<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 28, 2000
AT HOME CORPORATION
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(Exact name of the Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
000-22697 77-0408542
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(Commission (IRS Employer
File Number Identification No.)
450 Broadway Street, Redwood City, CA 94063
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(Address of principal executive offices) (Zip code)
(650) 556-5000
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(The Registrant's telephone number)
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 5: OTHER EVENTS.
On March 28, 2000, the Registrant and its principal cable partners-
AT&T Corp., Comcast Corporation and Cox Communications, Inc. - agreed to new
extended distribution arrangements and a reorganization of the Registrant's
corporate governance structure. The Registrant and AT&T issued a joint press
release announcing this agreement on March 29, 2000.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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99.01 Letter Agreement dated March 28, 2000 among the Registrant,
AT&T Corp., Comcast Corporation and Cox Communications,
Inc., together with term sheets attached thereto.
99.02 Press release issued jointly by the Registrant and AT&T
Corp. on March 29, 2000.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 3, 2000 AT HOME CORPORATION
By: /s/ DAVID G. PINE
--------------------------
David G. Pine
Senior Vice President and
General Counsel
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<PAGE>
Exhibit 99.01
AT HOME CORPORATION
425 Broadway Street
Redwood City, CA 94603
March 28, 2000
AT&T Corp.
Comcast Corporation
Cox Communications, Inc.
Ladies and Gentlemen:
Reference is hereby made to the term sheets attached hereto as Annexes
A, B and C (the "Term Sheets" ) regarding certain agreements among At Home
Corporation ("Excite@Home"), AT&T Corp. ("AT&T"), Comcast Corporation
("Comcast"), Cox Communications, Inc. ("Cox") and certain of their respective
subsidiaries (collectively, the "Parties").
1. The Term Sheets set forth the agreements of the Parties in respect
of the transactions contemplated hereby and thereby. The Parties intend that the
covenants and agreements set forth in the Term Sheets will be superseded by
definitive agreements and instruments or definitive waivers or amendments of
existing instruments, which will contain provisions incorporating and expanding
upon the agreements set forth in the Term Sheets, together with provisions
customary in the case of transactions of the type described herein and therein,
and such other provisions as are reasonable and appropriate in the context of
the transactions contemplated hereby and thereby. The foregoing notwithstanding,
the Parties expressly acknowledge and agree that this Letter Agreement
(including the Term Sheets) constitutes a binding agreement among them, subject
to the terms and conditions set forth in this Letter Agreement and the Term
Sheets, until definitive documentation is executed and delivered (except that
the effectiveness and enforceability of the provisions of the Term Sheets is
subject to certain conditions set forth in paragraph 3 below). If definitive
documentation is not executed and delivered with respect to any matter contained
in the Term Sheets within 90 days from the date of this Letter Agreement, then
this Letter Agreement and the relevant provisions of the Term Sheets shall be
deemed to be such definitive documentation with respect to such matter,
commencing on the date hereof (subject to paragraph 3 below). Each party hereto
agrees to act in good faith and to use all reasonable efforts to consummate the
transactions contemplated by this Letter Agreement and the Term Sheets, and to
complete the related definitive agreements, waivers or amendments; provided that
the foregoing will not require Cox or Comcast to incur any cost or detriment in
connection with satisfaction of the condition set forth in paragraph 3(c) below.
2. (a) As promptly as practicable after the date hereof, Excite@Home
shall take all such action as may be necessary, including seeking all requisite
stockholder approvals under applicable law and the Restated Certificate of
Incorporation of Excite@Home (the "Charter"), to
<PAGE>
cause the Charter to be amended (collectively, the "Charter Amendment") as
provided in Section 3(a) of Annex B.
(b) Each Party hereto agrees to take all steps necessary to implement
the Charter Amendment and any other action provided for in the Term Sheets that
under applicable law or the Charter requires action of or approval by the
stockholders of Excite@Home (each, an "Approval Item"), including, without
limitation, voting at any meeting of stockholders all shares of Voting Stock (as
defined in the Amended and Restated Stockholders' Agreement, dated as of July
16, 1997, as amended by the letter agreements dated October 2, 1997 and October
10, 1997 (the "Stockholders Agreement"), among Excite@Home and the stockholder
signatories thereto) held by it or any member of its Stockholder Group (as
defined in the Stockholders Agreement) in favor of such Charter Amendment (and
any other Approval Item) and/or executing or causing to be executed, as promptly
as practicable, a consent in writing to the Charter Amendment (and any other
Approval Item).
3. The effectiveness of all the provisions of the Term Sheets (and
any definitive documentation related thereto) shall be subject to (a)
effectiveness of the Charter Amendment, (b) receipt of any required approval of
the Nasdaq Stock Market, Inc. or an alternative national securities exchange,
including with respect to the extra voting power attached to shares of Series B
Common Stock to be issued pursuant to Annex B (including pursuant to the
warrants contemplated by Annex B), and (c) receipt of any other consents,
approvals and waivers as may be necessary to consummate the transactions
contemplated by the Term Sheets in a manner that results in the economic effects
contemplated thereby.
4. If the Effective Date shall not have occurred on or prior to
September 30, 2000, then any Party hereto (other than any Party whose failure to
comply with its obligations hereunder shall have caused such failure to occur)
may terminate this Letter Agreement by sending written notice to each of the
other Parties (a "Termination"). Following any such Termination, this Letter
Agreement (including the Term Sheets) shall be null and void and of no further
force or effect.
5. Each Party hereto severally represents to each of the other
parties hereto that this Letter Agreement (including the Term Sheets) has been
duly authorized, executed and delivered by such Party and constitutes the legal,
valid and binding obligation of such Party and, to the extent applicable, the
members of such Party's Stockholder Group, enforceable against such Party and
the applicable members of its Stockholder Group, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the rights of creditors generally and by general principles of
equity.
6. Each of AT&T, Comcast and Cox acknowledges and agrees that its
execution of this Letter Agreement shall constitute the consent of their
respective Stockholder Affiliates listed in Schedule I hereto to the
transactions contemplated by this Letter Agreement and the Term Sheets and each
of them agrees to use all reasonable efforts to cause their respective
subsidiaries and affiliates, including the Stockholder Affiliates, to comply
with the provisions, terms and obligations applicable to them as set forth in
this Letter Agreement and the Term Sheets. Each Party also agrees to waive, and
cause its applicable subsidiaries and affiliates to waive, any most favored
nations provisions to which they might otherwise be entitled with respect to
such
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<PAGE>
arrangements as may be entered into by Excite@Home in connection with
satisfaction of the conditions to the effectiveness of the Term Sheets.
This Letter Agreement (including the Term Sheets) shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to the conflicts of law rules of such state. The Parties hereto agree
that irreparable damage would occur in the event any provision of the Letter
Agreement or the Term Sheet was not performed in accordance with the terms
hereof or thereof, and that the Parties shall be entitled to specific
performance (subject to the moving party sustaining the applicable burden
necessary to obtain such relief including as to the inadequacy of money damages)
of the terms hereof and thereof in addition to any other remedy at law or in
equity.
This Letter Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same
instrument. This Letter Agreement shall not be effective as to any Party until
executed and delivered by all of the Parties.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
If the foregoing is in accordance with your understanding please
indicate your agreement by signing below, at which time this letter will
constitute a binding Letter Agreement among us.
Very truly yours,
AT HOME CORPORATION
By: /s/ THOMAS A. JERMOLUK
-------------------------------------------
Name: Thomas A. Jermoluk
Title: Chairman of the Board of Directors
Accepted and Agreed as of
the date first above written:
AT&T CORP.
By: /s/ JOHN C. PETRILLO
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Name: John Petrillo
Title: Executive Vice President, Corporate
Strategy and Business Development
COMCAST CORPORATION
By: /s/ ROBERT S. PICK
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Name: Robert S. Pick
Title: Vice President, Corporate Development
COX COMMUNICATIONS, INC.
By: /s/ DAVID M. WOODROW
-----------------------------
Name: David M. Woodrow
Title: Executive Vice President
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<PAGE>
SCHEDULE I
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STOCKHOLDER AFFILIATES
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AT&T
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AT&T Broadband, LLC
TCI Internet Services, Inc.
TCI Communications, Inc.
TCI Cable Investments Inc.
TCI.NET, Inc.
Comcast
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Comcast Cable Communications, Inc.
Comcast Online Communications, Inc.
Cox
---
Cox Enterprises, Inc.
<PAGE>
Annex A
Term Sheet among AT&T, Comcast, Cox and Excite@Home
(Certain capitalized terms used herein and not otherwise defined have the
meanings ascribed to them in the Letter Agreement, dated March 28, 2000, to
which this term sheet is attached).
1. Put Right
(a) AT&T grants to each of Cox and Comcast the right to put to AT&T or a
subsidiary designated by AT&T (the "Put"), exercisable at any time or from time
to time from January 1, 2001 through June 4, 2002, up to an aggregate number of
shares of Excite@Home Series A common stock ("Series A Shares") currently owned
by Cox or Comcast or their respective subsidiaries, as the case may be, equal to
the Maximum Number. For this purpose, the "Maximum Number" with respect to Cox
will be a number of Series A Shares having an aggregate purchase price under the
Put equal to $1,397,500,800 and the "Maximum Number" with respect to Comcast
will be a number of Series A Shares having an aggregate purchase price under the
Put equal to $1,500,152,640. In the event of any exercise of the Put by Cox or
Comcast, as the case may be, that would cause the aggregate number of Series A
Shares purchased to exceed the Maximum Number with respect to Cox or Comcast, as
the case may be, such exercise shall be deemed to apply only to a number of
Series A Shares that (together with all Series A Shares previously purchased
pursuant to exercises of the Put by Cox or Comcast, as the case may be) would
equal the Maximum Number and, upon the consummation of such Put exercise, the
Put shall be deemed fully satisfied with respect to Cox or Comcast, as the case
may be. If AT&T designates a subsidiary as provided in the first sentence of
this paragraph (a), AT&T will unconditionally guarantee the subsidiary's
obligations under the Put.
(b) The per share purchase price under the Put will be the greater of (1)
$48 and (2) the average per share trading price of the Series A Shares on the
Nasdaq National Market System (or the principal trading market or securities
exchange on which the Series A Shares are then traded) during the 30 consecutive
trading day period beginning 15 trading days immediately prior to and ending 15
trading days immediately following AT&T's receipt of the notice of exercise of
the Put. Each of Cox and Comcast shall have the right upon any exercise of the
Put, as specified in the notice of exercise, to require that AT&T (or its
designee) pay the purchase price therefor in cash or in shares of AT&T common
stock ("AT&T Shares") having an aggregate value equal to such purchase price,
based on the average per share trading price of the AT&T Shares on the New York
Stock Exchange (or the principal trading market or securities exchange on which
the AT&T Shares are then traded) during the 30 consecutive trading day period
beginning 15 trading days immediately prior to and ending 15 trading days
immediately following AT&T's receipt of the notice of exercise of the Put.
(c) If the Put is exercised for AT&T Shares, AT&T and Cox or Comcast, as
the case may be, will use their respective reasonable best efforts to assure
that the transactions pursuant to the Put qualify as a tax-free reorganization
under Section 368 of the Internal Revenue Code.
(d) Any exercise of the Put will be consummated as promptly as practicable
following AT&T's receipt of the notice of exercise and the determination of the
purchase price as set forth above, subject to receipt of any necessary approvals
and the absence of any legal prohibition for such consummation. The purchase
and sale shall also be subject to receipt of certificates con-
<PAGE>
taining representations and warranties substantially the same as those set forth
in Section 11.9(a) and (b) of the Stockholders Agreement and to any rights of
first offer or preemptive rights that may be applicable to the sale of Series A
Shares by Cox or Comcast, as the case may be.
