10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File Number 001-34419

AOL INC.

(Exact name of registrant as specified in its charter)

Delaware	20-4268793
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
770 Broadway New York, NY	10003
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 212-652-6400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   x	Accelerated filer  ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 2, 2012, the number of shares of the Registrant’s common stock, par value $0.01 per share, outstanding was 83,696,734.

AOL INC.

TABLE OF CONTENTS

		Page     Number
PART I. FINANCIAL INFORMATION
	Cautionary Statement Concerning Forward-Looking Statements		1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		20
Item 4.	Controls and Procedures		21
Item 1.	Financial Statements		22
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		37
Item 1A.	Risk Factors		38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 6.	Exhibits		38
Signatures			39
Exhibit Index			40

AOL INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Page     Number
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September  30, 2012 and 2011		22
Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		23
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011		24
Consolidated Statements of Equity for the Nine Months Ended September 30, 2012 and 2011		25
Note 1: Description of Business, Basis of Presentation and Summary of Significant Accounting Policies		26
Note 2: Income (Loss) Per Common Share		28
Note 3: Goodwill		28
Note 4: Business Acquisitions, Dispositions and Other Significant Transactions		29
Note 5: Income Taxes		30
Note 6: Stockholders’ Equity		31
Note 7: Equity-Based Compensation		33
Note 8: Restructuring Costs		35
Note 9: Commitments and Contingencies		35
Note 10: Segment Information		36

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding business strategies, market potential, future financial and operational performance and other matters. Words such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,” “will,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. Except as required by law, we are under no obligation to, and expressly disclaim any obligation to, update or alter any forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained in the forward-looking statements, including those factors discussed in detail in “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011 (“Annual Report”). In addition, we operate a web services company in a highly competitive, rapidly changing and consumer- and technology-driven industry. This industry is affected by government regulation, economic, strategic, political and social conditions, consumer response to new and existing products and services, technological developments and, particularly in view of new technologies, the continued ability to protect intellectual property rights. Our actual results could differ materially from management’s expectations because of changes in such factors.

Achieving our business and financial objectives, including improved financial results and maintenance of a strong balance sheet and liquidity position, could be adversely affected by the factors discussed or referenced in “Item 1A—Risk Factors” in our Annual Report as well as, among other things:

• changes in our plans, strategies and intentions;

• potential fluctuation in market valuations associated with our cash flows and revenues;

• the impact of significant acquisitions, dispositions and other similar transactions;

• our ability to attract and retain key employees;

• any negative unintended consequences of cost reductions, restructuring actions or similar efforts, including with respect to any associated savings, charges or other amounts;

• market adoption of new products and services;

• our ability to attract and retain unique visitors to our properties;

• asset impairments; and

• the impact of “cyber warfare” or terrorist acts and hostilities.

References in this Quarterly Report to “we,” “us,” the “Company,” and “AOL” refer to AOL Inc., a Delaware corporation.

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AOL INC.

PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our results of operations and financial condition together with our consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report as well as the discussion in the “Item 1—Business” section of our Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in “Item 1A—Risk Factors” in our Annual Report and “Cautionary Statement Concerning Forward-Looking Statements” herein.

Introduction

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on our business, recent developments, results of operations, liquidity and capital resources and critical accounting policies. MD&A is organized as follows:

• Overview. This section provides a general description of our business and outlook for 2012, as well as recent developments we believe are important in understanding our results of operations and financial condition or in understanding anticipated future trends.

• Results of operations. This section provides an analysis of our results of operations for the three and nine months ended September 30, 2012 and 2011.

• Liquidity and capital resources. This section provides a discussion of our current financial condition and an analysis of our cash flows for the nine months ended September 30, 2012 and 2011. This section also provides an update to the discussion in our Annual Report of our customer credit risk and includes a discussion of the amount of financial capacity available to fund our future commitments and ongoing operating activities.

• Critical accounting policies. This section identifies those accounting policies that are considered important to our results of operations and financial condition and require significant judgment and estimates on the part of management.

Overview

Our Business

We are a leading global web services company with a suite of compelling brands and offerings and a substantial worldwide audience. Our business spans online content, products and services that we offer to consumers, publishers, subscribers and advertisers. We are focused on attracting and engaging internet consumers and providing valuable online advertising services. We market our offerings to advertisers on both AOL Properties and the Third Party Network under the brand “AOL Advertising.” Through the Advertising.com Group, we provide third party publishers with premium products and services intended to make their websites attractive to brand advertisers, such as video and custom content production, in addition to offering ad serving and sales of third party advertising inventory. Our AOL-brand access subscription service, which we offer consumers in the United States for a monthly fee, is a valuable distribution channel for AOL Properties.

On June 29, 2012, we announced a plan to form operating units in conjunction with a planned change in organizational structure. We currently plan to organize our business into three main areas: AOL Membership,

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Brands and Advertising.com. We expect that the new operating structure will enhance our focus on profitability, coordinated business execution, and resource allocation across our portfolio of brands and services. We have initiated the process to prepare detailed information for each of these areas of our business and expect to complete that process by the end of the year. As of September 30, 2012, we continue to have one operating and reportable segment.

AOL Properties include our owned and operated content, products and services in the Huffington Post Media Group (“HPMG”), AOL Services and Local and Mapping strategy areas. AOL Properties also include co-branded websites owned or operated by third parties for which certain criteria have been met, including that the internet traffic has been assigned to us. We generate advertising revenues from AOL Properties through the sale of display advertising and search and contextual advertising. Display advertising revenue is generated by the display of graphical advertisements and other performance-based advertising. We offer advertisers marketing and promotional opportunities to purchase specific placements of advertising directly on AOL Properties (i.e., in particular locations and on specific dates). In addition, we offer advertisers the opportunity to bid on unreserved advertising inventory on AOL Properties utilizing our proprietary scheduling, optimization and delivery technology. We collectively refer to revenue associated with these offerings as premium display advertising revenue. Finally, advertising inventory on AOL Properties not sold directly to advertisers, as described above, may be included for sale to advertisers with inventory purchased from third-party publishers in the Third Party Network. Search and contextual advertising revenue is generated when a consumer clicks on a text-based advertisement on AOL Properties. These text-based advertisements are either generated from a consumer-initiated search query or placed on sites targeted by advertisers based on the content of the websites.

We also generate advertising revenues through the sale of advertising on third party websites, which we collectively refer to as the Third Party Network. Our advertising offerings on the Third Party Network consist primarily of the sale of display advertising and also include search and contextual advertising. In order to generate advertising revenues on the Third Party Network, we have historically had to incur higher traffic acquisition costs (“TAC”) as compared to advertising on AOL Properties.

Growth of our advertising revenues depends on our continued ability to attract consumers and increase engagement on AOL Properties by offering compelling content, products and services, as well as on our ability to provide effective advertising solutions and optimize our inventory monetization. In order to attract consumers and generate increased engagement, we have developed and acquired, and intend to continue to develop and potentially acquire, content, products and services designed to meet these goals. Our plans include the development of a number of platforms that are designed to facilitate the production, aggregation, distribution and consumption of national and local content. Additionally, we have invested in premium content brands to deliver a scaled and differentiated array of premium news, analysis, commentary, entertainment and community engagement.

Historically, our primary subscription service has been our subscription access service. To supplement our subscription access service, we offer new products and services that are either third party or AOL-developed products. We earn performance-based fees in relation to marketing third party products and services. We offer these products to our current and former access subscribers as well as other internet consumers.

Key indicators to understanding our operating results include:

• Growth of advertising revenues;

• Unique visitors to AOL Properties;

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• Monthly average churn and average paid tenure of our domestic AOL-brand access subscribers;

• Our investment in the local online market, which we believe is a potential growth area; and

• Our ability to manage our operating cost structure.

Trends, Challenges and Uncertainties Impacting Our Business

The web services industry is highly competitive and rapidly changing. Trends, challenges and uncertainties that may have a significant impact on our business, our opportunities and our ability to execute our strategy include the following:

• Advertising, commerce and information continue to migrate to the internet and away from traditional media outlets. We believe this continuing trend will create strategic growth opportunities for us to attract new consumers and develop new and effective advertising solutions. Additionally, the amount of content that is available online continues to expand. We believe our strategy is aligned with this rapid expansion as we aim to create a global content brand network while providing our consumers with an array of news, analysis, commentary, entertainment and community engagement. We offer a variety of sites that we expect to continue to drive consumer engagement, focusing on target audiences such as women, local and influencers. We continue to expand our distribution of our content, products and services on multiple platforms and digital devices (e.g., PCs, laptops, mobile phones and tablets).

• We believe that there is a significant strategic growth opportunity in providing local content, platforms and services covering geographic locations ranging from neighborhoods to major metropolitan areas. Patch is our community-specific news and information platform dedicated to providing comprehensive and trusted local coverage for individual towns and communities. We have been investing in the development of this platform as well as developing and offering compelling local content and growing user engagement within Patch towns. We have increased our focus on local, regional and national advertising and commerce opportunities as we continue the next phase of our development of Patch.

• The method of internet access continues to shift away from dial-up access and this trend has contributed to the decline in our subscription revenues. We continue to evolve our offerings of online products and services to provide significant value to our subscribers and other consumers. We expect that our offerings will allow us to continue to grow new subscription services and expand our customer base. As the number of subscribers has declined, our remaining subscriber base has become longer tenured. We believe that subscriber churn and the decline in subscription revenues will continue to moderate in the foreseeable future as our tenured base matures and the value of the additional products and services offered to subscribers increases.

• We believe there is a growing advertiser demand for innovation in online advertising formats to be more conducive to product branding. To address this opportunity, we are focusing on premium formats and video to create an enhanced experience for consumers and advertisers. We are increasing our focus on premium news, analysis, commentary, entertainment and community engagement through HPMG. We are also increasing video streams and reach through video platforms and networks offered by 5 Minutes Ltd. (“5Min”) and goviral ApS (“goviral”) and improving premium format advertising offerings through Pictela, Inc.

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Recent Developments

Dutch Auction Tender Offer

On June 28, 2012, we announced a $400.0 million modified Dutch auction tender offer. The tender offer began on the date of the announcement, June 28, 2012, and expired on August 2, 2012. Through the Dutch auction tender offer, AOL’s shareholders had the opportunity to tender some or all of their shares at a price within the range of $27.00 to $30.00 per share. Upon expiration, approximately 0.3 million shares were tendered through the offer at a final purchase price of $30.00 per share, for a total purchase price of approximately $8.8 million. We accounted for the repurchase of these shares as treasury stock during the third quarter of 2012.

Accelerated Stock Repurchase Agreement

On August 26, 2012, we entered into a fixed dollar collared accelerated stock repurchase agreement with Barclays Capital Inc. (“Barclays”), as agent for Barclays Bank PLC, effective August 27, 2012 (the “ASR Agreement”). Under the ASR Agreement, on August 30, 2012, we paid $654.1 million from cash on hand to Barclays to repurchase outstanding shares of common stock. The consideration paid to Barclays to repurchase shares included $54.1 million in contemplation of the special cash dividend announced by us on August 27, 2012 and discussed further below, which was calculated as the present value of the special cash dividend with respect to those shares deliverable under the ASR Agreement prior to the ex-dividend date of December 3, 2012.

The specific number of shares that we ultimately will repurchase under the ASR Agreement will be based generally on the share price of our common stock over a valuation period in accordance with the terms of the ASR Agreement, subject to a floor and cap provision that establishes a minimum and maximum number of repurchased shares, and subject to the agreed adjustment for the value of the special cash dividend. The minimum and maximum share number depends generally on the share price at which Barclays purchased shares of common stock during the initial hedging period, during which Barclays established an initial hedge position in respect of its obligations to deliver shares under the ASR Agreement. Barclays delivered 4.0 million shares to us on August 30, 2012, which we accounted for as treasury stock during the third quarter. Barclays delivered an additional 6.5 million shares on October 24, 2012, and Barclays will be required to make additional share deliveries under the ASR Agreement. We expect to receive delivery of a substantial majority of shares underlying the transaction before the end of the year. On final settlement of the ASR Agreement, we may be entitled to receive additional shares of common stock, or if we elect, cash, from Barclays, or under certain circumstances specified in the ASR Agreement, we may be required to deliver shares or make a cash payment, at our option, to Barclays. In connection with this transaction, Barclays has purchased and is expected to continue to purchase common stock in the open market. See “Note 6” in our consolidated financial statements for additional information on the ASR Agreement.

Special Cash Dividend

On August 26, 2012, we declared the payment of a special, one-time, cash dividend of $5.15 per share, payable on December 14, 2012 to shareholders of record at the close of business on December 5, 2012 (the “Special Cash Dividend”). As a result of the declaration of the Special Cash Dividend, we recorded an estimated dividend payable of $445.1 million as of September 30, 2012, reflecting the estimated amount of the Special Cash Dividend based on shares expected to be outstanding on December 5, 2012. This amount is subject to change based on the actual number of shares outstanding on December 5, 2012. We expect to announce the anticipated treatment of the dividend for tax purposes prior to the ex-dividend date of December 3, 2012. See “Note 6” in our consolidated financial statements for additional information on the Special Cash Dividend.

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Tax Asset Protection Plan

As of September 30, 2012, we have significant domestic tax attributes, including both net operating loss deferred tax assets and capital loss carry-forward deferred tax assets. Unless otherwise restricted, we can utilize these tax attributes in certain circumstances to offset future U.S. taxable income, including in connection with capital gains that may be generated from a potential asset sale. Should a “change of control” be triggered under Section 382 of the Internal Revenue Code of 1986, as amended, we may not be able to utilize these tax attributes to offset future U.S. taxable income, or such utilization could be significantly delayed. As a result, during the third quarter of 2012, we adopted a Tax Asset Protection Plan (the “TAPP”) that is intended to act as a deterrent to any individual, individual fund or family of funds with common dispositive power acquiring 4.9% or more of our outstanding shares without the approval of our Board of Directors. We intend to submit the TAPP for stockholder approval at our next annual meeting of stockholders. The adoption of the TAPP did not have a material impact on our financial statements as of and for the three months ended September 30, 2012. See “Note 6” in our consolidated financial statements for additional information on the TAPP.

Key Metrics

Audience Metrics

We utilize unique visitor numbers to evaluate the performance of AOL Properties. In addition, we utilize unique visitor numbers to evaluate the reach of our total advertising network, which includes both AOL Properties and the Third Party Network. Unique visitor numbers provide an indication of our consumer reach. Although our consumer reach does not correlate directly to advertising revenue, we believe that our ability to broadly reach diverse demographic and geographic audiences is attractive to brand advertisers seeking to promote their brands to a variety of consumers without having to partner with multiple content providers. AOL’s unique visitor numbers also include unique visitors attributable to co-branded websites owned by third parties for which certain criteria have been met, including that the internet traffic has been assigned to us through a traffic assignment letter. For the three months ended September 30, 2012, approximately 8.4% of our unique visitors to AOL Properties were attributable to co-branded websites owned by third parties where the internet traffic was assigned to us, compared to approximately 6.1% for the three months ended September 30, 2011. This increase is due primarily to new agreements for co-branded websites.

The source for our unique visitor information is a third party (comScore Media Metrix, or “Media Metrix”). While we are familiar with the general methodologies and processes that Media Metrix uses in estimating unique visitors, we have not performed independent testing or validation of Media Metrix’s data collection systems or proprietary statistical models, and therefore we can provide no assurance as to the accuracy of the information that Media Metrix provides.

The following table presents our unique visitor metrics for the periods presented (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic average monthly unique visitors to AOL Properties		111		107		110		111
Domestic average monthly unique visitors to AOL Advertising Network		186		187		186		183

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Subscriber Access Metrics

The primary metrics we monitor for our subscription access service are monthly average churn and average paid tenure. Monthly average churn represents on average the percentage of AOL-brand access subscribers that are either terminated or cancel our services each month, factoring in new and reactivated subscribers. The domestic AOL-brand access subscriber monthly average churn was 1.8% and 2.2% for the three months ended September 30, 2012 and 2011, respectively. Average paid tenure represents the average period of time subscribers have paid for domestic AOL-brand internet access. The average paid tenure of the remaining domestic AOL-brand access subscribers has been increasing, and was approximately 11.8 years and 10.6 years for the three months ended September 30, 2012 and 2011, respectively.

Results of Operations

Revenues

The following table presents our revenues, by revenue type, for the periods presented (in millions):

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2012		2011		% Change		2012		2011		% Change
Revenues:
Advertising	$	340.0	$	317.7		7 %	$	1,007.9	$	950.4		6 %
Subscription		173.5		191.9		(10)%		531.1		608.6		(13)%
Other		18.2		22.1		(18)%		53.2		66.3		(20)%
Total revenues	$	531.7	$	531.7		-	$	1,592.2	$	1,625.3		(2)%

The following table presents our revenues, by revenue type, as a percentage of total revenues for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Revenues:
Advertising		64%		60%		63%		58%
Subscription		33		36		33		37
Other		3		4		4		5
Total revenues		100%		100%		100%		100%

Advertising Revenues

Advertising revenues are generated on AOL Properties through display advertising and search and contextual advertising, as described in “Overview – Our Business” herein. Agreements for advertising on AOL Properties typically take the form of impression-based contracts in which we provide impressions in exchange for a fixed fee (generally stated as cost- per-thousand impressions), time-based contracts in which we provide a minimum number of impressions over a specified time period for a fixed fee or performance-based contracts in which performance is measured in terms of either “click-throughs” when a user clicks on a company’s advertisement or other user actions such as product/customer registrations, survey participation, sales leads or product purchases. In addition, agreements with advertisers can include other advertising-related elements such as content sponsorships, exclusivities or advertising effectiveness research.

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In addition to advertising revenues generated on AOL Properties, we also generate revenues from our advertising offerings on the Third Party Network. To generate revenues on the Third Party Network, we purchase advertising inventory from publishers (both large and small) in the Third Party Network using proprietary optimization, targeting and delivery technology to best match advertisers with available advertising inventory. Advertising arrangements for the sale of Third Party Network inventory typically take the form of impression-based contracts or performance-based contracts.

Advertising revenues on AOL Properties and the Third Party Network for the three and nine months ended September 30, 2012 and 2011 are as follows (in millions):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012		2011		% Change		2012		2011		% Change
AOL Properties:
Display	$	135.4	$	136.7		(1)%	$	405.6	$	402.8		1 %
Search and Contextual		91.8		85.1		8 %		267.9		268.7		(0)%
Total AOL Properties		227.2		221.8		2 %		673.5		671.5		0 %
Third Party Network		112.8		95.9		18%		334.4		278.9		20%
Total advertising revenues	$	340.0	$	317.7		7 %	$	1,007.9	$	950.4		6 %

Advertising revenues increased $22.3 million and $57.5 million for the three and nine months ended September 30, 2012, respectively, as compared to the same periods in 2011, primarily reflecting an increase in Third Party Network revenue. The increase in Third Party Network revenue of $16.9 million and $55.5 million for the three and nine months ended September 30, 2012, respectively, relates in part to an increase in publishers on the network and increased sales of premium packages and products, including video. In addition, Third Party Network revenue increased by $9.6 million and $23.5 million for the three and nine months ended September 30, 2012, respectively, as a result of the consolidation of Ad.com Japan beginning in the first quarter of 2012. Domestic search and contextual revenue for the three and nine months ended September 30, 2012, increased $6.7 million and $2.8 million, respectively, as compared to the same periods in 2011, driven primarily by continued increase in search revenue on AOL.com of $8.9 million and $22.8 million, respectively, through the optimization of both the customer and advertiser experiences and by increased queries from marketing related efforts. The increase in domestic search and contextual revenues was partially offset by a decline in AOL-brand access subscribers and a decline in queries on co-branded portals. International search and contextual revenue declines of $3.6 million for the nine months ended September 30, 2012 are mainly due to fewer queries primarily in the UK. International display revenue increased by $2.0 million and $7.2 million for the three and nine months ended September 30, 2012, respectively, primarily due to improved performance in the UK and Canada. Domestic display revenue declined $3.3 million and $4.4 million for the three and nine months ended September 30, 2012, respectively, due to the decline in the sale of reserved inventory and an increase in the number of impressions sold through the network at lower prices. The decrease in domestic display revenue was partially offset by growth in reserved pricing due to the increased sales of premium formats and video and by strong revenue growth from Patch.

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Revenues Associated with Google

For all periods presented in this Quarterly Report, we have had a contractual relationship with Google Inc. (“Google”) whereby we generate revenues through paid text-based search and contextual advertising on AOL Properties provided by Google, which represent a significant percentage of the advertising revenues generated by AOL Properties. For the three and nine months ended September 30, 2012, the revenues associated with the Google relationship (substantially all of which were search and contextual revenues generated on AOL Properties) were $85.9 million and $250.9 million, respectively, as compared to $80.7 million and $252.0 million for the three and nine months ended September 30, 2011, respectively.

Subscription Revenues

The number of domestic AOL-brand access subscribers was 2.9 million and 3.5 million at September 30, 2012 and 2011, respectively. Domestic average monthly revenue per AOL-brand access subscriber (“ARPU”) was $18.47 and $18.09 for the three and nine months ended September 30, 2012, respectively, compared to $17.49 and $17.66 for the three and nine months ended September 30, 2011, respectively. We include in our subscriber numbers individuals, households and entities that have provided billing information and completed the registration process sufficiently to allow for an initial log-on to the AOL access service. Individuals who have registered for our free offerings, including subscribers who have migrated from paid subscription plans, are not included in the AOL-brand access subscriber numbers presented above. Subscribers to our subscription access service contribute to our ability to generate advertising revenues.

Subscription revenues declined 10% and 13% for the three and nine months ended September 30, 2012, respectively, as compared to the same periods in 2011. The decline was due to an approximate 16% decrease in the number of domestic AOL-brand access subscribers between September 30, 2011 and September 30, 2012. Subscription revenue for the three and nine months ended September 30, 2012 as compared to the three and nine months ended September 30, 2011 also includes a favorable impact related to the simplified pricing structure initiated in late 2011.

Other Revenues

Other revenues consist primarily of revenues from licensing our proprietary ad serving technology to third parties through ADTECH, licensing revenues from third-party customers of MapQuest’s business-to-business services and fees from mobile carriers associated with our mobile e-mail and instant messaging functionality. In addition, other revenue also includes revenue from ticket sales related to technology events hosted by TechCrunch and production fees for videos produced by StudioNow.

Other revenues decreased 18% and 20% for the three and nine months ended September 30, 2012, respectively, as compared to the same periods in 2011, due primarily to a decrease in revenues from our mobile messaging services and a decline in third party web hosting revenues, partially offset by an increase in StudioNow production fees. In addition, the nine months ended September 30, 2012 includes an increase in ADTECH licensing revenues.

Geographical Concentration of Revenues

For the periods presented herein, a significant majority of our revenues have been generated in the United States. The majority of the non-United States revenues for these periods were generated by our European operations (primarily in the United Kingdom). We expect the significant majority of our revenues to continue to be generated in the United States for the foreseeable future. See “Note 1” in our accompanying consolidated financial statements for further discussion of our geographical concentrations.

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Operating Costs and Expenses

The following table presents our operating costs and expenses for the periods presented (in millions):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012		2011		% Change		2012		2011		% Change
Costs of revenues	$	382.3	$	397.9		(4)%	$	1,163.1	$	1,190.2		(2)%
General and administrative		97.2		95.5		2%		301.2		333.5		(10)%
Amortization of intangible assets		9.0		22.6		(60)%		28.6		73.5		(61)%
Restructuring costs		0.4		7.1		(94)%		7.7		35.5		(78)%

The following table represents our operating costs and expenses as a percentage of revenues for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Operating costs and expenses:
Costs of revenues		72	%		75	%		73	%		73	%
General and administrative		18			18			19			21
Amortization of intangible assets		2			4			2			5
Restructuring costs		-			1			-			2
Operating costs and expenses		92	%		98	%		94	%		101	%

Costs of Revenues

The following categories of costs are generally included in costs of revenues: personnel and facilities costs, TAC, network-related costs, non-network depreciation and amortization and other costs of revenues. TAC consists of costs incurred through arrangements in which we acquire third-party online advertising inventory for resale and arrangements whereby partners distribute our free products or services or otherwise direct traffic to AOL Properties. TAC arrangements have a number of different economic structures, the most common of which are: payments based on a cost per thousand impressions or based on a percentage of the ultimate advertising revenues generated from the advertising inventory acquired for resale and payments for direct traffic delivered to AOL Properties priced on a per click basis (e.g., search engine marketing fees). These arrangements are primarily on a variable basis; however, the arrangements can also be on a fixed-fee basis, which often carry reciprocal performance guarantees by the counterparty, or a combination of fixed and variable fees.

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Costs of revenues for the three and nine months ended September 30, 2012 and 2011 are as follows (in millions):

	Three Months Ended September 30,							Nine Months Ended September 30,
	2012		2011		% Change			2012		2011		% Change
Costs of revenues:
Personnel costs	$	155.4	$	159.3		(2)	%	$	477.0	$	481.2		(1)	%
Facilities costs		13.2		14.1		(6)	%		40.4		42.6		(5)	%
TAC		89.6		76.5		17	%		252.8		222.2		14	%
Network-related costs		40.1		47.0		(15)	%		121.1		142.4		(15)	%
Non-network depreciation and amortization		15.4		17.8		(13)	%		48.0		54.5		(12)	%
Other costs of revenues		68.6		83.2		(18)	%		223.8		247.3		(10)	%
Total costs of revenues	$	382.3	$	397.9		(4)	%	$	1,163.1	$	1,190.2		(2)	%

Costs of revenues decreased for the three and nine months ended September 30, 2012 as compared to the same periods in 2011.

The decrease in personnel costs for the three and nine months ended September 30, 2012 as compared to the same periods in 2011 is primarily due to declines in retention compensation expense of $7.4 million and $18.3 million, respectively, related to our 2010 and 2011 acquisitions, partially offset by increases in compensation.

TAC increased for the three and nine months ended September 30, 2012 as compared to the same periods in 2011, primarily due to the increase in Third Party Network advertising revenues, which resulted in higher variable revenue share payments to our publishing partners (including increases in TAC as a result of our consolidation of Ad.com Japan of $6.5 million and $15.8 million for the three and nine months ended September 30, 2012, respectively).

The decrease in network-related costs for the three and nine months ended September 30, 2012 as compared to the same periods in 2011 is primarily due to the decommissioning of certain network equipment, which is due in part to the decline in the number of domestic AOL-brand access subscribers. Costs of revenues for the three and nine months ended September 30, 2012 as compared to the same periods in 2011 also included a decline in non-network depreciation and amortization primarily due to a decline in depreciable and amortizable assets.

Other costs of revenues decreased for the three months ended September 30, 2012 as compared to the same period in 2011 primarily due to declines in internal content development costs of $5.1 million related primarily to our reduced reliance on freelancers and a decline in business travel related costs of $2.4 million.

Other costs of revenues decreased for the nine months ended September 30, 2012 as compared to the same period in 2011 primarily due to declines in internal content development costs of $22.6 million related primarily to our reduced reliance on freelancers, declines in office supplies and equipment of $3.9 million, a decrease in billing expenses of $3.1 million due to a decline in AOL brand-access subscribers and a decrease in outsourced member service costs of $2.8 million which primarily related to a decline in call center operations. These declines were partially offset by an increase in sales tax expense of $9.6 million relating to the Virginia sales tax settlement in the second quarter of 2012.

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

General and Administrative

General and administrative expenses were essentially flat for the three months ended September 30, 2012 as compared to the same period in 2011, as a small increase in compensation was substantially offset by a decline in consulting costs.

