As filed with the Securities and Exchange Commission on February 14, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
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. "
_______________
CALCULATION OF REGISTRATION FEE
<TABLE>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price aggregate offering registration fee
per unit (1) price(1)
<S> <C> <C> <C> <C>
Common Stock, par value 1,006,942 $34.1875 $34,424,830 $10,432
$.01 per share
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, based upon the
average of the high and low sale prices of the Common Stock as reported on
the New York Stock Exchange on February 11, 1997.
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.
1,006,942 Shares of Common Stock
(Par Value $.01 Per Share)
The 1,006,942 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 February 11, 1997, the closing sale price of the Common Stock, as
reported by the NYSE, was $34.1875 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, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
Number 0-19836).
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1996 and December 31, 1996, filed pursuant to Section
13 or 15(d) of the 1934 Act (File Number 0-19836).
(c) The Company's Current Reports on Forms 8-K and 8-K/A for an event
dated August 5, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act
(File No. 0-19836).
(d) The Company's Current Report on Form 8-K for an event dated
October 29, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act
(File No. 0-19836).
(e) 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 2
RISK FACTORS 5
THE COMPANY 11
PLAN OF DISTRIBUTION 13
LEGALITY OF COMMON STOCK 13
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 contains and incorporates 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, 1996 (the "Form 10-K") and in the Company's Quarterly
Reports on Form 10-Q for the quarters ended September 30, 1996 and December 31,
1996, and under "Business" in the Form 10-K, all 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 online services and Internet markets are highly competitive. The
Company believes that existing competitors, which include, among others,
commercial Internet-based online services such as CompuServe Corporation,
Internet service providers, such as Prodigy Services Company and the Microsoft
Network and various national and local independent Internet service providers,
as well as long distance and regional telephone companies, including, among
others, AT&T Corp., MCI Communications Corporation and various regional Bell
operating companies, are likely to enhance and more aggressively market their
service offerings. In addition, new competitors, including Internet directory
services and various media and telecommunications companies, have entered or
announced plans to enter the online services and Internet markets, resulting in
greater competition for the Company. Some of the direct competitors and possible
future competitors referred to above may have greater financial, technical,
marketing or personnel resources than the Company. The competitive environment
could require further price reductions and increased spending on marketing,
network capacity, content procurement and product development, limit the
Company's opportunities to enter into and/or renew agreements with content
providers and distribution partners, limit its ability to develop new products
and services, limit its ability to continue to grow its subscriber base and
result in increased attrition in the Company's subscriber base. Any of the
foregoing events could have an impact on revenues and result in an increase in
costs as a percentage of revenues. These factors may have a material adverse
effect on the Company's financial condition and operating results.
Subscriber Retention Rates
Subscriber retention rates increased in the second quarter of fiscal 1997
relative to the first quarter of fiscal 1997. Subscriber retention rates
decreased in January 1997 relative to the average retention rate for the quarter
ended December 1996, which the Company believes is primarily a result of
cancellations associated with the high number of registrations that occurred in
December 1996, cancellations associated with network access, and cancellations
associated with the transition of subscribers to a higher standard monthly fee.
Network Capacity and Operations
The Company recently adopted the Flat-Rate Plan which provides complete
access to AOL for a flat monthly fee of $19.95 with no additional hourly
charges. 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.
The Company anticipates continuing to aggressively build AOLnet, a
proprietary TCP/IP network operated by the Company, in order to increase its
network capacity. The Company relies on its subsidiary ANS CO+RE Systems, Inc.
("ANS"), BBN Corporation ("BBN"), U.S. Sprint and others to buildout this
network. Any service failure on the part of BBN, U.S. Sprint or other providers
or other factors could materially affect the AOLnet buildout, which could have a
material adverse effect on the Company's business. In addition, 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. In addition, supply
shortages exist for certain component parts, including modems, circuits,
routers, local exchange carrier lines from local telephone companies, that the
Company requires to expand network capacity. The buildout of AOLnet requires a
substantial investment in telecommunications equipment, which the Company plans
to finance 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'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, unauthorized intrusions and
other events. The Company believes it has taken prudent measures to reduce the
risk of interruption in its operations for such causes. However, there can be
no assurance that these measures are sufficient. Any damage or failure that
causes interruptions in the Company's operations could have a material adverse
effect on its business. While 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.