(e) The provisions of this Section 1 will be subject to appropriate
adjustments to reflect stock splits, stock dividends and other extraordinary
transactions.
(f) In the event that Excite@Home separates its portal/content businesses
from its platform/connectivity businesses, through a tracking stock or
otherwise, AT&T, Excite@Home and Cox or Comcast, as the case may be, if
requested by Cox or Comcast, as the case may be, will work together to effect a
tax-free exchange, if feasible, of up to all of the Series A Shares currently
owned by Cox or Comcast, as the case may be, for shares reflecting the separated
portal/content businesses ("Portal Shares") on a basis that provides the same
economic result to each party as would have resulted from exercise of the Put
for the Maximum Number of Series A Shares then remaining subject to the Put with
respect to Cox or Comcast, as the case may be. For example, if Cox or Comcast
were then entitled to exercise the Put with respect to $1 billion of Series A
Shares, the foregoing exchange, if elected, would entitle Cox or Comcast, as the
case may be, to exchange a number of Series A Shares that would have a purchase
price under the Put of $1 billion in exchange for Portal Shares having a value
of $1 billion. In such event, AT&T will waive its rights with respect to a
number of Portal Shares that it would otherwise have had the right to receive in
an amount sufficient to compensate Excite@Home for the excess of the value of
the Portal Shares issued over the value of the Excite@Home shares acquired.
Alternatively, AT&T will waive its rights with respect to a number of Portal
Shares that it would otherwise have had the right to receive in an amount equal
to the number of Portal Shares issued to Cox or Comcast, as the case may be, and
Excite@Home will issue to AT&T a number of Series A Shares equal to the number
of Series A Shares exchanged by Cox or Comcast, as the case may be, for such
number of Portal Shares. In any event, such exchange will be deemed to satisfy
the Put in full with respect to Cox or Comcast, as the case may be.
2. Stockholders' Agreement
(a) Each of Cox and Comcast (including its applicable subsidiaries and
members of its Stockholder Group and Stockholder Affiliates) hereby waives all
its rights under the Stockholders Agreement, other than the provisions of
Article X thereof; provided that Cox's and Comcast's rights under Section 4.5 of
the Stockholders Agreement will survive until June 4, 2002. Without limiting
the foregoing, each of Cox and Comcast hereby waives its rights under the
Stockholders Agreement to representation on the Excite@Home board of directors
(the "Board") and will immediately cause the resignation or removal of its
current representative on the Board. When and as necessary to give effect to
the intention of the parties expressed in this paragraph, each of Cox and
Comcast (for itself and members of its Stockholder Group) agrees to vote (or
execute consents with respect to) all shares of Voting Stock (as defined in the
Stockholders Agreement) held by it or any member of its Stockholder Group in
such manner as may be necessary to give effect to such waivers.
(b) Each of AT&T (including its applicable subsidiaries) and Excite@Home
hereby waives all its rights under the Stockholders Agreement as against each of
Cox and Comcast (in-
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<PAGE>
cluding its applicable subsidiaries and members of its Stockholder Group and
Stockholder Affiliates), other than the provisions of Article X thereof;
provided that, as set forth above, the provisions of Section 4.5 of the
Stockholders Agreement will survive until June 4, 2002.
(c) Each of the parties hereto acknowledges that the foregoing waivers
shall not constitute an amendment to the Stockholders Agreement, which shall
continue in full force and effect, subject to such waivers. The parties agree
that such waivers shall be irrevocable, except as otherwise expressly set forth
in the Letter Agreement to which this term sheet is an annex. In the event the
parties to the Stockholders Agreement determine to terminate the Stockholders
Agreement, the relevant provisions thereof that are not waived pursuant to this
Section 2 (or otherwise waived by agreement of the parties to the Stockholders
Agreement) will be incorporated into this term sheet or the definitive
documentation contemplated by the Letter Agreement.
3. Portal Arrangements
In the event AT&T enters into negotiations with any third party prior to
June 4, 2002 with respect to a portal arrangement involving distribution over
AT&T's cable facilities, AT&T will notify the third party of Cox's and Comcast's
interest in exploring comparable arrangements for distribution over Cox's and
Comcast's cable facilities. In such event, AT&T will also use its commercially
reasonable efforts to facilitate concurrent discussions between such third party
and Cox and Comcast with respect to such comparable arrangements.
4. Noncompete
Until June 4, 2006, but only for so long as Cox or Comcast, as the case may
be, continues to use Excite@Home as its provider of platform/connectivity
services used in its residential high-speed ISP services over cable in
substantially all its United States cable systems, AT&T will not provide
wireline (e.g., DSL or hybrid-fiber/coaxial) high-speed Internet access services
to residential customers in the territories served by the United States cable
systems of Cox or Comcast, as the case may be. For the avoidance of doubt, the
foregoing will not apply to any wireless high-speed Internet access services,
including fixed wireless, and will not apply to any Internet access services at
or below 128 Kbps.
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<PAGE>
Annex B
Term Sheet between AT&T and Excite@Home
(Certain capitalized terms used herein and not otherwise defined have the
meanings ascribed to them in the Letter Agreement, dated March 28, 2000, to
which this term sheet is attached).
1. Distribution Arrangements
(a) Until June 4, 2002, the terms of the Master Distribution Agreement
Term Sheet and LCO Term Sheet, dated May 15, 1997 (collectively, the "MDA"),
will remain in place as between Excite@Home and the AT&T Controlled Affiliates.
(b) From June 4, 2002 through June 4, 2008, Excite@Home and AT&T agree
that the following arrangements will govern their relationships:
(i) AT&T (including its Controlled Affiliates) will use Excite@Home
as its provider of platform/connectivity services used in AT&T's high-speed
residential ISP services over cable in all its United States cable systems
that are covered by the MDA as of June 4, 2002 ("Existing Excite@Home
Systems"), subject to negotiation of commercially reasonable terms (including
service level standards) to be negotiated in good faith. For the avoidance of
doubt, the parties acknowledge that this will not prevent AT&T from providing
access to its cable systems to third-party residential ISP's or OSP's who may
use other platform/connectivity services that are not provided by Excite@Home
or AT&T. With respect to each territory covered by AT&T's cable systems in
which AT&T uses Excite@Home as AT&T's provider of platform/connectivity
services used in its high-speed residential ISP services over cable pursuant
to the terms of the New MDA (as defined below), Excite@Home will use its
platform/connectivity services for high-speed residential ISP services in such
territory only over such AT&T cable systems.
(ii) AT&T will make Excite@Home's content services a featured portal
for AT&T's high-speed residential ISP services over cable in Existing
Excite@Home Systems. For this purpose, "portal" refers to the entity or
service that manages and controls the content of the national area of the home
page. As the context requires, the term "portal" also refers to any entity or
service that manages, controls or guides the customer's access to content and
other services on the Internet. "Featured portal" means that the Excite@Home
portal will always be available for selection, and will be displayed
prominently, on AT&T's residential high-speed ISP start page, unless and until
the customer affirmatively selects otherwise. Without limiting the foregoing,
AT&T will offer Excite@Home's portal comparable prominence and accessibility
on the start page for AT&T's high-speed residential ISP services over cable in
Existing Excite@Home Systems as is offered to any other portal, so long as the
overall arrangement offered by Excite@Home in exchange for such prominence and
accessibility is at least as favorable to AT&T in the aggregate, in AT&T's
good faith judgment, as the overall arrangement offered by such other portal,
after taking into account all relevant factors, including size, volume, equity
participation (including the equity arrangement offered hereby), duration, and
other related arrangements. The provisions set forth in this subparagraph
(ii) will not apply (A) to customers brought to AT&T's residential high-speed
ISP through another portal or content provider or as a result of joint
marketing
<PAGE>
between AT&T and another portal or content provider or (B) following a change
of control of Excite@Home or a change in ownership of Excite@Home's portal.
(iii) In all of AT&T's United States owned and operated cable systems
other than Existing Excite@Home Systems (the "AT&T Other Systems"), the
provisions set forth in the foregoing subparagraphs (i) and (ii) shall apply
except to the extent that compliance with such provisions would violate or
result in significant adverse consequences to AT&T under any preexisting
contracts. In the event that AT&T does not cause such AT&T Other Systems to
comply with the provisions set forth in the foregoing subparagraphs (i) and
(ii) on or prior to December 31, 2002, AT&T will forfeit a number of Warrant
Shares (as defined below) covered by the Warrants (as defined below) granted
in respect of the homes passed by such AT&T Other Systems as follows:
(A) As of January 1, 2003, AT&T will forfeit a number of shares
covered by the Warrants equal to 1/6 of the number of Warrant Shares
granted in respect of homes passed by such AT&T Other Systems that are not,
on or prior to December 31, 2002, brought into compliance with the
foregoing subparagraphs (i) and (ii); and
(B) As of each succeeding January 1, through and including January
1, 2008, AT&T will forfeit a number of shares covered by the Warrants equal
to 1/6 of the number of Warrant Shares granted in respect of homes passed
by such AT&T Other Systems that are not, on or prior to the immediately
preceding December 31, brought into compliance with the foregoing
subparagraphs (i) and (ii).
Warrants may not be exercised with respect to Warrant Shares that are subject
to forfeiture pursuant to this subparagraph (iii) until such time as they are
no longer subject to forfeiture.
(iv) AT&T will not impose blocking provisions against Excite@Home
(whether under the MDA or otherwise) that are more onerous than those that
AT&T imposes against other portals using AT&T's United States cable
facilities.
(v) Neither AT&T nor Excite@Home will affirmatively remarket any
alternative portal to residential customers in AT&T's territory who are
Excite@Home customers as of June 4, 2002 ("Existing Excite@Home Customers")
(i.e., they will not engage in or participate in marketing targeted to
Existing Excite@Home Customers that seeks to cause any such customer to change
the customer's portal). Excite@Home will not affirmatively remarket any
alternative high speed residential Internet access distribution method in
AT&T's territory to such Existing Excite@Home Customers (i.e., it will not
engage in or participate in marketing targeted to Existing Excite@Home
Customers that seeks to cause any such customer to access the Internet at high
speeds other than through AT&T's cable infrastructure). The marketing
restrictions set forth above, however, will not (A) preclude general mass
marketing that is not targeted at Existing Excite@Home Customers, (B) prevent
an Existing Excite@Home Customer from changing such customer's portal or high
speed Internet access method, (C) prohibit Excite@Home from advertising,
marketing or promoting its narrowband or broadband portal services, or its
free dial-up Internet access services at speeds below 128 Kbps, independent of
any distribution method or partner, (D) prohibit AT&T from advertising,
marketing or promoting its narrowband residential ISP
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services, with or without any content or portal partner, or (E) prevent either
party, subject to the other provisions of this term sheet, from advertising,
marketing or promoting its portal or residential ISP services to customers
other than Existing Excite@Home Customers.
(vi) If a new customer of AT&T's high-speed residential ISP chooses
Excite@Home's portal, Excite@Home will pay AT&T a marketing fee with respect
to such customer. The marketing fee may take the form of a cash payment,
revenue sharing, or other arrangement agreed to between Excite@Home and AT&T.
If Excite@Home induces a new customer to subscribe to Excite@Home's
portal/content services through AT&T's high-speed residential ISP, AT&T will
pay Excite@Home a marketing fee with respect to such customer. Such marketing
fees, and any joint marketing arrangements between AT&T and Excite@Home that
are designed to bring new customers to AT&T's high-speed residential ISP
services over cable, will be on a most favored nations basis with comparable
arrangements between AT&T and other comparable media providers and comparable
arrangements between Excite@Home and other comparable distributors.
Excite@Home will also pay fees to AT&T for the carriage of Excite@Home's
content, and traffic management fees (if any), on a most favored nations basis
with similar fees paid by other media providers to AT&T for comparable
services. The provisions set forth in this subparagraph (vi) will not apply
following a change of control of Excite@Home or following a change in
ownership of Excite@Home's portal.
