[LETTERHEAD OF @HOME NETWORK]
July 19, 1996
Tom A. Jermoluk
Dear Tom:
It gives me great pleasure to offer you the position of President and Chief
Executive Officer of At Home Corporation (the 'Company'), effective July 22,
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1996 (the 'Effective Date'). The Board of Directors intends to elect you
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Chairman as of the first Board of Directors meeting after the Effective Date.
The terms of your employment are as follows:
1. Base Compensation. Your base salary will be $500,000 per year. Your base
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salary shall be reviewed annually by the Board of Directors or its Compensation
Committee and any annual increase will be effective as of the date determined
appropriate by the Board or its Compensation Committee.
2. Bonuses. You will be eligible for a bonus of $200,000 per year based on
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the performance of the Company with a minimum bonus to be determined by the
Board of Directors or its Compensation Committee. The exact bonus formula will
be determined by October 1, 1996. Performance measurements will be based on the
Company's annual operating plan.
3. Restricted Stock Award.
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(a) You will be granted the right to purchase one million five hundred
thousand (1,500,000) shares of restricted Series A common stock of the Company
(the 'Restricted Stock') at the fair market value per share of the Company's
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common stock at the first Board of Directors meeting after the Effective Date,
which is currently expected to be ten cents ($.10) per share. You also will be
granted the right to purchase fifty thousand (50,000) shares of restricted
Series K preferred stock of the Company (the 'Series K Stock') at $10.00 per
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share at the first Board of Directors meeting after the Effective Date. (The
50,000 shares of Series K Stock are convertible into five hundred thousand
(500,000) shares of restricted Series A common stock of the Company, and for
purposes of paragraph 3 of this Agreement it shall be assumed that such shares
of Series K Stock are converted into Series A common stock). The vesting start
date for the grant of the Restricted Stock and the Series K Stock will be your
first date of employment. Twenty-five (25%) percent of your Restricted Stock
and Series K Stock will vest on the
Effective Date. After the first twelve full calendar months from the date of
grant vestingrestrictions will lapse at the rate of 2.08% per month on the last
day of each calendar month thereafter.
(b) If you are an employee of the Company on or after the second
anniversary of the Effective Date, the Company will guarantee (the 'First
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Guarantee') for a period of two years so long as the Company is not publicly
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traded and you continue to be employed by the Company (the 'First Guarantee
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Period') that the Restricted Stock and Series K Stock shall have an aggregate
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fair market value of $10,000,000 (the 'First Guaranteed Value') as follows:
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(i) At any time during the First Guarantee Period on which you
elect to sell vested shares of Restricted Stock or Series K Stock, you may cause
the Company to purchase such shares, in which case the product obtained by
multiplying the First Guaranteed Value by the Applicable Percentage shall be
paid by the Company in exchange for such shares of Restricted Stock and Series K
Stock.
(ii) For purposes of this paragraph 3(b), the Applicable Percentage
as of any date shall be equal to the number of shares of Restricted Stock and
Series K Stock sold by you on such date divided by 2,000,000.
(iii) The First Guarantee shall continue until the earliest to occur
of (A) the termination of your employment at any time pursuant to paragraphs
5(a) or 5(b) below; or (B) ninety days after the termination of your employment
pursuant to paragraph 5(c) or 5(d).
(c) If you are an employee of the Company on or after the fourth
anniversary of the Effective Date, the Company will guarantee (the 'Second
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Guarantee') for a period of five years so long as you continue to be employed by
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the Company (the 'Second Guarantee Period') that the Restricted Stock and Series
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K Stock shall have an aggregate fair market value of $20,000,000 (the 'Second
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Guaranteed Value') as follows:
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(i) At any time that you sell vested shares of Restricted Stock or
Series K Stock during the Second Guarantee Period, the Company shall pay to you
the excess, if any, of (A) the product obtained by multiplying (x) the Second
Guaranteed Value by (y) the Applicable Percentage over (B) the sales price of
any such shares of Restricted Stock and Series K Stock sold by you; provided,
however, that in no event shall the Company make a payment to you if the sum of
the amounts received by you upon the sale of all shares of Restricted Stock and
Series K Stock on or prior to such date or pursuant to payments on the Second
Guarantee equal or exceed the Second Guaranteed Value multiplied by a fraction,
the numerator of which is the number of shares of Restricted Stock and Series K
Stock sold by you during the Second Guarantee Period, and the denominator of
which is 2,000,000.
(ii) For purposes of this paragraph 3(c), the Applicable Percentage
as of any date shall be equal to the number of shares of Restricted Stock and
Series K Stock sold by you on such date divided by 2,000,000.
(iii) The Second Guarantee shall continue until the earliest to occur
of (A) the termination of your employment at any time pursuant to paragraphs
5(a) or 5(b) below; or (B) ninety days after the termination of your employment
pursuant to paragraph 5(c) or 5(d).
