<PAGE>
As filed with the Securities and Exchange Commission on March 10, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
AT HOME CORPORATION
(Exact name of the Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 77-0408542
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
</TABLE>
450 Broadway Street
Redwood City, California 94063
(650) 569-5000
(Address and telephone number of the Registrant's principal executive offices)
-----------
Kenneth A. Goldman
Chief Financial Officer
At Home Corporation
425 Broadway Street
Redwood City, California 94063
(650) 569-5000
(Name, address and telephone number of the Registrant's agent for service)
-----------
Copies to:
Gordon K. Davidson, Esq.
Jeffrey R. Vetter, Esq.
Thomas J. Hall, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
(650) 494-0600
-----------
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, 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Amounts Maximum Offering Maximum
Title of Each Class of to be Price Aggregate Amount of
Shares to be Registered Registered Per Unit Offering Price Registration Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4 3/4% Convertible Subordinated Notes
due 2006.............................. $500,000,000 100% $500,000,000 $132,000
Series A Common Stock, $.01 par value per share.. 8,846,246(1) -- -- --(2)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Represents the number of shares of Series A common stock that are
currently issuable upon conversion of the notes. The number of shares of
Series A common stock that may be issued upon conversion of the notes in
the future is indeterminate, and the Registrant is also registering this
indeterminate amount pursuant to Rule 416 under the Securities Act.
(2) No additional consideration will be received for the Series A common
stock, and, therefore, no registration fee is required pursuant to Rule
457(i).
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. The +
+selling securityholders may not sell these securities until the registration +
+statement filed with the securities and exchange commission is effective. +
+This prospectus is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to completion dated March 10, 2000)
[LOGO]
At Home Corporation
$500,000,000 principal amount
4 3/4% Convertible Subordinated Notes due 2006
Shares of Series A Common Stock
issuable upon conversion of the notes
-----------
Excite@Home's Series A common stock trades on the Nasdaq National Market.
Last reported sale price on March 9, 2000: $30.38 per share.
Trading Symbol: ATHM
-----------
THE OFFERING
With this prospectus, the selling securityholders named in this prospectus or
in prospectus supplements may offer and sell the notes or the shares of our
Series A common stock into which the notes may be converted.
Interest of 4 3/4% per year on the principal amount is payable semiannually
beginning June 15, 2000.
Holders may convert the notes into shares of our Series A common stock at any
time on or before December 15, 2006, at a conversion price of $56.52 per share,
subject to adjustment upon specified events. We may redeem our notes on or
after December 20, 2002 at the redemption prices listed in this prospectus,
plus accrued interest. Holders of the notes also may require us to redeem the
notes if a fundamental change of Excite@Home, as defined in the prospectus,
occurs before December 15, 2006. The notes are general unsecured obligations
and are subordinated in right of repayment below all of our existing and future
senior debt.
-----------
Investing in the notes or our Series A common stock involves a high degree of
risk. Please carefully consider the "Risk Factors" beginning on page 2 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 , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
U.S. Federal Income Tax
Prospectus Summary.................... 1 Considerations........................ 32
Risk Factors.......................... 2 Selling Securityholders............... 38
Ratio of Earnings to Fixed Charges.... 19 Plan of Distribution.................. 41
Use of Proceeds....................... 19 Legal Matters......................... 43
Dividend Policy....................... 19 Experts............................... 43
Description of Notes.................. 20 Where You Can Find More Information... 43
</TABLE>
ABOUT THIS PROSPECTUS
We make many statements in this prospectus under the captions "Prospectus
Summary," "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, MatchLogic and the @ball logo are our registered
trademarks, and Excite Network is also our trademark. Other trademarks and
tradenames appearing in this prospectus are the property of their respective
holders.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company, the notes being sold in this offering and
our financial statements and notes thereto appearing elsewhere in this
prospectus. Unless the context otherwise requires, the terms "we," "us," "our"
and Excite@Home refer to At Home Corporation and its wholly-owned subsidiaries.
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 Delaware 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
<TABLE>
<C> <S>
Securities Offered... $500,000,000 principal amount of 4 3/4% Convertible
Subordinated Notes due 2006.
Interest............. 4 3/4% per year on the principal amount, payable semi-
annually in arrears in cash on June 15 and December 15
of each year, beginning June 15, 2000.
Conversion........... You may convert each note into Series A common stock at
any time on or before December 15, 2006, at a conversion
price of $56.52 per share, subject to adjustment if
certain events affecting our Series A common stock
occur.
Subordination........ The notes will be subordinated to all of our existing
and future senior indebtedness and are effectively
subordinated to all debt and other liabilities of our
subsidiaries. As of January 31, 2000, we had
approximately $2.4 million of senior indebtedness
outstanding and our subsidiaries had approximately $68.1
million of liabilities outstanding. Neither we nor our
subsidiaries are limited from incurring debt, including
senior indebtedness, under the indenture.
Optional Redemption.. We may redeem any of the notes on or after December 20,
2002, by giving you at least 30 days' notice. We may
redeem the notes either in whole or in part at the
redemption prices set forth in this prospectus, together
with accrued and unpaid interest.
Fundamental Change... If a fundamental change (as described under "Description
of Notes--Redemption at Option of the Holder") occurs on
or before December 15, 2006, you may require us to
purchase all or part of your notes at a redemption price
equal to 100% of the outstanding principal amount of the
notes being redeemed, plus accrued and unpaid interest.
Use of Proceeds...... We will not receive any cash from the sale of our notes
or Series A common stock offered with this prospectus.
NASDAQ National
Market Symbol ...... ATHM
</TABLE>
1
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. 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 the notes or 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.
We have not yet completely integrated 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.
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
2
<PAGE>
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
did 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,
Bluemountain.com and other companies, 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;
. pricing changes for Internet-based advertising;
3
<PAGE>
. 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 the
completion of 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
4
<PAGE>
be adversely affected if we experience difficulties in introducing new products
and services or if users do not accept these new products or services.
We depend on the sale of advertisements on our services, and if online
advertising does not become accepted, or if users employ new technology to
block or filter online advertising, 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.
Privacy concerns could lead to legislation or new technology that 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, and technology that shields e-mail addresses, cookies and other
electronic means of identification could become commercially accepted. Any
reduction or limitation in the use of cookies, through legislation, new
technology or otherwise, could limit the effectiveness of our ad targeting,
which could harm our business.
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
5
<PAGE>
unauthorized marketing. The Federal Trade Commission and some states have been
investigating Internet companies regarding their use of personal information,
and some groups have initiated legal action against Internet companies
regarding their privacy practices. 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.
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, that third party sponsors
do not perform their obligations under these agreements, or that they 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
6
<PAGE>
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.
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.
7
<PAGE>
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.
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 570 employees at December 31, 1998 to approximately 2,400 employees at
January 31, 2000. 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
8
<PAGE>
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.
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, governments of some foreign countries, 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. 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.
9
<PAGE>
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.
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
10
<PAGE>
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.
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
DOCSIScompliant 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.
11
<PAGE>
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, Inc., GTE
Corp., 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 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:
12
<PAGE>
. 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.
. 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
13
<PAGE>
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 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.
14
<PAGE>
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 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.
15
<PAGE>
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.
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
16
<PAGE>
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 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.
Risks Related to this Offering
The notes are subordinated to senior indebtedness
The notes will be unsecured and subordinated in right of payment to all of
our existing and future senior indebtedness. In the event of our bankruptcy,
liquidation or reorganization or upon acceleration of the notes due to an event
of default under the indenture and in certain other events, our assets will be
available to pay obligations on the notes only after all secured senior
indebtedness has been paid. As a result, there may not be sufficient assets
remaining to pay amounts due on any or all of the outstanding notes. Neither we
nor our subsidiaries are prohibited from incurring debt, including senior
indebtedness, under the indenture. If we or our subsidiaries were to incur
additional debt or liabilities, our ability to pay our obligation on the notes
could be adversely affected. As of January 31, 2000, we had approximately $2.4
million of senior indebtedness outstanding. We may from time to time incur
additional debt, including senior indebtedness. Our subsidiaries may also from
time to time incur other additional debt and liabilities. See "Description of
Notes--Subordination of Notes."
We conduct a substantial portion of our operations through our subsidiaries,
which may affect our ability to make payments on the notes
A substantial portion of our operations are conducted through our
subsidiaries. As a result, our cash flow and our ability to service our debt,
including the notes, is dependent upon the earnings of our subsidiaries. In
addition, we are dependent on the distribution of earnings, loans or other
payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the notes or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans
or other payments. In addition, any payment of dividends, distributions, loans
or advances by our subsidiaries to us could be subject to statutory or
contractual restrictions. Payments to us by our subsidiaries will also be
contingent upon our subsidiaries' earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, will be effectively subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us. As of
January 31, 2000, our
17
<PAGE>
subsidiaries had liabilities, including lease obligations and trade payables
but excluding intercompany liabilities, of approximately $68.1 million. These
subsidiaries may incur additional liabilities in the future.
We may be unable to redeem the notes upon a fundamental change
Upon a fundamental change, you may require us to redeem all or a portion of
your notes. If a fundamental change were to occur, we may not have enough funds
to pay the redemption price for all tendered notes. In addition, in certain
situations, a fundamental change would result in an event of default under or
existing debentures. Any future credit agreements or other agreements relating
to our indebtedness may contain similar provisions, or expressly prohibit the
repurchase of the notes upon a fundamental change or may provide that a
fundamental change constitutes an event of default under that agreement. If a
fundamental change occurs at a time when we are prohibited from purchasing or
redeeming notes, we could seek the consent of our lenders to redeem the notes
or could attempt to refinance this debt. If we do not obtain a consent, we
could not purchase or redeem the notes. Our failure to redeem tendered notes
would constitute an event of default under this indenture, which might
constitute a default under the terms of our other indebtedness. In such
circumstances, or if a fundamental change would constitute an event of default
under our senior indebtedness, the subordination provisions of the indenture
would restrict payments to the holders of notes. The term "fundamental change"
is limited to certain specified transactions and may not include other events
that might adversely affect our financial condition. Our obligation to offer to
redeem the notes upon a fundamental change would not necessarily afford you
protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving Excite@Home. See "Description of
Notes--Redemption at Option of the Holder."
A public market may not develop for the notes
Prior to the offering there has been no trading market for the notes. The
initial purchasers have advised us that they currently intend to make a market
in the notes. However, the initial purchasers are not obligated to make a
market and may discontinue this market making activity at any time without
notice. In addition, market-making activity by the initial purchasers will be
subject to the limits imposed by the Securities Act and the Exchange Act. As a
result, we cannot assure you that any market for the notes will develop or, if
one does develop, that it will be maintained. If an active market for the notes
fails to develop or be sustained, the trading price of the notes could be
seriously harmed.
Our stock price may continue to experience large short-term fluctuations,
which may significantly affect the trading price of the notes
In recent periods, the price of our Series A common stock has fluctuated
greatly. Fluctuations in the trading price of our Series A common stock will
affect the trading price of the notes. These price fluctuations have been rapid
and severe and have left investors little time to react. The price of our
Series A common stock may continue to fluctuate greatly in the future due to a
variety of company specific factors, including:
. quarter to quarter variations in our operating results;
. shortfalls in revenue or earnings from levels expected by securities
analyst;
. announcements of technological innovations or new products or services
by other companies; and
. announcements by AT&T and our other partners relating to their
relationship with us or their deployment of the @Home service.
18
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows (in thousands):
<TABLE>
<CAPTION>
Period from
March 28, 1995 Year ended December 31,
(inception) to ------------------------------------------
December 31, 1995 1996 1997 1998 1999
----------------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Deficiency of earnings
available to cover
fixed charges......... $(2,756) $(24,513) $(55,717) $(144,179) $(1,457,638)
</TABLE>
These computations include us and our consolidated subsidiaries. Earnings
consist of net loss plus fixed charges. Fixed charges consist of interest
expense, including amortization of debt issuance costs, and that portion of
rental expense we believe to be representative of interest.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes or the Series A
common stock by the selling securityholders under this prospectus. On December
20, 1999, we received approximately $486 million from the sale of the notes,
after deducting estimated expenses and the placement agents' discount. We used
$350 million of this amount to finance the cash component of the purchase price
for Bluemountain.com. We have used and intend to use the remaining net proceeds
for general corporate purposes, including working capital and capital
expenditures.
DIVIDEND POLICY
We have never paid any cash dividends on our Series A common stock, and we
do not anticipate paying any cash dividends in the foreseeable future.
19
<PAGE>
DESCRIPTION OF NOTES
The notes were issued under an indenture dated as of December 1, 1999,
between Excite@Home and State Street Bank and Trust Company of California,
N.A., as trustee. You may request a copy of the indenture from the trustee.
The following description is a summary of the material provisions of the
notes and the indenture. It does not purport to be complete. This summary is
subject to and is qualified by reference to all the provisions of the
indenture, including the definitions of certain terms used in the indenture.
Wherever particular provisions or defined terms of the indenture or form of
note are referred to, these provisions or defined terms are incorporated in
this prospectus by reference.
As used in this "Description of Notes" section, references to "Excite@Home,"
"we," "our" or "us" refer solely to At Home Corporation and not its
subsidiaries.
General
The notes are general unsecured obligations of Excite@Home. Our payment
obligations under the notes are subordinated to our senior indebtedness as
described under "--Subordination of Notes." The notes are convertible into
Series A common stock as described under "--Conversion of Notes." The notes are
limited to $500,000,000 aggregate principal amount. The notes were issued in
denominations of $1,000 and multiples of $1,000. The notes will mature on
December 15, 2006 unless earlier converted, redeemed at our option or redeemed
at your option upon a fundamental change.
We are not subject to any financial covenants under the indenture. In
addition, we are not restricted under the indenture from paying dividends,
incurring debt, including senior indebtedness, or issuing or repurchasing our
securities.
You are not afforded protection in the event of a highly leveraged
transaction or a change in control of Excite@Home under the indenture except to
the extent described below under "--Redemption at Option of the Holder."
We will pay interest on June 15 and December 15 of each year, beginning June
15, 2000 to record holders at the close of business on the preceding June 1 and
December 1, as the case may be, except:
. interest payable upon redemption will be paid to the person to whom
principal is payable, unless the redemption date is an interest payment
date; and
. as set forth in the next sentence.
In case you convert your note into Series A common stock during the period
after any record date but prior to the next interest payment date either:
. we will not be required to pay interest on the interest payment date if
the note has been called for redemption on a redemption date that occurs
during this period; or
. we will not be required to pay interest on the interest payment date if
the note is to be redeemed in connection with a fundamental change on a
repurchase date that occurs during this period; or
. if otherwise, any note not called for redemption that is submitted for
conversion during this period must also be accompanied by an amount equal
to the interest due on the interest payment date on the converted
principal amount, unless at the time of conversion there is a default in
the payment of interest on the notes. See "--Conversion of Notes."
We maintain an office in the Borough of Manhattan, the City of New York for
the payment of interest, which shall initially be an office or agency of the
trustee.
20
<PAGE>
We may pay interest either:
. by check mailed to your address as it appears in the note register,
provided that if you are a holder with an aggregate principal amount in
excess of $2.0 million, you shall be paid, at your written election, by
wire transfer in immediately available funds; or
. by transfer to an account maintained by you in the United States.
However, payments to The Depository Trust Company, New York, New York, which
we refer to as DTC, will be made by wire transfer of immediately available
funds to the account of DTC or its nominee. Interest will be computed on the
basis of a 360-day year composed of twelve 30-day months.
Form, Denomination and Registration
The notes were issued:
. in fully registered form;
. without interest coupons; and
. in denominations of $1,000 principal amount and integral multiples of
$1,000.
Global Note, Book-Entry Form
Notes sold to "qualified institutional buyers" as defined in Rule 144A under
the Securities Act, whom we refer to as QIBs, are evidenced by global notes. We
have deposited the global notes with DTC and registered the global notes in the
name of Cede & Co. as DTC's nominee. Except as set forth below, a global note
may be transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
QIBs may hold their interests in a global note directly through DTC if such
holder is a participant in DTC, or indirectly through organizations which are
participants in DTC (called "participants"). Transfers between participants
will be effected in the ordinary way in accordance with DTC rules and will be
settled in clearing house funds. The laws of some states require that certain
persons take physical delivery of securities in definitive form. As a result,
the ability to transfer beneficial interests in the global note to such persons
may be limited.
QIBs who are not participants may beneficially own interests in a global
note held by DTC only through participants, or certain banks, brokers, dealers,
trust companies and other parties that clear through or maintain a custodial
relationship with a participant, either directly or indirectly (called
"indirect participants"). So long as Cede & Co., as the nominee of DTC, is the
registered owner of a global note, Cede & Co. for all purposes will be
considered the sole holder of such global note. Except as provided below,
owners of beneficial interests in a global note will:
. not be entitled to have certificates registered in their names;
. not receive physical delivery of certificates in definitive registered
form; and
. not be considered holders of the global note.
We will pay interest on and the redemption price of a global note to Cede &
Co., as the registered owner of the global note, by wire transfer of
immediately available funds on each interest payment date or the redemption or
repurchase date, as the case may be. Neither we, the trustee nor any paying
agent will be responsible or liable:
. for the records relating to, or payments made on account of, beneficial
ownership interests in a global note; or
. for maintaining, supervising or reviewing any records relating to the
beneficial ownership interests.
We have been informed that DTC's practice is to credit participants'
accounts on that payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount represented
21
<PAGE>
by a global note as shown on the records of DTC, unless DTC has reason to
believe that it will not receive payment on that payment date. Payments by
participants to owners of beneficial interests in the principal amount
represented by a global note held through participants are the responsibility
of the participants, as is now the case with securities held for the accounts
of customers registered in "street name."
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing its interest.
Neither Excite@Home, the trustee, registrar, paying agent nor conversion
agent have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised us that it will take any
action permitted to be taken by a holder of notes, including the presentation
of notes for exchange, only at the direction of one or more participants to
whose account with DTC interests in the global note are credited, and only in
respect of the principal amount of the notes represented by the global note as
to which the participant or participants has or have given such direction.
DTC has advised us that it is:
. a limited purpose trust company organized under the laws of the State of
New York;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the Uniform Commercial
Code; and
. a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants.
Participants include securities brokers, dealers, banks, trust companies and
clearing corporations and other organizations. Some of the participants or
their representatives, together with other entities, own DTC. Indirect access
to the DTC system is available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
DTC has agreed to the foregoing procedures to facilitate transfers of
interests in a global note among participants. However, DTC is under no
obligation to perform or continue to perform these procedures, and may
discontinue these procedures at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will issue notes in certificated form in exchange for
global notes.
Certificated Notes
One note, which was sold to an investor that is an institutional accredited
investor, was issued in certificated form. In addition, QIBs may request that
certificated notes be issued in exchange for notes represented by a global
note.
Conversion of Notes
You may convert your note, in whole or in part, into Series A common stock
through the final maturity date of the notes, subject to prior redemption of
the notes. If we call notes for redemption, you may convert the notes only
until the close of business on the business day prior to the redemption date
unless we fail to pay the redemption price. If you have submitted your notes
for redemption upon a fundamental change, you may convert your notes only if
you withdraw your conversion election. You may convert your notes in part so
long as this part is $1,000 principal amount or an integral multiple of $1,000.
If any notes not called for redemption are converted after a record date for
any interest payment date and prior to the next interest payment date, the
22
<PAGE>
notes must be accompanied by an amount equal to the interest payable on the
interest payment date on the converted principal amount unless a default exists
at the time of conversion.
The initial conversion price for the notes is $56.52 per share of Series A
common stock, subject to adjustment as described below. We will not issue
fractional shares of Series A common stock upon conversion of notes. Instead,
we will pay cash equal to the market price of the Series A common stock on the
business day prior to the conversion date. Except as described below, you will
not receive any accrued interest or dividends upon conversion.
To convert your note into Series A common stock you must:
. complete and manually sign the conversion notice on the back of the note
or facsimile of the conversion notice and deliver this notice to the
conversion agent;
. surrender the note to the conversion agent;
. if required, furnish appropriate endorsements and transfer documents;
. if required, pay all transfer or similar taxes; and
. if required, pay funds equal to interest payable on the next interest
payment date.
The date you comply with these requirements is the conversion date under the
indenture.
We will adjust the conversion price if the following events occur:
(1) we issue Series A common stock as a dividend or distribution on our
Series A common stock;
(2) we issue to all holders of Series A common stock certain rights or
warrants to purchase our Series A common stock;
(3) we subdivide or combine our Series A common stock;
(4) we distribute, to all holders of Series A common stock, any capital
stock, evidences of indebtedness or assets, including securities but
excluding:
. rights or warrants listed in (2) above;
. dividends or distributions listed in (1) above; and
. cash distributions listed in (5) below;
(5) we distribute cash, excluding any quarterly cash dividend on our
common stock to the extent that the aggregate cash dividend per share
of Series A common stock in any quarter does not exceed the greater
of:
. the amount per share of Series A common stock of the next preceding
quarterly cash dividend on the Series A common stock to the extent
that the preceding quarterly dividend did not require an adjustment of
the conversion price pursuant to this clause (5), as adjusted to
reflect subdivisions or combinations of the Series A common stock; and
. 3.75% of the average of the last reported sale price of the Series A
common stock during the ten trading days immediately prior to the
declaration date of the dividend, and excluding any dividend or
distribution in connection with the liquidation, dissolution or
winding up of Excite@Home.
If an adjustment is required to be made under this clause (5) as a result
of a distribution that is a quarterly dividend, the adjustment would be
based upon the amount by which the distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant to this clause
(5). If an adjustment is required to be made under this clause (5) as a
result of a distribution that is not a quarterly dividend, the adjustment
would be based upon the full amount of the distribution;
(6) we or one of our subsidiaries makes a payment in respect of a tender
offer or exchange offer for our Series A common stock to the extent
that the cash and value of any other consideration included in
23
<PAGE>
the payment per share of Series A common stock exceeds the current
market price per share of Series A common stock on the trading day next
succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer; and
(7) someone other than us or one of our subsidiaries makes a payment in
respect of a tender offer or exchange offer in which, as of the
closing date of the offer, our board of directors is not recommending
rejection of the offer. The adjustment referred to in this clause (7)
will only be made if:
. the tender offer or exchange offer is for an amount that increases the
offeror's ownership of common stock to more than 25% of the total
shares of common stock outstanding; and
. the cash and value of any other consideration included in the payment
per share of Series A common stock exceeds the current market price
per share of Series A common stock on the business day next succeeding
the last date on which tenders or exchanges may be made pursuant to
the tender or exchange offer.
However, the adjustment referred to in this clause (7) will generally not
be made if as of the closing of the offer, the offering documents
disclose a plan or an intention to cause us to engage in a consolidation
or merger of Excite@Home or a sale of all or substantially all of our
assets.
In the event that Excite@Home implements a rights agreement, it will
provide that upon conversion of the notes into common stock, the holders will
receive, in addition to common stock, the rights described under the rights
agreement, whether or not the rights have separated from common stock at the
time of conversion, subject to certain limited customary exceptions.
In the event that we effect a tracking stock arrangement such as that
described under "Risk Factors--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 of our media business," or a similar
arrangement, by distributing common stock on our Series A common stock or
reclassifying our Series A common stock, we will be required to enter into a
supplemental indenture to provide that the notes will become convertible into:
(A) in the case of a reclassification, the shares of capital stock into
which the Series A common stock has been reclassified; and
(B) in the case of a stock distribution, in lieu of the adjustment
otherwise applicable under clause (4) above, the same number of shares
of Series A common stock into which the notes were convertible
immediately prior to such distribution plus the shares of other common
stock that would have been distributed on those shares of Series A
common stock if such shares of Series A common stock had been
outstanding on the applicable date.
Such supplemental indenture will provide for appropriate modifications to
the conversion privilege of the notes to reflect the fact that the notes have
become convertible into more than a single class of common stock as well as
appropriate conversion prices with respect to each class, which will be
subject to adjustment upon the occurrence of certain events affecting such
class of common stock on terms comparable to those summarized in this section.
The supplemental indenture will also provide for appropriate adjustments to
the fundamental change provisions described below under "--Redemption at
Option of the Holder." In the event of any transaction or event in connection
with which all or substantially all of any class of common stock into which
the notes are convertible (but not all of such classes) shall be exchanged
for, converted into, acquired for or constitute solely the right to receive
consideration, whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification or otherwise,
which is not all or substantially all our common stock (or common stock of our
successor obligor on the notes) listed on, or that will be listed immediately
after the transaction or event on, a United States national securities
exchange or approved for quotation on the Nasdaq National Market or any
similar United States system of automated dissemination or quotations of
securities prices, then:
24
<PAGE>
(X) such event or transaction shall not be treated as a fundamental change
within the meaning of the third clause of the definition of such term;
and
(Y) the conversion prices of the other class or classes of common stock
into which the notes are then convertible shall be adjusted as if a
distribution had been made with respect to such shares, in accordance
with the indenture.
Upon any such adjustment, the notes will no longer be convertible into such
shares and we will enter into an additional supplemental indenture to
appropriately reflect the changes to the conversion privileges applicable to
the notes and the fundamental change provisions described below under "--
Redemption at Option of the Holder."
In the event of:
. any reclassification of our Series A common stock; or
. a consolidation, merger or combination involving Excite@Home; or
. a sale or conveyance to another person of the property and assets of
Excite@Home as an entirety or substantially as an entirety,
in which holders of Series A common stock would be entitled to receive stock,
other securities, other property, assets or cash for their Series A common
stock, holders of notes will generally be entitled thereafter to convert their
notes into the same type of consideration received by Series A common stock
holders immediately prior to one of these types of events.
You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of Series A common stock or in certain other
situations requiring a conversion price adjustment. See "U.S. Federal Income
Tax Considerations."
We may from time to time reduce the conversion price for a period of at
least 20 days if our board of directors has made a determination that this
reduction would be in our best interests. Any such determination by our board
will be conclusive. We would give holders at least 15 days' notice of any
reduction in the conversion price. In addition, we may reduce the conversion
price if our board of directors deems it advisable to avoid or diminish any
income tax to holders of Series A common stock resulting from any stock or
rights distribution. See "U.S. Federal Income Tax Considerations."
We will not be required to make an adjustment in the conversion price unless
the adjustment would require a change of at least 1% in the conversion price.
However, we will carry forward any adjustments that are less than one percent
of the conversion price. Except as described above in this section, we will not
adjust the conversion price for any issuance of our Series A common stock or
convertible or exchangeable securities or rights to purchase our Series A
common stock or convertible or exchangeable securities.
Optional Redemption by Excite@Home
The notes are not entitled to any sinking fund. At any time on or after
December 20, 2002, we may redeem the notes in whole or in part at the following
prices expressed as a percentage of the principal amount:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------- ----------
<S> <C>
Beginning on December 20, 2002 and ending on December 14, 2003...... 102.714%
Beginning on December 15, 2003 and ending on December 14, 2004...... 102.036
Beginning on December 15, 2004 and ending on December 14, 2005...... 101.357
Beginning on December 15, 2005 and ending on December 14, 2006...... 100.679
</TABLE>
25
<PAGE>
and 100% at December 15, 2006. In each case, we will pay interest to, but
excluding, the redemption date. If the redemption date is an interest payment
date, interest shall be paid to the record holder on the relevant record date.
We are required to give notice of redemption by mail to holders not more than
60 but not than 30 days prior to the redemption date.
If less than all of the outstanding notes are to be redeemed, the trustee
shall select the notes to be redeemed in principal amounts of $1,000 or
integral multiples of $1,000 by lot, pro rata or by another method the trustee
considers fair and appropriate. If a portion of your notes is selected for
partial redemption and you convert a portion of your notes, the converted
portion shall be deemed to be of the portion selected for redemption.
We may not redeem the notes if we have failed to pay any interest or premium
on the notes and such failure to pay is continuing. We will issue a press
release if we redeem the notes.
Redemption at Option of the Holder
If a fundamental change occurs prior to December 15, 2006, you may require
us to redeem your notes, in whole or in part, on a repurchase date that is 30
days after the date of our notice of the fundamental change. The notes will be
redeemable in multiples of $1,000 principal amount.
We shall redeem the notes at a price equal to 100% of the principal amount
to be redeemed, plus accrued interest to, but excluding, the repurchase date.
If the repurchase date is an interest payment date, we will pay interest to the
record holder on the relevant record date.
We will mail to all record holders a notice of the fundamental change within
10 days after the occurrence of the fundamental change. We are also required to
deliver to the trustee a copy of the fundamental change notice. If you elect to
redeem your notes, you must deliver to us or our designated agent, on or before
the 30th day after the date of our fundamental change notice, your redemption
notice and any notes to be redeemed, duly endorsed for transfer. We will
promptly pay the redemption price for notes surrendered for redemption
following the repurchase date.
A "fundamental change" is deemed to have occurred at such time as
. any person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than us, any of our subsidiaries, any
of our or any of our subsidiaries' employee benefit plans, or any
Permitted Holder, files a Schedule 13D or 14D-1 under the Exchange Act (or
any successor schedule, form or report) disclosing that such person has
become the beneficial owner of 50% or more of the total voting power in
the aggregate of all classes of our capital stock then outstanding
normally entitled to vote in elections of directors, with certain
exceptions; or
. there shall be consummated any consolidation or merger of us pursuant to
which the Series A common stock would be converted into cash, securities
or other property, in each case, other than a consolidation or merger of
us in which the holders of common stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority
of the total voting power in the aggregate of all classes of capital stock
of the continuing or surviving corporation normally entitled to vote in
elections of directors immediately after the consolidation or merger; or
. the occurrence of any transaction or event in connection with which all or
substantially all Series A common stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive consideration
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise), all or substantially all of which does not consist of common
stock which is (or, upon consummation of or immediately following such
transaction or event, which will be) listed on a United States national
securities exchange or approved for quotation on the Nasdaq National
Market or any similar United States system of automated dissemination of
quotations of securities prices.
26
<PAGE>
"Permitted Holder" means:
. TCI, any person or entity which owns, directly or indirectly, a majority of
the total voting power of TCI, and any business entity at least a majority
of the total voting power of which is owned, directly or indirectly, by
TCI or any person or entity which owns, directly or indirectly, a majority
of the total voting power of TCI (but, in each case, only so long as such
voting power is so owned),
. AT&T, any person or entity which owns, directly or indirectly, a majority
of the total voting power of AT&T, and any business entity at least a
majority of the total voting power of which is owned, directly or
indirectly by AT&T or any person or entity which owns, directly or
indirectly, a majority of the total voting power of AT&T (but, in each
case, only so long as such voting power is so owned),
. any person who is a member of a "group" (as defined pursuant to Section
13(d)(3) of the Exchange Act) with TCI or AT&T, and
. any person or entity, a majority of the equity interests of which are
distributed, directly or indirectly, to the stockholders of TCI or AT&T,
as applicable, provided that TCI or AT&T own, directly or indirectly, a
majority of the equity interests and voting power of such person or entity
immediately prior to such distribution.
The indenture does not permit the Board of Directors to waive our obligation
to purchase notes at the option of a Holder in the event of a fundamental
change. We will comply with any applicable provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act in the event of a fundamental
change.
These fundamental change redemption rights could discourage a potential
acquiror of Excite@Home. However, this fundamental change redemption feature is
not the result of management's knowledge of any specific effort to obtain
control of Excite@Home by means of a merger, tender offer or solicitation, or
part of a plan by management to adopt a series of anti-takeover provisions. The
term "fundamental change" is limited to certain specified transactions and may
not include other events that might adversely affect our financial condition.
Our obligation to offer to redeem the notes upon a fundamental change would not
necessarily afford you protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving
Excite@Home.
We may be unable to redeem the notes in the event of a fundamental change.
If a fundamental change were to occur, we may not have enough funds to pay the
redemption price for all tendered notes. In addition, in certain situations, a
fundamental change would result in an event of default under our existing
credit facility. Our existing credit facility also prohibits redemptions of the
notes. Any future credit agreements or other agreements relating to our
indebtedness may contain similar provisions, or expressly prohibit the
repurchase of the notes upon a fundamental change or may provide that a
fundamental change constitutes an event of default under that agreement. If a
fundamental change occurs at a time when we are prohibited from purchasing or
redeeming notes, we could seek the consent of our lenders to redeem the notes
or could attempt to refinance this debt. If we do not obtain a consent, we
could not purchase or redeem the notes. Our failure to redeem tendered notes
would constitute an event of default under the indenture, which might
constitute a default under the terms of our other indebtedness. In such
circumstances, or if a fundamental change would constitute an event of default
under our senior indebtedness, the subordination provisions of the indenture
would restrict payments to the holders of notes.
