As filed with the Securities and Exchange Commission on November 21, 1997
Registration No. 333-21921
SECURITIES AND EXCHANGE COMMISSION
FORM S-3/A
PRE-EFFECTIVE AMENDMENT NO. TWO
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMERICA ONLINE, INC.
(Exact name of registrant as specified in its charter)
Delaware 54-1322110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 448-8700
(Address, including zip code, and telephone, including
area code, of registrant's principal executive offices)
Stephen M. Case
Chief Executive Officer
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 448-8700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Sheila A. Clark, Esquire
Deputy General Counsel
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 448-8700
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. //
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. //
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. //
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. //
_______________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
AMERICA ONLINE, INC.
377,716 Shares of Common Stock
(Par Value $.01 Per Share)
The 377,716 shares of Common Stock of American Online, Inc., a
Delaware corporation (the "Company" or "America Online"), offered hereby are
being sold by the selling stockholders identified herein (the "Selling
Stockholders"). Such offers and sales may be made on one or more exchanges,
in the over-the- counter market, or otherwise, at prices and on terms then
prevailing, or at prices related to the then-current market price, or in
negotiated transactions, or by underwriters pursuant to an underwriting
agreement in customary form, or in a combination of any such methods of sale.
The Selling Stockholders may also sell such shares in accordance with Rule 144
under the Securities Act of 1933, as amended (the "1933 Act"). The Selling
Stockholders are identified and certain information with respect to them is
provided under the caption "Selling Stockholders" herein, to which reference
is made. The expenses of the registration of the securities offered
hereby, including fees of counsel for the Company, will be paid by the Company.
The following expenses will be borne by the Selling Stockholders:
underwriting discounts and selling commissions, if any, and the fee of
legal counsel, if any, for the Selling Stockholders. The filing by the Company
of this Prospectus in accordance with the requirements of Form S-3 is not an
admission that any person whose shares are included herein is an "affiliate" of
the Company.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing selling orders on behalf of any
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the 1933 Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the 1933 Act. The Company will not
receive any of the proceeds from the sale of the securities offered hereby. The
Common Stock is listed on the New York Stock Exchange ("NYSE") under the symbol
AOL. On November 20,<R/> 1997, the closing sale price of the Common
Stock, as reported by the NYSE, was $
74.875 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person is authorized in connection with any offering made hereby to give
any information or to make any representations other than as contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus is not
an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
The date of this Prospectus is , 1997.
AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024 of the Commission's office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and at its regional
offices located at 7 World Trade Center, Suite 1300, New York, NY 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
of such reports, proxy statements and other information can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, DC 20549 at prescribed rates. The Commission also maintains
a Web site that contains reports, proxy and information statements and other
information regarding registrants (including America Online) that file
electronically with the Commission. The address of this site is
http://www.sec.gov. The Company's Common Stock is listed on the New York Stock
Exchange (the "NYSE") under the symbol "AOL" and reports, proxy
statements and other information concerning the Company may also be inspected
at the offices of the NYSE at 20 Broad Street, New York, NY 10005.
Additional updating information with respect to the securities covered herein
may be provided in the future to purchasers by means of appendices to this
Prospectus.
The Company has filed with the Commission in Washington, DC a registration
statement (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the 1933 Act with respect to the securities
offered or to be offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement, certain items of which are
omitted in accordance with the rules and regulations of the Commission. For
further information about the Company and the securities offered hereby,
reference is made to the Registration Statement and the exhibits thereto.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997 , filed pursuant to Section 13 or 15(d) of the 1934
Act (File Number 0-19836).
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
Number 0-19836).
(c) The Company's Current Report on Forms 8-K for an event
dated September 7, 1997 , filed pursuant to Section 13 or 15(d) of
the 1934 Act (File No. 0-19836).
(d) The description of the Company's capital stock which is
contained in a registration statement on Form 8-A under the 1934 Act, including
any amendments or reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act, prior
to the filing of a post-effective amendment which indicates that all securities
covered by this Prospectus have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of the filing of such
reports and documents.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all documents incorporated by reference herein, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
therein). Requests for such copies should be directed to: Sheila A. Clark,
Deputy General Counsel, America Online, Inc., 22000 AOL Way, Dulles, Virginia
20166-9323, telephone number (703) 448-8700.
TABLE OF CONTENTS
Page
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 1
RISK FACTORS 3
RECENT DEVELOPMENTS 9
THE COMPANY 10
SELLING STOCKHOLDERS 11
PLAN OF DISTRIBUTION 12
LEGALITY OF COMMON STOCK 12
EXPERTS 13
RISK FACTORS
An investment in the shares being offered by this Prospectus involves a
high degree of risk. In addition to the other information contained in this
Prospectus or incorporated herein by reference, prospective investors should
carefully consider the following risk factors before purchasing the shares
offered hereby. This Prospectus and other statements made by the Company to
the public contain and incorporate by reference forward-looking statements
within the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. Reference is made in particular to the discussion set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997 (the "Form 10-K") and in the Company's quarterly
report on Form 10-Q for the quarter ended September 30, 1997 and in
"Business" in the Company's Form 10-K, incorporated by reference into this
Prospectus. Such statements are based on current expectations that involve a
number of uncertainties including those set forth in the risk factors below.
Actual results could differ materially from those projected in the forward-
looking statements.
