as the industry standard. This
makes it difficult to project future advertising rates and revenues. For
example, advertising rates based on the number of "click throughs," or user
requests for additional information made by clicking on the advertisement,
instead of rates based solely on the number of impressions, or times an
advertisement is displayed, could adversely affect our revenues because
impression-based advertising comprises a substantial majority of our current
advertising revenues. Our advertising revenues could be harmed if we are unable
to adapt to new forms of online advertising. Moreover, "filter" software
programs that limit or prevent advertising from being delivered to a web user's
computer are available. Widespread adoption of this software could harm the
commercial viability of online advertising.
We must develop and maintain the awareness of our brands to attract consumers
and advertisers.
Maintaining and strengthening our brands is critical to achieving widespread
acceptance of our services by consumers and advertisers, particularly in light
of the competitive nature of our markets. Promoting and positioning our brands
will depend largely on the success of our marketing efforts and our ability to
provide high quality services. In order to promote our brands, we plan to
increase our marketing expenses from prior periods. We may find it necessary to
increase our marketing budget or otherwise increase our financial commitment to
creating and maintaining brand loyalty among users. If we fail to promote and
maintain our brands or incur excessive expenses in an attempt to promote and
maintain our brands, our business could be harmed.
We could face liability related to the privacy of personal information about
our users.
Our narrowband services use "cookies" to deliver targeted advertising, help
compile demographic information about users and limit the frequency with which
an advertisement is shown to the user. Cookies are bits of information keyed to
a specific drive and passed to a web site server through the user's browser
software. Cookies are placed on the user's hard drive, often without the user's
knowledge or consent. We could face liability relating to the collection and
use of this information, as well as other misuses such as unauthorized
marketing. The Federal Trade Commission and some states have been investigating
Internet companies regarding their use of personal information. In addition,
the United States federal and various state governments have proposed new laws
restricting the collection and use of information regarding Internet users. We
could incur additional expenses if new regulations regarding the use of
personal information are introduced or if they chose to investigate our privacy
practices.
Privacy concerns could make it more difficult for us to deliver targeted
advertising.
Due to privacy concerns, some Internet commentators, consumer advocates and
governmental officials have suggested that the use of cookies be limited or
eliminated. In addition, certain currently available web browsers allow a user
to delete cookies or prevent cookies from being stored on the user's hard
drive. Any reduction or limitation in the use of cookies could limit the
effectiveness of our ad targeting, which could harm our business.
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The sponsorship advertising we sell subjects us to financial and other risks.
We derive a substantial portion of our revenues from sponsorship
arrangements. These are advertising relationships under which third parties
receive sponsored services and placements on our services in addition to
traditional banner advertisements across our services. These arrangements
expose us to potential financial risks, including the risk that we fail to
deliver required minimum levels of user impressions and that third-party
sponsors do not renew the agreements at the end of their term. These
arrangements also require us to integrate sponsors' content with our services,
which can require the dedication of resources and programming and design
efforts to accomplish. We may not be able to attract additional sponsors or
renew existing sponsorship arrangements when they expire.
In addition, we have granted exclusivity provisions to some of our sponsors,
and may in the future grant additional exclusivity provisions. These
exclusivity provisions may have the effect of preventing us from accepting
advertising or sponsorship arrangements from certain advertisers during the
term of the agreements. Our inability to enter into further sponsorship or
advertising arrangements as a result of any exclusivity arrangements could harm
our business.
We may face potential liability from our electronic commerce-related
advertising arrangements.
Some of our advertising relationships provide that we may receive payments
based on the amount of goods or services purchased by consumers clicking from
our services to a seller's web site. These arrangements may expose us to legal
risks and uncertainties, including potential liabilities to consumers of these
products and services. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate to
indemnify us for all liability that may be imposed.
Some of the liabilities that may result from these arrangements include:
. potential liabilities for illegal activities that may be conducted by
the sellers;
. product liability or other tort claims relating to goods or services
sold through third-party e-commerce sites;
. claims for consumer fraud and false or deceptive advertising or sales
practices;
. breach of contract claims relating to purchases; and
. claims that items sold through these sites infringe third-party
intellectual property rights.
Even to the extent that these claims do not result in material liability,
investigating and defending these claims could harm our business.
Our equity investments in other companies may not yield any returns.
We have made equity investments in many Internet companies, including joint
ventures in other countries. In most instances, these investments are in the
form of illiquid securities of private companies. These companies typically are
in an early stage of development and may be expected to incur substantial
losses. Our investments in these companies may not yield any return.
Furthermore, if these companies are not successful, we could incur charges
related to write-downs or write-offs of assets. We also record and continue to
record a share of the net losses in some of these companies, up to our cost
basis, if they are our affiliates. We and our strategic investors intend to
continue to make significant additional investments in the future. Losses or
charges resulting from these investments could harm our operating results.
We must maintain the security of our networks.
We have in the past experienced security breaches in our networks. While we
have taken steps to prevent these breaches, 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 our networks, or actual
problems with the security, privacy or reliability of our broadband network,
may inhibit the acceptance of our services.
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The need to securely transmit confidential information over the Internet
has been a significant barrier to electronic commerce and communications over
the Internet. Any well-publicized compromise of security could deter more
people from using the Internet or our services or from using them to conduct
transactions that involve transmitting confidential information, such as
purchases of goods or services. Because many of our advertisers seek to
encourage people to use the Internet to purchase goods or services, our
business could be harmed if this were to occur. We may also incur significant
costs to protect against the threat of security breaches or to alleviate
problems caused by these breaches.
Our limited experience with international operations may prevent us from
growing our business outside the United States.
A key component of our strategy is to expand into international markets and
offer broadband and narrowband services in those markets. We have 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. Some of our investments in international joint ventures include an
option to purchase the interests of other joint venture stockholders which, if
not exercised by a specified date, gives the other joint venture stockholders
the right to purchase our interest in the joint venture for a nominal price.
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 broadband and narrowband 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;
. potential inability to use European customer information due to new
European governmental regulations; and
. lack of a developed cable infrastructure in many international markets.
We may be liable for our links to third-party web sites.
We could be exposed to liability with respect to the third-party web sites
that may be accessible through our services. These claims may allege, among
other things, that by linking to web sites operated by third parties, we may
be liable for copyright or trademark infringement or other unauthorized
actions by third parties through these web sites. Other claims may be based on
errors or false or misleading information provided by our services. Our
business could be harmed due to the cost of investigating and defending these
claims, even to the extent these types of claims do not result in liability.
Protection of our intellectual property rights is costly and difficult.
We regard our intellectual property, including our patents, copyrights,
trademarks, trade secrets, and similar intellectual property as critical to
our success. We rely upon patents, trademark and copyright law, trade secret
protection and confidentiality or license agreements to protect our
proprietary rights. Effective protection of intellectual property may not be
available in every country in which our products and services are available.
We cannot guarantee that the steps we have taken to protect our proprietary
rights will be adequate.
We may be subject to intellectual property infringement claims, which are
costly to defend and could limit our ability to use certain technologies in
the future.
Many parties are actively developing Internet-related technologies. We
believe that these parties will continue to take steps to protect these
technologies, including seeking patent protection. As a result, we believe
that disputes regarding the ownership of these technologies are likely to
arise in the future. From time to time, parties assert patent infringement
claims against us in the form of letters, lawsuits and other forms of
communications. In addition to patent claims, third parties may assert claims
against us alleging infringement of copyrights, trademark rights, trade secret
rights or other proprietary rights or alleging unfair competition.
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We may incur substantial expenses in defending against third-party
infringement claims regardless of the merit of the claims. In the event that
there is a determination that we have infringed third-party proprietary rights,
we could incur substantial monetary liability and be prevented from using the
rights in the future.
Our business depends on the continued growth in Internet use.
We operate in a new and rapidly evolving market. Our business may be
adversely affected if usage of the Internet or other online services does not
continue to grow. This growth could be hindered by a number of factors
including: the adequacy of the Internet's infrastructure to meet increased
usage demands; privacy and security concerns; and availability of cost-
effective services. Any of these issues could cause the Internet's performance
or level of usage to decline.
Future acquisitions could result in dilutive issuances of stock and the need
for additional financing.
We have typically paid for our acquisitions by issuing shares of our capital
stock. In the future, we may effect other large or small acquisitions by using
stock, and this will dilute our stockholders. We may also use cash to buy
companies or technologies in the future, as we did for a portion of the
purchase price for Bluemountain.com, and we may need to incur additional debt
to pay for these acquisitions. Acquisition financing may not be available on
favorable terms or at all. In addition, we will likely be required to amortize
significant amounts of goodwill and other intangible assets in connection with
future acquisitions, which would materially harm our results of operations.
We must manage our growth.
Our growth and recent acquisitions have placed a significant strain on our
managerial, operational, and financial resources. For example, we have grown
from 292 employees at June 30, 1997 to more than 2,300 employees at December
31, 1999. In addition, we plan to continue to hire additional personnel. To
manage our growth, we must continue to implement and improve our operational
and financial systems and to expand, train and manage our employee base. Any
failure to manage growth effectively could harm our business.