(vii) AT&T (and the appropriate business groups within AT&T) and
Excite@Home will work together to extend Excite@Home's services, subject to
negotiation of commercially reasonable terms and conditions, to other AT&T
residential distribution facilities and services, including set-top boxes and
narrowband dial-up access, other than wireless. With respect to wireless,
AT&T will work with Excite@Home in good faith to facilitate the negotiation of
such arrangements with the AT&T Wireless Group. The provisions set forth in
this subparagraph (vii) will not apply following a change of control of
Excite@Home or, with respect to portal services, following a change in
ownership of Excite@Home's portal.
(c) As promptly as practicable, AT&T and Excite@Home will enter into a
new distribution agreement (the "New MDA"), to be effective as of June 4, 2002,
incorporating the terms of this term sheet and such other terms and conditions
as the parties may agree. The parties acknowledge that it may be desirable to
incorporate in the New MDA terms and conditions that are not included in the
current MDA, and the parties will develop an expedited process for negotiating
such potential changes. However, if the parties are not able to negotiate such
changes prior to June 4, 2002, the New MDA will take the form of the MDA except
as expressly modified by this term sheet.
(d) Except as otherwise agreed by the parties (in their sole discretion),
all arrangements between the parties will terminate as of June 4, 2008.
2. Issuance of Additional Equity
(a) As of the execution of the Letter Agreement to which this term sheet is
attached, Excite@Home has granted to AT&T a warrant to purchase a number of
Series A Shares equal
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<PAGE>
to two (2) multiplied by the total number of homes passed by AT&T's cable
systems, including cable systems under contract to be acquired by AT&T but
excluding homes passed by cable systems under contract to be divested by AT&T,
as of March 28, 2000 (the "Initial Warrant"). The Initial Warrant will provide
that, upon the occurrence of the Effective Date (as defined in the Letter
Agreement), the terms of the Initial Warrant shall automatically be amended such
that one-half of the shares subject to the Initial Warrant shall be shares of
Excite@Home Series B common stock ("Series B Shares") and one-half of the shares
subject to the Initial Warrant shall be Series A Shares.
(b) In the event AT&T (i) sells or otherwise disposes of any of its homes
passed between March 28, 2000 and June 4, 2002 without causing such transferred
homes to remain bound by the MDA (as modified by this term sheet and the other
term sheets attached to the Letter Agreement), or (ii) fails to complete the
acquisition of any systems under contract to be acquired as of March 28, 2000,
and such events result in a net decline in the number of homes passed by AT&T's
cable systems, then AT&T will be required to forfeit a proportionate amount of
the shares covered by the Initial Warrant.
(c) In the event the number of homes passed by AT&T's cable systems
increases on a net basis between March 28, 2000 and June 4, 2002 (it being
understood that homes passed by systems under contract to be acquired by AT&T as
of March 28, 2000 shall be deemed for this purpose to be homes passed by AT&T as
of March 28, 2000, but homes passed by systems under contract to be divested by
AT&T as of March 28, 2000 shall not be deemed for this purpose to be homes
passed by AT&T as of March 28, 2000), Excite@Home will issue to AT&T a second
warrant as of June 4, 2002 to purchase an equal number of Series A Shares and
Series B Shares totaling, in the aggregate, two (2) multiplied by the total
number of additional homes passed by AT&T's cable systems as of June 4, 2002
(the "Second Warrant"). The Initial Warrant, the Second Warrant and the
Additional Warrants (as defined below) are referred to collectively as the
"Warrants." The Series A Shares and Series B Shares covered by the Warrants are
referred to collectively as the "Warrant Shares."
(d) In the event that, as of any December 4 or June 4 (an "Adjustment
Date") following June 4, 2002 and prior to June 4, 2008, there has been a net
increase or decrease in the number of homes passed by AT&T's cable systems of
more than 5% compared to the number of homes passed by its systems as of June 4,
2002, without deducting any transferred homes that AT&T causes to remain bound
by the New MDA, then, in the case of a net decrease, AT&T will be required to
forfeit a number of shares covered by the Second Warrant and/or the Initial
Warrant or, in the case of a net increase, Excite@Home will issue an additional
warrant to AT&T (together with any further additional warrants granted pursuant
to this paragraph (d), the "Additional Warrants"), on the following terms. The
aggregate number of shares subject to forfeiture or subject to the Additional
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<PAGE>
Warrant (which shall in either event be comprised of an equal number of Series A
Shares and Series B Shares) will equal (i) two (2) multiplied by (ii) the
difference between the number of homes passed by AT&T's cable systems as of the
applicable Adjustment Date and the number of homes passed by AT&T's cable
systems as of June 4, 2002, multiplied by (iii) a fraction, the numerator of
which is the number of six-month periods remaining from the applicable
Adjustment Date until June 4, 2008 (the "Remaining Number of Six-Month Periods")
and the denominator of which is twelve (12). Following the first Adjustment
Date, if any, on which there is a forfeiture of Warrant Shares or a grant of an
Additional Warrant pursuant to the foregoing provisions, on each subsequent
Adjustment Date the 5% increase or decrease test set forth in the foregoing
provisions shall apply with reference to the last Adjustment Date on which there
was a forfeiture or a grant of an Additional Warrant, and further forfeitures or
further grants of Additional Warrants, if any, will be calculated pursuant to
the foregoing provisions, but based on the difference between the number of
homes passed by AT&T's cable systems as of the subsequent Adjustment Date and
the number of homes passed by AT&T's cable systems as of the immediately
preceding Adjustment Date on which there was a forfeiture or a grant of an
Additional Warrant. In the event of any forfeiture following the grant of any
Additional Warrants, the forfeiture will be applied first against the most
recently granted Warrants, next against the next most recently granted Warrants,
etc.
(e) The per share exercise price of the Initial Warrant and the Second
Warrant will be $29.5375, which is equal to the average daily closing price of
the Series A Shares during the ten (10) consecutive trading days ended on March
24, 2000. The per share exercise price of each Additional Warrant will be equal
to the average daily closing price of the Series A Shares during the ten (10)
consecutive trading days ended on the issue date of the Additional Warrant.
(f) The Initial Warrant and the Second Warrant will become 100% vested
and immediately exercisable on June 4, 2002, subject only to HSR compliance.
Each Additional Warrant will become vested, and immediately exercisable subject
only to HSR compliance, as to a fraction of the Warrant Shares covered thereby
equal to one divided by the Remaining Number of Six-Month Periods, on each June
4 and December 4 after issuance of the Additional Warrant (with the result that
all Additional Warrants will be 100% vested as of June 4, 2008).
(g) The Warrants will expire on March 28, 2015.
(h) The Warrants will include registration rights comparable to those
currently applicable to the Series A Shares and Series B Shares now beneficially
owned by AT&T. The Warrants will also contain a net exercise provision to
facilitate sales under Rule 144. Warrant Shares that are Series B Shares must
be converted into Series A before they may be sold to any party other than an
affiliate of AT&T.
(i) Beginning on June 4, 2002, AT&T may sell up to 16.66% of its Warrant
Shares per year on a cumulative basis.
(j) The Warrants shall contain customary dilution protection, including,
without limitation, adjustments to the number and kind of shares issuable upon
exercise of the Warrants and the exercise price to reflect stock splits,
combinations, stock dividends, recapitalizations, and similar transactions.
(k) As soon as practicable after the Effective Date, Excite@Home shall
issue to AT&T a number of Series B Shares equal to the total number of Warrant
Shares (Series A Shares and Series B Shares) subject to the Initial Warrant, in
exchange for AT&T's transfer to Excite@Home of an equal number of Series A
Shares currently beneficially owned by AT&T.
(l) Within ten (10) business days following the date of the Letter
Agreement, AT&T will provide Excite@Home with a letter representing to
Excite@Home, to the best of AT&T's knowledge, the total number of homes passed
by AT&T's cable systems, including cable sys-
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<PAGE>
tems under contract to be acquired by AT&T but excluding homes passed by cable
systems under contract to be divested by AT&T, as of March 28, 2000. In
addition, prior to and as a condition to the issuance of the Second Warrant,
AT&T will represent to Excite@Home in writing, to the best of AT&T's knowledge,
the number of additional homes passed as of June 4, 2002 on a net basis by
AT&T's cable systems. Excite@Home shall have reasonable audit rights to verify
the number of homes passed by AT&T's cable systems as of each such date, and any
discrepancy between the represented number and the audited number (following
reasonable resolution of any dispute) will be reflected in an adjustment to the
Initial Warrant or the Second Warrant, as the case may be. AT&T will provide a
similar representation letter, and Excite@Home will have similar audit rights,
with respect to the number of homes passed by AT&T's cable systems as of each
Adjustment Date.
3. Charter Amendments and Nasdaq Approval
(a) At its next stockholders meeting, which is anticipated to occur in
May 2000, Excite@Home will obtain approval of its stockholders (i) to increase
the number of authorized Series B Shares as required for the Initial Warrant and
the exchange of Series B Shares for Series A Shares as contemplated by this term
sheet, plus a reasonable additional number to be reserved for use in connection
with the Second Warrant and any Additional Warrants, and (ii) to amend
Excite@Home's Amended and Restated Certificate of Incorporation (A) to provide
that the holders of the Series B Shares will be entitled to elect a majority of
the board of directors while retaining the right of the holders of Series A
Shares to elect two Series A Directors, (B) to eliminate all supermajority and
unanimous board voting requirements, and (C) to make such other changes as the
parties may agree with a view to simplifying the certificate of incorporation to
as great an extent as possible in light of the governance changes reflected in
this term sheet and the related term sheets attached to the Letter Agreement.
For the avoidance of doubt, after giving effect to these amendments, the holders
of Series B Shares shall have the right to elect as a class such number of
directors which equals the smallest number that constitutes a majority of the
Board of Directors, the holders of Series A Shares shall be entitled to elect as
a class two directors, and any additional directors will be elected by the
holders of Series A Shares, Series B Shares and Series K Shares (if any), voting
together as a single class. AT&T will vote its Series B Shares in favor of the
election of the Chief Executive Officer of Excite@Home to the Board of Directors
as an additional director.
(b) In the event the number of Series B Shares authorized pursuant to the
foregoing paragraph (a) proves to be insufficient to cover the Second Warrant,
at its next stockholder meeting following June 4, 2002, Excite@Home will obtain
approval of its stockholders to increase the number of authorized Series B
Shares as required for the Second Warrant. In the event the number of Series B
Shares authorized pursuant to the foregoing paragraph (a) proves to be
insufficient to cover any Additional Warrant, at its next stockholder meeting
following the issuance of such Additional Warrant, Excite@Home will obtain
approval of its stockholders to increase the number of authorized Series B
Shares as required for such Additional Warrant.
(c) As promptly as practicable, Excite@Home also will obtain the approval
from Nasdaq (or an alternative national securities exchange reasonably agreed by
AT&T and Excite@Home) for the creation and issuance of additional Series B
Shares contemplated by this term sheet (given the 10 for 1 voting rights held by
such Series B Shares).
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<PAGE>
4. Other Provisions
(a) Excite@Home will outsource specific platform and network management
services from AT&T, on commercially reasonable terms.
(b) Excite@Home will implement management incentive programs, subject to
the approval of its board of directors, designed to tie specified incentives to
management's performance in meeting specified service level standards and
operating standards.
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<PAGE>
Annex C
Term Sheet for Comcast, Cox and Excite@Home
[applicable to each of Comcast and Cox separately]
(Certain capitalized terms used herein and not otherwise defined have the
meanings ascribed to them in the Letter Agreement, dated March 28, 2000, to
which this term sheet is attached.)