Competition
The Company competes in the highly competitive businesses of online and
Internet services, advertising and electronic commerce. Internet service
providers and online services, including the Microsoft Network, Prodigy Services
Company, CompuServe Corporation and various national and local Internet service
providers as well as long distance and regional telephone and cable companies,
including, among others, AT&T Corp., MCI Communications Corporation and various
regional Bell operating companies, @Home Network, and WebTV currently compete
with the Company for both subscribers and for advertising and electronic
commerce revenues. The products and services offered by the Company are thus
available not only from other online service companies, but also from Web-based
Internet service providers using industry-standard browser and navigational
software, from telephone companies who may offer such services directly to their
customers as part of their telephone service and from suppliers of operating
systems who may incorporate functional equivalents to the Company's services in
their products. The Company also competes for advertising and electronic
commerce revenues with major Web sites operated by search services and other
companies such as Yahoo! Inc., Netscape Communications Corporation, Infoseek
Corporation, CNET, Inc., Lycos, Inc., and Excite, Inc., with global media
companies such as newspapers, radio and television stations and content
providers such as The Walt Disney Company and Time Warner Inc. and with direct
marketing and telemarketing companies. The Company has entered into an
agreement with WorldCom, Inc. to acquire the CompuServe Corporation's online
services businesses, although there can be no assurance that the acquisition
will be consummated. See "Recent Developments".
Some of the present competitors and potential future competitors of the
Company may have greater financial, technical, marketing and/or personnel
resources than the Company. The competitive environment could (i)
require further price reductions and increased spending on marketing, network
capacity, content procurement and product development, (ii) limit the
Company's opportunities to enter into and/or renew agreements with content
providers and distribution partners, (iii) limit its ability to develop
new products and services, (iv) limit its ability to continue to grow its
subscriber base, (v) result in increased attrition in the Company's
subscriber base and (vi) negatively impact the Company's ability to meet its
business objective of changing its business model into one in which increasingly
more revenues and profits are generated from sources other than online service
subscription revenues, such as advertising and electronic commerce. Any of the
foregoing events could have an impact on revenues or result in an increase in
costs as a percentage of revenues, which could have a material adverse effect on
the Company's business, financial condition and operating results.
Network Capacity and Operations
The Company has adopted a flat-rate pricing plan which
provides access to AOL for a flat monthly fee of $19.95 with no additional
hourly charges (the "Flat-Rate Plan") . Due to the rapid growth in
subscriber usage resulting from flat-rate pricing, the Company and its data
communications access providers have experienced difficulty in providing
adequate server and network capacity, respectively. As a result, members have
encountered difficulty in accessing and using the America Online service.
America Online employs a diversified portfolio approach in designing,
structuring and operating its network services. America Online manages AOLnet,
a network of third party network service providers, including Sprint
Corporation, ANS Communications, Inc., a wholly-owned subsidiary of America
Online ("ANS"), BBN Corporation, a part of GTE Internetworking and UUNET
Technologies, Inc. The Company anticipates continuing aggressively
to build AOLnet , in order to increase its network capacity.
There can be no assurance that the AOLnet build-out or other efforts to
expand server and network capacity will be successful, or if they are
successful, that customer demand will develop for the capacity created, and the
failure to do so could have a material adverse effect on the Company's
business , financial condition and operating results . In addition, supply
shortages exist for certain component parts, including local exchange carrier
lines from local telephone companies, modems, circuits and routers, that the
Company requires to expand network capacity. The buildout of AOLnet requires a
substantial investment in telecommunications equipment, which the Company is
financing principally through leasing and asset-backed debt financing.
Continuing supply shortages or the failure to obtain the necessary financing for
the buildout of AOLnet could have a material adverse effect on the Company's
ability to expand network capacity. The Company has recently entered into an
agreement to sell ANS. See "Recent Developments".
The Company's operations are dependent on its ability to protect its
computer equipment and the information stored in its data centers against damage
by fire, power loss, telecommunications failures, service failures by third
party network service providers, unauthorized intrusions and other events.
Although the Company believes it has taken prudent measures to reduce the
risk of interruption in its operations for such causes, there can be no
assurance that these measures will be sufficient. Any damage or failure
that causes interruptions in the Company's operations could have a material
adverse effect on its business, financial condition and operating results.
Although the Company carries property and business interruption insurance to
cover its operations, the coverage may not be adequate to compensate for losses
that may occur. Software defects and server and network expansion could also
cause service outages, and although the Company has made efforts to reduce
outages, there can be no assurance that its efforts to reduce outages will be
successful, and the failure to do so could have a material adverse effect on the
Company's business, financial condition and operating results.
Evolving Business Model ; Development of Other Revenues
The Company's business model is evolving into one in which the
Company relies on revenues generated from non-subscription based revenues, such
as from electronic commerce and advertising and merchandise sales, as well as
subscription based sources . With the introduction of the Flat-Rate Plan,
the Company has experienced increases in the average total usage hours per
member per month, and increases in the number of hours of usage relative
to online service revenues. While the growth and management of AOLnet,
particularly in the last fiscal year, has provided overall lower per hour
data communication costs , it is anticipated that such lower costs
will be more than offset by the additional costs resulting from increased
total usage hours, primarily as a result of the introduction of the Flat-
Rate Plan.
In order to meet its future profitability goals, the Company believes
that it must increase non-subscription based revenues, as well as reduce
marketing expenses as a percentage of total revenues. The Company expects that
the growth in other revenues, assuming such growth continues, will represent an
increasing portion of total revenues, and will provide the Company with the
opportunity and flexibility to fund programs designed to meet its business
objectives. There can be no assurance that the Company will adequately generate
such other revenue streams, and the failure to do so could have a material
adverse effect on the Company's business, financial condition and operating
results.