Evolving Business Model
The Company's business model is evolving quickly into one in which
increasingly more revenues and profits are generated from sources other than
online service subscription revenues, such as merchandise sales, the provision
of data network services, transaction fees and advertising. The Company expects
that gross margins in the near-future associated with online service revenues
will be lower than those achieved in recent periods. With the introduction of
the Flat-Rate Plan, the Company experienced an increase in the average total
usage hours per member per month, and an increase in the number of hours of
usage relative to online service revenues. While the Company expects that the
growth and management of AOLnet will provide overall lower per hour data
communication costs going forward, it is anticipated that this factor will be
more than offset by an increase in total usage hours, primarily as a result of
the introduction of the Flat-Rate Plan.
In order to meet its future operating margin targets, the Company plans to
increase other revenues, which generally carry higher margins than online
service revenues, as well as reduce marketing expenses as a percentage of total
revenues. There can be no assurances, however, that the Company's operating
margins will not be adversely affected in the future by changing business
strategies and other conditions.
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 and results of operations.
Development of Other Revenues
While other revenues, such as revenues from the sale of merchandise,
advertising, data network services, and transaction fees, currently represent a
relatively small percentage of total revenues, a substantial portion of the
Company's margins are associated with these revenues. Among the Company's
business objectives are continuing to accelerate the change in its business
model into one in which increasingly more revenues and profits are generated
from sources other than online service subscription revenues, such as
merchandise sales, the provision of data network services, transaction fees and
advertising, which generally carry higher margins than online service revenues.
The Company expects that the growth in other revenues, assuming such growth
continues, will be a primary source of future profit growth, 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 such other revenue
streams will continue to develop, and such failure could have a material adverse
effect on the Company's operations and profitability.
Seasonality
In April 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 have an effect in the future.
Member acquisition 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. Customer usage is expected to be lower in the summer months
due largely to extended day light hours and competing outdoor leisure
activities.
Access to Content Providers
As competition in the online services market intensifies, it may become
more difficult or expensive to secure and retain content and/or content
providers. The Company generally pays royalties to its content providers under
short-term renewable agreements. While no single content provider accounts for
more than one percent of usage of the Company's America Online service, and the
Company does not believe that any single content provider is material to its
operations, there can be no assurance that the loss of a number of content
providers or significantly increased costs to maintain certain content providers
would not have a material adverse effect on the Company's business.
Acquisitions
Since the beginning of January 1995, the Company has acquired or merged
with Booklink Technologies, Inc., ANS, Medior, Inc., Wide Area Information
Servers, Inc., Global Network Navigator, Inc., Ubique, Ltd. ("Ubique"), the
Johnson-Grace Company and the ImagiNation Network, Inc. ("INN"). Acquisitions
which the Company makes 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 or financial condition.
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.
Through its division America Online Enterprises, the Company has begun to
offer tools and services to enterprises and industries seeking private networks
and to use the America Online service and the Internet as a medium for
communications and commerce. The market for products and services for commercial
use of online services and the Internet has only recently begun to develop, is
rapidly evolving, and is characterized by an increasing number of competitors.
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 enterprise market.
The Company has begun to offer online services internationally in Canada
and, through a joint venture with Bertelsmann AG, in Germany, the United
Kingdom, Austria, Switzerland, and France, and, soon, in Japan through a joint
venture with Mitsui & Co. and Nihon Keizai Shimbun Inc. 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 U.S., 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 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, online services are accessed primarily by
personal computers via modem. As online services become accessible by screen-
based telephones, 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. 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 and Legal Uncertainties
In the United States, the Company is not currently subject to direct
regulation other than federal and state regulation applicable to businesses
generally. However, changes in the regulatory environment relating to the
telecommunications and media industry could have an adverse effect on the
Company's business.