Subordination of Notes
Indebtedness evidenced by the notes is subordinated in right of payment, as
set forth in the indenture, to the prior payment in full in cash or other
payment satisfactory to holders of all existing and future senior indebtedness.
Upon any payment or distribution of our assets to creditors upon any
dissolution, winding up, liquidation or reorganization of Excite@Home, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership
27
<PAGE>
or other similar proceedings, the holders of all senior indebtedness shall
first be entitled to receive payment in full in cash or other payment
satisfactory to the holders of senior indebtedness of all amounts due or to
become due thereon, or payment of such amounts shall have been provided for,
before the holders of the notes shall be entitled to receive any payment or
distribution with respect to any notes.
In addition, no payment may be made on the notes if any notes are declared
due and payable prior to their maturity by reason of the occurrence of an event
of default until the earlier of:
. 120 days after the date of such acceleration or
. the payment in full of all senior indebtedness, but only if such payment
is then otherwise permitted under the terms of the indenture.
No payment of the principal, premium, if any, or interest (including
liquidated damages, if any) on the notes may be made by us if:
. any payment default on any senior indebtedness has occurred and is
continuing beyond any applicable grace periods, or
. any default other than a payment default with respect to senior
indebtedness occurs and is continuing that permits the acceleration of the
maturity of the senior indebtedness and the default is either the subject
of judicial proceedings or we receive a written notice of the default
(called a "senior indebtedness default notice").
We may resume payments on the notes when:
. the default with respect to the senior indebtedness is cured or waived
or ceases to exist or
. in the case of a non-payment default, 179 or more days pass after notice
of the default is received by us, provided that the terms of the indenture
otherwise permit the payment of the notes at that time.
If we receive a senior indebtedness default notice, then a similar notice
received within nine months thereafter relating to the same default on the same
issue of senior indebtedness shall not be effective to prevent the payment of
the notes as provided above.
The term "senior indebtedness" means the principal, premium, if any, and
unpaid interest, including bankruptcy interest, rent and end of term payments
payable on or in connection with, and, to the extent not included in the
foregoing, all amounts payable as fees, costs, expenses, liquidated damages,
indemnities, repurchase and other put obligations and other amounts to the
extent accrued or due on or in connection with all present and future secured:
(1) indebtedness of Excite@Home for borrowed money;
(2) obligations of Excite@Home evidenced by bonds, notes, notes or similar
instruments;
(3) all obligations of Excite@Home under:
. securities repurchase agreements,
. interest rate swaps, caps, collars, options and similar arrangements,
. any foreign exchange contract, currency swap contract, futures
contract, currency option contract or other foreign currency hedge,
and
. credit swaps, caps, floors, collars and similar arrangements;
(4) obligations incurred, assumed or guaranteed by Excite@Home in
connection with the acquisition by it or a subsidiary of any business,
properties or assets (except purchase money indebtedness classified as
accounts payable under generally accepted accounting principals);
28
<PAGE>
(5) obligations of Excite@Home as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally
accepted accounting principles and liabilities under any financing
lease or so-called "synthetic" lease transaction entered into by
Excite@Home;
(6) reimbursement of obligations of Excite@Home in respect of letters of
credit, bank guarantees or bankers' acceptances;
(7) obligations of Excite@Home to make payments to any entity as
consideration for the acquisition by us of subscribers to its current
Internet services or to future similar or related services, or to
acquire rights to transport data using assets owned by any other
entity; and
(8) obligations of Excite@Home under direct or indirect guarantees in
respect of, and obligations (contingent and otherwise) to purchase or
otherwise acquire, or otherwise assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds
referred to in clauses (1) through (7) above.
However, senior indebtedness does not include:
. any indebtedness or obligations of the kinds referred to in clauses (1)
through (7) above (collectively, "Debt") as to which, in the instrument or
agreement creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that such debt shall be subordinated
in right of payment to any other of our Debt, unless such instrument or
agreement expressly provides that such Debt shall be senior in right of
payment to the notes;
. all of our Debt that is not secured;
. accounts payable or other indebtedness to trade creditors created or
assumed by Excite@Home in the ordinary course of business;
. any of our Debt as to which, in the instrument or agreement creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that such Debt shall not be senior in right of payment
to, or is on the same basis in right of payment with, or ranks junior in
right of payment to, the notes;
. our Debt in respect to the notes;
. any of our Debt to any subsidiaries; and
. the Convertible Subordinated Notes due 2018.
By reason of such subordination, in the event of dissolution, insolvency,
bankruptcy or other similar proceedings, upon any distribution of our assets
our unsecured creditors who are not holders of notes or holders of our senior
indebtedness may recover less, ratably, than holders of senior indebtedness and
may recover more, ratably, than the holders of notes.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, is effectively subordinated to the claims
of that subsidiary's creditors, including trade creditors. In addition, even if
we were a creditor of any of our subsidiaries, our rights as a creditor would
be subordinate to any security interest in the assets of our subsidiaries and
any indebtedness of our subsidiaries senior to that held by us.
As of January 31, 2000, we had approximately $2.4 million in outstanding
borrowings (excluding accrued interest therein) that would have constituted
senior indebtedness. There are no restrictions in the indenture on the creation
of additional senior indebtedness or indebtedness. As of January 31, 2000, our
subsidiaries had liabilities, including trade payables and lease obligations
but excluding intercompany liabilities, of approximately $68.1 million. Our
subsidiaries may incur additional liabilities in the future.
Events of Default; Notice and Waiver
The following are events of default under the indenture:
. we fail to pay principal or premium, if any, upon redemption or otherwise
on the notes, whether or not the payment is prohibited by subordination
provisions;
29
<PAGE>
. we fail to pay any interest and liquidated damages, if any, on the notes,
whether or not the payment is prohibited by the subordination provisions
of the indenture;
. we fail to perform or observe any of the covenants in the indenture for 60
days after notice;
. we default on any bond, note, note or other evidence of indebtedness for
money borrowed of Excite@Home having an aggregate outstanding principal
amount of in excess of $10,000,000, which default shall have resulted in
such indebtedness being accelerated, without such indebtedness being
discharged or such acceleration having been rescinded or annulled within
20 days after receipt of notice thereof by us from the trustee from
holders of not less than 25% in aggregate principal amount at maturity of
the notes then outstanding, unless such default has been cured or waived;
or
. certain events involving bankruptcy, insolvency or reorganization of
Excite@Home.
The trustee may withhold notice to the holders of the notes of any default,
except defaults in payment of principal, premium, interest or liquidated
damages, if any, on the notes. However, the trustee must consider it to be in
the interest of the holders of the notes to withhold this notice.
If an event of default occurs and continues, the trustee or the holders of
at least 25% in principal amount of the outstanding notes may declare the
principal, premium, and accrued interest and liquidated damages, if any, on the
outstanding notes to be immediately due and payable. In case of certain events
of bankruptcy or insolvency involving Excite@Home, the principal, premium and
accrued interest and liquidated damages, if any, on the notes will
automatically become due and payable. However, if we cure all defaults, except
the nonpayment of principal, premium, interest or liquidated damages, if any,
that became due as a result of the acceleration, and meet certain other
conditions, with certain exceptions, this declaration may be cancelled and the
holder of a majority of the principal amount of outstanding notes may waive
these past defaults. Payments of principal, premium, or interest on the notes
that are not made when due will accrue interest at the annual rate of 4 3/4%
from the required payment date.
Upon any acceleration of the notes, the subordination provisions of the
indenture preclude any payment being made to holders of notes until the earlier
of:
. 120 days or more after the date of this acceleration; and
. the payment in full of all senior indebtedness, but only if such payment
is then otherwise permitted under the terms of the indenture.
Upon the expiration of any such payment blockage period, holders of notes
are required to pay over any amounts collected by such holders to the holders
of senior indebtedness to the extent necessary to pay all holders of senior
indebtedness in full in cash or other payment satisfactory to holders of senior
indebtedness. See "--Subordination of Notes" above.
The holders of a majority of outstanding notes have the right to direct the
time, method and place of any proceedings for any remedy available to the
trustee, subject to limitations specified in the indenture.
No holder of the notes may pursue any remedy under the indenture, except in
the case of a default in the payment of principal, premium or interest on the
notes, unless:
. the holder has given the trustee written notice of an event of default;
. the holders of at least 25% in principal amount of outstanding notes make a
written request, and offer reasonable indemnity, to the trustee to pursue
the remedy;
. the trustee does not receive an inconsistent direction from the holders of
a majority in principal amount of the notes; and
. the trustee fails to comply with the request within 60 days after
receipt.
30
<PAGE>
Modification of the Indenture
The consent of the holders of a majority in principal amount of the
outstanding notes is required to modify or amend the indenture. However, a
modification or amendment requires the consent of the holder of each
outstanding note if it would:
. extend the fixed maturity of any note;
. reduce the rate or extend the time for payment of interest of any note;
. reduce the principal amount or premium of any note;
. reduce any amount payable upon redemption of any note;
. adversely change our obligation to redeem any note upon a fundamental
change;
. impair the right of a holder to institute suit for payment on any note;
. change the currency in which any note is payable;
. impair the right of a holder to convert any note;
. adversely modify the subordination provisions of the indenture; or
. reduce the percentage of notes required for consent to any modification
of the indenture.
We are permitted to modify certain provisions of the indenture without the
consent of the holders of the notes.
Registration Rights
We entered into a registration rights agreement with the placement agents.
You generally will be required to be named as a selling securityholder in this
prospectus before you may sell securities with this prospectus. You will also
be required to comply with prospectus delivery requirements, and to agree to be
bound by applicable provisions of the registration rights agreement, including
some indemnification provisions. To be named as a selling stockholder, you must
complete and submit to us a notice and questionnaire in the form supplied by
us. If you do not complete and deliver a questionnaire or provide the other
information we may request, you will not be permitted to sell your registrable
securities with this prospectus.
Suspension of this offering. We may suspend the use of this prospectus and
registration statement:
. upon the occurrence or existence of any pending corporate development
that, in our reasonable discretion, makes it appropriate to suspend the
availability of this prospectus and the registration statement for a
discrete period of time; or
. if we learn of any event that causes this prospectus to include an untrue
statement of a material fact or omits 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.
We may not suspend the use of the prospectus and registration statement more
than one time in any three-month period, or more than three times in any
twelve- month period, and each such suspension shall not exceed 30 days in
length, without incurring liquidated damages. However, if the suspension is due
to a pending corporate development, we may, without incurring an obligation to
pay liquidated damages, extend the suspension for an additional 30 days,
provided that the aggregate duration of all suspensions does not exceed 60 days
in any three-month period or 90 days in any twelve-month period.
If either type of event listed above occurs, then we will, if required by
the Securities Act or the rules and regulations thereunder, either file a post-
effective amendment to the registration statement or file an amended prospectus
or prospectus supplement, and distribute such amended prospectus or prospectus
supplement to each relevant selling securityholder. Each selling securityholder
has agreed not to trade securities from the time the
31
<PAGE>
selling securityholder receives notice from us of this type of event until the
selling securityholder receives a prospectus supplement or amendment.
Liquidated Damages. We will pay predetermined liquidated damages on the
notes at an annual rate equal to 0.5% of the principal amount of the notes, and
on the common stock at an annual rate equal to 0.5% of the conversion price, if
the prospectus is unavailable for periods in excess of those permitted above.
Rule 144A Information Requirement
We will furnish to the holders or beneficial holders of the notes or the
underlying Series A common stock and prospective purchasers, upon their
request, the information required under Rule 144A(d)(4) under the Securities
Act until such time as such securities are no longer "restricted securities"
within the meaning of Rule 144 under the Securities Act, assuming these
securities have not been owned by an affiliate of Excite@Home.
Information Concerning the Trustee
We have appointed State Street Bank and Trust Company of California, N.A.,
the trustee under the indenture, as paying agent, conversion agent, note
registrar and custodian for the notes. The trustee or its affiliates may
provide banking and other services to us in the ordinary course of their
business.
The indenture contains certain limitations on the rights of the trustee, as
long as it or any of its affiliates remains our creditor, to obtain payment of
claims in certain cases or to realize on certain property received on any claim
as security or otherwise. The trustee and its affiliates will be permitted to
engage in other transactions with us. However, if the trustee or any affiliate
continues to have any conflicting interest and a default occurs with respect to
the notes, the trustee must eliminate such conflict or resign.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
As used in this section, references to "Excite@Home" refer solely to At Home
Corporation and not its subsidiaries.
The following is a summary of certain U.S. federal income tax considerations
relating to the purchase, ownership and disposition of the notes and common
stock into which notes may be converted, but does not purport to be a complete
analysis of all the potential tax considerations relating thereto. This summary
is based on laws, regulations, rulings and decisions now in effect, all of
which are subject to change or differing interpretation possibly with
retroactive effect. Except as specifically discussed below with regard to Non-
U.S. Holders, as defined below, this summary applies only to beneficial owners
that will hold notes and Series A common stock into which notes may be
converted as "capital assets" (within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code")) and who, for U.S.
federal income tax purposes, are:
. individual citizens or residents of the U.S.,
. corporations, partnerships or other entities created or organized in or
under the laws of the U.S. or of any political subdivision thereof
(unless, in the case of a partnership, Treasury Regulations otherwise
provide),
. estates, the incomes of which are subject to U.S. federal income taxation
regardless of the source of such income or
. trusts subject to the primary supervision of a U.S. court and the control
of one or more U.S. persons ("U.S. Holders").
Persons other than U.S. Holders, which we refer to as Non-U.S. Holders, are
subject to special U.S. federal income tax considerations, some of which are
discussed below. This discussion does not address tax
32
<PAGE>
considerations applicable to an investor's particular circumstances or to
investors that may be subject to special tax rules, such as banks, holders
subject to the alternative minimum tax, tax-exempt organizations, insurance
companies, foreign persons or entities (except to the extent specifically set
forth below), dealers in securities or currencies, persons that will hold notes
as a position in a hedging transaction, "straddle" or "conversion transaction"
for tax purposes or persons deemed to sell notes or Series A common stock under
the constructive sale provisions of the Code.
At Home has not sought any ruling from the Internal Revenue Service (the
"IRS") or an opinion of counsel with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance
that the IRS will agree with such statements and conclusions. In addition, the
IRS is not precluded from successfully adopting a contrary position. This
summary does not consider the effect of the federal estate or gift tax laws or
the tax laws (except as set forth below with respect to Non-U.S. Holders) of
any applicable foreign, state, local or other jurisdiction.
Investors considering the purchase of notes should consult their own tax
advisors with respect to the application of the United States federal income
tax laws to their particular situations as well as any tax consequences arising
under the federal estate or gift tax rules or under the laws of any state,
local or foreign taxing jurisdiction or under any applicable tax treaty.
U.S. Holders
Taxation of Interest
Interest paid on the notes will be included in the income of a U.S. Holder
as ordinary income at the time it is treated as received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. Under Treasury Regulations, the possibility of an
additional payment under a note may be disregarded for purposes of determining
the amount of interest or original issue discount income to be recognized by a
holder in respect of such note (or the timing of such recognition) if the
likelihood of the payment, as of the date the notes are issued, is remote. A
holder may require Excite@Home to redeem any and all of his notes in the event
of a fundamental change. Excite@Home intends to take the position that a
"fundamental change" is remote under the Treasury Regulations, and does not
intend to treat the possibility of a "fundamental change" as affecting the
yield to maturity of any note. In the event this contingency occurs, it would
affect the amount and timing of the income that must be recognized by a U.S.
Holder of notes. There can be no assurance that the IRS will agree with such
position.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange (other than a conversion) or redemption of a note, a
U.S. Holder generally will recognize capital gain or loss equal to the
difference between:
. the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such
amount is attributable to accrued interest income not previously included
in income, which will be taxable as ordinary income, or is attributable to
accrued interest that was previously included in income, which amount may
be received without generating further income) and
. such holder's adjusted tax basis in the note.
A U.S. Holder's adjusted tax basis in a note generally will equal the cost of
the note to such holder. Such capital gain or loss will be long-term capital
gain or loss if the U.S. Holder's holding period in the note is more than one
year at the time of sale, exchange or redemption. Long-term capital gains
recognized by certain non-corporate U.S. Holders, including individuals, will
generally be subject to a maximum rate of tax of 20%. The deductibility of
capital losses is subject to limitations.
33
<PAGE>
Conversion of the Notes
A U.S. Holder generally will not recognize any income, gain or loss upon
conversion of a note into Series A common stock except with respect to cash
received in lieu of a fractional share of Series A common stock. A U.S.
Holder's tax basis in the Series A common stock received on conversion of a
note will be the same as such holder's adjusted tax basis in the note at the
time of conversion, reduced by any basis allocable to a fractional share
interest, and the holding period for the Series A common stock received on
conversion will generally include the holding period of the note converted.
However, a U.S. Holder's tax basis in shares of Series A common stock
considered attributable to accrued interest generally will equal the amount of
such accrued interest included in income, and the holding period for such
shares shall begin on the date of conversion. To the extent that, as a result
of a reclassification, consolidation, merger or other transaction involving
Excite@Home, the notes become convertible in whole or in part into securities
of another entity or into other property, assets or cash, the holders may
recognize gain or loss upon conversion of notes.
Cash received in lieu of a fractional share of Series A common stock upon
conversion will be treated as a payment in exchange for the fractional share of
Series A common stock. Accordingly, the receipt of cash in lieu of a fractional
share of Series A common stock generally will result in capital gain or loss
(measured by the difference between the cash received for the fractional share
and the holder's adjusted tax basis in the fractional share).
Dividends
Distributions, if any, made on the Series A common stock after a conversion
generally will be included in the income of a U.S. Holder as ordinary dividend
income to the extent of Excite@Home's current and accumulated earnings and
profits. Distributions in excess of Excite@Home's current and accumulated
earnings and profits will be treated as a return of capital to the extent of
the U.S. Holder's basis in the Series A common stock and thereafter as capital
gain.
Holders of convertible debt instruments such as the notes may, in certain
circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. Adjustments to the conversion
price made pursuant to a bona fide reasonable adjustment formula which has the
effect of preventing the dilution of the interest of the holders of the debt
instruments, however, will generally not be considered to result in a
constructive distribution of stock. Certain of the possible adjustments
provided in the notes, including, without limitation, adjustments in respect of
taxable dividends to stockholders of Excite@Home, will not qualify as being
pursuant to a bona fide reasonable adjustment formula. If such adjustments are
made, the U.S. Holders of notes will be deemed to have received constructive
distributions taxable as dividends to the extent of Excite@Home's current and
accumulated earnings and profits even though they have not received any cash or
property as a result of such adjustments. In certain circumstances, the failure
to provide for such an adjustment may result in taxable dividend income to the
U.S. Holders of Series A common stock.
Sale of Series A Common Stock
Upon the sale or exchange of Series A common stock a U.S. Holder generally
will recognize capital gain or loss equal to the difference between
. the amount of cash and the fair market value of any property received upon
the sale or exchange and
. such U.S. Holder's adjusted tax basis in the Series A common stock.
Such capital gain or loss will be long-term capital gain or loss if the U.S.
Holder's holding period in Series A common stock is more than one year at the
time of the sale or exchange. Long-term capital gains recognized by certain
non-corporate U.S. Holders, including individuals, will generally be subject to
a maximum rate of tax of 20%. A U.S. Holder's basis and holding period in
Series A common stock received upon conversion of a note
34
<PAGE>
are determined as discussed above under "Conversion of the Notes." The
deductibility of capital losses is subject to limitations.
Special Tax Rules Applicable to Non-U.S. Holders
In general, subject to the discussion below concerning backup withholding:
(a) Payments of principal or interest on the notes by Excite@Home or any
paying agent to a beneficial owner of a note that is a Non-U.S. Holder
will not be subject to U.S. withholding tax, provided that, in the
case of interest:
. such Non-U.S. Holder does not own, actually or constructively, 10% or
more of the total combined voting power of all classes of stock of
Excite@Home entitled to vote within the meaning of Section 871(h)(3)
of the Code,
. such Non-U.S. Holder is not a "controlled foreign corporation" with
respect to which Excite@Home is a "related person" within the meaning
of the Code,
. such Non-U.S. Holder is not a bank receiving interest described in
Section 881(c)(3)(A) of the Code, and
. the certification requirements under Section 871(h) or Section 881(c)
of the Code and Treasury Regulations thereunder are satisfied;
(b) A Non-U.S. Holder of a note or Series A common stock will not be
subject to U.S. federal income tax on gains realized on the sale,
exchange or other disposition of such note or Series A common stock
unless
. such Non-U.S. Holder is an individual who is present in the U.S. for
183 days or more in the taxable year of sale, exchange or other
disposition, and certain conditions are met,
. such gain is effectively connected with the conduct by the Non- U.S.
Holder of a trade or business in the U.S. and, if certain U.S. income
tax treaties apply, is attributable to a U.S. permanent establishment
maintained by the Non-U.S. Holder,
. the Non-U.S. Holder is subject to Code provisions applicable to certain
U.S. expatriates, or
. in the case of Series A common stock held by a person who holds more
than 5% of such stock, Excite@Home is or has been, at any time within
the shorter of the five-year period preceding such sale or other
disposition or the period such Non-U.S. Holder held the Series A common
stock, a U.S. real property holding corporation (a "USRPHC") for U.S.
federal income tax purposes. Excite@Home does not believe that it is
currently a USRPHC or that it will become one in the future;
(c) Interest on notes not excluded from U.S. withholding tax as described
in (a) above and dividends on Series A common stock after conversion
generally will be a subject to U.S. withholding tax at a 30% rate,
except where an applicable tax treaty provides for the reduction or
elimination of such withholding tax.
To satisfy the certification requirements referred to in (a) above, Sections
871(h) and 881(c) of the Code and currently effective Treasury Regulations
thereunder require that either:
. the beneficial owner of a note must certify, under penalties of perjury,
to Excite@Home or its paying agent, as the case may be, that such owner is
a Non-U.S. Holder and must-provide such owner's name and address, and U.S.
taxpayer identification number ("TIN"), if any, or
. a securities clearing organization, bank or other financial institution
that holds customer securities in the ordinary course of its trade or
business (a "Financial Institution") and holds the note on behalf of the
beneficial owner thereof must certify, under penalties of perjury, to
Excite@Home or its paying
35
<PAGE>
agent, as the case may be, that such certificate has been received from
the beneficial owner and must furnish the payer with a copy thereof.
Such requirement will be fulfilled if the beneficial owner of a note certifies
on IRS Form W-8 substitute form, under penalties of perjury, that it is a Non-
U.S. Holder and provides its name and address or any Financial Institution
holding the note on behalf of the beneficial owner files a statement with the
withholding agent to the effect that it has received such a statement from the
beneficial owner (and furnishes the withholding agent with a copy thereof).
Treasury Regulations effective for payments made after December 31, 2000,
will provide alternative methods for satisfying the certification requirements
described above and below, subject to certain grandfathering provisions. These
new regulations also require, in the case of notes held by a foreign
partnership, that (i) the certification be provided by the partners rather
than by the foreign partnership and (ii) the partnership provide certain
information, including a TIN. A look-through rule will apply in the case of
tiered partnerships.
If a Non-U.S. Holder of a note or Series A common stock is engaged in a
trade or business in the U.S. and if interest on the note, dividends on the
Series A common stock, or gain realized on the sale, exchange or other
disposition of the note or Series A common stock is effectively connected with
the conduct of such trade or business (and, if certain tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the Non U.S.
Holder in the U.S.), the Non- U.S. Holder, although exempt from U.S.
withholding tax (provided that the certification requirements discussed in the
next sentence are met), will generally be subject to U.S. federal income tax
on such interest, dividends or gain on a net income basis in the same manner
as if it were a U.S. Holder. In lieu of the certificate described above, such
a Non-U.S. Holder will be required, under currently effective Treasury
Regulations, to provide Excite@Home with a properly executed IRS Form 4224 in
order to claim an exemption from withholding tax. In addition, if such Non-
U.S. Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30% (or such lower rate provided by an applicable treaty) of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments.
U.S. Federal Estate Tax
A note held by an individual who at the time of death is not a citizen or
resident of the U.S. (as specially defined for U.S. federal estate tax
purposes) will not be subject to U.S. federal estate tax if the individual did
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Excite@Home and, at the time of the
individual's death, payments with respect to such note would not have been
effectively connected with the conduct by such individual of a trade or
business in the U.S. Common stock held by an individual who at the time of
death is not a citizen or resident of the U.S. (as specially defined for U.S.
federal estate tax purposes) will be included in such individual's estate for
U.S. federal estate tax purposes, unless an applicable estate tax treaty
otherwise applies.
Non-U.S. Holders should consult with their tax advisors regarding U.S. and
foreign tax consequences with respect to the notes and Series A common stock.
Backup Withholding and Information Reporting
Backup withholding of U.S. federal income tax at a rate of 31% may apply to
payments pursuant to the terms of a note or Series A common stock to a U.S.
Holder that is not an "exempt recipient" and that fails to provide certain
identifying information, such as the holder's tax identification number, in
the manner required. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities are exempt recipients. Payments made
in respect of a note or common stock must be reported to the Service, unless
the U.S. Holder is an exempt recipient or otherwise establishes an exemption.
In the case of payments of interest on a note to a Non-U.S. Holder,
Treasury Regulations provide that backup withholding and information reporting
will not apply to payments with respect to which either requisite
36
<PAGE>
certification has been received or an exemption has otherwise been established
(provided that neither Excite@Home nor a paying agent has actual knowledge that
the holder is a U.S. Holder or that the conditions of any other exemption are
not in fact satisfied).
Dividends on the common stock paid to Non-U.S. Holders that are subject to
U.S. withholding tax, as described above, generally will be exempt from U.S.
backup withholding tax but will be subject to certain information reporting.
Payments of the proceeds of the sale of a note or Series A common stock to
or through a foreign office of a U.S. broker or a foreign office of a broker
that is a U.S. related person (either a "controlled foreign corporation",
within the meaning of the Code, or a foreign person, 50% or more of whose gross
income from all sources for the three-year period ending with the close of its
taxable year preceding the payment was effectively connected with the conduct
of a trade or business within the U.S.) are currently subject to certain
information reporting requirements, unless the payee is an exempt recipient or
such broker has evidence in its records that the payee is a Non-U.S. Holder and
no actual knowledge that such evidence is false and certain other conditions
are met. Temporary Treasury Regulations indicate that such payments are not
currently subject to backup withholding.
Under current Treasury Regulations, payments of the proceeds of a sale of a
note or Series A common stock to or through the U.S. office of a broker will be
subject to information reporting and backup withholding unless the payee
certifies under penalties of perjury as to his or her status as a Non-U.S.
Holder and satisfies certain other qualifications (and no agent of the broker
who is responsible for receiving or reviewing such statement has actual
knowledge that it is incorrect) and provides his or her name and address or the
payee otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules from a payment to a
holder of a note or common stock will be allowed as a refund or credit against
such holder's U.S. federal income tax provided that the required information is
furnished to the IRS in a timely manner.
As noted above, new regulations will generally be applicable to payments
made after December 31, 2000. In general, these new regulations do not
significantly alter the substantive withholding and information reporting
requirements but unify current certification procedures and forms and clarify
reliance standards. Under these new regulations, special rules apply which
permit the shifting of primary responsibility for withholding to certain
financial intermediaries acting on behalf of beneficial owners. A holder of a
note or Series A common stock should consult with its tax advisor regarding the
application of the backup withholding rules to its particular situation, the
availability of an exemption therefrom, the procedure for obtaining such an
exemption, if available, and the impact of these new regulations on payments
made with respect to notes or Series A common stock after December 31, 2000.
The preceding discussion of certain U.S. federal income tax considerations
is for general information only and is not tax advice. Accordingly, each
prospective investor should consult its own tax adviser as to the particular
U.S. federal, state, and local tax consequences of purchasing, holding and
disposing of the notes and series a common stock of at home. Tax advisors
should also be consulted as to the U.S. estate and gift tax consequences and
the foreign tax consequences of purchasing, holding and disposing of the notes
and series a common stock of At Home, as well as the consequences of any
proposed change in applicable laws.
37
<PAGE>
SELLING SECURITYHOLDERS
The following table presents information with respect to the selling
securityholders and the principal amounts of notes and shares of our Series A
common stock issuable upon the conversion of these notes that each selling
securityholder may offer with this prospectus. The term "selling
securityholders" includes donees and pledgees selling securities received from
a named selling securityholder after the date of this prospectus. The notes
were originally issued by us and sold by the placement agents to qualified
institutional buyers and an institutional accredited investor in a transaction
exempt from the registration requirements of the Securities Act. To our
knowledge, except as disclosed below, none of the selling securityholders has,
or within the past three years has had, any position, office or other material
relationship with us or any of our affiliates.
Beneficial ownership is determined under the rules of the Securities and
Exchange Commission, and generally includes voting or investment power with
respect to securities. Unless indicated below, to our knowledge, the persons
and entities named in the table have sole voting and sole investment power with
respect to all securities beneficially owned. The principal amounts of notes
provided in the table below is based on information provided to us by each of
the selling securityholders as of approximately February 29, 2000. The number
of shares of Series A common stock that may be sold is calculated based on the
current conversion price of $56.52 per share. If each selling securityholder
named below converted all of its notes, each would own less than 1% of our
outstanding Series A common stock, based on 393,480,194 shares of our Series A
common stock outstanding as of February 29, 2000.
Since the date on which each provided this information, each selling
securityholder identified below may have sold, transferred or otherwise
disposed of all or a portion of their notes in a transaction exempt from the
registration requirements of the Securities Act. Because the selling
securityholders are not obligated to sell the notes or the Series A common
stock issuable upon the conversion of the notes, we cannot estimate the amount
of the notes or how many shares of our Series A common that each selling
securityholder will beneficially own after this offering. Information
concerning the selling securityholders may change from time to time and we may
update, amend or supplement this prospectus from time to time to update the
disclosure in this section. In addition, the conversion ratio, and therefore
the number of shares of our Series A common stock issuable upon conversion of
the notes, is subject to adjustment. Accordingly, the number of shares of
Series A common stock issuable upon conversion of the notes may increase or
decrease.
<TABLE>
<CAPTION>
Principal Shares of Shares of
amount of notes Series A Series A
beneficially common common
owned Percentage stock stock
that may of notes beneficially that may
Name be sold outstanding owned be sold
---- --------------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
AIG Sound Shore
Opportunity Holding Fund
Ltd...................... $1,500,000 * 26,541 26,541
Arbitex Master Fund L.P... $2,000,000 * 35,388 35,388
Bank America Pension
Plan..................... $3,000,000 * 53,082 53,082
Bank Austria Cayman
island, Ltd.............. $3,000,000 * 53,082 53,082
BBT Fund, L.P. ........... $2,000,000 * 35,388 35,388
Bear, Stearns & Co. Inc... $7,500,000 1.5% 132,705 132,705
Black Diamond Offshore
Ltd...................... $3,808,000 * 67,378 67,378
BNP Arbitrage SNC......... $9,500,000 1.9% 168,093 168,093
Carlisle Investments...... $500,000 * 8,847 8,847
Chrysler Corporation
Master Retirement Trust.. $3,175,000 * 56,178 56,178
Circlet (IMA) Limited..... $2,500,000 * 44,235 44,235
Deephaven Domestic
Convertible Trading Ltd.. $4,000,000 * 70,776 70,776
Deeprock & Co............. $1,000,000 * 17,694 17,694
Delphi Foundation......... $40,000 * 707 707
Delta Air Lines Master
Trust.................... $1,395,000 * 24,683 24,683
Double Black Diamond
Offshore LDC............. $12,226,000 2.4% 216,326 216,326
Duckbill & Co............. $2,000,000 * 35,388 35,388
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Principal Shares of Shares of
amount of notes Series A Series A
beneficially common common
owned Percentage stock stock
that may of notes beneficially that may
Name be sold outstanding owned be sold
---- --------------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Evergreen Income &
Growth Fund............ $4,000,000 * 70,776 70,776
Family Service Life
Insurance Co........... $250,000 * 4,423 4,423
General Motors
Foundation............. $410,000 * 7,254 7,254
General Motors Employees
Global Group Pension
Trust.................. $7,540,000 1.5% 159,612 133,412
Global Bermuda Limited
Partnership............ $500,00 * 27,247 8,847
Goldman, Sachs &
Co.(/1/)............... $720,000 * 12,739 12,739
Grace Brothers Ltd...... $2,000,000 * 35,388 35,388
Granville Capital
Corporation............ $5,500,000 1.1% 97,317 97,317
Guardian Life Insurance
Co..................... $4,600,000 * 81,392 81,392
Guardian Pension Trust.. $150,000 * 2,654 2,654
JMG Capital Partners,
L.P. .................. $5,000,000 1.0% 108,120 88,470
JMG Triton Offshore
Fund, Ltd.............. $5,000,000 1.0% 336,138 88,470
J.P. Morgan Securities
Inc.................... $12,000,000 2.4% 212,328 212,328
Lakeshore International
Ltd.................... $1,000,000 * 54,594 17,694
LDG Limited............. $250,000 * 4,423 4,423
Lipper Convertibles,
L.P.................... $9,000,000 1.8% 159,246 159,246
McMahan Securities Co.