General and administrative expenses decreased $32.3 million for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011. The decrease was primarily due to a decline in personnel costs of $26.6 million, including the impact of reduced corporate headcount, a favorable change in our accrued vacation as a result of a change in policy and reduced stock compensation expense resulting from vesting of certain stock awards in December 2011. General and administrative expenses for the nine months ended September 30, 2012 as compared to the same period in 2011 were also impacted by declines in marketing costs of $5.8 million, a decrease in depreciation and amortization of $6.5 million primarily due to a decline in depreciable and amortizable assets and prior year acquisition-related expenses of $9.7 million. These declines were partially offset by costs incurred during the nine months ended September 30, 2012 of $10.6 million related to the proxy contest and $9.4 million related to the patent sale and return of the related proceeds to shareholders.

Amortization of Intangible Assets

Amortization of intangible assets results primarily from acquired intangible assets including acquired technology, customer relationships and trade names. Amortization of intangible assets decreased $13.6 million and $44.9 million for the three and nine months ended September 30, 2012 as compared to the same periods in 2011, related to the impact of certain intangible assets becoming fully amortized.

Restructuring Costs

For the nine months ended September 30, 2012, we incurred $7.7 million of restructuring costs related to organizational changes made in an effort to improve our ability to execute our strategy. These restructuring costs were primarily related to involuntary terminations of employees.

We incurred $7.1 million and $35.5 million of restructuring costs for the three and nine months ended September 30, 2011, respectively, related to our restructuring activities to better align our organizational structure and costs with our strategy. Restructuring costs for the nine months ended September 30, 2011 includes costs incurred as a result of our acquisition of The Huffington Post, a reassessment of our operations in India and actions in the United States to align our costs with our strategy. The majority of these costs related to involuntary employee terminations.

Other Transactions Impacting Operating Income

The following table presents other transactions impacting operating income for the periods presented (in millions):

	Three Months Ended September 30,							Nine Months Ended September 30,
	2012			2011		% Change		2012			2011		% Change
Income from licensing of intellectual property	$	-		$	-		NM		$      (96.0	)	$	-		NM
(Gain) loss on disposal of assets, net		(0.3	)		-		NM		(946.1	)		1.6		NM

NM = not meaningful

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

On June 15, 2012, the Company sold approximately 800 patents and their related patent applications (the “Sold Patents”) to Microsoft Corporation, a Washington corporation (“Microsoft”), and granted Microsoft a non-exclusive license to the Company’s retained patent portfolio. Income from licensing of intellectual property of $96.0 million for the nine months ended September 30, 2012 reflects the license of our retained patent portfolio to Microsoft in June 2012. The gain on disposal of assets, net of $946.1 million for the nine months ended September 30, 2012 reflects the sale of the Sold Patents to Microsoft. See “Note 4” in our accompanying consolidated financial statements for additional information.

Operating Income (Loss)

Operating income increased $34.5 million for the three months ended September 30, 2012 as compared to the same period in 2011 due to the declines in cost of revenues, amortization of intangible assets and restructuring costs.

Operating income increased $1,142.7 million for the nine months ended September 30, 2012 as compared to the same period in 2011 due to the gain on the disposition of the Sold Patents and income from licensing of intellectual property, as well as declines in cost of revenues, general and administrative costs, amortization of intangible assets and restructuring costs, partially offset by the decline in revenues.

Other Income Statement Amounts

The following table presents our other income statement amounts for the periods presented (in millions):

	Three Months Ended September 30,							Nine Months Ended September 30,
	2012		2011			% Change		2012		2011			% Change
Other income (loss), net	$	2.0	$	(1.5	)		NM	$	9.3	$	(2.6	)		NM
Income tax provision (benefit)		24.4		9.7			NM		130.7		(1.9	)		NM

Other Income (Loss), Net

Other income, net was $2.0 million for the three months ended September 30, 2012 as compared to other loss, net of $1.5 million for the same period in 2011. The increase was due primarily to a non-cash gain related to a step acquisition of $1.8 million and favorable foreign currency impacts of $1.2 million.

Other income, net was $9.3 million for the nine months ended September 30, 2012 as compared to other loss, net of $2.6 million for the same period in 2011. The increase was due primarily to the $10.8 million non-cash gain related to the consolidation of Ad.com Japan recorded in the first quarter of 2012.

Income Tax Provision (Benefit)

We recorded pre-tax income from operations of $45.1 million and related income tax expense of $24.4 million, which resulted in an effective tax rate of 54.1% for the three months ended September 30, 2012, as compared to an effective tax rate of 136.6% for the three months ended September 30, 2011. The effective tax rate for the three months ended September 30, 2011 and the three months ended September 30, 2012 differed substantially from the statutory U.S. federal income tax rate of 35.0% primarily due to foreign losses that did not produce a tax benefit.

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

We recorded pre-tax income from operations of $1,143.0 million and related income tax expense of $130.7 million, which resulted in an effective tax rate of 11.4% for the nine months ended September 30, 2012, as compared to the effective tax rate of 16.4% for the nine months ended September 30, 2011. The effective tax rate for the nine months ended September 30, 2012 differed substantially from the statutory U.S. federal income tax rate of 35.0% primarily due to the tax impact of the patent transaction with Microsoft during the second quarter of 2012. No material cash taxes will be paid on the patent transaction due to existing net operating losses which offset substantially all of the ordinary income generated by the patent transaction. However, for book purposes, this transaction resulted in income tax expense of $71.2 million. The patent transaction consisted of two elements: first, the sale of patents and the stock of a subsidiary, and second, the licensing of our retained patent portfolio, resulting in pre-tax income of $1,042.1 million. The tax expense relates primarily to ordinary income realized on the transaction, the majority of which is due to the licensing portion. In addition, the transaction created a significant capital loss due to the tax basis in the disposed subsidiary. We do not believe it is currently more likely than not that this capital loss will be realized, and accordingly, have recorded a full valuation allowance on the capital loss generated by the patent transaction. In addition to the effect of the patent transaction on income tax expense, we also had foreign losses that did not produce a tax benefit. The effective tax rate for the nine months ended September 30, 2011 differed from the statutory U.S. federal income tax rate of 35.0% due to income tax benefits related to a worthless stock deduction and escrow disbursements from prior acquisitions, partially offset by foreign losses that did not produce a tax benefit.

Adjusted OIBDA

We use Adjusted OIBDA as a supplemental measure of our performance. We define Adjusted OIBDA as operating income before depreciation and amortization excluding the impact of restructuring costs, non-cash equity-based compensation, gains and losses on all disposals of assets (including those recorded in costs of revenues) and non-cash asset impairments and write-offs. We consider Adjusted OIBDA to be a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business on a consistent basis across reporting periods, as it eliminates the effect of non-cash items such as depreciation of tangible assets, amortization of intangible assets that were primarily recognized in business combinations, asset impairments and write-offs, as well as the effect of restructurings and gains and losses on asset sales, which we do not believe are indicative of our core operating performance. We exclude the impacts of equity-based compensation to allow us to be more closely aligned with the industry and analyst community. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business or the current or future expected cash expenditures for restructuring costs. The Adjusted OIBDA measure also does not include equity-based compensation, which is and will remain a key element of our overall long-term compensation package. Moreover, the Adjusted OIBDA measures do not reflect gains and losses on asset sales or impairment charges and write-offs related to goodwill, intangible assets and fixed assets which impact our operating performance. We evaluate the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets, investment spending levels and return on capital.

Adjusted OIBDA is a non-GAAP financial measure and may be different than similarly-titled non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”).

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following table presents our reconciliation of Adjusted OIBDA to operating income (loss) (in millions):

	Three Months Ended September 30,							Nine Months Ended September 30,
	2012		2011		% Change			2012		2011		% Change
Operating income (loss)	$	43.1	$	8.6		NM		$	1,133.7	$	(9.0)		NM
Add: Depreciation		34.3		38.3		(10)	%		105.6		125.1		(16)	%
Add: Amortization of intangible assets		9.0		22.6		(60)	%		28.6		73.5		(61)	%
Add: Restructuring costs		0.4		7.1		(94)	%		7.7		35.5		(78)	%
Add: Equity-based compensation		11.1		10.3		8	%		28.3		31.7		(11)	%
Add: Asset impairments and write-offs		0.2		0.9		(78)	%		3.0		5.1		(41)	%
Add: Losses/(gains) on disposal of assets, net		(0.2)		(0.6)		(67)	%		(946.6)		1.0		NM
Adjusted OIBDA	$	97.9	$	87.2		12	%	$	360.3	$	262.9		37	%

Adjusted OIBDA increased for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011 due primarily to the increase in operating income, driven by declines in costs of revenues.

Adjusted OIBDA increased for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 due primarily to the increase in operating income, driven by $96.0 million from licensing our retained patent portfolio. Adjusted OIBDA for the nine months ended September 30, 2012 was negatively impacted by costs related to the proxy contest of $10.6 million, costs related to the patent sale and return of the related proceeds to shareholders of $9.4 million and $9.6 million of expense relating to the Virginia sales tax settlement in the second quarter of 2012.

Liquidity and Capital Resources

Current Financial Condition

Historically, the cash we generate has been sufficient to fund our working capital, capital expenditure and financing requirements. Forecasts of future cash flows are dependent on many factors, including future economic conditions and the execution of our strategy. We expect to fund our ongoing working capital, investing and financing requirements, including future repurchases of common stock and payment of the Special Cash Dividend, through our existing cash balance and cash flows from operations. Increases in cash flows from operations are achieved when growth from our online advertising services more than offsets the decline in domestic AOL-brand access subscribers. In order for us to achieve an increase in earnings from advertising services, we believe it will be important to increase the number and engagement of consumers who visit our properties, to enable us to increase our overall volume of display advertising sold, including through our higher-priced channels, and to maintain or increase pricing for advertising. Advertising revenues, however, are more unpredictable and variable than our subscription revenues, and are more likely to be adversely affected during economic downturns, as spending by advertisers tends to be cyclical in line with general economic conditions.

If we are unable to successfully implement our strategic plan and grow the earnings generated by our online advertising services, we may need to reassess our cost structure and/or seek other financing alternatives to fund our business. If it is necessary to seek other financing alternatives, our ability to obtain future financing will

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

depend on, among other things, our financial condition and results of operations as well as the condition of the capital markets or other credit markets at the time we seek financing. Currently we do not have a credit rating from the credit rating agencies, so our access to the capital markets may be limited. As part of our ongoing assessment of our business and availability of capital and to enhance our liquidity position, we have divested of certain assets and product lines and may consider divesting of additional assets or product lines.

At September 30, 2012, our cash and equivalents totaled $867.1 million, as compared to $407.5 million at December 31, 2011. The increase in cash and equivalents was primarily due to the $1,056 million proceeds from the sale of the Sold Patents and the license of our retained patent portfolio to Microsoft in the second quarter of 2012 and cash provided by operations for the nine months ended September 30, 2012. Offsetting these increases to cash and equivalents were payments of $654.1 million made to Barclays during the third quarter of 2012 in connection with the ASR Agreement. See “Note 6” in our consolidated financial statements for more information on the ASR Agreement. Our cash and equivalents consist of highly liquid short-term investments that are readily convertible to cash.

Approximately 11% of our cash and equivalents as of September 30, 2012 is held internationally, primarily in the United Kingdom, India, Japan, and Germany, and is intended to be utilized to fund our foreign operations. Cash held internationally would have to be repatriated in order to be used to fund our domestic operations. If we were to repatriate funds, we currently expect that we would incur additional tax liabilities. We believe the cash balance in the U.S. is sufficient to fund our domestic working capital needs.

Summary Cash Flow Information

Our cash flows from operations are driven by net income adjusted for non-cash items such as depreciation, amortization, goodwill impairment, equity-based compensation expense and other activities impacting net income such as the gains and losses on the sale of assets or operating subsidiaries. Cash flows from investing activities consist primarily of the cash used in the acquisitions of various businesses, proceeds received from the sale of assets or operating subsidiaries and cash used for capital expenditures. Capital expenditures and product development costs are mainly for the purchase of computer hardware, software, network equipment, furniture, fixtures and other office equipment. Cash flows from financing activities relate primarily to principal payments made on capital lease obligations and repurchases of common stock.

Operating Activities

The following table presents cash provided by operating activities for the periods presented (in millions):

	Nine Months Ended September 30,
	2012		2011
Net income (loss)	$	1,012.3	$	(9.7)
Adjustments for non-cash and non-operating items:
Depreciation and amortization		134.2		198.6
Asset impairments and write-offs		3.0		5.1
(Gain) loss on step acquisitions and disposal of assets, net		(958.7)		2.4
Equity-based compensation		28.3		31.7
Deferred income taxes		103.0		(5.8)
Other non-cash adjustments		(3.2)		4.0
All other, net, including working capital changes		(30.0)		(29.9)
Cash provided by operating activities	$	288.9	$	196.4

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Cash provided by operating activities increased $92.5 million for the nine months ended September 30, 2012, as compared to the nine months ended September 30, 2011, primarily due to the increase in operating income (excluding the gain on the disposition of the Sold Patents) driven mainly by the $96 million cash received from licensing our retained patent portfolio to Microsoft during the second quarter of 2012.

Investing Activities

The following table presents cash provided (used) by investing activities for the periods presented (in millions):

	Nine Months Ended September 30,
	2012		2011
Investments and acquisitions, net of cash acquired	$	(10.3)	$	(374.8)
Proceeds from disposal of assets, net		951.5		2.9
Capital expenditures and product development costs		(49.0)		(67.9)
Cash provided (used) by investing activities	$	892.2	$	(439.8)

Cash provided by investing activities was $892.2 million for the nine months ended September 30, 2012, as compared to cash used by investing activities of $439.8 million for the nine months ended September 30, 2011. The $1,332.0 million increase in cash provided by investing activities was principally due to the approximately $950 million in proceeds (net of transaction costs paid) from the disposition of the Sold Patents in 2012, as well as the acquisitions of The Huffington Post and goviral during the nine months ended September 30, 2011. The increase in cash provided by investing activities was also due to a decrease in capital expenditures and product development costs. In addition, investments and acquisitions, net of cash acquired, for the nine months ended September 30, 2012 includes $6.9 million of cash acquired from the step acquisition of Ad.com Japan (net of $1.2 million cash paid for the additional 3% interest) during the first quarter of 2012.

Financing Activities

The following table presents cash used by financing activities for the periods presented (in millions):

	Nine Months Ended September 30,
	2012		2011
Repurchase of common stock	$	(698.7)	$	(69.2)
Principal payments on capital leases		(41.1)		(36.4)
Tax withholdings related to net share settlements of restricted stock units		(6.3)		(0.3)
Decrease (increase) in cash collateral securing letters of credit		0.3		(12.6)
Proceeds from exercise of stock options		26.1		0.6
Cash used by financing activities	$	(719.7)	$	(117.9)

Cash used by financing activities increased $601.8 million for the nine months ended September 30, 2012, as compared to the same period in 2011, primarily due to repurchases of common stock, partially offset by $26.1 million of cash provided by the exercise of stock options in 2012.

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Included in the $698.7 million related to repurchases of common stock for the nine months ended September 30, 2012 was $654.1 million paid to Barclays on August 30, 2012 to repurchase outstanding shares of common stock under the ASR Agreement, and the remainder was used to repurchase shares on the open market under the stock repurchase program approved on August 10, 2011 and through the modified Dutch auction tender offer. $54.1 million of the consideration paid to Barclays to repurchase shares was in contemplation of the Special Cash Dividend, and represents the present value of the one-time cash dividend with respect to those shares deliverable under the ASR Agreement prior to the ex-dividend date of December 3, 2012. See “Note 6” in our accompanying consolidated financial statements for additional information on our stock repurchase programs and Special Cash Dividend.

Included in the cash used by financing activities for the nine months ended September 30, 2011 was $69.2 million of cash paid for share repurchases as part of the stock repurchase program approved on August 10, 2011 and $12.6 million of cash collateral posted to secure letters of credit related to certain lease agreements.

Free Cash Flow

We use Free Cash Flow as a supplemental measure of our performance. We define Free Cash Flow as cash provided by operating activities, less capital expenditures, product development costs and principal payments on capital leases. We consider Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, capitalized product development costs and principal payments on capital leases, can be used for strategic opportunities, including investing in our business, making strategic acquisitions and strengthening the balance sheet. Analysis of Free Cash Flow also facilitates management’s comparisons of our operating results to competitors’ operating results. A limitation on the use of this metric is that Free Cash Flow does not represent the total increase or decrease in cash for the period because it excludes certain non-operating cash flows.

Free Cash Flow is a non-GAAP financial measure and may be different than similarly-titled non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

The following table presents our reconciliation of Free Cash Flow to cash provided by operating activities (in millions):

	Nine Months Ended September 30,
	2012		2011
Cash provided by operating activities	$	288.9	$	196.4
Less: Capital expenditures and product development costs		49.0		67.9
Less: Principal payments on capital leases		41.1		36.4
Free Cash Flow	$	198.8	$	92.1

Free Cash Flow increased $106.7 million for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011. This increase is due to the increase in cash provided by operating activities, discussed in “Summary Cash Flow Information—Operating Activities” above and due to reduced capital expenditures and product development costs resulting from the shift in late 2011 to begin leasing certain assets.

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PART I - ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Customer Credit Risk

Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed-upon contractual payment obligations. Credit risk originates from sales of advertising and subscription access service and is dispersed among many different counterparties. No single customer had a receivable balance at September 30, 2012 greater than 10% of total net receivables.

Customer credit risk is monitored on a company-wide basis. We maintain a comprehensive approval process prior to issuing credit to third-party customers. On an ongoing basis, we track customer exposure based on news reports, rating agency information and direct dialogue with customers. Counterparties that are determined to be of a higher risk are evaluated to assess whether the payment terms previously granted to them should be modified. We also continuously monitor payment levels from customers, and a provision for estimated uncollectible amounts is maintained based on historical experience and any specific customer collection issues that have been identified. While such uncollectible amounts have historically been within our expectations and related reserve balances, if there is a significant change in uncollectible amounts in the future or the financial condition of our counterparties across various industries or geographies deteriorates further, additional reserves may be required.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP, which require management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management considers an accounting policy to be critical if it is important to our financial condition and results of operations and if it requires significant judgment and estimates on the part of management in its application. The development and selection of these critical accounting policies have been determined by our management. Due to the significant judgment involved in selecting certain of the assumptions used in these areas, it is possible that different parties could choose different assumptions and reach different conclusions. We consider the policies related to the following matters to be critical accounting policies: (a) gross versus net revenue recognition; (b) impairment of goodwill; and (c) income taxes.

For additional information about our critical accounting policies and our significant accounting policies, see “Item 7—MD&A—Critical Accounting Policies” and “Note 1” to our audited consolidated financial statements in our Annual Report. There have been no significant changes to our critical accounting policies disclosed in our Annual Report for the year ended December 31, 2011.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2011.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information we are required to disclose in our financial reports is recorded, processed, summarized and reported within the time periods specified by the SEC rules and forms, and that such information is accumulated and communicated to senior management, as appropriate, to allow timely decisions regarding required disclosure. Management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2012, at a reasonable assurance level.

Changes to Internal Control Over Financial Reporting

We have evaluated the changes in our internal control over financial reporting that occurred during the three and nine months ended September 30, 2012 and concluded that there have not been any changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM  1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; In millions, except per share amounts)

	Three Months Ended         September 30,					Nine Months Ended         September 30,
	2012		2011			2012		2011
Revenues:
Advertising	$	340.0	$	317.7		$	1,007.9	$	950.4
Subscription		173.5		191.9			531.1		608.6
Other		18.2		22.1			53.2		66.3
Total revenues		531.7		531.7			1,592.2		1,625.3
Costs of revenues		382.3		397.9			1,163.1		1,190.2
General and administrative		97.2		95.5			301.2		333.5
Amortization of intangible assets		9.0		22.6			28.6		73.5
Restructuring costs		0.4		7.1			7.7		35.5
Income from licensing of intellectual property		-		-			(96.0)		-
(Gain) loss on disposal of assets, net		(0.3)		-			(946.1)		1.6
Operating income (loss)		43.1		8.6			1,133.7		(9.0)
Other income (loss), net		2.0		(1.5)			9.3		(2.6)
Income (loss) from operations before income taxes		45.1		7.1			1,143.0		(11.6)
Income tax provision (benefit)		24.4		9.7			130.7		(1.9)
Net income (loss)	$	20.7	$	(2.6)		$	1,012.3	$	(9.7)
Net (income) loss attributable to noncontrolling interests		0.1		-			0.4		-
Net income (loss) attributable to AOL Inc.	$	20.8	$	(2.6)		$	1,012.7	$	(9.7)
Per share information attributable to AOL Inc. common stockholders:
Basic net income (loss) per common share	$	0.22	$	(0.02)		$	10.82	$	(0.09)
Diluted net income (loss) per common share	$	0.22	$	(0.02)		$	10.64	$	(0.09)
Shares used in computing basic income (loss) per common share		92.6		106.2			93.6		106.7
Shares used in computing diluted income (loss) per common share		96.0		106.2			95.2		106.7
Cash dividends declared per common share	$	5.15	$	-		$	5.15	$	-
Comprehensive income (loss) attributable to AOL Inc.:
Comprehensive income (loss)	$	22.6	$	(7.1)		$	1,000.0	$	0.6
Comprehensive (income) loss attributable to noncontrolling interests		0.1		-			0.6		-
Comprehensive income (loss) attributable to AOL Inc.	$	22.7	$	(7.1	)	$	1,000.6	$	0.6

See accompanying notes.

22

AOL INC.

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

	September 30, 2012			December 31, 2011
	(unaudited)
Assets
Current assets:
Cash and equivalents	$	867.1		$	407.5
Accounts receivable, net of allowances of $7.2 and $8.3, respectively		303.1			311.5
Prepaid expenses and other current assets		27.9			36.9
Deferred income taxes		38.1			53.7
Total current assets		1,236.2			809.6
Property and equipment, net		487.3			505.2
Goodwill		1,076.5			1,064.0
Intangible assets, net		129.2			135.2
Long-term deferred income taxes		169.0			259.2
Other long-term assets		62.7			51.8
Total assets	$	3,160.9		$	2,825.0
Liabilities and Equity
Current liabilities:
Accounts payable	$	72.6		$	74.9
Accrued compensation and benefits		117.2			152.8
Accrued expenses and other current liabilities		163.3			171.6
Dividend payable (see Note 6)		445.1			-
Deferred revenue		68.6			70.9
Current portion of obligations under capital leases		49.4			44.6
Total current liabilities		916.2			514.8
Long-term portion of obligations under capital leases		60.8			66.2
Long-term deferred income taxes		6.7			3.5
Other long-term liabilities		81.0			67.9
Total liabilities		1,064.7			652.4
Commitments and contingencies (see Note 9)
Redeemable noncontrolling interest (see Note 1)		14.1			-
Equity:
Common stock, $0.01 par value, 109.2 million shares issued and 90.1 million shares outstanding as of September 30, 2012 and 107.0 million shares issued and 94.3 million shares outstanding as of December 31, 2011		1.1			1.1
Additional paid-in capital		2,953.0			3,422.4
Accumulated other comprehensive income (loss), net		(299.6	)		(287.5	)
Accumulated deficit (see Note 6)		(222.2	)		(789.8	)
Treasury stock, at cost, 19.1 million shares at September 30, 2012 and 12.7 million shares at December 31, 2011		(349.9	)		(173.6	)
Total stockholders’ equity		2,082.4			2,172.6
Noncontrolling interest		(0.3	)		-
Total equity		2,082.1			2,172.6
Total liabilities, redeemable noncontrolling interest and equity	$	3,160.9		$	2,825.0

See accompanying notes.

23

AOL INC.

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; In millions)

	Nine Months Ended September 30,
	2012		2011
Operating Activities
Net income (loss)	$	1,012.3	$	(9.7)
Adjustments for non-cash and non-operating items:
Depreciation and amortization		134.2		198.6
Asset impairments and write-offs		3.0		5.1
(Gain) loss on step acquisitions and disposal of assets, net		(958.7)		2.4
Equity-based compensation		28.3		31.7
Deferred income taxes		103.0		(5.8)
Other non-cash adjustments		(3.2)		4.0
Changes in operating assets and liabilities, net of acquisitions		(30.0)		(29.9)
Cash provided by operating activities		288.9		196.4
Investing Activities
Investments and acquisitions, net of cash acquired		(10.3)		(374.8)
Proceeds from disposal of assets, net		951.5		2.9
Capital expenditures and product development costs		(49.0)		(67.9)
Cash provided (used) by investing activities		892.2		(439.8)
Financing Activities
Repurchase of common stock (see Note 6)		(698.7)		(69.2)
Principal payments on capital leases		(41.1)		(36.4)
Tax withholdings related to net share settlements of restricted stock units		(6.3)		(0.3)
Decrease (increase) in cash collateral securing letters of credit		0.3		(12.6)
Proceeds from exercise of stock options		26.1		0.6
Cash used by financing activities		(719.7)		(117.9)
Effect of exchange rate changes on cash and equivalents		(1.8)		3.6
Increase (decrease) in cash and equivalents		459.6		(357.7)
Cash and equivalents at beginning of period		407.5		801.8
Cash and equivalents at end of period	$	867.1	$	444.1
Supplemental disclosures of cash flow information
Cash paid for interest	$	4.5	$	4.8
Cash paid for income taxes	$	9.2	$	11.5

See accompanying notes.

24

AOL INC.

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; In millions)

	Common Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss), Net		Accumulated Deficit		Treasury Stock, at Cost		Non- Controlling Interest		Total Equity
	Shares		Amount
Balance at December 31, 2010		106.7	$	1.1	$	3,376.6	$	(287.9)	$	(802.9)	$	-	$	-	$	2,286.9
Net loss		-		-		-		-		(9.7)		-		-		(9.7)
Foreign currency translation adjustments		-		-		-		10.3		-		-		-		10.3
Comprehensive income (loss)		-		-		-		10.3		(9.7)		-		-		0.6
Amounts related to equity-based compensation, net of tax withholdings (see Note 6)		-		-		39.0		-		-		-		-		39.0
Issuance of common stock		0.3		-		0.3		-		-		-		-		0.3
Repurchase of common stock		(5.0)		-		-		-		-		(69.2)		-		(69.2)
Balance at September 30, 2011		102.0	$	1.1	$	3,415.9	$	(277.6)	$	(812.6)	$	(69.2)	$	-	$	2,257.6
Balance at December 31, 2011		94.3	$	1.1	$	3,422.4	$	(287.5)	$	(789.8)	$	(173.6)	$	-	$	2,172.6
Net income (loss)		-		-		-		-		1,012.7		-		(0.3)		1,012.4
Unrealized gain on equity method investments		-		-		-		0.4		-		-		-		0.4
Foreign currency translation adjustments		-		-		-		(12.5)		-		-		-		(12.5)
Comprehensive income (loss)		-		-		-		(12.1)		1,012.7		-		(0.3)		1,000.3
Amounts related to equity-based compensation, net of tax withholdings		-		-		26.9		-		-		-		-		26.9
Issuance of common stock		2.2		-		26.1		-		-		-		-		26.1
Repurchase of common stock (see Note 6)		(6.4)		-		(522.4)		-		-		(176.3)		-		(698.7)
Dividends declared (see Note 6)		-		-		-		-		(445.1)		-		-		(445.1)
Balance at September 30, 2012		90.1	$	1.1	$	2,953.0	$	(299.6)	$	(222.2)	$	(349.9)	$	(0.3)	$	2,082.1

See accompanying notes.

25

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

For a description of the business of AOL Inc. (“AOL” or the “Company”), see “Note 1” to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”).

Basis of Presentation

Basis of Consolidation

The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of AOL and all voting interest entities in which AOL has a controlling voting interest (“subsidiaries”) and variable interest entities in which AOL is the primary beneficiary in accordance with the consolidation accounting guidance. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation. The consolidated balances of the Company’s variable interest entities are not material to the Company’s consolidated financial statements for the periods presented.