1. Distribution Arrangements
(a) The terms of the Master Distribution Agreement Term Sheet and LCO
Term Sheet dated May 15, 1997 (collectively, the "MDA") and all related LCO
agreements will remain in place as between Excite@Home and the COX/COMCAST
Controlled Affiliates until June 4, 2002, provided that COX/COMCAST may, at its
option, terminate the mutual exclusivity provisions of the MDA, or the entire
MDA and all related LCO agreements, as to the COX/COMCAST Controlled Affiliates
at any time on or after June 4, 2001 upon at least 6 months prior written
notice, which termination will take effect on the June 4 or December 4 next
occurring after the expiration of such 6 month notice period. The foregoing
shall not affect the right of any party to terminate the MDA or any related LCO
agreement, to the extent that any such agreement provides for termination in the
event of a breach. In the event of any termination of the entire MDA,
COX/COMCAST and Excite@Home will, if requested by COX/COMCAST, commence the
transfer of certain Excite@Home assets and services to COX/COMCAST as set forth
in the Exit Plan in the Transition and Service Level Plan (the "TSLP") attached
to this term sheet.
Notwithstanding the foregoing, COMCAST may terminate the exclusivity
provisions of the MDA at any time prior to June 4, 2002 if required to do so by
Microsoft Corporation pursuant to Section 5.02 of the Agreement between Comcast
and Microsoft dated June 8, 1997 (the "Microsoft Agreement"), in which event the
Series A Shares currently held by COMCAST will be subject to repurchase by
Excite@Home as provided in the MDA, and the Warrants (as defined below) will
cease to vest thereafter as provided herein. In the event of any other
termination of exclusivity or any termination of the entire MDA by COMCAST, the
Series A Shares currently held by COMCAST will not be subject to repurchase by
Excite@Home as provided in the MDA, but the Warrants to purchase additional
Series A Shares will cease to vest thereafter as provided herein.
(b) As promptly as practicable, COX/COMCAST and Excite@Home will enter
into a new distribution agreement (the "New MDA") to govern their relationship
from June 4, 2002 through June 4, 2006. The New MDA will become effective as of
June 4, 2002 and will incorporate the terms of this term sheet and such other
terms and conditions as the parties may agree. The parties acknowledge that it
may be desirable to incorporate in the New MDA terms and conditions that are not
included in the current MDA, and the parties will develop an expedited process
for negotiating such potential changes. However, if the parties are not able to
negotiate such changes prior to June 4, 2002, the New MDA will take the form of
the MDA except as expressly modified by this term sheet. COX/COMCAST may
terminate the New MDA at any time on or after June 4, 2002 upon at least 6
months prior written notice, which
<PAGE>
termination will take effect on the June 4 or December 4 next occurring after
the expiration of such 6 month notice period. In the event COX/COMCAST
terminates the New MDA, COX/COMCAST and Excite@Home will, if requested by
COX/COMCAST, commence the transfer of certain Excite@Home assets and services to
COX/COMCAST as set forth in the Exit Plan in the TSLP attached to this term
sheet.
(c) The New MDA will provide as follows:
(i) COX/COMCAST (including its Controlled Affiliates) will use
Excite@Home as COX/COMCAST's provider of platform/connectivity services used
in COX/COMCAST's high-speed residential ISP services over cable in all its
United States cable systems that are covered by the MDA as of June 4, 2002
("Existing Excite@Home Systems"), subject to negotiation of commercially
reasonable terms (including service level standards) to be negotiated in good
faith. For the avoidance of doubt, the parties acknowledge that this will not
prevent COX/COMCAST from providing access to its cable systems to third-party
residential ISP's or OSP's who may use other platform/connectivity services
that are not provided by Excite@Home, AT&T or COX/COMCAST. With respect to
each territory covered by COX/COMCAST's cable systems in which COX/COMCAST
uses Excite@Home as COX/COMCAST's provider of platform/ connectivity services
used in its high-speed residential ISP services over cable pursuant to the
terms of the New MDA, Excite@Home will use its platform/connectivity services
for high-speed residential ISP services in such territory only over such
COX/COMCAST cable systems.
(ii) COX/COMCAST will make Excite@Home's content services a featured
portal for COX/COMCAST's high-speed residential ISP services over cable in
Existing Excite@Home Systems. For this purpose, "portal" refers to the entity
or service that manages and controls the content of the national area of the
home page. As the context requires, the term "portal" also refers to any
entity or service that manages, controls or guides the customer's access to
content and other services on the Internet. "Featured portal" means that the
Excite@Home portal will always be available for selection, and will be
displayed prominently, on COX/COMCAST's high-speed residential ISP start page,
unless and until the customer affirmatively selects otherwise. Without
limiting the foregoing, COX/COMCAST will offer Excite@Home's portal comparable
prominence and accessibility on the start page for COX/COMCAST's high-speed
residential ISP services over cable in Existing Excite@Home Systems as is
offered to any other portal, so long as the overall arrangement offered by
Excite@Home in exchange for such prominence and accessibility is at least as
favorable to COX/COMCAST in the aggregate, in COX/COMCAST's reasonable good
faith judgment, as the overall arrangement offered by such other portal, after
taking into account all relevant factors, including size, volume, equity
participation (including the equity arrangement offered hereby), duration, and
other related arrangements. The provisions set forth in this subparagraph
(ii) will not apply (A) to customers brought to COX/COMCAST's high-speed
residential ISP through another portal or content provider or as a result of
joint marketing between COX/COMCAST and another portal or content provider or
(B) following a change of control of Excite@Home or a change in ownership of
Excite@Home's portal.
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<PAGE>
(iii) In all of COX/COMCAST's United States owned and operated cable
systems other than Existing Excite@Home Systems (the "COX/COMCAST Other
Systems"), the provisions set forth in the foregoing subparagraphs (i) and
(ii) shall apply except to the extent that compliance with such provisions
would violate or result in significant adverse consequences to COX/COMCAST
under any preexisting contracts. In the event that COX/COMCAST does not cause
such COX/COMCAST Other Systems to comply with the provisions set forth in the
foregoing subparagraphs (i) and (ii) on or prior to December 31, 2002,
COX/COMCAST will forfeit a number of Warrant Shares (as defined below) covered
by the Warrants granted in respect of the homes passed by such COX/COMCAST
Other Systems as follows:
(A) As of January 1, 2003, COX/COMCAST will forfeit a number
of shares covered by the Warrants equal to 1/2 of the number of Warrant
Shares granted in respect of homes passed by such COX/COMCAST Other Systems
that are not, on or prior to December 31, 2002, brought into compliance
with the foregoing subparagraphs (i) and (ii); and
(B) As of each succeeding January 1, through and including
January 1, 2006, COX/COMCAST will forfeit a number of shares covered by the
Warrants equal to 1/6 of the number of Warrant Shares granted in respect of
homes passed by such COX/COMCAST Other Systems that are not, on or prior to
the immediately preceding December 31, brought into compliance with the
foregoing subparagraphs (i) and (ii).
Warrants may not be exercised with respect to Warrant Shares that are subject
to forfeiture until such time as they are no longer subject to forfeiture.
(iv) COX/COMCAST will not impose blocking provisions against
Excite@Home (whether under the MDA or otherwise) that are more onerous than
those that COX/COMCAST imposes against other portals using COX/COMCAST's
United States cable facilities.
(v) Neither COX/COMCAST nor Excite@Home will affirmatively remarket
any alternative portal to residential customers in COX/COMCAST's territory who
are Excite@Home customers as of June 4, 2002 ("Existing Excite@Home
Customers") (i.e., they will not engage in or participate in marketing
targeted to Existing Excite@Home Customers that seeks to cause any such
customer to change the customer's portal). Excite@Home will not affirmatively
remarket any alternative high speed residential Internet access distribution
method in COX/COMCAST's territory to such Existing Excite@Home Customers
(i.e., it will not engage in or participate in marketing targeted to Existing
Excite@Home Customers that seeks to cause any such customer to access the
Internet at high speeds other than through COX/COMCAST's cable
infrastructure). The marketing restrictions set forth above, however, will
not (A) preclude general mass marketing that is not targeted at Existing
Excite@Home Customers, (B) prevent an Existing Excite@Home Customer from
changing such customer's portal or high speed Internet access method, (C)
prohibit Excite@Home from advertising, marketing or promoting its narrowband
or
3
<PAGE>
broadband portal services, or its free dial-up Internet access services at
speeds below 128 Kbps, independent of any distribution method or partner, (D)
prohibit COX/COMCAST from advertising, marketing or promoting its narrowband
residential ISP services, with or without any content or portal partner, or
(E) prevent either party, subject to the other provisions of this term sheet,
from advertising, marketing or promoting its portal or residential ISP
services to customers other than Existing Excite@Home Customers.
(vi) If a new customer of COX/COMCAST's high-speed residential ISP
chooses Excite@Home's portal, Excite@Home will pay COX/COMCAST a marketing
fee with respect to such customer. The marketing fee may take the form of a
cash payment, revenue sharing, or other arrangement agreed to between
Excite@Home and COX/COMCAST. If Excite@Home induces a new customer to
subscribe to Excite@Home's portal/content services through COX/COMCAST's high-
speed residential ISP, COX/COMCAST will pay Excite@Home a marketing fee with
respect to such customer. Such marketing fees, and any joint marketing
arrangements between COX/COMCAST and Excite@Home that are designed to bring
new customers to COX/COMCAST's high speed residential ISP services over cable,
will be on a most favored nations basis with comparable arrangements between
COX/COMCAST and other media providers and comparable arrangements between
Excite@Home and other comparable distributors. Excite@Home will also pay fees
to COX/COMCAST for the carriage of Excite@Home's content, and traffic
management fees (if any), on a most favored nations basis with similar fees
paid by other media providers to COX/COMCAST for comparable services. The
provisions set forth in this subparagraph (vi) will not apply following a
change of control of Excite@Home or following a change in ownership of
Excite@Home's portal.
(d) COX/COMCAST and Excite@Home have agreed to a plan for the transfer of
certain portions of the Excite@Home assets and services to COX/COMCAST during
the term of the MDA or New MDA, as the case may be, as set forth in the
Implementation Plan in the TSLP attached to this term sheet.
(e) Regardless of whether the MDA or the New MDA, as the case may be,
remains in effect with respect to COX/COMCAST, COX/COMCAST shall have the right
until June 4, 2006 to negotiate commercial arrangements with Excite@Home for the
provision of services currently or in the future offered by Excite@Home, on
terms reasonably comparable to those offered to other parties. The most favored
nations provisions contained in the MDA with respect to such services will be
extended to apply to COX/COMCAST until June 4, 2006 so long as at least 50% of
COX/COMCASTS's broadband residential Internet service subscribers use the
Excite@Home platform/connectivity services, whether or not the MDA or the new
MDA is then in effect.
(f) Except as otherwise agreed by the parties (in their sole discretion),
all arrangements between the parties will terminate as of June 4, 2006.
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<PAGE>
2. Issuance of Additional Equity
(a) As of the execution of the Letter Agreement to which this term sheet
is attached, Excite@Home has granted to COX/COMCAST a warrant to purchase a
number of Series A Shares equal to two (2) multiplied by the total number of
homes passed by COX/COMCAST's cable systems, including cable systems under
contract to be acquired by COX/COMCAST but excluding homes passed by cable
systems under contract to be divested by COX/COMCAST, as of March 28, 2000 (the
"Initial Warrant").
(b) In the event COX/COMCAST (i) sells or otherwise disposes of any of
its homes passed between March 28, 2000 and June 4, 2002 without causing such
transferred homes to remain bound by the MDA (as modified by this term sheet and
the other term sheets attached to the Letter Agreement), or (ii) fails to
complete the acquisition of any systems under contract to be acquired as of
March 28, 2000 and such events result in a net decline in the number of homes
passed by COX/COMCAST's cable systems, then COX/COMCAST will be required to
forfeit a proportionate amount of the shares covered by the Initial Warrant.