Additionally, the changing business model and resulting expansion of its
business and changes in its operations have placed significant demands on the
Company's administrative, operational and financial resources. The Company's
future performance will depend in part on its ability to manage its growth and
to adapt its administrative, operational and financial control systems to the
needs of an expanded and evolving entity. The failure of management to
anticipate, respond to and manage changing business conditions could have a
material adverse effect on the Company's business, financial condition
and results of operations.
Seasonality
In 1996, the Company began to see the effects of seasonality in
both member acquisitions and in the amount of time spent by customers using its
services. The Company may have experienced the effects of seasonality in
previous periods, but the effects, if any, were not discernible due to the
masking effect resulting from the Company's substantial growth rates in those
periods. The Company expects that seasonality will continue to have an
effect in the future. The growth in the subscriber base is expected to
be highest in the second and third fiscal quarters, when sales of new computers
and computer software are highest due to the holiday season.
Relationships with Providers
As competition intensifies in the online services markets, it may become
more difficult or expensive to secure and maintain relationships with electronic
commerce, advertising, marketing, technology and content providers. Although
the Company does not believe that any single relationship is material to its
business, financial condition, or results of operations, there can be no
assurance that the failure to establish new relationships or that the loss of a
number of relationships or significantly increased costs or decreased revenues,
as the case may be, to maintain relationships would not have a material adverse
effect on the Company's business, financial condition and operating
results. .
Acquisitions
Since the beginning of January 1996 , the Company has acquired or
merged with, among others, the Johnson-Grace Company and the ImagiNation
Network, Inc. (doing business as WorldPlay Entertainment). On September 7,
1997, the Company entered into an agreement to acquire the online services
businesses of CompuServe Corporation (the "CompuServe Business"). There can be
no assurance that the acquisition of the CompuServe Business will be consummated
or, if it is, that its businesses can be successfully managed and operated by
the Company. See "Recent Developments". Acquisitions by the Company
involve risks, including successful integration and management of acquired
technology, operations and personnel. The integration of acquired businesses
may also lead to the loss of key employees of the acquired companies and
diversion of management attention from other ongoing business concerns. In
addition, acquisitions may result in significant charges for in-process research
and development or other matters. Any of these factors could have a material
adverse effect on the Company's business, financial condition and operating
results .
New Businesses and International Ventures
The Company pursues new products and services to diversify its sources of
revenue and leverage its technological and other competencies. There can be no
assurance that the Company will be able to successfully develop, or achieve
commercial acceptance for, these new products and services. Demand for and
market acceptance of new products and services are subject to a high degree of
uncertainty. Moreover, critical issues concerning commercial activities via the
Internet, including security, reliability, cost, ease of use and access, remain
unresolved and may adversely impact the growth and development of the Company's
business.
The Company offers its online services in the United States and Canada,
and through joint ventures, in Austria, France, Germany, Japan, Sweden,
Switzerland, and the United Kingdom. The Company has recently announced its
intention, through a joint venture, to offer online services in Australia in
1998. There can be no assurance that the Company or its partners will be
able to, or to continue to, successfully market, sell and deliver its services
in these markets. In addition, there are certain significant risks inherent in
doing business on an international level, such as laws governing content that
differ greatly from those in the United States , unexpected changes in
regulatory requirements, political risks, export restrictions, export controls
relating to encryption technology, tariffs and other trade barriers,
fluctuations in currency exchange rates, issues regarding intellectual property
and potentially adverse tax consequences, any or all of which could impact the
Company's international operations.
Changing Technologies
As Internet online services evolve, the Company will be required to
offer technological advances such as improved data compression and delivery of
voice and full-motion video. Currently, Internet online services are
accessed primarily by personal computers via modems . As online services
become accessible by cable, satellite, television or other consumer
electronic devices, and become commercially deliverable over other wired
conduits such as coaxial and fiber optic cable, the Company may have to develop
new technology or modify its existing technology to keep pace with these
developments. Competitors of the Company could gain advantage by
implementing new access technologies more quickly than the Company. Pursuit
of these technological advances will require substantial expenditures, and there
can be no assurance that the Company will succeed in adapting its online service
business to alternate access devices and conduits.
Government Regulation ; Legal Uncertainties
In the United States and most countries in which the Company conducts
its major operations, the Company is not currently subject to direct regulation
other than pursuant to laws applicable to businesses generally. Adverse changes
in the legal or regulatory environment relating to the interactive online
services and Internet industry in the United States, Europe or Japan could have
a material adverse effect on the Company's business, financial condition and
operating results. A number of legislative and regulatory proposals from
various international bodies and foreign and domestic governments in the areas
of encryption standards, content regulation, consumer protection, intellectual
property, privacy, electronic commerce, and taxation, among others, are now
under consideration. The Company is unable at this time to predict which, if
any, of such proposals may be adopted and, if adopted, whether such proposals
would have an adverse effect on the Company's business, financial condition and
operating results. See also "Risk Factors--New Businesses and International
Ventures".
Moreover, the manner in which existing domestic and foreign laws will or
may be applied to online service and Internet access providers is uncertain, as
is the effect on the Company's business given different possible applications.
Similarly, the Company is unable to predict the effect on the Company from the
potential future application of various domestic and foreign laws governing
content, export restrictions, privacy, export controls on encryption technology,
tariffs and other trade barriers, intellectual property and taxes.
