Should any modification of the Time Warner Option Plans necessary to effectuate
the immediately preceding sentence render any transaction to which Time Warner
is a party, and which is intended to be eligible for pooling-of-interest
accounting under APB No. 16, ineligible for such treatment then such
modification shall not be required; provided that the number of shares subject
to options to be granted in the ordinary course consistent with past practice
shall be reduced to reflect the effect of such acceleration.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in Time
Warner SEC Reports filed prior to the date of this Agreement, or as required by
a Governmental Entity, Time Warner shall not change its methods of accounting
in effect at September 30, 1999, except as required by changes in GAAP as
concurred in by Time Warner's independent public accountants. Time Warner shall
not (i) change its fiscal year or (ii) make any tax election that, individually
or in the aggregate, would have a Material Adverse Effect on Time Warner.
(k) Certain Agreements and Arrangements. Time Warner shall not, and shall
not permit any of its Subsidiaries to, enter into any Time Warner Internet
Restrictions or any agreements or arrangements (x) that limit or otherwise
restrict Time Warner or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, or that could, after the Effective Time,
limit or restrict America Online or any of its affiliates (including Holdco) or
any successor thereto, from engaging or competing in any line of business or in
any geographic area which agreements or arrangements, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
Holdco and its Subsidiaries, taken together, after giving effect to the Mergers
or (y) of a type described in Section 5.2(k) of the America Online Disclosure
(l) Satisfaction of Closing Conditions. Except as required by law, Time
Warner shall not, and shall not permit any of its Subsidiaries to, take any
action that would, or would reasonably be expected to, result in (i) any of the
conditions to the Mergers set forth in Article VII not being satisfied or (ii)
a material delay in the satisfaction of such conditions.
(m) No Related Actions. Time Warner will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
5.3 Governmental Filings. Each party shall (a) confer on a reasonable basis
with the other and (b) report to the other (to the extent permitted by law or
regulation or any applicable confidentiality agreement) on operational matters.
Time Warner and America Online shall file all reports required to be filed by
each of them with the SEC (and all other Governmental Entities) between the
date of this Agreement and the Effective Time and shall, if requested by the
other party and to the extent permitted by law or regulation or any applicable
confidentiality agreement, deliver to the other party copies of all such
reports, announcements and publications promptly after such request.
5.4 Control of Other Party's Business. Nothing contained in this Agreement
shall give Time Warner, directly or indirectly, the right to control or direct
America Online's operations and nothing contained in this Agreement shall give
America Online, directly or indirectly, the right to control or direct Time
Warner's operations prior to the Effective Time. Prior to the Effective Time,
each of Time Warner and America Online shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over
6.1 Preparation of Proxy Statement; Stockholders Meetings.
(a) As promptly as reasonably practicable following the date hereof, America
Online and Time Warner shall cooperate in preparing and each shall cause to be
filed with the SEC mutually acceptable proxy materials which shall constitute
the joint proxy statement/prospectus relating to the matters to be submitted to