L.P.................... $500,000 * 8,847 8,847
Morgan Stanley Dean
Witter(/2/)............ $11,000,000 2.2% 294,718 19,634
Morgan Stanley Dean
Witter Convertible
Securities Trust....... $1,500,000 * 26,541 26,541
Motion Picture Industry
Health Plan--Active
Member Fund............ $370,000 * 6,546 6,546
Motion Picture Industry
Health Plan--Retiree
Member Fund............ $180,000 * 3,184 3,184
Motors Insurance
Corporation............ $2,010,000 * 35,564 35,564
Nomura Securities
International Inc. .... $12,000,000 2.4% 253,886 212,328
OCM Convertible Limited
Partnership............ $10,000 * 176 176
OCM Convertible Limited
Partnership............ $85,000 * 1,503 1,503
OCM Convertible Trust... $1,750,000 * 30,964 30,964
Partner Reinsurance
Company Ltd............ $645,000 * 11,412 11,412
Peoples Benefit Life
Insurance Company...... $2,000,000 * 35,388 35,388
Peoples Benefit Life
Insurance Company
(Teamsters)............ $2,000,000 * 35,388 35,388
Phoenix Goodwin High
Yield Fund............. $4,000,000 * 70,776 70,776
Pine Grove Equitized
Partners LLC........... $ 1,000,000 * 17,694 17,694
Republic Short Term
Fund................... $ 95,000 * 1,680 1,680
Retail Clerks Pension
Trust.................. $ 3,000,000 * 53,082 53,082
Sage Capital............ $ 3,100,000 * 54,851 54,851
State of Connecticut
Combined Investment
Funds.................. $ 3,400,000 * 60,159 60,159
Tennessee Consolidated
Retirement Systems..... $ 5,000,000 1.0% 88,470 88,470
TQA Master Fund......... $ 1,000,000 * 17,694 17,694
TQA Master Plus Fund.... $ 1,250,000 * 22,117 22,117
Vanguard Convertible
Securities Fund, Inc... $ 3,490,000 * 61,752 61,752
Warburg Dillon Read
LLC.................... $ 2,500,000 * 45,414 44,235
White River Securities
LLC.................... $ 7,500,000 1.5% 132,705 132,705
Worldwide Transactions
Ltd.................... $ 966,000 * 17,092 17,092
Other holders of notes
or future transferees
of these holders....... $312,585,000 62.5% 5,530,878(/3/) 5,530,878
</TABLE>
39
<PAGE>
- --------
*Less than 1%
(1) Goldman, Sachs & Co. served as a placement agent for the debentures and the
notes, and received customary compensation for these services.
(2) Morgan Stanley Dean Witter served as an underwriter for our initial public
offering and as a placement agent for the debentures and the notes, and
received customary compensation for these services.
(3) Assumes that any other holders of the notes, or any future transferees of
these holders, do not beneficially own any Series A common stock other than
the Series A common stock issuable upon conversion of the notes.
40
<PAGE>
PLAN OF DISTRIBUTION
The selling securityholders will be offering and selling all securities
offered and sold under this prospectus. We will not receive any of the proceeds
of the sales of these securities. In connection with this offering, we entered
into a registration rights agreement dated December 1, 1999 with the placement
agents of the notes. Securities may only be offered or sold with this
prospectus pursuant to the terms of the registration rights agreement. However,
selling securityholders may resell all or a portion of the securities in open
market transactions in reliance upon Rule 144 or Rule 144A under the Securities
Act, provided they meet the criteria and conform to the requirements of one of
these rules.
Who may sell and applicable restrictions. The securities may be sold
directly by the selling securityholders from time to time. The selling
securityholders may decide not to sell any of the securities offered with this
prospectus, and selling stockholders could transfer, devise or gift these
securities by other means.
Alternatively, the selling securityholders may from time to time offer the
securities through brokers, dealers or agents that may receive compensation in
the form of discounts, concessions or commissions from the selling
securityholders and/or the purchasers of the securities for whom they may act
as agent. In effecting sales, broker-dealers that are engaged by the selling
securityholders may arrange for other broker-dealers to participate. The
selling securityholders 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 securityholders may be deemed to be underwriters, the selling
securityholders 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.
Prospectus delivery. The selling securityholders are 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 disclose:
. the name of the selling securityholder 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 securityholders 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 securityholder 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.
Manner of sales. The selling securityholders will act independently of the
company 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, at fixed prices or at negotiated prices.
The securities 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;
41
<PAGE>
. 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 securityholders and any other person
participating in a distribution will be subject to applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder,
including Regulation M. Regulation M may limit the timing of purchases and
sales of any of the securities by the selling securityholders 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
securityholders 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.
Hedging and other transactions with broker-dealers. In connection with
distributions of the securities, the selling securityholders 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
securityholders. The selling securityholders may also sell securities short and
redeliver the securities to close out short positions. The selling
securityholders 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.
Expenses associated with registration. We have agreed to pay substantially
all of the expenses of registering the securities under the Securities Act and
of compliance with blue sky laws, including registration and filing fees,
printing and duplication expenses, administrative expenses, legal and
accounting fees, fees for one legal counsel retained by the selling
securityholders and fees of the trustee under the indenture pursuant to which
we originally issued the securities. If the notes or the underlying Series A
common stock are sold through underwriters or broker-dealers, the selling
securityholders will be responsible for underwriting discounts, underwriting
commissions and agent commissions.
Indemnification and contribution. In the registration rights agreement, we
and the selling securityholders have agreed to indemnify or provide
contribution to each other and specified other persons against some liabilities
in connection with the offering of the securities, including liabilities
arising under the Securities Act. The selling securityholders may also agree to
indemnify any broker-dealer or agent that participates in transactions
involving sales of the securities against some liabilities, including
liabilities arising under the Securities Act.
Termination of this offering. We have agreed to keep this registration
statement effective until all securities that may be sold with this prospectus
have been sold with this prospectus or sold under Rule 144 under the Securities
Act, or until the applicable holding periods under Rule 144(k), with respect to
such securities, assuming they are not held by one of our affiliates, have
expired.
42
<PAGE>
LEGAL MATTERS
Fenwick & West LLP, Palo Alto, California, will provide us with an opinion
as to legal matters in connection with the notes and the Series A common stock
that may be offered with this prospectus. Winthrop, Stimson, Putnam & Roberts,
New York, New York, has provided us with an opinion as to legal matters related
to the laws of the State of New York in connection with the notes.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our annual report on Form 10-K, as amended,
for the year ended December 31, 1998, as set forth in their report included
therein, 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 Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have also audited the consolidated
financial statements of Excite, Inc. included as an exhibit to our current
report on Form 8-K/A dated August 13, 1999, as set forth in their report
included therein, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. The consolidated financial statements
of Excite, Inc. are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
The financial statements of Narrative Communications Corp. incorporated into
this prospectus by reference to the audited historical financial statements
included as Exhibit 99.01 of our current report on Form 8-K/A filed on February
19, 1999 have been incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants.
WHERE YOU CAN FIND MORE INFORMATION
We incorporate into this prospectus by reference the following documents:
. the registration statement on Form S-3 of which this prospectus is a
part, and the documents filed as exhibits to the registration
statement and incorporated into the registration statement by
reference;
. our annual report on Form 10-K, as amended, for the year ended
December 31, 1998;
. all other reports filed under Section 13(a) or 15(d) of the Exchange
Act since December 31, 1998, including: (1) our quarterly reports on
Form 10-Q for the quarters ended March 31, June 30 and September 30,
1999; and (2) our current reports on Form 8-K filed on January 14,
1999 (as amended on February 19, 1999), January 21, 1999 (two
reports), 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;
. the description of our Series A common stock contained in our
registration statement on Form 8-A (File No. 000-22697), filed with
the Commission on June 13, 1997; and
. all other information that we file with the Securities and Exchange
Commission pursuant 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. Such inconsistent incorporated statement shall not be deemed,
except as modified or superceded, to constitute a part of this prospectus or
the registration statement.
43
<PAGE>
Because we are subject to the informational requirements of the Exchange
Act, we file reports and other information with the Commission. 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. Reports, proxy and
information statements and other information that we file electronically with
the Commission are available at the Commission's web site at
http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3 under
the Securities Act with respect to the notes and Series A common stock offered
with 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, our notes
and our Series A common stock. Statements contained in this prospectus as to
the contents of any contract or other document, including the indenture and the
registration rights agreement, 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.
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 into this prospectus by reference
(except exhibits, unless they are specifically incorporated by reference into
this prospectus). You should direct any requests for copies to At Home
Corporation, 450 Broadway Street, Redwood City, California 94063, Attention:
David G. Pine, Vice President and General Counsel, telephone: (650) 556-5000.
44
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF EXCITE@HOME]
At Home Corporation
$500,000,000 principal amount
4 3/4% Convertible Subordinated Notes due 2006
Shares of Series A common stock
issuable upon conversion of the notes
-------------------------
PROSPECTUS
, 2000
-------------------------
You should rely only on the information contained in or incorporated by
reference into this prospectus. We have not authorized anyone to provide you
with different information. The selling securityholders are offering to sell,
and seeking offers to buy, the securities 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 the securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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>
<CAPTION>
Securities and Exchange Commission registration fee..................... $132,000
<S> <C>
Nasdaq National Market filing fee....................................... 17,500
Accounting fees and expenses............................................ 10,000
Legal fees and expenses................................................. 30,000
Miscellaneous........................................................... 10,500
--------
Total.................................................................. $200,000
========
</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:
<TABLE>
<CAPTION>
Document
--------
<C> <S>
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).
</TABLE>
In connection with the purchase and sale of the notes, the Registrant
entered into a Purchase Agreement with the placement agents of the notes under
which the placement agents agreed to indemnify the Registrant and its
directors, officers and controlling persons against specified liabilities,
including losses arising out of material misstatements or omissions in the
offering memorandum by which the notes were initially sold by the Registrant.
In addition, the Registrant entered into a Registration Rights Agreement with
the placement agents under which the placement agents agreed to provide similar
indemnification for specified liabilities, including liabilities arising under
the Securities Act, with respect to this registration statement and prospectus.
The following documents are incorporated by reference:
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 Exhibit
Number Title
------- -------
<C> <S>
3.01 Fifth Amended and Restated Certificate of Incorporation of the
Registrant, 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).
3.02 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).
4.01 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).
4.02 Form of Amended and Restated Stockholders' Agreement, dated July 16,
1997, by and among the Registrant and the parties indicated therein
(incorporated by reference to Exhibit 4.04 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 Indenture, dated as of December 1, 1999, by Registrant to State Street
Bank and Trust Company of California, N.A., as trustee (contains form
of note).
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
4.04 Registration Rights Agreement, dated December 1, 1999, between the Registrant and Morgan
Stanley & Co. Incorporated, Goldman Sachs & Co., Deutsche Bank Securities Inc., Donaldson
Lufkin & Jenrette Securities Corporation, Hambrecht & Quist LLC and BancBoston Robertson
Stephens Inc.
5.01 Opinion of Fenwick & West LLP regarding the legality of the notes and the shares of Series A
common stock being registered.
5.02 Opinion of Winthrop, Stimson, Putnam & Roberts regarding the legality of the notes being registered.
12.01 Statement regarding the computation of the ratio of earnings to fixed charges.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP, Independent Auditors.
23.03 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.01 Power of attorney (see pg. II-5 of this registration statement).
25.01 Form T-1 statement of eligibility of trustee for indenture under the Trust Indenture Act of 1939.
</TABLE>
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.
II-3
<PAGE>
(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-4
<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 9th
day of March, 2000.
AT HOME CORPORATION
By: /s/ George Bell
-------------------------------
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
--------- ----- ----
<S> <C> <C>
Principal Executive Officer:
/s/ George Bell President, Chief Executive March 9, 2000
______________________________________ Officer and Director
George Bell
Principal Financial Officer:
/s/ Kenneth A. Goldman Senior Vice President and March 9, 2000
______________________________________ Chief Financial Officer
Kenneth A. Goldman
Principal Accounting Officer:
/s/ Robert A. Lerner Corporate Controller March 9, 2000
______________________________________
</TABLE> Robert A. Lerner
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Additional Directors:
/s/ Thomas A. Jermoluk Chairman March 9, 2000
______________________________________
Thomas A. Jermoluk
/s/ William R. Hearst III Director March 9, 2000
______________________________________
William R. Hearst III
______________________________________ Director
C. Michael Armstrong
/s/ L. John Doerr Director March 9, 2000
______________________________________
L. John Doerr
______________________________________ Director
Ray Liguri
/s/ John C. Malone Director March 9, 2000
______________________________________
John C. Malone
______________________________________ Director
John C. Petrillo
/s/ Brian L. Roberts Director March 9, 2000
______________________________________
Brian L. Roberts
______________________________________ Director
Ted Rogers
/s/ David M. Woodrow Director March 9, 2000
______________________________________
David M. Woodrow
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
4.03 Indenture, dated as of December 1, 1999, by Registrant to State Street
Bank and Trust Company of California, N.A., as trustee (contains form
of note).
4.04 Registration Rights Agreement, dated December 1, 1999, between the
Registrant and Morgan Stanley & Co. Incorporated, Goldman Sachs & Co.,
Deutsche Bank Securities Inc., Donaldson Lufkin & Jenrette Securities
Corporation, Hambrecht & Quist LLC and BancBoston Robertson Stephens
Inc.
5.01 Opinion of Fenwick & West LLP regarding the legality of the notes and
the shares of Series A common stock being registered.
5.02 Opinion of Winthrop, Stimson, Putnam & Roberts regarding the legality
of the notes being registered.
12.01 Statement regarding the computation of the ratio of earnings to fixed
charges.
23.02 Consent of Ernst & Young LLP, Independent Auditors.
23.03 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.01 Power of attorney (see pg. II-5 of this registration statement).
Form T-1 statement of eligibility of trustee for indenture under the
25.01 Trust Indenture Act of 1939.
</TABLE>
<PAGE>
EXHIBIT 4.03
- --------------------------------------------------------------------------------
AT HOME CORPORATION
To
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
___________________________
INDENTURE
Dated as of
December 1, 1999
___________________________
4% Convertible Subordinated Notes due 2006
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE ONE DEFINITIONS.............................................................................................. 1
Section 1.1. Definitions.................................................................................... 1
ARTICLE TWO ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF
NOTES.......................................................................................... 6
Section 2.1. Designation Amount and Issue of Notes.......................................................... 6
Section 2.2. Form of Notes.................................................................................. 6
Section 2.3. Date and Denomination of Notes; Payments of Interest........................................... 7
Section 2.4. Execution of Notes............................................................................. 8
Section 2.5. Exchange and Registration of Transfer of Notes; Restrictions on Transfer;
Depositary..................................................................................... 9
Section 2.6. Mutilated, Destroyed, Lost or Stolen Notes..................................................... 15
Section 2.7. Temporary Notes................................................................................ 16
Section 2.8. Cancellation of Notes Paid, Etc................................................................ 16
Section 2.9. CUSIP Numbers.................................................................................. 17
ARTICLE THREE REDEMPTION OF NOTES.................................................................................... 17
Section 3.1. (a) Initial Prohibition on Redemption.......................................................... 17
Section 3.2. Notice of Redemptions; Selection of Notes...................................................... 17
Section 3.3. Payment of Notes Called for Redemption......................................................... 19
Section 3.4. Conversion Arrangement on Call for Redemption.................................................. 19
Section 3.5. Redemption at Option of Holders................................................................ 21
ARTICLE FOUR SUBORDINATION OF NOTES.................................................................................. 24
Section 4.1. Notes Subordinate to Senior Indebtedness....................................................... 24
Section 4.2. Payment Over of Proceeds upon Dissolution, Etc................................................. 24
Section 4.3. No Payment When Senior Indebtedness in Default................................................. 25
Section 4.4. Payment Permitted If No Default................................................................ 26
Section 4.5. Subrogation to Rights of Holders of Senior Indebtedness........................................ 26
Section 4.6. Provisions Solely To Define Relative Rights.................................................... 27
Section 4.7. Trustee To Effectuate Subordination............................................................ 27
Section 4.8. No Waiver of Subordination Provisions.......................................................... 27
Section 4.9. Notice to Trustee.............................................................................. 28
Section 4.10. Reliance on Judicial Order or Certificate of Liquidating Agent................................. 28
Section 4.11. Trustee Not Fiduciary for Holders of Senior Indebtedness....................................... 28
Section 4.12. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's
Rights......................................................................................... 29
Section 4.13. Article Applicable to Paying Agents............................................................ 29
Section 4.14. Certain Conversions Deemed Payment............................................................. 29
ARTICLE FIVE PARTICULAR COVENANTS OF THE COMPANY..................................................................... 29
Section 5.1. Payment of Principal, Premium and Interest..................................................... 29
Section 5.2. Maintenance of Office or Agency................................................................ 30
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued)
Page
----
<S> <C> <C>
Section 5.3. Appointments to Fill Vacancies in Trustee's Office............................................. 30
Section 5.4. Provisions as to Paying Agent.................................................................. 30
Section 5.5. Existence...................................................................................... 31
Section 5.6. Maintenance of Properties...................................................................... 31
Section 5.7. Payment of Taxes and Other Claims.............................................................. 32
Section 5.8. Rule 144A Information Requirement.............................................................. 32
Section 5.9. Stay, Extension and Usury Laws................................................................. 32
Section 5.10. Compliance Certificate......................................................................... 33
Section 5.11. Liquidated Damages Notice...................................................................... 33
ARTICLE SIX NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE........................................................................................ 33
Section 6.1. Noteholders' Lists............................................................................. 33
Section 6.2. Preservation and Disclosure of Lists........................................................... 34
Section 6.3. Reports by Trustee............................................................................. 34
Section 6.4. Reports by Company............................................................................. 34
ARTICLE SEVEN REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF
DEFAULT........................................................................................ 35
Section 7.1. Events of Default.............................................................................. 35
Section 7.2. Payments of Notes on Default; Suit Therefor.................................................... 36
Section 7.3. Application of Monies Collected by Trustee..................................................... 38
Section 7.4. Proceedings by Noteholder...................................................................... 39
Section 7.5. Proceedings by Trustee......................................................................... 39
Section 7.6. Remedies Cumulative and Continuing............................................................. 39
Section 7.7. Direction of Proceedings and Waiver of Defaults by Majority of Noteholders..................... 40
Section 7.8. Notice of Defaults............................................................................. 40
Section 7.9. Undertaking to Pay Costs....................................................................... 40
ARTICLE EIGHT THE TRUSTEE............................................................................................ 41
Section 8.1. Duties and Responsibilities of Trustee......................................................... 41
Section 8.2. Reliance on Documents, Opinions, Etc........................................................... 42
Section 8.3. No Responsibility for Recitals, Etc............................................................ 43
Section 8.4. Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes........................... 43
Section 8.5. Monies to be Held in Trust..................................................................... 43
Section 8.6. Compensation and Expenses of Trustee........................................................... 43
Section 8.7. Officers' Certificate as Evidence.............................................................. 44
Section 8.8. Conflicting Interests of Trustee............................................................... 44
Section 8.9. Eligibility of Trustee......................................................................... 44
Section 8.10. Resignation or Removal of Trustee.............................................................. 44
Section 8.11. Acceptance by Successor Trustee................................................................ 45
Section 8.12. Succession by Merger, Etc...................................................................... 46
Section 8.13. Preferential Collection of Claims.............................................................. 46
Section 8.14. Trustee's Application for Instructions from the Company........................................ 47
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued)
Page
----
<S> <C> <C>
ARTICLE NINE THE NOTEHOLDERS......................................................................................... 47
Section 9.1. Action by Noteholders.......................................................................... 47
Section 9.2. Proof of Execution by Noteholders.............................................................. 47
Section 9.3. Who Are Deemed Absolute Owners................................................................. 47
Section 9.4. Company-Owned Notes Disregarded................................................................ 48
Section 9.5. Revocation of Consents; Future Holders Bound................................................... 48
ARTICLE TEN MEETINGS OF NOTEHOLDERS.................................................................................. 48
Section 10.1. Purpose of Meetings............................................................................ 48
Section 10.2. Call of Meetings by Trustee.................................................................... 49
Section 10.3. Call of Meetings by Company or Noteholders..................................................... 49
Section 10.4. Qualifications for Voting...................................................................... 49
Section 10.5. Regulations.................................................................................... 50
Section 10.6. Voting......................................................................................... 50
Section 10.7. No Delay of Rights by Meeting.................................................................. 50
ARTICLE ELEVEN SUPPLEMENTAL INDENTURES............................................................................... 51
Section 11.1. Supplemental Indentures Without Consent of Noteholders......................................... 51
Section 11.2. Supplemental Indenture with Consent of Noteholders............................................. 52
Section 11.3. Effect of Supplemental Indenture............................................................... 53
Section 11.4. Notation on Notes.............................................................................. 53
Section 11.5. Evidence of Compliance of Supplemental Indenture to be Furnished to
Trustee........................................................................................ 53
ARTICLE TWELVE CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE..................................................... 53
Section 12.1. Company May Consolidate, Etc on Certain Terms.................................................. 53
Section 12.2. Successor Corporation to be Substituted........................................................ 54
Section 12.3. Opinion of Counsel to be Given Trustee......................................................... 54
ARTICLE THIRTEEN SATISFACTION AND DISCHARGE OF INDENTURE............................................................. 54
Section 13.1. Discharge of Indenture......................................................................... 55
Section 13.2. Deposited Monies to be Held in Trust by Trustee................................................ 55
Section 13.3. Paying Agent to Repay Monies Held.............................................................. 55
Section 13.4. Return of Unclaimed Monies..................................................................... 55
Section 13.5. Reinstatement.................................................................................. 56
ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS.................................................................................. 57
Section 14.1. Indenture and Notes Solely Corporate Obligations............................................... 57
ARTICLE FIFTEEN CONVERSION OF NOTES.................................................................................. 57
Section 15.1. Right to Convert............................................................................... 57
Section 15.2. Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends............................................ 57
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued)
Page
----
<S> <C> <C>
Section 15.3. Cash Payments in Lieu of Fractional Shares..................................................... 59
Section 15.4. Conversion Price............................................................................... 59
Section 15.5. Adjustment of Conversion Price................................................................. 59
Section 15.6. Effect of Reclassification, Consolidation, Merger or Sale...................................... 67
Section 15.7. Special Provisions Applicable to Tracking Stock or Similar Arrangement......................... 67
Section 15.8. Taxes on Shares Issued......................................................................... 70
Section 15.9. Reservation of Shares; Shares to be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock............................................. 70
Section 15.10. Responsibility of Trustee...................................................................... 71
Section 15.11. Notice to Holders Prior to Certain Actions..................................................... 71
ARTICLE SIXTEEN MISCELLANEOUS PROVISIONS............................................................................. 72
Section 16.1. Provisions Binding on Company's Successors..................................................... 72
Section 16.2. Official Acts by Successor Corporation......................................................... 72
Section 16.3. Addresses for Notices, Etc..................................................................... 72
Section 16.4. Governing Law.................................................................................. 73
Section 16.5. Evidence of Compliance with Conditions Precedent; Certificates to Trustee...................... 73
Section 16.6. Legal Holidays................................................................................. 73
Section 16.7. Trust Indenture Act............................................................................ 73
Section 16.8. No Security Interest Created................................................................... 74
Section 16.9. Benefits of Indenture.......................................................................... 74
Section 16.10. Table of Contents, Headings, Etc............................................................... 74
Section 16.11. Authenticating Agent........................................................................... 74
Section 16.12. Execution in Counterparts...................................................................... 75
Section 16.13. Severability................................................................................... 75
</TABLE>
-iv-
<PAGE>
Reconciliation and Tie Between the Trust Indenture Act of 1939, as amended, and
Indenture, dated as of December 1, 1999, between At Home Corporation and State
Street Bank and Trust Company of California, N.A., as Trustee.
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1)....................................................... 8.9
(a)(2)........................................................... 8.9
(a)(3).......................................................... N.A.
(a)(4).......................................................... N.A.
(a)(5)........................................................... 8.9
(b)............................................. 8.8; 8.9; 8.10; 8.11
Section 311(a)......................................................... 8.13
(b)............................................................. 8.13
(b)(2).......................................................... 8.13
Section 312(a)..................................................... 6.1; 6.2(a)
(b).............................................................. 6.2(b)
(c).............................................................. 6.2(c)
Section 313(a).......................................................... 6.3(a)
(b).............................................................. 6.3(a)
(c).............................................................. 6.3(a)
(d).............................................................. 6.3(b)
Section 314(a).......................................................... 6.4
(b)............................................................. N.A.
(c)(1).......................................................... 16.5
(c)(2).......................................................... 16.5
(c)(3).......................................................... N.A.
(d)............................................................. N.A.
(e)............................................................. 16.5
Section 315(a).......................................................... 8.1
(b).............................................................. 7.8
(c).............................................................. 8.1
(d).............................................................. 8.1
(d)(1)........................................................... 8.1(a)
(d)(2)........................................................... 8.1(b)
(d)(3)........................................................... 8.1(c)
(e).............................................................. 7.9
Section 316(a).......................................................... 7.7
(a)(1)(A)........................................................ 7.7
(a)(1)(B)........................................................ 7.7
(a)(2).......................................................... N.A.
(b).............................................................. 7.4
Section 317(a)(1)....................................................... 7.5
(a)(2)........................................................... 7.5
(b).............................................................. 5.4
Section 318(a)......................................................... 16.7
</TABLE>
- ------------------
* Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
** Note: N.A. means Not Applicable.
<PAGE>
INDENTURE
INDENTURE, dated as of December 1, 1999, between At Home Corporation, a
Delaware corporation (hereinafter called the "Company"), having its principal
office at 450 Broadway, Redwood City, California 94063, and State Street Bank
and Trust Company of California, N.A., a national banking association organized
under the laws of the United States, as trustee hereunder (hereinafter called
the "Trustee"), having its principal corporate office at 633 West 5th Street,
12th Floor, Los Angeles, California 90071.
W I T N E S S E T H:
-------------------
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue of its 4% Convertible Subordinated Notes due 2006 (hereinafter called
the "Notes") and, to provide the terms and conditions upon which the Notes are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect repayment upon a
Fundamental Change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute this Indenture a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE ONE
DEFINITIONS
Section 1.1. Definitions. The terms defined in this Section 1.1 (except
-----------
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture that are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein", "hereof", "hereunder", and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as the
singular.
<PAGE>
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Company or a
------------------
committee of such Board duly authorized to act for it hereunder.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
------------
which is not a day on which the banking institutions in The City of New York or
the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.
"Closing Price" has the meaning specified in Section 15.5(h)(1).
-------------
"Commission" means the Securities and Exchange Commission, as from time to
----------
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Equity" means the Common Stock, the Series B Common Stock, par
-------------
value $0.01 per share, of the Company, and the Series K Common Stock, par value
$0.01 per share, of the Company authorized at the date of this instrument as
originally executed or shares of any class or classes resulting from any
reclassification or reclassifications thereof.
"Common Stock" means the Series A Common Stock, par value $0.01 per share,
------------
of the Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Sections 15.6 and 15.7, shares issuable on
conversion or repurchase of Notes shall include only shares of Common Stock or
shares of any class or classes of common stock resulting from any
reclassification or reclassifications thereof or distributed on Common Stock
pursuant to a distribution subject to Section 15.7; provided, however, that if
-------- -------
at any time there shall be more than one such resulting class, the shares so
issuable on conversion of Notes shall include shares of all such classes, and
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"common stock" means any stock of any class of capital stock which has no
------------
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the issuer
thereof (other than preferences among classes of capital stock designed to
represent economic interest in distinct businesses of the same issuer as in the
case of a "tracking stock") and which is not subject to redemption by the issuer
thereof (except in the case of a "tracking stock" in exchange for common stock
of a Person owning substantially all of the assets of the business the
performance of which is tracked by such capital stock).
"Company" means the corporation named as the "Company" in the first
-------
paragraph of this Indenture, and, subject to the provisions of Article Twelve,
shall include its successors and assigns.
"Company Notice" has the meaning specified in Section 3.5(b).
--------------
-2-
<PAGE>
"Conversion Price" has the meaning specified in Section 15.4.
----------------
"Corporate Trust Office" or other similar term, means the designated office
----------------------
of the Trustee at which at any particular time its corporate trust business
shall be administered, which office is, at the date as of which this Indenture
is dated, located at 633 West 5th Street, 12th Floor, Los Angeles, California
90071, Attention: Corporate Trust Department (At Home Corporation, 4%
Convertible Subordinated Notes due 2006).
"Custodian" means State Street Bank and Trust Company of California, N.A.,
---------
as custodian with respect to the Notes in global form, or any successor entity
thereto.
"default" means any event that is, or after notice or passage of time, or
-------
both, would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.3.
------------------
"Depositary" means, with respect to the Notes issuable or issued in whole
----------
or in part in global form, the Person specified in Section 2.5(d) as the
Depositary with respect to such Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Event of Default" means any event specified in Section 7.1(a), (b), (c),
----------------
(d), (e) or (f).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder, as in effect from time to
time.
"Fundamental Change" shall have the meaning specified in Section 3.5(g).
------------------
"Global Note" has the meaning set forth in Section 2.5(b).
-----------
"Indenture" means this instrument as originally executed or, if amended or
---------
supplemented as herein provided, as so amended or supplemented.
"Initial Purchasers" means Morgan Stanley & Co. Incorporated, Goldman,
------------------
Sachs & Co., Deutsche Bank Securities Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Hambrecht & Quist LLC and BancBoston Robertson Stephens
Inc.
"Institutional Accredited Investor" means an institutional "accredited
---------------------------------
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Liquidated Damages" has the meaning specified for "Liquidated Damages
------------------
Amount" in Section 2(e) of the Registration Rights Agreement.
"Note" or "Notes" means any Note or Notes, as the case may be,
---- -----
authenticated and delivered under this Indenture, including the Global Note.
"Note register" has the meaning specified in Section 2.5(a).
-------------
"Note registrar" has the meaning specified in Section 2.5(a).
--------------
-3-
<PAGE>
"Noteholder" or "holder" as applied to any Note, or other similar terms
---------- ------
(but excluding the term "beneficial holder"), means any Person in whose name at
the time a particular Note is registered on the Note registrar's books.
"Officers' Certificate", when used with respect to the Company, means a
---------------------
certificate signed by both (a) the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President and (b) the Treasurer or any
Assistant Treasurer, the Controller or any Assistant Controller, or the
Secretary or any Assistant Secretary of the Company.
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
------------------
who may be an employee of or counsel to the Company, or other counsel reasonably
acceptable to the Trustee.
"outstanding", when used with reference to Notes and subject to the
-----------
provisions of Section 9.4, means, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, (i) for the redemption of which
monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which
shall have been otherwise defeased in accordance with Article Thirteen;
(c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6; and
(d) Notes converted into Common Stock pursuant to Article Fifteen and
Notes deemed not outstanding pursuant to Article Three.
"Person" means a corporation, an association, a partnership, a limited
------
liability company, an individual, a joint venture, a joint stock company, a
trust, an unincorporated organization or a government or an agency or a
political subdivision thereof.
"Portal Market" means The Portal Market operated by the National
-------------
Association of Securities Dealers, Inc. or any successor thereto.
"Predecessor Note" of any particular Note means every previous Note
----------------
evidencing all or a portion of the same debt as that evidenced by such
particular Note, and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note that it replaces.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
---
"Registration Rights Agreement" means that certain Registration Rights
-----------------------------
Agreement, dated as of December 1, 1999, among the Company and the Initial
Purchasers, as amended from time to time in accordance with its terms.
"Responsible Officer", when used with respect to the Trustee, means an
-------------------
officer of the Trustee in the Corporate Trust Office assigned and duly
authorized by the Trustee to administer this Indenture.
"Restricted Securities" has the meaning specified in Section 2.5(d).
---------------------
-4-
<PAGE>
"Rule 144A" means Rule 144A as promulgated under the Securities Act.
---------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder, as in effect from time to time.