The Federal Communications Commission is considering reforming the current
system of access charges under which long distance telecommunications carriers
pay local telephone companies for using local networks to complete long distance
telephone calls. Currently, Internet service providers, including the Company,
are exempt from paying such network access charges. A change in the system of
network access charges to require Internet service providers to pay network
access charges could have a material adverse impact on the Company's business or
financial condition.
The Communications Decency Act of 1996 (the "CDA") generally makes it
illegal to use an interactive computer service, or to permit a
telecommunications facility to send or display certain "indecent"
communications. The CDA has been challenged in federal court on constitutional
grounds, but the Company cannot predict whether the CDA will be upheld or if it
will be interpreted in a manner that could result in a material liability being
imposed on the Company. If the CDA is upheld, similar state laws could result in
an additional material liability for the Company. Other laws make it illegal to
traffic by computer in obscene or child pornographic materials. Although the
Company does not believe that its activities violate these laws, it cannot
predict how a court would interpret these laws and what duties might be imposed
on the Company.
Other legislative proposals from international, federal, and state
government bodies in the areas of content regulation, consumer protection,
intellectual property, privacy rights and state tax issues could impose
additional regulations and obligations upon all Internet online service
providers. The Company cannot predict the likelihood that any such legislation
will pass, nor the financial impact, if any, the resulting regulation may have.
Moreover, the applicability to Internet online providers of existing laws
governing issues such as intellectual property ownership, libel and personal
privacy is uncertain. Recent events relating to the use of Internet online
services for illegal activities has increased public focus and could lead to
increased pressure on legislatures to impose regulations on Internet online
service providers such as the Company. The law relating to the liability of
online service companies and Internet access providers for information carried
on or disseminated through their systems is currently unsettled and has been the
subject of several recent private lawsuits. If similar actions were to be
initiated against the Company, costs incurred as a result of such actions could
have a material adverse effect on the Company's business.
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. 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
The Company is a party to various litigation matters, investigations and
proceedings from time to time. The Company is currently a party to numerous
class action lawsuits filed on behalf of subscribers who are seeking damages in
connection with difficulties in accessing the AOL service after the introduction
of the Flat-Rate Plan. The Company does not believe that these lawsuits will
result in a material liability for the Company. The costs and other effects of
litigation, governmental investigations, legal and administrative cases and
proceedings (whether civil, such as environmental and product-related, 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 in the future.
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. Within 30 days of
the date hereof, holders of approximately 6,560,000 shares of America Online
Common Stock (outstanding or issuable upon exercise of certain rights) have
rights of registration of their shares for resale. 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 COMPANY
America Online, Inc., including its subsidiaries ("America Online" or the
"Company"), is the global leader in the interactive services market, with nearly
$1.1 billion in revenue during fiscal 1996, and has led the development of a new
interactive medium. The Company has the largest subscriber base of any Internet
online service provider, serving approximately 8 million members worldwide as of
January 1997, more than four times the number of subscribers two years ago. The
Company generates revenues principally through membership and usage fees, as
well as increasingly from merchandise sales and advertising, the provision of
network services to enterprises, transaction fees and other various sources.
America Online seeks to leverage its resources and strategic alliances with
partners and competitors to reach new markets and improve products and services.
The Company offers its online services in Germany, the United Kingdom, France,
Austria, Switzerland, and Canada, and plans to soon offer its online services in
Japan.
The Company's mission, through its three operating divisions, AOL Networks,
AOL Studios, and ANS, is to lead the development of a new interactive medium
that transcends traditional boundaries between people and places to create a new
kind of interactive global community that holds the potential to change the way
people communicate with others, stay informed, learn new things, and buy
products and services. To accomplish this mission, the Company's strategy is to
expand investment in network capacity and member services in order to serve
existing members and support growth, pursue related business opportunities and
alternative revenue models, build unique and engaging content, provide a full
range of interactive services, and maintain technological flexibility.