(c) In the event the number of homes passed by COX/COMCAST's cable
systems increases on a net basis between March 28, 2000 and June 4, 2002 (it
being understood that homes passed by systems under contract to be acquired by
COX/COMCAST as of March 28, 2000 shall be deemed for this purpose to be homes
passed by COX/COMCAST as of March 28, 2000, but homes passed by systems under
contract to be divested by COX/COMCAST as of March 28, 2000 shall not be deemed
for this purpose to be homes passed by COX/COMCAST as of March 28, 2000),
Excite@Home will issue to COX/COMCAST a second warrant as of June 4, 2002 to
purchase a number of Series A Shares equal to two (2) multiplied by the total
number of additional homes passed by COX/COMCAST's cable systems as of June 4,
2002 (the "Second Warrant"). The Initial Warrant, the Second Warrant and the
Additional Warrants (as defined below) are referred to collectively as the
"Warrants." The Series A Shares covered by the Warrants are referred to
collectively as the "Warrant Shares."
(d) In the event that as of any December 4 or June 4 (an "Adjustment Date")
following June 4, 2002 and prior to June 4, 2006, there has been a net increase
or decrease in the number of homes passed by COX/COMCAST's cable systems of more
than 5% compared to the number of homes passed by its systems as of June 4,
2002, without deducting any transferred homes that COX/COMCAST causes to remain
bound by the New MDA, then, in the case of a net decrease, COX/COMCAST will be
required to forfeit a number of shares covered by the Second Warrant and/or the
Initial Warrant or, in the case of a net increase, Excite@Home will issue an
additional warrant to COX/COMCAST (together with any further additional warrants
granted pursuant to this paragraph (d), the "Additional Warrants"), on the
following terms. The aggregate number of shares subject to forfeiture or
subject to the Additional Warrant (which shall in either event be comprised of
Series A Shares) will equal (i) two (2) multiplied by (ii) the difference
between the number of homes passed by COX/COMCAST's cable systems as of the
applicable Adjustment Date and the number of homes passed by COX/COMCAST's cable
systems as of June 4, 2002, multiplied by (iii) a fraction, the numerator of
which is the number of six-month periods remaining from the applicable
Adjustment Date until June 4, 2006
5
<PAGE>
(the "Remaining Number of Six-Month Periods") and the denominator of which is
twelve (12). Following the first Adjustment Date, if any, on which there is a
forfeiture of Warrant Shares or a grant of an Additional Warrant pursuant to the
foregoing provisions, on each subsequent Adjustment Date the 5% increase or
decrease test set forth in the foregoing provisions shall apply with reference
to the last Adjustment Date on which there was a forfeiture or a grant of an
Additional Warrant, and further forfeitures or further grants of Additional
Warrants, if any, will be calculated pursuant to the foregoing provisions, but
based on the difference between the number of homes passed by COX/COMCAST's
cable systems as of the subsequent Adjustment Date and the number of homes
passed by COX/COMCAST's cable systems as of the immediately preceding Adjustment
Date on which there was a forfeiture or a grant of an Additional Warrant. In the
event of any forfeiture following the grant of any Additional Warrants, the
forfeiture will be applied first against the most recently granted Warrants,
next against the next most recently granted Warrants, etc.
(e) The per share exercise price of the Initial Warrant and the Second
Warrant will be $29.5375, which is equal to the average daily closing price of
the Series A Shares during the ten (10) consecutive trading days ended on March
24, 2000. The per share exercise price of each Additional Warrant will be equal
to the average daily closing price of the Series A Shares during the ten (10)
consecutive trading days ended on the issue date of the Additional Warrant.
(f) The Initial Warrant will become vested, and immediately exercisable
subject only to HSR compliance, as to 1/6 of the Warrant Shares on June 4, 2001
and as to an additional 1/12 on each December 4 and June 4 thereafter until June
4, 2006, and the Second Warrant will become vested, and immediately exercisable
subject only to HSR compliance, as to 1/5 of the Warrant Shares on June 4, 2002
and as to an additional 1/10 on each December 4 and June 4 thereafter until June
4, 2006, so long as either (a) the MDA and its mutual exclusivity provisions or
(b) the New MDA, as the case may be, has been continuously in effect up to the
time of such vesting date with respect to COX/COMAST. Each Additional Warrant
will become vested, and immediately exercisable subject only to HSR compliance,
as to a fraction of the Warrant Shares equal to one divided by the Remaining
Number of Six Month Periods, on each June 4 and December 4 after issuance of the
Additional Warrant, so long as the New MDA has been continuously in effect up to
the time of such vesting date. If COX/COMCAST terminates the MDA or the New
MDA, no further vesting of the Warrants will occur, but the Warrants will remain
exercisable as to any Warrant Shares that have become vested prior to the date
of termination. If COX/COMCAST terminates the exclusivity provisions of the MDA
but not the MDA itself before June 4, 2002, COX/COMCAST will permanently forfeit
those Warrant Shares as to which the Initial Warrant and Second Warrant would
have otherwise become vested during the period that the exclusivity provisions
are not in effect (the "Nonexclusive Period"); provided, however, that
COX/COMCAST may resume vesting of the remaining Warrant Shares beginning on June
4, 2002 so long as the MDA has remained continuously in effect as to COX/COMCAST
until June 4, 2002, COX/COMCAST is in material compliance with the New MDA as of
June 4, 2002 and, during the Nonexclusive Period, COX/COMCAST has maintained
content carriage for all Excite@Home customers existing at the beginning of the
Nonexclusive Period on the terms of the MDA (other than exclusivity) and has not
remarketed
6
<PAGE>
(in the manner contemplated by paragraph 1(c)(v) above) any of Excite@Home's
portal customers.
(g) The Warrants will expire on March 28, 2015.
(h) The Warrants will include registration rights comparable to those
currently applicable to the Series A Shares now beneficially owned by
COX/COMCAST. The Warrants will also contain a net exercise provision to
facilitate sales under Rule 144.
(i) The Warrants shall contain customary dilution protection, including,
without limitation, adjustments to the number and kind of shares issuable upon
exercise of the Warrants and the exercise price to reflect stock splits,
combinations, stock dividends, recapitalizations, and similar transactions.
(j) Within ten (10) business days following the date of the Letter
Agreement, COX/COMCAST will provide Excite@Home with a letter representing to
-----------
Excite@Home, to the best of COX/COMCAST's knowledge, the total number of homes
passed by COX/COMCAST's cable systems, including cable systems under contract to
be acquired by COX/COMCAST but excluding homes passed by cable systems under
contract to be divested by COX/COMCAST, as of March 28, 2000. In addition,
prior to and as a condition to the issuance of the Second Warrant, COX/COMCAST
will represent to Excite@Home in writing, to the best of COX/COMCAST's
knowledge, the number of additional homes passed as of June 4, 2002 on a net
basis by COX/COMCAST's cable systems. Excite@Home shall have reasonable audit
rights to verify the number of homes passed by COX/COMCAST's cable systems as of
each such date, and any discrepancy between the represented number and the
audited number (following reasonable resolution of any dispute) will be
reflected in an adjustment to the Initial Warrant or the Second Warrant, as the
case may be. COX/COMCAST will provide a similar representation letter and
Excite@Home will have similar audit rights with respect to the number of homes
passed by COX/COMCAST's cable systems as of each Adjustment Date.
(k) The existing warrants held by COMCAST with respect to cable systems
acquired by COMCAST from Prime - Potomac, L.P, Prime - Chicago L.P., Jones
Intercable Inc. and Garden State Cablevision L.P. will be amended to eliminate
any performance vesting conditions and will be exercisable in equal six month
increments over the original vesting term of such warrants on the same June 4
and December 4 dates and under the same conditions as the Initial Warrant. The
terms of the following agreements may be terminated by COMCAST at the same time
that it terminates the MDA and all related LCO agreements as provided herein:
(i) @Home Network Distribution Agreement dated as of January 1, 1999 by and
between At Home Corporation, and InterMedia Partners, Intermedia Partners IV, LP
including its affiliates and InterMedia Partners of Kentucky, LP., (ii) @Home
Network Distribution Agreement dated as of March 22, 1999 between At Home
Corporation, Prime - Potomac, LLC and Prime Communications - Chicago, LLC; (iii)
@Home Network Distribution Agreement dated June 29, 1998, between At Home
Corporation and Garden State Cablevision L.P.; and (iv) @Home Network
Distribution Agreement dated as of June 26, 1998 by and between At Home
Corporation and Jones Intercable Inc.
7
<PAGE>
TRANSITION AND SERVICE LEVEL PLAN
---------------------------------
I. Introduction
The objective of this document is to outline how Excite@Home ("E@H") will
support Cox Communications, Inc. and Comcast Corporation ("Cox/Comcast")
following the signing of the Letter Agreement and accompanying Term Sheets to
which this document is attached. This document includes the following seven
sections:
Section I This introduction.
Section II Defined terms.
Section III A description of the Master Service Level Agreement that the
parties will enter into to improve and monitor overall service
quality.
Section IV An Implementation Plan that Cox/Comcast may elect to commence
at any time during the term of the MDA or the New MDA in order
to transfer certain subsystems and network elements to
Cox/Comcast.
Section V An Exit Plan that describes how the parties would unwind their
relationship in the event Cox/Comcast elect to terminate the
MDA or New MDA.
Section VI Certain general terms that are applicable to both the
Implementation Plan and the Exit Plan.
Section VII Dispute resolution and remedies
II. Defined Terms
1. Diligent Efforts: Diligent efforts means an obligation to use
----------------
commercially reasonable efforts, and dedicate the required personnel
(including where appropriate the retention of consultants) and other
resources, to complete the required task. The parties acknowledge that
if during the next twelve months Cox/Comcast elect to commence the
Implementation Plan or the Exit Plan, the timing for the required
subsystem and asset transfers will be affected by E@H's need to continue
to stabilize and improve its network services.
2. Fair Value: The Fair Value of an asset means the value that would be
----------
allocated to that asset in the event that an independent appraiser was
asked to allocate the purchase price for GAAP purposes of a purchase of
E@H by a third party. For purposes of determining the Fair Value of an
asset, the parties acknowledge that in some cases Cox/Comcast have
contributed a portion of the funding to develop assets and that such
funding contribution should be a key factor in calculating the Fair Value
which Cox/Comcast will have to pay for such assets. For purposes of
determining the Fair Value of an asset or service, the parties further
acknowledge that the purpose of requiring Cox/Comcast to pay Fair Value
is to ensure that E@H meets its fiduciary
<PAGE>
duties to its other stockholders as opposed to generating new revenue
streams. If Cox/Comcast and E@H are unable to agree on Fair Value with
respect to any asset within 20 days, they shall appoint an appraiser to
determine Fair Value. In the event that Cox/Comcast and E@H are unable to
agree on an appraiser within 10 days, either party may cause the American
Arbitration Association ("AAA") of New York to appoint such appraiser. In
determining Fair Value, the appraiser shall consider only the "market"
and "cost" (i.e. replacement cost less depreciation) approaches to value
so that the assets are valued on a stand alone basis without
consideration of (i) the fact that such assets are imbedded in an ongoing
enterprise, and (ii) the fact that the assets may be in a unique location
and used to support a valuable customer base.
3. Network elements: Network elements are specific hardware and software
----------------
that are used to provide a given service. The specific equipment and
software change over time, as well as where they are located. For
example, E@H is in the process of moving the network elements that
provide email out of the regional data centers ("RDCs").
4. Subsystem: A subsystem is a group of network elements that provide
---------
specific functionality required to deliver the @Home service; provided,
however, that the content provided by E@H as part of the @Home service
will not be a considered a subsystem. For example, DHCP is a subsystem
that is provided by a given set of hardware and software elements.