Reliance on Key Personnel
The Company's success depends in part upon the performance of its executive
officers and other key employees. The loss of the services of one or more of its
key personnel could have a material adverse effect on the Company 's business,
financial condition and operating results . The Company depends on its
continued ability to attract and retain highly skilled and qualified personnel.
Competition for such personnel is intense, and there can be no assurance that
the Company will be successful in attracting and retaining such personnel.
Volatility of Share Price
The market price of the Company's Common Stock has a history of volatility.
Factors such as quarterly variations in financial results and membership growth
and usage, new pricing strategies, the announcement of technological
innovations, mergers, acquisitions, strategic partnerships or new product
offerings by the Company or its competitors, the entrance of new competitors
into the online services market and changes in content providers may have a
significant impact on the market price of the Common Stock. Moreover, the
Common Stock could experience price volatility based on market conditions. In
particular, a substantial short interest exists in the Company's Common Stock
which may tend to exacerbate volatility.
Litigation and Other Proceedings
The Company is a party to various litigation matters, investigations and
proceedings, including a lawsuit filed on behalf of shareholders against the
Company and its chief executive officer and chief financial officer alleging
violations of the federal securities laws. Such class action lawsuit was filed
in federal court in Alexandria, Virginia against the Company, its officers,
outside directors and its auditors in February 1997. In July 1997, the court
dismissed the complaint, finding that the allegations of the complaint were not
sufficiently specific. The plaintiffs filed an amended complaint in September
1997, this time naming
the Company, its Chief Executive Officer and its
Chief Financial Officer as defendants. The court has declined to dismiss the
amended complaint and the case will now be litigated. A shareholder derivative
suit related to such class action lawsuit has also been filed in Delaware
chancery court against certain current and former directors of the Company. .
The costs and other effects of pending or future litigation, governmental
investigations, legal and administrative cases and proceedings (whether
civil or criminal), settlements, judgments and investigations, claims and
changes in those matters, and developments or assertions by or against the
Company relating to intellectual property rights and intellectual property
licenses could have a material adverse effect on the Company's business,
financial condition and operating results.
Year 2000 Potential Problems
The Company utilizes a significant number of computer software programs and
operating systems across its entire organization, including applications used in
operating the AOL Service, the Company's proprietary software, member services,
network access, content providers, joint ventures and various administrative and
billing functions. To the extent the Company's software applications contain
source codes that are unable to appropriately interpret the upcoming calendar
year 2000, some level of modification, or even possibly replacement of such
applications, may be necessary. The Company has appointed a Year 2000 Task Force
to perform an audit to assess the scope of the Company's risks and bring its
applications into compliance. This Task Force is currently in the process of
completing its identification of applications that are not Year 2000 compliant.
In addition, the Company has begun to ask its vendors, joint venture partners
and content partners about their progress in identifying and addressing problems
that their computer systems may face in correctly processing date information
related to the Year 2000.
The Company is in the early stages of conducting its Year 2000 audit and
therefore is unable to make a reasonable estimate of the costs associated with
Year 2000 compliance. Accordingly, no assurance can be given that any or all of
the Company's or third party systems are or will be Year 2000 compliant or that
the costs required to address the Year 2000 issue or that the impact of the
Company's failure to achieve substantial Year 2000 compliance will not have a
material adverse effect on the Company's business, financial condition or
results of operations.
Future Sales of Common Stock
Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices of the Common Stock. H<R/>olders
of approximately
5,538,000 shares of America Online Common Stock
(outstanding or issuable upon exercise of certain rights) have rights of
registration of their shares for resale. In connection with a master data
communications agreement, the Company has issued a warrant to purchase 3,600,000
restricted shares of the Company's common stock under the terms of which the
Company would be required to register such shares on Form S-3 within 45 days of
a full exercise.<R/> Additional shares are subject to registration statements
on Form S-8 in connection with the Company's stock option plans. The sales of
any of the foregoing shares could have a material adverse effect on the then-
prevailing market price of Common Stock.
Anti-Takeover Defense Provisions
The Company's Restated Certificate of Incorporation and Restated By-laws
contain certain provisions that could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of the Company. Certain of such provisions allow
the Company to issue preferred stock with rights senior to those of its Common
Stock and impose various procedural and other requirements which could make it
more difficult for stockholders to effect certain corporate actions. In
addition, the Company has a stockholder rights plan pursuant to which holders of
Common Stock are entitled to one preferred share purchase right for each
outstanding share of Common Stock they hold, exercisable under certain defined
circumstances involving a potential change of control. The foregoing provisions
could limit the price that certain investors might be willing to pay in the
future for shares of Common Stock.
The stock option agreements between the Company and its directors,
officers and employees generally provide that following a merger, consolidation,
sale or transfer of the Company (as described in the option agreements, a
''Change of Control''), the unvested options accelerate upon the earliest of (i)
12 months following the Change of Control, (ii) termination of employment
without cause, and (iii) certain downgrades of employment, all as described in
the option agreements. These provisions may have the effect of increasing the
cost of, and thereby discouraging, a future attempt to take over the
Company.