Through its AOL Networks division, which oversees the Company's Internet
online service, the Company offers its members a broad range of features
including e-mail, online conferences and forums for special interest groups,
entertainment software, computing support, an extensive "newsstand" of
electronic magazines and newspapers, seamless access to the Internet, and a
broad array of original programming and informative content. The Company focuses
on maximizing the interactive nature of its service by encouraging members to
share information and ideas and provides numerous tools for members to customize
the AOL service to best suit their individual and business needs. AOL
Productions, a wholly-owned subsidiary, is a full featured multimedia production
studio that can handle all aspects of interactive content and design for the
Company, its advertisers and its media partners. The Company's Enterprise Sales
unit develops and markets interactive services for businesses.
Through its AOL Studios division, the Company builds new content brands for
AOL and cross-distribution platforms. The Company has launched Digital City in
partnership with the Tribune Company to provide local content and community
programming, and has formed Greenhouse to identify and assist entrepreneurs in
the creation of unique online programming and interactive services. AOL Studios
also provides authoring and production tools for developing content for AOL and
the Internet.
ANS, the Company's data networking subsidiary, deploys access
infrastructure for AOL and the Internet services industry. ANS provides large
scale, high-speed network access to AOL individual and business subscribers.
ANS is the primary supplier for AOLnet, the Company's proprietary data
communication network, which the Company built during fiscal 1996 from 20,000
modems to 140,000 modems, resulting in increased network capacity, higher speed
access, and reduced data communication costs. The portfolio of AOL networks has
expanded to reach approximately 1,000 cities worldwide.
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. Its
Internet address is AOL [email protected], and its America Online address is AOL IR.
SELLING STOCKHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of Common Stock, as of February 12, 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
Beneficially Beneficially
Owned Prior to Shares to be Owned After
the Offering(1)(2) Sold in the the Offering (1)(2)
Number Percent Offering Number Percent
<S> <C> <C> <C> <C> <C>
AT&T Corp. 480,786 * 480,786 -- --
Draper Associates II, L.P. 278,464 * 278,464 -- --
Peter Burnight. 47,210 * 47,210 -- --
William J. Livingston & Janine
Livington Trustees, W&J Living
Trust 32,259 * 32,259 -- --
Wasatch Venture Corp. 29,698 * 29,698 -- --
David Goldman (3) 250,358 * 28,000 222,358 *
Polaris Fund, L.P. 25,796 * 22,874 2,922 *
Barry Schuler & Tracy Strong,
JT TEN (3)(4) 548,546 * 20,000 558,546 *
Meyerson Investments, L.P. 17,354 * 17,354 -- --
Dale Dougherty (3) 17,762 * 10,982 6,780 --
Gregory Shove (3)(5) 19,847 * 7,790 12,057 --
Labrador Ventures I, L.P. 7,624 * 7,624 -- --
Tom Burt (3)(6) 29,112 * 6,000 23,112 *
Patrick J. Silvagnia 5,310 * 5,310 -- --
Irving S. Reed 35,453 * 2,500 32,953 *
Peter Baltaxe(3)(7) 7,180 * 2,164 5,016 *
Stephen N. Livingston(3)(8) 48,508 * 1,400 47,108 *
Jose Marcelino Camarena Bolanos 1,331 * 1,331 -- --
Juan Ricardo Perez Escamilla Costas 1,187 * 1,187 -- --
Hayes C. Batten 2,867 * 1,000 1,867 *
Peter Meyer 934 * 934 -- --
Sidney Wise 720 * 720 -- --
Robert Zeckhauser 612 * 612 -- --
Octavio Camarena Villasenor 360 * 360 -- --
J. Roger Miller 359 * 359 -- --
Allen L. Morgan 24 * 24 -- --
</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 95,858,039 shares of Common Stock outstanding on January 31, 1997.
(3) Includes shares issuable upon the exercise of options held by the following
that are exercisable within 60 days as follows: Goldman - 12,500;
Schuler - 30,000; Strong - 20,000; Dougherty - 6,780; Shove - 12,057;
Burt - 10,414; Baltaxe - 4,064; and Livingston - 1,303.
(4) Mr. Schuler is an employee of the Company, and he is the President,
Creative Development of AOL Networks, a division of the Company.
(5) Mr. Shove is the Vice President of Electronic Commerce of the Company.