"Senior Indebtedness" means, without duplication, the principal, premium
-------------------
(if any) and unpaid interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding), rent and
end of term payments payable on or in connection with, and, to the extent not
included in the foregoing, all amounts payable as fees, costs, expenses,
liquidated damages, indemnities, repurchase and other put obligations and other
amounts to the extent accrued or due on or in connection with, all present and
future secured (i) indebtedness of the Company for borrowed money, (ii)
obligations of the Company evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of the Company under (w) securities
repurchase agreements, (x) interest rate swaps, caps, collars, options and
similar arrangements, (y) any foreign exchange contract, currency swap contract,
futures contract, currency option contract or other foreign currency hedge, and
(z) credit swaps, caps, floors, collars and similar arrangements, (iv)
obligations incurred, assumed or guaranteed by the Company in connection with
the acquisition by it or a subsidiary of any business, properties or assets
(except purchase-money indebtedness classified as accounts payable under
generally accepted accounting principles), (v) obligations of the Company as
lessee under leases required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles and liabilities under any
financing lease or so-called "synthetic" lease transaction entered into by the
Company, (vi) reimbursement obligations of the Company in respect of letters of
credit, bank guarantees or bankers' acceptances, (vii) obligations of the
Company to make payments to any entity as consideration for the acquisition by
the Company of subscribers to its current Internet services or to future similar
or related services, or to acquire rights to transport data using assets owned
by any other entity, and (viii) obligations of the Company under direct or
indirect guarantees in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vii) above, provided that Senior Indebtedness shall not
--------
include: (a) any indebtedness or obligations of the kinds referred to in clause
(i) through (viii) above (collectively, "Debt") as to which, in the instrument
or agreement creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that such Debt shall be subordinated in
right of payment to any other Debt of the Company, unless such instrument or
agreement expressly provides that such Debt shall be senior in right of payment
to the Notes; (b) any Debt that is not secured; (c) any Debt of the Company as
to which, in the instrument or agreement creating or evidencing the same or
pursuant to which the same is outstanding, it is expressly provided that such
Debt shall not be senior in right of payment to, or is pari passu in right of
payment with, or ranks junior in right of payment to, the Notes; (d) Debt of the
Company in respect of the Notes; (e) any Debt of the Company to any Subsidiary
of the Company; and (f) the Company's Convertible Subordinated Debentures due
2018.
"Significant Subsidiary" means, as of any date of determination, a
----------------------
Subsidiary of the Company, if as of such date of determination either (a) the
assets of such subsidiary equal 10% or more of the Company's total consolidated
assets or (b) the total revenue of which represented 10% or more of the
Company's consolidated total revenue for the most recently completed fiscal
year.
"Subsidiary" means, with respect to any Person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of capital stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the
-5-
<PAGE>
other subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or managing general partner of which is
such Person or a subsidiary of such Person or (b) the only general partners of
which are such Person or of one or more subsidiaries of such Person (or any
combination thereof).
"Trading Day" has the meaning specified in Section 15.5(h)(5).
-----------
"Trigger Event" has the meaning specified in Section 15.5(d).
-------------
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as
-------------------
it was in force at the date of this Indenture, except as provided in Sections
11.3 and 15.6; provided, however, that, in the event the Trust Indenture Act of
1939 is amended after the date hereof, the term "Trust Indenture Act" shall
mean, to the extent required by such amendment, the Trust Indenture Act of 1939
as so amended.
"Trustee" means State Street Bank and Trust Company of California, N.A. and
-------
its successors and any corporation resulting from or surviving any consolidation
or merger to which it or its successors may be a party and any successor trustee
at the time serving as successor trustee hereunder.
"Vice President," when used with respect to the Company or the Trustee,
--------------
means any vice president whether or not designated by a number or a word or
words before or after the title "vice president."
The definitions of certain other terms are as specified in Sections 2.5 and
3.5 and Article Fifteen.
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION,
REGISTRATION AND EXCHANGE OF NOTES
Section 2.1. Designation Amount and Issue of Notes. The Notes shall be
-------------------------------------
designated as "4% Convertible Subordinated Notes due 2006". Notes not to exceed
the aggregate principal amount of $500,000,000 (or up to $575,000,000 if the
over-allotment option (the "Over-allotment Option") set forth in Section 2 of
Purchase Agreement dated December 7, 1999 (as amended from time to time by the
parties thereto) by and between the Company and the Initial Purchasers is
exercised in full) (except pursuant to Sections 2.5, 2.6, 3.3, 3.5 and 15.2
hereof) upon the execution of this Indenture, or from time to time thereafter,
may be executed by the Company and delivered to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver said Notes to or upon
the written order of the Company, signed by (a) its Chairman of the Board, Chief
Executive Officer, President or any Vice President and (b) its Treasurer or any
Assistant Treasurer, its Controller or any Assistant Controller or its Secretary
or any Assistant Secretary, without any further action by the Company hereunder.
Section 2.2. Form of Notes. The Notes and the Trustee's certificate of
-------------
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
---------
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or
-6-
<PAGE>
regulation of any securities exchange or automated quotation system on which the
Notes may be listed, or to conform to usage.
Any Global Note shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented thereby may from time to time be
increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in such manner and
upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any, on any
Global Note shall be made to the holder of such Note.
The terms and provisions contained in the form of Note attached as Exhibit
-------
A hereto shall constitute, and are hereby expressly made, a part of this
- -
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.3. Date and Denomination of Notes; Payments of Interest. The
----------------------------------------------------
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication and shall bear interest from the applicable
date in each case as specified on the face of the form of Note attached as
Exhibit A hereto. Interest on the Notes shall be computed on the basis of a
- ----------
360-day year comprised of twelve (12) 30-day months.
The Person in whose name any Note (or its Predecessor Note) is registered
on the Note register at the close of business on any record date with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date, except (i) that the interest payable upon redemption
(unless the date of redemption is an interest payment date) will be payable to
the Person to whom principal is payable and (ii) as set forth in the next
succeeding sentence. In the case of any Note (or portion thereof) that is
converted into Common Stock during the period from (but excluding) a record date
to (but excluding) the next succeeding interest payment date either (x) if such
Note (or portion thereof) has been called for redemption on a redemption date
which occurs during such period, or is to be redeemed in connection with a
Fundamental Change on a Repurchase Date (as defined in Section 3.5) that occurs
during such period, the Company shall not be required to pay interest on such
interest payment date in respect of any such Note (or portion thereof) except to
the extent required to be paid upon redemption of such Note or portion thereof
pursuant to Section 3.3 or 3.5 hereof or (y) if such Note (or portion thereof)
has not been called for redemption on a redemption date that occurs during such
period and is not to be redeemed in connection with a Fundamental Change on a
Repurchase Date that occurs during such period, such Note (or portion thereof)
that is submitted for conversion during such period shall be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted, as provided in the penultimate paragraph of
Section 15.2 hereof. Interest shall be payable at the office of the Company
maintained by the Company for such purposes in the Borough of Manhattan, City of
New York, which shall initially be an office or agency of the Trustee and may,
as the Company shall specify to the paying agent in writing by each record date,
be paid either (i) by check mailed to the address of the Person entitled thereto
as it appears in the Note register (provided that the holder of Notes with an
aggregate principal amount in excess of $2,000,000 shall, at the written
election of such holder, be paid by wire transfer in immediately available
funds) or (ii) by transfer to an account maintained by such Person located in
the United States; provided, however, that payments to the Depositary will be
made by wire transfer of immediately available funds to the account of the
-7-
<PAGE>
Depositary or its nominee. The term "record date" with respect to any interest
payment date shall mean the June 1 or December 1 preceding the relevant June 15
or December 15, respectively.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any June 15 or December 15 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder, and such Defaulted
Interest shall be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a special record date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest to be paid on each Note and the date of the
payment (which shall be not less than twenty-five (25) days after the
receipt by the Trustee of such notice, unless the Trustee shall consent to
an earlier date), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Person
entitled to such Defaulted Interest as in this clause provided. Thereupon
the Trustee shall fix a special record date for the payment of such
Defaulted Interest which shall be not more than fifteen (15) days and not
less than ten (10) days prior to the date of the proposed payment, and not
less than ten (10) days after the receipt by the Trustee of the notice of
the proposed payment, the Trustee shall promptly notify the Company of such
special record date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the special record date therefor to be mailed, first-class postage prepaid,
to each Noteholder at his address as it appears in the Note register, not
less than ten (10) days prior to such special record date. Notice of the
proposed payment of such Defaulted Interest and the special record date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Notes (or their respective Predecessor
Notes) were registered at the close of business on such special record date
and shall no longer be payable pursuant to the following clause (2) of this
Section 2.3.
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, and upon such notice as may be required
by such exchange or automated quotation system, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Section 2.4. Execution of Notes. The Notes shall be signed in the name
------------------
and on behalf of the Company by the manual or facsimile signature of its
Chairman of the Board, Chief Executive Officer, President or any Vice President
and attested by the manual or facsimile signature of its Secretary or any of its
Assistant Secretaries or its Treasurer or any of its Assistant Treasurers (which
may be printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
---------
agent appointed by the Trustee as provided by Section 16.11), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company
-8-
<PAGE>
shall be conclusive evidence that the Note so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5. Exchange and Registration of Transfer of Notes; Restrictions
------------------------------------------------------------
on Transfer; Depositary.
- -----------------------
(a) The Company shall cause to be kept at the Corporate Trust Office
a register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 5.2 being herein sometimes
collectively referred to as the "Note register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Note register shall be in
written form or in any form capable of being converted into written form within
a reasonably prompt period of time. The Trustee is hereby appointed "Note
registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. The Company may appoint one or more co-registrars in accordance with
Section 5.2.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
Section 5.2. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Noteholder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption or conversion shall (if so required by the Company or the
Note registrar) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Notes shall
be duly executed by the Noteholder thereof or his attorney duly authorized in
writing.
No service charge shall be made to any holder for any registration of
transfer or exchange of Notes, but the Company may require payment by the holder
of a sum sufficient to cover any tax, assessment or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Notes.
-9-
<PAGE>
Neither the Company nor the Trustee nor any Note registrar shall be
required to exchange or register a transfer of (a) any Notes for a period of
fifteen (15) days next preceding any selection of Notes to be redeemed, (b) any
Notes or portions thereof called for redemption pursuant to Section 3.2, (c) any
Notes or portions thereof surrendered for conversion pursuant to Article Fifteen
or (d) any Notes or portions thereof tendered for redemption (and not withdrawn)
pursuant to Section 3.5.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Notes that, upon
initial issuance are beneficially owned by QIBs or as a result of a sale or
transfer after initial issuance are beneficially owned by QIBs, will be
represented by one or more Notes in global form registered in the name of the
Depositary or the nominee of the Depositary (the "Global Note"), except as
otherwise specified below. The transfer and exchange of beneficial interests in
any such Global Note shall be effected through the Depositary in accordance with
this Indenture and the procedures of the Depositary therefor. The Trustee shall
make appropriate endorsements to reflect increases or decreases in the principal
amounts of any such Global Note as set forth on the face of the Note ("Principal
Amount") to reflect any such transfers. Except as provided below, beneficial
owners of a Global Note shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders of such
Global Note.
(c) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, upon any transfer of a
definitive Note to a QIB in accordance with Rule 144A, and upon receipt of the
definitive Note or Notes being so transferred, together with a certification,
substantially in the form on the reverse of the Note, from the transferor that
the transfer is being made in compliance with Rule 144A (or other evidence
satisfactory to the Trustee), the Trustee shall make an endorsement on the
Global Note to reflect an increase in the aggregate Principal Amount of the
Notes represented by such Global Note, and the Trustee shall cancel such
definitive Note or Notes in accordance with the standing instructions and
procedures of the Depositary, the aggregate Principal Amount of the Notes
represented by such Global Note to be increased accordingly; provided, however,
that no definitive Note, or portion thereof, in respect of which the Company or
an Affiliate of the Company held any beneficial interest shall be included in
such Global Note until such definitive Note is freely tradable in accordance
with Rule 144(k) under the Securities Act, provided further that the Trustee
shall issue Notes in definitive form upon any transfer of a beneficial interest
in the Global Note to the Company or any Affiliate of the Company.
Upon any sale or transfer of a Note to an Institutional Accredited Investor
(other than pursuant to a registration statement that has been declared
effective under the Securities Act), such Institutional Accredited Investor
shall, prior to such sale or transfer, furnish to the Company and/or the Trustee
a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit B to
---------
this Indenture. Upon any transfer of a beneficial interest in the Global Note
to an Institutional Accredited Investor, the Trustee shall make an endorsement
on the Global Note to reflect a decrease in the aggregate Principal Amount of
the Notes represented by such Global Note, and the Company shall execute a
definitive Note or Notes in exchange therefore, and the Trustee, upon receipt of
such definitive Note or Notes and the written order of the Company, shall
authenticate and deliver such, definitive Note or Notes.
Any Global Note may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Custodian, the Depositary or by the
National Association of Securities Dealers, Inc. in order for the Notes to be
tradeable on The Portal Market or as may be required for the Notes to be
tradeable on any other market developed for trading of securities pursuant to
Rule 144A or required to comply with any applicable law or any regulation
thereunder or with the rules and regulations of any securities exchange or
automated quotation system upon
-10-
<PAGE>
which the Notes may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Notes are subject.
(d) Every Note that bears or is required under this Section 2.5(d) to
bear the legend set forth in this Section 2.5(d) (together with any Common Stock
issued upon conversion of the Notes and required to bear the legend set forth in
Section 2.5(e), collectively, the "Restricted Securities") shall be subject to
the restrictions on transfer set forth in this Section 2.5(d) (including those
set forth in the legend set forth below) unless such restrictions on transfer
shall be waived by written consent of the Company, and the holder of each such
Restricted Security, by such Noteholder's acceptance thereof, agrees to be bound
by all such restrictions on transfer. As used in Sections 2.5(d) and 2.5(e), the
term "transfer" encompasses any sale, pledge, loan, transfer or other
disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange therefor
or substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.5(e), if applicable)
shall bear a legend in substantially the following form, unless such Note has
been sold pursuant to a registration statement that has been declared effective
under the Securities Act (and which continues to be effective at the time of
such transfer), or unless otherwise agreed by the Company in writing, with
written notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2)
AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER
THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO AT HOME CORPORATION OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,
N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT
-11-
<PAGE>
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH
TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(F) ABOVE), IT WILL
FURNISH TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT; AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE
TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE
(2)(F) ABOVE OR UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED
HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Note (or security issued in exchange or substitution therefor) as to
which such restrictions on transfer shall have expired in accordance with their
terms or as to conditions for removal of the foregoing legend set forth therein
have been satisfied may, upon surrender of such Note for exchange to the Note
registrar in accordance with the provisions of this Section 2.5, be exchanged
for a new Note or Notes, of like tenor and aggregate principal amount, which
shall not bear the restrictive legend required by this Section 2.5(d).
-12-
<PAGE>
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.5(c) and in this
Section 2.5(d)), a Global Note may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Notes in global form. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co.
If at any time the Depositary for a Global Note notifies the Company that
it is unwilling or unable to continue as Depositary for such Note, the Company
may appoint a successor Depositary with respect to such Note. If a successor
Depositary is not appointed by the Company within ninety (90) days after the
Company receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for the authentication and delivery of
Notes, will authenticate and deliver, Notes in certificated form, in aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note.
If a Note in certificated form is issued in exchange for any portion of a
Global Note after the close of business at the office or agency where such
exchange occurs on any record date and before the opening of business at such
office or agency on the next succeeding interest payment date, interest will not
be payable on such interest payment date in respect of such certificated Note,
but will be payable on such interest payment date, subject to the provisions of
Section 2.3, only to the Person to whom interest in respect of such portion of
such Global Note is payable in accordance with the provisions of this Indenture.
Notes in certificated form issued in exchange for all or a part of a Global
Note pursuant to this Section 2.5 shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall deliver such Notes in
certificated form to the Persons in whose names such Notes in certificated form
are so registered.
At such time as all interests in a Global Note have been redeemed,
converted, canceled, exchanged for Notes in certificated form, or transferred to
a transferee who receives Notes in certificated form thereof, such Global Note
shall, upon receipt thereof, be canceled by the Trustee in accordance with
standing procedures and instructions existing between the Depositary and the
Custodian. At any time prior to such cancellation, if any interest in a Global
Note is exchanged for Notes in certificated form, redeemed, converted,
repurchased or canceled, or transferred to a transferee who receives Notes in
certificated form therefor or any Note in certificated form is exchanged or
transferred for part of a Global Note, the principal amount of such Global Note
shall, in accordance with the standing procedures and instructions existing
between the Depositary and the Custodian, be appropriately reduced or increased,
as the case may be, and an endorsement shall be made on such Global Note, by the
Trustee or the Custodian, at the direction of the Trustee, to reflect such
reduction or increase.
(e) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any stock certificate representing Common Stock issued upon conversion of any
Note shall bear a legend in substantially the following form, unless such Common
Stock has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer) or such Common Stock has
-13-
<PAGE>
been issued upon conversion of Notes that have been transferred pursuant to a
registration statement that has been declared effective under the Securities
Act, or unless otherwise agreed by the Company in writing with written notice
thereof to the transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF
AGREES THAT, UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES
OF THE COMMON STOCK EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO AT HOME
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER,
FURNISHES TO BOSTON EQUISERVE, L.P., AS TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM SUCH TRANSFER AGENT OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
LAWS (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO
SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (1)(F) ABOVE), IT
WILL FURNISH TO BOSTON EQUISERVE, L.P., AS TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK
EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
1(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A
PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO BOSTON EQUISERVE, L.P. (OR A SUCCESSOR TRANSFER AGENT,
AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
-14-
<PAGE>
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE (1)(E) ABOVE OR UPON ANY
TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY AFTER THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED
HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.5(e).
(f) Any Note or Common Stock issued upon the conversion or exchange
of a Note that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such Notes
or Common Stock, as the case may be, no longer being "restricted securities" (as
defined under Rule 144).
Section 2.6. Mutilated, Destroyed, Lost or Stolen Notes. In case any Note
------------------------------------------
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case the
applicant for a substituted Note shall furnish to the Company, to the Trustee
and, if applicable, to such authenticating agent such security or indemnity as
may be required by them to save each of them harmless for any loss, liability,
cost or expense caused by or connected with such substitution, and, in every
case of destruction, loss or theft, the applicant shall also furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.
Following receipt by the Trustee or such authenticating agent, as the case
may be, of satisfactory security or indemnity and evidence, as described in the
preceding paragraph, the Trustee or such authenticating agent may authenticate
any such substituted Note and make available for delivery such Note. Upon the
issuance of any substituted Note, the Company may require the payment by the
holder of a sum sufficient to cover any tax, assessment or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or has been tendered for redemption (and not withdrawn) or
is to be converted into Common Stock shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a
-15-
<PAGE>
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, the Trustee and, if
applicable, any paying agent or conversion agent evidence to their satisfaction
of the destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section 2.6
by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7. Temporary Notes. Pending the preparation of Notes in
---------------
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the Notes in certificated form, but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the Notes in certificated form. Without unreasonable delay the Company will
execute and deliver to the Trustee or such authenticating agent Notes in
certificated form (other than in the case of Notes in global form) and thereupon
any or all temporary Notes (other than any such Global Note) may be surrendered
in exchange therefor, at each office or agency maintained by the Company
pursuant to Section 5.2 and the Trustee or such authenticating agent shall
authenticate and make available for delivery in exchange for such temporary
Notes an equal aggregate principal amount of Notes in certificated form. Such
exchange shall be made by the Company at its own expense and without any charge
therefor. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits and subject to the same limitations under this
Indenture as Notes in certificated form authenticated and delivered hereunder.
Section 2.8. Cancellation of Notes Paid, Etc. All Notes surrendered for
-------------------------------
the purpose of payment, redemption, conversion, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by
it, and no Notes shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Indenture. The Trustee shall dispose of such
canceled Notes in accordance with its customary procedures. If the Company shall
acquire any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are delivered to the Trustee for cancellation.
Section 2.9. CUSIP Numbers. The Company in issuing the Notes may use
-------------
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a
-16-
<PAGE>
convenience to Noteholders; provided, however, that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE THREE
REDEMPTION OF NOTES
Section 3.1. (a) Initial Prohibition on Redemption. Except as otherwise
---------------------------------
provided in Section 3.5, the Notes may not be redeemed by the Company, in whole
or in part, at any time prior to December 20, 2002.
(b) Optional Redemption by the Company. At any time on or after
----------------------------------
December 20, 2002, and prior to maturity, the Notes may be redeemed at the
option of the Company, in whole or in part, upon notice as set forth in Section
3.2, at the following redemption prices (expressed as percentages of the
principal amount), together in each case with accrued and unpaid interest, if
any (including Liquidated Damages, if any) to, but excluding, the date fixed for
redemption:
<TABLE>
<CAPTION>
Period Redemption Price
- ------ ----------------
<S> <C>
Beginning on December 20, 2002 and ending on December 14, 2003............... 102.714%
Beginning on December 15, 2003 and ending on December 14, 2004............... 102.036
Beginning on December 15, 2004 and ending on December 14, 2005............... 101.357
Beginning on December 15, 2005 and ending on December 14, 2006............... 100.679
</TABLE>
and 100% on December 15, 2006; provided, however, that if the date fixed for
redemption is on a June 15 or December 15, then the interest payable on such
date shall be paid to the holder of record on the preceding June 1 or December
1, respectively.
Section 3.2. Notice of Redemptions; Selection of Notes. In case the
-----------------------------------------
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption and it or, at its written request received by the Trustee not fewer
than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption not fewer than thirty (30) nor more than sixty (60)
days prior to the date fixed for redemption to the holders of Notes so to be
redeemed as a whole or in part at their last addresses as the same appear on the
Note register; provided, however, that if the Company shall give such notice, it
shall also give written notice, and written notice of the Notes to be redeemed,
to the Trustee. Such mailing shall be by first class mail. The notice if mailed
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note. Concurrently with the
mailing of any such notice of redemption, the Company shall issue a press
release announcing such redemption, the form and content of which press release
shall be determined by the Company in its sole discretion. The failure to issue
any such press release or any defect therein shall not affect the validity of
the redemption notice or any of the proceedings for the redemption of any Note
called for redemption.
-17-
<PAGE>
Each such notice of redemption shall specify the aggregate principal amount
of Notes to be redeemed, the CUSIP number or numbers of the Notes being
redeemed, the date fixed for redemption (which shall be a Business Day), the
redemption price at which Notes are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Notes, that interest accrued to the date fixed for redemption will be paid as
specified in said notice, and that on and after said date interest thereon or on
the portion thereof to be redeemed will cease to accrue. Such notice shall also
state the current Conversion Price and the date on which the right to convert
such Notes or portions thereof into Common Stock will expire. If fewer than all
the Notes are to be redeemed, the notice of redemption shall identify the Notes
to be redeemed (including CUSIP numbers, if any). In case any Note is to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that, on and after the
date fixed for redemption, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.2, the Company will deposit with the Trustee
or with one or more paying agents (or, if the Company is acting as its own
paying agent, set aside, segregate and hold in trust as provided in Section 5.4)
an amount of money in immediately available funds sufficient to redeem on the
redemption date all the Notes (or portions thereof) so called for redemption
(other than those theretofore surrendered for conversion into Common Stock) at
the appropriate redemption price, together with accrued interest to, but
excluding, the date fixed for redemption; provided, however, that if such
payment is made on the redemption date it must be received by the Trustee or
paying agent, as the case may be, by 10:00 a.m. New York City time on such date.
The Company shall be entitled to retain any interest, yield or gain on amounts
deposited with the Trustee or any paying agent pursuant to this Section 3.2 in
excess of amounts required hereunder to pay the redemption price together with
accrued interest to, but excluding, the date fixed for redemption. If any Note
called for redemption is converted pursuant hereto prior to such redemption, any
money deposited with the Trustee or any paying agent or so segregated and held
in trust for the redemption of such Note shall be paid to the Company upon its
written request, or, if then held by the Company, shall be discharged from such
trust. Whenever any Notes are to be redeemed, the Company will give the Trustee
written notice in the form of an Officers' Certificate not fewer than forty-five
(45) days (or such shorter period of time as may be acceptable to the Trustee)
prior to the redemption date as to the aggregate principal amount of Notes to be
redeemed.
If less than all of the outstanding Notes are to be redeemed, the Trustee
shall select the Notes or portions thereof of the Global Note or the Notes in
certificated form to be redeemed (in principal amounts of $1,000 or integral
multiples thereof) by lot, on a pro rata basis or by another method the Trustee
deems fair and appropriate. If any Note selected for partial redemption is
submitted for conversion in part after such selection, the portion of such Note
submitted for conversion shall be deemed (so far as may be) to be the portion to
be selected for redemption. The Notes (or portions thereof) so selected shall
be deemed duly selected for redemption for all purposes hereof, notwithstanding
that any such Note is submitted for conversion in part before the mailing of the
notice of redemption.
Upon any redemption of less than all of the outstanding Notes, the Company
and the Trustee may (but need not), solely for purposes of determining the pro
rata allocation among such Notes as are unconverted and outstanding at the time
of redemption, treat as outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as outstanding any Note authenticated
and delivered during such period in exchange for the unconverted portion of any
Note converted in part during such period.
-18-
<PAGE>
Section 3.3. Payment of Notes Called for Redemption. If notice of redemption
--------------------------------------
has been given as above provided, the Notes or portion of Notes with respect to
which such notice has been given shall, unless converted into Common Stock
pursuant to the terms hereof, become due and payable on the date fixed for
redemption and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price, together with
interest accrued to said date) interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and, after the close of business on
the Business Day next preceding the date fixed for redemption, such Notes shall
cease to be convertible into Common Stock and, except as provided in Sections
8.5 and 13.4, to be entitled to any benefit or security under this Indenture,
and the holders thereof shall have no right in respect of such Notes except the
right to receive the redemption price thereof and unpaid interest to (but
excluding) the date fixed for redemption. On presentation and surrender of such
Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to (but
excluding) the date fixed for redemption; provided, however, that if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any notice of redemption during the continuance of a default in payment of
interest or premium, if any, on the Notes. If any Note called for redemption
shall not be so paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid or duly provided for, bear interest from the
date fixed for redemption at the rate borne by the Note and such Note shall
remain convertible into Common Stock until the principal and premium, if any,
and interest shall have been paid or duly provided for.
Section 3.4. Conversion Arrangement on Call for Redemption. In connection
---------------------------------------------
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to (but
excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article Three, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article Fifteen) surrendered by such purchasers for conversion, all
as of immediately prior to the close of business on the date fixed for
redemption (and the right to convert any such Notes shall be extended through
such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and
-19-
<PAGE>
such purchasers for the purchase and conversion of any Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture.
-20-
<PAGE>
Section 3.5. Redemption at Option of Holders.
-------------------------------
(a) If there shall occur a Fundamental Change at any time prior to
maturity of the Notes, then each Noteholder shall have the right, at such
holder's option, to require the Company to redeem all of such holder's Notes, or
any portion thereof that is an integral multiple of $1,000 principal amount, on
the date (the "Repurchase Date") that is thirty (30) days after the date of the
Company Notice (as defined in Section 3.5(b) below) of such Fundamental Change
(or, if such 30th day is not a Business Day, the next succeeding Business Day)
at a redemption price equal to 100% of the principal amount thereof, together
with accrued interest to (but excluding) the Repurchase Date; provided, however,
that, if such Repurchase Date is a June 15 or December 15, then the interest
payable on such date shall be paid to the holders of record of the Notes on the
next preceding June 1 or December 1, respectively.
Upon presentation of any Note redeemed in part only, the Company shall
execute and, upon the Company's written direction to the Trustee, the Trustee
shall authenticate and deliver to the holder thereof, at the expense of the
Company, a new Note or Notes, of authorized denominations, in principal amount
equal to the unredeemed portion of the Notes so presented.
(b) On or before the tenth day after the occurrence of a
Fundamental Change, the Company or at its written request (which must be
received by the Trustee at least five (5) Business Days prior to the date the
Trustee is requested to give notice as described below, unless the Trustee shall
agree in writing to a shorter period), the Trustee, in the name of and at the
expense of the Company, shall mail or cause to be mailed to all holders of
record on the date of the Fundamental Change a notice (the "Company Notice") of
the occurrence of such Fundamental Change and of the redemption right at the
option of the holders arising as a result thereof. Such notice shall be mailed
in the manner and with the effect set forth in the first paragraph of Section
3.2 (without regard for the time limits set forth therein). If the Company shall
give such notice, the Company shall also deliver a copy of the Company Notice to
the Trustee at such time as it is mailed to Noteholders. Concurrently with the
mailing of any Company Notice, the Company shall issue a press release
announcing such Fundamental Change referred to in the Company Notice, the form
and content of which press release shall be determined by the Company in its
sole discretion. The failure to issue any such press release or any defect
therein shall not affect the validity of the Company Notice or any proceedings
for the redemption of any Note which any Noteholder may elect to have the
Company redeem as provided in this Section 3.5.
Each Company Notice shall specify the circumstances constituting the
Fundamental Change, the Repurchase Date, the price at which the Company shall be
obligated to redeem Notes, that the holder must exercise the redemption right on
or prior to the close of business on the Repurchase Date (the "Fundamental
Change Expiration Time"), that the holder shall have the right to withdraw any
Notes surrendered prior to the Fundamental Change Expiration Time, a description
of the procedure which a Noteholder must follow to exercise such redemption
right and to withdraw any surrendered Notes, the place or places where the
holder is to surrender such holder's Notes, the amount of interest accrued on
each Note to the Repurchase Date and the "CUSIP" number or numbers of the Notes
(if then generally in use).
No failure of the Company to give the foregoing notices and no defect
therein shall limit the Noteholders' redemption rights or affect the validity of
the proceedings for the redemption of the Notes pursuant to this Section 3.5.
-21-
<PAGE>
(c) For a Note to be so redeemed at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time. All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Note for repayment shall be determined by the Company, whose determination shall
be final and binding absent manifest error.
(d) On or prior to the Repurchase Date, the Company will deposit
with the Trustee or with one or more paying agents (or, if the Company is acting
as its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to redeem on the Repurchase Date all
the Notes to be redeemed on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided,
however, that if such payment is made on the Repurchase Date it must be received
by the Trustee or paying agent, as the case may be, by 10:00 a.m. New York City
time, on such date. Payment for Notes surrendered for redemption (and not
withdrawn) prior to the Fundamental Change Expiration Time will be made promptly
(but in no event more than five (5) Business Days) following the Repurchase Date
by mailing checks for the amount payable to the holders of such Notes entitled
thereto as they shall appear on the registry books of the Company.
(e) In the case of a reclassification, change, consolidation,
merger, combination, sale or conveyance to which Section 15.6 applies, in which
the Common Stock of the Company is changed or exchanged as a result into the
right to receive stock, securities or other property or assets (including cash),
which includes shares of Common Stock of the Company or shares of common stock
of another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities or other property or
assets (including cash) (as determined by the Company, which determination shall
be conclusive and binding), then the Person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture (accompanied
by an Opinion of Counsel that such supplemental indenture complies with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) modifying the provisions of this Indenture relating to the right of
holders of the Notes to cause the Company to redeem the Notes following a
Fundamental Change, including without limitation the applicable provisions of
this Section 3.5 and the definitions of Common Stock and Fundamental Change, as
appropriate, as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply to such other
Person if different from the Company and the common stock issued by such Person
(in lieu of the Company and the Common Stock of the Company).
(f) The Company will comply with the provisions of Rule 13e-4 and
any other tender offer rules under the Exchange Act to the extent then
applicable in connection with the redemption rights of the holders of Notes in
the event of a Fundamental Change.
(g) A "Fundamental Change" shall be deemed to have occurred at
such time as either of the following events shall occur:
(i) There shall be consummated any consolidation or merger of
the Company pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case, other than a consolidation or merger
of the Company in which the holders of Common Equity immediately
-22-
<PAGE>
prior to the consolidation or merger have, directly or indirectly, at least a
majority of the total voting power in the aggregate of all classes of common
stock of the continuing or surviving corporation normally entitled to vote in
elections of directors immediately after such consolidation or merger; or
(ii) There is a report filed by any person, including its
Affiliates and Associates, on Schedule 13D or 14D-1 (or any successor schedule,
form or report) pursuant to the Exchange Act, disclosing that such person (for
the purposes of this Section 3.5 only, the term "person" shall include a
"person" within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing) has become
the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of 50%
or more of the total voting power in the aggregate of all classes of Common
Equity then outstanding of the Company normally entitled to vote in elections of
directors; provided, however, that a person shall not be deemed beneficial owner
-------- -------
of, or to own beneficially, (A) any securities tendered pursuant to a tender or
exchange offer made by or on behalf of such person or any of such person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange thereunder, or (B) any securities if such beneficial
ownership (1) arises solely as a result of a revocable proxy delivered in
response to a proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act, and (2) is
not also then reportable on Schedule 13D (or any successor schedule, form or
report) under the Exchange Act; or
(iii) The occurrence of any transaction or event in connection
with which all or substantially all Series A Common Stock shall be exchanged
for, converted into, acquired for or constitute solely the right to receive
consideration (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) all or substantially all of which does not consist of common stock
which is (or, upon consummation of or immediately following such transaction or
event, which will be) listed on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.