The financial position and operating results of the majority of AOL’s foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the consolidated balance sheet as a component of accumulated other comprehensive income (loss), net.

Redeemable Noncontrolling Interest

The noncontrolling interest in a joint venture between Mitsui & Company Ltd. (“Mitsui”) and AOL (“Ad.com Japan”) is classified outside of permanent equity in the Company’s consolidated balance sheet as of September 30, 2012, due to a redemption right available to the noncontrolling interest holder in the future. The noncontrolling interest holder’s right to redeem its stock is exercisable any time between July 1 and July 30 of any year, commencing with July 1, 2014. Net income in the consolidated statement of comprehensive income for the three and nine months ended September 30, 2012 reflects 100 percent of the results of Ad.com Japan as the Company has a controlling interest in the entity. Net income is subsequently adjusted to exclude AOL’s noncontrolling interests to arrive at net income attributable to AOL Inc.

Changes in Basis of Presentation

The Company has changed the classification of certain amounts within the accompanying consolidated statement of cash flows for the nine months ended September 30, 2011. The revisions, related to accrued liabilities and capital expenditures, do not have a material impact on the consolidated statement of cash flows.

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include asset impairments, reserves established for doubtful accounts, equity-based compensation, depreciation and amortization, business combinations, income taxes, litigation matters and contingencies.

26

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Interim Financial Statements

The interim consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, the results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of AOL in the Annual Report.

Information about Geographical Areas

Revenues in different geographical areas are as follows (in millions):

	Three Months  Ended September 30,(a)				Nine Months Ended September 30,(a)
	2012		2011		2012		2011
United States	$	475.2	$	483.1	$	1,426.0	$	1,480.9
United Kingdom		23.5		24.4		71.1		73.3
Germany		7.3		9.2		24.4		28.2
Canada		10.7		9.3		27.7		27.2
Japan		9.8		0.2		24.7		0.7
Other international		5.2		5.5		18.3		15.0
Total international		56.5		48.6		166.2		144.4
Total	$	531.7	$	531.7	$	1,592.2	$	1,625.3

(a) Revenues are attributed to countries based on the location of customers.

Recent Accounting Standards

Goodwill Impairment

In September 2011, new guidance was issued related to assessing goodwill impairment. Under the new guidance, a company is permitted to make a qualitative assessment of whether goodwill impairment exists before applying the two-step goodwill impairment test. If the conclusion from the qualitative assessment is that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the company would be required to conduct the current two-step goodwill impairment test. Otherwise, it would not need to apply the two-step test.

This new guidance became effective for the Company in January 2012. Given the proximity of the book value and fair value of the Company’s sole reporting unit as of the date of its 2011 annual goodwill impairment test, this guidance is not expected to result in a material change to the way the Company performs its analysis for goodwill.

27

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2—INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share is calculated by dividing net income (loss) attributable to AOL Inc. common stockholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted income (loss) per common share by application of the treasury stock method, only in periods in which such effect would have been dilutive for the period.

For the three and nine months ended September 30, 2012, the Company had 1.0 million and 5.1 million, respectively, of weighted-average potentially dilutive common shares that were not included in the computation of diluted earnings per share because to do so would be anti-dilutive for that period. For the three and nine months ended September 30, 2011, the Company had 10.1 million and 9.5 million, respectively, of weighted-average potentially dilutive common shares that were not included in the computation of diluted earnings per share because to do so would be anti-dilutive for that period.

The following table is a reconciliation of basic and diluted net income (loss) attributable to AOL Inc. common stockholders per common share (in millions, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net income (loss) attributable to AOL Inc. common stockholders	$	20.8	$	(2.6)	$	1,012.7	$	(9.7)
Shares used in computing basic income (loss) per common share		92.6		106.2		93.6		106.7
Dilutive effect of equity-based awards		3.4		-		1.6		-
Shares used in computing diluted income (loss) per common share		96.0		106.2		95.2		106.7
Basic net income (loss) per common share	$	0.22	$	(0.02)	$	10.82	$	(0.09)
Diluted net income (loss) per common share	$	0.22	$	(0.02)	$	10.64	$	(0.09)

NOTE 3—GOODWILL

A summary of changes in the Company’s goodwill during the nine months ended September 30, 2012 is as follows (in millions):

	Gross Goodwill		Impairments		Net Goodwill
December 31, 2011	$	36,689.1	$	(35,625.1)	$	1,064.0
Acquisitions		18.7		-		18.7
Translation adjustments		(6.2)		-		(6.2)
September 30, 2012	$	36,701.6	$	(35,625.1)	$	1,076.5

The increase in goodwill for the nine months ended September 30, 2012 was due primarily to acquisitions, including AOL’s purchase of a controlling interest in Ad.com Japan. See “Note 4” for additional information on this acquisition.

28

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4—BUSINESS ACQUISITIONS, DISPOSITIONS AND OTHER SIGNIFICANT TRANSACTIONS

Ad.com Japan

On February 9, 2012, AOL entered into a share-purchase agreement with Mitsui to purchase an additional 3% interest in Ad.com Japan for approximately $1.2 million. Ad.com Japan, which operates a display advertising network business in Japan, was formed in 2006. Prior to the execution of the share purchase agreement, AOL and Mitsui each owned a 50% interest in Ad.com Japan, and AOL accounted for its 50% interest using the equity method of accounting. As part of this transaction, AOL obtained control of the board and of the day-to-day operations of Ad.com Japan. AOL has accounted for the incremental 3% share purchase as a business combination achieved in stages (“step acquisition”) and consolidated Ad.com Japan beginning on February 9, 2012 (“the closing date”).

Under the accounting guidance for step acquisitions, AOL is required to record all assets acquired, liabilities assumed, and Mitsui’s noncontrolling interests at fair value, and recognize the entire goodwill of the acquired business. The step acquisition guidelines also require that AOL remeasure its preexisting investment in Ad.com Japan at fair value, and recognize any gains or losses from such remeasurement. The fair value of AOL’s interest immediately before the closing date was $15.4 million, which resulted in the Company recognizing a non-cash gain of approximately $10.8 million within other income (loss), net on the consolidated statement of comprehensive income in the first quarter of 2012. The Company used a combination of the market based approach (guideline public company) and an income approach (discounted cash flow analysis), both of which represent level 3 fair value measurements, to measure both the fair value of AOL’s preexisting investment and the fair value of Mitsui’s noncontrolling interest. As Mitsui has a right to put its interest to AOL based on a pre-established and determinable price in the future, the noncontrolling interest is presented as redeemable noncontrolling interest outside permanent equity in the Company’s consolidated balance sheet. The noncontrolling interest holder’s right to redeem its stock is exercisable any time between July 1 and July 30 of any year, commencing with July 1, 2014. The amount payable from AOL to Mitsui if Mitsui were to exercise its redemption right is determined by taking the sum of ¥2,000,000,000 (approximately $26.0 million as of the closing date) plus any incremental cash over the $7.8 million cash balance at December 31, 2011, and multiplying that total by Mitsui’s percentage ownership of Ad.com Japan (47% at closing). The Company has elected to recognize changes in the redemption value as they occur; however, this has no impact on the carrying value of Mitsui’s interest in Ad.com Japan because it exceeds the current redemption value. As of September 30, 2012 the undiscounted redemption value of the put option held by Mitsui was calculated to be approximately $12.3 million, which is below the $14.1 million carrying value of Mitsui’s interest in Ad.com Japan.

AOL recorded $9.7 million of goodwill (which is not deductible for tax purposes) and $19.2 million of intangible assets associated with this acquisition. The intangible assets associated with this acquisition consist primarily of trade names to be amortized on a straight-line basis over a period of ten years and advertiser relationships to be amortized over a period of five years. The fair value of the significant identified intangible assets was estimated by using relief from royalty, cost savings and multi-period excess earnings valuation methodologies, which represent level 3 fair value measurements. Inputs used in the methodologies primarily included projected future cash flows, discounted at a rate commensurate with the risk involved.

Unaudited pro forma results of operations assuming this acquisition had taken place at the beginning of each period are not provided because the historical operating results of the acquired company were not significant and pro forma results would not be significantly different from reported results for the periods presented.

29

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Patent Portfolio Sale and License

On June 15, 2012, the Company sold approximately 800 patents and their related patent applications (the “Sold Patents”) to Microsoft Corporation, a Washington corporation (“Microsoft”), and granted Microsoft a non-exclusive license to the Company’s retained patent portfolio, for aggregate proceeds of $1,056 million in cash (excluding transaction costs). The transaction was structured as a sale of all of the outstanding shares of a wholly owned non-operating subsidiary and the direct sale of certain other patents not held by the subsidiary. The Company concluded that immediate recognition of all of the proceeds was appropriate as the Company has no ongoing performance obligations with respect to the sold or licensed patents.

The disposed assets had a carrying value of $3.6 million on the Company’s balance sheet and accordingly, the Company recorded a gain on the disposition of the Sold Patents of $946.1 million (which represents the consideration allocated to the sale less the carrying value of the disposed assets and transaction costs that were contingent on closing). With respect to the licensing portion of the transaction, the Company recognized income from licensing its retained patent portfolio of $96.0 million during the three months ended June 30, 2012.

Based on the anticipated utilization of existing deferred tax assets and the fact that the disposition of the Sold Patents generated a capital loss (which is subject to a full valuation allowance), the Company does not expect the $1,056 million in proceeds to result in material cash taxes.

NOTE 5—INCOME TAXES

The Company recorded pre-tax income from operations of $45.1 million and related income tax expense of $24.4 million, which resulted in an effective tax rate of 54.1% for the three months ended September 30, 2012, as compared to an effective tax rate of 136.6% for the three months ended September 30, 2011. The effective tax rate for the three months ended September 30, 2011 and the three months ended September 30, 2012 differed substantially from the statutory U.S. federal income tax rate of 35.0% primarily due to foreign losses that did not produce a tax benefit.

The Company recorded pre-tax income from operations of $1,143.0 million and related income tax expense of $130.7 million, which resulted in an effective tax rate of 11.4% for the nine months ended September 30, 2012, as compared to the effective tax rate of 16.4% for the nine months ended September 30, 2011. The effective tax rate for the nine months ended September 30, 2012 differed substantially from the statutory U.S. federal income tax rate of 35.0% primarily due to the tax impact of the patent transaction with Microsoft during the second quarter of 2012. No material cash taxes will be paid on the patent transaction due to existing net operating losses which offset substantially all of the ordinary income generated by the patent transaction. However, for book purposes, this transaction resulted in income tax expense of $71.2 million. The patent transaction consisted of two elements: first, the sale of patents and the stock of a subsidiary, and second, the licensing of AOL’s retained patent portfolio, resulting in pre-tax income of $1,042.1 million. The tax expense relates primarily to ordinary income realized on the transaction, the majority of which is due to the licensing portion. In addition, the transaction created a significant capital loss due to the tax basis in the disposed subsidiary. The Company does not believe it is currently more likely than not that this capital loss will be realized, and accordingly, has recorded a full valuation allowance on the capital loss generated by the patent transaction. In addition the effect of the patent transaction on income tax expense, the Company also had foreign losses that did not produce a tax benefit. The effective tax rate for the nine months ended September 30, 2011 differed from the statutory U.S. federal income tax rate of 35.0% due to income tax benefits related to a worthless stock deduction and escrow disbursements from prior acquisitions, partially offset by foreign losses that did not produce a tax benefit.

30

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6—STOCKHOLDERS’ EQUITY

AOL is authorized to issue up to 660.0 million shares of all classes of stock, consisting of 60.0 million shares of preferred stock, par value $0.01 per share (“Preferred Stock”), and 600.0 million shares of common stock, par value $0.01 per share. In August 2012, in connection with the Tax Asset Protection Plan discussed further below, AOL filed a Certificate of Designation to its Amended and Restated Certificate of Incorporation creating a series of approximately 0.1 million shares of Preferred Stock designated as Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”). The Series A Preferred Stock has the voting and such other rights as provided for in the Certificate of Designation. Rights and privileges associated with shares of Preferred Stock are subject to authorization by the Company’s Board of Directors and may differ from those of any and all other series at any time outstanding. All shares of common stock will be identical and will entitle the holders thereof to the same rights and privileges.

As of September 30, 2012, 109.2 million shares of common stock were issued and 90.1 million shares of common stock were outstanding.

During the nine months ended September 30, 2011, the Company recorded $39.0 million of equity-based compensation that resulted in an increase in additional paid-in capital. Included in this amount was $31.7 million related to expense incurred under AOL’s equity-based compensation plan, $3.6 million related to the fair value of unvested Huffington Post Plan options held by The Huffington Post employees that were converted into AOL stock options and related to pre-combination service, as well as $4.0 million related to the accelerated vesting of stock options related to terminated employees.

Stock Repurchase Program

On August 10, 2011, the Company’s Board of Directors approved a stock repurchase program, which authorized the Company to repurchase up to $250.0 million of its outstanding shares of common stock from time to time through August 2012. Repurchases were subject to market conditions, share price and other factors. Repurchases were made in accordance with applicable securities laws in the open market or in private transactions and may include derivative transactions, or pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. For the nine months ended September 30, 2012, the Company paid $35.8 million to repurchase 2.1 million shares at a weighted average price of $17.29 per share as part of this program. From the inception of the program through September 30, 2012, the Company repurchased a total of 14.8 million shares at a weighted average price of $14.11 per share as part of this program, for total consideration of $209.4 million. Shares repurchased under the program were recorded as treasury stock on the Company’s consolidated balance sheet. The shares repurchased under this program during the nine months ended September 30, 2012 were not the result of an accelerated share repurchase agreement and did not result in any derivative transactions. Management has not made a decision on whether shares purchased under this program will be retired or reissued. The Company’s Board of Directors re-authorized the purchase of the remaining shares under this program to be purchased as part of the accelerated stock repurchase agreement entered into on August 26, 2012 as defined below.

Dutch Auction Tender Offer

On June 28, 2012, AOL announced a $400.0 million modified Dutch auction tender offer. The tender offer began on the date of the announcement, June 28, 2012, and expired on August 2, 2012. Through the Dutch tender offer, AOL’s shareholders had the opportunity to tender some or all of their shares at a price within the range of $27.00 to $30.00 per share. Upon expiration, approximately 0.3 million shares were tendered through the offer at a final purchase price of $30.00 per share, for a total purchase price of approximately $8.8 million. We accounted for the repurchase of these shares as treasury stock on the Company’s consolidated balance sheet during the third quarter of 2012.

31

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Accelerated Stock Repurchase Agreement

On August 26, 2012, the Company entered into a fixed dollar collared accelerated stock repurchase agreement with Barclays Capital Inc. (“Barclays”), as agent for Barclays Bank PLC, effective August 27, 2012 (the “ASR Agreement”). Under the ASR Agreement, on August 30, 2012, AOL paid $654.1 million from cash on hand to Barclays to repurchase outstanding shares of common stock. The consideration paid to Barclays to repurchase shares included $54.1 million in contemplation of the special cash dividend announced by the Company on August 27, 2012 and discussed further below, which was calculated as the present value of the special cash dividend with respect to those shares deliverable under the ASR Agreement prior to the ex-dividend date of December 3, 2012. Since the ASR Agreement is indexed to the Company’s stock and the Company has the option to settle in cash or shares at the Company’s discretion, the Company has accounted for shares repurchased under the ASR Agreement within equity in its consolidated balance sheet. As such, the $654.1 million payment to Barclays was initially recorded as a reduction to additional paid in capital (“APIC”) prior to the shares being delivered. As the shares are delivered by Barclays, AOL will transfer an amount equal to the estimated value of the shares delivered from APIC to treasury stock, such that upon completion of the ASR Agreement, the entire $654.1 million will be recorded as treasury stock. On August 30, 2012, Barclays delivered 4.0 million shares to AOL at an estimated value of $131.7 million and that amount was recorded as treasury stock on the Company’s consolidated balance sheet. Barclays delivered an additional 6.5 million shares on October 24, 2012.

The specific number of shares that AOL ultimately will repurchase under the ASR Agreement will be based generally on the share price of AOL common stock over a valuation period in accordance with the terms of the ASR Agreement, subject to a floor and cap provision that establishes a minimum and maximum number of repurchased shares, and subject to the agreed adjustment for the value of the special cash dividend. The minimum and maximum share number depends generally on the share price at which Barclays purchased shares of AOL’s common stock during the initial hedging period, during which Barclays established an initial hedge position in respect of its obligations to deliver shares under the ASR Agreement. Barclays will be required to make additional share deliveries under the ASR Agreement, and AOL expects to receive delivery of a substantial majority of shares underlying the transaction before the end of the year. On final settlement of the ASR Agreement, AOL may be entitled to receive additional shares of AOL common stock, or, if it elects, cash, from Barclays, or under certain circumstances specified in the ASR Agreement, AOL may be required to deliver shares or make a cash payment, at its option, to Barclays. In connection with this transaction, Barclays has purchased and is expected to continue to purchase AOL common stock in the open market.

Special Cash Dividend

On August 26, 2012, AOL declared the payment of a special, one-time, cash dividend of $5.15 per share, payable on December 14, 2012 to shareholders of record at the close of business on December 5, 2012 (the “Special Cash Dividend”). In connection with the payment of the Special Cash Dividend and in accordance with and pursuant to the Company’s Amended and Restated 2010 Stock Incentive Plan (“2010 SIP”), the Company plans to make an equitable adjustment to outstanding stock options, such that both the fair value and intrinsic value of employee awards immediately following the Special Cash Dividend will be essentially unchanged from the fair value and intrinsic value prior to the Special Cash Dividend. In addition, individuals who hold restricted stock units (“RSUs”) and performance stock units (“PSUs”) will be paid out the Special Cash Dividend as the respective RSUs and PSUs vest. The Company does not expect to record any material incremental compensation expense in connection with the adjustment of stock options or payment of dividends on RSUs and PSUs. As a result of the declaration of the Special Cash Dividend, AOL recorded an estimated dividend payable of $445.1 million as of September 30, 2012 with an offsetting reduction to retained earnings in the Company’s consolidated balance sheet, reflecting the estimated amount of the Special Cash Dividend based on shares expected to be outstanding on December 5, 2012. This amount is subject to change based on the actual number of shares outstanding on December 5, 2012. The Company expects to announce the anticipated treatment of the Special Cash Dividend for tax purposes prior to the ex-dividend date of December 3, 2012.

32

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Tax Asset Protection Plan

As of September 30, 2012, AOL has significant domestic tax attributes, including both net operating loss deferred tax assets and capital loss carry-forward deferred tax assets. Unless otherwise restricted, AOL can utilize these tax attributes in certain circumstances to offset future U.S. taxable income, including in connection with capital gains that may be generated from a potential asset sale. Should a “change of control” be triggered under Section 382 of the Internal Revenue Code of 1986, as amended, the Company may not be able to utilize these tax attributes to offset future U.S. taxable income, or such utilization could be significantly delayed. As a result, during the third quarter of 2012, the Company adopted a Tax Asset Protection Plan (the “TAPP”) that is intended to act as a deterrent to any individual, individual fund or family of funds with common dispositive power acquiring 4.9% or more of the Company’s outstanding shares without the approval of the Company’s Board of Directors.

Pursuant to the TAPP, the Company declared a dividend of one right on each outstanding share of common stock held of record as of the close of business on September 7, 2012. One right will also be issued together with each share of common stock issued after September 7, 2012 but before the date the rights are exercisable and, in certain circumstances, after such date. Subject to the terms, provisions and conditions of the TAPP, if the rights become exercisable, each right would initially represent the right to purchase from the Company one ten-thousandth of a share of Series A Preferred Stock for a purchase price of $100. If issued, each fractional share of Series A Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of common stock. However, prior to exercise, a right does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation rights.

The rights will expire on August 27, 2015, or such earlier time as the Company’s Board of Directors determines that the Company has no remaining designated tax attributes as of the beginning of a taxable year. The Company intends to submit the TAPP for stockholder approval at its next annual meeting of stockholders. The adoption of the TAPP did not have a material impact on the Company’s financial statements as of and for the three months ended September 30, 2012.

NOTE 7—EQUITY-BASED COMPENSATION

Pursuant to the Company’s 2010 SIP stock options are granted to employees, advisors and non-employee directors of AOL with exercise prices equal to the quoted market value of the common stock at the date of grant. Performance stock options are also granted to certain senior level executives. Generally, the stock options vest ratably over a three to four year vesting period and expire ten years from the date of grant. Certain stock option awards provide for accelerated vesting upon an election to retire after reaching a specified age and years of service, as well as certain additional circumstances for non-employee directors.

Also pursuant to the 2010 SIP, AOL may also grant shares of common stock, RSUs or PSUs to its employees, advisors and non-employee directors, which generally vest ratably over a three to four year period from the date of grant. Holders of restricted stock, RSU and PSU awards are generally entitled to receive cash dividends or dividend equivalents, respectively, at the discretion of the Board of Directors, if paid by the Company during the period of time that the restricted stock, RSU or PSU awards are unvested. Certain of the Company’s PSU awards are subject to quarterly remeasurement of expense with corresponding adjustments to cumulative recognized compensation expense, as the service inception date precedes the grant date for these awards.

The Company is authorized to grant equity awards to employees, advisors and non-employee directors covering an aggregate of 21.8 million shares of AOL common stock under the 2010 SIP. Shares that are subject to Restricted Stock Awards or Other Stock-Based Awards (as such terms are defined in the 2010 SIP) shall be counted against the share authorization limit and the per participant limit as 1.61 shares for every share granted.

33

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Amounts available for issuance pursuant to grants under the 2010 SIP will change over time based on such activities as the conversion of equity awards into common stock, the forfeiture of equity awards and the cancellation of equity awards, among other activities.

Upon the (i) exercise of a stock option award, (ii) vesting of a RSU, (iii) grant of restricted stock or (iv) vesting of a performance share, shares of AOL common stock are issued from authorized but unissued shares or from treasury stock.

Equity-Based Compensation Expense

Compensation expense recognized by AOL related to its equity-based compensation plans is as follows (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Stock options	$	4.7	$	5.1	$	13.5	$	15.7
RSUs and PSUs		6.4		5.2		14.8		16.0
Total equity-based compensation expense	$	11.1	$	10.3	$	28.3	$	31.7
Tax benefit recognized	$	4.4	$	4.1	$	11.2	$	12.5

As of September 30, 2012, the Company had 7.8 million stock options and 3.2 million RSUs/PSUs outstanding to employees, advisors and non-employee directors. The weighted-average exercise price of the stock options and the weighted-average grant date fair value of the RSUs/PSUs outstanding as of September 30, 2012 were $21.32 and $24.68, respectively.

As of September 30, 2012, total unrecognized compensation cost related to unvested AOL stock option awards was $29.9 million and is expected to be recognized over a weighted-average period of approximately 2.4 years. Total unrecognized compensation cost as of September 30, 2012 related to unvested RSUs/PSUs was $49.7 million and is expected to be recognized over a weighted-average period of approximately 2.2 years. To the extent the actual forfeiture rate is different from what the Company has estimated, equity-based compensation expense related to these awards will be different from the Company’s expectations.

AOL Stock Options

The assumptions presented in the table below represent the weighted-average value of the applicable assumption used to value AOL stock options at their grant date:

	Nine Months Ended September 30,
	2012		2011
Expected volatility		39.1%		36.8%
Expected term to exercise from grant date		5.10 years		5.51 years
Risk-free rate		1.1%		2.4%
Expected dividend yield		0.0%		0.0%

The assumptions above relate to AOL stock options granted during the period. The assumptions for 2011 do not include stock options that were converted in connection with the acquisition of The Huffington Post during the nine months ended September 30, 2011.

34

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8—RESTRUCTURING COSTS

For the nine months ended September 30, 2012, the Company incurred $7.7 million of restructuring costs related to organizational changes made in an effort to improve its ability to execute its strategy. These restructuring costs were primarily related to involuntary employee terminations.

A summary of AOL’s restructuring activity for the nine months ended September 30, 2012 is as follows (in millions):

	Employee Terminations		Other Exit Costs		Total
Liability at December 31, 2011	$	5.6	$	7.1	$	12.7
Restructuring expense		7.8		(0.1)		7.7
Foreign currency translation and other adjustments		1.0		0.2		1.2
Cash paid		(13.6)		(4.0)		(17.6)
Liability at September 30, 2012	$	0.8	$	3.2	$	4.0

At September 30, 2012, of the remaining liability of $4.0 million, $3.7 million was classified as a current liability within accrued expenses and other current liabilities, with the remaining $0.3 million classified within other long-term liabilities in the consolidated balance sheet. Amounts classified as long-term are expected to be paid through 2014.

NOTE 9—COMMITMENTS AND CONTINGENCIES

Commitments

For a description of AOL’s commitments see “Note 10” to the Company’s audited consolidated financial statements included in the Annual Report.

Contingencies

During the second quarter of 2012, the Company paid $13.5 million to settle a sales tax matter with the Virginia Department of Taxation covering the period from February 1995 through December 2011. In connection with the resolution of this matter, the Company recorded incremental sales and use tax expense within general and administrative expense of $9.6 million for the nine months ended September 30, 2012.

AOL is a party to a variety of claims, suits and proceedings that arise in the normal course of business, including actions with respect to intellectual property claims, tax matters, labor and unemployment claims, commercial claims, claims related to the Company’s business model for content creation and other matters. With respect to tax matters, AOL has received tax assessments in certain states related to sales and use taxes on its business operations. AOL has appealed these tax assessments and plans to vigorously contest these matters. In addition, AOL has received assessments in certain foreign countries related to income tax and transfer pricing, and plans to vigorously contest these matters as well. In certain instances, the Company was required to pay a portion of the tax assessment in order to proceed with the dispute of the assessment. While the results of such normal course claims, suits and proceedings cannot be predicted with certainty, management does not believe that, based on current knowledge and the likely timing of resolution of the various matters, any additional reasonably possible potential losses above the amount accrued for such matters would be material to the Company’s financial statements. Regardless of the outcome, legal proceedings can have an adverse effect on us because of defense costs, diversion of management resources and other factors.

35

AOL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10—SEGMENT INFORMATION

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses and that has discrete financial information that is regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

On June 29, 2012, the Company announced a plan to form operating units in conjunction with a planned change in management structure. However, the planned operating units are still being finalized, and there is currently no financial data regularly reviewed by the Company’s chief operating decision maker below the consolidated unit level. The Company has determined that the chief operating decision maker function consists of its Chief Executive Officer and its Chief Operating Officer as of and for the three months ended September 30, 2012. The chief operating decision maker function continues to evaluate performance and make operating decisions about allocating resources based on financial data presented on a consolidated basis. There are no executives who are held accountable by AOL’s chief operating decision maker function, or anyone else, for an operating measure of profit or loss for any operating unit below the consolidated unit level. Accordingly, management has determined that the Company has one segment as of and for the nine months ended September 30, 2012.

36

AOL INC.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the second quarter of 2012, we paid $13.5 million to settle a sales tax matter with the Virginia Department of Taxation covering the period from February 1995 through December 2011. In connection with the resolution of this matter, we recorded incremental sales and use tax expense within general and administrative expense of $9.6 million for the nine months ended September 30, 2012, respectively.