5. System interfaces: System interfaces are specific interfaces to other
-----------------
network elements or subsystems, both internal and customer facing, that
convey information required to provide a given service. They include not
just the interfaces themselves, but also any control information,
information used for fault management and isolation, security, service
evolution and service failover (i.e. all the "touch points").
Performance specifications are required for proper implementation of the
system interfaces and to assure proper delivery of the @Home service.
Today such system interfaces are utilized successfully for Tier 2 and for
some IT functions.
III. Master Service Level Agreements
1. Preparation of Master SLA. E@H and Cox/Comcast will use their diligent
-------------------------
efforts to negotiate and enter into a Master Service Level Agreement
("Master SLA") by no later than June 30, 2000. The Master SLA will
include specifications and standards for the Operator Facilities and the
@Home Facilities (as those terms are defined in the MDA), including,
without limitation, minimum plant performance standards, network
infrastructure standards, and certification criteria which will ensure
high signal quality and reliable service. The Master SLA will contain
liquidated damages provisions designed to ensure prompt performance of
E@H's and Cox/Comcast's respective obligations, which liquidated damages
amounts will be customary
Page 2
<PAGE>
to the communications and software integration industries. E@H
management will report to E@H's Board of Directors as to the status of
the Master SLA at the Board of Directors meeting scheduled for May 4,
2000 in New York City.
2. Updates to Master SLA. The parties will use their diligent efforts to
---------------------
update the Master SLA (including the liquidated damages provisions
continued therein) on at least an annual basis to reflect the transfer
of any subsystems to Cox/Comcast.
3. Time is of the Essence. The parties agree that time is of the essence
----------------------
in connection with entering into the Master SLA and any required
amendments to the Master SLA.
IV. Implementation Plan
1. Assumptions/Goals:
-----------------
(a) Cox /Comcast desire to remain in the E@H coalition of MSOs, and
continue to deliver the @Home service.
(b) Cox /Comcast want the ability to provide certain subsystems of the
@Home service themselves at their option, instead of E@H continuing
to provide these services.
(c) Cox/Comcast want the ability to evolve these subsystems and to use
them to support IP services other than those provided by E@H. For
example, Cox/Comcast may want to offer its own telecommuting
service, set top service and/or IP telephony service.
(d) Cox/Comcast also want to control certain subsystems so as to ensure
that their cable infrastructure is used to deliver services that are
consistent with various products and service level objectives.
(e) Both E@H and Cox/Comcast are committed to providing high quality
service to the user before, during, and after transitioning
subsystems. The parties acknowledge that it is of the utmost
importance that the transferred subsystems continue to interface
seamlessly with other network elements and subsystems so as to
assure the proper delivery of the @Home service.
2. Obligations:
-----------
(a) Appendix A sets forth the major subsystems and the related network
----------
elements used to deliver the @Home service that Cox/Comcast may
elect to provide instead of E@H. Appendix A represents the good
faith
Page 3
<PAGE>
understanding of E@H and Cox/Comcast with respect to those subsystems
and related network elements that may be transferred to effectuate
the goals of the Implementation Plan set forth above, but it is not
intended to be a comprehensive list. Cox/Comcast may add other major
subsystems relating to the @Home service, such as email, to Appendix
A so long as the transfer of such subsystems is required to meet the
goals of the Implementation Plan set forth above and Cox/Comcast
agree to the requirements set forth in this Section IV.2 with respect
to that subsystem. In exchange for payment in an amount equal to Fair
Value, E@H will transfer to Cox/Comcast the subsystems and other
assets that have been requested by Cox/Comcast to the extent they are
transferable.
(b) Cox/Comcast may elect to transfer the subsystems (including without
limitation any enhancements to such subsystems developed prior to the
Termination date (as defined below)) on a subsystem by subsystem
basis. At such time as Cox/Comcast elects to have a subsystem
transferred, the parties agree to use their diligent efforts to
complete the transfer in accordance with the time periods set forth
in Appendix A. The parties agree that time is of the essence in
connection with any such transfers.
(c) E@H will document all system interfaces for a subsystem at the time
Cox/Comcast elects to provide that subsystem. These subsystem
interface specifications will include any service level APIs, both
customer facing as well as internal to other subsystems, as well as
any control and management interfaces needed for provisioning or
operation of the @Home service. Performance requirements to assure
proper service operation will also be fully documented, as will any
information about specific hardware and software requirements that
may be necessary.
(d) After a particular subsystem is transferred to Cox/Comcast,
Excite@Home will provide timely notice about changes in its interface
specifications that are needed to assure high quality delivery of the
@Home service to Cox/Comcast and their customers. Major interface
changes will be documented and communicated at least 90 days before
transition. Minor interface changes will be documented and
communicated at least 30 days before transition. In any case, E@H
will notify Cox/Comcast of interface changes such that they will have
a reasonable period of time to achieve interface interoperation.
Cox/Comcast will modify their subsystems, at their own expense, to
comply with such interface specification changes so long as they do
not constitute an Adverse Change (as defined below). An "Adverse
Change" is an interface specification change proposed by Excite@Home
Page 4
<PAGE>
that would (a) materially impair Cox/Comcast's ability to offer their
own IP services (such as a telecommuting service, set top service or
IP telephony), and (ii) require a material cost to implement given
the circumstances. In the event of an Adverse Change, Cox/Comcast
will not be required to modify its subsystems to comply with the
proposed interface specification change and Excite@Home will support
the prior version of the interface for a period of up to six months.
If this support is done solely for Cox/Comcast, then the cost of such
support will be borne by Cox/Comcast.
In the event there is a disagreement as to whether a proposed
interface specification change constitutes an Adverse Change,
Cox/Comcast and Excite@Home will appoint an industry expert to
consider the matter. In the event that Cox/Comcast and Excite@Home
are unable to agree on an industry expert within 10 days, either
party may cause the AAA of New York to appoint such an industry
expert. The decision of the industry expert will be binding on both
parties.
The parties also acknowledge that no provision of this Transition and
Service Level Plan will supercede Cox/Comcast's rights with respect
to the introduction of new enhancements or functions for the @Home
service pursuant to Section 13 of the MDA.
(e) Service level agreements (with penalties for non-performance) will be
defined by Cox/Comcast and E@H for both sides of each interface to
assure proper service operation and service delivery. Such service
level agreements will be consistent with performance requirements for
each subsystem and will be modeled after the Master SLA.
(f) Cox/Comcast may make changes in the architecture, design and
implementation of transferred subsystems independently of E@H;
provided; however, that the required interfaces to other E@H
subsystems and customer interfaces are maintained and supported
adequately to continue delivery and evolution of the @Home service.
(g) After a particular subsystem is transferred satisfactorily to
Cox/Comcast, Cox/Comcast will assume complete responsibility for
configuration, fault management, operations, capacity planning, and
technology evolution. E@H will continue to support monitoring and
surveillance consistent with defined interfaces to assure high
quality delivery of the @Home service.
(h) After a particular subsystem is transferred satisfactorily to
Cox/Comcast, fault isolation and troubleshooting will require a
coordinated effort by E@H and Cox/Comcast in order to provide
satisfactory service reliability and customer service. In order to
achieve this goal, E@H and
Page 5
<PAGE>
Cox/Comcast will work together in good faith to facilitate
communication between their respective Network Operations Centers,
provide for visibility into their respective networks, and implement
other appropriate processes and procedures.
(i) Within three months of Comcast/Cox's request, E@H also will provide
Cox/Comcast with a comprehensive list of individually priced services
relating to the @Home service (the "@Home Services") which E@H will
make available to Cox/Comcast. Cox/Comcast may utilize such services
on a transitional or long-term basis so long as the MDA or the New
MDA is in effect. (Thereafter, Cox/Comast can procure services
pursuant to Section V.2(d) below). Such services will be provided to
Cox/Comcast pursuant to reasonable commercial terms; provided,
however that their combined costs will not exceed the revenue split
in effect under the MDA or the New MDA, as the case may be.
(j) After a subsystem is transferred to Cox/Comcast, the percentage split
of the aggregate Basic Service Revenue (as defined in the LCO/MDA)
paid to E@H will be lowered appropriately to reflect the fact that
Cox/Comcast are providing that subsystem instead of E@H as originally
contemplated under the MDA and that E@H has avoided some costs
because of this transfer.
(k) In order to facilitate the parties respective obligations under this
Section IV.2, E@H will have periodic meetings with Cox/Comcast to
discuss future planning and architecture directions for the evolution
of the @Home service and subsystem interfaces so that all parties are
aware of general architectural directions and product impacts.
V. Exit Plan
1. Assumptions/Goals:
-----------------
(a) Cox/Comcast has elected to terminate the MDA or the New MDA, as the
case may be, as of a specific date (the "Termination Date").
(b) At such time following the Termination Date as Cox/Comcast elects,
the assets used by E@H to deliver the services provided to
Cox/Comcast will be transferred to Cox/Comcast to the greatest extent
practicable, with such transfers to take place in exchange for Fair
Value.
(c) Unless otherwise agreed, upon satisfactory transfer of such assets,
responsibility for providing all services will be transferred to
Cox/Comcast and Cox/Comcast's product offerings may diverge from
those offered by E@H.
Page 6
<PAGE>
(d) Both E@H and Cox/Comcast are committed to providing high quality
service to the user before and after the Termination Date, but
acknowledge the transferred assets may no longer interface seamlessly
with other network elements and subsystems unless expressly agreed in
writing to the contrary. Notwithstanding the foregoing, the parties
acknowledge that it is of the utmost importance that the quality of
the service provided to subscribers be maintained prior to the
transfer of such assets.
2. Obligations:
-----------
(a) Cox/Comcast will provide E@H with written notice of its decision to
terminate the MDA or the New MDA (the "Termination Notice"). Within
three months following the Termination Notice, E@H will provide
Cox/Comcast with a comprehensive list of all network elements and
other items that directly or indirectly are used by E@H to provide
services to Cox/Comcast. Such list will include, among other things,
the items listed below.
. All owned, leased or licensed hardware and software.
. All third party products or services utilized by E@H to provide
the @Home service, indicating any restrictions on use or E@H's
ability to transfer such products or services to Cox/Comcast.
. All database information, including mapping, addressing, history
abuse, customers, trouble ticketing, schema, etc.
. All software developed by E@H including tools, network management,
developer kits, etc.
. All documentation, including procedural manuals.
. All application interfaces including billing, network management,
trouble ticketing, etc.
. A description of the inter-relationships between the network
elements.
(b) Within three months of receiving the above described list,
Cox/Comcast will notify E@H in writing of those network elements and
other assets that it wants transferred. Appendix B sets forth the
-----------
major network elements and assets that the parties currently
anticipate would be transferred under the Exit Plan. Appendix B
represents the good faith understanding of E@H and Cox/Comcast with
respect to those subsystems and related network elements that may be
transferred to effectuate the goals of the Exit Plan set forth above,
but it is not intended to be a comprehensive list. In exchange for
payment in an amount equal to Fair Value, E@H will transfer to
Cox/Comcast the network elements and other assets that have been
requested by Cox/Comcast to the extent they are transferable.
Page 7
<PAGE>
(c) The parties agree to use their diligent efforts to cause any
transfers requested by Cox/Comcast to be made in accordance with the
time periods set forth in Appendix B. The parties agree that time is
of the essence in connection with any such transfers.