Government regulation and legal uncertainties relating to the Internet could
hinder the popularity of the Internet.
New Internet privacy and other laws. There are currently few laws or
regulations that specifically regulate communications or commerce on the
Internet. However, laws and regulations may be adopted in the future that
address issues such as user privacy, pricing, content and the characteristics
and quality of products and services. For example:
. The United States federal and various state governments have proposed
limitations on the collection and use of information regarding Internet
users. In October 1998, the European Union adopted a directive that may
result in limitations on our collection and use of information regarding
Internet users in Europe.
. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and
online service providers in a manner similar to long distance telephone
carriers and to impose access fees on these companies. This could
increase the cost of transmitting data over the Internet.
. A portion of the Telecommunications Act, which has since been ruled
unconstitutional, sought to prohibit transmitting certain types of
information and content over the Internet.
Moreover, it may take years to determine the extent to which existing laws
relating to issues such as property ownership, libel and personal privacy are
applicable to the Internet. Any new laws or regulations relating to the
Internet could harm our business.
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Tax laws. The tax treatment of the Internet and electronic commerce is
currently unsettled. A number of proposals have been made at the federal, state
and local level and by certain foreign governments that could impose taxes on
the sale of goods and services and certain other Internet activities. Our
business may be harmed by the passage of laws in the future imposing taxes or
other burdensome regulations on online commerce.
Other jurisdictions. Because Excite@Home's service will be available in
multiple states and foreign countries such jurisdictions may claim that it is
required to qualify to do business as a foreign corporation in each of these
states and foreign countries. If we fail to qualify as a foreign corporation in
a jurisdiction where we are required to do so, we could be subject to taxes and
penalties.
We could face liability for defamatory or indecent content provided on our
services.
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 against Internet and
online services providers. Our insurance may not adequately protect it from
these types of claims.
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 through their systems could require
us to implement measures to reduce its exposure to this liability. This may
require that we expend substantial resources or discontinue service or product
offerings. The increased focus on 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.
Year 2000 issues could affect the performance of our systems.
While not all Year 2000 date-related disruption scenarios have passed,
through the date of this prospectus, we have experienced no material
disruptions or other significant problems. There is a possibility of
disruptions in the future including errors that could still arise in our
internal and network information systems because of their failure to correctly
recognize and process date information after the calendar change from 1999 to
2000, or their inability to properly process the date February 29, 2000. We
also may yet experience supplier-related Year 2000 problems. If any of these
Year 2000 problems occur, our operations could be significantly hampered. We
are continuing to monitor and mitigate our exposure as appropriate, but based
on currently available information, management continues to believe that Year
2000-related disruptions or other problems, if any, will not have a significant
adverse impact on our operational results or financial condition. However, we
cannot be certain that Year 2000 issues will not have a material adverse impact
on us since it is still early in 2000.
Our future success depends on our ability to attract, retain and motivate
highly skilled employees.
Our future success depends on our ability to attract, retain and motivate
highly skilled employees. Competition for employees in the Internet industry is
intense, particularly in the Silicon Valley where we are headquartered.
Additionally, it is often more difficult to attract employees once a company's
stock is publicly traded because the exercise price of equity awards such as
stock options are based on the public market, which is highly volatile. We may
be unable to attract, assimilate or retain other highly qualified employees in
the future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. This risk is compounded by
the fact that we are controlled by our principal cable partners and therefore,
we may not have the same flexibility as a typical Silicon Valley company to
pursue initiatives proposed by management. Moreover, hiring and retention is
made more difficult due to the uncertainty concerning the relationship we will
have with our principal cable partners following the expiration of their
exclusivity obligations in June 2002.
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Risks Relating to Excite@Home's Broadband Services
Our broadband business is unproven, and it may not achieve profitability.
The profit potential of our broadband business model is unproven and our
broadband services may not achieve widespread consumer or commercial
acceptance. We have had difficulty predicting whether the pricing models for
our broadband services will prove to be viable, whether demand for our
broadband services will materialize at the prices our cable partners charge for
our broadband services, or whether current or future pricing levels will be
sustainable. If these pricing levels are not achieved or sustained or if our
broadband services do not achieve or sustain broad market acceptance, our
business will be significantly harmed.
Growth of our broadband service may be inhibited by factors beyond our
control.
Our ability to increase the number of subscribers to our broadband 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;
. 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 the roll-out of these products with the @Home
service; and
. the quality of customer and technical support our cable partners
provide.
We need to add subscribers at a rapid rate for our broadband business to
succeed, but we may not achieve our subscriber growth goals.
Our actual revenues or the rate at which we 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.
Our broadband subscriber growth is limited by installation and price
constraints.
Installation of the @Home service requires a customer service representative
of a cable partner to install a cable modem at a customer's location and
therefore can be time consuming. If we are unable to speed the installation of
our service, our subscriber growth could be constrained. 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
service. Recently, companies have begun to offer free Internet access with the
purchase of personal computers and some Internet service providers have reduced
or eliminated Internet access charges in exchange for placing advertisements on
a customer's computer screen. If these promotions become more widely used, or
if Internet access fees decline, consumers may be less willing to pay a premium
for broadband services, or our broadband services in particular.
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If we cannot maintain the scalability and speed of our @Home broadband
network, customers will not accept our broadband services.
Due to the limited deployment of our broadband services, the ability of our
broadband network to connect and manage a substantial number of subscribers at
high transmission speeds is unknown. Therefore, we face risks related to our
network's ability to be scaled up to accommodate increased subscriber levels
while maintaining performance. Our network may be unable to achieve or
maintain a high speed of data transmission, especially as the number of our
subscribers increases. Because of our reliance on regional data centers and
the cable infrastructure located in particular geographic areas to support our
broadband services, our and our cable partners' infrastructure must also be
able to accommodate increased subscribers in a particular area. If the
existing infrastructure for a geographic area does not accommodate additional
subscribers, network performance for an area could decline causing us to lose
subscribers in that area, especially if a cable partner was unwilling to
upgrade its infrastructure in that area.
In recent periods, the performance of the @Home network has experienced
some deterioration in some markets partially as a result of subscriber abuse
of the @Home service. While we are seeking to eliminate this abuse by
enforcing our acceptable-use policy and by limiting users' upstream bandwidth,
our failure to do so may result in slower network performance and reduced
customer demand for our services.
If new "DOCSIS" compliant cable modems are not deployed timely and
successfully, our subscriber growth could be constrained.
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 commercial availability
of DOCSIS-compliant cable modems is widespread, among other reasons.
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. If our cable partners are not able to obtain a sufficient
quantity of DOCSIS- compliant modems, our growth will be limited.
We also believe that in order to meet our subscriber goals, two-way cable
modems must also become widely available in other channels, such as through
personal computer manufacturers and through retail outlets. Currently, this
widespread availability has not yet occurred. In addition, these modems must
be easy for consumers to install themselves, rather than requiring a customer
service representative to perform the installation. If two-way cable modems do
not become quickly available in outlets other than through cable television
companies, or if they cannot be installed easily by consumers, it would be
difficult for us to attract large numbers of additional subscribers and our
business would be harmed.
Our broadband business may be impacted by cable unbundling proposals and
other government regulation.
Currently, our broadband services are not directly subject to regulations
of the Federal Communication Commission or any other federal, state or local
communications regulatory agency. However, changes in the regulatory
environment relating to the Internet, cable television or telecommunications
markets which could require regulatory compliance by us or which could impact
our exclusivity arrangements, our ability to provide broadband services to our
subscribers or our revenues include:
. The FCC or local agencies could require our cable partners to grant
competitors access to their cable systems. America Online, GTE,
MindSpring Enterprises, Inc., Consumers Union and other parties have
requested Congress, the Federal Communications Commission and state and
local authorities 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, or if
government authorities require third-party access to cable networks or
unaffiliated Internet service
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providers, our competitors may be able to provide service over our cable
partners' systems. The rates that our cable partners charge for this
third-party access, or for the @Home services, could also be subject to
rate regulation or tariffing requirements.
. Local governmental proceedings. Some local jurisdictions, including
Portland and Multnomah County, Oregon and Broward County, Florida, have
imposed third-party access requirements on AT&T and other cable
companies operating in those communities. The imposition of these
requirements has been challenged in Federal Courts. In June 1999, a U.S.
District Court upheld the third-party access requirement imposed on AT&T
by Portland and Multnomah County. This decision has been appealed to the
U.S. Court of Appeal for the Ninth Circuit. Numerous other local
jurisdictions have considered or are considering imposing similar third-
party access requirements and other municipalities may consider imposing
similar requirements in the future.
. Other litigation. In October 1999, GTE filed a lawsuit in a U.S.