Notwithstanding the foregoing provisions of this Section 3.5, a Fundamental
Change shall not be deemed to have occurred if at any time the Company, any
Subsidiary of the Company, any employee stock ownership plan or any other
employee benefit plan of either the Company or any Subsidiary of the Company, or
any person holding shares of Common Stock for or pursuant to the terms of any
such employee benefit plan, or any Permitted Holder, files or becomes obligated
to file a report under or in response to Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act disclosing beneficial
ownership by it of 50% or more of the total voting power in the aggregate of all
classes of Common Equity then outstanding of the Company normally entitled to
vote in elections of directors.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Permitted Holder" means (i) Tele-Communications, Inc. a Delaware
corporation ("TCI"), any person or entity which owns, directly or indirectly, a
majority of the total voting power of TCI, and any business entity at least a
majority of the total voting power of which is owned, directly or indirectly, by
TCI or any person or entity which owns, directly or indirectly, a majority of
the total voting power of TCI (but, in each case, only so long as such voting
power is so owned), (ii) AT&T Corp., a New York corporation ("AT&T"), any person
or entity which owns, directly or indirectly, a majority of the total voting
power of AT&T, and any business entity at least a majority of the total voting
power of which is owned, directly or indirectly by
-23-
<PAGE>
AT&T, or any person or entity which owns, directly or indirectly, a majority of
the total voting power of AT&T (but, in each case, only so long as such voting
power is so owned), (iii) any person who is a member of a "group" (as defined
pursuant to Section 13(d)(3) of the Exchange Act) with TCI or AT&T, and (iv) any
person or entity, a majority of the equity interests of which are distributed,
directly or indirectly, to the stockholders of TCI or AT&T, as applicable,
provided that TCI or AT&T own, directly or indirectly, a majority of the equity
interests and voting power of such person or entity immediately prior to such
distribution.
The provisions of this Section 3.5(g) are subject to the terms of any
supplemental indenture provided for in Section 15.7.
ARTICLE FOUR
SUBORDINATION OF NOTES
Section 4.1. Notes Subordinate to Senior Indebtedness. The Company covenants
----------------------------------------
and agrees, and each holder of a Note, by his acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article Four, the indebtedness represented by the Notes and the
payment of principal of, premium, if any, or interest (including Liquidated
Damages, if any) on each and all of the Notes and all obligations of the Company
under this Indenture are hereby expressly made subordinate and junior in right
of payment to the prior payment in full in cash or other payment satisfactory to
the holders of Senior Indebtedness of all Senior Indebtedness and that said
subordination is for the benefit of the holders of Senior Indebtedness and they
and or each of them severally may enforce such subordination.
Section 4.2. Payment Over of Proceeds upon Dissolution, Etc. In the event of
----------------------------------------------
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company, then and in any such event
the holders of Senior Indebtedness shall be entitled to receive payment in full
in cash or other payment satisfactory to the holders of Senior Indebtedness of
all amounts due or to become due on or in respect of all Senior Indebtedness, or
provision shall be made for such payment in cash or other payment satisfactory
to the holders of Senior Indebtedness, before the holders of the Notes are
entitled to receive any payment on account of principal of (or premium, if any)
or interest on the Notes, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Notes in any
such case, proceeding, dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the holder of any Note shall have received any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, before all Senior Indebtedness is paid in full in
cash or other payment satisfactory to the holders of Senior Indebtedness or
payment thereof provided for in a manner satisfactory to the holders of Senior
Indebtedness, then and in such event such payment or distribution shall be paid
over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full in cash or
-24-
<PAGE>
other payment satisfactory to the holders of Senior Indebtedness, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
For purposes of this Article Four only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which in
either case are subordinated in right of payment to all Senior Indebtedness
which may at the time be outstanding to substantially the same extent as, or to
a greater extent than, the Notes are so subordinated as provided in this Article
Four. The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an entirety
to another Person upon the terms and conditions set forth in Article Twelve
shall not be deemed a dissolution, winding up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company for the purposes of this Section 4.2 if the Person formed by such
consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article Twelve.
Section 4.3. No Payment When Senior Indebtedness in Default.
----------------------------------------------
(a) The Company may not make any payment of the principal of,
premium, if any, or interest (including Liquidated Damages, if any) in respect
of the Notes nor may the Company pay cash with respect to the redemption price
or acquire any Notes for cash or property (other than for Common Stock of the
Company) if (a) a payment default on any Senior Indebtedness has occurred and is
continuing beyond any applicable grace period with respect thereto; or (b) a
default (other than a default referred to in the preceding clause (a)) on any
Senior Indebtedness occurs and is continuing that permits holders of such Senior
Indebtedness to accelerate the stated maturity thereof and the default is the
subject of judicial proceedings or the Company receives a notice of default
thereof from any Person who may give such notice pursuant to the instrument
evidencing or document governing such Senior Indebtedness. If the Company
receives any such notice, then a similar notice received within nine months
thereafter relating to the same default on the same issue of Senior Indebtedness
shall not be effective for purposes of this Section 4.3.
The Company may resume payment on the Notes and may acquire Notes
if and when (i) the default referred to above is cured or waived or ceases to
exist; or (ii) in the case of a default referred to in clause (b) of the
preceding paragraph, 179 or more days pass after the receipt by the Company of
the notice described in clause (b) above; and this Article Four otherwise
permits the payment or acquisition at that time.
Nothing contained in this Article Four or elsewhere in this
Indenture or in any of the Notes shall prevent the conversion by a holder of any
Notes into Common Stock in accordance with the provisions for conversion of such
Notes set forth in this Indenture, including the payment of cash in lieu of
fractional shares of Common Stock in accordance with Article Fifteen, or in any
of such Notes in the event of an occurrence of the events described in this
Section 4.3.
(b) In the event that any Notes are declared due and payable
before their stated maturity pursuant to Section 7.1, then and in such event the
Company shall promptly notify holders of Senior Indebtedness of such
acceleration. The Company may not pay the Notes until the earlier of (i) the
passage of 120 or more days have passed after such acceleration occurs or (ii)
the payment in full in cash or other payment satisfactory to the holders of
Senior Indebtedness of all Senior Indebtedness, and may thereafter pay the Notes
if this Article Four permits the payment at that time.
-25-
<PAGE>
In the event that, notwithstanding the foregoing provisions, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
holders of the Notes before all Senior Indebtedness of the Company is paid in
full in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company, or provision is made for such payment thereof in
accordance with its terms in cash or other payment satisfactory to the holders
of such Senior Indebtedness of the Company, such payment or distribution shall
be held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness of the Company or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness of the Company may have
been issued, as their respective interests may appear for application to the
payment of all Senior Indebtedness of the Company remaining unpaid to the extent
necessary to pay all Senior Indebtedness of the Company in full in cash or other
payment satisfactory to the holders of such Senior Indebtedness of the Company,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of such Senior Indebtedness of the Company.
The provisions of this Section 4.3 shall not apply to any payment with
respect to which Section 4.2 would be applicable.
Section 4.4. Payment Permitted If No Default. Nothing contained in this
-------------------------------
Article Four or elsewhere in this Indenture or in any of the Notes shall prevent
(a) the Company, at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Company referred
to in Section 4.2 or under the conditions described in Section 4.3, from making
payments at any time of the principal of, premium, if any, or interest
(including Liquidated Damages, if any), as the case may be, on the Notes, or (b)
the application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of, premium, if any, or interest
(including Liquidated Damages, if any), as the case may be, on the Notes or the
retention of such payment by the holders, if, at the time of such application by
the Trustee, it did not have knowledge that such payment would have been
prohibited by the provisions of this Article Four.
Section 4.5. Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
Subject to the payment in full of all Senior Indebtedness, and until the Notes
are paid in full, the holders of the Notes shall be subrogated (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to indebtedness of the Company to substantially the same
extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness to the extent that payments and distributions otherwise
payable to holders of Notes have been applied to the payment of Senior
Indebtedness as provided by this Article Four. For purposes of such subrogation,
no payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the holders of the Notes or the Trustee
would be entitled, except for the provisions of this Article Four, and no
payments over pursuant to the provisions of this Article Four to the holders of
Senior Indebtedness by holders of the Notes or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the holders
of the Notes, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
Section 4.6. Provisions Solely To Define Relative Rights. The provisions
-------------------------------------------
of this Article Four are and are intended solely for the purpose of defining the
relative rights of the holders of the Notes on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this Article Four or
elsewhere in this Indenture or in the Notes is intended to or shall (a) impair,
as among the Company, its
-26-
<PAGE>
creditors other than holders of Senior Indebtedness and the holders of the
Notes, the obligation of the Company, which is absolute and unconditional (and
which, subject to the rights under this Article Four of the holders of Senior
Indebtedness, is intended to rank equally with all other general obligations of
the Company), to pay to the holders of the Notes the principal of, premium, if
any, or interest (including Liquidated Damages, if any), as the case may be, on
the Notes as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
holders of the Notes and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Four of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such holder.
Section 4.7. Trustee To Effectuate Subordination. Each holder of a Note by
-----------------------------------
his acceptance thereof authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article Four and appoints the Trustee his attorney-in-fact for
any and all such purposes.
Section 4.8. No Waiver of Subordination Provisions. No right of any
-------------------------------------
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the holders of the Notes, without
incurring responsibility to the holders of the Notes and without impairing or
releasing the subordination provided in this Article Four or the obligations
hereunder of the holders of the Notes to the holders of Senior Indebtedness, do
any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; (iv) exercise or refrain from exercising any rights against the
Company and any other Person; (v) apply any and all sums received from time to
time to the Senior Indebtedness.
Section 4.9. Notice to Trustee. The Company shall give prompt written
-----------------
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Notes.
Notwithstanding the provisions of this Article Four or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment to or by the Trustee
in respect of the Notes, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 8.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
-------- -------
Trustee shall not have received the notice provided for in this Section 4.9 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive
-27-
<PAGE>
such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 8.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee therefor) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Four, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Four, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 4.10. Reliance on Judicial Order or Certificate of Liquidating
--------------------------------------------------------
Agent. Upon any payment or distribution of assets of the Company referred
- ------
to in this Article Four, the Trustee, subject to the provisions of Section 8.1,
and the holders of the Notes shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the holders of Notes, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Four.
Section 4.11. Trustee Not Fiduciary for Holders of Senior Indebtedness.
--------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to holders of Notes or to the
Company or to any other Person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article Four or
otherwise.
Section 4.12. Rights of Trustee as Holder of Senior Indebtedness;
--------------------------------------------------
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
- --------------------------------
be entitled to all the rights set forth in this Article Four with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article Four shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.6.
Section 4.13. Article Applicable to Paying Agents. In case at any time any
-----------------------------------
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article Four shall
in such case (unless the context otherwise requires) be construed as extending
to and including such paying agent within its meaning as fully for all intents
and purposes as if such paying agent were named in this Article Four in addition
to or in place of the Trustee; provided, however, that Section 4.12 shall not
-------- -------
apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as paying agent.
-28-
<PAGE>
Section 4.14. Certain Conversions Deemed Payment. For the purposes of this
----------------------------------
Article Four only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article Fifteen shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
(if any) or interest on the Notes or on account of the purchase or other
acquisition of Notes, and (2) the payment, issuance or delivery of cash,
property or securities (other than junior securities) upon conversion of a Note
shall be deemed to constitute payment on account of the principal of such Note.
For the purposes of this Section 4.14, the term "junior securities" means (a)
shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to the prior payment in full
of all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Notes are so subordinated as provided in this Article Four.
Nothing contained in this Article Four or elsewhere in this Indenture or in the
Notes is intended to or shall impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the holders of the Notes, the right,
which is absolute and unconditional, of the holder of any Note to convert such
Note in accordance with Article Fifteen.
ARTICLE FIVE
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1. Payment of Principal, Premium and Interest. The Company
------------------------------------------
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article Three), and interest (including Liquidated
Damages, if any), on each of the Notes at the places, at the respective times
and in the manner provided herein and in the Notes.
Section 5.2. Maintenance of Office or Agency. The Company will maintain an
-------------------------------
office or agency in the Borough of Manhattan, the City of New York, where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency not
designated or appointed by the Trustee. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office or the office of agency of
the Trustee in The Borough of Manhattan, The City of New York (which shall
initially be located at State Street Bank and Trust Company, N.A., 61 Broadway,
New York, NY 10006, Attention: Corporate Trust Department (At Home Corporation,
4% Convertible Subordinated Notes due 2006).
The Company may also from time to time designate co-registrars and one or
more offices or agencies where the Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar, Custodian and conversion agent and each of the Corporate Trust Office
and the office of agency of the Trustee in The Borough of Manhattan, The City of
New York (which shall initially be located at State Street Bank and Trust
Company, N.A., 61 Broadway, New York, NY 10006, Attention: Corporate Trust
Department (At Home Corporation, 4% Convertible Subordinated Notes due 2006)),
shall be considered as one such office or agency of the Company for each of the
aforesaid purposes.
-29-
<PAGE>
So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notices set forth in Section 8.10(a) and the third
paragraph of Section 8.11. If co-registrars have been appointed in accordance
with this Section, the Trustee shall mail such notices only to the Company and
the holders of Notes it can identify from its records.
Section 5.3. Appointments to Fill Vacancies in Trustee's Office. The
--------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4. Provisions as to Paying Agent.
-----------------------------
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company will
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section 5.4:
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest
(including Liquidated Damages, if any) on the Notes (whether such
sums have been paid to it by the Company or by any other obligor on
the Notes) in trust for the benefit of the holders of the Notes;
(2) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the Notes) to make any
payment of the principal of and premium, if any, or interest
(including Liquidated Damages, if any) on the Notes when the same
shall be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal of, premium,
if any, or interest on the Notes, deposit with the paying agent a sum (in funds
which are immediately available on the due date for such payment) sufficient to
pay such principal, premium, if any, or interest, and (unless such paying agent
is the Trustee) the Company will promptly notify the Trustee of any failure to
take such action; provided, however, that if such deposit is made on the due
date, such deposit shall be received by the paying agent by 10:00 a.m. New York
City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on
or before each due date of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, set aside, segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay such principal, premium, if any, or interest (including Liquidated Damages,
if any) so becoming due and will promptly notify the Trustee of any failure to
take such action and of any failure by the Company (or any other obligor under
the Notes) to make any payment of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes when the same shall become
due and payable.
(c) Anything in this Section 5.4 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 5.4, such sums to be held by the Trustee upon the
trusts herein contained and upon
-30-
<PAGE>
such payment by the Company or any paying agent to the Trustee, the Company or
such paying agent shall be released from all further liability with respect to
such sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
The Trustee shall not be responsible for the actions of any other paying
agents (including the Company if acting as its own paying agent) and shall have
no control of any funds held by such other paying agents.
Section 5.5. Existence. Subject to Article Twelve, the Company will do or
---------
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Noteholders.
Section 5.6. Maintenance of Properties. The Company will cause all
-------------------------
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any subsidiary and
not disadvantageous in any material respect to the Noteholders.
Section 5.7. Payment of Taxes and Other Claims. The Company will pay or
---------------------------------
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Significant Subsidiary
and (iii) all stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection with
the issuance, transfer, exchange or conversion of any Notes or with respect to
this Indenture; provided, however, that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(B) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Section 5.8. Rule 144A Information Requirement. Within the period prior to
---------------------------------
the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof
which continue to be Restricted Securities in connection with any sale thereof
and any prospective purchaser of Notes or such Common Stock designated by such
holder or beneficial holder, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or beneficial
holder of the Notes or such Common Stock and it will take such further action as
any holder or beneficial holder of such Notes or such Common Stock may
reasonably
-31-
<PAGE>
request, all to the extent required from time to time to enable such holder or
beneficial holder to sell its Notes or Common Stock without registration under
the Securities Act within the limitation of the exemption provided by Rule 144A,
as such Rule may be amended from time to time. Upon the request of any holder or
any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.
Section 5.9. Stay, Extension and Usury Laws. The Company covenants (to the
------------------------------
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of, premium, if any,
or interest (including Liquidated Damages, if any) on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.10. Compliance Certificate. The Company shall deliver to the
----------------------
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware of
(i) any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or (ii) any Event of Default, an
Officers' Certificate specifying with particularity such default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto.
Any notice required to be given under this Section 5.10 or Section 4.5
shall be delivered to a Responsible Officer of the Trustee at its Corporate
Trust Office. In the event that the payment of the Notes is accelerated because
of an Event of Default, the Company shall promptly provide written notice to the
Trustee specifying the names and addresses of the holders of Senior Indebtedness
if the Trustee (and not the Company) is to provide holders of Senior
Indebtedness notice of such acceleration under Section 4.5 of the Indenture.
Section 5.11. Liquidated Damages Notice. In the event that the Company is
-------------------------
required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Agreement, the Company will provide written notice
("Liquidated Damages Notice") to the Trustee of its obligation to pay Liquidated
Damages no later than fifteen days prior to the proposed payment date for the
Liquidated Damages, and the Liquidated Damages Notice shall set forth the amount
of Liquidated Damages to be paid by the Company on such payment date. The
Trustee shall not at any time be under any duty to responsibility to any holder
of Notes to determine the Liquidated Damages, or with respect to the nature,
extent or calculation of the amount of Liquidated Damages when made, or with
respect to the method employed in such calculation of the Liquidated Damages.
-32-
<PAGE>
ARTICLE SIX
NOTEHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1. Noteholders' Lists. The Company covenants and agrees that it
------------------
will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each June 1 and December 1 in each year beginning
with June 1, 2000, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished by the Company to the Trustee so long as the Trustee is
acting as the sole Note registrar.
Section 6.2. Preservation and Disclosure of Lists.
------------------------------------
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar or
co-registrar in respect of the Notes, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 6.1 upon receipt of a new list so
furnished.
(b) The rights of Noteholders to communicate with other holders
of Notes with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of Notes made
pursuant to the Trust Indenture Act.
Section 6.3. Reports by Trustee.
------------------
(a) Within sixty (60) days after May 15 of each year commencing
with the year 2000, the Trustee shall transmit to holders of Notes such reports
dated as of May 15 of the year in which such reports are made concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of such report shall, at the time of such transmission
to holders of Notes, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Notes are listed and with the Company.
The Company will promptly notify the Trustee in writing when the Notes are
listed on any stock exchange or automated quotation system or delisted
therefrom.
Section 6.4. Reports by Company. The Company shall file with the Trustee
------------------
(and the Commission if at any time after the Indenture becomes qualified under
the Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
-33-
<PAGE>
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act, whether or not the Notes are governed by such Act;
provided, however, that any such information, documents or reports required to
- -------- -------
be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within fifteen (15) days after the same is so
required to be filed with the Commission. Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
ARTICLE SEVEN
REMEDIES OF THE TRUSTEE AND
NOTEHOLDERS ON AN EVENT OF DEFAULT
Section 7.1. Events of Default. In case one or more of the following
-----------------
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest
(including Liquidated Damages, if any) upon any of the Notes as and when the
same shall become due and payable, and continuance of such default for a period
of thirty (30) days, whether or not such payment is permitted under Article Four
hereof; or
(b) default in the payment of the principal of or premium, if
any, on any of the Notes as and when the same shall become due and payable
either at maturity or in connection with any redemption pursuant to Article
Three, by acceleration or otherwise, whether or not such payment is permitted
under Article Four hereof; or
(c) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the Notes
or in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 7.1 specifically dealt
with) continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4; or
(d) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed of the Company having an aggregate outstanding
principal amount of in excess of $10,000,000, which default shall have resulted
in such indebtedness being accelerated, without such indebtedness being
discharged or such acceleration having been rescinded or annulled within 20 days
after receipt of notice thereof by the Company from the Trustee or the Company
and a Responsible Officer of the Trustee from the holders of not less than 25%
in aggregate principal amount of the Notes at the time outstanding (unless such
default has been cured or waived) specifying such default and requiring the
Company to cause such indebtedness to be discharged or such acceleration to be
rescinded or annulled.
(e) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
the Company or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
-34-
<PAGE>
liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, or shall consent to any such
relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against the Company, or shall
make a general assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to the Company or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of ninety
(90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(e) or (f)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than twenty-five percent (25%) in aggregate principal amount of the Notes then
outstanding hereunder determined in accordance with Section 9.4, by notice in
writing to the Company (and to the Trustee if given by Noteholders), may declare
the principal of and premium, if any, on all the Notes and the interest accrued
thereon (including Liquidated Damages, if any) to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default specified in
Section 7.1(e) or (f) occurs, the principal of all the Notes and the interest
accrued thereon shall (including Liquidated Damages, if any) be immediately and
automatically due and payable without necessity of further action. This
provision, however, is subject to the conditions that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon (including Liquidated Damages, if any) all Notes and the principal
of and premium, if any, on any and all Notes which shall have become due
otherwise than by acceleration (with interest on overdue installments of
interest (including Liquidated Damages, if any) (to the extent that payment of
such interest is enforceable under applicable law) and on such principal and
premium, if any, at the rate borne by the Notes, to the date of such payment or
deposit) and amounts due to the Trustee pursuant to Section 8.6, and if any and
all defaults under this Indenture, other than the nonpayment of principal of and
premium, if any, and accrued interest on (including Liquidated Damages, if any)
Notes which shall have become due by acceleration, shall have been cured or
waived pursuant to Section 7.7, then and in every such case the holders of a
majority in aggregate principal amount of the Notes then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults or Events of
Default and rescind and annul such declaration and its consequences; but no such
waiver or rescission and annulment shall extend to or shall affect any
subsequent default or Event of Default, or shall impair any right consequent
thereon. The Company shall notify a Responsible Officer of the Trustee,
promptly upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
-35-
<PAGE>
Section 7.2. Payments of Notes on Default; Suit Therefor. The Company
-------------------------------------------
covenants that (a) in case default shall be made in the payment of any
installment of interest upon (including Liquidated Damages, if any) any of the
Notes as and when the same shall become due and payable, and such default shall
have continued for a period of thirty (30) days, or (b) in case default shall be
made in the payment of the principal of or premium, if any, on any of the Notes
as and when the same shall have become due and payable, whether at maturity of
the Notes or in connection with any redemption, by or under this Indenture
declaration or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Notes, the whole amount
that then shall have become due and payable on all such Notes for principal and
premium, if any, or interest (including Liquidated Damages, if any), as the case
may be, with interest upon the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law)
upon the overdue installments of interest (including Liquidated Damages, if any)
at the rate borne by the Notes, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other amounts due the Trustee under Section 8.6. Until such demand by the
Trustee, the Company may pay the principal of and premium, if any, and interest
on (including Liquidated Damages, if any) the Notes to the registered holders,
whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Notes under Title 11
of the United States Code, or any other applicable law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Company or such other obligor, the property of the Company or such other
obligor, or in the case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand pursuant to the provisions of this Section 7.2, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
(including Liquidated Damages, if any) owing and unpaid in respect of the Notes,
and, in case of any judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee and of the Noteholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Notes, its or their
creditors, or its or their property, and to collect and receive any monies or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of any amounts due the Trustee under Section 8.6, and
any receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
custodian or similar official is hereby authorized by each of the Noteholders to
make such payments to the Trustee, and, in the event that the Trustee shall
consent to the making of such payments directly to the Noteholders, to pay to
the Trustee any amount due it for reasonable compensation, expenses, advances
and disbursements, including counsel fees incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses, advances and disbursements out of the estate in any such proceedings
shall be denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all
-36-
<PAGE>
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.
Section 7.3. Application of Monies Collected by Trustee. Any monies
------------------------------------------
collected by the Trustee pursuant to this Article Seven shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
8.6;
SECOND: Subject to the provisions of Article Four, in case the
principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on (including Liquidated Damages, if any) the
Notes in default in the order of the maturity of the installments of such
interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments of interest
(including Liquidated Damages, if any) at the rate borne by the Notes, such
payments to be made ratably to the Persons entitled thereto;
THIRD: Subject to the provisions of Article Four, in case the
principal of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount then owing and
unpaid upon the Notes for principal and premium, if any, and interest
(including Liquidated Damages, if any), with interest on the overdue
principal and premium, if any, and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of interest
(including Liquidated Damages, if any) at the rate borne by the Notes, and
in case such monies shall be insufficient to pay in full the whole amounts
so due and unpaid upon the Notes, then to the payment of such principal and
premium, if any, and interest (including Liquidated Damages, if any)
without preference or priority of principal and premium, if any, over
interest (including Liquidated Damages, if any), or of interest (including
Liquidated Damages, if any) over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any
Note over any other Note, ratably to the aggregate of such principal and
premium, if any, and accrued and unpaid interest; and
FOURTH: Subject to the provisions of Article Four, to the payment of
the remainder, if any, to the Company or any other Person lawfully entitled
thereto.
-37-
<PAGE>
Section 7.4. Proceedings by Noteholder. No holder of any Note shall have
-------------------------
any right by virtue of or by reference to any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than twenty-five percent (25%)
in aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall
have any right in any manner whatever by virtue of or by reference to any
provision of this Indenture to affect, disturb or prejudice the rights of any
other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any (including the redemption price upon redemption
pursuant to Article Three), and accrued interest on (including Liquidated
Damages, if any) such Note, on or after the respective due dates expressed in
such Note or in the event of redemption, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in its own behalf and for its own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, its rights of
conversion as provided herein.
Section 7.5. Proceedings by Trustee. In case of an Event of Default known
----------------------
to a Responsible Officer of the Trustee, the Trustee may, in its discretion,
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as are necessary to protect and enforce any of
such rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Section 7.6. Remedies Cumulative and Continuing. Except as provided in
----------------------------------
Section 2.6, all powers and remedies given by this Article Seven to the Trustee
or to the Noteholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to
-38-
<PAGE>
be a waiver of any such default or any acquiescence therein, and, subject to the
provisions of Section 7.4, every power and remedy given by this Article Seven or
by law to the Trustee or to the Noteholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7. Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders. --------------------------------------------------------------
- -----------
The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided, however, that (a) such direction shall not
be in conflict with any rule of law or with this Indenture, (b) the Trustee may
take any other action which is not inconsistent with such direction and (c) the
Trustee may decline to take any action that would benefit some Noteholder to the
detriment of other Noteholders. The holders of a majority in aggregate principal
amount of the Notes at the time outstanding determined in accordance with
Section 9.4 may, on behalf of the holders of all of the Notes, waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest (including Liquidated Damages, if any) or premium, if
any, on, or the principal of, the Notes, (ii) a failure by the Company to
convert any Notes into Common Stock, (iii) a default in the payment of
redemption price pursuant to Article Three or (iv) a default in respect of a
covenant or provisions hereof which under Article Eleven cannot be modified or
amended without the consent of the holders of each or all Notes then outstanding
or affected thereby. Upon any such waiver, the Company, the Trustee and the
holders of the Notes shall be restored to their former positions and rights
hereunder; but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon. Whenever any default or
Event of Default hereunder shall have been waived as permitted by this Section
7.7, said default or Event of Default shall for all purposes of the Notes and
this Indenture be deemed to have been cured and to be not continuing; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.
Section 7.8. Notice of Defaults. The Trustee shall, within ninety (90) days
------------------
after a Responsible Officer of the Trustee has knowledge of the occurrence of a
default, mail to all Noteholders, as the names and addresses of such holders
appear upon the Note register, notice of all defaults known to a Responsible
Officer, unless such defaults shall have been cured or waived before the giving
of such notice; provided, however, that except in the case of default in the
payment of the principal of, or premium, if any, or interest (including
Liquidated Damages, if any) on any of the Notes, the Trustee shall be protected
in withholding such notice if and so long as a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Noteholders.
Section 7.9. Undertaking to Pay Costs. All parties to this Indenture agree,
------------------------
and each holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, however, that the provisions of this
Section 7.9 (to the extent permitted by law) shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than ten percent in principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4,
or to any suit instituted by any Noteholder for the enforcement of the payment
of the principal of or premium, if any, or interest on any Note on or after the
due date expressed in such Note or to any suit for the enforcement of the right
to convert any Note in accordance with the provisions of Article Fifteen.
-39-
<PAGE>
ARTICLE EIGHT
THE TRUSTEE
Section 8.1. Duties and Responsibilities of Trustee. The Trustee, prior to
--------------------------------------
the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trust
Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Indenture and no implied covenants or obligations
shall be read into this Indenture and the Trust Indenture Act
against the Trustee; and
(2) in the absence of bad faith and willful misconduct on the
part of the Trustee, the Trustee may conclusively rely as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture;
but, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the Trustee, unless the
Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Notes at the time outstanding determined as provided in Section 9.4 relating to
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this Section;
(e) the Trustee shall not be liable in respect of any payment (as to
the correctness of amount, entitlement to receive or any other matters relating
to payment) or notice effected by the Company or any paying agent or any records
maintained by any co-registrar with respect to the Notes; and
-40-
<PAGE>
(f) if any party fails to deliver a notice relating to an event the
fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 8.2. Reliance on Documents, Opinions, Etc. Except as otherwise
------------------------------------
provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document (whether in its original or facsimile form) believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its own selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney; and
(f) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.
Section 8.3. No Responsibility for Recitals, Etc. The recitals contained
-----------------------------------
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
-41-
<PAGE>
Section 8.4. Trustee, Paying Agents, Conversion Agents or Registrar May Own
--------------------------------------------------------------
Notes. The Trustee, any paying agent, any conversion agent or Note registrar, in
- -----
its individual or any other capacity, may become the owner or pledgee of Notes
with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note registrar.
Section 8.5. Monies to be Held in Trust. Subject to the provisions of
--------------------------
Section 13.4 and Section 4.2, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed in writing from time to time by the Company and the
Trustee.
Section 8.6. Compensation and Expenses of Trustee. The Company covenants
------------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) as mutually agreed to from
time to time in writing between the Company and the Trustee, and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence, willful misconduct, recklessness or
bad faith. The Company also covenants to indemnify the Trustee (or any officer,
director or employee of the Trustee), in any capacity under this Indenture and
its agents and any authenticating agent for, and to hold them harmless against,
any and all loss, liability, claim or expense incurred without negligence,
willful misconduct, recklessness or bad faith on the part of the Trustee or such
officers, directors, employees and agent or authenticating agent, as the case
may be, and arising out of or in connection with the acceptance or
administration of this trust or in any other capacity hereunder, including the
costs and expenses of defending themselves against any claim of liability in the
premises. The obligations of the Company under this Section 8.6 to compensate or
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the holders of particular Notes. The
obligation of the Company under this Section shall survive the satisfaction and
discharge of this Indenture.
When the Trustee and its agents and any authenticating agent incur expenses
or render services after an Event of Default specified in Section 7.1(e) or (f)
with respect to the Company occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
bankruptcy, insolvency or similar laws.
Section 8.7. Officers' Certificate as Evidence. Except as otherwise
---------------------------------
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct on the part
of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee.
Section 8.8. Conflicting Interests of Trustee. If the Trustee has or shall
--------------------------------
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or
-42-
<PAGE>
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
Section 8.9. Eligibility of Trustee. There shall at all times be a Trustee
----------------------
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of a bank holding company system, its
bank holding company shall have a combined capital and surplus of at least
$50,000,000). If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.9, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 8.10. Resignation or Removal of Trustee.
---------------------------------
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment sixty (60) days after the mailing of
such notice of resignation to the Noteholders, the resigning Trustee may, upon
ten (10) business days' notice to the Company and the Noteholders, appoint a
successor identified in such notice or may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
trustee, or, if any Noteholder who has been a bona fide holder of a Note or
Notes for at least six (6) months may, subject to the provisions of Section 7.9,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8 after
written request therefor by the Company or by any Noteholder who has
been a bona fide holder of a Note or Notes for at least six (6)
months; or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.9, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent
-43-
<PAGE>
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee; provided, however, that if no successor Trustee shall have been
appointed and have accepted appointment sixty (60) days after either the Company
or the Noteholders has removed the Trustee, the Trustee so removed may petition
any court of competent jurisdiction for an appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee which shall be deemed appointed as successor trustee unless,
within ten (10) days after notice to the Company of such nomination, the Company
objects thereto, in which case the Trustee so removed or any Noteholder, or if
such Trustee so removed or any Noteholder fails to act, the Company, upon the
terms and conditions and otherwise as in Section 8.10(a) provided, may petition
any court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
Section 8.11. Acceptance by Successor Trustee. Any successor trustee
-------------------------------
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amount then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless, at the time of such acceptance, such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, the Company (or the former trustee, at the written direction of
the Company) shall mail or cause to be mailed notice of the succession of such
trustee hereunder to the holders of Notes at their addresses as they shall
appear on the Note register. If the Company fails to mail such notice within
ten (10) days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
Section 8.12. Succession by Merger, Etc. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee (including any trust created
by this Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part
-44-
<PAGE>
of any of the parties hereto, provided that in the case of any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, such corporation shall be qualified under the provisions of Section 8.8
and eligible under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or any authenticating agent appointed by such successor
trustee may authenticate such Notes in the name of the successor trustee; and in
all such cases such certificates shall have the full force that is provided in
the Notes or in this Indenture; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate Notes
in the name of any predecessor Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
Section 8.13. Preferential Collection of Claims. If and when the Trustee
---------------------------------
shall be or become a creditor of the Company (or any other obligor upon the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of the claims against the Company (or any such
other obligor).