We are a party to a variety of claims, suits and proceedings that arise in the normal course of business, including actions with respect to intellectual property claims, tax matters, labor and unemployment claims, commercial claims, claims related to our business model for content creation and other matters. With respect to tax matters, we have received tax assessments in certain states related to sales and use taxes on our business operations. We have appealed these tax assessments and plan to vigorously contest these matters. In addition, we have received assessments in certain foreign countries related to income tax and transfer pricing, and plan to vigorously contest these matters as well. In certain instances, we were required to pay a portion of the tax assessment in order to proceed with the dispute of the assessment. While the results of such normal course claims, suits and proceedings cannot be predicted with certainty, management does not believe that, based on current knowledge and the likely timing of resolution of various matters, any additional reasonably possible potential losses above the amount accrued for such matters would be material to our financial statements. Regardless of the outcome, legal proceedings can have an adverse effect on us because of defense costs, diversion of management resources and other factors. See “Item 1A—Risk Factors—Risks Relating to Our Business—If we cannot continue to enforce and protect our intellectual property rights, our business could be adversely affected” and “Item 1A—Risk Factors—Risks Relating to Our Business—We have been, and may in the future be, subject to claims of intellectual property infringement or tort law violations that could adversely affect our business” included in our Annual Report.

37

AOL INC.

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

There have been no material changes to the Company’s risk factors from those disclosed in Part I – Item 1A of our Annual Report for the year ended December 31, 2011.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following is a summary of common shares repurchased by the Company under its stock repurchase program:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) (b)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) (b)
July 1, - July 31, 2012		-	$	-		-	$	400,000,000
August 1, - August 31, 2012		4,292,435	$	32.73		4,292,435	$	522,400,000
September 1, - September 30, 2012		-	$	-		-	$	522,400,000
Total		4,292,435	$	32.73		4,292,435	$	522,400,000

(a) On June 28, 2012, we announced a $400.0 million modified Dutch auction tender offer. The tender offer began on the date of the announcement, June 28, 2012, and expired on August 2, 2012. Through the Dutch tender offer, AOL’s shareholders had the opportunity to tender some or all of their shares at a price within the range of $27.00 to $30.00 per share. Upon expiration, approximately 0.3 million shares were tendered through the offer at a final purchase price of $30.00 per share, for a total purchase price of approximately $8.8 million.

(b) On August 26, 2012, we entered into a fixed dollar collared accelerated stock repurchase agreement with Barclays Capital Inc. (“Barclays”), as agent for Barclays Bank PLC, effective August 27, 2012 (the “ASR Agreement”). Under the ASR Agreement, on August 30, 2012, we paid $654.1 million from cash on hand to Barclays to repurchase outstanding shares of common stock, including $54.1 million in contemplation of the one-time cash dividend, which was calculated as the present value of the Special Cash Dividend announced on August 27, 2012 with respect to those shares deliverable under the ASR Agreement prior to the ex-dividend date of December 3, 2012. The approximate dollar value of shares that may yet be repurchased under the program disclosed above excludes commissions and other fees paid in relation to repurchases through September 30, 2012.

ITEM 6. EXHIBITS

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure, other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

See the Exhibit Index immediately following the signature page of this Quarterly Report.

38

AOL INC.

SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 6, 2012.

AOL INC.
By	/s/    Karen Dykstra
Name:	Karen Dykstra
Title:	Chief Financial Officer

39

AOL INC.

EXHIBIT INDEX

Exhibit Number	Description
3.1	Certificate of Designation, Preferences, and Rights of Series A Junior Participating Preferred Stock filed with the Secretary of State of Delaware on August 27, 2012.
4.1	Tax Asset Protection Plan, dated as of August 27, 2012, between AOL Inc. and Computer share Trust Company, N.A., as Rights Agent, which includes as Exhibit B the Form of Rights Certificate (incorporated by reference from Exhibit 4.1 to AOL Inc.’s Current Report on Form 8-K filed with the SEC on August 27, 2012).
10.1	Share Repurchase Transaction Letter Agreement (“ASR Agreement”), dated August 26, 2012 and effective August 27, 2012, between AOL Inc. and Barclays Bank PLC, through its agent Barclays Capital Inc.**
10.2	Amendment to ASR Agreement dated August 31, 2012, between AOL Inc. and Barclays Bank PLC, through its agent Barclays Capital Inc.**
10.3	First Amendment to the Executive Employment Agreement of John Reid-Dodick, dated as of July 17, 2012, between AOL Inc. and John Reid-Dodick.*
10.4	Executive Employment Agreement, dated September 10, 2012 and effective September 7, 2012, between AOL Inc. and Arthur Minson.*
10.5	Executive Employment Agreement, dated September 19, 2012, between AOL Inc. and Karen E. Dykstra.*
10.6	Form of AOL Inc. 2012 Annual Bonus Plan.*
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101	Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (ii) Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, (iv) Consolidated Statements of Equity for the nine months ended September 30, 2012 and 2011 and (v) Notes to Consolidated Financial Statements. ††

* Management contract or compensatory plan or arrangement.

** An application for confidential treatment for selected portions of this agreement has been filed with the Securities and Exchange Commission.

† This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

40

AOL INC.

EXHIBIT INDEX

†† In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

41

EX-3.1

Exhibit 3.1

CERTIFICATE OF DESIGNATION, PREFERENCES, AND

RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

AOL INC.

Pursuant to Section 151 of the General Corporation Law of the State of Delaware, the undersigned officer of AOL Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

That pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), a duly authorized committee of the Board of Directors on August 26, 2012, adopted the following resolution creating a series of Preferred Stock designated as Series A Junior Participating Preferred Stock (as hereinafter defined):

RESOLVED, that a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations, and restrictions thereof are as follows:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” and the number of shares constituting such series shall be fifty thousand (50,000).

Section 2. Dividends and Distributions.

(A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock, in preference to the holders of shares of Common Stock, par value $0.01 per share, of the Corporation (the “Common Stock”), and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September, and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 10,000 times the aggregate per share amount of all cash dividends, and 10,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the

1

Corporation shall at any time after August 26, 2012 (the “Rights Dividend Declaration Date”) (i) pay any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares or (iv) issue any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in Paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 10,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend

2

on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein or required by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) that shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two directors.

(ii) During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that such voting right shall not be exercised unless the holders of 10% in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two directors or, if such right is exercised at an annual meeting, to elect two directors. If the number that may be so elected at any special meeting does not amount to the required number, the holders of Preferred Stock shall have the right to make such increase in the number of directors as shall be necessary to permit the election by them of the required number. After the holders of Preferred Stock shall have exercised their right to elect directors in any default period and during the continuance of such period, the number of directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock.

(iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect directors, the Board of Directors

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may order, or any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the Board of Directors. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this Paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to such holder at such holder’s last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this Paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

(iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of directors until the holders of Preferred Stock, voting as a class, shall have exercised their right to elect two directors, after the exercise of which right (x) the directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in Paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock that elected the director whose office shall have become vacant. References in this Paragraph (C) to directors elected by the holders of a particular class of stock shall include directors elected by such directors to fill vacancies as provided in clause (y) of the foregoing sentence.

(v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect directors shall cease, (y) the term of any directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of directors shall be such number as may be provided for in the Certificate of Incorporation or Bylaws irrespective of any increase made pursuant to the provisions of Paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the Certificate of Incorporation or Bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining directors.

(D) Except as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

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Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends on, or make any other distributions on, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock;

(ii) declare or pay dividends on, or make any other distributions on, any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution, or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase, or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation, or winding up) to the Series A Junior Participating Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designation creating a series of Preferred Stock or any similar stock, or as otherwise required by law.

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Section 6. Liquidation, Dissolution, or Winding Up.

(A) Upon any liquidation (voluntary or otherwise), dissolution, or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received an amount equal to $10,000 per share of Series A Participating Preferred Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 10,000 (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends, and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to one with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.

(B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences.

(C) In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination, or other transaction in which the shares of Common Stock are exchanged for, converted or changed into other stock or securities, cash, or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged, converted or changed in an amount per share (subject to

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the provision for adjustment hereinafter set forth) equal to 10,000 times the aggregate amount of stock, securities, cash, or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed, converted or exchanged. In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange, conversion or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable.

Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.

Section 10. Amendment. At any time when any shares of Series A Junior Participating Preferred Stock are outstanding, neither the Certificate of Incorporation of the Corporation nor this Certificate of Designation shall be amended in any manner that would adversely alter or change the powers, preferences, or any relative, special or other rights of the Series A Junior Participating Preferred Stock without the affirmative vote of the holders of two­thirds or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class.

Section 11. Fractional Shares. The Series A Junior Participating Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions, and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, AOL Inc. has caused this Certificate of Designation to be signed by the undersigned this 27^th day of August, 2012.

AOL INC.
By:	/s/ Julie Jacobs
Name:	Julie Jacobs
Title:	Executive Vice President, General
	Counsel and Corporate Secretary

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EX-10.1

Exhibit 10.1

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT A CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION: [****]

Barclays Bank PLC

5 The North Colonnade

Canary Wharf, London E14 4BB

Facsimile:+44(20)77736461

Telephone: +44 (20) 777 36810

c/o Barclays Capital Inc.

as Agent for Barclays Bank PLC

745 Seventh Ave

New York, NY 10019

DATE:	August 26, 2012
TO:	AOL Inc.
Attention:	Arthur T. Minson
Facsimile:	+1 703 466 9097
Telephone:	+1 212 206 5004
Email:	Arthur.Minson@teamaol.com
FROM:	Barclays Capital Inc., acting as Agent for Barclays Bank PLC
TELEPHONE:	+1 212 412 4000
SUBJECT:	Share Repurchase Transaction

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between Barclays Bank PLC (“Barclays”), through its agent Barclays Capital Inc. (the “Agent”), and AOL Inc. (“Counterparty”) on the Trade Date specified below (the “Transaction”). This Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below. Barclays Bank PLC is not a member of the Securities Investor Protection Corporation (“SIPC”). Barclays is regulated by the Financial Services Authority.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern. For purposes of the Equity Definitions, the Transaction shall be deemed to be a Share Forward Transaction.

Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.

1. This Confirmation evidences a complete and binding agreement between Barclays and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall supplement, form a part of and be subject to an agreement in the form of the ISDA 1992 Master Agreement (Multicurrency – Cross Border) (the “Agreement”) as if Barclays and Counterparty had executed an agreement in such form (without any Schedule and with such other elections set forth in this Confirmation) on the Trade Date. In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction. The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

2. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:
Trade Date:	August 27, 2012
Seller:	Barclays
Buyer:	Counterparty
Shares:	The Common Stock, $0.01 par value per share of Counterparty (Ticker symbol “AOL”).
Prepayment:	Applicable
Prepayment Amount:	As specified in Schedule A
Prepayment Date:	Three Exchange Business Days following the Trade Date.
Additional Payment:	Counterparty shall pay to Barclays an amount equal to the Additional Payment as specified in Schedule A on the Prepayment Date.
Initial Shares:	As specified in Schedule A.
Initial Share Delivery:	Barclays shall deliver a number of Shares equal to the Initial Shares to Counterparty on the Initial Share Delivery Date in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date being deemed to be a “Settlement Date” for purpose of such Section 9.4.
Initial Share Delivery Date:	Three Exchange Business Days following the Trade Date.
Initial Hedge Period:	The period (the “Initial Hedge Period”) commencing on, and including, the Scheduled Trading Day immediately following the Trade Date and ending on, and including the

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Scheduled Trading Day on which Barclays completes the purchase of a number of Shares (the “Hedge Shares”) necessary to establish its initial hedge position with respect to the Transaction (such date, the “Hedge Period End Date”); provided, that if, on any Scheduled Trading Day, the Hedging Price (calculated as if such Scheduled Trading Day were the last day in the Initial Hedge Period) is equal to or greater than USD [****] on such Scheduled Trading Day and each of the nine immediately preceding Scheduled Trading Days during the Initial Hedge Period (a “Hedging Price Termination”), the Transaction shall be terminated and Barclays shall promptly (but in no event later than the Scheduled Trading Day immediately following such 10th consecutive Scheduled Trading Day (the “Hedging Price Termination Date”)) provide written notice to Counterparty of such Hedging Price Termination.

Upon a Hedging Price Termination (i) if the number of Hedge Shares purchased by Barclays during the period beginning on, and including, the first Scheduled Trading Day of the Initial Hedge Period and ending on, and including, the Hedging Price Termination Date is greater than the Initial Shares, Barclays shall deliver to Counterparty on the third Exchange Business Day immediately following the Hedging Price Termination Date the excess of such number of Hedge Shares over the Initial Shares and (ii) Barclays shall pay to Counterparty on the third Exchange Business Day immediately following, if clause (i) above is applicable, the Hedging Price Termination Date, or otherwise, the last Scheduled Trading Day of the Termination Purchase Period an amount in USD (the “Refund Amount”) equal to (A) (1) the Prepayment Amount, plus (2) the Additional Payment, minus (B) (1) the aggregate purchase price paid by Barclays in respect of the Hedge Shares purchased by Barclays during the period beginning on, and including, the first Scheduled Trading Day of the Initial Hedge Period and ending on, and including, the Hedging Price Termination Date, plus (2) if, and only if, the number of Hedge Shares purchased by Barclays during the period beginning on, and including, the first Scheduled Trading Day of the Initial Hedge Period and ending on, and including, the Hedging Price Termination Date is less than the number of Initial Shares, the product of (1) the excess of the Initial Shares over such number of Hedge Shares, multiplied by (2) the volume weighted average price at which Barclays purchases Shares in connection with the Transaction during the Termination Purchase Period; provided, that in lieu of payment of an amount in USD equal

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to the Refund Amount by Barclays to Counterparty, Counterparty shall have the right, in its sole discretion, to require Barclays to satisfy its obligation to pay the Refund Amount to Counterparty by delivering Shares to Counterparty (in which case Section 5(o) shall apply as if the Refund Amount were a Payment Obligation owed by Barclays to Counterparty); provided further, that if the Refund Amount is less than zero, Barclays shall not make any payment to Counterparty, and Section 5(o) shall apply as if the absolute value of the Refund Amount were a Payment Obligation owed by Counterparty to Barclays.

The “Termination Purchase Period” means the number of consecutive Scheduled Trading Days immediately following the Hedging Price Termination Date, determined by Barclays in its commercially reasonable discretion, required to complete the purchase of the number of Shares equal to the Initial Shares minus the number of Hedge Shares purchased by Barclays during the period beginning on, and including, the first Scheduled Trading Day of the Initial Hedge Period and ending on, and including, the Hedging Price Termination Date.

On the first Scheduled Trading Day immediately following the Hedge Period End Date, Barclays shall provide written notice (the “Confirmation Pricing Supplement”) to Counterparty in substantially the form attached hereto as Exhibit A, of the Hedging Price, Adjusted Hedging Price, Discount, Maximum Shares, Minimum Shares, Maximum Maturity Date, Minimum Maturity Date and first day of the Trading Period. Upon receipt of the Confirmation Pricing Supplement, Counterparty shall promptly execute and return the Confirmation Pricing Supplement to Barclays; provided, that Counterparty’s failure to so execute and return the Confirmation Pricing Supplement shall not affect the binding nature of the Confirmation Pricing Supplement, and the terms set forth therein, if accurately determined pursuant to the terms of this Confirmation (including Schedule A hereto), shall be binding on Counterparty to the same extent, and with the same force and effect, as if Counterparty had executed a written version of the Confirmation Pricing Supplement. Upon the reasonable request of Counterparty from time to time, Barclays shall promptly provide Counterparty with notice of the Hedging Price (as defined below), calculated as if the date on which Counterparty makes such request were the last Scheduled Trading Day during the Initial Hedge Period.

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	Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of the provisions set forth in the four immediately preceding paragraphs.
Hedging Price:	The volume weighted average price at which Barclays purchases Shares to establish its initial hedge position with respect to the Transaction during the Initial Hedge Period. For the avoidance of doubt, the parties hereto agree and acknowledge that Barclays may execute Rule 10b-18 block purchases to establish all or a portion of its initial hedge position with respect to the Transaction during the Initial Hedge Period. Barclays agrees that it shall purchase Hedge Shares in a commercially reasonable manner, including using good faith efforts to purchase Shares during the Initial Hedge Period in connection with the Transaction in a manner designed not to unnecessarily increase the price of the Shares.
Exchange:	The New York Stock Exchange
Related Exchange(s):	All Exchanges
Calculation Agent:	Barclays; provided, that following the occurrence of an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to which Barclays is the Defaulting Party, Counterparty shall have the right to designate a nationally recognized third-party dealer in over-the-counter corporate equity derivatives to act as the Calculation Agent during the period when such Event of Default is continuing. Following any determination, calculation or adjustment by the Calculation Agent hereunder, the Calculation Agent will, upon request, provide to Counterparty promptly following such request a report (in a commonly used file format for storage and manipulation of financial data but without disclosing any proprietary models of the Calculation Agent or other information that may be proprietary or subject to contractual, legal or regulatory obligations to not disclose such information) displaying in reasonable detail the basis for such determination, calculation or adjustment, as the case may be.
Valuation:
Trading Period:	The period of consecutive Scheduled Trading Days from, and including, the first Scheduled Trading Day following the Hedge Period End Date to, and including, the Maximum Maturity Date, as specified in Schedule A; provided, that Barclays may designate any Scheduled Trading Day on or

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	after the Minimum Maturity Date (as specified in Schedule A) and prior to the Maximum Maturity Date as the last Scheduled Trading Day of the Trading Period. Barclays shall notify Counterparty of any designation made pursuant to this provision on or prior to the Scheduled Trading Day immediately following such designated day.
Market Disruption Event:	Section 6.3(a) of the Equity Definitions shall be amended by deleting the words “at any time during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and replacing them with the words “at any time during the regular trading session on the Exchange, without regard to after hours or any other trading outside of the regular trading session hours”, by amending and restating clause (a)(iii) thereof in its entirety to read as follows: “(iii) an Early Closure that the Calculation Agent determines is material,” and by adding the words “or (iv) a Regulatory Disruption” after clause (a)(iii) as restated above. Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
Regulatory Disruption:	A “Regulatory Disruption” shall occur if Barclays determines in its reasonable discretion based on advice of counsel that it is appropriate in light of legal, regulatory or self-regulatory requirements or related policies or procedures (provided, that such requirements, policies or procedures relate to legal or regulatory issues and are generally applicable in similar situations and applied to the Transaction in a non-discriminatory manner) for Barclays to refrain from all or any part of the market activity in which it would otherwise engage in connection with the Transaction.
Disrupted Day:	The definition of “Disrupted Day” in Section 6.4 of the Equity Definitions shall be amended by adding the following sentence after the first sentence: “A Scheduled Trading Day on which a Related Exchange fails to open during its regular trading session will not be a Disrupted Day if the Calculation Agent determines that such failure will not have a material impact on Barclays’s ability to unwind any hedging transactions related to the Transaction”.
Consequence of Disrupted Days:	Notwithstanding anything to the contrary in the Equity Definitions, to the extent that a Disrupted Day occurs during the Trading Period, the Calculation Agent may postpone the Maximum Maturity Date and/or the Minimum Maturity Date by no more than one Scheduled Trading Day for each

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	Disrupted Day. If any Disrupted Day occurs during the Initial Hedge Period or the Trading Period, the Calculation Agent shall determine whether (i) such Disrupted Day is a Disrupted Day in whole, in which case the 10b-18 VWAP for such Disrupted Day shall not be included for purposes of determining the Hedging Price, if such Disrupted Day occurs during the Initial Hedge Period, or the Forward Price, if such Disrupted Day occurs during the Trading Period, or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the 10b-18 VWAP for such Disrupted Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day effected before the relevant Market Disruption Event (if any) occurred and/or after the relevant Market Disruption Event (if any) ended, and the Hedging Price, if such Disrupted Date occurs during the Initial Hedge Period, or the Forward Price, if such Disrupted Date occurs during the Trading Period, shall be determined by the Calculation Agent in a commercially reasonable manner on the basis of the nature and duration of the relevant Market Disruption Event. Any day on which the Exchange is scheduled to close prior to its normal closing time shall be considered a Disrupted Day in whole. All determinations by the Calculation Agent to modify the Hedge Period or the Trading Period or any other adjustment as specified herein, including as a result of a deemed Disrupted Day or Days pursuant to Section 5, shall be communicated to Counterparty promptly following such determination or adjustment, as the case may be.
Valuation Time:	Scheduled Closing Time; provided, that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion.
Valuation Date:	The last Scheduled Trading Day of the Trading Period.
Settlement Terms:
Settlement Method Election:	Applicable with respect to the settlement of the Number of Shares to be Delivered, with Counterparty as the Electing Party (and, for the avoidance of doubt, not applicable with respect to the Initial Share Delivery, Interim Share Delivery or Supplemental Share Delivery); provided, that if Counterparty elects Cash Settlement in whole or in part, on the date of such election, Counterparty shall be deemed to have repeated as of such date the representation set forth in Section 5(p) below and shall represent and warrant that Counterparty is making such election in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws.

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	If Counterparty elects for Physical Settlement of the Transaction in part but not in whole, in its notice of Settlement Election, Counterparty shall specify the portion (as a percentage, the “Physical Settlement Percentage”) of the Transaction in respect of which Physical Settlement shall be applicable and the portion (as a percentage, which shall be equal to 100%, minus the Physical Settlement Percentage) of the Transaction in respect of which Cash Settlement shall be applicable. Following any such election, the provisions opposite the caption “Physical Settlement” below shall apply to the portion of the Transaction in respect of which Physical Settlement is applicable (as specified by Counterparty in its notice of Settlement Election) and the provisions opposite the caption “Cash Settlement” below shall apply to the portion of the Transaction in respect of which Cash Settlement is applicable (as specified by Counterparty in its notice of Settlement Election). For the avoidance of doubt, Counterparty may elect Physical Settlement in whole (and not in part).
Default Settlement Method:	Physical Settlement. For the avoidance of doubt, Counterparty shall not be required to make any election pursuant to the terms of Settlement Method Election above on or prior to the Settlement Method Election Date, but if Counterparty does not make such election, Physical Settlement shall be deemed to apply in accordance with the terms hereof.
Settlement Method Election Date:	(A) If the Number of Shares to be Delivered is a positive number, the first Scheduled Trading Day immediately following the date that is six months following the earlier of (i) notice of the designation of the final day of the Trading Period or (ii) the Maximum Maturity Date, and (B) if the Number of Shares to be Delivered is a negative number, the first Scheduled Trading Day immediately following the earlier of (i) notice of the designation of the final day of the Trading Period or (ii) the Maximum Maturity Date.
Physical Settlement:	If the Number of Shares to be Delivered is a positive number and Counterparty has not validly elected Cash Settlement pursuant to the provisions opposite the caption “Settlement Method Election” above on or prior to the Settlement Method Election Date, Barclays shall deliver to Counterparty on the Settlement Date the Number of Shares to be Delivered. If the Number of Shares to be Delivered is a negative number and Counterparty has not validly elected Cash Settlement

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	pursuant to the provisions opposite the caption “Settlement Method Election” above on or prior to the Settlement Method Election Date, Counterparty shall deliver to Barclays the absolute value of such number subject to “Physical Settlement by Counterparty” and Section 5(h) below. Section 9.11 of the Equity Definitions is hereby modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares or the fact that any certificates representing such Shares contain a restrictive legend.
Forward Price:	The amount equal to (i) the arithmetic average of the 10b-18 VWAPs for all Exchange Business Days in the Trading Period (subject to “Consequence of Disrupted Days” above) (the “Average 10b-18 VWAP”), minus (ii) the Discount, as specified in Schedule A; provided, that unless a Cancellation Event (as defined below) has occurred prior to the first Scheduled Trading Day immediately following the Fixed Amount Adjustment Date (as specified in Schedule A), on the first Scheduled Trading Day following the Fixed Amount Adjustment Date, the 10b-18 VWAP for each Exchange Business Day during the Trading Period that occurs prior to the Fixed Amount Adjustment Date (subject to “Consequence of Disrupted Days” above) shall be reduced by the Fixed Amount (as specified in Schedule A)
10b-18 VWAP:	(A) For any Scheduled Trading Day that is not a Disrupted Day, the volume-weighted average price at which the Shares trade as reported in the composite transactions for all United States securities exchanges on which such Shares are traded (or, if applicable, any successor Exchange), excluding (i) trades that do not settle regular way, (ii) opening (regular way) reported trades in the consolidated system on such Scheduled Trading Day, (iii) trades that occur in the last ten minutes before the scheduled close of trading on the Exchange on such Scheduled Trading Day and ten minutes before the scheduled close of the primary trading in the market where the trade is effected, and (iv) trades on such Scheduled Trading Day that do not satisfy the requirements of Rule 10b-18(b)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as determined in by the Calculation Agent in accordance with the immediately succeeding sentence, or (B) for any Scheduled Trading Day that is a Disrupted Day, an amount determined in good faith and in a commercially reasonable manner by the Calculation Agent as the 10b-18 VWAP pursuant to “Consequence of

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	Disrupted Days” above. For purposes of determining the 10b-18 VWAP on any Schedule Trading Day as set forth in clause (A) of the immediately preceding sentence, the Calculation Agent shall refer to the Bloomberg Page “AOL <Equity> AQR SEC” (or any successor thereto), as published by Bloomberg at 4:15 p.m. New York time (or 15 minutes following the end of any extension of the regular trading session); provided, that if, on any Scheduled Trading Day, such price is not so reported for any reason or the Calculation Agent reasonably determines that such price is not consistent with the description of such price in clause (A) of the immediately preceding sentence, the Calculation Agent shall determine the 10b-18 VWAP in good faith and in a commercially reasonable manner.
Number of Shares to be Delivered:	A number of Shares equal to the difference between (i) the Share Amount minus (ii) the number of Shares previously delivered pursuant to Initial Share Delivery, Interim Share Delivery, Supplemental Share Delivery and any Shares delivered pursuant to Section 5(n); provided, that a number of Shares less than a whole number shall be rounded upward.
Share Amount:	The quotient of the Prepayment Amount divided by the Forward Price; provided, that if such quotient is (i) greater than the Maximum Shares, the Share Amount shall equal the Maximum Shares, and (ii) less than the Minimum Shares, the Share Amount shall equal the Minimum Shares.
Settlement Date:	Unless otherwise provided under the heading Physical Settlement by Counterparty or Section 5(h), (a) if the Number of Shares to be Delivered is a positive number, the third Exchange Business Day immediately following the later of (i) the last Scheduled Trading Day of the Trading Period and (ii) the date that Counterparty validly makes (or is deemed to have made) a Settlement Method Election and (b) if the Number of Shares to be Delivered is a negative number, the third Exchange Business Day immediately following the last Scheduled Trading Day of the Trading Period.
Minimum Shares:	As specified in Schedule A.
Interim Shares:	As specified in Schedule A.
Interim Share Delivery:	Barclays shall deliver to Counterparty on the Interim Share Delivery Date a number of Shares equal to the Interim Shares. Such delivery shall be in accordance with Section 9.4 of the Equity Definitions, with the Interim Share Delivery Date being deemed to be a “Settlement Date” for purpose of such Section 9.4.