RECENT DEVELOPMENTS
On September 7, 1997, America Online entered into a Purchase and Sale
Agreement (the "Agreement") by and among America Online, ANS, a Delaware
corporation and a wholly-owned subsidiary of America Online, and WorldCom, Inc.,
a Georgia corporation ("WorldCom"), pursuant to which America Online agreed to
transfer to WorldCom and WorldCom agreed to transfer to America Online all of
the online services businesses of CompuServe Corporation, a Delaware corporation
("CompuServe"), and $175 million in cash, subject to certain adjustments (the
"Purchase and Sale"). Consummation of the Purchase and Sale is subject to the
satisfaction of certain conditions, including, among others, the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any foreign competition law
or similar law, the receipt of other required regulatory approvals, and the
absence of certain adverse changes. Consummation of the Purchase and Sale is
also subject to the consummation of WorldCom's acquisition of CompuServe
pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated
September 7, 1997, by and among H&R Block, Inc., a Missouri corporation ("H&R
Block"), H&R Block Group, Inc., a Delaware corporation, a wholly-owned
subsidiary of H&R Block and the majority shareholder of CompuServe, WorldCom,
and Walnut Acquisition Company, L.L.C., a Delaware limited liability company
which is wholly-owned by WorldCom. The closing of the Purchase and Sale is
expected to occur on or before March 1, 1998, as soon as practicable after the
satisfaction of the foregoing conditions. See "Risk Factors--Acquisitions."
The Agreement provides that upon closing of the Purchase and Sale, the
Company, WorldCom, and ANS will enter into a Master Agreement for Data Services,
and that the Company, UUNET Technologies, Inc. and CompuServe will enter into a
Network Services Agreement, each with an initial term to end in December 2002,
subject to extension by the Company in certain circumstances (together, the
"Network Agreements"). The Network Agreements provide for the Company to
receive Internet access, additional modems for the Company's dial-up member
access network, network and modem maintenance and operations services, and
capacity on the CompuServe network in consideration for certain minimum
commitments and fees in amounts to be based on certain factors.
On November 10, 1997, the Company announced that the Antitrust Division of
the U.S. Department of Justice has advised AOL that it is permitting the
statutory waiting period required for the AOL-WorldCom, Inc.-ANS Communications,
Inc.-CompuServe transactions to expire without seeking additional information.
On November 11, 1997, the Company was informed that the German Federal Cartel
Office would not object to the consummation of the transactions.
THE COMPANY
America Online, including its subsidiaries , is the global
leader in the interactive communications and services medium, with over $1.6
billion in revenue during fiscal 1997 . The Company has the largest
subscriber base of any Internet online service , with more than 9.4 million
members worldwide as of September 30, 1997, an increase of over 40% from the
previous year . The Company generates revenues principally through
membership and usage fees, as well as increasingly from other revenues, which
include electronic commerce fees and advertising sales revenues. The
Company offers its online services in the U.S. and Canada and, through joint
ventures, in Austria, France, Germany, Japan, Sweden, Switzerland and the United
Kingdom, and offers access to its AOL service in over 100 countries.
The Company's mission is to become the recognized brand leader in the
development of an interactive medium that transcends traditional boundaries
between people and places to create an interactive global community that holds
the potential to change the way people communicate, stay informed, learn, shop
and do business. To accomplish this mission, the Company's strategy is to
continue to improve and expand its service offerings by incorporating new,
scaleable technologies, build unique and engaging programming and content,
expand investment in network capacity in order to serve existing members and
support growth, and pursue related business opportunities, while maintaining
technological flexibility. The Company seeks to establish America Online and
AOL as recognized brand names and to build customer loyalty as a foundation for
growth in subscribers and revenues.
Through its AOL Networks unit, which oversees the Company's flagship
Internet online service, the Company offers its members a broad range of
original programming, features and tools through the AOL service and the AOL.com
web site. The Company focuses on maximizing the value of its interactive
service by encouraging members to share information and ideas and by providing
numerous tools for members to customize the AOL service to best suit their
individual and business needs. Offerings include electronic mail, Buddy Lists,
Instant Messages, interactive news and magazines, entertainment, weather,
sports, games, stock quotes, mutual fund transactions, online shopping, Internet
access with search capabilities, software files, computing support, online
classes and auditorium events, online meeting rooms and conversations (chat),
and parental, mail and marketing controls. By offering a broad range of high
quality Internet online products and services, AOL Networks seeks to build its
subscriber base as a platform for increasing subscription and non-subscription
based revenues, including from electronic commerce and advertising.
Through its AOL Studios unit, the Company creates, invests in and builds
original content for AOL and the Internet, focusing on branded properties in
categories of local content, multiplayer games, entertainment, romance, sports
and women. Under AOL Studios are Digital City, Inc. (owned by the Company and
the Tribune Company, and providing local, community-based interactive content
and services), Greenhouse Networks (a premier content developer for the mass
market), WorldPlay Entertainment (expanding online games into a social
entertainment experience) and AOL Ventures, Inc. (a content venture portfolio of
strategic minority investments).
ANS Communications, the Company's managed network services subsidiary,
deploys access infrastructure for AOL and the Internet services industry. ANS
provides large scale, high-speed network access for AOL's individual and
business subscribers. ANS is a primary supplier for AOLnet, the Company's
proprietary data communications network, which the Company expanded during
fiscal 1997 from 143,000 modems to 350,000 modems, resulting in increased
network capacity, higher speed access, and reduced per-hour data communication
costs. The portfolio of AOL networks expanded during fiscal 1997 to reach
approximately 1,300 cities worldwide. The Company has recently entered into an
agreement with WorldCom, Inc. to sell ANS, as described above in "Recent
Developments".
America Online was incorporated in Delaware on May 24, 1985. The Company's
principal executive offices are located at 22000 AOL Way, Dulles, Virginia
20166-9323. Its telephone number at that address is (703) 448-8700.