District Court and in November 1999, a class action was filed, each
alleging violations of the federal antitrust laws. Although it is too
early to predict the outcome of this litigation, we could be forced to
pay damages, allow other service providers to utilize our network,
otherwise alter the way we do business or incur significant costs in
defending these litigations. Any of these outcomes could harm our
business. In addition, others could initiate litigation on similar legal
theories in the future.
. 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 broadband services successfully. For example,
reregulation of cable television rates may affect the speed at which our
cable partners upgrade their cable systems to carry our broadband
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 an additional cable service 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 thus it would be difficult or
impossible for us or our cable partners to operate without a uniform set
of franchise requirements.
We could lose subscribers to, distribution relationships for and revenues
from our broadband services to our competitors.
The markets for consumer and business broadband services are extremely
competitive, and we expect that competition will intensify in the future. Our
most direct competitors for broadband services include the following:
. Providers of cable-based Internet services. Media One Group, which AT&T
has agreed to acquire, and Time Warner Inc. 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 and we may compete for subscribers in the future if and when
our cable partners cease to be subject to their exclusivity obligations.
In addition, we compete with other providers of cable-based Internet
services, such as ISP Channel, Inc. and High Speed Access Corporation.
. Telecommunications providers. We compete with national long-distance and
local exchange carriers that offer high-speed, Internet access services
such as asymmetric digital subscriber line, known as DSL. Recently,
these services have been offered in a number of areas and at lower
prices than in the past. If the advanced services offered by these
companies are deregulated, this would further enhance the ability of
these companies to compete against our services.
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. 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 and other Internet portals and
online services that have announced broadband strategies, such as
Yahoo!.
Many of our competitors and potential competitors have substantially
greater financial, technical and marketing resources, larger subscriber bases,
longer operating histories, 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 us. We may not be able to
compete successfully against current or future competitors, and competitive
pressures could significantly harm our broadband subscriber base, our ability
to renew and enter into new distribution agreements and our revenues.
Our dependence on our network to provide our broadband services exposes us to
a significant risk of system failure.
Our operations for our broadband services 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 broadband 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 our broadband services. Any damage or failure that causes
interruptions in our network operations could harm our business.
Risks Related to Our Relationships With Our Cable Partners
The success of our business depends on our relationships with our cable
partners, most of which have agreed to provide our broadband services on an
exclusive basis. We have also agreed not to provide a variety of Internet
services in the areas covered by our cable partners. Our agreements with our
cable partners are complex. Some of the risks associated with these
relationships are set forth below. For a summary of some of the key aspects of
these agreements, you should refer to our annual report on Form 10-K/A for the
year ended December 31, 1998.
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 our broadband 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 December 31, 1999,
approximately 40% of our North American cable partners' cable infrastructure
was capable of delivering the @Home service. Our cable partners have announced
and are implementing 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. Furthermore, because of
consolidation in the cable television industry, as well as the sale or
transfer of cable assets among cable television operators, many cable
companies have delayed upgrading particular systems that they plan to sell or
transfer. If these upgrades are not completed in a timely manner, our
broadband services may not be available on a widespread basis and we may not
be able to increase our subscriber base at the rate we anticipate. 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 broadband
services. As has happened in the past, even if a cable partner upgrades its
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cable infrastructure, the upgraded infrastructure may not function properly,
and therefore may cause a delay in the availability of our broadband services
for particular areas. The failure of our cable partners to complete these
upgrades in a timely and satisfactory manner, or at all, would prevent us from
delivering broadband services and would significantly harm our business.
Our cable partners are not generally obligated to carry our broadband
services, and the exclusivity obligations that prevent them from carrying
competing services may be terminated.
Most of 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 broadband services. Also, the exclusivity obligations of our principal
cable partners, AT&T, Comcast Corporation, Cox Communications, Inc. and
Cablevision Systems Corp., expire on June 4, 2002, and may be terminated sooner
under some circumstances, as follows:
. principal cable partners may terminate all their exclusivity obligations
upon a change in law that materially impairs some of their rights;
. 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 12 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;
. Comcast or Cox may terminate the exclusivity provisions of our principal
cable partners if AT&T and its affiliates do not meet specified
subscriber penetration levels for the @Home service. On June 4, 1999,
Cox had this right, but Cox agreed to waive it for 1999; and
. Comcast may terminate its own exclusivity obligations at any time if it
allows us to repurchase a portion of Comcast's equity interest in
Excite@Home. Comcast has informed us that it has 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, changes were made to the corporate governance
provisions of our certificate of incorporation and bylaws. These 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 goals for the twelve months following June 4, 1999
above its current goal for that period.
In December 1999, AT&T announced that customers of its broadband cable
systems will be able to choose their Internet service providers for high-speed
Internet access upon expiration of our exclusivity agreement with AT&T.
Therefore, AT&T will not extend its current exclusive agreement with us.
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 and our cable partners are continuing to explore the relationships we
will have after our exclusivity obligations expire as well as possible
strategic alternatives to our current relationships.
We depend on our cable partners to promote our services and obtain new
subscribers.
The rate at which we are able to obtain new subscribers depends not only on
the degree to which our cable partners upgrade their cable systems but also on
the level and effectiveness of the efforts made by our cable partners to
promote our services. Our cable partners have achieved different levels of
subscriber penetration. In Canada, for example, where our cable partners have
high levels of upgraded cable systems, and
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faced early competition from other providers of high speed data services, we
have relatively high levels of subscriber penetration (exceeding those in the
United States). Among our principal U.S. cable partners, AT&T, Cox and Comcast
are actively promoting our services and are beginning to increase their
penetration rates. Cablevision, however, has deployed our service to only a
small number of subscribers and continues to offer its own online service
called Optimum Online in certain of its cable systems. We cannot predict the
rate at which our cable partners will add new subscribers to our services. If
our cable partners do not actively and effectively promote our services, we
will not be able to reach the level of subscribers necessary to achieve a
profitable business model.
We are controlled by AT&T, Cox and Comcast.
TCI controls approximately 57% of our voting power. AT&T owns TCI and
therefore controls this voting power. Currently, four of our eleven directors
are directors, officers or employees of TCI, AT&T or their affiliates. AT&T
currently owns all 30,800,000 outstanding shares of our Series B common stock,
each of which carries ten votes per share. This Series B common stock ownership
gives AT&T 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 AT&T
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 AT&T'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.
We depend on a continuing cooperative relationship with AT&T, Cox, Comcast
and other large stockholders to take action that requires stockholder consent.
It is possible that AT&T's stockholders' objectives will diverge from what
management considers to be our optimum strategy.
In connection with the proposed issuance of our tracking stock, our
principal cable stockholders may require us to extend the requirement in our
certificate of incorporation that all board actions must be approved by four of
our five Series B directors beyond the time that AT&T no longer holds a
majority of our voting power. Accordingly, we may adopt amendments to our
certificate of incorporation that would enable AT&T, Comcast and Cox to retain
control of our subscription business even if we issue additional stock that
dilutes AT&T's voting control below 50% of our outstanding voting shares.
Warrants issued to our cable partners may result in additional dilution to our
stockholders.
We have entered into agreements with Cablevision, Rogers Cablesystems
Limited, Shaw Cablesystems Ltd. and other cable partners under which we issued
warrants to purchase shares of our Series A common stock. Under these
agreements, warrants to purchase approximately 28.5 million shares of our
Series A common stock at an average price of $1.66 per share were exercisable
as of December 31, 1999. To the extent that Cablevision, Rogers, Shaw or other
cable partners become eligible to and exercise their warrants, our stockholders
would experience substantial dilution.
We also may issue additional stock, or warrants to purchase stock, at prices
equal to or less than fair market value in connection with efforts to expand
distribution of the @Home service.
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Risks Related to Our Narrowband Services
Our narrowband services could lose users, advertisers and revenues to
competitors.
Our narrowband services compete 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 this
market. These competitors include:
. Internet portal companies such as Disney's Go Network, Lycos, Netscape's
Netcenter and Yahoo!;
. online 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 a wide variety of online information, entertainment and
community services such as services that are targeted to vertical
markets or electronic commerce services.
Many providers of Internet services have been entering into distribution
arrangements, co-branding arrangements, content arrangements and other
strategic partnering arrangements with ISPs, online service providers,
providers of web browsers, operators of high-traffic web sites and other
businesses in an attempt to increase traffic and page views, thereby making
their web sites more attractive to advertisers while also making it more
difficult for consumers to link to services. To the extent that our direct
competitors or other web site operators are able to enter into successful
strategic relationships, these competitors and web sites could experience
increases in traffic and page views, or the traffic and page views on our
narrowband services could remain constant or decline, either of which could
harm our business by making these web sites appear more attractive to
advertisers.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories in the Internet market, greater
name recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we have. These competitors may be able
to undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, distribution
partners, advertisers and content providers. Further, it is possible that our
competitors could develop search and retrieval services or other online
services that are equal or superior to ours or that achieve greater market
acceptance than our offerings.