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Interim Share Delivery Date:	The third Exchange Business Day immediately following the Hedge Period End Date.
Supplemental Share Delivery	Barclays shall deliver to Counterparty on the Supplemental Share Delivery Date, the excess, if any, of (i) the Minimum Shares over (ii) the number of the Initial Shares plus the number of Interim Shares plus any Shares delivered pursuant to Section 5(n), reduced by the portion of such number of shares not then held by Barclays that Barclays determines in its commercially reasonable discretion is not available in the stock loan market at a cost less than or equal to the Initial Stock Loan Rate. Such delivery shall be in accordance with Section 9.4 of the Equity Definitions, with the Supplemental Share Delivery Date being deemed to be a “Settlement Date” for purpose of such Section 9.4.
Supplemental Share Delivery Date:	The fifth Exchange Business Day immediately following the Fixed Amount Adjustment Date.
Maximum Shares:	As specified in Schedule A.
Physical Settlement by Counterparty:	If the Number of Shares to be Delivered is a negative number and Counterparty elects or is deemed to elect for Physical Settlement by Counterparty to apply, Section 5(h) shall apply and Counterparty shall have the right to elect that the shares delivered (“Physical Settlement Shares”) (and any Make-Whole Shares, as such term is defined below) shall be (i) fully registered, freely tradable and free and clear of any lien, charge, claim or other encumbrance (“Free Shares”) with such election being conditional upon the agreement between Barclays and Counterparty of reasonable and customary underwriting terms including but not limited to indemnification and contribution and due diligence (the “Underwriting Agreement”), or (ii) unregistered Shares (“Restricted Shares”). No fractional Shares shall be delivered in connection with Physical Settlement by Counterparty, and the value of any fractional Share otherwise deliverable shall be rounded up to the nearest whole Share. (a) If Counterparty elects to deliver Free Shares, Counterparty shall deliver a number of Free Shares equal to the absolute value of the Number of Shares to be Delivered on the Settlement Date. (b) If Counterparty elects to deliver Restricted Shares, Counterparty shall deliver to Barclays an initial number of Restricted Shares on the Cash Settlement Date (as defined in Section 5(g)(i) below) as determined by the following formula:  s   p

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where, s = the absolute value of the Cash Settlement Amount (as defined in Section 5(g) below); and p = the price per Share equal to the fair market value per Share as determined by the Calculation Agent in a commercially reasonable manner. On the Cash Settlement Date a balance (the “Settlement Balance”) shall be established with an initial balance equal to the absolute value of the Cash Settlement Amount. Following the sale of the Physical Settlement Shares by Barclays, which shall be completed in a commercially reasonable period of time, the Settlement Balance shall be reduced by an amount equal to the aggregate proceeds (net of any brokerage and underwriting commissions and fees, including any customary private placement fees, all of which are commercially reasonable) received by Barclays upon the sale of the Physical Settlement Shares. If following the sale of some but not all of the Physical Settlement Shares the Settlement Balance has been reduced to zero, no additional Physical Settlement Shares shall be sold by Barclays and Barclays shall redeliver to Counterparty any remaining Physical Settlement Shares. If following the sale of the Physical Settlement Shares the Settlement Balance has not been reduced to zero, then Counterparty shall (i) promptly deliver to Barclays an additional number of Restricted Shares (the “Make-Whole Shares”) equal to (x) the Settlement Balance as of such date divided by (y) the price per Restricted Share equal to the fair market value per Restricted Share as determined by the Calculation Agent in a commercially reasonable manner (the “Make-Whole Price”) or (ii) promptly deliver to Barclays cash in an amount equal to the then remaining Settlement Balance. This provision shall be applied successively until the Settlement Balance is reduced to zero.

Cash Settlement:

Applicable if Counterparty has validly elected Cash Settlement pursuant to the provisions opposite the caption “Settlement Method Election” above on or prior to the Settlement Method Election Date, in which case Section 5(g) below shall apply.

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Settlement Currency:	USD
Adjustments:
Method of Adjustment:	Calculation Agent Adjustment; provided, that the Equity Definitions shall be amended by (i) deleting Section 11.2(e)(iii) and (ii) replacing the words “diluting or concentrative” in Sections 11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word “economic” and by adding the words “or the Transaction” after the words “theoretical value of the relevant Shares” in Section 11.2(a), 11.2(c) and 11.2(e)(vii); provided further, that adjustments may be made to account for changes in volatility, stock loan rate and liquidity relative to the relevant Shares. Each of Counterparty and Barclays acknowledges and agrees that the adoption of any tax asset protection plan or similar agreement disclosed to Barclays on or prior to the Trade Date (the “Tax Asset Protection Plan”) shall not constitute a Potential Adjustment Event, it being understood and agreed by each of Counterparty and Barclays that any subsequent separation of such rights, the occurrence of any triggering event permitting the exercise of some or all such rights, or any similar event shall constitute a Potential Adjustment Event.
Extraordinary Events:
New Shares:	Section 12.1(i) of the Equity Definitions is hereby amended by deleting the text in clause (i) in its entirety and replacing it with the phrase “publicly quoted, traded or listed on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their respective successors) and”.
Share-for-Share:	The definition of “Share-for-Share” set forth in Section 12.1(f) of the Equity Definitions is hereby amended by the deletion of the parenthetical in clause (i) thereof.
Cancellation and Payment (Calculation Agent Determination):	Sections 12.2(e) and 12.3(d) and the first paragraph of Section 12.7(b) of the Equity Definitions shall be amended by inserting the words “or Share Forward Transaction” after the words “Option Transaction” in each place where such words appear therein. Section 12.7(c) shall be deleted from the Equity Definitions, and each reference in the Equity Definitions to “Section 12.7(c)” shall be replaced with a reference to “Section 12.7(b)”.
Consequence of Merger Events:
Share-for-Share:	Modified Calculation Agent Adjustment.

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Share-for-Other:	Cancellation and Payment (Calculation Agent Determination).
Share-for-Combined:	Cancellation and Payment (Calculation Agent Determination); provided, that Barclays may elect Component Adjustment.
Consequence of Tender Offers:
Tender Offer:	Applicable
Share-for-Share:	Modified Calculation Agent Adjustment.
Share-for-Other:	Modified Calculation Agent Adjustment.
Share-for-Combined:	Modified Calculation Agent Adjustment.
Modified Calculation Agent Adjustment:	For greater certainty, the definition of “Modified Calculation Agent Adjustment” in Sections 12.2 and 12.3 of the Equity Definitions shall be amended by (i) adding the following italicized language after the stipulated parenthetical provision: “(including adjustments to account for changes in volatility, stock loan rate or liquidity relevant to the Shares or to the Transaction, but excluding adjustments to account for changes in expected dividends) from the Exchange Business Day immediately preceding the Announcement Date or the Determination Date, as applicable, to the first Exchange Business Day immediately following the Merger Date (Section 12.2) or Tender Offer Date (Section 12.3).” and (ii) deleting the phrase “expected dividends,” from such stipulated parenthetical provision.
Announcement Date:	The definition of “Announcement Date” in Section 12.1 of the Equity Definitions shall be amended by (i) replacing the word “leads to the” in the third and the fifth lines thereof with the words “, if completed, would lead to a”; (ii) replacing the words “voting shares” in the fifth line thereof with the word “Shares”; (iii) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof; (iv) replacing the words “a firm” with the word “any” in the second and fourth lines thereof; (v) inserting the words “or to explore the possibility of engaging in” after the words “engage in” in the second line thereto; and (vi) inserting the words “or to explore the possibility of purchasing or otherwise obtaining” after the word “obtain” in the fourth line thereto.
Announcement Event:	If an Announcement Event has occurred, the Calculation Agent shall have the right to determine the economic effect of the Announcement Event on the theoretical value of the Transaction (including without limitation any change in

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	volatility, stock loan rate or liquidity relevant to the Shares or to the Transaction) (i) at a time that it deems appropriate, from the Announcement Date to the date of such determination (the “Determination Date”), and (ii) on the Valuation Date or on a date on which a payment amount is determined pursuant to Sections 12.7 or 12.8 of the Equity Definitions, from the Exchange Business Day immediately preceding the Announcement Date or the Determination Date, as applicable, to the Valuation Date or the date on which a payment amount is determined pursuant to Sections 12.7 or 12.8 of the Equity Definitions. If any such economic effect is material, the Calculation Agent will adjust the terms of the Transaction to reflect such economic effect; provided, that the reference in Section 12.8(a) of the Equity Definitions to “Extraordinary Event” shall be replaced for this purpose with a reference to “Announcement Event.” “Announcement Event” shall mean the occurrence of the Announcement Date of a Merger Event or Tender Offer or of a potential Merger Event or potential Tender Offer.
Composition of Combined Consideration:	Not Applicable; provided, that notwithstanding Sections 12.5(b) and 12.1(f) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by an actual holder of the Shares, the Calculation Agent will, in its sole discretion, determine such composition.
Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination); provided, that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
Change in Law:	Applicable; provided, that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “, or public announcement of, the formal or informal interpretation”; (ii) replacing the word “Shares” where it appears in clause (X) thereof with the words “Hedge Position”; and (iii) immediately following the word

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	“Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by Barclays on the Trade Date (unless another commercially reasonable manner of holding, acquiring or disposing of Shares relating to such Transaction is reasonably available to Barclays that has not become illegal and would not result in a material increase in cost to Barclays in performing its obligations under the Transaction)”; and provided further, that Barclays shall not terminate the Transaction for a Change in Law referred to in clause (Y) of Section 12.9(a)(ii) of the Equity Definitions except to the extent it is exercising its right to terminate transactions as a result of a “Change in Law” event with respect to other similarly situated customers in respect of similar transactions. The parties agree that, for the avoidance of doubt, for purposes of Section 12.9(a)(ii) of the Equity Definitions, “any applicable law or regulation”, and for purposes of Section 5(b)(i) of the Agreement, “any applicable law”, shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any similar law or regulation (collectively, the “Wall Street Act”), and the consequences specified in Section 12.9(b)(i) of the Equity Definitions and Section 6 of the Agreement shall apply to any Change in Law or Illegality, as the case may be, arising from any such act, rule or regulation. The parties hereby agree that Section 12.9(a)(ii)(Y) of the Equity Definitions shall be applicable to any additional capital charges or other regulatory capital requirements imposed in connection with the Wall Street Act, if they result in a materially increased cost to Barclays in performing its obligations under the Transaction. The foregoing constitutes a specific reservation for purposes of the Wall Street Act.
Failure to Deliver:	Not Applicable.
Insolvency Filing:	Applicable; provided, that the definition of “Insolvency Filing” in Section 12.9 of the Equity Definitions shall be amended by deleting the clause “provided that such proceedings instituted or petitions presented by creditors and not consented to by the Issuer shall not be deemed an Insolvency Filing” at the end of such definition and replacing it with the following: “; or it has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by a creditor and such proceeding is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof.”

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	Section 12.9(b)(i) of the Equity Definitions is hereby amended by adding the following sentence at the end thereof: “If neither party elects to terminate the Transaction in respect of an Insolvency Filing, the Calculation Agent may adjust the terms of the Transaction upon the occurrence of such an event pursuant to Modified Calculation Agent Adjustment (as if such event were a Tender Offer).”
Hedging Disruption:	Applicable; provided, that Section 12.9(a)(v) of the Equity Definitions is hereby modified by inserting the following sentence at the end of such Section: “Such inability described in phrases (A) or (B) above shall not constitute a “Hedging Disruption” unless such inability will result in continued performance by the Hedging Party under the Transaction being commercially unreasonable or commercially impracticable.”
Loss of Stock Borrow:	Applicable; provided, that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity Definitions are amended by deleting the words “at a rate equal to or less than the Maximum Stock Loan Rate” and replacing it with the words “at a Borrow Cost equal to or less than the Maximum Stock Loan Rate”. For purposes of Section 12.9 of the Equity Definitions, all references to “Hedging Shares” shall be deemed to be references to Barclays’s short position in respect of the Transaction.
Borrow Cost:	The cost to borrow the relevant Shares that would be incurred by a third party market participant borrowing such Shares, as determined by the Calculation Agent on the relevant date of determination. Such costs shall include (a) the spread below FED-FUNDS that would be earned on collateral posted in connection with such borrowed Shares, net of any costs or fees, and (b) any stock loan borrow fee that would be payable for such Shares, expressed as fixed rate per annum.
Maximum Stock Loan Rate:	200 basis points.
Increased Cost of Stock Borrow:	Applicable; provided, that (a) Section 12.9(a)(viii) of the Equity Definitions shall be amended by deleting “rate to borrow Shares” and replacing it with “Borrow Cost” and (b) Section 12.9(b)(v) of the Equity Definitions shall be amended by (i) adding the word “or” immediately before the phrase “(B)”, (ii) deleting subsection (C) in its entirety, (iii) replacing “either party” in the penultimate sentence with “the

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	Hedging Party”, and (iv) replacing the word “rate” in clauses (X) and (Y) of the final sentence therein with the words “Borrow Cost”.
Initial Stock Loan Rate:	30 basis points, as adjusted by the Calculation Agent to reflect any subsequent Price Adjustment due to an Increased Cost of Stock Borrow.
FED FUNDS:	For any day, the rate set forth for such day opposite the caption “Federal funds”, as such rate is displayed on the page “FedsOpen <Index> <GO>” on the BLOOMBERG Professional Service, or any successor page; provided, that if no rate appears for any day on such page, the rate for the immediately preceding day for which a rate does so appear shall be used for such day.
Hedging Party:	Barclays or an affiliate of Barclays that is involved in the hedging of the Transaction for all applicable Additional Disruption Events.
Determining Party:	Barclays for all applicable Extraordinary Events.
Acknowledgments:
Non-Reliance:	Applicable.
Agreements and Acknowledgments Regarding Hedging Activities:	Applicable.
Additional Acknowledgments:	Applicable.

3. Mutual Representations, Warranties and Agreements.

In addition to the representations, warranties and agreements in the Agreement and those contained elsewhere herein, each of Barclays and Counterparty represents and warrants to, and agrees with, the other party that:

(a) Commodity Exchange Act. It is an “eligible contract participant” within the meaning of Section 1a(18) of the U.S. Commodity Exchange Act, as amended (the “CEA”). The Transaction has been subject to individual negotiation by the parties. The Transaction has not been executed or traded on a “trading facility” as defined in Section 1a(51) of the CEA;

(b) Securities Act. It is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or an “accredited investor” as defined in Section 2(a)(15)(ii) of the Securities Act; and

(c) ERISA. The assets used in the Transaction (1) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (2) do not constitute “plan assets” within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.

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4. Representations, Warranties and Agreements of Counterparty.

In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty further represents, warrants and agrees that:

(a) Counterparty’s entry into and performance of the Transaction, including the repurchase of Shares by Counterparty hereunder, will comply in all material respects with (i) all laws and regulations applicable to it (including, without limitation, the Securities Act and the Exchange Act, and the regulations promulgated thereunder) and (ii) all contractual obligations of Counterparty;

(b) Counterparty shall promptly provide written notice to Barclays upon obtaining knowledge of the occurrence of any event that would constitute an Event of Default, a Potential Event of Default, a Potential Adjustment Event, a Merger Event or any other Extraordinary Event; provided, however, that should Counterparty be in possession of material non-public information regarding Counterparty, Counterparty shall not communicate such information to Barclays;

(c) (A) Counterparty is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary, (B) Counterparty is not relying on any communication (written or oral) of Barclays or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from Barclays or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction;

(d) Counterparty has (and shall at all times during the Transaction have) the capacity and authority to invest directly in the Shares underlying the Transaction and has not entered into the Transaction with the intent to avoid any regulatory filings;

(e) Counterparty’s financial condition is such that it has no need for liquidity with respect to its investment in the Transaction and no need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or indebtedness;

(f) Counterparty’s investments in and liabilities in respect of the Transaction, which it understands are not readily marketable, are not disproportionate to its net worth, and Counterparty is able to bear any loss in connection with the Transaction, including the loss of its entire investment in the Transaction;

(g) Counterparty is not as of the Trade Date, and shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase the number of Shares underlying with the Transaction in compliance with the laws of the jurisdiction of Counterparty’s incorporation or organization;

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(h) the Transaction, and any repurchase of the Shares by Counterparty in connection with the Transaction, is pursuant to a publicly announced Share repurchase program that has been approved by Counterparty’s board of directors (a copy of such approval to be provided to Barclays upon request), including approval of consummating such repurchase through a transaction in the nature of the Transaction, and any such repurchase pursuant to the Transaction has been, or shall if so required be, publicly disclosed in its periodic filings under the Exchange Act and its financial statements and notes thereto;

(i) Counterparty understands, agrees and acknowledges that Barclays has no obligation or intention to register the Transaction under the Securities Act, any state securities law or other applicable federal securities law;

(j) (A) each of Counterparty’s filings under the Securities Act, the Exchange Act, or other applicable securities laws that are required to be filed have been filed and (B) as of the respective dates thereof and as of the Trade Date (or such other date on which such representation is made), such filings when considered as a whole (with the more recent such filings deemed to amend inconsistent statements contained in any earlier such filings) do not contain any misstatement of a material fact or omit any material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading;

(k) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;

(l) Counterparty understands, agrees and acknowledges that no obligations of Barclays to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Barclays or any governmental agency;

(m) without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Barclays is not making any representations or warranties with respect to the treatment of the Transaction under any accounting standards, including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project;

(n) Counterparty is not entering into the Transaction for the purpose of (i) creating actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares (or any security convertible into or exchangeable for the Shares);

(o) Counterparty has not entered into any obligation that would contractually limit it from effecting settlement under the Transaction and it agrees not to enter into any such obligation during the term of the Transaction;

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(p) to Counterparty’s knowledge, no state or local (including non-U.S. jurisdictions, other than the United Kingdom or any jurisdiction therein) law, rule, regulation or regulatory order applicable to the Shares (not including laws, rules, regulations or regulatory orders of any jurisdiction that are applicable solely as a result of Barclays’ and/or its affiliates’ activities, assets or businesses other than Barclays’ activities in respect of the Transaction) would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Barclays or its affiliates owning or holding (however defined) Shares in connection with the Transaction; and

(q) Counterparty (i) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (ii) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (iii) has total assets of at least $50 million as of the date hereof.

5. Other Provisions:

(a) Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Barclays and Counterparty shall be transmitted exclusively through Agent.

(b) Rule 10b-18.

(i) During the Initial Hedge Period (other than purchases made by Barclays as part of its dynamic adjustment of its hedge of the options embedded in the Transaction or that Barclays reasonably believes are attributable solely to Barclays), the Cash Settlement Pricing Period (as defined below), if any, and the Termination Purchase Period, if any, and with respect to any purchases executed as a result of an occurrence of an Additional Termination Event, Barclays agrees to use commercially reasonable efforts to make all purchases of Shares in a manner that would comply with the limitations set forth in clauses (b)(1), (b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 under the Securities Exchange Act of 1934 (“Rule 10b-18”), as if such rule was applicable to such purchases.

(ii) Except as disclosed to Barclays in writing prior to the Trade Date, Counterparty represents and warrants to Barclays that it has not made any purchases of blocks by or for itself or any of its Affiliated Purchasers pursuant to the one block purchase per week exception in Rule 10b-18(b)(4) under the Exchange Act during each of the four calendar weeks preceding such date (“Rule 10b-18 purchase,” “blocks” and “Affiliated Purchaser”, each as defined in Rule 10b-18).

(iii) Counterparty agrees that it (A) will not, on any day during the Initial Hedge Period, the Trading Period, any Cash Settlement Pricing Period and any Termination Purchase Period, make, or permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction unless such public announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares; (B) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify Barclays following any such announcement that such announcement has been made; and

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(C) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Barclays with written notice specifying (i) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the announcement date that were not effected through Barclays or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the announcement date. Such written notice shall be deemed to be a certification by Counterparty to Barclays that such information is true and correct. In addition, Counterparty shall promptly notify Barclays of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. “Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

(c) Rule 10b5-1. It is the intent of the parties that the Transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act (“Rule 10b5-1”), and the parties agree that this Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c), and Counterparty shall take no action that results in the Transaction not so complying with such requirements. Without limiting the generality of the preceding sentence, Counterparty acknowledges and agrees that (A) Counterparty does not have, and shall not attempt to exercise, any influence over how, when or whether Barclays effects any purchases in connection with the Transaction, (B) during the Initial Hedge Period, the Trading Period, any Cash Settlement Pricing Period and any Termination Purchase Period, neither Counterparty nor its officers or employees shall, directly or indirectly, communicate any information regarding Counterparty or the Shares to any employee of Barclays or its affiliates who is directly involved with the hedging of and trading with respect to the Transaction, it being agreed that the Permissible Contacts (as specified in Schedule A) are not directly involved with such activities, (C) Counterparty is entering into the Transaction in good faith and not as part of a plan or scheme to evade compliance with federal securities laws including, without limitation, Rule 10b-5 and (D) Counterparty will not alter or deviate from this Confirmation or enter into or alter a corresponding hedging transaction with respect to the Shares. Counterparty also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 and no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer or director of Counterparty is aware of any material non-public information regarding Counterparty or the Shares.

(d) Company Purchases. Without the prior written consent of Barclays and except for purchases that are not solicited by or on behalf of Counterparty, its affiliates or affiliated purchasers (each as defined in Rule 10b-18 of the Exchange Act) or purchases executed by Barclays or an Affiliate of Barclays, Counterparty shall not purchase, and shall cause its affiliates or affiliated purchasers not to directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a

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depository share) or any security convertible into or exchangeable or exercisable for Shares during the Initial Hedge Period, the Trading Period, any Cash Settlement Pricing Period and any Termination Purchase Period; provided, that this Section 5(d) shall not (i) limit Counterparty’s ability, pursuant to its employee incentive plans, to re-acquire Shares in connection with the related equity transactions; (ii) limit Counterparty’s ability to withhold shares to cover exercise price and/or tax liabilities associated with such equity transactions; or (iii) limit Counterparty’s ability to grant stock and options to “affiliated purchasers” (as defined in Rule 10b-18) or the ability of such affiliated purchasers to acquire such stock or options, in connection with the Counterparty’s compensatory plans for directors, officers and employees or any agreements with respect to the compensation of directors, officers or employees of any entities that are acquisition targets of Issuer, so long as, in the case of clause (i), (ii) or (iii) of this sentence, any such re-acquisition, withholding, grant, acquisition or other purchase does not constitute a “Rule 10b-18 Purchase” (as defined in Rule 10b-18).

(e) Regulation M. Counterparty is not on the date hereof, engaged in a distribution, as such term is used in Regulation M under the Exchange Act, of any securities of Counterparty, other than a distribution meeting the requirements of the exception set forth in Section 102(b)(7) of Regulation M under the Exchange Act. Counterparty shall not, until the later of the Settlement Date or the final Cash Settlement Date (as defined below), if applicable, engage in any such distribution.

(f) Additional Termination Event.

(i) Notwithstanding any other provision hereof, an “Additional Termination Event” shall occur and Counterparty shall be the sole Affected Party pursuant to such Additional Termination Event if on any day occurring after the Trade Date and on or prior to the last Scheduled Trading Day in the Trading Period (1) Counterparty declares a distribution, issue or dividend to existing holders of the Shares with an ex-dividend date on or prior to the Valuation Date of (i) a cash distribution, issue or dividend (other than a cash dividend in an amount per Share equal to the Fixed Amount (as specified in Schedule A)), (ii) securities or share capital of another issuer acquired or owned (directly or indirectly) by Counterparty as a result of a spin-off or other similar transaction or (iii) any other type of securities (other than Shares, which may constitute a Potential Adjustment Event), rights or warrants or other assets, in any case for payment (cash or other consideration) at less than the prevailing market price as determined by Barclays (not including the adoption of the Tax Asset Protection Plan, it being understood and agreed by the parties that any subsequent separation of the rights thereunder, the occurrence of any triggering event permitting the exercise of some or all such rights, or any similar event may constitute an “Additional Termination Event”); or (2) Counterparty declares a cash distribution, issue or dividend to existing holders of the Shares with an ex-dividend date on or prior to the Valuation Date that is different than the Fixed Amount Adjustment Date specified in Schedule A.

(ii) Notwithstanding any other provision hereof, if, prior to the first Exchange Business Day immediately following the Fixed Amount Adjustment Date (as specified in Schedule A), any event occurs that requires (subject to Section 5(o) below) the payment of any amount in connection with the Transaction pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement (any such transaction or

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event, including an Additional Termination Event pursuant to Section 5(f)(i), a “Cancellation Event”), all references in the Confirmation to the Adjusted Hedging Price shall be deemed to be references to the Hedging Price, which means, for the avoidance of doubt, that no adjustments shall be made in this Confirmation to reflect the Fixed Amount.

(g) Cash Settlement. (i) If Cash Settlement applies and the Number of Shares to be Delivered is a negative number (i.e., the Counterparty owes value to Barclays), Counterparty may elect to pay to Barclays on each Cash Settlement Date an amount in cash equal to the Cash Settlement Amount for such Cash Settlement Date; provided, that Counterparty on the date of such election provides the representation contained in Section 5(p) below. “Cash Settlement Date” shall mean the third Currency Business Day immediately following each Exchange Business Day on which Barclays delivers to Counterparty a Hedge Repurchase Notice. For purposes of this Section 5(g)(i), “Cash Settlement Amount” shall mean, with respect to each Cash Settlement Date, the product of (i) the number of Hedge Repurchase Shares, as specified in the applicable Hedge Repurchase Notice, multiplied by (ii) the volume weighted average price at which Barclays purchased such Shares on the Scheduled Trading Day related to such Cash Settlement Date, which purchases shall be conducted by Barclays in a commercially reasonable manner. “Cash Settlement Pricing Period” shall mean the period commencing on the third Scheduled Trading Day immediately following the last Scheduled Trading Day of the Trading Period and ending on the Exchange Business Day on which Barclays completes the purchase of a number of shares equal to the absolute value of the Number of Shares to be Delivered (each such Share, a “Hedge Repurchase Share”). With respect to each Scheduled Trading Day during the Cash Settlement Pricing Period, Barclays shall deliver a notice (each such notice, a “Hedge Repurchase Notice”) to the Counterparty of the number of Hedge Repurchase Shares purchased by Barclays on such Scheduled Trading Day.

(ii) If Cash Settlement applies and the Number of Shares to be Delivered is a positive number (i.e., Barclays owes value to the Counterparty), Barclays shall deliver to the Counterparty the Cash Settlement Amount on the third Exchange Business Day immediately following the date on which Barclays generates aggregate net cash proceeds equal to the Cash Settlement Amount pursuant to the provisions set forth below. For purposes of this Section 5(g)(ii) “Cash Settlement Amount” shall mean the actual price that Barclays receives for selling the Number of Shares to be Delivered (net of any brokerage or other commercially reasonable commissions), which sales shall be conducted by Barclays in a commercially reasonable manner beginning on the second Exchange Business Day immediately following the later of (i) the third Scheduled Trading Day immediately following the last Scheduled Trading Day of the Trading Period and (ii) the date on which Counterparty validly elects Cash Settlement pursuant to the provisions opposite the caption “Settlement Method Election” above. In connection with any Cash Settlement for which the Number of Shares to be Delivered is positive, Counterparty shall, at its election, either (X) in order to allow Barclays to sell the Number of Shares to be Delivered in a registered offering, make available to Barclays an effective registration statement under the Securities Act and (A) enter into an agreement, in form and substance reasonably satisfactory to Barclays, substantially in the form of an underwriting agreement for a registered offering, (B) use its reasonable best efforts to provide accountant’s “comfort” letters customary in form for registered offerings of equity securities, (C) provide disclosure opinions of nationally

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recognized outside counsel to Counterparty reasonably acceptable to Barclays, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Barclays a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities (provided, however, that if Barclays, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (Y) of this Section 5(g)(ii) shall apply at the election of Counterparty); or (Y) in order to allow Barclays to sell the Number of Shares to be Delivered in a private placement, enter into and comply with a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance satisfactory to Barclays.