(iv) If the Company is not publicly traded on the date during the
Second Guarantee Period on which you elect to sell vested shares of Restricted
Stock or Series K Stock, you may cause the Company to purchase such shares, in
which case the product obtained by multiplying the Second Guaranteed Value by
the Applicable Percentage shall be paid by the Company in exchange for such
shares of Restricted Stock and Series K Stock.
(v) Notwithstanding anything in this paragraph 3 to the contrary,
(A) in the event your employment terminates on or prior to the fourth
anniversary of the Effective Date as a result of your death or permanent
disability as shall be defined in the Company's long-term disability income
plan, you shall be eligible for the Second Guarantee pursuant to the foregoing
provisions, except that the Second Guaranteed Value shall be multiplied by a
fraction, the numerator of which is the number of whole months from the
Effective Date to the date your employment terminates, and the denominator of
which is forty-eight and (B) in the event your employment terminates pursuant to
paragraph 5(c) or 5(d) below, the Second Guarantee shall commence on such
termination of employment and shall continue for ninety days.
4. Indemnification. The Company agrees to provide you with standard
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indemnification for directors and officers.
5. Termination and Termination Payments.
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(a) You have the right to terminate your employment at any time upon not
less than one month's written notice to the Company. In such event, the Company
shall pay you all compensation (including base salary and pro rata bonus) due to
you to the date of termination. The Company shall repurchase all unvested
shares of Restricted Stock and Series K Stock owned by you on the date of your
termination of employment within ninety days of your termination at your
original purchase price for such Restricted Stock and Series K Stock.
(b) The Company shall have the right to terminate your employment with
'cause' upon written notice to you. In such event, the Company shall pay you
all compensation (including base salary and accrued vacation but excluding
bonus) due to you on the date of termination. The Company shall repurchase all
unvested shares of Restricted Stock and Series K Stock owned by you on the date
of your termination of employment within ninety days of your termination at your
original purchase price for such Restricted Stock and Series K Stock. For
purposes of this Agreement, termination of your employment with the Company
shall be regarded as a termination for 'cause' only upon (i) your willful and
continued failure to substantially perform your duties with the Company after
there is delivered to you by the Board of Directors a written demand for
substantial performance which sets forth in detail the specific respects in
which it believes you have not substantially performed your duties; (ii) your
willfully engaging in gross misconduct which is materially detrimental to the
Company; (iii) your committing a felony or an act of fraud against the Company
or its affiliates; or (iv) your
breaching materially the terms of your employee confidentiality and proprietary
information agreement with the Company or any other similar agreement that may
be in effect from time to time. No act, or failure to act, by you shall be
considered 'willful' if done, or omitted to be done by you in good faith and in
your reasonable belief that your act or omission was in the best interests of
the Company and/or required by applicable law. You shall not be deemed to have
been terminated for cause under clause (i), (ii) or (iv) of this paragraph 5(b)
unless and until there shall have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors at a meeting of the Board of Directors
called and held for that purpose (after reasonable notice to and an opportunity
for you, together with your counsel, to be heard before the Board of Directors),
finding that in the good faith opinion of the Board of Directors, you are guilty
of conduct set forth in such clauses and specifying the particulars thereof in
detail.
(c) The Company shall have the right to terminate your employment for any
reason without 'cause' upon not less than one month's written notice to you. If
the Company terminates your employment for any reason without 'cause' (i) the
Company shall pay you all compensation (including base salary and bonus) due to
you at the date of your termination and continue to pay you in equal
installments an amount equal to the sum of your then current monthly base salary
plus bonus for a period of six months after the date of such termination and
(ii) all vesting restrictions with respect to the Restricted Stock and Series K
Stock shall lapse on the date of such termination.
(d) If you resign for any of the following reasons, it shall be deemed to
be a termination of your employment by the Company without 'cause': (i) You
shall be placed in a lower stature position than the position described in this
Agreement; (ii) Your base salary hereunder shall be reduced by more than twenty
percent without your consent; (iii) You shall cease to be the Chief Executive
Officer of the Company reporting to the Board of Directors; or (iv) the Company
shall otherwise breach the material terms of this Agreement.
6. Vacation. You shall be entitled to paid vacation in accordance with the
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Company's vacation policy for employees, as in effect from time to time.
7. Benefits. The Company will provide you with benefits as part of its
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standard employee benefits package.
8. Nondisclosure. Both you and the Company agree to keep the terms of this
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Agreement confidential except as may otherwise be required by law.
9. Entire Agreement. This Agreement represents the entire agreement between
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you and the Company concerning the matters addressed herein, and supersedes all
prior agreements and understanding on such matters.
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To indicate your acceptance of this offer, please sign this letter. We are
pleased to have you as At Home Corporation's President and Chief Executive
Officer.
Sincerely,
FOR THE BOARD OF DIRECTORS OF
AT HOME CORPORATION
/s/ L. John Doerr
L. John Doerr
Director
AGREED TO AND ACCEPTED:
/s/ Thomas A. Jermoluk Date: 22 JUL 96
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Employment Agreement - At Home Corp. and Tom A. Jermoluk
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