The Internet in general, and our narrowband services specifically, also
must compete with traditional advertising media, such as print, radio and
television, for a share of advertisers' total advertising budgets. To the
extent that the Internet is not perceived as an effective advertising medium,
advertisers may be reluctant to devote a significant portion of their
advertising budgets to Internet advertising.
If Internet users do not continue to use Internet portal sites, our business
could be harmed.
The success of our Internet portal web sites is also dependent on Internet
users continuing to use "portal" web sites for their information needs.
Internet measurement services have reported that the number of unique users of
Internet portal sites has been decreasing in recent periods. If Internet users
begin to become less dependent on portal sites, and instead go directly to
particular web sites, our traffic levels could decrease, which could make our
sites less attractive to advertisers.
Our systems may not be able to accommodate increases in the number of users
of our narrowband services.
Our web sites for the Excite Network are currently hosted and operated on a
computer network infrastructure separate from our broadband services. The
Excite Network must accommodate a high volume of traffic and deliver
frequently-updated information. The web sites for the Excite Network have in
the past, and may in the future, experience slower response times or other
problems for a variety of reasons. We also depend
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on third party information providers to provide updated information and content
for these services on a timely basis. The Excite Network could experience
disruptions or interruption in service due to the failure or delay in the
transmission or receipt of this information. In addition, the users of these
Excite Network services depend on Internet service providers, online service
providers and other web site operators for access to the Excite Network. Each
of these parties has experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems. These types of occurrences could cause users to
perceive the Excite Network as not functioning properly and therefore cause
them to use other services.
We depend on several third-party relationships for users, advertisers and
revenues.
We depend on a number of third party relationships to provide users and
content for the Excite Network, including agreements for links to narrowband
services to be placed on high-traffic web sites and agreements for third
parties to provide content, games and e-mail for narrowband web sites. If these
relationships terminate and we are not able to replace them, we could lose
users or advertisers.
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.
DIVIDEND POLICY
We have never paid any cash dividends on our capital 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.
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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. Except for the relationships described below, the
selling stockholders have not had any other position, office or other material
relationship with us or any of our predecessors or affiliates.
Except as noted below, the share information provided in the table below is
based on information provided to us by the selling stockholders as of February
15, 2000. Each selling stockholder beneficially owns less than 1% of our
outstanding Series A common stock, based on 361,065,615 shares of Series A
common stock outstanding as of February 15, 2000. We may update, amend or
supplement this prospectus from time to time to update the disclosure in this
section. The former stockholders of Hartford House, Ltd. and Kendara, Inc.
received their shares in connection with our acquisitions of Hartford House,
Ltd. in December 1999 and Kendara, Inc. in February 2000.
The selling stockholders may from time to time offer and sell any or all of
their shares that are registered under this prospectus. Because the selling
stockholders are not obligated to sell their shares, and because the selling
stockholders may also acquire publicly traded shares of our Series A common
stock, we cannot estimate how many shares of the selling stockholders will
beneficially own after this offering.
<TABLE>
<CAPTION>
Shares Total
Owned Shares
Before that May
the be
Name Offering Offered
---- --------- ---------
<S> <C> <C>
Fortuna Ventures, L.P(1)................................... 1,553,240 1,553,240
Stephen Schutz and Susan Schutz, Trustees under Trust dated
December 19, 1985(1)...................................... 1,062,665 1,062,665
Jared Schutz(1)............................................ 823,093 823,093
Mohr, Davidow Ventures V, L.P.(2).......................... 475,446 475,446
Institutional Venture Partners VIII, L.P.(3)............... 451,598 451,598
Pavani Diwanji(4).......................................... 286,580 286,580
Freeman Murray(5).......................................... 233,996 233,996
Bret Comolli(6)............................................ 80,791 80,791
IVP Broadband Fund L.P.(7)................................. 51,123 51,123
Robert Polis, as Trustee of the Robert Nathan Polis
Revocable Trust dated August 25, 1993(1).................. 46,472 46,472
Mohr, Davidow Ventures V, L.P. as nominee for MDV
Entrepreneurs' Network Fund II(A), L.P. and MDV
Entrepreneurs' Network Fund II(B), L.P.(8)................ 35,786 35,786
Brian Wilson............................................... 29,578 29,578
Jean Michel Leon and Christilla Leon....................... 19,719 19,719
Gleb Budman................................................ 14,000 14,000
Stuart Cheshire............................................ 11,831 11,831
Jason Knight............................................... 9,859 9,859
Heinrich Gantenbein........................................ 9,859 9,859
IVM Investment Fund VIII, LLC(9)........................... 8,512 8,512
Paul B. Callahan........................................... 7,887 7,887
Vlad Bolshakov............................................. 7,887 7,887
Arthur Van Hoff............................................ 7,697 7,697
David Cheriton............................................. 7,697 7,697
Christopher Kelly.......................................... 5,915 5,915
G & H Partners............................................. 5,842 5,842
Scott Eikenberry and Ashley Eikenberry..................... 4,929 4,929
Cory Cooke and Janelle Hargrove............................ 4,929 4,929
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Shares Total
Owned Shares
Before that May
the be
Name Offering Offered
---- --------- ---------
<S> <C> <C>
Noel Wilson................................................. 4,929 4,929
Michael Sheridan............................................ 4,046 4,046
Donna Novitsky 3,943 3,943
Wendy Riggs................................................. 1,971 1,971
Steve Jessey................................................ 1,854 1,854
Martin Foster............................................... 1,676 1,676
Carol Dressler.............................................. 1,603 1,603
Richard P. Yoon............................................. 1,577 1,577
Laura Bidinger and Joseph Bidinger.......................... 1,577 1,577
Miko Matsumora.............................................. 1,577 1,577
Bob Adler................................................... 1,090 1,090
Melissa Criqui.............................................. 788 788
James Gosling............................................... 394 394
Geoff Baehr................................................. 394 394
Steve Arnold................................................ 394 394
Ashmeet Sidana.............................................. 394 394
Jeff Whipps................................................. 394 394
Marko Balabanovic........................................... 49 49
Jane Prusakova.............................................. 19 19
--------- ---------
Total..................................................... 5,285,600 5,285,600
</TABLE>
- --------
(1) Based on information provided to us as of February 25, 2000.
(2) Prior to our acquisition of Kendara, Mohr, Davidow Ventures V, L.P. and
Mohr, Davidow Ventures V, L.P. as nominee for MDV Entrepreneurs' Network
Fund II(A), L.P. and MDV Entrepreneurs' Network Fund II(B), L.P. together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Jonathan Feiber, a representative of these partnerships, served as a
director of Kendara.
(3) Prior to our acquisition of Kendara, Institutional Venture Partners VIII,
L.P., IVP Broadband Fund L.P. and IVM Investment Fund VIII, LLC together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Timothy M. Haley, a representative of these partnerships, served as a
director of Kendara.
(4) Pavani Diwanji was Chief Technical Officer and a director of Kendara. Prior
to our acquisition of Kendara, Ms. Diwanji held approximately 23.2% of the
fully-diluted common shares of Kendara.
(5) Freeman Murray was Secretary of Kendara. Prior to our acquisition of
Kendara, Mr. Freeman held approximately 19.0% of the fully-diluted common
shares of Kendara.
(6) Bret Comolli was Chief Executive Officer and a director of Kendara. Prior
to our acquisition of Kendara, Mr. Comolli held approximately 10.5% of the
fully-diluted common shares of Kendara.
(7) Prior to our acquisition of Kendara, Institutional Venture Partners VIII,
L.P., IVP Broadband Fund L.P. and IVM Investment Fund VIII, LLC together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Timothy M. Haley, a representative of these partnerships, served as a
director of Kendara.
(8) Prior to our acquisition of Kendara, Mohr, Davidow Ventures V, L.P. and
Mohr, Davidow Ventures V, L.P. as nominee for MDV Entrepreneurs' Network
Fund II(A), L.P. and MDV Entrepreneurs' Network Fund II(B), L.P. together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Jonathan Feiber, a representative of these partnerships, served as a
director of Kendara.
(9) Prior to our acquisition of Kendara, Institutional Venture Partners VIII,
L.P., IVP Broadband Fund L.P. and IVM Investment Fund VIII, LLC together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Jonathan Feiber, a representative of these partnerships, served as a
director of Kendara.
21
<PAGE>
In the acquisition of Kendara, in addition to issuing 1,475,211shares of our
Series A common stock, we issued 202.130 shares of our newly-created Series B
preferred stock which automatically converts into approximately 202,130 shares
of our Series A common stock on February 10, 2001. In addition, we issued
1,279.065 shares of our newly-created Series C preferred stock to Pavani
Diwanji, Freeman Murray and Bret Comolli which automatically converts into
approximately 1,279,065 shares of our Series A common stock as such shares vest
pursuant to stock purchase agreements or option agreements between Kendara and
each of Ms. Diwanji, Mr. Murray and Mr. Comolli.