Section 8.14. Trustee's Application for Instructions from the Company. Any
-------------------------------------------------------
application by the Trustee for written instructions from the Company (other than
with regard to any action proposed to be taken or omitted to be taken by the
Trustee that affects the rights of the holders of the Notes or holders of Senior
Indebtedness under this Indenture, including, without limitation, under Article
Four hereof) may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three (3) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
ARTICLE NINE
THE NOTEHOLDERS
Section 9.1. Action by Noteholders. Whenever in this Indenture it is
---------------------
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article Ten, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record
-45-
<PAGE>
date for determining holders entitled to take such action. The record date shall
be not more than fifteen (15) days prior to the date of commencement of
solicitation of such action.
Section 9.2. Proof of Execution by Noteholders. Subject to the provisions
---------------------------------
of Sections 8.1, 8.2 and 10.5, proof of the execution of any instrument by a
Noteholder or its agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the registry of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.6.
Section 9.3. Who Are Deemed Absolute Owners. The Company, the Trustee, any
------------------------------
paying agent, any conversion agent and any Note registrar may deem the Person in
whose name such Note shall be registered upon the Note register to be, and may
treat it as, the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon
made by any Person other than the Company or any Note registrar) for the purpose
of receiving payment of or on account of the principal of, premium, if any, and
interest on such Note, for conversion of such Note and for all other purposes;
and neither the Company nor the Trustee nor any paying agent nor any conversion
agent nor any Note registrar shall be affected by any notice to the contrary.
All such payments so made to any holder for the time being, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for monies payable upon any such Note.
Section 9.4. Company-Owned Notes Disregarded. In determining whether the
-------------------------------
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or any Affiliate of
the Company or any other obligor on the Notes shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided,
however, that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action,
only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or any Affiliate of the Company or any such other obligor. In the case of
a dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described Persons, and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.
Section 9.5. Revocation of Consents; Future Holders Bound. At any time
--------------------------------------------
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
-46-
<PAGE>
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE TEN
MEETINGS OF NOTEHOLDERS
Section 10.1. Purpose of Meetings. A meeting of Noteholders may be called
-------------------
at any time and from time to time pursuant to the provisions of this Article Ten
for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to give
any directions to the Trustee permitted under this Indenture, or to consent
to the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Noteholders pursuant to any of the provisions of Article Seven;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article Eight;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of the Notes
under any other provision of this Indenture or under applicable law.
Section 10.2. Call of Meetings by Trustee. The Trustee may at any time call
---------------------------
a meeting of Noteholders to take any action specified in Section 10.1, to be
held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 9.1, shall be mailed to
holders of Notes at their addresses as they shall appear on the Note register.
Such notice shall also be mailed to the Company. Such notices shall be mailed
not less than twenty (20) nor more than ninety (90) days prior to the date fixed
for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
Section 10.3. Call of Meetings by Company or Noteholders. In case at any
------------------------------------------
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the Notes
then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
10.1, by mailing notice thereof as provided in Section 10.2.
Section 10.4. Qualifications for Voting. To be entitled to vote at any
-------------------------
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a
-47-
<PAGE>
person appointed by an instrument in writing as proxy by a holder of one or more
Notes on the record date pertaining to such meeting. The only persons who shall
be entitled to be present or to speak at any meeting of Noteholders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
Section 10.5. Regulations. Notwithstanding any other provisions of this
-----------
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each Noteholder or
proxyholder shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Noteholders. Any meeting of Noteholders duly called
pursuant to the provisions of Section 10.2 or 10.3 may be adjourned from time to
time by the holders of a majority of the aggregate principal amount of Notes
represented at the meeting, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.
Section 10.6. Voting. The vote upon any resolution submitted to any meeting
------
of Noteholders shall be by written ballot on which shall be subscribed the
signatures of the holders of Notes or of their representatives by proxy and the
outstanding principal amount of the Notes held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Noteholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 10.2. The record shall show the principal amount of the
Notes voting in favor of or against any resolution. The record shall be signed
and verified by the affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7. No Delay of Rights by Meeting. Nothing contained in this
-----------------------------
Article Ten shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any
-48-
<PAGE>
right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE ELEVEN
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without Consent of Noteholders. The
------------------------------------------------------
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may, from time to time, and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6 or Section 15.7
and the redemption obligations of the Company pursuant to the requirements of
Section 3.5(e) or Section 15.7 and to make any other modifications permitted or
required by 15.7.
(b) subject to Article Four, to convey, transfer, assign, mortgage
or pledge to the Trustee as security for the Notes, any property or assets;
(c) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article Twelve;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however, that in
respect of any such additional covenant, restriction or condition, such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture that shall not materially adversely affect the
interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualifications of this
Indenture under the Trust Indenture Act, or under any similar federal statute
hereafter enacted.
-49-
<PAGE>
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture, the Trustee
is hereby authorized to join with the Company in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.
Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Agreement.
Section 11.2. Supplemental Indenture with Consent of Noteholders. With the
--------------------------------------------------
consent (evidenced as provided in Article Nine) of the holders of not less than
a majority in aggregate principal amount of the Notes at the time outstanding,
the Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may, from time to time and at any time, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
any supplemental indenture or of modifying in any manner the rights of the
holders of the Notes; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Notes, or modify the
provisions of this Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to redeem any Note upon the happening of a Fundamental
Change in a manner adverse to the holder of Notes, or impair the right to
convert the Notes into Common Stock subject to the terms set forth herein,
including Section 15.6, in each case, without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
-50-
<PAGE>
Section 11.3. Effect of Supplemental Indenture. Any supplemental indenture
--------------------------------
executed pursuant to the provisions of this Article Eleven shall comply with the
Trust Indenture Act, as then in effect, provided that this Section 11.3 shall
not require such supplemental indenture or the Trustee to be qualified under the
Trust Indenture Act prior to the time such qualification is in fact required
under the terms of the Trust Indenture Act or the Indenture has been qualified
under the Trust Indenture Act, nor shall it constitute any admission or
acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article Eleven, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder, subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 11.4. Notation on Notes. Notes authenticated and delivered after
-----------------
the execution of any supplemental indenture pursuant to the provisions of this
Article Eleven may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section 11.5. Evidence of Compliance of Supplemental Indenture to be
------------------------------------------------------
Furnished to Trustee. Prior to entering into any supplemental indenture, the
- --------------------
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Eleven.
ARTICLE TWELVE
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1. Company May Consolidate, Etc on Certain Terms. Subject to the
---------------------------------------------
provisions of Section 12.2, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of the Company with or into any
other Person or Persons (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same and that shall be
organized under the laws of the United States of America, any state thereof or
the District of Columbia; provided, however, that upon any such consolidation,
merger, sale, conveyance or lease, the due and punctual payment of the principal
of and premium, if any, and interest (including Liquidated Damages, if any) on
all of the Notes, according to their tenor and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the Person (if other than the Company) formed by such consolidation, or into
which the Company shall have been merged, or by the
-51-
<PAGE>
Person that shall have
acquired or leased such property, and such supplemental indenture shall provide
for the applicable conversion rights set forth in Section 15.6.
Section 12.2. Successor Corporation to be Substituted. In case of any such
---------------------------------------
consolidation, merger, sale, conveyance or lease and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor Person shall succeed to
and be substituted for the Company, with the same effect as if it had been named
herein as the party of this first part. Such successor Person thereupon may
cause to be signed, and may issue either in its own name or in the name of At
Home Corporation any or all of the Notes, issuable hereunder that theretofore
shall not have been signed by the Company and delivered to the Trustee; and,
upon the order of such successor Person instead of the Company and subject to
all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver, or cause to be authenticated and
delivered, any Notes that previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication, and any Notes that
such successor Person thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Notes so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Notes theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Notes had been issued at the date of the execution hereof. In the event
of any such consolidation, merger, sale, conveyance or lease, the Person named
as the "Company" in the first paragraph of this Indenture or any successor that
shall thereafter have become such in the manner prescribed in this Article
Twelve may be dissolved, wound up and liquidated at any time thereafter and such
Person shall be released from its liabilities as obligor and maker of the Notes
and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
Section 12.3. Opinion of Counsel to be Given Trustee. The Trustee shall
--------------------------------------
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article Twelve.
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1. Discharge of Indenture. When (a) the Company shall deliver to
----------------------
the Trustee for cancellation all Notes theretofore authenticated (other than any
Notes that have been destroyed, lost or stolen and in lieu of or in substitution
for which other Notes shall have been authenticated and delivered) and not
theretofore canceled, or (b) all the Notes not theretofore canceled or delivered
to the Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes that shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) not theretofore canceled or delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due to such date of maturity or redemption date, as
the case may be, accompanied by a verification report, as to the sufficiency of
the deposited amount, from an
-52-
<PAGE>
independent certified accountant or other financial professional satisfactory to
the Trustee, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, then this Indenture shall cease to be of
further effect (except as to (i) remaining rights of registration of transfer,
substitution and exchange and conversion of Notes, (ii) rights hereunder of
Noteholders to receive payments of principal of and premium, if any, and
interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder), and the Trustee, on written demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel as required by
Section 16.5 and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture; the
Company, however, hereby agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Notes.
Section 13.2. Deposited Monies to be Held in Trust by Trustee. Subject to
-----------------------------------------------
Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1,
provided such deposit was not in violation of Article Four, shall be held in
trust for the sole benefit of the Noteholders and not to be subject to the
subordination provisions of Article Four, and such monies shall be applied by
the Trustee to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest and premium, if any.
Section 13.3. Paying Agent to Repay Monies Held. Upon the satisfaction and
---------------------------------
discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
Section 13.4. Return of Unclaimed Monies. Subject to the requirements of
--------------------------
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment that such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 13.5. Reinstatement. If the Trustee or the paying agent is unable
-------------
to apply any money in accordance with Section 13.2 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
provided, however, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.
-53-
<PAGE>
ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.1. Indenture and Notes Solely Corporate Obligations. No recourse
------------------------------------------------
for the payment of the principal of or premium, if any, or interest on any Note,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in this
Indenture or in any supplemental indenture or in any Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director or subsidiary, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE FIFTEEN
CONVERSION OF NOTES
Section 15.1. Right to Convert. Subject to and upon compliance with the
----------------
provisions of this Indenture, including, without limitation, Article Four, the
holder of any Note shall have the right, at its option, at any time after the
original issuance of the Notes hereunder through the close of business on the
final maturity date of the Notes (except that, with respect to any Note or
portion of a Note that shall be called for redemption, such right shall
terminate, except as provided in Section 15.2, Section 3.2 or Section 3.4, at
the close of business on the Business Day next preceding the date fixed for
redemption of such Note or portion of a Note unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any such
Note, or any portion of such principal amount which is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided, together with any required
funds, in Section 15.2. A Note in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change pursuant to Section 3.5
may be converted only if such holder withdraws its election to exercise in
accordance with Section 3.5. A holder of Notes is not entitled to any rights of
a holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article Fifteen.
Section 15.2. Exercise of Conversion Privilege; Issuance of Common Stock on
-------------------------------------------------------------
Conversion; No Adjustment for Interest or Dividends. In order to exercise the
- ---------------------------------------------------
conversion privilege with respect to any Note in certificated form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion in
the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
the portion thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
-54-
<PAGE>
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.8. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any interest
in a Global Note, the beneficial holder must complete, or cause to be completed,
the appropriate instruction form for conversion pursuant to the Depository's
book-entry conversion program, deliver, or cause to be delivered, by book-entry
delivery an interest in such Global Note, furnish appropriate endorsements and
transfer documents if required by the Company or the Trustee or conversion
agent, and pay the funds, if any, required by this Section 15.2 and any transfer
taxes if required pursuant to Section 15.8.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such Noteholder at the office or agency maintained by the Company for such
purpose pursuant to Section 5.2, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such Note or portion
thereof as determined by the Company in accordance with the provisions of this
Article Fifteen and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, calculated by
the Company as provided in Section 15.3. In case any Note of a denomination
greater than $1,000 shall be surrendered for partial conversion, and subject to
Section 2.3, the Company shall execute and the Trustee shall authenticate and
deliver to the holder of the Note so surrendered, without charge to him, a new
Note or Notes in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 15.2 have been satisfied as to such Note (or portion thereof), and
the Person in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the Person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
No adjustment in respect of interest on any Note converted or dividends on
any shares issued upon conversion of such Note will be made upon any conversion
except as set forth in the next sentence. If this Note (or portion hereof) is
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the close of business on the Business
Day preceding the following interest payment date and either (x) has not been
called for redemption on a redemption date that occurs during such period or (y)
is not to be redeemed in connection with a Fundamental Change on a Repurchase
Date that occurs during such period, this Note (or portion hereof being
converted) must be accompanied by an amount, in New York Clearing House funds or
other funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount being converted; provided,
however, that no such payment shall be required if there shall exist at the time
of conversion a default in the payment of interest on the Notes.
-55-
<PAGE>
Upon the conversion of an interest in a Global Note, the Trustee (or other
conversion agent appointed by the Company), or the Custodian at the direction of
the Trustee (or other conversion agent appointed by the Company), shall make a
notation on such Global Note as to the reduction in the principal amount
represented thereby. The Company shall notify the Trustee in writing of any
conversions of Notes effected through any conversion agent other than the
Trustee.
Section 15.3. Cash Payments in Lieu of Fractional Shares. No fractional
------------------------------------------
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares that shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market price thereof to
the holder of Notes. The current market price of a share of Common Stock shall
be the Closing Price on the last Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
Section 15.4. Conversion Price. The conversion price shall be as specified
----------------
in the form of Note (herein called the "Conversion Price") attached as Exhibit A
hereto, subject to adjustment as provided in this Article Fifteen.
Section 15.5. Adjustment of Conversion Price. The Conversion Price shall
------------------------------
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution by a
fraction, the numerator of which shall be the number of shares of the Common
Stock outstanding at the close of business on the date fixed for such
determination, and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. For the
purpose of this paragraph (a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company. If any dividend or distribution of
the type described in this Section 15.5(a) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price that would
then be in effect if such dividend or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them (for a period expiring
within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights or warrants plus the number of
shares that the aggregate offering price of the total number of shares so
offered
-56-
<PAGE>
would purchase at such Current Market Price, and the denominator of which shall
be the number of shares of Common Stock outstanding on the date fixed for
determination of stockholders entitled to receive such rights or warrants plus
the total number of additional shares of Common Stock offered for subscription
or purchase. Such adjustment shall be successively made whenever any such rights
or warrants are issued, and shall become effective immediately after the opening
of business on the day following the date fixed for determination of
stockholders entitled to receive such rights or warrants. To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Conversion Price shall be readjusted to the Conversion Price that
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. In the event that such rights or
warrants are not so issued, the Conversion Price shall again be adjusted to be
the Conversion Price that would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received by the Company for such rights or warrants and any amount payable on
exercise or conversion thereof, the value of such consideration, if other than
cash, to be determined by the Board of Directors.
(c) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 15.5(a)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 15.5(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 15.5(a) (any of the foregoing hereinafter in this Section 15.5(d) called
the "Securities")), then, in each such case, the Conversion Price shall be
reduced so that the same shall be equal to the price determined by multiplying
the Conversion Price in effect on the Record Date with respect to such
distribution by a fraction, the numerator of which shall be the Current Market
Price per share of the Common Stock on such Record Date less the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive, and described in a resolution of the Board of Directors) on the
Record Date of the portion of the Securities so distributed applicable to one
share of Common Stock and the denominator of which shall be the Current Market
Price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following such Record
Date; provided, however, that in the event the then fair market value (as so
determined) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price of
the Common Stock on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Noteholder shall have the right to
receive upon conversion the amount of Securities such holder would have received
had such holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price that would then be in effect if
such dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes of this
-57-
<PAGE>
Section 15.5(d) by reference to the actual or when issued trading market for any
securities, it must in doing so consider the prices in such market over the same
period used in computing the Current Market Price of the Common Stock.
In the event that the Company implements a rights plan (the "Rights Plan"),
upon conversion of the Notes into Common Stock, to the extent that the Rights
Plan is still in effect upon such conversion, the holders of Notes will receive,
in addition to the Common Stock, the rights described therein (whether or not
the rights have separated from the Common Stock at the time of conversion),
subject to the limitations set forth in the Rights Plan. Any distribution of
rights or warrants pursuant to a Rights Plan that comply with the requirements
set forth in the immediately preceding sentence of this paragraph shall not
constitute a distribution of rights or warrants for purposes of this Section
15.5(d).
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 15.5 (and no adjustment to the Conversion Price under
this Section 15.5 will be required) until the occurrence of the earliest Trigger
Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Price shall be made under this Section 15.5(d). If any such right or warrant,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 15.5 was made, (1) in the case of any such
rights or warrants that shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption r repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the case of such rights or
warrants that shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
No adjustment of the Conversion Price shall be made pursuant to this
Section 15.5(d) in respect of rights or warrants distributed or deemed
distributed on any Trigger Event to the extent that such rights or warrants are
actually distributed, or reserved by the Company for distribution to holders of
Notes upon conversion by such holders of Notes to Common Stock.
For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 15.5(d)
-58-
<PAGE>
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 15.5(a) and (b) with respect to such dividend or distribution shall
then be made), except (A) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution", "the date fixed for the
determination of stockholders entitled to receive such rights or warrants" and
"the date fixed for such determination" within the meaning of Sections 15.5(a)
and (b), and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash dividend
on the Common Stock to the extent the aggregate cash dividend per share of
Common Stock in any fiscal quarter does not exceed the greater of (A) the amount
per share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Price pursuant to this Section 15.5(e)
(as adjusted to reflect subdivisions, or combinations of the Common Stock), and
(B) 3.75% of the arithmetic average of the Closing Price (determined as set
forth in Section 15.5(h)) during the ten Trading Days (as defined in Section
15.5(h)) immediately prior to the date of declaration of such dividend, and (y)
any dividend or distribution in connection with the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary), then, in such
case, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such record date by a fraction, the numerator of
which shall be the Current Market Price of the Common Stock on the record date
less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock, and the denominator of which shall be
such Current Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the record
date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of cash such holder
would have received had such holder converted each Note on the record date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared. If any
adjustment is required to be made as set forth in this Section 15.5(e) as a
result of a distribution that is a quarterly dividend, such adjustment shall be
based upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an
adjustment is required to be made as set forth in this Section 15.5(e) above as
a result of a distribution that is not a quarterly dividend, such adjustment
shall be based upon the full amount of the distribution.
(f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that as of the last time (the "Expiration Time") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it may be amended) exceeds
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction the numerator of which
-59-
<PAGE>
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator of which shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the Trading Day
following the Expiration Time. In the event that the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price that would then be in effect if such tender or
exchange offer had not been made.
(g) In case of a tender or exchange offer made by a Person other than
the Company or any Subsidiary for an amount that increases the offeror's
ownership of Common Equity to more than twenty-five percent (25%) of the Common
Equity outstanding and that is for the Common Stock to the extent the cash and
value of any other consideration included in the payment per share of Common
Stock having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the Board of
Directors) that as of the last time (the "Offer Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds the Current Market Price of the Common Stock on
the Trading Day next succeeding the Offer Expiration Time, and in which, as of
the Offer Expiration Time the Board of Directors is not recommending rejection
of the offer, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the Offer Expiration Time by a fraction the numerator of which shall be
the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Offer Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time and the denominator of which shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Offer Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Accepted Purchased Shares") and
(y) the product of the number of shares of Common Stock outstanding (less any
Accepted Purchased Shares) at the Offer Expiration Time and the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the Trading Day following the Offer Expiration Time. In
the event that such Person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such Person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 15.5(g)
shall not be made if, as of the Offer Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article Twelve.
(h) For purposes of this Section 15.5, the following terms shall have
the meaning indicated:
-60-
<PAGE>
(1) "Closing Price" with respect to any security on any day shall
mean the closing sale price, regular way, on such day or, in case no
such sale takes place on such day, the average of the reported closing
bid and asked prices, regular way, in each case as quoted on the Nasdaq
National Market or, if such security is not quoted or listed or admitted
to trading on such Nasdaq National Market, on the principal national
securities exchange or quotation system on which such security is quoted
or listed or admitted to trading or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, the
average of the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time to time by
the Board of Directors for that purpose, or a price determined in good
faith by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose determination
shall be conclusive.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question except as hereinafter
provided for purposes of any computation under Section 15.5(f) or (g);
provided, however, that (1) if the "ex" date (as hereinafter defined)
for any event (other than the issuance or distribution requiring such
computation and other than the tender or exchange offer requiring such
computation under Section 15.5(f) or (g)) that requires an adjustment to
the Conversion Price pursuant to Section 15.5(a), (b), (c), (d), (e),
(f) or (g) occurs during such ten consecutive Trading Days, the Closing
Price for each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the same fraction
by which the Conversion Price is so required to be adjusted as a result
of such other event, (2) if the "ex" date for any event (other than the
issuance or distribution requiring such computation and other than the
tender or exchange offer requiring such computation under Section
15.5(f) or (g)) that requires an adjustment to the Conversion Price
pursuant to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs on or
after the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for each
Trading Day on and after the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted as
a result of such other event, and (3) if the "ex" date for the issuance
or distribution requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing Price for each Trading
Day on or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value (as determined by the Board
of Directors or, to the extent permitted by applicable law, a duly
authorized committee thereof in a manner consistent with any
determination of such value for purposes of Section 15.5(d), (f) or (g),
whose determination shall be conclusive and described in a resolution of
the Board of Directors or such duly authorized committee thereof, as the
case may be) of the evidences of indebtedness, shares of capital stock
or assets being distributed applicable to one share of Common Stock as
of the close of business on the day before such "ex" date. For purposes
of any computation under Section 15.5(f) or (g), the "Current Market
Price" of the Common Stock on any date shall be deemed to be the average
of the daily Closing Prices per share of Common Stock for such day and
the next two succeeding Trading Days; provided, however, that if the
"ex" date for any event (other than the tender or exchange offer
requiring such computation under Section 15.5(f) or (g)) that requires
an
-61-
<PAGE>
adjustment to the Conversion Price pursuant to Section 15.5(a), (b),
(c), (d), (e), (f) or (g) occurs on or after the Expiration Time or
Offer Expiration Time, as the case may be, for the tender or exchange
offer requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted as provided in clauses (1), (2) and (3) of
the proviso contained in the first sentence of this Section 15.5(h)(2).
For purpose of this paragraph, the term "ex" date, (1) when used with
respect to any issuance or distribution, means the first date on which
the Common Stock trades, regular way, on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades, regular way, on
such exchange or in such market after the time at which such subdivision
or combination becomes effective, and (3) when used with respect to any
tender or exchange offer means the first date on which the Common Stock
trades, regular way, on such exchange or in such market after the
Expiration Time or the Offer Expiration Time of such offer.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or
other property, the date fixed for determination of stockholders
entitled to receive such cash, securities or other property (whether
such date is fixed by the Board of Directors or by statute, contract or
otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is
quoted on the Nasdaq National Market, a day on which trades may be made
thereon or (y) if the applicable security is listed or admitted for
trading on the New York Stock Exchange or another national securities
exchange, a day on which the New York Stock Exchange or another national
securities exchange is open for business or (z) if the applicable
security is not so listed, admitted for trading or quoted, any day other
than a Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order
to close.
(i) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5(a), (b), (c), (d), (e), (f) or (g)
as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the reduction at least fifteen (15) days prior to the date the reduced
Conversion
-62-
<PAGE>
Price takes effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such price; provided, however, that any adjustments that by reason of
this Section 15.5(j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article Fifteen shall be made by the Company and shall be made to the nearest
cent or to the nearest one-hundredth (1/100) of a share, as the case may be. No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on the cash.
(k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Unless and until a Responsible Officer of the Trustee shall have
received such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Price and may assume that the last
Conversion Price of which it has knowledge is still in effect. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion Price
and the date on which each adjustment becomes effective and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Note at
his last address appearing on the Note register provided for in Section 2.5 of
this Indenture, within twenty (20) days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.
(l) In any case in which this Section 15.5 provides that an adjustment
shall become effective immediately after (1) a record date or Record Date for an
event, (2) the date fixed for the determination of stockholders entitled to
receive a dividend or distribution pursuant to Section 15.5(a), (3) a date fixed
for the determination of stockholders entitled to receive rights or warrants
pursuant to Section 15.5(b), (4) the Expiration Time for any tender or exchange
offer pursuant to Section 15.5(f), or (5) the Offer Expiration Time for a tender
or exchange offer pursuant to Section 15.5(g) (each a "Determination Date"), the
Company may elect to defer until the occurrence of the relevant Adjustment Event
(as hereinafter defined) (x) issuing to the holder of any Note converted after
such Determination Date and before the occurrence of such Adjustment Event, the
additional shares of Common Stock or other securities issuable upon such
conversion by reason of the adjustment required by such Adjustment Event over
and above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (y) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 15.3. For purposes of this Section 15.5(l), the
term "Adjustment Event" shall mean:
(a) in any case referred to in clause (1) hereof, the occurrence
of such event,
(b) in any case referred to in clause (2) hereof, the date any
such dividend or distribution is paid or made,
(c) in any case referred to in clause (3) hereof, the date of
expiration of such rights or warrants, and
-63-
<PAGE>
(d) in any case referred to in clause (4) or clause (5) hereof,
the date a sale or exchange of Common Stock pursuant to such tender or
exchange offer is consummated and becomes irrevocable.
(m) For purposes of this Section 15.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
Section 15.6. Effect of Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another Person as a result of which holders of
Common Stock shall be entitled to receive stock, other securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, or (iii) any sale or conveyance of all or substantially all of the
properties and assets of the Company to any other Person as a result of which
holders of Common Stock shall be entitled to receive stock, other securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, then the Company or the successor or purchasing Person, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that each Note shall be convertible
into the kind and amount of shares of stock, other securities or other property
or assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purposes of this Section 15.6 the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
Fifteen (which will include separate conversion prices and adjustments with
respect thereto in the event the Notes become convertible into more than one
class of common stock of the Company (or its successor as obligor on the
Notes)).
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at its address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
-64-
<PAGE>
If this Section 15.6 applies to any event or occurrence, Section 15.5 shall
not apply.
Section 15.7. Special Provisions Applicable to Tracking Stock or Similar
----------------------------------------------------------
Arrangement. In the event that the Company effects a tracking stock or similar
- -----------
arrangement the terms of which track the economic performance of one or more
(but not all) of the Company's line or lines of business or business unit or
units by distributing common stock on its Common Stock or reclassifying its
Common Stock, then the Company shall execute with the Trustee a supplemental
indenture (which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) providing:
(a) that immediately following the effective date of such
reclassification or the record date for such distribution, as the case may be,
the Notes shall be convertible into, (i) in the case of a reclassification of
the Common Stock, the shares of each class or series of common stock into which
the Common Stock has been reclassified, and (ii) in the case of a stock
distribution, the same number of shares of Common Stock into which the Notes
were convertible immediately prior to such distribution plus the shares of other
common stock that would have been distributed on those shares of Common Stock if
such shares of Common Stock had been outstanding on the record date for such
distribution;
(b) that a Fundamental Change under Section 3.5(g)(iii) will be
deemed to occur in the event of any transaction or event in connection with
which all or substantially all of each class of common stock into which the
Notes are convertible shall be exchanged for, converted into, acquired for or
constitute solely the right to receive consideration (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) all or substantially all of
which does not consist of common stock of the Company (or common stock of the
successor to the Company as obligor on the Notes) which is (or, upon
consummation of or immediately following such transaction or event, which will
be) listed on a United States national securities exchange or approved for
quotation on the Nasdaq National Market or any similar United States system of
automated dissemination of quotation of securities prices;
(c) that in the event of any transaction or event in connection with
which all or substantially all of any class of common stock into which the Notes
are convertible (but not all of such classes) shall be exchanged for, converted
into, acquired for or constitute solely the right to receive consideration
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, redemption or otherwise)
which is not all or substantially all common stock of the Company (or common
stock of the successor obligor to the Company on the Notes) listed on (or that
will be listed immediately after the transaction or event on) a United States
national securities exchange or approved for quotation on the Nasdaq National
Market or any similar United States system of automated dissemination or
quotations of securities prices (an "Adjustment Occurrence"), then (i) such
Adjustment Occurrence shall not be a Fundamental Change for purposes of Section
3.5(g)(iii), but instead (ii) the Notes shall no longer be convertible into such
class of common stock (or any associated property, assets or other securities
(other than shares of another class of common stock of the Company (or its
successor obligor on the Notes)) that was previously receivable upon conversion
of the Notes as a result of any reclassification change or other event with
respect to shares of such class of common stock) (the "Deemed Distributed
Property"), but instead the conversion price or conversion prices (which may be
appropriately allocated to a portion of the principal amount of each Note for
purposes of determining the number of shares issuable upon conversion) for
purposes of calculating the number of shares of the other class or classes of
common stock (and any associated property, assets and other securities
receivable upon conversion of the Notes as a result of any reclassification,
change or other event with respect to shares of such class of common stock,
other than shares of common stock of the Company (or its successor obligor on
the Notes) for which a separate conversion
-65-
<PAGE>
price or conversion prices and provisions for adjustments with respect thereto
have been established pursuant to this Article Fifteen ("Associated Property"))
shall be reduced so that the aggregate fair market value (determined immediately
following the Adjustment Occurrence) of the shares of such class or classes of
common stock receivable upon conversion of a Note (together with Associated
Property) is equal to the aggregate fair market value of the shares of common
stock (together with Associated Property) receivable upon conversion of a Note
immediately prior to the Adjustment Occurrence (with, in any case where the
Notes continue to be convertible into more than one class of common stock and,
accordingly, more than one conversion price applies, the conversion price
adjustments appropriately weighted to reflect the relative aggregate values of
common stock and Associated Property applicable to each class of common stock
into which a Note continues to be convertible, on the one hand, and Deemed
Distributed Property, on the other hand);
(d) that upon any such Adjustment Occurrence, the Company shall
execute with the Trustee an additional supplemental indenture (which shall
comply with the Trust Indenture Act as in force at the date of execution of such
supplemental indenture) to appropriately reflect the modifications to the
conversion price and the conversion privileges applicable to the Notes and the
Fundamental Change provisions set forth in Section 3.5(g)(iii) of the Indenture
as a result of such Adjustment Occurrence;
(e) appropriate modifications to the form of Note set forth as
Exhibit A to this Indenture to account for any modifications to Conversion
- ---------
Price, conversion privileges and Fundamental Change definitions and such other
appropriate modifications to the form of Note to account for the class or
classes of common stock that result from such reclassification or stock
dividend;
(f) appropriate modifications to the conversion privilege of the
Notes to provide for the fact that the Notes have become convertible into more
than a single class of common stock (including clarification that Sections 15.9
and 15.11 of the Indenture shall apply to each such class of common stock), as
well as modification to the Conversion Price (which may be appropriately
allocated to a portion of the principal amount of each Note for purposes of
determining the shares issuable upon conversion) to provide for appropriate
conversion prices with respect to the shares of each class of Common Stock
receivable upon conversion of the Notes as a result of such reclassification or
stock distribution, as the case may be, with such conversion prices to be
subject to adjustment upon the occurrence of certain events affecting each such
class or classes of common stock, as the case may be, on terms as nearly
equivalent as may be practicable to the adjustments provided for in this Article
Fifteen (including Sections 15.5 and 15.6 and this Section 15.7); and
(g) such other modifications to the provisions of the Indenture as
the Board of Directors of the Company determines are consistent with the intent
of this Section 15.7, provided that such modifications are not adverse in any
material respects to the holders of the Notes and the Board shall have reached
this determination.