SELLING STOCKHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of Common Stock, as of October 10, 1997, by certain
stockholders
of the Company who are offering Shares pursuant to this Prospectus, both before
and
after giving effect to this offering.
<TABLE>
Shares Shares to Shares
Beneficially Owned be Sold Beneficially Owned
Prior to in the After
the Offering (1)(2) Offering the Offering (1)(2)
Number Percent Number Percent
<S> <C> <C> <C> <C> <C>
Legg Mason
Fund Adviser (3) 3,437,500 3.34% 362,500 3,075,000 2.99%
Dale 17,762 * 10,982 6,780 *
Dougherty (4)
Jose Marcelino
Camarena Bolanos 1,331 * 1,331 -0- -0-
Juan Richardo Perez
Escamilla Costas 1,187 * 1,187 -0- -0-
Sidney Wise 720 * 720 -0- -0-
Robert Zeckhauser 612 * 612 -0- -0-
Octavio Camarena 360 * 360 -0- -0-
Villasenor
Allen L. Morgan 24 * 24 -0- -0-
</TABLE>
* Represents beneficial ownership of less than 1% of the outstanding shares
of Common Stock.
(1) Unless otherwise noted, the persons named in the table, to the Company's
knowledge, have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to the
information contained in the footnotes to this table. Assumes that each
Selling Shareholder will sell all of the shares of Common Stock offered by
him hereunder. See "Plan of Distribution."
(2) Based on 102,910,389 shares of Common Stock outstanding on
September 30, 1997.
(3) Legg Mason Fund Adviser is the beneficial owner of all 3,437,500 shares
of the Company's common stock and an investment adviser to both Legg Mason Value
Trust, Inc. which is the direct owner of 2,012,500 shares of the Company's
common stock, and Legg Mason Special Investment Trust, Inc. which is the direct
owner of 1,425,000 shares of the Company's common stock.
(4) Includes 6,780 shares issuable upon the exercise of options
held by Mr. Dougherty that are exercisable within 60 days.
PLAN OF DISTRIBUTION
The 377,716 shares of Common Stock of the Company offered hereby
(the "Shares") may be offered and sold from time to time by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such offers and sales may be made from time to time on one or more
exchanges, including the NYSE, or in the over-the-counter market, or
otherwise, at prices and on terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. The Shares may be
sold by one or more of the following: (a) a block trade in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account; (c) an exchange distribution in
accordance with the rules of such exchange; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; (e)
privately negotiated transactions; and (f) a combination of any such methods of
sale. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from Selling Stockholders or from
the purchasers in amounts to be negotiated immediately prior to the sale. The
Selling Stockholders may also sell the Shares in accordance with Rule 144 under
the 1933 Act.
The Company is required under the terms of agreements with the Selling
Stockholders to maintain the effectiveness of the registration of the Shares
being offered hereunder until the earlier of the date upon which the
registration of the Shares has been effective for thirty days or the date upon
which all of the Shares offered hereby have been sold.
The Selling Stockholders and any brokers participating in such sales may be
deemed to be underwriters within the meaning of the 1933 Act. There can be no
assurance that the Selling Stockholders will sell any or all of the Shares of
Common Stock offered hereunder.
All proceeds from any such sales will be the property of the Selling
Stockholders who will bear the expense of underwriting discounts and selling
commissions, if any, and their own legal fees.
LEGALITY OF COMMON STOCK
The validity of the issuance of the Shares of Common Stock offered hereby
is being passed upon for the Company by Sheila A. Clark, Deputy General Counsel,
America Online, Inc.
EXPERTS
The consolidated financial statements of America Online, Inc., appearing in
its Annual Report (Form 10-K), as of June 30, 1997 and 1996 and
for each of the three years in the period ended June 30, 1997 , have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the expenses that are expected to be incurred in
connection with the offering of the Shares. All such expenses shall be borne by
the Company. All amounts set forth below are estimates, other than the
registration fee.
<TABLE>
<S> <C>
Registration Fee $10,432
Legal Fees and Expenses 10,000
Accounting Fees and Expenses 25,000
Miscellaneous 4,568
TOTAL 50,000
</TABLE>
The Selling Stockholders will bear the expense of their own legal counsel
and their own miscellaneous fees and expenses, if any.
Item 15. Indemnification of Officers and Directors
Section 145(a) of the General Corporation Law of the State of Delaware
("Delaware Corporation Law") provides, in general, that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director or officer of the corporation. Such indemnity may be against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding, if the indemnified party acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and if, with respect to any criminal action or proceeding, the
indemnified party did not have reasonable cause to believe his conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general, that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director or officer of the
corporation, against any expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation.
Section 145(g) of the Delaware Corporation law provides, in general, that a
corporation shall have the power to purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation against any
liability asserted against him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of the law.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law (the
"Delaware Statute"), Article Ninth of the Registrant's Restated Certificate of
Incorporation (the "Certificate of Incorporation") (incorporated by reference
herein) provides that:
To the fullest extent permitted by the Delaware General Corporation
Law as the same now exists or may hereafter be amended, the Corporation
shall indemnify, and advance expenses to, its directors and officers and
any person who is or was serving at the request of the Corporation as a
director or officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise. The Corporation, by action of its
board of directors, may provide indemnification or advance expenses to
employees and agents of the Corporation or other persons only on such terms
and conditions and to the extent determined by the board of directors in
its sole and absolute discretion.