22
<PAGE>
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 securities may be
deemed to be underwriters, and any profits on the sale of the securities 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, they may be subject to statutory liabilities, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
In addition, some of the selling stockholders are venture capital funds,
corporations or trusts which may, in the future, distribute their shares to
their partners, stockholders or trust beneficiaries, respectively, which
distributees may likewise distribute such shares to their partners,
stockholders or trust beneficiaries. Those shares may later be sold by those
partners, stockholders or trust beneficiaries, or by any of their respective
distributees.
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 the over-the-counter
market. The shares may be sold at then prevailing market prices, at prices
related to prevailing market prices or at negotiated prices. The 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 that
the shares 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 they may transfer, devise or gift these shares by other
means.
The shares may be sold according to one or more of the following methods:
. a block trade in which the broker or dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
. purchases by a broker or dealer as principal and resale by the broker or
dealer for its account as allowed under this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. an exchange distribution under the rules of the exchange;
. face-to-face transactions between sellers and purchasers without a
broker-dealer; and
. by writing options.
Some persons participating in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities, including
the entry of stabilizing bids or syndicate covering transactions or the
imposition of penalty bids. The selling stockholders and any other person
participating in a distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder including Regulation M.
This regulation may limit the timing of purchases and sales of any of the
securities by the selling stockholders and any other person. The anti-
manipulation rules under the Exchange Act may apply to sales of securities in
the market and to the activities of the selling stockholders and their
affiliates. Furthermore, Regulation M of the Exchange Act may restrict the
ability of any person engaged in the distribution of the securities to engage
in market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
All of the foregoing may affect the marketability of the securities and the
ability of any person or entity to engage in market-making activities with
respect to the securities.
23
<PAGE>
Hedging and other transactions with broker-dealers. In connection with
distributions of the securities, the selling stockholders may enter into
hedging transactions with broker-dealers. In connection with these
transactions, broker-dealers may engage in short sales of the registered
securities in the course of hedging the positions they assume with selling
stockholders. The selling stockholders may also sell securities short and
redeliver the securities to close out short positions. The selling stockholders
may also enter into option or other transactions with broker-dealers which
require the delivery to the broker-dealer of the registered securities. The
broker-dealer may then resell or transfer these securities under this
prospectus. A selling stockholder may also loan or pledge the registered
securities to a broker-dealer and the broker-dealer may sell the securities so
loaned or, upon a default, the broker-dealer may effect sales of the pledged
securities under this prospectus.
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 securities 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 securities being offered;
. the price at which the securities 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 reallowed or paid to dealers; and
. that the participating broker-dealers did not conduct any investigation
to verify the information in this prospectus 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 securities. In addition, if
we receive notice from a selling stockholder that a donee or pledgee intends to
sell more than 500 shares of Series A common stock, a supplement to this
prospectus will be filed.
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.
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 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.
The Series A common stock offered under this prospectus was originally
issued to former stockholders of Bluemountain.com and Kendara, Inc. in
connection with the acquisitions of these companies pursuant to exemptions from
the registration requirements of the Securities Act provided by Section 4(2)
thereof and/or Regulation D promulgated thereunder. In connection with the
acquisitions of Bluemountain.com and Kendara, we agreed to register the shares
of Series A common stock offered under this prospectus under the Securities
Act. Excite@Home and the selling stockholders have agreed to indemnify each
other, and their respective controlling persons, against specific liabilities,
including liabilities arising under the Securities Act and Exchange Act, in
connection with the offer and sale of the shares. In addition, the selling
stockholders may indemnify brokers, dealers, agents or underwriters that
participate in transactions involving sales of the shares against specific
liabilities, including liabilities arising under the Securities Act and/or
Exchange Act.
24
<PAGE>
LEGAL MATTERS
Fenwick & West LLP, Palo Alto, California, will provide us with an opinion as
to legal matters in connection with the shares of Series A common stock that
may be offered with this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our annual report on Form 10-K/A 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 consolidated 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.
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-3 of which this prospectus is a
part, and the exhibits filed with this registration statement and
incorporated into the registration statement by reference;
. 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;
. the registration of our Series A common stock on Form 8-A filed on June
13, 1997 under Section 12(g) of the Exchange Act, including any
amendment or report filed for the purpose of updating such description;
. our quarterly reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1999;
. our current reports on Form 8-K filed with the SEC on January 14, 1999
(as amended on February 19, 1999), February 19, 1999, April 8, 1999,
June 14, 1999 (as amended on August 13, 1999), August 2, 1999, October
27, 1999, December 6, 1999 and December 22, 1999; and
. all other information that we file with the Commission under to
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 Room 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.
25
<PAGE>
We have filed with the Commission a registration statement on Form S-3 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 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.
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF EXCITE@HOME APPEARS HERE]
At Home Corporation
5,285,600 Shares of
Series A common stock
----------------
PROSPECTUS
March , 2000
----------------
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. The selling stockholders are offering to sell, and
seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered hereby. Normal commission expenses and brokerage fees are payable
individually by the selling stockholders. All amounts are estimated except the
Securities and Exchange Commission registration fee and the Nasdaq National
Market filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 46,702.24
Nasdaq National Market filing fee.................................. 17,500.00
Accounting fees and expenses....................................... 10,000.00
Legal fees and expenses............................................ 30,000.00
Miscellaneous...................................................... 5,797.76
-----------
Total............................................................ $110,000.00
===========
</TABLE>
ITEM 15. Indemnification of Directors and Officers.
As permitted by the Delaware General Corporation Law, the registrant's
certificate of incorporation, as amended and restated, includes a provision
that eliminates the personal liability of its directors to the registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
. for any breach of the director's duty of loyalty to the corporation or
its stockholders;
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law; and
. for any transaction from which the director derived an improper personal
benefit.
As permitted by Section 145 of the Delaware General Corporation Law, the
registrant's certificate of incorporation, as amended and restated, further
provides:
. for mandatory indemnification, to the fullest extent permitted by
applicable law, for any person who is or was a director or officer, or
is or was serving at the request of the registrant as a director,
officer, employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or nonprofit entity, including service
with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by
this person;
. that the registrant's obligation to indemnify any person who was or is
serving at the registrant's request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
enterprise or nonprofit entity must be reduced by any amount the person
may collect as indemnification from the other corporation, partnership,
joint venture, trust, enterprise or nonprofit entity;
. that the registrant must advance to all indemnified parties the expenses
(including attorneys' fees) incurred in defending any proceeding
provided that indemnified parties (if they are directors or officers)
must provide the registrant an undertaking to repay the advances if
indemnification is determined to be unavailable;
. that the rights conferred in the certificate of incorporation are not
exclusive; and
. that the registrant may not retroactively amend the certification of
incorporation provisions relating to indemnity.
II-1
<PAGE>
The indemnification provision in the registrant's certificate of
incorporation and the indemnification agreements entered into between the
registrant and each of its directors and executive officers may be sufficiently
broad to permit indemnification of the registrant's directors and officers for
liabilities arising under the Securities Act. The registrant has also obtained
directors' and officers' liability insurance.
The following documents are incorporated by reference:
Document
1. Fifth Amended and Restated Certificate of Incorporation (see Exhibit
3.01).
2. Form of Indemnification Agreement entered into between the registrant
and each of its directors and executive officers (incorporated by
reference to Exhibit 10.09 to the registrant's registration statement
on Form S-1 (File No. 333-27323) declared effective by the Commission
on July 11, 1997).
In addition, the registrant has entered into various merger agreements and
related registration rights agreements in connection with its acquisitions of
and mergers with various companies under which the parties to those agreements
have agreed to indemnify the registrant and its directors, officers, employees
and controlling persons against specified liabilities, including liabilities
arising under the Securities Act, the Exchange Act or other federal or state
laws.
Item 16. Exhibits.
The following exhibits are filed with this registration statement or
incorporated into this registration statement by reference:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
4.01 The Registrant's Fifth Amended and Restated Certificate of
Incorporation filed with the Delaware Secretary of State on May 28,
1999 (incorporated by reference to Exhibit 4.01 to the Registrant's
registration statement on Form S-8, File No. 333-79883, filed with the
Commission on June 3, 1999).
4.02 The Registrant's Second Amended and Restated Bylaws as adopted on July
16, 1997 (incorporated by reference to Exhibit 3.05 to the
Registrant's registration statement on Form S-1, File No. 333-27323,
declared effective by the Commission on July 11, 1997).
4.03 Form of certificate of the Registrant's Series A Common Stock
(incorporated by reference to Exhibit 4.05 to the Registrant's
registration statement on Form S-1, File No. 333-27323, declared
effective by the Commission on July 11, 1997).
4.04 Certificate of Designation of Series B Non-Voting Convertible
Preferred Stock of At Home Corporation.
4.05 Certificate of Designation of Series C Non-Voting Convertible
Preferred Stock of At Home Corporation.
4.06 Agreement and Plan of Reorganization, dated October 23, 1999, by and
among At Home Corporation and Hartford House, Ltd. (incorporated by
reference to Exhibit 2.01 of our Quarterly Report on Form 10-Q for the
quarter ending on September 30, 1999).