(h) Share Delivery Conditions. If Physical Settlement by Counterparty applies, Counterparty may deliver Free Shares in respect of its settlement obligations only if the following conditions have been satisfied (the “Registration Provisions”): (i) a registration statement (“Registration Statement”) (which may be a shelf registration statement filed pursuant to Rule 415 under the Securities Act) covering public resale by Barclays (or an affiliate thereof) of any Shares delivered by Counterparty to Barclays under such Physical Settlement by Counterparty (“Settlement Shares”) shall have been filed with, and declared effective by, the Securities and Exchange Commission no later than one Scheduled Trading Day prior to the Settlement Date and such registration statement continues to be in effect at all times to and including the date that Barclays or its affiliate(s) has fully and finally sold any Settlement Shares hereunder, (ii) the contents of such registration statement and of any prospectus supplement to the prospectus included therein (including, without limitation, any sections describing the plan of distribution) shall be reasonably satisfactory to Barclays, (iii) Barclays shall have been afforded a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for transactions pursuant to which Barclays (or an affiliate thereof) acts as an underwriter of equity securities of similar size and the results of such investigation are satisfactory to Barclays, in its discretion, and (iv) as of the Settlement Date, an agreement between Barclays and Counterparty of reasonable and customary underwriting terms including but not limited to indemnification and contribution and due diligence (the “Underwriting Agreement”) shall have been entered into with Barclays in connection with the public resale of the Settlement Shares by Barclays (or an affiliate thereof). Notwithstanding the foregoing, if Counterparty elects for Physical Settlement by Counterparty to apply and Counterparty delivers Restricted Shares in respect of its settlement obligation, Barclays shall attempt to sell the Settlement Shares, if any, pursuant to an exemption from registration under the Securities Act by soliciting bids from interested parties in a manner exempt from registration.

Counterparty agrees that any Registration Statement it files for purposes of Physical Settlement by Counterparty pursuant to the provisions above, at the time the same becomes effective, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein to make the statements therein not misleading. Counterparty represents that any prospectus delivered to Barclays in connection with sales made under the Registration Statement (as such prospectus may be supplemented from time to time) will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

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For the avoidance of doubt, nothing in this clause (h) shall prevent or impact the ability of the Counterparty to deliver Restricted Shares as set forth in clause (b) under “Physical Settlement by Counterparty” above.

(i) Transfer or Assignment. Counterparty may not transfer or assign any of its rights or obligations under the Transaction or the Agreement without the prior written consent of Barclays. Notwithstanding any provision of the Agreement to the contrary, Barclays may, subject to applicable law, freely transfer and assign all of its rights and obligations under the Transaction and the Agreement without the consent of Counterparty to any affiliate of Barclays whose obligations hereunder are guaranteed by Barclays, or to any third party with a rating (or whose guarantor has a rating) for its long term, unsecured and unsubordinated indebtedness of A- or better by Standard & Poor’s Ratings Services or its successor (“S&P”), or A3 or better by Moody’s Investors Service, Inc. or its successor (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency mutually agreed by Counterparty and Barclays; provided, that Counterparty will not, as a result of such transfer, be required under the Agreement or this Confirmation to (i) pay to the transferee or assignee an amount greater than the amount that it would have been required to pay to Barclays in the absence of such transfer or assignment or (ii) receive from the transferee or assignee an amount less than the amount that Counterparty would have received from Barclays in the absence of such transfer or assignment, in each case based on the circumstances in effect on the date of such transfer.

(j) Excess Ownership. If at any time (1) the Equity Percentage exceeds 9.0% or (2) Barclays, Barclays Group (as defined below) or any person whose ownership position would be aggregated with that of Barclays or Barclays Group (Barclays, Barclays Group or any such person, a “Barclays Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (other than Section 13 of the Exchange Act, “Applicable Limitations”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the minimum number of Shares that could reasonably be expected to give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Barclays Person, or could reasonably be expected have a material adverse effect on a Barclays Person as a result of an action or actions taken by Counterparty, under any Applicable Limitation, as determined by Barclays, in its reasonable discretion, minus (y) 1.0% of the number of Shares outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), Barclays may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that an Excess Ownership Position no longer exists. In the event that Barclays so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Shares equal to the Terminated Portion, (y) Counterparty shall be the sole Affected Party with respect to such partial termination and (z) such Transaction shall be the only Terminated Transaction (and, for the avoidance of doubt, the provisions of Section 5(o) shall apply to any amount that is payable by Barclays to Counterparty pursuant to this sentence). The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator

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of which is the number of Shares that Barclays and any of its affiliates subject to aggregation with Barclays, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Barclays (“Barclays Group”), beneficially own (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator of which is the number of Shares outstanding on such day.

Barclays shall use commercially reasonable efforts to avoid the occurrence of an Excess Ownership Position, subject to compliance with all applicable legal, regulatory or self-regulatory requirements or related policies or procedures (provided, that such requirements, policies or procedures relate to legal or regulatory issues and are generally applicable in similar situations and applied to the Transaction in a non-discriminatory manner).

Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Barclays to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Barclays may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Barclays’ obligations in respect of the Transaction and any such designee may assume such obligations. Barclays shall be discharged of its obligations to Counterparty to the extent of any such performance.

(k) Role of Agent. Each of Barclays and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Barclays under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Barclays and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Barclays or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Counterparty acknowledges that the Agent is an affiliate of Barclays. Counterparty acknowledges that the Agent is an affiliate of Barclays. Barclays will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.

(l) Regulatory Provisions. The time of dealing for the Transaction will be confirmed by Barclays upon written request by Counterparty. The Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transaction.

(m) Netting and Setoff. Obligations under the Transaction shall not be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against obligations under the Transaction, whether arising under the Agreement, this Confirmation,

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under any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of setoff, netting or recoupment; provided, that both parties agree that subparagraph (ii) of Section 2(c) of the Agreement shall apply to the Transaction, except that upon the occurrence of an Event of Default or Termination Event with respect to a party who is the Defaulting Party or the Affected Party (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set-off or apply any obligation of X under the Transaction owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y) under an Equity Contract owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give notice to the other party of any set-off effected under this Section 5(m). “Equity Contract” shall mean for purposes of this Section 5(m).any transaction relating to Shares between X and Y (or any Affiliate of Y) that qualifies as ‘equity’ under applicable accounting rules. Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency. If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 5(m) shall be effective to create a charge or other security interest.

(n) Staggered Settlement. Barclays may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver any Shares deliverable on such Nominal Settlement Date on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows: (i) in such notice, Barclays will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date) or delivery times and how it will allocate the Shares it is required to deliver under the applicable settlement method above among the Staggered Settlement Dates or delivery times; and (ii) the aggregate number of Shares that Barclays will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Barclays would otherwise be required to deliver on such Nominal Settlement Date.

(o) Alternative Calculations and Counterparty Payment on Early Termination and on Certain Extraordinary Events. If Barclays owes Counterparty or if Counterparty owes Barclays any amount in connection with the Transaction (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or (ii) pursuant to Section 6(d)(ii) of the Agreement (a “Payment Obligation”), any such Payment Obligation shall be satisfied by delivery of Termination Delivery Units (as defined below) unless Counterparty gives irrevocable telephonic notice to Barclays, confirmed in writing within one Scheduled Trading Day, no later than noon New York time on the Early Termination Date or other date the Transaction is cancelled or terminated, that Barclays will be required to satisfy, or Counterparty will satisfy, as the case may be, such Payment Obligation in cash (“Notice of Barclays/Counterparty Termination Cash Payment”); provided, that if Counterparty elects to require Barclays to satisfy its Payment Obligation in cash, Barclays shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by delivery of Termination Delivery Units, notwithstanding Counterparty’s

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election to the contrary; provided further, that Barclays shall have the right to deem that Counterparty has given a Notice of Barclays/Counterparty Termination Cash Payment in the event of (i) an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, which Event of Default or Termination Event resulted from an event or events within Counterparty’s control. If Counterparty has not given (nor deemed to have given) a Notice of Barclays/Counterparty Termination Cash Payment, then within a commercially reasonable period of time following the relevant Early Termination Date or other relevant date on which the Transaction is cancelled or terminated, as the case may be, Barclays shall deliver to Counterparty or Counterparty shall deliver to Barclays, as the case may be, a number of Termination Delivery Units having a fair market value equal to the amount of such Payment Obligation (such number of Termination Delivery Units to be delivered to be determined by the Calculation Agent as the number of whole Termination Delivery Units that could be sold or purchased, as the case may be, over a commercially reasonable period of time to generate cash proceeds or with an amount of cash, as the case may be, equal to such Payment Obligation (net of any brokerage fees (in the case of a delivery by Barclays to Counterparty) or underwriting commissions and fees, including any customary private placement fees (in the case of a delivery by Counterparty to Barclays), all of which are commercially reasonable)). For the avoidance of doubt, if Counterparty has given (or is deemed to have given) a Notice of Barclays/Counterparty Termination Cash Payment, the provisions set forth in Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as the case may be, shall apply in lieu of the provisions set forth in this Section 5(o). If the provisions set forth in this Section 5(o) are applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (modified as described above) and 9.12 of the Equity Definitions shall be applicable, except that all references to “Shares” shall be read as references to “Termination Delivery Units.” “Termination Delivery Units” means in the case of a Termination Event, Event of Default or Delisting, one Share or, in the case of Nationalization, Insolvency, Tender Offer or Merger Event, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency, Tender Offer or Merger Event; provided, that if such Nationalization, Insolvency, Tender Offer or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

(p) No Material Non-Public Information. On the Trade Date and each day pursuant to the terms hereof on which this representation is repeated or deemed repeated, Counterparty represents and warrants to Barclays that none of Counterparty and its officers and directors is aware of any material non-public information concerning Counterparty or the Shares. “Material” information for these purposes is any information to which an investor would reasonably attach importance in reaching a decision to buy, sell or hold Shares.

(q) Maximum Number of Shares. The number of Shares that may be issued under any settlement by Counterparty pursuant to this Confirmation, the Definitions or the Agreement will be limited to the total Shares authorized but not outstanding, reduced by the total amount of contingently issuable Shares. In any event, the number of Shares issuable by Counterparty at settlement shall not exceed 10,000,000 Shares. If the number of Shares to be issued at settlement by Counterparty

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exceeds the limit in the first sentence of this provision, Counterparty will use its commercially reasonable best efforts to obtain all necessary approvals to issue additional Shares to enable it to satisfy all obligations hereunder.

(r) Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.

(s) Status of Claims in Bankruptcy. Barclays acknowledges and agrees that this Confirmation is not intended to convey to Barclays rights with respect to the Transaction that are senior to the claims of common stockholders of Counterparty in any U.S. bankruptcy proceedings of Counterparty; provided, that nothing herein shall limit or shall be deemed to limit Barclays’ right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to the Transaction; provided further, that nothing in this Section 5(s) shall limit or shall be deemed to limit Barclays’ rights in respect of any transactions other than the Transaction.

(t) No Collateral. Notwithstanding any provision of this Confirmation, the Agreement, Equity Definitions or any other agreement between the parties to the contrary, the obligations of Counterparty under the Transaction are not secured by any collateral.

(u) Securities Contract. The parties hereto agree and acknowledge that Barclays is one or more of a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” (as such term is defined in Section 741(8) of the Bankruptcy Code) or a “transfer” within the meaning of Section 546 of the Bankruptcy Code and (B) that Barclays is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.

(v) Payments on Early Termination. The parties hereto agree that for the Transaction, for the purposes of Section 6(e) of the Agreement, Loss and Second Method will apply. The Termination Currency shall be USD. Notwithstanding anything to the contrary herein, in no event will any adjustment be made or consideration be paid as a result of an Extraordinary Dividend declared by Counterparty. “Extraordinary Dividend” for these purposes shall mean any dividend or distribution on the Shares.

(w) Binding Contract. This Confirmation, as supplemented by the Confirmation Pricing Supplement, is a “qualified financial contract”, as such term is defined in Section 5-701(b)(2) of the General Obligations Law of New York (the “General Obligations Law”); (ii) the Confirmation Pricing Supplement constitutes a “confirmation in writing sufficient to indicate that a contract has been made between the parties” hereto, as set forth in Section 5-701(b)(3)(b)

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of the General Obligations Law; and (iii) this Confirmation constitutes a prior “written contract” as set forth in Section 5-701(b)(1)(b) of the General Obligations Law, and each party hereto intends and agrees to be bound by this Confirmation, as supplemented by the Confirmation Pricing Supplement. Barclays and Counterparty further agree and acknowledge that this Confirmation, as supplemented by the Confirmation Pricing Supplement, constitutes a contract “for the sale or purchase of a security”, as set forth in Section 8-113 of the Uniform Commercial Code of New York.

(x) Right to Extend. Barclays may postpone any potential Valuation Date or postpone or extend any other date of valuation or delivery with respect to some or all of the relevant Shares, if Barclays determines, in its reasonable discretion, that such postponement or extension is reasonably necessary or appropriate to preserve, based on advice of counsel, Barclays’ hedging or hedge unwind activity hereunder in light of existing liquidity conditions (including but not limited to the liquidity in the stock borrow market) or to enable Barclays to effect purchases or sale of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Barclays were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Barclays; provided, that such requirements, policies or procedures relate to legal or regulatory issues and are generally applicable in similar situations and applied to the Transaction in a non-discriminatory manner.

(y) Governing Law. The law of the State of New York (without reference to choice of law doctrine).

(y) Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.

(z) Part 2(b) of the ISDA Schedule – Payee Representation:

For the purpose of Section 3(f) of this Agreement, Counterparty makes the following representation to Barclays:

Counterparty is a corporation established under the laws of the State of Delaware and is a U.S. person (as that term is defined in Section 7701(a)(30) of the Code).

For the purpose of Section 3(f) of this Agreement, Barclays makes the following representation to Counterparty:

(A) Each payment received or to be received by it in connection with this Agreement is effectively connected with its conduct of a trade or business within the United States; and

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(B) It is a “foreign person” (as that term is used in Section 1.6041-4(a)(4) of the United States Treasury Regulations) for United States federal income tax purposes.

(aa) Part 3(a) of the ISDA Schedule – Tax Forms:

Party Required to Deliver Document

	Form/Document/Certificate	Date by which to be Delivered
Counterparty	A complete and duly executed United States Internal Revenue Service Form W-9 (or successor thereto).	(i) Upon execution and delivery of this Agreement; (ii) promptly upon reasonable demand by Barclays; and (iii) promptly upon learning that any such Form previously provided by Counterparty has become obsolete or incorrect.
Barclays	A complete and duly executed United States Internal Revenue Service Form W-8ECI (or successor thereto).	(i) Upon execution and delivery of this Agreement; and (ii) promptly upon learning that any such Form previously provided by Barclays has become obsolete or incorrect.

6. Account Details:

(a) Account for payments to Counterparty:

AOL Inc.

ABA: [****]

Acct: AOL Inc.

Acct No.: [****]

Account for delivery of Shares to Counterparty: To Be Provided.

(b) Account for payments to Barclays:

Bank: Barclays Bank plc NY

ABA# [****]

BIC: [****]

Acct: [****]

Beneficiary: [****]

Ref: [****]

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7. Offices:

The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party.

The Office of Barclays for the Transaction is: Inapplicable, Barclays is not a Multibranch Party.

8. Notices:

For purposes of this Confirmation:

(a) Address for notices or communications to Counterparty:

AOL Inc.

Attention: Arthur T. Minson, Chief Operating Officer and Acting Chief Financial Officer

Telephone No.: +1 212 206 5004

Facsimile No.: +1 703 466 9097

with a copy to:

Attention: Julie Jacobs, Executive Vice President, General Counsel and Secretary

Telephone No.: +1 703 265 1080

Facsimile No.: +1 703 466 9093

(b) Address for notices or communications to Barclays:

Barclays Bank PLC
c/o Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attn:	Paul Robinson
Telephone:	(+1) 212-526-0111
Facsimile:	(+1) 917-522-0458

This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

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Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Barclays a facsimile of the fully-executed Confirmation to Barclays at (+1) 917-522-0458. Originals shall be provided for your execution upon your request.

Very truly yours,
BARCLAYS CAPITAL INC.,
acting solely as Agent in connection with the Transaction
By:	/s/ Bryan C. Spencer
	Name: Bryan C. Spencer
	Title: Authorized Signatory
Accepted and confirmed as of the Trade Date:
AOL INC.
By:	/s/ Arthur T. Minson
	Name:
	Title:

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SCHEDULE A

For the purposes of the Transaction, the following terms shall have the following values/meanings:

1. Prepayment Amount:	USD 600,000,000
2. Additional Payment:	USD 54,060,000
3. Maximum Maturity Date:	[****]
4. Minimum Maturity Date:	[****]
5. Discount:	An amount in USD equal to [****]
6. Initial Shares:	4,000,000
7. Interim Shares	The lesser of (x) 6,500,000 and (y) the Minimum Shares, minus the Initial Shares.
8. Minimum Shares:	The number of Shares equal to the quotient of (i) the Prepayment Amount, divided by (ii) [****]% of the Adjusted Hedging Price.
9. Maximum Shares:	The number of Shares equal to the quotient of (i) the Prepayment Amount, divided by (ii) [****]% of the Adjusted Hedging Price.
10. Fixed Amount:	USD 5.15
11. Fixed Amount Adjustment Date:	November 30, 2012
12. Permissible Contacts:	Paul Robinson, Stephen Roti, Marcus Weickel, Bo Diamond, Alexander Mielke, Joseph Valenti, Sandhya Murali, Scott Levy, Philipp Becker, Matthew Danton, Anna Shearer or any other person identified by any of the foregoing or any member of the Barclays legal department in writing after the Trade Date.

EXHIBIT A

CONFIRMATION PRICING SUPPLEMENT

This Confirmation Pricing Supplement is the Confirmation Pricing Supplement referred to in the Confirmation dated as of August 26, 2012 between Barclays Bank PLC and AOL Inc.

For all purposes under the Confirmation, the following terms of the Confirmation shall be as specified below:

1.	Hedging Price:	USD [    ]
2.	Adjusted Hedging Price:	Hedging Price, minus the Fixed Amount
3.	Maximum Maturity Date:	[DATE]
4.	Minimum Maturity Date:	[DATE]
5.	Discount:	USD [    ]
5.	Maximum Shares:	[     ]
6.	Minimum Shares:	[     ]
7.	First day of Trading Period:	[     ]

Please acknowledge the foregoing by signing this Confirmation Pricing Supplement and returning a copy to us at facsimile number 646-885-9546 (United States of America), Attention: Documentation.

Yours Sincerely,

BARCLAYS CAPITAL INC.,
acting solely as Agent in connection with the Transaction
By:
	Name:
	Title:
AOL INC.
By:
	Name:
	Title:

EX-10.2

Exhibit 10.2

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT A CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION: [****]

EXECUTION COPY

Amendment to Confirmation Agreement

Barclays Bank PLC

5 The North Colonnade

Canary Wharf, London E14 4BB

Facsimile:+44 (20) 777 36461

Telephone: +44 (20) 777 36810

c/o Barclays Capital Inc.

as Agent for Barclays Bank PLC 745

Seventh Ave

New York, NY 10019

AOL Inc.

Attention: Athur T. Minson

Telephone No.: +1 212 206 5004

Facsimile No.: +1 703 466 9097

August 31, 2012

Dear Mr. Minson:

Reference is made to the Share Repurchase Transaction letter agreement dated August 26, 2012, between Barclays Bank PLC, through its agent Barclays Capital Inc., and AOL Inc. (the “Confirmation”). The purpose of this letter agreement (this “Amendment Agreement”) is to amend certain terms set forth in the Confirmation as described below. All capitalized terms used, but not defined herein, shall have the meanings assigned thereto in the Confirmation. Notwithstanding anything in the Confirmation to the contrary, Barclays and Counterparty hereby agree as follows:

1. Maximum Maturity Date: Section 3 of Schedule A to the Confirmation shall be deleted in its entirety and replaced with the following:

Maximum Maturity Date:                                [****]

2. Minimum Maturity Date: Section 4 of Schedule A to the Confirmation shall be deleted in its entirety and replaced with the following:

Minimum Maturity Date:                                [****]

3. Fixed Amount Adjustment Date: Section 11 of Schedule A to the Confirmation shall be deleted in its entirety and replaced with the following:

Fixed Amount Adjustment Date:            December 3, 2012

4. Representations, Warranties and Agreements:

(a) Each party represents to the other party, as of the date hereof, as to the matters set forth in Section 3(a) of the Agreement; provided that references in such Section to the Agreement shall be to this Amendment Agreement.

(b) On the date hereof, Counterparty hereby repeats all of the representations and warranties set forth in Section 4(a), Section 4(c) through Section 4(o), Section 4(q) and Section 5(p) of the Confirmation; provided that references in such Sections to (x) the “Trade Date” or “the date hereof” shall be deemed references to the date of this Amendment Agreement, (y) “the Transaction” shall be deemed references to “the Transaction, as amended by this Amendment Agreement,” and (z) “this Confirmation” shall be deemed references to “this Confirmation, as amended by this Amendment Agreement.”

5. Counterparts: This Amendment Agreement may be signed in any number of counterparts, each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same instrument.

6. Governing Law: This Amendment Agreement shall be governed by and construed in accordance with the laws of the State of New York.

Except as expressly modified herein, the Confirmation shall remain in full force and effect.

Please confirm that the foregoing correctly sets forth the terms and conditions of our agreement by executing this Amendment Agreement.

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Very truly yours,
BARCLAYS CAPITAL INC.,
acting solely as Agent in connection with the Transaction
By:	/s/ Bryan C. Spencer
	Name: Bryan C. Spencer
	Title: Authorized Signatory
Accepted and confirmed as of the date hereof:
AOL INC.
By:	/s/ Arthur Minson
	Name: Arthur Minson
	Title: COO

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EX-10.3

Exhibit 10.3

Execution Copy

FIRST AMENDMENT TO THE

EXECUTIVE EMPLOYMENT AGREEMENT OF JOHN REID-DODICK

This FIRST AMENDMENT TO THE EXECUTIVE EMPLOYMENT AGREEMENT (the “First Amendment”), by and between AOL Inc., a Delaware corporation (“Company”), and John Reid-Dodick (“Employee”) is made and entered into as of July 17, 2012 (the “Effective Date”).

WHEREAS, Employee and Company entered into an employment agreement dated December 1, 2011 (the “Employment Agreement”); and

WHEREAS, upon the request of Employee, Company and Employee have agreed to change certain terms of Employee’s equity incentive awards and desire to amend the Employment Agreement to reflect these changes.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Employee and Company agree as follows:

1. Paragraph 4D(i) of the Employment Agreement is hereby replaced in its entirety with the following:

(i) During the Employment Term, he will be eligible to participate in any grants or awards of long term equity incentives that are offered to all other Executive Vice Presidents of Company. Employee’s participation in any such programs will be at the same rate as comparable level Executive Vice Presidents of Company. Any such awards or grants shall be determined in accordance with the terms and conditions of the plans, agreements and notices under which such grants or awards were issued, subject to approval, and in a manner determined, by Company’s Board of Directors (or any duly authorized committee thereof) in its sole discretion.

2. Paragraph 4D(iii) of the Employment Agreement is hereby replaced in its entirety with the following:

(iii) RSUs shall have the following vesting schedule: (A) fifty percent (50%) of the RSUs shall vest on the second (2nd) anniversary from the date of grant; (B) an additional twenty-five (25%) shall vest on the third (3rd) anniversary from the date of grant; and (C) the remaining twenty-five percent (25%) shall vest on the fourth (4th) anniversary from the date of grant, provided, that Employee is continuously employed with Company from the grant date to each applicable vesting date. Except as may be otherwise provided in the applicable award agreement, any RSU that is unvested on the date of Employee’s termination for any reason shall be forfeited on such date of termination.

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3. Paragraph 4D(iv) of the Employment Agreement is hereby replaced in its entirety with the following:

(iv) Stock Options shall vest over four (4) years following the date of grant, with twenty-five percent (25%) of such Stock Options vesting on the first (1st) anniversary of the date of grant, and monthly thereafter, provided, that Employee is continuously employed with Company from the grant date to each applicable vesting date. Except as may be otherwise provided in the applicable award agreement, any Stock Option that is unvested on the date of Employee’s termination for any reason shall be forfeited on such date of termination.

4. Counterparts. This First Amendment may be signed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

5. Entire Agreement. The Employment Agreement, as amended by this First Amendment, contains the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, written or oral, between the parties with respect thereto.

6. Employment Agreement Terms. Except as provided in this First Amendment, all terms and conditions of the Employment Agreement shall remain in effect and shall not be altered by this First Amendment.

(Signature page to First Amendment follows)

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Execution Copy

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the date first written above.

AOL INC.
By:	/s/ Julie Jacobs
Name:	Julie M. Jacobs
Title:	Executive Vice President and
	General Counsel
JOHN REID-DODICK
/s/ John B. Reid-Dodick
Chief People Officer

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EX-10.4

Exhibit 10.4

Execution Copy

EXECUTIVE EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of September 10, 2012, by and between AOL INC. (“Company”), a Delaware Corporation with an address at 770 Broadway, New York, New York 10003, and Arthur Minson (“Executive”).

WHEREAS, Company retained Executive as Executive Vice President and Chief Financial Officer pursuant to an Employment Agreement among AOL LLC, a Delaware limited liability company, and Executive dated August 24, 2009 (the “Prior Employment Agreement”);

WHEREAS, Company desires to continue to retain the services of Executive as an Executive Vice President and Chief Operating Officer of Company; and

WHEREAS, Company and Executive desire to enter into this Agreement, which such Agreement supersedes and replaces the Prior Employment Agreement with Company, to set forth the terms and conditions of the employment relationship between Company and Executive.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Term. Executive’s term of employment (the “Employment Term”) under this Agreement shall be four (4) years, effective as of September 7, 2012, and shall continue for a period through and including September 6, 2016, (“Term Date”), subject to the following provisions for extension and the provisions regarding earlier termination set forth in this Agreement. If at the Term Date, Executive’s employment has not been terminated previously in accordance with this Agreement, and Executive and Company have not agreed to an extension or renewal of this Agreement or to the terms of a new employment agreement, then Executive’s Employment Term shall continue on a month-to-month basis, and Executive shall continue to be employed by Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 30 days’ written notice delivered to the other party (which notice may be delivered by either party at any time on or after a date which is 30 days before the Term Date). If Company elects to give notice of termination under this paragraph 1 and the basis for such termination is not one of the grounds for termination set forth in paragraphs 5.B. or 5.C., then Executive’s termination shall be deemed a termination without Cause under paragraph 5.A. If Executive elects to give notice of termination under this paragraph 1, and the basis for such termination is not one of the grounds for termination set forth in paragraph 5.E., then Executive’s termination shall be deemed a voluntary resignation not for Good Reason under paragraph 5.D.

2. Duties. Executive shall be an Executive Vice President of Company and shall have the business title of Chief Operating Officer and shall perform all duties incident to such positions

Execution Copy

as well as any other lawful duties as may from time to time be assigned by the Chief Executive Officer, which duties and authority shall be consistent, and those normally associated, with Executive’s position, and agrees to abide by all Company by-laws, policies, practices, procedures, or rules, including Company’s Standards of Business Conduct (the “SBC”) that are provided or made available to Executive. Executive shall report directly to the Chief Executive Officer. Executive will be expected to perform services for Company at Company’s New York City office, subject to such travel as may be required in the performance of Executive’s duties.

3. Exclusive Services and Best Efforts. Executive agrees to devote his best efforts, energies, and skill to the discharge of the duties and responsibilities attributable to his position, and to this end, he will devote his full time and attention exclusively to the business and affairs of Company. Executive is not precluded from performing any charitable or civic duties, provided that such duties do not interfere with the performance of his duties as an employee of Company, do not violate the SBC or the Confidentiality and Invention Assignment Agreement (“Confidentiality Agreement”), or cause a conflict of interest. Executive may sit on the boards of non-Company entities during employment only if first approved in writing by Business Conduct & Compliance. Notwithstanding the above, Company confirms its approval for Executive to continue serving on the Alumni Board of Regis High School.

4. Compensation and Benefits.

A. Base Salary. During the Employment Term, Company shall pay Executive a base salary at the rate of no less than $35,416.67 semi-monthly, less applicable withholdings, which is $850,000.08 on an annual basis (“Base Salary”). Executive’s semi-monthly paydays fall on the 15th and the last day of each month. If the 15th or the last day of the month falls on a weekend or bank holiday, the payday is the preceding day. Executive’s Base Salary will be reviewed annually during the Employment Term and may be increased based on Executive’s individual performance or increases in competitive market conditions. Executive’s Base Salary may be decreased upon mutual consent of Company and Executive.