(6) Mr. Burt is currently the Vice President of Distribution for the Greenhouse
business unit of the Company. Prior to joining the Company in October,
1995, Mr. Burt was the founder and Chief Executive Officer of 2Market,
Inc., a majority owned subsidiary of the Company.
(7) Before Mr. Baltaxe resigned from the Company in February 1997, he was
(8) Mr. Livingston is Director of Management Information Systems of the
Company.
PLAN OF DISTRIBUTION
The 1,006,942 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, 1996 and 1995 and for each of the
three years in the period ended June 30, 1996, 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 5,000
Accounting Fees and Expenses 15,000
Miscellaneous 4,568
TOTAL 35,000
</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 each
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 each 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.)
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 Report on Form 10-Q for the quarter ended September 30,
1995, 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 -- Consents of Ernst & Young LLP
23.2 -- Consent of Sheila A.Clark, Deputy General Counsel, America
Online, Inc. (included in Exhibit 5.1)
24 -- Powers of Attorney
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 February 14,
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, February 14, 1997
Stephen M. Case Chief Executive Officer and
and Director (principal executive
officer)
* Chairman Emeritus and Director February 14, 1997
James V. Kimsey
* Senior Vice President and Chief February 14, 1997
Lennert J. Leader Financial Officer (principal
financial and accounting officer)
* President & Chief February 14, 1997
Robert W. Pittman Executive Officer,
AOL Networks, and Director
* Director February 14, 1997
Frank J. Caufield
* Director February 14, 1997
Robert J. Frankenberg
* Director February 14, 1997
Alexander M. Haig, Jr.
* Director February 14, 1997
William N. Melton
* Director February 14, 1997
Thomas J. Middelhoff
* Director February 14, 1997
Scott C. Smith
*By Lennert J. Leader, Attorney-in-Fact
February 14, 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 1,006,942 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 have been duly and validly authorized by the Company, and the Shares are
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 incorporation by reference in the Registration Statement (Form
S-3) and related Prospectus of America Online, Inc. for the registration of
1,006,942 shares of its common stock, of our report dated September 11, 1996,
with respect to the financial statements of The ImagiNation Network, Inc. as of
December 31, 1994 and 1995 and for each of the three years in the period then
ended included in the Form 8-K/A No. 1 dated October 21, 1996 of America Online,
Inc., filed with the Securities and Exchange Commission.
/s/Ernst & Young
ERNST & YOUNG LLP
Walnut Creek, California
February 12, 1997
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of America Online,
Inc. for the registration of its common stock and to the incorporation by
reference therein of our report dated August 28, 1996, 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, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young
ERNST & YOUNG LLP
Vienna, Virginia
February 13, 1997
POWER OF ATTORNEY
I, Stephen M. Case, 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 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,
as full 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 13th day of February, 1997.
/s/ Stephen M. Case
Signature
POWER OF ATTORNEY
I, James V. Kimsey, 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 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,
as full 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 13th day of February, 1997.
/s/ James V. Kimsey
Signature
POWER OF ATTORNEY
I, Robert W. Pittman, 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 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,
as full 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 13th day of February, 1997.
/s/ Robert W. Pittman
Signature
POWER OF ATTORNEY
I, Frank J. Caufield, 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 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,
as full 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 13th day of February, 1997.
/s/ Frank J. Caufield
Signature
POWER OF ATTORNEY
I, Robert J. Frankenberg, 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
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, as full 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 12th day of February, 1997.
/s/ Robert J. Frankenberg
Signature
POWER OF ATTORNEY
I, Alexander M. Haig, Jr., 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
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, as full 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 10th day of February, 1997.
/s/ Alexander M. Haig, Jr.
Signature
POWER OF ATTORNEY
I, William N. Melton, 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 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,
as full 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 13th day of February, 1997.
/s/ William N. Melton
Signature
POWER OF ATTORNEY
I, Thomas J. Middelhoff, 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
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, as full 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 13th day of February, 1997.
/s/ Thomas J. Middelhoff
Signature
POWER OF ATTORNEY
I, Scott C. Smith, 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 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,
as full 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 13th day of February, 1997.
/s/ Scott C. Smith
Signature