5.01 Opinion of Fenwick & West LLP regarding the legality of the shares of
Series A common stock being registered.
23.01 Consent of Ernst & Young LLP, Independent Auditors.
23.02 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.03 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.01 Power of attorney (see page II-4 of this registration statement).
</TABLE>
II-2
<PAGE>
ITEM 17. Undertakings.
The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(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 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 the 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 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.
(6) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(7) For purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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-3 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 2nd
day of March, 2000.
AT HOME CORPORATION
/s/ George Bell
By: _________________________________
George Bell
President and Chief Executive
Officer
POWER OF ATTORNEY
Each individual whose signature appears below constitutes and appoints George
Bell, Kenneth A. Goldman and David G. Pine, and each of them, his true and
lawful attorneys-in-fact and agents, each with the 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, and to sign any registration statement for the same offering covered
by this registration statement that is to be effective upon filing pursuant to
Rule 415 promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, 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 of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
Principal Executive Officer:
<S> <C> <C>
/s/ George Bell President, Chief Executive March 2, 2000
____________________________________ Officer and Director
George Bell
Principal Financial Officer:
/s/ Kenneth A. Goldman Senior Vice President and March 2, 2000
____________________________________ Chief Financial Officer
Kenneth A. Goldman
Principal Accounting Officer:
/s/ Robert A. Lerner Corporate Controller March 2, 2000
____________________________________
Robert A. Lerner
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
Additional Directors:
<S> <C> <C>
/s/ Thomas A. Jermoluk Chairman March 2, 2000
____________________________________
Thomas A. Jermoluk
/s/ William R. Hearst III Director March 2, 2000
____________________________________
William R. Hearst III
____________________________________ Director
C. Michael Armstrong
____________________________________ Director
L. John Doerr
/s/ John C. Malone Director March 2, 2000
____________________________________
John C. Malone
____________________________________ Director
John C. Petrillo
/s/ Brian L. Roberts Director March 2, 2000
____________________________________
Brian L. Roberts
____________________________________ Director
Ray Ligun
/s/ David M. Woodrow Director March 2, 2000
____________________________________
David M. Woodrow
Director
____________________________________
Ted Rogers
</TABLE>
II-5
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
4.01 The Registrant's Fifth Amended and Restated Certificate of
Incorporation filed with the Delaware Secretary of State on May 28,
1999 (incorporated by reference to Exhibit 4.01 to the Registrant's
registration statement on Form S-8, File No. 333-79883, filed with the
Commission on June 3, 1999).
4.02 The Registrant's Second Amended and Restated Bylaws as adopted on July
16, 1997 (incorporated by reference to Exhibit 3.05 to the
Registrant's registration statement on Form S-1, File No. 333-27323,
declared effective by the Commission on July 11, 1997).
4.03 Form of certificate of the Registrant's Series A Common Stock
(incorporated by reference to Exhibit 4.05 to the Registrant's
registration statement on Form S-1, File No. 333-27323, declared
effective by the Commission on July 11, 1997).
4.04 Certificate of Designation of Series B Non-Voting Convertible
Preferred Stock of At Home Corporation.
4.05 Certificate of Designation of Series C Non-Voting Convertible
Preferred Stock of At Home Corporation.
4.06 Agreement and Plan of Reorganization, dated October 23, 1999, by and
among At Home Corporation and Hartford House, Ltd. (incorporated by
reference to Exhibit 2.01 of our Quarterly Report on Form 10-Q for the
quarter ending on September 30, 1999).
5.01 Opinion of Fenwick & West LLP regarding the legality of the shares of
Series A common stock being registered.
23.01 Consent of Ernst & Young LLP, Independent Auditors.
23.02 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.03 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.01 Power of attorney (see page II-4 of this registration statement).
</TABLE>
<PAGE>
EXHIBIT 4.04
CERTIFICATE OF DESIGNATION
of
SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
of
AT HOME CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------------------
At Home Corporation, a Delaware corporation (the "Company"), does hereby
certify that pursuant to the authority granted to and vested in the Board of
Directors of the Company (the "Board of Directors" or the "Board") in accordance
with the provisions of Article IV, Section C of the Fifth Amended and Restated
Certificate of Incorporation of the Company, and in accordance with the
provisions of Section 151 of the Delaware General Corporation Law, the Company's
Board of Directors has duly adopted the following resolutions creating a series
of Preferred Stock, par value $0.01 per share ("Preferred Stock"), of the
Company designated as Series B Non-Voting Convertible Preferred Stock.
RESOLVED, that the Company hereby designates and creates a series of
Preferred Stock of the Company and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and limitations thereof as
follows:
A. Designation and Amount. Of the 9,650,000 shares of Preferred Stock
----------------------
authorized to be issued by the Company, 1,008 shares shall be designated as
"Series B Non-Voting Convertible Preferred Stock" ("Series B Preferred Stock").
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
--------
Series B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series B Preferred
Stock.
B. Rights, Preferences and Restrictions of Preferred Stock. The rights,
-------------------------------------------------------
preferences, restrictions and other matters relating to the Series B Preferred
Stock are as follows:
1. Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any other stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, and subject to Section
5(c)(ii) hereof, the holders of shares of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, non-cumulative dividends in an amount
(if any) per share (rounded to the nearest cent), subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Series A Common Stock, par value $0.01 per share
(the "Common Stock") of the Company or other distribution payable in securities,
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock. In the event the Company shall at
any time declare or pay any dividend on the
<PAGE>
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which such holders of shares of Series B Preferred Stock
were entitled to immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) The Company shall declare a dividend or distribution on the
Series B Preferred Stock as provided in subsection (a) of this Section at the
same time it declares a dividend or distribution on the Common Stock (other than
a dividend or distribution payable in shares of Common Stock or other
distribution payable in securities). The Board of Directors shall fix a record
date for the determination of holders of shares of Series B Preferred Stock
entitled to receive payment of such dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date fixed for the
payment thereof and shall be on the same day as the record date fixed for the
Common Stock.
(c) Dividends payable pursuant to subsection (a) of this Section
shall not be mandatory or cumulative (except as provided in subsection (b) of
this Section) and no rights or interest shall accrue to the holders of the
Series B Preferred Stock by reason of the fact that the Company shall fail to
declare or pay dividends on the Preferred Stock in any amount in any calendar
year or any fiscal year of the Company, whether or not earnings of the Company
in any calendar year or fiscal year were sufficient to pay such dividends in
whole or in part.
(d) Except as provided in this Section 1, holders of the Series B
Preferred Stock shall not be entitled to receive any dividends.
2. Voting Rights. Except as otherwise provided by law, holders of
-------------
Series B Preferred Stock shall have no voting rights and their consent shall not
be required for taking any corporate action.
3. Reacquired and Converted Shares. Any shares of Series B Preferred
-------------------------------
Stock purchased, received upon conversion or otherwise acquired by the Company
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof and shall not be reissued.
4. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Upon any liquidation, dissolution or winding up of the
Company, the holders of shares of Series B Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, on a pro rata pari
passu basis with the Common Stock, plus an amount equal to any declared but
unpaid dividends. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which such holders of shares of Series
B Preferred Stock were entitled to immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after
<PAGE>
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) The foregoing rights upon liquidation, dissolution or winding
up provided to the holders of Series B Preferred Stock shall be subject to the
rights of the holders of any other series of Preferred Stock (or any other
stock) ranking prior and superior to the Series B Preferred Stock upon
liquidation, dissolution or winding up.
5. Conversion.
----------
(a) Automatic Conversion. On the Conversion Date, each outstanding
--------------------
shares of Series B Preferred Stock shall automatically convert into the right to
receive that number of shares of Common Stock as equals the Common Stock
Conversion Number.
(b) Mechanics of Conversion. Upon the conversion of the Series B
-----------------------
Preferred Stock as specified in Section 5(a) above, the outstanding shares of
Series B Preferred Stock shall be converted into shares of Common Stock
automatically without the need for any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Company or its transfer agent; provided, however,
-------- -------
that the Company shall not be obligated to issue certificates evidencing such
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Series B Preferred Stock are either delivered to the
Company or its transfer agent as provided below, or the holder notifies the
Company or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such certificates.
Following the occurrence of such automatic conversion of the Series B Preferred
Stock, the holders of Series B Preferred Stock shall surrender the certificates
representing such shares at the office of the Company or any transfer agent for
the Series B Preferred Stock. Thereupon, there shall be issued and delivered to
such holder promptly at such office and in its name as shown on such surrendered
certificate or certificates, a certificate or certificates for the number of
shares of Common Stock into which the shares of Series B Preferred Stock
surrendered were converted on the date on which such automatic conversion
occurred. Such conversion shall be deemed to have been made immediately prior to
the close of business on the Conversion Date, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(c) Adjustments to Common Stock Conversion Number for Certain
---------------------------------------------------------
Diluting Issues.