The Company shall cause notice of the execution of such supplemental
indenture (and any supplemental indenture executed as contemplated by Section
15.7(d) above) to be mailed to each holder of Notes, at its address appearing on
the Note register provided for in Section 2.5 of this Indenture, within twenty
(20) days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture. Such notice
shall include (i) a description of the substantive provisions of the
supplemental indenture and (ii) a statement that such supplemental indenture is
in the form contemplated by this Section 15.7.
-66-
<PAGE>
The above provisions of this Section shall similarly apply to successive
reclassifications and stock distributions to effect a tracking stock or similar
arrangement.
If this Section 15.7 applies to a reclassification or stock distribution to
effect a tracking stock or similar arrangement or to a transaction or event
described in Section 15.7(c), neither Section 15.5 nor 15.6 shall apply to such
reclassification, distribution or transaction or event.
The Company shall make such further modifications to the provisions of the
Indenture as are consistent with the intent of this Section 15.7, in addition to
those set forth above in this Section 15.7, as determined in good faith by the
Company and evidenced by a resolution of the Board of Directors of the Company
as are necessary and appropriate to protect the interests of the holders of
Notes.
Section 15.8. Taxes on Shares Issued. The issue of stock certificates on
----------------------
conversions of Notes shall be made without charge to the converting Noteholder
for any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the Person or Persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 15.9. Reservation of Shares; Shares to be Fully Paid; Compliance
----------------------------------------------------------
with Governmental Requirements; Listing of Common Stock. The Company shall
- -------------------------------------------------------
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares of Common Stock to provide for the
conversion of the Notes from time to time as such Notes are presented for
conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free from all taxes, liens and charges with respect to the issue
thereof.
If any shares required to be reserved for purposes of conversion of Notes
hereunder require registration with or approval of any governmental authority
under any Federal or State law, before such shares may be issued upon
conversion, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered or approved, as the case may
be.
The Company further covenants that, if at any time the Common Stock shall
be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system, the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Note;
provided, however, that, if the rules of such exchange or automated quotation
system permit the Company to defer the listing of such Common Stock until the
first conversion of the Notes into Common Stock in accordance with the
provisions of this Indenture, the Company covenants to
-67-
<PAGE>
list such Common Stock issuable upon conversion of the Notes in accordance with
the requirements of such exchange or automated quotation system at such time.
Section 15.10. Responsibility of Trustee. The Trustee and any other
-------------------------
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Price or whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other conversion agent make no representations
with respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Note for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article Fifteen. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 or Section 15.7 relating either
to the kind or amount of shares of stock or securities or property (including
cash) receivable by Noteholders upon the conversion of their Notes after any
event referred to in such Section 15.6 or Section 15.7 or to any adjustment to
be made with respect thereto, but, subject to the provisions of Section 8.1, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
Section 15.11. Notice to Holders Prior to Certain Actions. In case:
------------------------------------------
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion Price
pursuant to Section 15.5 or to which Section 15.7 would apply; or
(b) the Company shall authorize the granting to the holders of all
or substantially all of its Common Stock of rights or warrants to subscribe for
or purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common Stock of
the Company (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Significant Subsidiary; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or any Significant Subsidiary;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
ten (10) days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend,
-68-
<PAGE>
distribution or rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
ARTICLE Sixteen
MISCELLANEOUS PROVISIONS
Section 16.1. Provisions Binding on Company's Successors. All the
------------------------------------------
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 16.2. Official Acts by Successor Corporation. Any act or
--------------------------------------
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any Person that shall at the time be the lawful sole successor of the
Company.
Section 16.3. Addresses for Notices, Etc. Any notice or demand which by
--------------------------
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to At Home Corporation, 450 Broadway, Redwood City, California 94063,
Attention: Treasurer. Any notice, direction, request or demand hereunder to or
upon the Trustee shall be deemed to have been sufficiently given or made, for
all purposes, if given or served by being deposited, postage prepaid, by
registered or certified mail in a post office letter box addressed to the
Corporate Trust Office, which office is, at the date as of which this Indenture
is dated, located at 633 West 5th Street, 12th Floor, Los Angeles, California
90071, Attention: Corporate Trust Department (At Home Corporation, 4%
Convertible Subordinated Notes due 2006).
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to him
by first class mail, postage prepaid, at his address as it appears on the Note
register and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 16.4. Governing Law. This Indenture and each Note shall be deemed
-------------
to be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of the State of New
York, without regard to the conflict of laws provisions thereof.
-69-
<PAGE>
Section 16.5. Evidence of Compliance with Conditions Precedent;
------------------------------------------------
Certificates to Trustee. Upon any application or demand by the Company to the
- -----------------------
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include: (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 16.6. Legal Holidays. In any case in which the date of maturity
--------------
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 16.7. Trust Indenture Act. This Indenture is hereby made subject
-------------------
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Notes issued hereunder shall not be subject to
the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the
Trust Indenture Act as now in effect or as hereafter amended or modified;
provided further that this Section 16.7 shall not require this Indenture or the
Trustee to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act,
nor shall it constitute any admission or acknowledgment by any party to the
Indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act. If
any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in an indenture qualified under the
Trust Indenture Act, such required provision shall control.
Section 16.8. No Security Interest Created. Nothing in this Indenture or
----------------------------
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction in which property of the
Company or its subsidiaries is located.
Section 16.9. Benefits of Indenture. Nothing in this Indenture or in the
---------------------
Notes, express or implied, shall give to any Person, other than the parties
hereto, any paying agent, any authenticating agent, any Note registrar and their
successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 16.10. Table of Contents, Headings, Etc. The table of contents and
--------------------------------
the titles and headings of the articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
-70-
<PAGE>
Section 16.11. Authenticating Agent. The Trustee may appoint an
--------------------
authenticating agent that shall be authorized to act on its behalf, and subject
to its direction, in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 3.5, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a Person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall either promptly appoint a successor authenticating agent or itself
assume the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to time
such reasonable compensation for its services as shall be agreed upon in writing
between the Company and the authenticating agent.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 16.11 shall
be applicable to any authenticating agent.
Section 16.12. Execution in Counterparts. This Indenture may be executed in
-------------------------
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 16.13. Severability. In case any provision in this Indenture or in
------------
the Notes shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
-71-
<PAGE>
State Street Bank and Trust Company of California, N.A. hereby accepts the
trusts in this Indenture declared and provided, upon the terms and conditions
herein above set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed.
AT HOME CORPORATION
By: /s/ Kenneth A. Goldman
-------------------------------------
Name: Kenneth A. Goldman
Title: Senior Vice President and Chief
Financial Officer
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By: /s/ Mark Henson
-------------------------------------
Name: Mark Henson
Title: Assistant Vice President
<PAGE>
EXHIBIT A
For Global Note only: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) (THE "DEPOSITARY", WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE
CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREIN IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO AT HOME CORPORATION OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (2)(F) ABOVE), IT WILL FURNISH TO STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
<PAGE>
REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE (2)(F)
ABOVE OR UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER
THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
A-2
<PAGE>
AT HOME CORPORATION
4% CONVERTIBLE SUBORDINATED NOTE DUE 2006
CUSIP:___________________
No. __________ $___________________
At Home Corporation, a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received hereby promises to pay to
________________________, or registered assigns, the principal sum of
_________________ ($___________) (which, taken together with all principal
amounts of all other outstanding Notes, shall not exceed $500,000,000 (or
$575,000,000 if the Over-allotment Option is exercised in full) in the aggregate
at any time) on December 15, 2006, at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest, semi-annually on June 15 and December 15 of each year, commencing June
15, 2000, on said principal sum at said office or agency, in like coin or
currency, at the rate per annum of 4%, from June 15 or December 15, as the case
may be, next preceding the date of this Note to which interest has been paid or
duly provided for, unless the date hereof is a date to which interest has been
paid or duly provided for, in which case from the date of this Note, or unless
no interest has been paid or duly provided for on the Notes, in which case from
December 13, 1999, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after any
June 1 or December 1, as the case may be, and before the following June 15 or
December 15, this Note shall bear interest from such June 15 or December 15;
provided, however, that if the Company shall default in the payment of interest
- -------- -------
due on such June 15 or December 15, then this Note shall bear interest from the
next preceding June 15 or December 15 to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on such Note,
from December 13, 1999. Except as otherwise provided in the Indenture, the
interest payable on the Note pursuant to the Indenture on any June 15 or
December 15 will be paid to the Person entitled thereto as it appears in the
Note register at the close of business on the record date, which shall be the
June 1 or December 1 (whether or not a Business Day) next preceding such June 15
or December 15, as provided in the Indenture; provided, however, that any such
interest not punctually paid or duly provided for shall be payable as provided
in the Indenture. Interest may, at the option of the Company, be paid either
(i) by check mailed to the registered address of such Person (provided that the
holder of Notes with an aggregate principal amount in excess of $2,000,000
shall, at the written election of such holder, be paid by wire transfer of
immediately available funds) or (ii) by transfer to an account maintained by
such Person located in the United States; provided, however, that payments to
-------- -------
the Depositary will be made by wire transfer of immediately available funds to
the account of the Depositary or its nominee.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
A-3
<PAGE>
This Note shall be deemed to be a contract made under the laws of the State
of New York, and for all purposes shall be construed in accordance with and
governed by the laws of the State of New York, without regard to principles of
conflicts of laws.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
AT HOME CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Attest:_________________________
Name:___________________________
Title:__________________________
Dated:_______________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
By:_____________________________
Authorized Officer
A-4
<PAGE>
FORM OF REVERSE OF NOTE
AT HOME CORPORATION
4% CONVERTIBLE SUBORDINATED NOTE DUE 2006
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 4% Convertible Subordinated Notes due 2006 (herein called the
"Notes"), limited to the aggregate principal amount of $500,000,000 (or up to
$575,000,000 if the Over-allotment Option is exercised in full) all issued or to
be issued under and pursuant to an Indenture dated as of December 1, 1999
(herein called the "Indenture"), between the Company and State Street Bank and
Trust Company of California, N.A., as trustee (herein called the "Trustee"), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Notes.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages (as defined in the Indenture), if any) on
all Notes may be declared by either the Trustee or the holders of not less than
25% in aggregate principal amount of the Notes then outstanding, and upon said
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the holders of the Notes; provided, however, that no
-------- -------
such supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable upon redemption thereof, or impair the right of any Noteholder to
institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Notes, or modify the provisions of the Indenture with
respect to the subordination of the Notes in a manner adverse to the Noteholders
in any material respect, or change the obligation of the Company to redeem any
Note upon the happening of a Fundamental Change (as defined in the Indenture) in
a manner adverse to the holder of the Notes, or impair the right to convert the
Notes into Common Stock subject to the terms set forth in the Indenture,
including Section 15.6 thereof, without the consent of the holder of each Note
so affected or (ii) reduce the aforesaid percentage of Notes, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding. Subject to the provisions
of the Indenture, the holders of a majority in aggregate principal amount of the
Notes at the time outstanding may on behalf of the holders of all of the Notes
waive any past default or Event of Default under the Indenture and its
consequences except a default in the payment of interest (including Liquidated
Damages, if any) or any premium on, or the principal of, any of the Notes, or a
failure by the Company to convert any Notes into Common Stock of the Company, or
a default in the payment of the redemption price pursuant to Article Three of
the Indenture, or a default in respect of a covenant or provisions of the
Indenture which under Article Eleven of the Indenture cannot be modified without
the consent of the holders of each or all Notes then outstanding or affected
thereby. Any such consent or waiver by the holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders
A-5
<PAGE>
and owners of this Note and any Notes which may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is made
upon this Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
whether outstanding at the date of the Indenture or thereafter incurred, and
this Note is issued subject to the provisions of the Indenture with respect to
such subordination. Each holder of this Note, by accepting the same, agrees to
and shall be bound by such provisions and authorizes the Trustee on its behalf
to take such action as may be necessary or appropriate to effectuate the
subordination so provided and appoints the Trustee his attorney-in-fact for such
purpose.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
(including Liquidated Damages, if any) on this Note at the place, at the
respective times, at the rate and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
The Notes are issuable in fully registered form, without coupons, in
denominations of $1,000 principal amount and any integral multiple of $1,000.
At the office or agency of the Company referred to on the face hereof, and in
the manner and subject to the limitations provided in the Indenture, without
payment of any service charge but with payment of a sum sufficient to cover any
tax, assessment or other governmental charge that may be imposed in connection
with any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of any other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
December 20, 2002. At any time on or after December 20, 2002, and prior to
maturity, the Notes may be redeemed at the option of the Company, in whole or in
part, upon mailing a notice of such redemption not less than 30 days but not
more than 60 days before the date fixed for redemption to the holders of Notes
at their last registered addresses, all as provided in the Indenture, at the
following optional redemption prices (expressed as percentages of the principal
amount), together in each case with accrued and unpaid interest (including
Liquidated Damages, if any) to, but excluding, the date fixed for redemption:
<TABLE>
<CAPTION>
Period Redemption Price
- ------ ----------------
<S> <C>
Beginning on December 20, 2002 and ending on December 14, 2003......... 102.714%
Beginning on December 15, 2003 and ending on December 14, 2004......... 102.036
Beginning on December 15, 2004 and ending on December 14, 2005......... 101.357
Beginning on December 15, 2005 and ending on December 14, 2006......... 100.679
</TABLE>
and 100% on December 15, 2006; provided, however, that if the date fixed for
redemption is on a June 15 or December 15, then the interest payable on such
date shall be paid to the holder of record on the preceding June 1 or December
1, respectively.
The Company may not give notice of any redemption of the Notes if a default
in the payment of interest or premium, if any, on the Notes has occurred and is
continuing.
The Notes are not subject to redemption through the operation of any
sinking fund.
A-6
<PAGE>
If a Fundamental Change occurs at any time prior to maturity of the Notes,
the Notes will be redeemable on the 30th day after notice thereof (the
"Repurchase Date") at the option of the holder of the Notes at a redemption
price equal to 100% of the principal amount thereof, together with accrued
interest to (but excluding) the date of redemption; provided, however, that, if
such Repurchase Date is a June 15 or December 15, the interest payable on such
date shall be paid to the holder of record of the Notes on the preceding June 1
or December 1, respectively. The Notes will be redeemable in multiples of
$1,000 principal amount. The Company shall mail to all holders of record of the
Notes a notice of the occurrence of a Fundamental Change and of the redemption
right arising as a result thereof on or before the 10th day after the occurrence
of such Fundamental Change. For a Note to be so redeemed at the option of the
holder, the Company must receive at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, such
Note with the form entitled "Option to Elect Repayment Upon a Fundamental
Change" on the reverse thereof duly completed, together with such Note, duly
endorsed for transfer, on or before the 30th day after the date of such notice
of a Fundamental Change (or if such 30th day is not a Business Day, the
immediately succeeding Business Day).
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after the original issuance of any Notes
through the close of business on the final maturity date of the Notes, or, as to
all or any portion hereof called for redemption, prior to the close of business
on the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
the principal hereof or any portion of such principal which is $1,000 or an
integral multiple thereof into that number of shares of the Company's Common
Stock (as such shares shall be constituted at the date of conversion) obtained
by dividing the principal amount of this Note or portion thereof to be converted
by the Conversion Price of $56.52, as may adjusted from time to time as provided
in the Indenture, upon surrender of this Note, together with a conversion notice
as provided in the Indenture (the form entitled "Conversion Notice" on the
reverse hereof), to the Company at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, or at
the option of such holder, the Corporate Trust Office, and, unless the shares
issuable on conversion are to be issued in the same name as this Note, duly
endorsed by, or accompanied by instruments of transfer in form satisfactory to
the Company duly executed by, the holder or by his duly authorized attorney. No
adjustment in respect of interest on any Note converted or dividends on any
shares issued upon conversion of such Note will be made upon any conversion
except as set forth in the next sentence. If this Note (or portion hereof) is
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the close of business on the Business
Day preceding the following interest payment date and either (x) has not been
called for redemption on a redemption date that occurs during such period or (y)
is not to be redeemed in connection with a Fundamental Change on a Repurchase
Date that occurs during such period, this Note (or portion hereof being
converted) must be accompanied by an amount, in New York Clearing House funds or
other funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount being converted; provided,
however, that no such payment shall be required if there shall exist at the time
of conversion a default in the payment of interest on the Notes. No fractional
shares will be issued upon any conversion, but an adjustment and payment in cash
will be made, as provided in the Indenture, in respect of any fraction of a
share which would otherwise be issuable upon the surrender of any Note or Notes
for conversion. A Note in respect of which a holder is exercising its right to
require redemption upon a Fundamental Change may be converted only if such
holder withdraws its election to exercise such right in accordance with the
terms of the Indenture. Any Notes called for redemption, unless surrendered for
conversion by the holders thereof on or before the close of business on the
Business Day preceding the date fixed for redemption, may be deemed to be
redeemed from the holders of such Notes for an amount equal to the applicable
redemption price, together with accrued but unpaid interest (including
Liquidated Damages, if any) to (but excluding) the date fixed for redemption, by
one or more investment
A-7
<PAGE>
banks or other purchasers who may agree with the Company (i) to purchase such
Notes from the holders thereof and convert them into shares of the Company's
Common Stock and (ii) to make payment for such Notes as aforesaid to the Trustee
in trust for the holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, a new Note or Notes of authorized denominations for
an equal aggregate principal amount will be issued to the transferee in exchange
thereof; subject to the limitations provided in the Indenture, without charge
except for any tax, assessment or other governmental charge imposed in
connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar) for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or interest
on this Note, or for any claim based hereon or otherwise in respect hereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any supplemental indenture or in any Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of New York,
and for all purposes shall be construed in accordance with the laws of New York,
without regard to principles of conflicts of laws.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
A-8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT - _____ Custodian _____
TEN ENT - as tenant by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right
of survivorship and not as under Uniform Gifts to Minors Act
tenants in common _________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
A-9
<PAGE>
CONVERSION NOTICE
TO: AT HOME CORPORATION
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion thereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of At
Home Corporation in accordance with the terms of the Indenture referred to in
this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
provide the appropriate information below and pay all transfer taxes payable
with respect thereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Note.
Dated: ___________________
____________________________________________
____________________________________________
Signature(s)
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Note registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
____________________________________________
Signature Guarantee
Fill in the registration of shares of Common Stock if to be issued, and
Notes if to be delivered, other than to and in the name of the registered
holder:
________________________________________
(Name)
________________________________________
(Street Address)
________________________________________
(City, State and Zip Code)
A-10
<PAGE>
__________________________________________
Please print name and address
Principal amount to be converted
(if less than all):
$________________________________________
Social Security or Other Taxpayer
Identification Number:
_________________________________________
A-11
<PAGE>
OPTION TO ELECT REPAYMENT
UPON A FUNDAMENTAL CHANGE
TO: AT HOME CORPORATION
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from At Home Corporation (the "Company") as to
the occurrence of a Fundamental Change with respect to the Company and requests
and instructs the Company to repay the entire principal amount of this Note, or
the portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the price of 100% of such entire principal amount or portion thereof,
together with accrued interest to, but excluding, such repayment date, to the
registered holder hereof.
Dated: ___________________
____________________________________________
____________________________________________
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
Principal amount to be repaid (if less
than all):
$_________________________________________
__________________________________________
Social Security or Other
Taxpayer Identification Number
A-12
<PAGE>
ASSIGNMENT
For value received __________________________________________ hereby
sell(s) assign(s) and transfer(s) unto ___________________(Please insert social
security or other Taxpayer Identification Number of assignee) the within Note,
and herebyirrevocably constitutes and appoints ________________________________
attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the Note prior to the expiration of the
holding period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision) (other than any transfer pursuant to
a registration statement that has been declared effective under the Securities
Act), the undersigned confirms that such Note is being transferred:
[ ] To At Home Corporation or a subsidiary thereof; or
[ ] Inside the United States pursuant to and in compliance with
Rule 144A under the Securities Act of 1933, as amended; or
[ ] Inside the United States to an Institutional Accredited Investor
pursuant to and in compliance with the Securities Act of 1933, as
amended, in a minimum denomination of $100,000; or
[ ] Outside the Unites States in compliance with Rule 904 under the
Securities Act; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated: ___________________
____________________________________________
____________________________________________
Signature(s)
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Note registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-13
<PAGE>
____________________________________________
Signature Guarantee
NOTICE: The signature of the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
A-14
<PAGE>
EXHIBIT B
At Home Corporation
450 Broadway
Redwood City, California 94063
State Street Bank and Trust Company of California, N.A., as Trustee
633 West 5th Street
12/th/ Floor
Los Angeles, California 90071
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of 4% Convertible Subordinated
Notes due 2006 (the "Notes") of At Home Corporation, a Delaware corporation (the
"Company") we confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are accredited
investors within the meaning of Rule 501(a)(1), (2) or (3) under the Securities
Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of Notes by us will be for our own account or
for the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which we exercise sole investment discretion or (B) we are a "bank,"
within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and
loan association" or other institution described in Section 3(a)(5)(A) of the
Securities Act that is acquiring Notes as fiduciary for the account of one or
more institutions for which we exercise sole investment discretion;
(iii) the event that we purchase any Notes, we will acquire Notes
having a minimum purchase price of not less than $100,000 for our own account or
for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
purchasing Notes; and
(v) we are not acquiring Notes with a view to distribution
thereof or with any present intention of offering or selling Notes or the Common
Stock of the Company issuable upon conversion thereof, except as permitted
below; provided that the disposition of our property and property of any
accounts for which we are acting as fiduciary shall remain at all times within
our control.
We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the Common Stock of the Company issuable
upon conversion thereof have not been registered under the Securities Act, and
we agree, on our own behalf and on behalf of each account for which we acquire
any Notes, that if in the future we decide to resell or otherwise transfer such
Notes or the Common Stock of the Company issuable upon conversion thereof, such
Notes or Common Stock of the Company may be resold or otherwise transferred
<PAGE>
only (i) to the Company or any subsidiary thereof, (ii) inside the United States
to a person who is a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in a transaction meeting the requirements of Rule
144A, (iii) inside the United States to an Institutional Accredited Investor
that, prior to such transfer, furnishes to the Trustee for the Notes (or in the
case of Common Stock of the Company, the transfer agent therefor) a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of such securities (the form of which letter can be
obtained from the Trustee or the transfer agent, as the case may be), (iv)
outside the United States in a transaction meeting the requirements of Rule 904
under the Securities Act, (v)pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if applicable), or (vi) pursuant
to a registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of such
transfer), and in each case, in accordance with any applicable securities law of
any state of the United States and in accordance with the legends set forth on
the Notes or the Common Stock of the Company issuable upon conversion thereof.
We further agree to provide any person purchasing any of the Notes or the Common
Stock of the Company issuable upon conversion thereof (other than pursuant to
clause (v) or (vi) above) from us a notice advising such purchaser that resales
of such securities are restricted as stated herein. We understand that the
Trustee and transfer agent for the Notes and the Common Stock of the Company
will not be required to accept for registration of transfer any Notes or any
Common Stock of the Company issued upon conversion of the Notes, except upon
presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with. We further understand that any
Notes and any Common Stock of the Company issued upon conversion of the Notes
will be in the form of definitive physical certificates and that such
certificates will bear a legend reflecting the substance of this paragraph other
than certificates transferred pursuant to (v) or (vi) above.
The Company and the Trustee and their respective counsel are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
(Name of Purchaser)
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address:____________________________________
____________________________________________
____________________________________________
B-2
<PAGE>
EXHIBIT 4.04
REGISTRATION RIGHTS AGREEMENT
by and among
AT HOME CORPORATION
as Issuer,
and
MORGAN STANLEY & CO. INCORPORATED,
GOLDMAN SACHS & CO.,
DEUTSCHE BANK SECURITIES, INC.
DONALDSON LUFKIN & JENRETTE SECURITIES CORPORATION
HAMBRECHT & QUIST LLC,
and
BANCBOSTON ROBERTSON STEPHENS INC.,
as Initial Purchasers
Dated as of December 1, 1999
<PAGE>
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of December
1, 1999 by and among At Home Corporation, a Delaware corporation (the
"Company"), and Morgan Stanley & Co. Incorporated, Goldman Sachs & Co., Deutsche
Bank Securities Inc., Donaldson Lufkin & Jenrette Securities Corporation,
Hambrecht & Quist LLC and BancBoston Robertson Stephens Inc. pursuant to the
Purchase Agreement, dated December 7, 1999 (the "Purchase Agreement"), among the
Company and the Initial Purchasers. In order to induce the Initial Purchasers
to enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution of this
Agreement is a condition to the closing under the Purchase Agreement.
The Company agrees with the Initial Purchasers, (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the beneficial owners (including
the Initial Purchasers) from time to time of the Notes (as defined herein) and
the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Notes (each of the foregoing a
"Holder" and together the "Holders"), as follows:
SECTION 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
"Affiliate" means with respect to any specified person, an "affiliate," as
defined in Rule 144, of such person.
"Amendment Effectiveness Deadline Date" has the meaning set forth in
Section 2(d) hereof.
"Applicable Conversion Price" as of any date of determination means the
Conversion Price in effect as of such date of determination or, if no Notes are
then outstanding, the Conversion Price that would be in effect were Notes then
outstanding.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Common Stock" means the shares of Series A Common Stock, par value $.01
per share, of the Company and any other shares of common stock with respect to
any reclassification or other event that may constitute "Common Stock" under the
Indenture, including the Underlying Common Stock.
"Conversion Price" has the meaning assigned such term in the Indenture.
"Damages Accrual Period" has the meaning set forth in Section 2(e) hereof.
"Damages Payment Date" means each interest payment date under the Indenture
in the case of Notes, and each June 15 and December 15 in the case of the
Underlying Common Stock.
<PAGE>
"Deferral Notice" has the meaning set forth in Section 3(i) hereof.
"Deferral Period" has the meaning set forth in Section 3(i) hereof.
"Effectiveness Deadline Date" has the meaning set forth in Section 2(a)
hereof.
"Effectiveness Period" means the period commencing on the date hereof and
ending on the date that all Registrable Securities have ceased to be Registrable
Securities.
"Event" has the meaning set forth in Section 2(e) hereof.
"Event Date" has the meaning set forth in Section 2(e) hereof.
"Event Termination Date" has the meaning set forth in Section 2(e) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Filing Deadline Date" has the meaning set forth in Section 2(a) hereof.
"Holder" has the meaning set forth in the second paragraph of this
Agreement.
"Indenture" means the Indenture, dated as of December 1, 1999, between the
Company and State Street Bank and Trust Company of California, N.A., as trustee,
pursuant to which the Notes are being issued.
"Initial Purchasers" means Morgan Stanley & Co. Incorporated, Goldman Sachs
& Co., Deutsche Bank Securities Inc., Donaldson Lufkin & Jenrette Securities
Corporation, Hambrecht & Quist LLC and BancBoston Robertson Stephens Inc.
"Initial Shelf Registration Statement" has the meaning set forth in Section
2(a) hereof.
"Issue Date" means the first date of original issuance of the Notes.
"Liquidated Damages Amount" has the meaning set forth in Section 2(e)
hereof.
"Losses" has the meaning set forth in Section 6 hereof.
"Material Event" has the meaning set forth in Section 3(i) hereof.
"Managing Underwriters" means the investment banking firm or firms that
shall manage or co-manage an Underwritten Offering.
"Notes" means the 4 3/4% Convertible Subordinated Notes due 2006 of the
Company to be purchased pursuant to the Purchase Agreement.
-2-
<PAGE>
"Notice and Questionnaire" means a written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex B to the Offering
Memorandum of the Company dated December 7, 1999 relating to the Notes.
"Notice Holder" means, on any date, any Holder that has delivered a Notice
and Questionnaire to the Company on or prior to such date.
"Purchase Agreement" has the meaning set forth in the preamble hereof.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.
"Record Holder" means (i) with respect to any Damages Payment Date relating
to any Notes as to which any such Liquidated Damages Amount has accrued, the
holder of record of such Note on the record date with respect to the interest
payment date under the Indenture on which such Damages Payment Date shall occur
and (ii) with respect to any Damages Payment Date relating to the Underlying
Common Stock as to which any such Liquidated Damages Amount has accrued, the
registered holder of such Underlying Common Stock fifteen (15) days prior to
such Damages Payment Date.
"Registrable Securities" means the Notes until such Notes have been
converted into or exchanged for the Underlying Common Stock and, at all times
subsequent to any such conversion or exchange, the Underlying Common Stock and
any securities into or for which such Underlying Common Stock has been converted
or exchanged or reclassified, and any security issued with respect thereto upon
any stock dividend, split or similar event until, in the case of any such
security, (A) the earliest of (i) its effective registration under the
Securities Act and resale in accordance with the Registration Statement covering
it, (ii) its sale to the public pursuant to Rule 144 (or any similar provision
then in force, but not Rule 144A) under the Securities Act, or (iii) the
expiration of the holding period that would be applicable thereto under Rule
144(k) were it not held by an Affiliate of the Company.
"Registration Expenses" has the meaning set forth in Section 5 hereof.
"Registration Statement" means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
"Restricted Securities" means "Restricted Securities" as defined in Rule
144.
-3-
<PAGE>
"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Shelf Registration Statement" has the meaning set forth in Section 2(a)
hereof.
"Special Counsel" means Wilson Sonsini Goodrich & Rosati, Professional
Corporation, or such successor counsel as shall be specified by the Holders of a
majority of the Registrable Securities, the fees and expenses of which will be
paid by the Company pursuant to Section 5 hereof.
"Subsequent Shelf Registration Statement" has the meaning set forth in
Section 2(b) hereof.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means State Street Bank and Trust Company of California, N.A.,
the Trustee under the Indenture.
"Underlying Common Stock" means the Common Stock into which the Notes are
convertible or issued upon any such conversion.
"Underwritten Registration or Underwritten Offering" means a registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. Shelf Registration.
(a) The Company shall prepare and file or cause to be prepared and
filed with the SEC, as soon as practicable but in any event by the date (the
"Filing Deadline Date") ninety (90) days after the Issue Date, a Registration
Statement for an offering to be made on a delayed or continuous basis pursuant
to Rule 415 of the Securities Act (a "Shelf Registration Statement") registering
the resale from time to time by Holders thereof of all of the Registrable
Securities (the "Initial Shelf Registration Statement"). The Initial Shelf
Registration Statement shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in accordance with the methods of distribution elected by the Holders
and set forth in the Initial Shelf Registration Statement. The Company shall
use all reasonable efforts to cause the Initial Shelf Registration Statement to
be declared effective under the Securities Act as promptly as is practicable but
in any event by the date (the "Effectiveness Deadline Date") that is one hundred
eighty (180) days after the Issue Date, and to keep the Initial Shelf
Registration Statement (or any Subsequent Shelf Registration Statement)
continuously effective under the Securities Act until the
-4-
<PAGE>
expiration of the Effectiveness Period. At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice
Holder on or prior to the date ten (10) Business Days prior to such time of
effectiveness shall be named as a selling securityholder in the Initial Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of Registrable Securities
in accordance with applicable law. None of the Company's security holders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company's securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any Subsequent
Shelf Registration Statement ceases to be effective for any reason at any time
during the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
otherwise ceased to be Registrable Securities), the Company shall use all
reasonable efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty (30) days of such
cessation of effectiveness amend the Shelf Registration Statement in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use all
reasonable efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or, to the extent to which the Company does
not reasonably object, as reasonably requested by the Initial Purchasers or by
the Trustee on behalf of the Holders of the Registrable Securities covered by
such Shelf Registration Statement or by any Managing Underwriter, if any, of
such Registrable Securities.
(d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i). Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
three (3) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as practicable after the date a Notice and Questionnaire is
delivered, and in any event upon the later of (x) five (5) Business Days after
such date or (y) five (5) Business Days after the expiration of any Deferral
Period in effect when the Notice and Questionnaire is delivered or put into
effect within five (5) Business Days of such delivery date, (i) if required by
applicable law, file with the SEC a post-effective amendment to the Shelf
Registration Statement or prepare and, if required by applicable law, file a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such
-5-
<PAGE>
Holder to deliver such Prospectus to purchasers of the Registrable Securities in
accordance with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, use all reasonable efforts to
cause such post-effective amendment to be declared effective under the
Securities Act as promptly as is practicable, but in any event by the date (the
"Amendment Effectiveness Deadline Date") that is forty-five (45) days after the
date such post-effective amendment is required by this clause to be filed; (ii)
provide such Holder copies of any documents filed pursuant to Section 2(d)(i);
and (iii) notify such Holder as promptly as practicable after the effectiveness
under the Securities Act of any post-effective amendment filed pursuant to
Section 2(d)(i); provided, that if such Notice and Questionnaire is delivered
during a Deferral Period, the Company shall so inform the Holder delivering such
Notice and Questionnaire and shall take the actions set forth in clauses (i),
(ii) and (iii) above upon expiration of the Deferral Period in accordance with
Section 3(i). Notwithstanding anything contained herein to the contrary, (i) the
Company shall be under no obligation to name any Holder that is not a Notice
Holder as a selling securityholder in any Registration Statement or related
Prospectus and (ii) the Amendment Effectiveness Deadline Date shall be extended
by up to ten (10) Business Days from the expiration of a Deferral Period (and
the Company shall incur no obligation to pay Liquidated Damages during such
extension) if such Deferral Period shall be in effect on the Amendment
Effectiveness Deadline Date.