B. Annual Bonus. In addition to Executive’s Base Salary, Executive will be eligible to participate in Company’s Annual Bonus Plan (the “ABP”), pursuant to its terms as determined by Company from time to time. Pursuant to the ABP, Company will review its overall performance and Executive’s individual performance and will determine Executive’s bonus under the ABP, if any (“Bonus”). Although as a general matter in cases of satisfactory individual performance, Company would expect to pay a Bonus at the target level provided for in the ABP where Company has met target performance with respect to the financial metrics measuring performance for a given year, Company does not commit to paying any Bonus, and Executive’s Bonus may be negatively affected by the exercise of Company’s discretion or by overall Company performance. Although any Bonus (and its amount, if a Bonus is paid) is fully discretionary and subject to the terms of the ABP, Executive’s target Bonus opportunity during the Employment Term is two-hundred percent (200%) of Executive’s Base Salary.

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C. Equity Incentive Awards.

(i) During Executive’s employment, he will be eligible to receive grants or awards of long term equity incentives and any such awards or grants shall be determined in accordance with the terms and conditions of the plans, agreements and notices under which such grants or awards were issued, subject to approval, and in a manner determined, by the Board of Directors of Company (the “Board”), or any duly authorized committee thereof, in its sole discretion.

(ii) All equity awards shall be subject to approval by the Compensation Committee of the Board and the terms and conditions of the applicable equity award agreement and Company’s applicable equity-based incentive compensation plan.

(iii) Initial Grant.

(a) Company shall grant to Executive an equity award that shall have an equity value equal to $5,000,000 on the date of grant. Based on the equity value on the date of grant, 33.33% of the equity award will be comprised of restricted stock units (“RSUs”) (rounded to the nearest whole number of units), 33.33% of the equity award will be comprised of stock options (“Stock Options”) (rounded down to the nearest whole share), and the remaining 33.33% of the equity award will be comprised of performance shares based on relative total shareholder return (“Performance Shares”)(rounded down to the nearest whole share). Equity value of RSUs and Performance Shares will be determined based on the closing price of a share of Company common stock on the date of grant. Equity value of Stock Options will be determined based on the standard option valuation formula used by Company. The grant of the RSUs, Stock Options and Performance Shares provided by this subsection shall be made on the next scheduled grant date following the first day of the Employment Term subject to compliance with applicable law and the schedule of the Compensation Committee of the Board.

(b) RSUs shall have the following vesting schedule: (A) fifty percent (50%) of the RSUs shall vest on the second (2^nd) anniversary from the date of grant; (B) an additional twenty-five (25%) shall vest on the third (3^rd) anniversary from the date of grant; and (C) the remaining twenty-five percent (25%) shall vest on the fourth (4^th) anniversary from the date of grant, provided, that Executive is continuously employed with Company from the grant date to each applicable vesting date. Except as may be otherwise provided in the applicable award agreement, any RSU that is unvested on the date of Executive’s termination for any reason shall be forfeited on such date of termination.

(c) Stock Options shall vest over four (4) years following the date of grant, with twenty-five percent (25%) of such Stock Options vesting on the first (1^st) anniversary of the date of grant, and monthly thereafter, provided, that Executive is continuously employed with Company from the grant date to each applicable vesting date. Except as may be otherwise provided in the applicable award agreement, any Stock Option that is unvested on the date of Executive’s termination for any reason shall be forfeited on such date of termination.

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Execution Copy

(d) Subject to achievement of performance objectives, Performance Shares shall vest following the Committee’s certification of performance following the end of a three-year performance period that starts on January 1, 2012, provided, that Executive is continuously employed with Company from the grant date to the applicable vesting date. Except as may be otherwise provided in the applicable award agreement, any Performance Share that is unvested on the date of Executive’s termination for any reason shall be forfeited on such date of termination.

D. Benefit Plans. During the Employment Term and as otherwise provided herein, Executive shall be entitled to participate in any and all employee health and other welfare benefit plans (including, but not limited to, life insurance, health and medical, dental, and disability plans) and other employee benefit plans, including, but not limited to, tax qualified retirement plans established by Company from time to time for the benefit of employees of Company. Executive shall be required to comply with the conditions attendant to coverage by such plans, which terms shall apply to Executive in the same manner as those applicable to executives of Company at the Executive Vice President level who are similarly situated, and Executive shall comply with and be entitled to benefits only in accordance with the terms and conditions of such plans as they may be amended from time to time. Nothing herein contained shall be construed as requiring Company to establish or continue any particular benefit plan in discharge of its obligations under this Agreement.

E. Vacation. Executive shall be entitled to not less than four (4) weeks of paid vacation each calendar year of his employment hereunder, in addition to Company’s recognized holidays and personal days, as well as to such other employment benefits that are or may be extended or provided to all executives at the Executive Vice President level. The accrual and/or carry-over of paid vacation from one year to the next shall be in accordance with Company policy applicable to the Company location where Executive’s principal office is located as it may exist and change from time to time.

F. Deductions from Salary, Bonus and Benefits. Company may withhold from any Base Salary, Bonus, equity or other benefits payable to Executive all federal, state, local, and other taxes and other amounts as permitted or required pursuant to law, rule, or regulation.

5. Termination of the Employment Agreement.

A. Termination Without Cause. Notwithstanding anything to the contrary herein, Company reserves the right to terminate Executive’s employment and this Agreement without Cause (defined below). If Company terminates Executive’s employment and this Agreement without Cause, then, solely in exchange for Executive’s execution and delivery of Company’s then standard separation agreement, which includes, among other obligations, a release of claims against Company and related entities and persons (sample release language is attached hereto as Exhibit A (the “Separation Agreement”), which language may be modified, but not materially except to comply with any changes in applicable law, by Company in the future), within the time period specified therein, and upon such agreement becoming effective by its terms, the following terms shall apply:

(i) Company will pay Executive an amount equal to twenty-four (24) months of Executive’s then current Base Salary, less applicable withholdings. This amount will be paid in forty-eight (48) substantially equal installments, which shall be treated as separate payments in accordance with paragraph 13 hereof, commencing on the sixtieth (60^th) day following Executive’s termination of employment. These payments will not be eligible for deferrals to Company’s 401(k) plan.

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(ii) Subject to the terms of paragraph 4.B, if Executive is terminated between January 1 and March 15, a Bonus payment under the ABP for the calendar year ending prior to Executive’s termination (“Prior Year”) will be paid at the same rate that continuing employees receive their bonus payments, less applicable tax withholdings, but in no event to exceed 100% of Executive’s target payout; provided that (i) Company pays a Bonus to eligible employees under Company’s ABP for the Prior Year, (ii) Executive’s Bonus has not already been paid to Executive at the time of termination of Executive’s employment, and (iii) Executive was otherwise eligible for such Bonus payment if Executive had remained employed through the date of payout. This amount will be paid to Executive in a lump sum on the earlier of the date on which other eligible employees are paid bonuses under the ABP for the Prior Year provided the Separation Agreement has become effective by its terms, or the sixtieth (60^th) day following Executive’s termination of employment. This payment will not be eligible for deferrals to Company’s 401(k) plan.

(iii) In addition, subject to the terms of paragraph 4.B, Executive will receive a Bonus payment under the ABP for the year in which Executive’s termination of employment occurs payable if and when bonuses are paid to other employees, prorated through the effective date of the termination of Executive’s employment, less applicable withholdings. This amount will not be eligible for deferrals to Company’s 401(k) plan.

(iv) If Executive elects group health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Company will pay the cost of Executive’s medical, dental and vision benefit coverage (“group health coverage”) under COBRA for up to eighteen (18) months, in accordance with COBRA, beginning the first day of the calendar month following Executive’s termination of employment. Executive agrees that Company may impute compensation income to Executive in an amount equal to 102% of the premium cost for such group health coverage if necessary to avoid adverse income tax consequences to Executive resulting from the application of Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”) to Company’s payment of the cost of such group health coverage.

(v) Certain of Executive’s outstanding equity-based awards shall be treated in accordance with paragraph 6. Other outstanding awards shall be treated in accordance with the terms and conditions of the applicable plan, award agreement and notice under which such awards were issued.

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(vi) If Executive’s Separation Agreement fails to become effective and irrevocable prior to the sixtieth (60^th) day following Executive’s termination of employment due to Executive’s failure to timely deliver the executed Separation Agreement, Company will have no obligation to make the payments or benefits provided by paragraphs 5.A.(i), (ii), (iii), (iv) and (v) herein, other than to provide Executive with COBRA to the extent required by law.

(vii) Executive agrees to assist Company, in connection with any litigation, investigation or other matter involving Executive’s tenure as an employee, officer or director of Company, including, but not limited to, meetings with Company representatives and counsel and giving testimony in any legal proceeding involving Company. No later than ninety (90) days following Company’s receipt of supporting documentation of Executive’s incurrence of such expenses, Company will reimburse Executive for reasonable out-of-pocket expenses incurred in rendering such assistance to Company (including attorney’s fees incurred in accordance with the applicable provisions of Company’s Bylaws and Certificate of Incorporation). Furthermore, Executive agrees not to affirmatively encourage or assist any person or entity in litigation against Company or its affiliates, officers, employees and agents in any manner. This provision does not prohibit Executive’s response to a valid subpoena for documents or testimony or other lawful process or limit Executive’s rights that are not legally waivable; however, Executive agrees to provide Company with prompt notice of said process.

(viii) Executive agrees not to make any disparaging or untruthful remarks or statements about Company or its products, services, officers, directors, or employees. Company agrees not to cause its officers or senior executives to make on its behalf any disparaging or untruthful remarks or statements about Executive’s employment with Company to prospective employers of Executive following Executive’s termination from employment. Nothing in this Agreement prevents Executive or Company from making truthful statements when required by law, court order, subpoena, or the like, to a governmental agency or body or in connection with any legal proceeding.

(ix) Executive shall not be entitled to notice and severance under any policy or plan of Company (the payments set forth in this paragraph 5.A. being given in lieu thereof) and Executive waives all participation in and claims under such policies and plans. For the avoidance of doubt, the foregoing sentence shall not have any adverse impact on Executive’s rights to indemnification and D&O coverage.

(x) Executive agrees that if Executive breaches any of Executive’s obligations, to the detriment of Company, under paragraphs 5.A.(vii) or (viii), 7, 8 or 9 of this Agreement, under the Confidentiality Agreement, or under the Separation Agreement, Company has the right to seek recovery of the full payments made to Executive under subparagraphs 5.A.(i), (ii), (iii), (iv) and (v) above, and to obtain all other remedies provided by law or equity.

B. Termination For Cause. Notwithstanding anything to the contrary herein, Company reserves the right to terminate Executive’s employment and this Agreement for Cause, as this term is defined below, with or without prior notice to Executive. Company will notify Executive in writing to provide the provision or provisions set forth in the definition of

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Cause below that are relied upon for such termination. Any determination of fraud for purposes of Section B.(i)(c) below will be made by the Board (or the appropriate subcommittee of the Board).

(i) For purposes of this Agreement, “Cause” means: (a) Executive’s conviction of, or nolo contendere or guilty plea to, a felony (whether any right to appeal has been or may be exercised); (b) Executive’s failure or refusal without proper cause to perform Executive’s lawful duties with Company, including Executive’s express obligations under this Agreement, if such failure or refusal remains uncured for 15 days after notice to Executive; (c) fraud, embezzlement, misappropriation that is not de minimis, or improper material destruction of Company property by Executive; (d) Executive’s breach of any statutory or common law duty of loyalty to Company; (e) Executive’s violation of the Confidentiality Agreement or the SBC; (f) Executive’s improper conduct substantially prejudicial to Company’s business; (g) Executive’s failure to cooperate in any internal or external investigation involving Company; or (h) Executive’s indictment (or its procedural equivalent) for a felony alleging fraud, embezzlement, misappropriation or destruction of Company property by Executive or alleging fraud, embezzlement, or monetary theft by Executive with respect to another party.

(ii) If Company terminates Executive’s employment and this Agreement for Cause, Company shall have no further obligation to Executive other than (a) to pay, within thirty (30) days of the effective date of termination of Executive’s employment with Company, Executive’s Base Salary and any accrued unused vacation, in accordance with Company policy, through the effective date of termination, and (b) with respect to any rights Executive may have pursuant to any insurance or other benefit plans of Company, but Executive will not be entitled to receive any bonus payments.

C. Death and Disability. Notwithstanding anything to the contrary herein, Executive’s employment and this Agreement shall terminate upon Executive’s death, and Company reserves the right to terminate Executive’s employment and this Agreement on account of Executive’s disability (as the term “disability” is defined in Company’s long-term disability plan, but which definition must also constitute a “disability” for purposes of Section 409A of the Code), and the terms of this paragraph 5.C. shall apply to such termination. If Executive’s employment and this Agreement terminate because of Executive’s death or disability, Company shall have no further obligation to Executive or Executive’s heirs other than (i) to pay Executive’s Base Salary and any accrued unused vacation, in accordance with Company policy, through the effective date of termination, (ii) subject to the terms of paragraph 4.B, to pay a Bonus payment at the target level under the ABP, prorated through the effective date of the termination of Executive’s employment, less applicable withholdings, payable within thirty (30) days of the effective date of Executive’s termination (which payment will not be eligible for deferrals to Company’s 401(k) plan), and (iii) with respect to any rights or benefits Executive may have pursuant to any insurance, benefit or other applicable plan of Company, but Executive shall not be entitled to receive any other bonus payments.

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D. Resignation Not For Good Reason. Executive may resign employment with Company at any time. If Executive resigns employment and such resignation does not constitute a resignation for Good Reason (defined below) within the meaning of paragraph 5.E herein, Company shall have no further obligation to Executive other than (i) to pay within thirty (30) days of the effective date of termination of Executive’s employment with Company, Executive’s Base Salary and any accrued unused vacation, in accordance with Company policy, through the effective date of the resignation, and (ii) with respect to any rights Executive may have pursuant to any insurance or other benefit plans of Company, but Executive will not be entitled to receive any bonus payments.

E. Resignation for Good Reason. Executive also may resign employment with Company and terminate this Agreement for Good Reason, provided that Executive gives Company written notice of the Good Reason condition within 60 days from the initial existence of the Good Reason condition, which written notice shall provide a 30-day period during which Company may remedy the actions that Executive has identified as the condition constituting grounds for a resignation for Good Reason. If Company has not remedied the Good Reason condition within 30 days following such notice from Executive, then Executive must resign his employment with Company within 30 days of the end of the remedy period or he will have forever waived his right to resign for Good Reason for such condition upon that occurrence, but not future occurrences of the same condition. Upon such a termination, Executive will be treated in accordance with paragraph 5.A herein, as if Executive’s employment had been terminated by Company without Cause. For purposes of this Agreement, “Good Reason” means: (i) Executive no longer reports to the Chief Executive Officer; (ii) a relocation of Executive’s principal office at Company to a location that is more than 50 miles from its location as of the date of this Agreement without Executive’s written consent; (iii) a material diminution in Executive’s duties, responsibilities, authority or title; (iv) a material diminution in Executive’s then Base Salary or target Bonus opportunity; or (v) Company’s requiring Executive to engage in unlawful conduct upon express direction of the Board.

6. Treatment of Outstanding Equity-Based Awards.

A. Treatment. If Executive’s employment is terminated without Cause as provided in paragraph 5.A. or if Executive resigns for Good Reason as provided in paragraph 5.E., subject to the effectiveness of the Separation Agreement and compliance with Section 12, then the following terms shall apply:

(i) All Outstanding Stock Options (defined below) that Executive holds at the time of such termination of employment shall continue to vest for twenty-four (24) months following the date of such termination and shall remain exercisable (but not beyond the term of any such option) following the end of such twenty-four month period for the period set forth in the applicable plan and stock option agreement. For this purpose, the end date of the twenty-four (24) month period will be the deemed date of Executive’s termination of employment. Any Outstanding Stock Options that are not vested pursuant to this paragraph shall be immediately canceled by Company without consideration upon Executive’s termination of employment and Executive shall have no further rights with respect thereto.

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(ii) Any Outstanding RSU Awards (defined below) that Executive holds at the time of such termination of employment that were scheduled to vest during the twenty-four (24) month period following the date of such termination shall vest in full upon Executive’s termination of employment and shall be settled as soon as practicable thereafter. Any Outstanding RSU Awards that are not vested pursuant to this paragraph shall be immediately canceled by the Company without consideration upon Executive’s termination of employment and Executive shall have no further rights with respect thereto.

B. Definitions.

(i) “Outstanding RSU Awards” means all outstanding restricted stock unit awards granted under the AOL Inc. 2010 Stock Incentive Plan (the “Plan”) that Executive holds as of the date of this Agreement.

(ii) “Outstanding Stock Options” means all outstanding options to purchase the Company’s common stock granted under the Plan that Executive holds as of the date of this Agreement.

7. Non-Competition Agreements and Restrictive Covenants.

A. Executive agrees to execute and abide by the enclosed Confidentiality Agreement with Company, which is incorporated herein by reference. Any reference in the Confidentiality Agreement to Executive’s “at will” employment status is superseded by this Agreement.

B. Executive acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character. Executive further acknowledges that the business of Company is international in scope, that its products and services are marketed throughout the world, that Company competes in nearly all of its business activities with other entities that are or could be located in nearly any part of the world and that the nature of Executive’s services, position and expertise are such that Executive is capable of competing with Company from nearly any location in the world.

C. Executive also agrees that, in addition to Executive’s obligations under the SBC and Confidentiality Agreement, while Executive is employed by Company and for twelve (12) months following termination of his employment for any reason, to the extent permitted by law, Executive shall not, directly or indirectly, except as a shareholder holding less than a one percent (1%) interest in a corporation whose shares are traded on a national securities exchange, participate in the ownership, control, or management of, or perform any services for or be employed by (i) Time Warner, Inc., Yahoo!, Inc., Google, Inc., including its YouTube subsidiary, Microsoft Corporation, IAC/Interactive Corp., News Corp, Facebook, Inc., LinkedIn Corporation, Yelp Inc. and Twitter Inc., or (ii) without the written consent of the Chief Executive Officer or the General Counsel of the Company, any entity that engages in any line of business

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that is substantially the same as any line of business which Company engages in, conducts or, to Executive’s knowledge, has definitive plans to engage in or conduct, and has not ceased to engage in or conduct, or any of their respective subsidiaries, affiliates or successors (any such entity identified by Section 7.C.(ii) is a “Competitive Entity”). Notwithstanding the preceding, in order to be considered a Competitive Entity, the entity must derive fifty percent (50%) or more of its total annual revenues from substantially similar products and services offered by Company.

D. Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and are no broader than are necessary to maintain the confidential information, trade secrets and the goodwill of Company and to protect the other legitimate business interests of Company and are not unduly restrictive on Executive.

E. The parties agree and intend that the covenants contained in this Agreement, including but not limited to the covenants set forth in this paragraph 7, shall be deemed to be a series of separate covenants and agreements, one for each and every county or political subdivision of each applicable state of the United States and each country of the world. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the governing laws and public policies of the State of New York, and to the extent applicable, each jurisdiction in which enforcement is sought. Accordingly, if any provision in this Agreement or deemed to be included herein shall be adjudicated to be invalid or unenforceable, such provision, without any action on the part of the parties hereto, shall be deemed amended to delete or to modify (including, without limitation, a reduction in duration, geographical area or prohibited business activities) the portion adjudicated to be invalid or unenforceable, such deletion or modification to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made, and such deletion or modification to be made only to the extent necessary to cause the provision as amended to be valid and enforceable.

8. Representations and Warranties of Executive. Executive hereby represents and warrants to Company as follows: (i) Executive has the legal capacity and unrestricted right to execute and deliver this Agreement and to perform all of his obligations hereunder; (ii) the execution and delivery of this Agreement by Executive and the performance of Executive’s obligations hereunder will not violate or be in conflict with any fiduciary or other duty, instrument, agreement, document, arrangement, or other understanding to which Executive is a party or by which Executive is or may be bound or subject; (iii) the execution and delivery of, and Executive’s performance under, this Agreement and as an employee of Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Executive prior to his employment with Company; (iv) the execution and delivery of, and Executive’s performance under, this Agreement and as an employee of Company does not and will not breach any prior agreement not to compete with the business of any other company; (v) Executive will not disclose to Company or induce Company to use any confidential or proprietary information or material belonging to any previous employer or

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other person or entity; (vi) Executive is not a party to any other agreement that will interfere with Executive’s full compliance with this Agreement; and (vii) Executive will not enter into any agreement, whether written or oral, in conflict with the provisions of this Agreement.

9. Employment Obligations.

A. Company Property. All records, files, lists, including computer-generated lists, drawings, documents, equipment, and similar items relating to Company’s business that Executive shall prepare or receive from Company shall remain Company’s sole and exclusive property. Upon termination of this Agreement, or upon Company’s request, Executive shall promptly return to Company all property of Company in his possession. Executive further represents that he will not copy, cause to be copied, print out, or cause to be printed out any software, documents, or other materials originating with or belonging to Company. Executive additionally represents that, upon termination of his employment with Company, he will not retain in his possession any such software, documents, or other materials.

B. Cooperation. Executive agrees that during his employment he shall, at the request of Company, render all assistance and perform all lawful acts that Company considers necessary or advisable in connection with any litigation involving Company or any director, officer, employee, shareholder, agent, representative, consultant, client, or vendor of Company. Executive’s reasonable expenses in connection therewith shall be paid by Company, including attorney’s fees in accordance with the applicable provisions of Company’s Bylaws and Certificate of Incorporation.

10. Arbitration. Except as provided in paragraph 11.B. herein or as otherwise excluded herein, any dispute or controversy arising under or relating to this Agreement and Executive’s employment hereunder (whether based on contract or tort or other common law or upon any federal, state or local statute or regulation, including, without limitation, claims of discrimination, harassment and retaliation under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act and similar federal, state and local fair employment practices laws) shall, at the election of either Executive or Company, be submitted to JAMS for resolution in arbitration in accordance with the then-current rules and procedures of JAMS for employment-related disputes. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 30 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy), and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this paragraph 10. Any such arbitration proceedings shall take place in New York, New York before a single arbitrator (rather than a panel of arbitrators), pursuant to any available streamlined or expedited (rather than a comprehensive) arbitration process and in accordance with an arbitration process which, in the judgment of such arbitrator, shall have the effect of reasonably limiting or reducing the cost of such arbitration for both parties. The resolution of any such dispute or controversy by the arbitrator appointed in accordance with the procedures of JAMS shall be final and binding. Judgment upon the

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award rendered by such arbitrator may be entered in any court having jurisdiction thereof, and the parties consent to the jurisdiction of the courts of New York for this purpose; provided, however, the parties may agree after the commencement of a proceeding to hold the arbitration in another jurisdiction. If at the time any dispute or controversy arises with respect to this Agreement JAMS is no longer providing arbitration services, then the American Arbitration Association shall be substituted for JAMS for purposes of this paragraph 10, and the arbitration will be conducted in accordance with the then current AAA Employment Arbitration Rules & Mediation Procedures.

11. Miscellaneous.

A. Captions. The section, paragraph and subparagraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

B. Specific Remedy. In addition to such other rights and remedies as Company may have at equity or in law with respect to any breach of this Agreement, if Executive commits a material breach of any provision of this Agreement or the Confidentiality Agreement, Company shall have the right and remedy to have such provision specifically enforced by any court having competent jurisdiction, it being acknowledged that any such breach or threatened breach will cause irreparable injury to Company.

C. Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of New York, without regard to the conflicts of law rules thereof.

D. Jurisdiction. Each of the parties hereto hereby irrevocably consents and submits to the jurisdiction of the Supreme Court of the State of New York, in New York, New York, and the United States District Court for the Southern District of New York in connection with any suit, action, arbitration or other proceeding concerning the interpretation of this Agreement or enforcement of paragraph 7 of this Agreement. Executive waives and agrees not to assert any defense of lack of jurisdiction, that venue is improper, inconvenient forum, or otherwise. To the extent allowable by law, Executive waives the right to a jury trial and agrees to accept service of process by certified mail at Executive’s last known address.

E. Successors and Assigns. Neither this Agreement, nor any of Executive’s rights, powers, duties, or obligations hereunder, may be assigned by Executive. This Agreement shall be binding upon and inure to the benefit of Executive and his heirs and legal representatives and Company and its successors. Successors of Company shall include, without limitation, any company or companies acquiring, directly or indirectly, all or substantially all of the assets of Company, whether by merger, consolidation, purchase, lease, or otherwise, and such successor shall thereafter be deemed “Company” for the purpose hereof.

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F. Notices. All notices, requests, demands, and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first class, registered mail, return receipt requested, postage and registry fees prepaid, to the applicable party and addressed as follows:

Company:

AOL Inc.

770 Broadway

New York, NY 10003

Attn: General Counsel

Executive:

At the address shown on the records of Company for Executive

Addresses may be changed by notice in writing signed by the addressee.

G. Amendment. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by Executive and the Chief Executive Officer or the General Counsel, subject to, if necessary, approval of the Compensation Committee of the Board.

H. Waiver. Any waiver or consent from Company with respect to any term or provision of this Agreement or any other aspect of Executive’s conduct or employment shall be effective only in the specific instance and for the specific purpose for which given and shall not be deemed, regardless of frequency given, to be a further or continuing waiver or consent. The failure or delay of Company at any time or times to require performance of, or to exercise any of its powers, rights, or remedies with respect to, any term or provision of this Agreement or any other aspect of Executive’s conduct or employment in no manner (except as otherwise expressly provided herein) shall affect Company’s right at a later time to enforce any such term or provision.

I. Severability. In addition to the provisions set forth in paragraph 7.E., if any provision of this Agreement is held to be invalid, the remainder of this Agreement shall not be affected thereby.

J. Survival. Paragraphs 5.A., 5.C. and 5.E., 6, 7, 8, 9, 10, 11, 12 and 13 shall survive termination of this Agreement.

K. Entire Agreement.

(i) This Agreement, including Exhibit A and the Confidentiality Agreement, embodies the entire agreement of the parties hereto with respect to its subject matter and merges with and supersedes all prior discussions, agreements, commitments, or understandings of every kind and nature relating thereto, whether oral or written, between

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Executive and Company, including, for the avoidance of doubt, the Prior Employment Agreement. Neither party shall be bound by any term or condition of this Agreement other than as is expressly set forth herein. If there is any conflict between the express terms of this Agreement and the Confidentiality Agreement, the terms of this Agreement shall prevail.

(ii) Executive represents and agrees that he fully understands his right, and Company has advised Executive, to discuss all aspects of this Agreement with Executive’s attorney, that to the extent he desired, he availed himself of this right, that he has carefully read and fully understands all of the provisions of the Agreement, that he is competent to execute this Agreement, that his decision to execute this Agreement has not been obtained by any duress, that he freely and voluntarily enters into this Agreement, and that he has read this document in its entirety and fully understands the meaning, intent, and consequences of this Agreement.

L. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

M. Tax Withholding. Company may withhold from any and all amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

12. Limitation on Certain Payments.

A. Calculation and Possible Benefit Reduction. If at any time or from time to time, it shall be determined by independent tax professionals selected by Company (“Tax Professional”) that any payment or other benefit to Executive pursuant to paragraph 5 of this Agreement or otherwise (“Potential Parachute Payment”) is or will, but for the provisions of this paragraph 12, become subject to the excise tax imposed by Section 4999 of the Code or any similar tax payable under any state, local, foreign or other law, but expressly excluding any income taxes and penalties or interest imposed pursuant to Section 409A of the Code (“Excise Taxes”), then Executive’s Potential Parachute Payment shall be either (a) provided to Executive in full, or (b) provided to Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Taxes, whichever of the foregoing amounts, after taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Taxes (“Payments”).