(d) Within three months following the Termination Notice, E@H also will
provide Cox/Comcast with a comprehensive list of all services
available from E@H with each service individually priced (the "Exit
Services"). Notwithstanding Cox/Comcast's decision to terminate the
MDA or the New MDA, Cox/Comcast may utilize such services on a
transitional or long-term basis following the Termination Date
through June 4, 2006. The Exit Services will be provided to
Cox/Comcast pursuant to reasonable commercial terms. As provided for
in Section 1(e) of the Term Sheet for Comcast, Cox and Excite@Home,
the most favored nations provisions contained in the MDA with respect
to such services will be extended to apply to Cox/Comcast until June
4, 2006 with respect to the Exit Services so long as at least 50% of
Cox/Comcast's broadband residential Internet service subscribers use
the Excite@Home platform/connectivity services, whether or not the
MDA or the new MDA is then in effect.
VI. General Terms
1. At least 60 days prior to the date a network element or other asset is
scheduled to be transferred to Cox/Comcast, E@H will transfer to
Cox/Comcast the items listed in Appendix C to the extent they are
----------
available and transferable. E@H will transfer third party hardware and
software to Cox/Comcast to the extent it is legally permitted to do so.
2. Payment of Fair Value for an asset will be due to E@H upon satisfactory
completion of the requested asset transfer.
3. In exchange for a payment that is customary in the communications and
software industries, E@H will provide Cox/Comcast with the necessary
training, services and support and maintenance required to enable
Cox/Comcast to integrate the transferred assets in such a way that the
transition is as seamless as possible. Such services will include:
. Engineering support.
. Training on software operation.
. Enhancements to software as required to facilitate the transition
of assets to Cox/Comcast.
. Assisting Cox/Comcast in developing a timetable and plans for
transition.
. Maintenance of BOS/CAPS to support the Cox/Comcast's integration
requirements.
Page 8
<PAGE>
In evaluating the appropriate payment for these services, the parties
will take into account both E@H's actual costs and the payment
arrangements that E@H has negotiated with hardware and software vendors
providing similar services.
4. If a specific existing network element or other asset is substantially
dedicated to providing service to Cox/Comcast, then such network element
or asset will be transferred to Cox/Comcast, and Cox/Comcast will
compensate E@H for the Fair Value of the same. If the specific network
element is not substantially dedicated to Cox/Comcast, then either E@H or
Cox/Comcast will deploy a network element or other asset providing
comparable functionality. If this is done by E@H, then E@H will be
compensated for the cost of this implementation and deployment. If a new
network element or asset is deployed, a QA and acceptance procedure that
is mutually agreeable to both parties will be developed to assure minimal
customer impact. Whether specific existing network elements are
"substantially dedicated" to Cox/Comcast will be determined by the
parties in good faith by assessing the percentage of the total
subscribers that are served by such network element or other asset which
are Cox/Comcast subscribers. For example, the network elements located
in the RDC serving Orange County, California are not dedicated to
Cox/Comcast and would require the deployment of new network elements.
5. As for intellectual property that E@H has developed (e.g. the Matrix
software that evaluates CMTS load balancing), such intellectual property
will be licensed to Cox/Comcast on a royalty free basis and E@H will
indemnify Cox/Comcast for third party intellectual property claims
relating to the same in accordance with standard industry practices.
Notwithstanding the foregoing, if Cox/Comcast elect to license the source
code for E@H developed software, Cox/Comcast will pay E@H Fair Value for
such source code. All E@H intellectual property that is licensed to
Cox/Comcast may not be sublicensed or utilized by third parties without
E@H's written consent.
VII. Dispute Resolution and Remedies:
1. Escalation Process: Except with respect to any claim for injunctive
------------------
relief, any claim, controversy or dispute between the parties relating to
this Transition and Service Level Plan (a "Dispute") will be resolved in
accordance with the following phases:
(a) The Chief Executive Officers of each of the parties involved in the
Dispute will first discuss the Dispute and use their good faith
efforts to reach a fair and equitable resolution. This phase will be
completed within 5 business days.
Page 9
<PAGE>
(b) In the event the Chief Executive Officers of the parties involved in
the Dispute are unable to resolve the Dispute, a committee of the
Board of Directors of E@H will review the Dispute and use its good
faith efforts to facilitate a fair and equitable resolution. This
phase will be completed within 10 business days.
(c) In the event such committee of the Board of Directors of E@H is
unable to resolve the Dispute, the parties may submit the Dispute to
a confidential arbitration proceeding. Such arbitration proceeding
will be subject to the rules of the AAA, will be conducted by a
single arbitrator chosen by the AAA, and will be binding on the
parties. This phase will be completed within 30 business days.
2. Failure to Complete Master SLA. Without limiting Cox/Comcast's right to
------------------------------
seek injunctive relief, in the event the Master SLA is not completed and
executed by the parties by the dates set forth below, Cox/Comcast may
withhold the following percentage of all amounts owing to Excite @Home
(the "Withholding Amount") after those dates.
If Master SLA is Not Then the Withholding
Completed By: Amount Will Equal:
------------- ------------------
July 31, 2000 20%
August 30, 2000 40%
September 30, 2000 60%
For example, if the Master SLA is not completed before August 30, 2000,
Cox/Comcast may withhold 20% of all amounts owing to Excite @Home that
accrued during July 2000 plus 40% of all amounts that accrued in August
2000.
The Withholding Amount will be released to Excite@Home upon completion of
the Master SLA.
3. Injunctive Relief. E@H acknowledges and agrees that a material breach by
-----------------
E@H of any material provision of this Transition and Service Level Plan
will cause Cox/Comcast irreparable injury for which an adequate remedy at
law is not available. Therefore, the parties agree that in the event of
any such breach Cox/Comcast will be entitled to equitable relief from any
court of competent jurisdiction to specifically enforce any such
provision of this Transition and Service Level Plan in addition to any
other remedies that such parties may have in law or in equity.
Page 10
<PAGE>
Appendix A
Major Subsystems and Dominant Service Elements to be Transferred Under
Implementation Plan (1)
Subsystem Name
- --------------
. Network elements that are included in the subsystem
. Current hardware/software platforms supporting the subsystem
. Dominant locations where hardware currently exists
. Estimated time frame to complete the transfer
Provisioning
- ------------
. Billing, subscriber management, network topology data management, IP address
allocation and IP addresses, MPROV software elements, customer care tools
. BOS/CAPS, Kenan Arbor billing, Oracle common servers, Remedy, communication
networks that link the MSO to Redwood City BOS network
. E@H Redwood City
. As soon as practicable
Member Services
- ---------------
. Member services software, web server, SQL links to BOS/CAPS and billing, etc.
. Dedicated member services platforms
. E@H Redwood City
. As soon as practicable
DHCP (used by modems to acquire control information, as well as to assign IP
- ----------------------------------------------------------------------------
addresses to user CPE)
- ----------------------
. AIC and JOIN DHCP server software, database agents that interface to MPROV
for service population
. RDC H/A servers, IP service provisioning clusters
. In RDC space and large headends
. 90 to 180 days
DNS (name services) - used to populate/use CPE names and addresses
- ------------------------------------------------------------------
. BIND software, and database agents that interface to CAPS for service
population
. RDC H/A servers, headend proxy servers
. In RDC space as well as headends
. 90 to 180 days
Regional transport networks (in large metro areas only)
- -------------------------------------------------------
. Routers, optical hardware, switches, leased network capacity (from CLECs or
RBOCs), microwave equipment, etc.
. Cisco routers, Cisco and Extreme switches, a variety of optical network
equipment and hardware, etc.
. In RDC space, as well as headend locations
. 90 to 180 days
Page 11
<PAGE>
CMTS (CMTS's used in delivering E@H services only)
- --------------------------------------------------
. Variety of CMTS equipment, associated debugging software, database agents for
service population
. CMTS hardware, RDC and CAPS MPROV agents
. In RDC space, headend space, and E@H Redwood City
. 90 to 180 days
Note 1: Such transfer will be implemented in accordance with Section VI of the
Transition and Service Level Plan.
Page 12
<PAGE>
Appendix B
Assets to be Transferred under Exit Plan
<TABLE>
<CAPTION>
Time required for E@H
What Cox/Comcast needs from ---------------------
--------------------------- response/transition to the
Component @Home (1) --------------------------
--------- --------- Cox/Comcast's request
---------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CPE - All customer premise . See Appendix C 90 day response time plus 90 day
equipment including the cable . Config. files for all modems transition period
modem and commercial services . CM IP addressing scheme
hardware. . PC IP address (transfer
ownership of IP addresses from E@H
to the Exiting MSO)
- -------------------------------------------------------------------------------------------------------------
MAN - Metropolitan area network . See Appendix C 90 day response time plus 90 day
(routers) and the routing on it. . Network element addressing transition period
scheme
. Network element ownership
(routers, e-switches, etc.)
. Network element passwords
. Network element config. files
. Access to human knowledge base
. Transfer of any management tools
. Transfer software licenses
. Transfer of non-private MAN IP
addresses from E@H to the Exiting
MSO
- -------------------------------------------------------------------------------------------------------------
Backbone . Point of demarcation is the 90 day response time plus 90 day
Cox/Comcast's side of E@H's transition period
multi-MSO agg. router.
- -------------------------------------------------------------------------------------------------------------
CMTS (Note: already owned by . See Appendix C 90 day response time plus 90 day
Cox/Comcast) . CMTS addressing scheme transition period
. CMTS passwords
. CMTS config files
. Access to human knowledge
. Transfer any management tools
. Transfer software licenses
(including Cisco IOS)
. Snapshot of database
provisioning information
- -------------------------------------------------------------------------------------------------------------
RDC Servers (DHCP, TFTP, DNS, . See Appendix C . 90 day response time plus 90
Email, News, Proxy Servers, HA day transition period
servers)
- -------------------------------------------------------------------------------------------------------------
Email domain name and . Develop appropriate IT support . 30-day response time plus
Personal web page domain name to forward subscribers' requests transition period of up to one
to the Cox/Comcast's domain year.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 13
<PAGE>
<TABLE>
<CAPTION>
Time required for E@H
What Cox/Comcast needs from ---------------------
--------------------------- response/transition to the
Component @Home (1) --------------------------
--------- --------- Cox/Comcast's request
---------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
. Allow Cox/Comcast use of E@H
domain during a transition period
- -------------------------------------------------------------------------------------------------------------
CPE software . License to use and distribute . N/A
. Customized browser all current customer client
. CPE PC tools & utilities software used in delivering the
. All other E@H distributed E@H service
software . Support.com (Tioga)
. NetDiags
. Test results of all modem and
network interface components
. Modem test procedures and
documentation to ensure level 2
compliance
- -------------------------------------------------------------------------------------------------------------
Provisioning: . Continue operation of current . N/A
. Order taking scheme until detailed, mutually
. Member services agreeable transition scheme is
. Logging & tracking established and implemented.
. Fulfillment (BOS/CAPS) . All current and historical data
. Documentation and source code files associated with the
Services: Cox/Comcast's subscribers
. Billing . CSR tools source code
. Tier 2 . API code, license and
. 800# remote access documentation
. Trouble resolution . BOS/CAPS code, licensing and
. NOC documentation
. KnowledgeBase . Scopus interface code,
. Installation training licensing and documentation
documentation . Remedy schemas, history and
templates
. Capacity planning tools
(Matrix, Netstats, Proxy, etc.)
. Abuse monitoring tools
. Training documents for all
provisioning and services
. Server integration (SIC) and
first modem provisioning (FMP)
documentation
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 14
<PAGE>
<TABLE>
<CAPTION>
Time required for E@H
What Cox/Comcast needs from ---------------------
--------------------------- response/transition to the
Component @Home (1) --------------------------
--------- --------- Cox/Comcast's request
---------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Content . E@H to continue current . N/A
operation and development
- -------------------------------------------------------------------------------------------------------------
Marketing . Sales serviceability database . N/A
. Transfer of OEM agreements
- -------------------------------------------------------------------------------------------------------------
Customer Data . All historical, usage, traffic . 30 days and ongoing
patterns, billing, click-thru,
homes passed info, demographic data
. Abuse information
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Note 1: Such transfer will be implemented in accordance with Section VI of the
Transition and Service Level Plan.