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
Statement has not been filed on or prior to the Filing Deadline Date, (ii) the
Initial Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date, (iii) the Company
has failed to perform its obligations set forth in Section 2(d) within the time
period required therein, (iv) the aggregate duration of Deferral Periods in any
period exceeds the number of days permitted in respect of such period pursuant
to Section 3(i) hereof or (v) the number of Deferral Periods in any period
exceeds the number permitted in respect of such period pursuant to Section 3(i)
hereof (each of the events of a type described in any of the foregoing clauses
(i) through (v) are individually referred to herein as an "Event," and the
Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date
in the case of clause (ii), the date by which the Company is required to perform
its obligations set forth in Section 2(d) in the case of clause (iii) (including
the filing of any post-effective amendment prior to the Amendment Effectiveness
Deadline Date), the date on which the aggregate duration of Deferral Periods in
any period exceeds the number of days permitted by Section 3(i) hereof in the
case of clause (iv), and the date of the commencement of a Deferral Period that
causes the limit on the number of Deferral Periods in any period under Section
3(i) hereof to be exceeded in the case of clause (v), being referred to herein
as an "Event Date"). Events shall be deemed to continue until the "Event
Termination Date," which shall be the following dates with respect to the
respective types of Events: the date the Initial Shelf Registration Statement
is filed in the case of an Event of the type described in clause (i), the date
the Initial Shelf Registration Statement is declared effective under the
Securities Act in the case of an Event of the type described in clause (ii), the
date the Company performs its obligations set forth in Section 2(d) in the case
of an Event of the type described in clause (iii) (including, without
limitation, the date the relevant post-effective amendment to the Shelf
Registration Statement is declared effective under the Securities Act),
-6-
<PAGE>
termination of the Deferral Period that caused the limit on the aggregate
duration of Deferral Periods in a period set forth in Section 3(i) to be
exceeded in the case of the commencement of an Event of the type described in
clause (iv), and termination of the Deferral Period the commencement of which
caused the number of Deferral Periods in a period permitted by Section 3(i) to
be exceeded in the case of an Event of the type described in clause (v).
Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of Notes that
are Registrable Securities and of shares of Underlying Common Stock issued upon
conversion of Notes that are Registrable Securities, as the case may be,
accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Liquidated Damages Amount is to be paid to Holders on a Damages Payment Date as
a result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to one-half of one percent (0.5 %) of the aggregate principal amount of
such Notes or, in the case of Notes that have been converted into or exchanged
for Underlying Common Stock, the Applicable Conversion Price of such shares of
Underlying Common Stock, as the case may be, in each case determined as of the
Business Day immediately preceding the next Damages Payment Date; provided, that
in the case of a Damages Accrual Period that is in effect solely as a result of
an Event of the type described in clause (iii) of the immediately preceding
paragraph, such Liquidated Damages Amount shall be paid only to the Holders that
have delivered Notice and Questionnaires that caused the Company to incur the
obligations set forth in Section 2(d) the non-performance of which is the basis
of such Event, provided further, that any Liquidated Damages Amount accrued with
respect to any Note or portion thereof called for redemption on a redemption
date or converted into Underlying Common Stock on a conversion date prior to the
Damages Payment Date, shall, in any such event, be paid instead to the Holder
who submitted such Note or portion thereof for redemption or conversion on the
applicable redemption date or conversion date, as the case may be, on such date
(or promptly following the conversion date, in the case of conversion).
Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to
any Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events. Following the
cure of all Events requiring the payment by the Company of Liquidated Damages
Amounts to the Holders of Registrable Securities pursuant to this Section, the
accrual of Liquidated Damages Amounts will cease (without in any way limiting
the effect of any subsequent Event requiring the payment of Liquidated Damages
Amount by the Company).
The Trustee shall be entitled, on behalf of Holders of Notes or Underlying
Common Stock, to seek any available remedy for the enforcement of this
Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude a Notice
-7-
<PAGE>
Holder or Holder of Registrable Securities from pursuing or obtaining specific
performance or other equitable relief with respect to this Agreement.
All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
SECTION 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof, and use
all reasonable efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided, that before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto with the SEC, furnish to the Initial Purchasers, the Special Counsel and
the Managing Underwriters of such offering, if any, copies of all such documents
proposed to be filed and use all reasonable efforts to reflect in each such
document when so filed with the SEC such comments as the Initial Purchasers
reasonably shall propose within two (2) Business Days of the delivery of such
copies to the Initial Purchasers, the Special Counsel and the Managing
Underwriters.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2(a); cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the Securities Act;
and use all reasonable efforts to comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all securities covered
by such Registration Statement during the Effectiveness Period in accordance
with the intended methods of disposition by the sellers thereof set forth in
such Registration Statement as so amended or such Prospectus as so supplemented.
(c) As promptly as practicable give notice to the Notice Holders, the
Initial Purchasers, the Special Counsel and the Managing Underwriters, if any,
(i) when any Prospectus, Prospectus supplement, Registration Statement or post-
effective amendment to a Registration Statement has been filed with the SEC and,
with respect to a Registration Statement or any post-effective amendment, when
the same has been declared effective, (ii) of any request, following the
effectiveness of the Initial Shelf Registration
-8-
<PAGE>
Statement under the Securities Act, by the SEC or any other federal or state
governmental authority for amendments or supplements to any Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of any Registration Statement or the
initiation or threatening of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (v) of the occurrence of (but not the nature of or
details concerning) a Material Event (provided, however, that no notice by the
Company shall be required pursuant to this clause (v) in the event that the
Company either promptly files a Prospectus supplement to update the Prospectus
or a Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into the Registration Statement, which, in either case, contains the
requisite information with respect to such Material Event that results in such
Registration Statement no longer containing any untrue statement of a material
fact or omitting to state a material fact necessary to make the statements
contained therein not misleading) and (vi) of the determination by the Company
that a post-effective amendment to a Registration Statement will be filed with
the SEC, which notice may, at the discretion of the Company (or as required
pursuant to Section 3(i)), state that it constitutes a Deferral Notice, in which
event the provisions of Section 3(i) shall apply.
(d) Use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment, and provide
immediate notice to each Notice Holder and the Initial Purchasers of the
withdrawal of any such order.
(e) If reasonably requested by the Initial Purchasers or any Notice
Holder, as promptly as practicable incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Initial Purchasers, the Special Counsel, the Managing Underwriters, if any, or
such Notice Holder shall determine to be required to be included therein by
applicable law and make any required filings of such Prospectus supplement or
such post-effective amendment; provided, that the Company shall not be required
to take any actions under this Section 3(e) that are not, in the reasonable
opinion of counsel for the Company, in compliance with applicable law.
(f) As promptly as practicable furnish to each Notice Holder, the
Special Counsel and the Initial Purchasers, and each Managing Underwriter, if
any, without charge, at least one (1) conformed copy of the Registration
Statement and any amendment thereto, including financial statements but
excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits (unless requested by such Notice Holder,
Special Counsel, Initial Purchasers or Underwriter).
(g) During the Effectiveness Period, deliver to each Notice Holder,
the Special Counsel and the Initial Purchasers and each Managing Underwriter, if
any, in connection with any sale of Registrable Securities pursuant to a
Registration Statement, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each preliminary
-9-
<PAGE>
prospectus) and any amendment or supplement thereto as such Notice Holder may
reasonably request; and the Company hereby consents (except during such periods
that a Deferral Notice is outstanding and has not been revoked) to the use of
such Prospectus or each amendment or supplement thereto by each Notice Holder
and the Underwriters, if any, in connection with any offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto in the manner set forth therein.
(h) Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use all reasonable efforts to
register or qualify or cooperate with the Notice Holders, the Managing
Underwriters, if any, and the Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Notice Holder or Managing Underwriter reasonably requests in writing (which
request may be included in the Notice and Questionnaire); prior to any public
offering of the Registrable Securities pursuant to the Shelf Registration
Statement, use all reasonable efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
in connection with such Notice Holder's offer and sale of Registrable Securities
pursuant to such registration or qualification (or exemption therefrom) and do
any and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of such Registrable Securities in the manner
set forth in the relevant Registration Statement and the related Prospectus;
provided, that the Company will not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Agreement or (ii) take any action
that would subject it to general service of process in suits or to taxation in
any such jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "Material Event") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the
-10-
<PAGE>
circumstances under which they were made, not misleading, or (C) the occurrence
or existence of any pending corporate development, that in the reasonable
discretion of the Company, makes it appropriate to suspend the availability of
the Shelf Registration Statement and the related Prospectus for a discrete
period of time, (i) in the case of clause (B) above, subject to the next
sentence, as promptly as practicable prepare and file, if necessary pursuant to
applicable law, a post-effective amendment to such Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document that would be incorporated by
reference into such Registration Statement and Prospectus so that such
Registration Statement does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and such Prospectus does not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, as
thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, and, in the case of a post-effective amendment to a Registration
Statement, subject to the next sentence, use its best efforts to cause it to be
declared effective as promptly as is practicable, and (ii) give notice to the
Notice Holders, the Special Counsel and the Managing Underwriters, if any, that
the availability of the Shelf Registration Statement is suspended (a "Deferral
Notice") and, upon receipt of any Deferral Notice, each Notice Holder agrees not
to sell any Registrable Securities pursuant to the Registration Statement until
such Notice Holder's receipt of copies of the supplemented or amended Prospectus
provided for in clause (i) above, or until it is advised in writing by the
Company that the Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such Prospectus. The Company will use all reasonable efforts to
ensure that the use of the Prospectus may be resumed (x) in the case of clause
(A) above, as promptly as is practicable, (y) in the case of clause (B) above,
as soon as, in the sole judgment of the Company, public disclosure of such
Material Event would not be prejudicial to or contrary to the interests of the
Company or, if necessary to avoid unreasonable burden or expense, as soon as
reasonably practicable thereafter, and (z) in the case of clause (C) above, as
soon as the earlier of (1) public disclosure of such pending material corporate
development or similar material event or (2) in the judgment of the Company,
public disclosure of such material corporate development or similar material
event would not be prejudicial to the Company. The Company shall be entitled to
exercise its right under this Section 3(i) to suspend the availability of the
Shelf Registration Statement or any Prospectus, without incurring or accruing
any obligation to pay liquidated damages pursuant to Section 2(e), no more than
one (1) time in any three-month period or three (3) times in any twelve-month
period, and any such period during which the availability of the Registration
Statement and any Prospectus is suspended (the "Deferral Period") shall, without
incurring any obligation to pay liquidated damages pursuant to Section 2(e), not
exceed 30 days; provided, that in the case of a Material Event relating to an
acquisition or a probable acquisition or financing, recapitalization, business
combination or other similar transaction, the Company may, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), deliver to Notice
Holders a second notice to the effect set forth above, which shall have the
effect of extending the Deferral Period by up to an additional 30 days, or such
shorter period of time as is specified in such second notice, provided, that the
aggregate duration of any Deferral Periods shall not, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), exceed 60 days in
any three-month period or 90 days in any twelve-month period.
(j) If requested in writing in connection with a disposition of
Registrable Securities pursuant to a Registration Statement, make reasonably
available for inspection during normal business hours by a representative for
the Notice Holders of such Registrable Securities, any Managing Underwriter
participating in any disposition of Registrable Securities, if any, and any
broker-dealers, attorneys and accountants retained by such Notice Holders or
underwriter, all relevant financial and other records and pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
appropriate executive officers, directors and designated employees of the
Company and its subsidiaries to make reasonably available for inspection during
normal business hours on reasonable notice all relevant information reasonably
requested by such representative for the Notice Holders, Managing Underwriter,
or any such broker-dealers, attorneys
-11-
<PAGE>
or accountants in connection with such disposition, in each case as is customary
for similar "due diligence" examinations; provided, however, that such persons
shall first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
Company and such source is not bound by a confidentiality agreement; and
provided further, that the foregoing inspection and information gathering shall,
to the greatest extent possible, be coordinated on behalf of all the Notice
Holders and the other parties entitled thereto by the counsel referred to in
Section 5.
(k) Use all reasonable efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
three-month period (or 90 days after the end of any twelve-month period if such
period is a fiscal year) commencing on the first day of the first fiscal quarter
of the Company commencing after the effective date of a Registration Statement,
which statements shall cover said periods.
(l) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including, in the event of an Underwritten Offering, those
reasonably requested by the Managing Underwriters, if any, or the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into, and if the
registration is an Underwritten Registration, (i) make such representations and
warranties, subject to the Company's ability to do so, to the Holders of such
Registrable Securities and the underwriters with respect to the business of the
Company and its subsidiaries, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as are customarily made by issuers to
underwriters in Underwritten Offerings and confirm the same if and when
requested; (ii) use its all reasonable efforts to obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters, if
any, Special Counsel and the Holders of a majority of the Registrable Securities
being sold) addressed to each of the underwriters covering the matters
customarily covered in opinions requested in Underwritten Offerings and such
other matters as may be reasonably requested by such Special Counsel and
Managing Underwriters; (iii) use all reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountants
-12-
<PAGE>
of any subsidiary of the Company or any business acquired or to be acquired by
the Company for which financial statements and financial data is, or is required
to be, included in the Registration Statement), addressed to each of the
Managing Underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with Underwritten Offerings; and (iv) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the Registrable
Securities being sold, the Special Counsel and the Managing Underwriters, if
any, to evidence the continued validity of the representations and warranties of
the Company and its subsidiaries made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. The above shall be
done at each closing under such underwriting or similar agreement as and to the
extent required thereunder.
(m) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold or to be sold pursuant to a Registration Statement, which certificates
shall not bear any restrictive legends, and cause such Registrable Securities to
be in such denominations as are permitted by the Indenture and registered in
such names as such Notice Holder may request in writing at least two (2)
Business Days prior to any sale of such Registrable Securities.
(a) Provide a CUSIP number for all Registrable Securities covered by
each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee and the transfer agent for the
Common Stock with printed certificates for the Registrable Securities that are
in a form eligible for deposit with The Depository Trust Company.
(b) Cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc.
(c) Upon (i) the filing of the Initial Registration Statement and (ii)
the effectiveness of the Initial Registration Statement, announce the same, in
each case by release to Reuters Economic Services and Bloomberg Business News.
SECTION 1. Holder's Obligations. Each Holder agrees, by acquisition of
the Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as may be required to be disclosed in the Registration Statement or that the
Company may from time to time reasonably request. Any sale of any Registrable
Securities by any Holder shall constitute a representation and warranty by such
Holder that the information relating to such Holder and its plan of distribution
is as set forth in the Prospectus delivered by such Holder in connection with
such disposition, that such Prospectus does not as of the time of such sale
contain any untrue statement of
-13-
<PAGE>
a material fact relating to or provided by such Holder or its plan of
distribution and that such Prospectus does not as of the time of such sale omit
to state any material fact relating to or provided by such Holder or its plan of
distribution necessary to make the statements in such Prospectus, in the light
of the circumstances under which they were made, not misleading.
SECTION 2. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the Special Counsel in
connection with Blue Sky qualifications of the Registrable Securities under the
laws of such jurisdictions as the Managing Underwriters, if any, or Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company, and in the
event of an Underwritten Offering, of printing prospectuses if the printing of
prospectuses is requested by the Special Counsel or the Holders of a majority of
the Registrable Securities included in any Registration Statement, (iii)
duplication expenses relating to copies of any Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company and the Special Counsel in connection with the Shelf
Registration Statement (provided that the Company shall not be liable for the
fees and expenses of more than one separate firm for all parties participating
in any transaction hereunder), (v) reasonable fees and disbursements of the
Trustee and its counsel and of the registrar and transfer agent for the Common
Stock and, in the event of an Underwritten Offering, fees and disbursements of
all independent certified public accountants referred to in Section 3(l)(iii)
hereof (including the expenses of any special audit and "cold comfort" letters
required by or incident to such performance) and (vi) Securities Act liability
insurance obtained by the Company in its sole discretion. In addition, the
Company shall pay the internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees performing legal
or accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing by the Company of the Registrable
Securities on any securities exchange on which similar securities of the Company
are then listed and the fees and expenses of any person, including special
experts, retained by the Company. Notwithstanding the provisions of this
Section 5, each seller of Registrable Securities shall pay selling expenses and
all registration expenses to the extent required by applicable law.
SECTION 3. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless each Notice Holder and each person, if any, who controls any
Notice Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) from and against any losses, liabilities,
claims, damages and expenses (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, "Losses"), arising out of or based upon any
untrue statement or alleged
-14-
<PAGE>
untrue statement of a material fact contained in any Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided, however, that the Company shall
not be liable in any such case to the extent that any such Losses arise out of
or are based upon an untrue statement or alleged untrue statement contained in
or omission or alleged omission from any of such documents in reliance upon and
conformity with any of the information relating to the Holders furnished to the
Company in writing by a Holder expressly for use therein; provided further, that
the indemnification contained in this paragraph shall not inure to the benefit
of any Holder of Registrable Securities (or to the benefit of any person
controlling such Holder) on account of any such Losses arising out of or based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if either (A) (i) such Holder failed
to send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale by such Holder to the person asserting the
claim from which such Losses arise and (ii) the Prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission, or (B) (x) such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the Prospectus
and (y) having previously been furnished by or on behalf of the Company with
copies of the Prospectus as so amended or supplemented, such Holder thereafter
fails to deliver such Prospectus as so amended or supplemented, with or prior to
the delivery of written confirmation of the sale of a Registrable Security to
the person asserting the claim from which such Losses arise. The Company shall
also indemnify each underwriter and each person who controls such person (within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) to the same extent and with the same limitations as provided above with
respect to the indemnification of the Holders of Registrable Securities. In
addition, the Company shall indemnify and hold harmless each holder of Notes or
Underlying Common Stock, any beneficial holder of Notes, and the Initial
Purchasers and each person, if any, who controls, or is an officer, director,
attorney or agent of, any holder of Notes or Underlying Common Stock, any
beneficial owner of Notes or Underlying Common Stock, and the Initial Purchasers
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against any losses, liabilities, claims, damages and
expenses (including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or claim)
arising out of or based upon any alleged claim asserted by any holder of
registration rights with respect to any securities of the Company or any of its
subsidiaries that the provisions of this Agreement are in any way inconsistent
or conflict with such holder's registration rights between the Company or any of
its subsidiaries and such holder or that such holder may restrict the ability of
any holder of Notes or Underlying Common Stock to resell their Notes or
Underlying Common Stock.
(b) Indemnification by Holders of Registrable Securities. Each Holder
agrees severally and not jointly to indemnify and hold harmless the Company and
its respective directors and officers, and each person, if any, who controls the
Company (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any other Holder, from and against all Losses
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus or in any
amendment or
-15-
<PAGE>
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished to the Company by such Holder expressly
for use in such Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities pursuant to
the Registration Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
as they are incurred. Such separate firm shall be designated in writing by, in
the case of parties indemnified pursuant to Section 6(a), the Holders of a
majority (with Holders of Notes deemed to be the Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such Notes are or would be convertible or exchangeable as of the date
on which such designation is made) of the Registrable Securities covered by the
Registration Statement held by Holders that are indemnified parties pursuant to
Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b),
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
-16-
<PAGE>
(d) Contribution. To the extent that the indemnification provided for
in this Section 6 is unavailable to an indemnified party under Section 6(a) or
6(b) hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement pursuant to the Purchase Agreement (before
deducting expenses) of the Registrable Securities to which such Losses relate.
Benefits received by any Holder shall be deemed to be equal to the value of
receiving Registrable Securities that are registered under the Securities Act.
The relative fault of the Holders on the one hand and the Company on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Holders
or by the Company, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this paragraph are
several in proportion to the respective number of Registrable Securities they
have sold pursuant to a Registration Statement, and not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
--- ----
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The indemnity, contribution and expense reimbursement obligations
of the parties hereunder shall be in addition to any liability any indemnified
party may otherwise have hereunder, under the Purchase Agreement or otherwise.
-17-
<PAGE>
(f) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.
SECTION 4. Information Requirements.
(a) The Company covenants that, if at any time before the end of the
Effectiveness Period the Company is not subject to the reporting requirements of
the Exchange Act, it will cooperate with any Holder of Registrable Securities
and take such further reasonable action as any Holder of Registrable Securities
may reasonably request in writing (including, without limitation, making such
reasonable representations as any such Holder may reasonably request), all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act
and customarily taken in connection with sales pursuant to such exemptions.
Upon the written request of any Holder of Registrable Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such filing requirements, unless such a statement has been included in the
Company's most recent report filed pursuant to Section 13 or Section 15(d) of
Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities (other than the
Common Stock) under any Section of the Exchange Act.
(b) The Company shall use all reasonable efforts to file the reports
required to be filed by it under the Exchange Act and shall use all reasonable
efforts to comply with all other requirements set forth in the instructions to
Form S-3 in order to allow the Company to be eligible to file registration
statements on Form S-3.
SECTION 5. Miscellaneous.
(a) No Conflicting Agreements. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Notes are or would be convertible or exchangeable
as of the date on which such consent is requested). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof
-18-
<PAGE>
with respect to a matter that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence. Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(w) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in a
Notice and Questionnaire or any amendment thereto;
(x) if to the Company, to:
At Home Corporation
450 Broadway Street
Redwood City, CA 94063
Attention: General Counsel
Telecopy No.: (650) 556-5100
and
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Gordon Davidson
Telecopy No.: (650) 494-1417
(y) if to the Initial Purchasers, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York
Attention: Equity Capital Markets
-19-
<PAGE>
Telecopy No.: (212) 761-0538
and
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: John A. Fore
Telecopy No.: (650) 493-6811
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of Holders
of a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchasers
or subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Initial Purchasers shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchasers. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
(i) Severability. If any term provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by
-20-
<PAGE>
such term, provision, covenant or restriction, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest extent
permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. No
party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement. In no event will such methods of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.
(k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
AT HOME CORPORATION
By: /s/ Kenneth A. Goldman
___________________________________
Name: Kenneth A. Goldman
Title: Senior Vice President
and Chief Financial Officer
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
DEUTSCHE BANK SECURITIES INC.
DONALDSON LUFKIN & JENRETTE SECURITIES CORPORATION
HAMBRECHT & QUIST LLC, and
BANCBOSTON ROBERTSON STEPHENS INC.
By: Morgan Stanley & Co. Incorporated
By: /s/ Michael Grimes
_____________________________
Name:
Title:
<PAGE>
Exhibit 5.01
------------
March 8, 2000
At Home Corporation
450 Broadway
Redwood City, California 94063
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-3
(the "Registration Statement") to be filed by At Home Corporation, a Delaware
corporation (the "Company") with the Securities and Exchange Commission (the
"Commission") on or about March 9, 2000 in connection with the registration
under the Securities Act of 1933, as amended, of (a) an aggregate of 8,846,246
shares of the Company's Series A Common Stock (the "Stock"), subject to issuance
by the Company upon the conversion of $500,000,000 aggregate principal amount of
the Company's Convertible Subordinated Notes due 2006 (the "Notes"), which Notes
are convertible into Stock at a conversion price of approximately $56.52 per
share, subject to adjustment in specified circumstances, and (b) the Notes. All
of the Stock and Notes may be sold on a delayed or continuous basis, as set
forth in the Registration Statement and associated prospectuses and prospectus
supplements, only be certain selling securityholders named in the Registration
Statement and the associated prospectuses and prospectus supplements (the
"Selling Securityholders").
In rendering this opinion, we have examined the following:
(1) the Company's Fifth Amended and Restated Certificate of Incorporation
filed with the Delaware Secretary of State on May 28, 1999
(2) the Company's Second Amended and Restated Bylaws, amended as of July
16, 1997, each of which are listed as exhibits to the Registration
Statement;
(3) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors that are contained in the
Company's minute books that are in our possession;
(4) the Registration Statement, together with the exhibits filed as a part
thereof;
(5) the prospectus prepared in connection with the Registration Statement
(the "Prospectus");
<PAGE>
(6) a certificate from the Company's transfer agent of even date herewith
verifying the number of the Company's issued and outstanding shares of
capital stock as of the date hereof and a summary report of currently
outstanding options and warrants to purchase the Company's capital
stock that was prepared by the Company and dated March 8, 2000,
verifying the number of such issued and outstanding securities);
(7) the Purchase Agreement between the Company and Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co., Deutsche Bank Securities Inc.,
Donaldson Lufkin & Jenrette Securities Corporation, Hambrecht & Quist
LLC and BancBoston Robertson Stephens Inc. (collectively, the "Initial
Purchasers") dated December 7, 1999;
(8) the Registration Rights Agreement between the Company and the Initial
Purchasers dated as of December 1, 1999;
(9) a Notice and Questionnaire completed and executed by each Selling
Securityholder;
(10) a Management Certificate addressed to us and dated of even date
herewith executed by the Company containing certain factual and other
representations; and
(11) The opinion of Winthrop, Stimson, Putnam & Roberts (the "Winthrop
Opinion") dated of even date herewith, given with respect to matters
related to the Notes which are governed by the laws of the state of
New York.
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 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.
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 rendering the opinion expressed in clause (i)(B) below with
respect to matters related to the Notes governed by the laws of the state of New
York, we have relied solely on the Winthrop Opinion.
<PAGE>
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 intend to issue the Stock, and
that the Selling Securityholders may offer and sell the Notes and 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 (i) the Notes are (A)
validly issued and (B) are binding obligations of the Company (except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws of general application relating to or
affecting creditors' rights, by general principles of equity (regardless of
whether considered in a proceeding at law or in equity), including without
limitation, the availability or unavailability of equitable remedies, and by an
implied covenant of good faith and fair dealing, and the effect of California
and federal laws relating to usury or permissible rates of interest for loans,
forebearances or the use of money), and (ii) upon completion of the proceedings
being taken or contemplated by you and upon conversion of the Notes, the
8,846,246 shares of Stock that may be sold by the Selling Securityholders
pursuant to the Registration Statement, when evidenced by appropriate
certificates that have been properly executed and delivered and when issued and
sold in accordance with and in the manner referred to in the relevant Prospectus
associated with the Registration Statement, will be validly issued, fully paid
and non-assessable.
<PAGE>
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 5.02
------------
March 8, 2000
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Re: At Home Corporation
$500,000,000 aggregate principal amount of
4 3/4% Convertible Subordinated Debentures due 2006
Ladies and Gentlemen:
At Home Corporation, a Delaware corporation (the "Company"), is to file today
with the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933 (the "Securities Act") with respect to $500,000,000 aggregate principal
amount of the Company's 4 3/4% Convertible Subordinated Notes due 2006 (the
"Notes") and the shares of Series A common stock of the Company issuable upon
conversion of the Notes. The Notes were issued pursuant to an Indenture dated as
of December 1, 1999 between the Company and State Street Bank and Trust Company
of California, N.A., as Trustee (the "Indenture").
In giving this opinion, we have reviewed copies of the Indenture, the Notes
and such other documents and have made such other inquiries and investigations
of law as we have deemed necessary or appropriate as a basis for the opinion
hereinafter expressed. In such review, we have assumed the genuineness of all
signatures, the conformity to the original documents of all documents submitted
to us as certified or photostatic copies, the authenticity of all such documents
and all documents submitted to us as original documents and the lack of any
undisclosed termination, modification, waiver or amendment to any document
reviewed by us. We have assumed that the Indenture constitutes (subject to the
same qualifications as are contained in this opinion) the valid and legally
binding agreement of the Trustee.
We are members of the bar of the State of New York, and do not express any
opinion herein as to matters governed by any law other than the law of the State
of New York and the General Corporation Law of the State of Delaware.
Based upon the foregoing and the assumption that the Notes have been duly
authorized, executed and delivered by the Company, duly authenticated by the
Trustee and duly paid for at the time of their original issuance, and subject to
the qualifications set forth herein, we are of the opinion that the Notes
constitute valid and binding obligations of the Company, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws affecting creditors' rights generally, by general
principles of equity (regardless of whether considered in a proceeding at law or
in equity), including, without limitation, the availability or unavailability of
equitable remedies, and by requirements of reasonableness, good faith and fair
dealing.
We express no opinion as to the shares of Series A common stock of the Company
issuable upon conversion of the Notes.
This opinion is delivered to you solely for your use in connection with the
Registration Statement and may not be used or relied upon by you for any other
purpose or by any other person without our prior written consent.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the heading "Legal Matters" in the
prospectus included in the Registration Statement. In giving this consent, we do
not hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission thereunder.
Very truly yours,
/s/ WINTHROP, STIMSON, PUTNAM & ROBERTS
<PAGE>
EXHIBIT 12.01
-------------
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Period from March 28, 1995 Year ended December 31,
(Inception) to
December 31, 1995 1996 1997 1998 1999
-------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Loss................................... $(2,756) $(24,513) $(55,717) $(144,179) $(1,457,638)
Plus fixed charges
Interest expense including -- 179 1,205 1,356 15,509
amortization of debt issuance costs......
Assumed interest element include in rent 33 200 415 1,198 3,376
expense.................................. ------- -------- -------- --------- -----------
Adjusted loss.............................. (2,723) (24,134) (54,097) (141,625) (1,438,753)
Fixed charges.............................. 33 379 1,620 2,554 18,885
------- -------- -------- --------- ----------
Deficiency of earnings available to $(2,756) $(24,513) $(55,717) $(144,179) $(1,457,638)
cover fixed charges....................... ======= ======== ======== ========= ===========
</TABLE>
<PAGE>
EXHIBIT 23.02
-------------
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 the $500,000,000 principal amount 4.75% Convertible
Subordinated Notes due 2006 and 8,846,246 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 for the year ended
December 31, 1998, as amended, filed with the Securities and Exchange
Commission.
We also consent to the incorporation by reference therein of our report dated
January 19, 1999, (March 22, 1999 as to Note 1 - Summary of Significant
Accounting Policies, paragraph 4 and Note 2 - Business Combinations and
Purchased Product Rights, paragraphs 3 and 6) with respect to the consolidated
financial statements of Excite, Inc. included as an exhibit to the current
report on Form 8-K/A of At Home Corporation dated August 19, 1999, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Walnut Creek, California
March 7, 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 7, 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
March 7, 2000
<PAGE>
EXHIBIT 25.01
-------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States 06-1143380
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(Address of principal executive offices) (Zip Code)
Lynda A. Vogel, Senior Vice President and Managing Director
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(213) 362-7399
(Name, address and telephone number of agent for service)
At Home Corporation
(Exact name of obligor as specified in its charter)
Delaware 77-0408542
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 Broadway Street, Redwood, CA 94063
(Address of principal executive offices) (Zip Code)
4 3/4% Convertible Subordinated Notes due 2006
(TYPE OF SECURITIES)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which
it is subject.
Comptroller of the Currency, Western District Office, 50 Fremont
Street, Suite 3900, San Francisco, California, 94105-2292
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent, State
Street Bank and Trust Company.
(See notes on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as an
Exhibit with corresponding exhibit number to the Form T-1of Western
Digital Corporation, filed pursuant to Section 305(b)(2) of the Trust
Indenture Act of 1939, as amended (the "Act"), on May 12, 1998
(Registration No. 333-52463), and is incorporated herein by reference.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A Certificate of Corporate Existence (with fiduciary powers) from the
Comptroller of the Currency, Administrator of National Banks is on file
with the Securities and Exchange Commission as an Exhibit with
corresponding exhibit number to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May 12,
1998 (Registration No. 333-52463), and is incorporated herein by
reference.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
Authorization of the Trustee to exercise fiduciary powers (included
in Exhibits 1 and 2; no separate instrument).
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on file
with the Securities and Exchange Commission as an Exhibit with
corresponding exhibit number to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May 12,
1998 (Registration No. 333-52463), and is incorporated herein by
reference.
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility, which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company of California,
National Association, a national banking association, organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Los Angeles, and State of California, on the 11th
day of February, 2000.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /S/ Mark Henson
---------------
NAME: Mark Henson
TITLE: Assistant Vice President
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939, as amended, in connection with the proposed issuance by
At Home Corporation of its 4 3/4% Convertible Subordinated Notes, we hereby
consent that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /S/ Mark Henson
---------------
NAME: Mark Henson
TITLE: Assistant Vice President
Dated: February 11, 2000
