Termination of the Merger Agreement. America Online and Time Warner can
jointly agree to terminate the merger agreement at any time. Either company may
also terminate the merger agreement if:
. the merger is not completed on or before May 31, 2001, so long as the
failure to complete the merger is not the result of the failure by that
company to fulfill any of its obligations under the merger agreement;
. government actions do not permit the completion of the merger;
. either company's stockholders do not vote to adopt the merger agreement
at a duly held meeting of that company's stockholders;
. the board of directors or officers of the other company fail to take
required actions as described on page 70; or
. the other company breaches its representations, warranties or covenants
in the merger agreement in a material way.
Termination Fees. The merger agreement provides that in several
circumstances, America Online or Time Warner may be required to pay termination
fees to the other party as described on pages 70 and 71.
"No Solicitation" Provisions. The merger agreement contains detailed
provisions prohibiting America Online and Time Warner from seeking an
alternative transaction. These "no solicitation" provisions prohibit America
Online and Time Warner, as well as their officers, directors, subsidiaries and
representatives, from taking any action to solicit an acquisition proposal as
described on page 66. The merger agreement does not, however, prohibit either
party or its respective board of directors from considering, and potentially
recommending, an unsolicited bona fide written superior proposal from a third
party as described on pages 67 and 68.
Regulatory Matters. Under U.S. antitrust laws, we may not complete the
merger until we have notified the Antitrust Division of the Department of
Justice and the Federal Trade Commission of the merger and filed the necessary
report forms, and until a required waiting period has ended. We have filed the
required information and materials with the Department of Justice and the
Federal Trade Commission.
To complete the merger, we must also obtain the approval of the Federal
Communications Commission, and a number of state and local authorities. The
Federal Communications Commission and these state and local authorities have
not completed their reviews of the merger.
In addition, both America Online and Time Warner are required to make
filings with or obtain approvals from the European Commission and other
international regulatory authorities in connection with the merger, including
regulatory authorities in Brazil, Canada and South Africa.
We cannot assure you that we will obtain all regulatory approvals to
complete the merger or that the granting of these approvals will not involve
the imposition of conditions to the completion of the merger or require changes
to the terms of the merger. These conditions or changes could result in the
conditions to the merger not being satisfied.
Accounting Treatment. We intend to account for the merger under the purchase
method of accounting for business combinations.
Completion and Effectiveness of the Merger. We will complete the merger when
all of the conditions to completion of the merger are satisfied or waived in
accordance with the merger agreement. The merger will