Page 15
<PAGE>
Appendix C
Items Needed to Take control of any Hardware Elements (1)
. Current equipment configuration
. Current service/maintenance contracts to the extent that they are assignable
. Documentation of operating practices and supporting service level agreements
. Training materials associated with equipment
. Passwords and accounts
. Monitoring tools and software reporting
. Historical performance reports
. Access to current responsible human resources
. Planned activity impacting equipment
. Documentation of all interfaces
. Title and licenses supporting
. Backup tapes and files
. Spares inventory
. Physical inventory location and access
Leased space / racks / power
Note 1: Such transfer will be implemented in accordance with Section VI of the
Transition and Service Level Plan.
Page 16
<PAGE>
EXHIBIT 99.02
FOR IMMEDIATE RELEASE
Excite@Home's Principal Cable Partners Extend Distribution Agreements,
AT&T Assumes More Prominent Role
NEW YORK AND REDWOOD CITY, CALIF. -- WEDNESDAY, MARCH 29, 2000 -- Excite@Home
(Nasdaq: ATHM) and its principal cable partners - AT&T, Comcast Corporation and
Cox Communications - announced today that they have agreed to new extended
distribution arrangements and a reorganization of the governance of the company.
This will enhance Excite@Home's decision-making and ability to capitalize on
growth opportunities.
Based on these new agreements, AT&T and Excite@Home have extended their
relationship through 2008, and Comcast and Cox have extended their relationship
with Excite@Home through 2006. The new distribution agreements reflect a common
belief among Excite@Home and its cable partners that growing subscribers on
high-speed cable Internet services is a key objective over the coming years.
Excite@Home will be the provider of platform/connectivity services used by its
principal cable partners in delivering their high-speed Internet services.
Excite@Home's portal also will be featured on AT&T's high-speed Internet service
start page for the length of the new agreement. In addition, Excite@Home will
work with AT&T to deliver services to consumers via advanced TV, narrowband
initiatives and, subject to negotiation with AT&T Wireless Group, wireless
services. Overall, these new arrangements expand Excite@Home's current business
model and represent a significant opportunity for the company as it provides
connectivity and content distribution services in partnership with cable
companies.
Specifically, AT&T agreed to extend its distribution relationship with
Excite@Home through 2008 and to feature the Excite@Home portal on its cable
Internet service through the same period. Excite@Home will also work with AT&T
to provide connectivity services to third party Internet Service Providers who
want to use AT&T's platform to deliver broadband services to consumers. AT&T
reiterated its intention to offer a choice of multiple service providers and
portals on its high-speed Internet systems following the June, 2002 expiration
of its current exclusive arrangements with Excite@Home. In addition Excite@Home
will work with AT&T to deliver services to consumers via advanced TV, wireless
and narrowband initiatives.
The exclusivity provisions of the Comcast and Cox distribution agreements with
Excite@Home remain in effect until June 2002. Comcast and Cox have also agreed
to use Excite@Home to provide platform/connectivity services, and to be their
featured portal, in delivering their high-speed Internet services through June,
2006. Subject to the forfeiture of certain warrants, and based on their other
business considerations, Comcast and Cox will each have the right to end the
<PAGE>
exclusivity provisions and may also terminate the entire distribution
arrangement beginning in June 2001.
Under today's agreements, Comcast and Cox will give up certain veto rights they
have at the Excite@Home board level and their representatives will resign from
the board. AT&T will have the right to elect a majority of the board members and
Excite@Home will amend its charter to allow board action by simple majority.
The agreements announced today have been approved by a committee of the
Excite@Home's independent directors, as well as by unanimous vote of the full
Board.
"Now, we can work even more effectively with Excite@Home to realize our common
vision of putting the Internet to work for individuals, families and
businesses," said C. Michael Armstrong, chairman and chief executive officer of
AT&T. "We can extend Excite@Home across access platforms, add new capabilities
of our own, and engage the creativity of third parties, such as content
providers and other web portals, to enrich the service. Working with
Excite@Home, we can bring broadband communications, information and transaction
services to millions of the world's homes, offices, and shops."
Brian L. Roberts, president of Comcast Corporation said, "From the outset, we
have viewed Excite@Home as an invaluable strategic partner. Together, we have
made significant progress in reducing installation time and in expanding the
online marketing, OEM, and retail channels that have accelerated our deployment
of high-speed cable Internet services. The extension of our agreements gives us
clarity and the ability to continue our aggressive deployment of Comcast@Home."
"From the beginning, we have combined broadband content and high-speed access to
offer our customers a superior online experience," said David Woodrow, executive
vice president of business development, Cox Communications. "However, this is
just the tip of the iceberg in terms of how broadband information,
communications, and entertainment services, combined with digital television
technologies will dramatically change the way consumers use and view the
Internet. We are pleased to extend our relationship with Excite@Home."
"When we began deploying high-speed Internet services in 1996, many doubted that
we would be able to use the cable networks to deliver broadband at a price
consumers could afford. But by working closely with our cable partners, we were
able to bring efficiencies to our network that lowered prices for consumers and
thereby sparked a broadband explosion," said Tom Jermoluk, chairman of
Excite@Home. "Now we are ready to move into the next phase of leading the
broadband revolution. We have established terms of carriage for the
post-exclusive period and this clarity will help drive new forms of business,
such as advanced TV and connectivity, that Excite@Home can exploit in
conjunction with its existing business model."
The Excite@Home Board of Directors also announced its intention to withdraw
plans for establishing a tracking stock for the media assets of its business.
"Through the new long-term extensions of our cable agreements, we have achieved
platform and content alignment with our partners," said George Bell, president
and CEO, Excite@Home. "Given this clarity, we believe we are better served with
a single unified company."
<PAGE>
In addition, AT&T has agreed to give Comcast and Cox the right to sell their
shares in Excite@Home to AT&T for a minimum price of $48 a share any time
between January 1, 2001, and June 4, 2002. Comcast and Cox each own
approximately 30 million Class A shares, or about 8 percent, of Excite@Home.
AT&T's purchase obligation is limited to an aggregate value of approximately $3
billion. If Excite@Home's average share price exceeds $48 for 15 days before and
15 days after Comcast or Cox exercises their right to sell, they will receive
the higher price per share and the number of shares AT&T purchases will be
reduced commensurately. Comcast and Cox have the right to take payment in cash
or in shares of AT&T stock.
Under the agreements announced today, Comcast and Cox will each receive new
warrants to purchase two Series A shares for each home its system passes. These
warrants will vest in installments every six months beginning in June, 2001, and
be fully vested in June, 2006, if Comcast and Cox have elected to continue their
extended non-exclusive distribution agreements through that period. Excite@Home
will also convert about 50 million of AT&T's Series A shares into Series B
shares, each of which has 10 votes. In connection with the new distribution
agreements through 2008, AT&T will also have the right to purchase up to
approximately 25 million Series A shares and 25 million Series B shares. As a
result, AT&T will have, on a fully diluted basis, 25 percent of the economic
interest in Excite@Home and 74 percent of the voting interest, as compared to
the 25 percent economic interest and 56 percent voting interest it has today.
Following the closing of the transactions announced today, AT&T will consolidate
Excite@Home's financial results with its own. This is expected to increase
AT&T's revenue in 2000 by approximately $400 million and will have no
significant impact on cash earnings. However, due to the amortization of
goodwill and other non-cash charges, it is expected to reduce 2000 operational
earnings per share by approximately 20 cents. Reported earnings per share for
2000 are expected to be reduced by approximately 5 cents as a result of the
agreements.
The changes to be made to Excite@Home's charter and the issuance of additional
Excite@Home stock require shareowner approval and other approvals. The companies
expect these transactions to be completed by the third quarter of 2000.
With more than one million cable modem subscribers, Excite@Home is setting the
pace for broadband and winning the hearts of consumers worldwide who are
enjoying the benefits of a high-speed, "always-on," and open connection to the
Internet afforded by the @Home service. Through the combination of content and
distribution, Excite@Home is changing the way consumers use and view the
Internet. Recognizing their positive impact on consumers, Excite@Home and its
cable partners look forward to accelerating and expanding the delivery of
high-speed services.
Excite@Home, the leader in broadband, offers media services through Excite
Network (www.excite.com, www.bluemountain.com and other properties), and
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broadband subscription services through @Home (www.home.com) and @Work
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(www.work.home.net). The company has a worldwide footprint of 72 million cable
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homes under long-term contract. Excite@Home's MatchLogic subsidiary
(www.matchlogic.com) offers marketers industry-leading digital advertising
------------------
<PAGE>
solutions including rich media production, targeted ad and email services, and
datamart management and analysis.
AT&T Corp (www.att.com) is among the world's premier voice, video and data
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communications companies, serving more than 80 million customers, including
consumers, businesses and government. With annual revenues of more than $62
billion and 148,000 employees, AT&T provides services to customers worldwide.
Backed by the research and development capabilities of AT&T Labs the company
runs the world's largest, most sophisticated communications network and has one
of the largest digital wireless networks in North America. The company is a
leading supplier of data and Internet services for businesses and offers
outsourcing, consulting and networking-integration to large businesses. It is
also one of the nation's largest Internet service providers for consumers.
Through its recent cable acquisitions, AT&T will bring its bundle of broadband
video, voice and data services to customers throughout the United States.
Internationally, the AT&T/BT Global Venture - recently named Concert - will
serve the communications needs of multinational companies and international
carriers worldwide.
Comcast Corporation (www.comcast.com) is principally involved in the
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development, management and operation of broadband cable networks and in the
provision of programming content through majority ownership of QVC,
Comcast-Spectacor, Comcast SportsNet, and The Golf Channel, a controlling
interest in E! Entertainment Television and through other programming
investments. Comcast Cable is the third largest cable company in the nation and,
incorporating pending cable transactions, will serve more than 8.2 million
subscribers. Comcast's Class A Special and Class A Common Stock are traded on
The Nasdaq Stock Market under the symbols CMCSK and CMCSA, respectively.
Cox Communications serves approximately 6 million customers nationwide, making
it the nation's fifth largest cable television company. A full-service provider
of telecommunications products, Cox offers an array of services, including Cox
Cable; local and long distance telephone services under the Cox Digital
Telephone brand; high-speed Internet access under the brands Cox@Home, Road
Runner and Cox Express; advanced digital video programming services under the
Cox Digital Cable brand; and commercial voice and data services via Cox Business
Services. Cox is an investor in telecommunications companies including Sprint
PCS and Excite@Home, as well as programming networks including Discovery
Channel, The Learning Channel, Outdoor Life and Speedvision. More information
about Cox Communications can be accessed on the Internet at www.cox.com.
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###
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(c) 2000 At Home Corporation. Excite@Home, @Home, @Work, Excite, the stylized
logo and MatchLogic are trademarks of At Home Corporation and may be registered
in certain jurisdictions. All other brand names are trademarks of their
respective owners. Legal Notices
-------------
The foregoing are "forward-looking statements" which are based on management's
beliefs as well as on a number of assumptions concerning future events made by
and information currently available to management. Readers are cautioned not to
put undue reliance on such forward-looking statements, which
<PAGE>
are not a guarantee of performance and are subject to a number of uncertainties
and other factors, many of which are outside the control of AT&T, Excite@Home,
Comcast Corporation and Cox Communications, that could cause actual results to
differ materially from such statements. The transactions described in this
release are subject to shareowner and other approvals and there can be no
assurance the transactions will be consummated or that the anticipated results
of the transactions will be realized. For a more detailed description of the
factors that could affect the companies' future results, please see the
companies' filings with the Securities and Exchange Commission. The companies
disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
This information is presented solely to provide additional information to
further understand the results of the companies.