The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Ninth shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under this Article Ninth.
The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Ninth shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors
and administrators of such officer or director. The indemnification and
advancement of expenses that may have been provided to an employee or agent
of the Corporation by action of the board of directors, pursuant to the
last sentence of Paragraph 1 of this Article Ninth, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be an employee or agent of the Corporation and shall inure to the
benefit of the heirs, executors and administrators of such a person, after
the time such person has ceased to be an employee or agent of the
Corporation, only on such terms and conditions and to the extent determined
by the board of directors in its sole discretion.
In addition, Article Five of the Registrant's Restated By-Laws
(Incorporated by reference herein) provides that:
Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an
officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"Indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide
prior to such amendment), against all expense, liability and loss
(including attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered
by such Indemnitee in connection therewith; provided, however, that, except
as provided in the section "Right of Indemnitees to Bring Suit" of this
Article with respect to proceedings to enforce rights to indemnification,
the Corporation shall indemnify any such Indemnitee in connection with a
proceeding (or part thereof) initiated by such Indemnitee only if such
proceeding (or part thereof) was authorized by the board of directors of
the Corporation.
Right to Advancement of Expenses. The right to indemnification
conferred in Section 1 of this Article shall include the right to be paid
by the Corporation the expenses (including attorney's fees) incurred in
defending any such proceeding in advance of its final disposition;
provided, however, that, if the Delaware General Corporation Law requires,
an advancement of expenses incurred by an Indemnitee in his capacity as a
director or officer (and not in any other capacity in which service was or
is rendered by such Indemnitee, including, without limitation, service to
an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such Indemnitee, to repay
all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
Indemnitee is not entitled to be indemnified for such expenses under this
section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in this section and the section "Right to
Indemnification" of this Article shall be contract rights and such rights
shall continue as to an Indemnitee who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
Indemnitee's heirs, executors and administrators. Any repeal or
modification of any of the provisions of this Article shall not adversely
affect any right or protection of an Indemnitee existing at the time of
such repeal or modification.
Right of Indemnitees to Bring Suit. If a claim under the sections
"Right to Indemnification" and "Right to Advancement of Expenses" of this
Article is not paid in full by the Corporation within sixty (60) days after
a written claim has been received by the Corporation, except in the case of
a claim for an advancement of expenses, in which case the applicable period
shall be twenty (20) days, the Indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by
the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking, the Indemnitee shall also be entitled to be paid the
expenses of prosecuting or defending such suit. In (i) any suit brought by
the Indemnitee to enforce a right to indemnification hereunder (but not in
a suit brought by the Indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover such expenses
upon a final adjudication that, the Indemnitee has not met any applicable
standard for indemnification set forth in the Delaware General Corporation
Law. Neither the failure of the Corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification
of the Indemnitee is proper in the circumstances because the Indemnitee has
met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its board of directors, independent legal counsel, or its stockholders)
that the Indemnitee has not met such applicable standard of conduct, shall
create a presumption that the Indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the
Indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of proving
that the Indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article or otherwise shall be on the
Corporation.
Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Article shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, the Corporation's Certificate of Incorporation as amended from
time to time, these By-Laws, any agreement, any vote of stockholders or
disinterested directors or otherwise.
Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the board of
directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
The directors and officers of the Registrant are covered by a policy of
liability insurance.
In addition, the Company's agreements with the Selling Stockholders
provide for indemnification by the Registrant of the Selling
Stockholders against certain liabilities under the 1933 Act, the 1934 Act,
state securities laws or otherwise, and , in certain cases, provide
for indemnification by the Selling Stockholders of the Registrant and its
directors, its officers and certain control persons against certain
liabilities under the 1933 Act, the 1934 Act, state securities laws, or
otherwise.
Item 16. Exhibits.
Exhibit No. Description
2.1 -- Agreement and Plan of Reorganization dated as of May 11, 1994, as
amended, among the Registrant, RCC Acquisition Corporation and RCC
Communications Corporation (Filed as Annex A to the Registrant's
Registration Statement on Form S-4, Registration No. 33-82030, and
incorporated herein by reference)
2.2 -- Agreement and Plan of Reorganization dated as of November 8,
1994, among the Registrant, BLT Acquisition Corporation, CMG
Information Services, Inc. and Booklink Technologies, Inc. (Filed as
Exhibit 1 to the Registrant's Report on Form 8-K, filed January 9,
1995 and incorporated herein by reference)
2.3 -- Asset Purchase Agreement by and between the Registrant and
Advanced Network & Services, Inc. dated as of November 25, 1994 (Filed
as Exhibit 1 to the Registrant's Report on Form 8-K, filed February
28, 1995 and incorporated herein by reference)
2.4 -- Agreement and Plan of Merger dated as of December 20, 1995, among
the Registrant, Santa's Acquisition Corp. and Johnson-Grace Company
and its Principal Shareholders (Filed as Exhibit 2.1 to the
Registrant's Report on Form 8-K, filed February 14, 1996 and
incorporated herein by reference.)
2.5 -- Stock Purchase Agreement, dated as of August 5, 1996, among the
Registrant, The ImagiNation Network, Inc. and AT&T Corp. (Filed as
Exhibit 10 to the Registrant's Report on Form 8-K, filed August 5,
1996, and incorporated herein by reference.)
2.6 -- Purchase and Sale Agreement dated as of September 7, 1997 by
and among America Online, Inc., ANS Communications, Inc. and WorldCom,
Inc. (Filed as Exhibit 2 to the Company's Current Report on Form 8-K,
dated September 19, 1997, and incorporated herein by reference.)