- ---------------
(i) Adjustments for Dividends, Splits, Subdivisions,
------------------------------------------------
Combinations or Consolidation of Common Stock. In the event the outstanding
- ---------------------------------------------
shares of Common Stock shall be increased by stock dividend payable in Common
Stock, stock split, subdivision, or other similar transaction into a greater
number of shares of Common Stock, the Common Stock Conversion Number of the
Series B Preferred Stock then in effect shall, concurrently with the
effectiveness of such event, be increased proportionally. In the event the
outstanding shares of Common Stock shall be decreased by reverse stock split,
combination, consolidation, or other similar transaction into a lesser number of
shares of Common Stock, the Common Stock Conversion Number of the Series B
Preferred Stock then in effect shall, concurrently with the effectiveness of
such event, be decreased proportionally.
(ii) Adjustments for Other Distributions. In the event the
-----------------------------------
Company at any time or from time to time makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive any distribution
payable in securities (other than shares of Common Stock and other than any
distribution which results in the payment of a dividend
<PAGE>
described in Section 1), then, and in each such event, provision shall be made
so that the holders of Series B Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Company which they would have
received had their Series B Preferred Stock been converted into Common Stock
immediately prior to the date of such event and had they thereafter, during the
period immediately prior to the date of such event to and including the date of
conversion, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section 5 with respect to the rights of the holders of the Series B
Preferred Stock.
(iii) Adjustments for Reclassification, Exchange and
----------------------------------------------
Substitution. If the Common Stock issuable upon conversion of the Series B
- ------------
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares provided for above), then following the effectiveness of such
reorganization or reclassification the Series B Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of such
other class or classes of stock into which the Common Stock was converted in
such reorganization or reclassification that would have been subject to receipt
by the holders upon conversion of such Series B Preferred Stock immediately
before that change.
(d) No Impairment. Except as provided in Section 5, the Company
-------------
will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company but will at all times in good faith assist in the
carrying out of all the provisions of this Section 5 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B Preferred Stock against
impairment.
(e) Certificate as to Adjustments of the Common Stock Conversion
------------------------------------------------------------
Number. Upon the occurrence of each adjustment or readjustment of the Common
- -----
Stock Conversion Number for the Series B Preferred Stock pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of any holder of Series B Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Common Stock Conversion Number at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series B
Preferred Stock.
(f) Notices of Record Date. In the event that this Company shall
----------------------
propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock, or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights;
<PAGE>
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease, or convey all or substantially all its property or
business, or to liquidate, dissolve, or wind up; then, in connection with each
such event, this Company shall send to the holders of Series B Preferred Stock:
(1) at least 10 days prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii)
and (iv) above, at least 20 days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event or the record date for
the determination of such holders if such record date is earlier).
Each such written notice shall be delivered personally, or given by first
class mail, postage prepaid, addressed to the holders of the Series B Preferred
Stock at the address for each such holder as shown on the books of this Company.
(g) Issue Taxes. The Company shall pay any and all issue and other
-----------
taxes (other than income taxes) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of Series B Preferred
Stock pursuant hereto; provided, however, that the Company shall not be
obligated to pay any transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.
(h) Reservation of Stock Issuable Upon Conversion. At the
---------------------------------------------
Conversion Date, the Company shall have reserved and have available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series B Preferred Stock such
number of its shares of Common Stock as shall be sufficient to effect the
conversion of all outstanding shares of Series B Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
B Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, engaging in best efforts to obtain the
requisite stockholder approval of any necessary amendment to its Certificate of
Incorporation.
(i) Defined Terms
-------------
As used herein, the following terms as have the meanings set forth below:
"Conversion Date," as applied to any shares of Series B Preferred
Stock, shall mean the date which is the one year anniversary of the date on
which such shares of Series B Preferred Stock were originally issued.
"Common Stock Conversion Number" shall mean one thousand (1000)
shares of Common Stock, as adjusted pursuant to Section 5(c) hereof.
6. Consolidation, Merger, etc. In case the Company shall enter into
--------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or other property, then in any such case each share of Series B
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
<PAGE>
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Company
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
7. No Redemption. The shares of Series B Preferred Stock shall not be
-------------
redeemable.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Company this 9th day of February, 2000.
AT HOME CORPORATION
By: /s/ David Pine
---------------------------
David Pine, Secretary
<PAGE>
EXHIBIT 4.05
CERTIFICATE OF DESIGNATION
of
SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK
of
AT HOME CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------------------
At Home Corporation, a Delaware corporation (the "Company"), does hereby
certify that pursuant to the authority granted to and vested in the Board of
Directors of the Company (the "Board of Directors" or the "Board") in accordance
with the provisions of Article IV, Section C of the Fifth Amended and Restated
Certificate of Incorporation of the Company, and in accordance with the
provisions of Section 151 of the Delaware General Corporation Law, the Company's
Board of Directors has duly adopted the following resolutions creating a series
of Preferred Stock, par value $0.01 per share ("Preferred Stock"), of the
Company designated as Series C Non-Voting Convertible Preferred Stock.
RESOLVED, that the Company hereby designates and creates a series of
Preferred Stock of the Company and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and limitations thereof as
follows:
A. Designation and Amount. Of the 9,650,000 shares of Preferred Stock
----------------------
authorized to be issued by the Company, 1,279 shares shall be designated as
"Series C Non-Voting Convertible Preferred Stock" ("Series C Preferred Stock").
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
--------
Series C Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series C Preferred
Stock.
B. Rights, Preferences and Restrictions of Preferred Stock. The rights,
-------------------------------------------------------
preferences, restrictions and other matters relating to the Series C Preferred
Stock are as follows:
1. Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any other stock) ranking prior and superior to the
Series C Preferred Stock with respect to dividends, and subject to Section
5(c)(ii) hereof, the holders of shares of Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, non-cumulative dividends in an amount
(if any) per share (rounded to the nearest cent), subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Series A Common Stock, par value $0.01 per share
(the "Common Stock") of the Company or other distribution payable in securities,
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock. In the event the Company shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which such
holders of shares of Series C Preferred Stock were entitled to immediately prior
to such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
<PAGE>
(b) The Company shall declare a dividend or distribution on the
Series C Preferred Stock as provided in subsection (a) of this Section at the
same time it declares a dividend or distribution on the Common Stock (other than
a dividend or distribution payable in shares of Common Stock or other
distribution payable in securities). The Board of Directors shall fix a record
date for the determination of holders of shares of Series C Preferred Stock
entitled to receive payment of such dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date fixed for the
payment thereof and shall be on the same day as the record date fixed for the
Common Stock.
(c) Dividends payable pursuant to subsection (a) of this Section
shall not be mandatory or cumulative (except as provided in subsection (b) of
this Section) and no rights or interest shall accrue to the holders of the
Series C Preferred Stock by reason of the fact that the Company shall fail to
declare or pay dividends on the Preferred Stock in any amount in any calendar
year or any fiscal year of the Company, whether or not earnings of the Company
in any calendar year or fiscal year were sufficient to pay such dividends in
whole or in part.
(d) Except as provided in this Section 1, holders of the Series
C Preferred Stock shall not be entitled to receive any dividends.
2. Voting Rights. Except as otherwise provided by law, holders of
-------------
Series C Preferred Stock shall have no voting rights and their consent shall not
be required for taking any corporate action.
3. Reacquired and Converted Shares. Any shares of Series C Preferred
-------------------------------
Stock purchased, received upon conversion or otherwise acquired by the Company
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof and shall not be reissued.
4. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Upon any liquidation, dissolution or winding up of the
Company, the holders of shares of Series C Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, on a pro rata pari
passu basis with the Common Stock, plus an amount equal to any declared but
unpaid dividends. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which such holders of shares of Series
C Preferred Stock were entitled to immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) The foregoing rights upon liquidation, dissolution or
winding up provided to the holders of Series C Preferred Stock shall be subject
to the rights of the holders of any other series of Preferred Stock (or any
other stock) ranking prior and superior to the Series C Preferred Stock upon
liquidation, dissolution or winding up.
5. Conversion.
----------
(a) Automatic Conversion. On the Conversion Date, each
--------------------
outstanding share of Series C Preferred Stock shall automatically convert into
the right to receive that number of shares of Common Stock as equals the Common
Stock Conversion Number.
(b) Mechanics of Conversion. Upon the conversion of the Series C
-----------------------
Preferred Stock as specified in Section 5(a) above, the outstanding shares of
Series C Preferred Stock shall be converted into shares of Common Stock
automatically without the need for any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Company or its transfer agent; provided, however,
-------- -------
that the Company shall not be obligated to issue certificates evidencing such
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Series C Preferred Stock are either delivered to the
Company or its
D-2
<PAGE>
transfer agent as provided below, or the holder notifies the Company or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates. Following the
occurrence of such automatic conversion of the Series C Preferred Stock, the
holders of Series C Preferred Stock shall surrender the certificates
representing such shares at the office of the Company or any transfer agent for
the Series C Preferred Stock. Thereupon, there shall be issued and delivered to
such holder promptly at such office and in its name as shown on such surrendered
certificate or certificates, a certificate or certificates for the number of
shares of Common Stock into which the shares of Series C Preferred Stock
surrendered were converted on the date on which such automatic conversion
occurred. Such conversion shall be deemed to have been made immediately prior to
the close of business on the Conversion Date, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(c) Adjustments to Common Stock Conversion Number for Certain
---------------------------------------------------------
Diluting Issues.
- ---------------
(i) Adjustments for Dividends, Splits, Subdivisions,
------------------------------------------------
Combinations or Consolidation of Common Stock. In the event the outstanding
- ---------------------------------------------
shares of Common Stock shall be increased by stock dividend payable in Common
Stock, stock split, subdivision, or other similar transaction into a greater
number of shares of Common Stock, the Common Stock Conversion Number of the
Series C Preferred Stock then in effect shall, concurrently with the
effectiveness of such event, be increased proportionally. In the event the
outstanding shares of Common Stock shall be decreased by reverse stock split,
combination, consolidation, or other similar transaction into a lesser number of
shares of Common Stock, the Common Stock Conversion Number of the Series C
Preferred Stock then in effect shall, concurrently with the effectiveness of
such event, be decreased proportionally.
(ii) Adjustments for Other Distributions. In the event
-----------------------------------
the Company at any time or from time to time makes, or fixes a record date for
the determination of holders of Common Stock entitled to receive any
distribution payable in securities (other than shares of Common Stock and other
than any distribution which results in the payment of a dividend described in
Section 1), then, and in each such event, provision shall be made so that the
holders of Series C Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which they would have received had their
Series C Preferred Stock been converted into Common Stock immediately prior to
the date of such event and had they thereafter, during the period immediately
prior to the date of such event to and including the date of conversion,
retained such securities receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 5 with respect to the rights of the holders of the Series C Preferred
Stock.
(iii) Adjustments for Reclassification, Exchange and
----------------------------------------------
Substitution. If the Common Stock issuable upon conversion of the Series C
- ------------
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares provided for above), then following the effectiveness of such
reorganization or reclassification the Series C Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of such
other class or classes of stock into which the Common Stock was converted in
such reorganization or reclassification that would have been subject to receipt
by the holders upon conversion of such Series C Preferred Stock immediately
before that change.
(d) No Impairment. Except as provided in Section 5, the Company
-------------
will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company but will at all times in good faith assist in the
carrying out of all the provisions of this Section 5
D-3
<PAGE>
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the Series C Preferred Stock
against impairment.
(e) Certificate as to Adjustments of the Common Stock Conversion
------------------------------------------------------------
Number. Upon the occurrence of each adjustment or readjustment of the Common
- ------
Stock Conversion Number for the Series C Preferred Stock pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series C Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of any holder of Series C Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Common Stock Conversion Number at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series C
Preferred Stock.
(f) Notices of Record Date. In the event that this Company shall
----------------------
propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock, or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease, or convey all or substantially all its property or
business, or to liquidate, dissolve, or wind up; then, in connection with each
such event, this Company shall send to the holders of Series C Preferred Stock:
(1) at least 10 days prior written notice of the
date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii)
and (iv) above, at least 20 days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event or the record date for
the determination of such holders if such record date is earlier).
Each such written notice shall be delivered personally, or given by first
class mail, postage prepaid, addressed to the holders of the Series C Preferred
Stock at the address for each such holder as shown on the books of this Company.
(g) Issue Taxes. The Company shall pay any and all issue and
-----------
other taxes (other than income taxes) that may be payable in respect of any
issue or delivery of shares of Common Stock on conversion of shares of Series C
Preferred Stock pursuant hereto; provided, however, that the Company shall not
be obligated to pay any transfer taxes resulting from any transfer requested by
any holder in connection with any such conversion.
(h) Reservation of Stock Issuable Upon Conversion. At the
---------------------------------------------
Conversion Date, the Company shall have reserved and have available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series C Preferred Stock such
number of its shares of Common Stock as shall be sufficient to effect the
conversion of all outstanding shares of Series C Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
C Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, engaging in best efforts to obtain the
requisite stockholder approval of any necessary amendment to its Certificate of
Incorporation.
D-4
<PAGE>
(i) Defined Terms
-------------
As used herein, the following terms as have the meanings set forth
below:
"Conversion Date," as applied to any share of Series C Preferred
Stock, shall mean the date on which the Company's right of repurchase lapses
with respect to such share of Series C Preferred Stock pursuant to the Amendment
to Stock Purchase Agreement or Amendment to Notice of Stock Option Grant and
Stock Option Agreement between the Company and each of the holders of shares of
Series C Preferred Stock.
"Common Stock Conversion Number" shall mean one thousand (1,000)
shares of Common Stock, as adjusted pursuant to Section 5(c) hereof.
6. Consolidation, Merger, etc. In case the Company shall enter into
--------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or other property, then in any such case each share of Series C
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Company
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
7. No Redemption. The shares of Series C Preferred Stock shall not be
-------------
redeemable.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Company this 9th day of February, 2000.
AT HOME CORPORATION
By: /s/ David Pine
--------------------------
David Pine, Secretary
D-5
<PAGE>
Exhibit 5.01
March 2, 2000
At Home Corporation
450 Broadway
Redwood City, California 94063
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-3
(the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about March 2, 2000 in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 5,285,600 shares of your Series A Common Stock (the "Stock"), all
of which will be sold by certain selling stockholders (the "Selling
Stockholders").
In rendering this opinion, we have examined the following:
(1) the Registration Statement, together with the exhibits filed as a
part thereof;
(2) the prospectus prepared in connection with the Registration
Statement (the "Prospectus");
(3) 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;
(4) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors that are contained in your minute books
that are in our possession;
(5) a certificate from your transfer agent dated of even date herewith,
verifying the number of your issued and outstanding shares of capital stock
as of the date hereof, and a list of option and warrant holders respecting
the Company's capital stock and of any rights to purchase capital stock
that was prepared by the Company dated of even date herewith verifying the
number of such issued and outstanding securities; and
(6) a Management Certificate addressed to us and dated of even date
herewith executed by you containing certain factual and other
representations.
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 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 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. We have also assumed
that the certificates representing the Stock have been, or will be when issued,
properly signed by authorized officers of the Company or their agents.
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 records and
documents 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.
<PAGE>
At Home Corporation
Page 2
We are admitted to practice law in the State of California, and we render
this opinion only with respect to, and express no opinion herein with
concerning the application or effect of the laws of any jurisdiction other
than, the existing laws of the United States of America and the States of
California and Delaware.
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 and that there will not have occurred any
change in law affecting the validity or enforceability of such shares of Stock.
The Company has informed us that the Company intends to issue the Stock from
time to time on a delayed or continuous basis. This opinion is limited to the
laws, including the rules and regulations, as in effect on the date hereof. We
are basing this opinion on our understanding that, prior to issuing any Stock,
the Company will advise us in writing of the terms thereof and other
information material thereto, will afford us an opportunity to review the
operative documents pursuant to which such Stock is to be issued (including the
Registration Statement, the Prospectus and the applicable Prospectus
Supplement, as then in effect) and will file such supplement or amendment to
this opinion (if any) as we may reasonably consider necessary or appropriate
with respect to such Stock. However, we undertake no responsibility to monitor
the Company's future compliance with applicable laws, rules or regulations of
the Commission or other governmental body. We also assume the Company will
timely file any and all supplements to the Registration Statement and
Prospectus as are necessary to comply with applicable laws in effect from time
to time.
Based upon the foregoing, it is our opinion that the 5,285,600 shares of
Stock to be sold by the Selling Stockholders pursuant to the Registration
Statement are validly issued, fully paid and nonassessable and that the up to
5,285,600 shares of Stock to be issued and sold by the Company, when issued,
sold and delivered in the manner and for the consideration stated in the
Registration Statement and the Prospectus, will be validly issued, fully paid
and nonassessable.
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 use in connection with issuance and
sale of shares subject to the Registration Statement and is not to be relied
upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
By: /s/ Jeffrey R. Vetter
_________________________________
Jeffrey R. Vetter, a partner
<PAGE>
EXHIBIT 23.01
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of At Home
Corporation for the registration of 5,285,600 shares of its Series A common
stock and to the incorporation by reference therein of our report dated January
19, 1999, with respect to the consolidated financial statements of At Home
Corporation included in its Annual Report on Form 10-K/A for the year ended
December 31, 1998, as amended, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Walnut Creek, California
February 28, 2000
<PAGE>
EXHIBIT 23.03
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of At Home
Corporation, filed with the SEC on or about March 2, 2000 of our report dated
April 23, 1998 relating to the financial statements of Narrative Communication
Corp., which appears in Exhibit 99.01 of the current Report on Form 8-K/A of At
Home Corporation filed with the SEC on January 14, 1999 (as amended on Form 8-
K/A on February 19,1999). We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 28, 2000