4.1 -- Article 4, Article 6 and Article 8 of the Restated Certificate of
Incorporation of the Registrant (Filed as part of Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended June 30,
1997, and incorporated herein by reference)
4.2 -- Rights Agreement dated as of April 23, 1993, including Exhibit A
(Certificate of Designation setting forth the terms of Series A Junior
Participating Preferred Stock, $.01 par value), Exhibit B (Form of
Rights Certificate) and Exhibit C (Summary of Rights to Purchase
Series A Junior Participating Preferred Shares) (Filed as Exhibit 1 to
the Registrant's Registration Statement on Form 8-A, filed on
September 9, 1996, and incorporated herein by reference)
4.3 -- First Amendment to the Rights Agreement dated as of January 31,
1995 (Filed as Exhibit 2 to the Registrant's Registration Statement on
Form 8-A, filed on September 9, 1996, and incorporated herein by
reference)
5.1 -- Opinion of Sheila A. Clark, Deputy General Counsel, America
Online, Inc., with respect to the legality of the securities being
registered
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Sheila A. Clark, Deputy General Counsel, America
Online, Inc. (included in Exhibit 5.1)
24.1 -- Powers of Attorney ( Filed as Exhibit 24 to the Registrant's
Registration Statement on Form S-3, filed on February 14, 1997, and incorporated
herein by reference, except for the power of attorney for Daniel F. Akerson
which is filed herewith. )
Item 17. Undertakings.
A. Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
1933 Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. Filings Incorporating Subsequent Exchange Act Documents by Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act) that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Request for Acceleration of Effective Date or Filing of Registration
Statement on Form S-8
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dulles, Commonwealth of Virginia on November
21, 1997.
AMERICA ONLINE, INC.
By:/s/Lennert J. Leader
Lennert J. Leader
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
* Chairman of the Board, President, November 21, 1997
Stephen M. Case Chief Executive Officer and
and Director (principal executive
officer)
* Senior Vice President and Chief November 21, 1997
Lennert J. Leader Financial Officer (principal
financial and accounting officer)
* President & Chief November 21, 1997
Robert W. Pittman Executive Officer,
AOL Networks, and Director
* Director November 21, 1997
Frank J. Caufield
* Director November 21, 1997
Robert J. Frankenberg
* Director November 21, 1997
Alexander M. Haig, Jr.
* Director November 21, 1997
William N. Melton
* Director November 21, 1997
Thomas Middelhoff
* Director November 21, 1997
Daniel F. Akerson
*By Lennert J. Leader, Attorney-in-Fact
November 21, 1997
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
Ladies and Gentlemen:
This opinion is furnished in connection with the preparation and filing by
America Online, Inc. (the "Company") with the Securities and Exchange Commission
of a Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended. You have requested my opinion concerning
the status under Delaware law of the
377,716 previously issued shares
(the "Shares") of the Company's common stock, par value $.01 per share ("Common
Stock"), which the Company is registering under the Act. The shares are to be
sold by certain shareholders of the Company (the "Selling Shareholders"). The
Company has not engaged any underwriters in connection with the proposed filing
of the Registration Statement. This opinion is being rendered in connection
with the filing of the Registration Statement.
I am Deputy General Counsel to the Company and have acted as counsel in
connection with the Registration Statement. In that connection, I, or a member
of my staff upon whom I have relied, have examined and am familiar with
originals or copies, certified or otherwise, identified to our satisfaction, of:
1. Restated Certificate of Incorporation of the Company as presently in
effect;
2. Restated By-Laws of the Company as presently in effect; and
3. Certain resolutions adopted by the Company's Board of Directors.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such copies.
Based upon and subject to the foregoing, we are of the opinion that the Shares
to be sold have been duly and validly authorized by the Company, and the Shares,
when sold, will be duly and validly issued, fully paid and non-assessable shares
of the Common Stock, free of preemptive rights.
This opinion is limited to the General Corporation Law of the State of Delaware
and federal law, although the Company acknowledges that I am not admitted to
practice in the State of Delaware and am not an expert in the laws of that
jurisdiction. We express no opinion with respect to the laws of any other
jurisdiction.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement, and further consent to the use of my name wherever appearing in the
Registration Statement and any amendment thereto.
Very truly yours,
/s/ Sheila A. Clark
Sheila A. Clark
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in Amendment No. 2 to the Registration
Statement on Form S-3 and related Prospectus of America
Online, Inc. for the registration of 377,716 shares of
its common stock and to the incorporation by reference therein of
our report dated September 10, 1997 , with respect to
the consolidated financial statements of America Online, Inc.
included in its Annual Report (Form 10-K) for the year ended
June 30, 1997 , filed with the Securities and Exchange
Commission.
/s/ Ernst & Young
ERNST & YOUNG LLP
Vienna, Virginia
November 20, 1997
POWER OF ATTORNEY
I, Daniel F. Akerson, whose signature appears below, constitute and appoint
Stephen M. Case, Lennert J. Leader and Sheila A. Clark, and each of them, my
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution in each of them, for him/her and in his/her name, place and
stead, and in any and all capacities, to sign the Registration Statement on Form
S-3, and any required amendments or supplements thereto, (and any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended) and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in or
about the premises, for to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his/her substitute or substitutes lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 31st day of October, 1997.
/S/DANIEL F. AKERSON
Daniel F. Akerson