B. Implementation and Any Benefit Reduction Under Paragraph 12.A. In the event of a reduction of benefits pursuant to paragraph 12.A., the Tax Professional shall determine which benefits shall be reduced so as to achieve the principle set forth in paragraph 12.A. For purposes of making the calculations required by paragraph 12.A., the Tax Professional may make reasonable assumptions and approximations concerning applicable

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taxes and may rely on reasonable, good faith interpretations concerning the application of the Code and other applicable legal authority. Company and Executive shall furnish to the Tax Professional such information and documents as the Tax Professional may reasonably request in order to make a determination under paragraph 12.A. Company shall bear all costs the Tax Professional may reasonably incur in connection with any calculations contemplated by paragraph 12.A.

C. Potential Subsequent Adjustments.

(i) If, notwithstanding any calculations performed or reduction in benefits imposed as described in paragraph 12.A., the IRS determines that Executive is liable for Excise Taxes as a result of the receipt of any payments made pursuant to paragraph 5 of this Agreement or otherwise, then Executive shall be obligated to pay back to Company, within thirty (30) days after a final IRS determination or in the event that Executive challenges the final IRS determination, a final judicial determination, a portion of the Payments equal to the “Repayment Amount.” The Repayment Amount shall be the smallest such amount, if any, as shall be required to be paid to Company so that Executive’s net after-tax proceeds with respect to the Payments (after taking into account the payment of the Excise Taxes and all other applicable taxes imposed on such benefits) shall be maximized. The Repayment Amount shall be zero if a Repayment Amount of more than zero would not result in Executive’s net after-tax proceeds with respect to the Payments being maximized. If the Excise Taxes are not eliminated pursuant to this paragraph 12.C, Executive shall pay the Excise Taxes.

(ii) Notwithstanding any other provision of this paragraph 12, if (i) there is a reduction in the payments to Executive as described above in this paragraph 12, (ii) the IRS later determines that Executive is liable for Excise Taxes, the payment of which would result in the maximization of Executive’s net after-tax proceeds (calculated based on the full amount of the Potential Parachute Payment and as if Executive’s benefits had not previously been reduced), and (iii) Executive pays the Excise Tax, then Company shall pay to Executive those payments which were reduced pursuant to paragraph 12.A. or subparagraph 12.C.(i) as soon as administratively possible after Executive pays the Excise Taxes to the extent that Executive’s net after-tax proceeds with respect to the payment of the Payments are maximized

13. Code Section 409A. This Agreement is intended to be exempt from Section 409A of the Code, as amended and will be interpreted in a manner intended to reflect that intention.

A. Notwithstanding anything herein to the contrary, if any amounts payable pursuant to this Agreement are determined to be subject to Section 409A of the Code, then with respect to such amounts: (i) if at the time of Executive’s separation from service from Company, Executive is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of the payment of such amounts on account of such separation from service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then Company will defer the commencement of the payment of any such amounts hereunder

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(without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six months following Executive’s separation from service from Company (or the earliest date as is permitted under Section 409A of the Code), and (ii) each payment of two or more installment payments made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code. Any amounts of deferred compensation that are payable by reason of Executive’s termination of employment shall not be paid unless such termination of employment also constitutes a “separation from service” for purposes of Section 409A of the Code and references to the employee’s “termination,” or “termination of employment” and words and phrases of similar meaning shall be construed to require a “separation from service” for purposes of Section 409A of the Code.

B. If any other payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by Company, that does not cause such an accelerated or additional tax.

C. To the extent any reimbursements or in-kind benefits due Executive under this Agreement constitutes “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv).

D. Company shall consult with Executive in good faith regarding the implementation of the provisions of this paragraph; provided that neither Company nor any of its employees or representatives shall have any liability to Executive with respect thereto.

(Signature Page to Follow)

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

AOL INC.
By:	/s/ John B. Reid-Dodick
Name:	John B. Reid-Dodick
Title:	Chief People Officer
ARTHUR MINSON
/s/ Arthur T. Minson

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EXHIBIT A

RELEASE AND WAIVER

In exchange and consideration for the Company’s promises to me in paragraph 5.A. of my Executive Employment Agreement dated September 10, 2012 (the “Agreement”) and other valuable consideration, I, Arthur Minson, agree to release and discharge unconditionally the Company and its past and present subsidiaries, affiliates, related entities, successors, predecessors, assigns, merged entities and parent entities, and its and their respective past and present officers, directors, stockholders, employees, benefit plans and their administrators and trustees, agents, attorneys, insurers, representatives, affiliates, and all of their respective successors and assigns, in their individual and official capacities, from any and all claims, actions, causes of action, demands, obligations or damages of any kind arising from my employment with the Company and my separation from employment or otherwise, whether known or unknown by me, which I ever had or now have upon or by reason of any matter, cause or thing, up to an including the day I sign this Release and Waiver. Without limiting the generality of the foregoing, the claims I am waiving include, but are not limited to, all claims arising out of or related to any stock options held by me or granted to me by the Company; all claims for unreimbursed business-related expenses (except in California); all claims under Title VII of the Civil Rights Act of 1964, as amended; all claims under the Worker Adjustment and Retraining Notification Act (WARN) and similar state and local statutes, all as amended; all claims under the Americans with Disabilities Act, as amended; all claims under the Age Discrimination in Employment Act (“ADEA”), as amended; all claims under the Older Workers Benefit Protection Act (“OWBPA”), as amended; all claims under the National Labor Relations Act, as amended; all claims under the Family and Medical Leave Act and similar state and local leave laws, all as amended; all claims under the Employee Retirement Income Security Act, as amended (except with respect to accrued vested benefits under any retirement or 401(k) plan in accordance with the terms of such plan and applicable law); all claims under 42 U.S.C. § 1981, as amended; all claims under the Sarbanes-Oxley Act of 2002, as amended; all claims of discrimination, harassment, and retaliation in connection with my employment, the terms and conditions of such employment and my separation from employment under any federal, state and local fair employment, non-discrimination or civil rights law or regulation, including, without limitation, the New York State and City Human Rights Laws, the Texas Human Rights law, the Illinois Human Rights Act, the Chicago Human Rights Ordinance, the Cook County Human Rights Ordinance, the Illinois Equal Pay Act, and the Illinois Worker’s Compensation Retaliation Law, all as amended; all claims of whistle blowing and retaliation under federal, state and local laws, including, without limitation, the New Jersey Conscientious Employee Protection Act and the Illinois Whistleblower Act, as amended and applicable; all claims under other analogous foreign, federal, state, and local laws, regulation, statutes and ordinances; all claims under any principle of common law or sounding in tort or contract; all claims concerning any right to reinstatement; and all claims for any type of relief from the Company, whether foreign, federal, state or local, whether statutory, regulatory or common law, and whether tort, contract or otherwise, to the fullest extent permitted by law, through the date I sign this Release and Waiver. Further, each of the persons and entities released herein is intended to be a third-party beneficiary of this Agreement.

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This release of claims does not affect and I do not release or waive any claim for (i) payments and benefits provided under the Agreement that are contingent upon the execution by me of this Release and Waiver or otherwise expressly survive termination thereof, (ii) any indemnification rights I may have in accordance with Company’s governance instruments or under any director and officer liability insurance maintained by Company with respect to liabilities arising as a result of my service as an officer and employee of Company, (iii) workers’ compensation benefits, unemployment benefits, or other legally non-waivable rights or claims, (iv) my vested rights, if any, in the Company’s 401(k) plan in accordance with the terms of such plan and applicable law, (v) my rights to own and exercise any and all Company stock options or other equity awards held by me in accordance with all other terms of those options and awards and plans, agreements, and notices under which such awards were granted, or (vi) claims related to the enforcement of the Agreement. Additionally, nothing in this Release and Waiver waives or limits my right to file a charge with, provide information to or cooperate in any investigation of or proceeding brought by a government agency, including without limitation the EEOC, (though I acknowledge I am not entitled to recover money or other relief with respect to the claims waived in this Waiver and Release).

I agree that I have been paid and/or received all leave (paid or unpaid), compensation, wages, bonuses, severance or termination pay, commissions, notice period, and/or benefits to which I may have been entitled and that no other remuneration or benefits are due to me, except the benefits I will receive under paragraph 5.A. of my Agreement dated September 10, 2012. I affirm that I have had no known workplace injuries or occupational diseases. I also represent that I have disclosed to the Company any information I have concerning any fraudulent or unlawful conduct involving the persons and entities I am releasing herein.

Pursuant to the OWBPA, I acknowledge and warrant the following: (i) that I am waiving rights and claims for age discrimination under the ADEA and OWBPA, in exchange for the consideration described above, which is not otherwise due to me; (ii) I am hereby advised to consult and have had the opportunity to consult with an attorney before signing this Release and Waiver; (iii) I am not waiving rights or claims for age discrimination that may arise after the effective date of this Release and Waiver; (iv) I have been given a period of at least twenty-one (21) days in which to consider this Release and Waiver and the waiver of any claims I have or may have under law, including my rights under the ADEA and OWBPA, before signing below; and (v) I understand that I may revoke the waiver of my age discrimination claims under the ADEA and OWBPA within seven (7) days after my execution of this Release and Waiver, and that such waiver shall not become effective or enforceable until seven (7) days after the date on which I execute this Release and Waiver. Any such revocation must be made in writing and delivered by certified mail to both the Chairman & Chief Executive Officer and the General Counsel of AOL Inc., at the following address: AOL Inc., 770 Broadway, New York, New York 10003. If I do not revoke my waiver of my age discrimination claims under the ADEA and OWBPA according to the terms herein within seven (7) days, the eighth day following my execution will be the “effective date” of this Release and Waiver.

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By signing below, I acknowledge that I have carefully reviewed and considered this Release and Waiver; that I fully understand all of its terms; and that I voluntarily agree to them.

Arthur Minson

Date:

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Exhibit 10.5

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EXECUTIVE EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of September 19, 2012, by and between AOL INC. (“Company”), a Delaware Corporation with an address at 770 Broadway, New York, New York 10003, and Karen E. Dykstra (“Executive”).

WHEREAS, Company desires to retain the services of Executive as Chief Financial Officer and an Executive Vice President of Company; and

WHEREAS, Company and Executive desire to enter into this Agreement to set forth the terms and conditions of the employment relationship between Company and Executive.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Term. Executive’s term of employment (the “Employment Term”) under this Agreement shall be four (4) years, commencing on September 19, 2012, and shall continue for a period through and including September 18, 2016, (“Term Date”), subject to the following provisions for extension and the provisions regarding earlier termination set forth in this Agreement. If at the Term Date, Executive’s employment has not been terminated previously in accordance with this Agreement, and Executive and Company have not agreed to an extension or renewal of this Agreement or to the terms of a new employment agreement, then Executive’s Employment Term shall continue on a month-to-month basis, and Executive shall continue to be employed by Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 30 days’ written notice delivered to the other party (which notice may be delivered by either party at any time on or after a date which is 30 days before the Term Date). If Company elects to give notice of termination under this paragraph 1 during the Employment Term (whether during the initial four-year term or any month-to-month extension) or on the Term Date and the basis for such termination is not one of the grounds for termination set forth in paragraphs 5.B. or 5.C., then Executive’s termination shall be deemed a termination without Cause under paragraph 5.A. If Executive elects to give notice of termination under this paragraph 1 during the Employment Term (whether during the initial four-year term or any month-to-month extension) or on the Term Date and the basis for such termination is not one of the grounds for termination set forth in paragraph 5.E., then Executive’s termination shall be deemed a voluntary resignation not for Good Reason under paragraph 5.D.

2. Duties; Conditions of Employment.

A. Duties. Executive shall be Chief Financial Officer and an Executive Vice President of Company and shall perform all duties incident to such positions as well as any other lawful duties as may from time to time be assigned by the Chief Executive Officer, which duties and

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authority shall be consistent, and those normally associated, with Executive’s position, and agrees to abide by all Company by-laws, policies, practices, procedures, or rules, including Company’s Standards of Business Conduct (the “SBC”) that are provided or made available to Executive. Executive shall report directly to the Chief Executive Officer. Executive will be expected to perform services for Company at Company’s New York, New York office, subject to such travel as may be required in the performance of Executive’s duties.

B. Conditions of Employment.

(i) Executive’s employment is contingent on submission of satisfactory proof of identity and eligibility to work in the United States. Executive must bring documentary proof of identity and eligibility to work in the United States on the first day of work. Executive should contact Company with any questions about what documents are acceptable for this purpose.

(ii) Executive authorized Company and/or a third party designated by Company to conduct a background check, which was satisfactorily completed. If Company subsequently determines that Executive falsified or failed to disclose relevant information on Executive’s background check application, Company reserves the right to terminate Executive’s employment, and Executive will not be eligible for the severance benefits outlined in paragraph 5.A.

3. Exclusive Services and Best Efforts. Executive agrees to devote her best efforts, energies, and skill to the discharge of the duties and responsibilities attributable to her position, and to this end, she will devote her full time and attention exclusively to the business and affairs of Company. Executive is not precluded from performing any charitable or civic duties, provided that such duties do not interfere with the performance of her duties as an employee of Company, do not violate the SBC or the Confidentiality and Invention Assignment Agreement (“Confidentiality Agreement”), or cause a conflict of interest. Executive may sit on the boards of non-Company entities during employment only if first approved in writing by the Executive Compliance Committee. Notwithstanding the above, Company confirms its approval for Executive to continue serving on the board of directors of Gartner. Additionally, Company confirms its approval for Executive to continue serving on the board of directors of Crane Co. until such time as her successor is appointed.

4. Compensation and Benefits.

A. Base Salary. During the Employment Term, Company shall pay Executive a base salary at the rate of no less than $ 29,166.67 semi-monthly, less applicable withholdings, which is $700,000.08 on an annual basis (“Base Salary”). Executive’s semi-monthly paydays fall on the 15th and the last day of each month. If the 15th or the last day of the month falls on a weekend or bank holiday, the payday is the preceding day. Executive’s Base Salary will be reviewed annually during the Employment Term and may be increased based on Executive’s individual performance or increases in competitive market conditions. Executive’s Base Salary may be decreased upon mutual consent of Company and Executive.

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B. Signing Payment. In order to compensate Executive for forfeiture of certain equity awards as a result of her resignation as a member of certain Boards and other transition expenses, and upon this Agreement becoming effective and Executive commencing employment with Company, Executive shall receive a payment of $200,000, less applicable withholdings, to be paid the second payroll period following the first day of the Employment Term. If Executive resigns or is terminated for Cause (defined below) on or before the first anniversary of the first day of the Employment Term, Executive agrees that she will repay the entire after-tax amount of the payment required by this paragraph to Company within 30 days of Executive’s resignation or termination for Cause. If Executive resigns or is terminated for Cause after the first anniversary of her employment commencement date but on or before the second anniversary of her employment commencement date, Executive agrees that she will repay fifty percent (50%) of the after-tax amount of the payment required by this paragraph to Company within 30 days of the effective date of Executive’s resignation or termination for Cause.

C. Bonus.

(i) Annual Bonus. In addition to Executive’s Base Salary, Executive will be eligible to participate in Company’s Annual Bonus Plan (the “ABP”), pursuant to its terms as determined by Company from time to time. Pursuant to the ABP, Company will review its overall performance and Executive’s individual performance and will determine Executive’s bonus under the ABP, if any (“Bonus”). Although as a general matter in cases of satisfactory individual performance, Company would expect to pay a Bonus at the target level provided for in the ABP where Company has met target performance with respect to the financial metrics measuring performance for a given year, Company does not commit to paying any Bonus, and Executive’s Bonus may be negatively affected by the exercise of Company’s discretion or by overall Company performance. Although any Bonus (and its amount, if a Bonus is paid) is fully discretionary and subject to the terms of the ABP, Executive’s target Bonus opportunity during the Employment Term is one hundred percent (100%) of Executive’s Base Salary. Executive is eligible to participate in the ABP for the year in which employment commences; however, Executive’s Bonus for such year will be prorated on a daily basis beginning on the starting date of the Employment Term.

D. Equity Incentive Awards.

(i) During Executive’s employment, she will participate in grants or awards of long term equity incentives that are offered to all other Executive Vice Presidents of Company. Executive’s participation in any such programs will be at the same rate as comparable level Executive Vice Presidents of Company. Any such awards or grants shall be determined in accordance with the terms and conditions of the plans, agreements and notices under which such grants or awards were issued.

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(ii) All equity awards shall be subject to approval by the Compensation Committee of Company’s Board of Directors (the “Board”) and the terms and conditions of the applicable equity award agreement and Company’s applicable equity-based incentive compensation plan.

(iii) Initial Grant.

(a) Company shall grant to Executive an equity award that shall have an equity value equal to $1,750,000.00 on the date of grant. Based on the equity value on the date of grant, 33.33% of the equity award will be comprised of restricted stock units (“RSUs”) (rounded to the nearest whole number of units), 33.33% of the equity award will be comprised of stock options (“Stock Options”) (rounded down to the nearest whole share), and the remaining 33.33% of the equity award will be comprised of performance shares based on relative total shareholder return (“Performance Shares”)(rounded down to the nearest whole share). Equity value of RSUs and Performance Shares will be determined based on the closing price of a share of Company common stock, par value $.01 per share, on the date of grant. Equity value of Stock Options will be determined based on the standard option valuation formula used by Company. The grant of the RSUs, Stock Options and Performance Shares provided by this subsection shall generally be made in an administratively reasonable period of time following the first day of the Employment Term subject to compliance with applicable law and the schedule of the Compensation Committee of the Board.

(b) RSUs shall have the following vesting schedule: (A) fifty percent (50%) of the RSUs shall vest on the second (2^nd) anniversary from the date of grant; (B) an additional twenty-five (25%) shall vest on the third (3^rd) anniversary from the date of grant; and (C) the remaining twenty-five percent (25%) shall vest on the fourth (4^th) anniversary from the date of grant, provided, that Executive is continuously employed with Company from the grant date to each applicable vesting date. Except as may be otherwise provided in the applicable award agreement or in this Agreement, any RSU that is unvested on the date of Executive’s termination for any reason shall be forfeited on such date of termination.

(c) Stock Options shall vest over four (4) years following the date of grant, with twenty-five percent (25%) of such Stock Options vesting on the first (1^st) anniversary of the date of grant, and monthly thereafter, provided, that Executive is continuously employed with Company from the grant date to each applicable vesting date. Except as may be otherwise provided in the applicable award agreement or in this Agreement, any Stock Option that is unvested on the date of Executive’s termination for any reason shall be forfeited on such date of termination.

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(d) Subject to achievement of performance objectives, Performance Shares shall vest following the Committee’s certification of performance following the end of a three-year performance period that starts on January 1, 2012, provided that Executive is continuously employed with Company from the grant date to the applicable vesting date. Except as may be otherwise provided in the applicable award agreement or in this Agreement, any Performance Share that is unvested on the date of Executive’s termination for any reason shall be forfeited on such date of termination.

(e) To the extent Company grants equity incentive awards to any new Executive Vice President as an inducement to commence employment with Company and such equity incentive awards have more favorable vesting terms than the equity incentive awards received by Executive pursuant to paragraph 4.D.(iii), then any outstanding and unvested equity incentive awards granted to Executive pursuant to paragraph 4.D.(iii) of the same type shall be amended to provide Executive with the same more favorable vesting terms; provided, however, that any special one-time equity incentive awards granted by Company to any new Executive Vice President that have more favorable vesting terms and are specifically intended to compensate for equity incentives from a previous employer that will be forfeited will not trigger any amendments under this paragraph 4.D.(iv) to the terms of Executive’s equity incentive awards. Furthermore, to the extent Company agrees to grant equity incentive awards to any current Executive Vice President during the term of his or her employment with Company that have more favorable vesting terms than any outstanding equity incentive awards received by Executive pursuant to paragraph 4.D.(iii), then any outstanding and unvested equity incentive awards granted to Executive pursuant to paragraph 4.D.(iii) of the same type shall be amended to provide Executive with the same more favorable vesting terms.

E. Benefit Plans.

(i) Eligibility; Participation. During the Employment Term and as otherwise provided herein, Executive shall be entitled to participate in any and all employee health and other welfare benefit plans (including, but not limited to, life insurance, health and medical, dental, and disability plans) and other employee benefit plans, including, but not limited to, tax qualified retirement plans established by Company from time to time for the benefit of employees of Company. Executive shall be required to comply with the conditions attendant to coverage by such plans, which terms shall apply to Executive in the same manner as those applicable to executives of Company at the Executive Vice President level who are similarly situated, and Executive shall comply with and be entitled to benefits only in accordance with the terms and conditions of such plans as they may be amended from time to time. Nothing herein contained shall be construed as requiring Company to establish or continue any particular benefit plan in discharge of its obligations under this Agreement.

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(ii) Enrollment. It will be necessary for Executive to make benefit elections within 30 days of the first day of the Employment Term. If Executive does not make an election within the designated timeframe, Executive hereby agrees that she will be enrolled into the benefits default plan and Executive will be responsible for any associated costs. Employee benefits are subject to amendment, modification, suspension and/or termination at the sole discretion of Company.

F. Vacation. Executive shall be entitled to not less than four (4) weeks of paid vacation each calendar year of her employment hereunder, in addition to Company’s recognized holidays and personal days, as well as to such other employment benefits that are or may be extended or provided to all executives at the Executive Vice President level. The accrual and/or carry-over of paid vacation from one year to the next shall be in accordance with Company policy applicable to the Company location where Executive’s principal office is located as it may exist and change from time to time.

5. Termination of the Employment Agreement.

A. Termination Without Cause. Notwithstanding anything to the contrary herein, Company reserves the right to terminate Executive’s employment and this Agreement without Cause (defined below). If Company terminates Executive’s employment and this Agreement without Cause, then, solely in exchange for Executive’s execution and delivery of Company’s then standard separation agreement, which includes, among other obligations, a release of claims against Company and related entities and persons (sample release language is attached hereto as Exhibit A (the “Separation Agreement”), which language may be modified, but not materially except to comply with any changes in applicable law, by Company in the future), within the time period specified therein, and upon such agreement becoming effective by its terms, the following terms shall apply:

(i) Company will pay Executive an amount equal to eighteen (18) months of Executive’s then current Base Salary, less applicable withholdings. This amount will be paid in thirty-six (36) substantially equal installments, which shall be treated as separate payments in accordance with paragraph 12 hereof, commencing on the sixtieth (60^th) day following Executive’s termination of employment. These payments will not be eligible for deferrals to Company’s 401(k) plan.

(ii) Subject to the terms of paragraph 4.C(i), if Executive is terminated between January 1 and March 15, a Bonus payment under the ABP for the calendar year ending prior to Executive’s termination (“Prior Year”) will be paid at the same rate that continuing employees receive their bonus payments, less applicable tax withholdings, but in no event to exceed 100% of Executive’s target payout; provided that (i) Company pays a Bonus to eligible employees under Company’s ABP for the Prior Year, (ii) Executive’s Bonus has not already been paid to Executive at the time of termination of Executive’s employment, and (iii) Executive was otherwise eligible for such Bonus payment if Executive had remained employed through the date of payout. This amount will be paid to Executive in a lump sum on the earlier of the date

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on which other eligible employees are paid bonuses under the ABP for the Prior Year provided the Separation Agreement has become effective by its terms, or the sixtieth (60^th) day following Executive’s termination of employment. This payment will not be eligible for deferrals to Company’s 401(k) plan.

(iii) In addition, subject to the terms of paragraph 4.C(i), Executive will receive a Bonus payment under the ABP for the year in which Executive’s termination of employment occurs payable if and when bonuses are paid to other employees, prorated through the effective date of the termination of Executive’s employment, less applicable withholdings. This amount will not be eligible for deferrals to Company’s 401(k) plan.

(iv) If Executive elects group health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Company will pay the cost of Executive’s medical, dental and vision benefit coverage (“group health coverage”) under COBRA for up to eighteen (18) months, in accordance with COBRA, beginning the first day of the calendar month following Executive’s termination of employment. Executive agrees that Company may impute compensation income to Executive in an amount equal to 102% of the premium cost for such group health coverage if necessary to avoid adverse income tax consequences to Executive resulting from the application of Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”) to Company’s payment of the cost of such group health coverage.

(v) If Executive’s Separation Agreement fails to become effective and irrevocable prior to the sixtieth (60^th) day following Executive’s termination of employment due to Executive’s failure to timely deliver the executed Separation Agreement, Company will have no obligation to make the payments or benefits provided by paragraphs 5.A.(i), (ii), (iii) and (iv) herein, other than to provide Executive with COBRA to the extent required by law.

(vi) Executive agrees to assist Company, in connection with any litigation, investigation or other matter involving Executive’s tenure as an employee, officer or director of Company, including, but not limited to, meetings with Company representatives and counsel and giving testimony in any legal proceeding involving Company. No later than ninety (90) days following Company’s receipt of supporting documentation of Executive’s incurrence of such expenses, Company will reimburse Executive for reasonable out-of-pocket expenses incurred in rendering such assistance to Company (including attorney’s fees incurred in accordance with the applicable provisions of Company’s Bylaws and Certificate of Incorporation). Furthermore, Executive agrees not to affirmatively encourage or assist any person or entity in litigation against Company or its affiliates, officers, employees and agents in any manner. This provision does not prohibit Executive’s response to a valid subpoena for documents or testimony or other lawful process or limit Executive’s rights that are not legally waivable; however, Executive agrees to provide Company with prompt notice of said process.

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(vii) Executive agrees not to make any disparaging or untruthful remarks or statements about Company or its products, services, officers, directors, or employees. Company agrees not to cause its directors, officers or senior executives to make on its behalf any disparaging or untruthful remarks or statements about Executive’s employment with Company to prospective employers of Executive following Executive’s termination from employment. Nothing in this Agreement prevents Executive or Company from making truthful statements when required by law, court order, subpoena, or the like, to a governmental agency or body or in connection with any legal proceeding.

(viii) Executive shall not be entitled to notice and severance under any policy or plan of Company (the payments set forth in this paragraph 5.A. being given in lieu thereof) and Executive waives all participation in and claims under such policies and plans. For the avoidance of doubt, the foregoing sentence shall not have any adverse impact on Executive’s rights to indemnification and D&O coverage.

(ix) Executive agrees that if Executive breaches any of Executive’s obligations, to the detriment of Company, under paragraphs 5.A.(vi) or (vii), under paragraphs 6, 7, or 8 of this Agreement, under the Confidentiality Agreement, or under the Separation Agreement, Company has the right to seek recovery of the full payments made to Executive under subparagraphs 5.A.(i), (ii), (iii) and (iv) above, and to obtain all other remedies provided by law or equity.

B. Termination For Cause. Notwithstanding anything to the contrary herein, Company reserves the right to terminate Executive’s employment and this Agreement for Cause, as this term is defined below, with or without prior notice to Executive.

(i) For purposes of this Agreement, “Cause” means: (a) Executive’s conviction of, or nolo contendere or guilty plea to, a felony (whether any right to appeal has been or may be exercised); (b) Executive’s failure or refusal without proper cause to perform Executive’s lawful duties with Company, including Executive’s express obligations under this Agreement, if such failure or refusal remains uncured for 30 days after notice to Executive specifically describing such failure or refusal; (c) fraud, embezzlement, misappropriation that is not de minimis, or improper material destruction of Company property by Executive; (d) Executive’s breach of any statutory or common law duty of loyalty to Company; (e) Executive’s violation of the Confidentiality Agreement or the SBC; (f) Executive’s improper conduct substantially prejudicial to Company’s business; (g) Executive’s failure to cooperate in any internal or external investigation involving Company; or (h) Executive’s indictment (or its procedural equivalent) for a felony alleging fraud, embezzlement, misappropriation or destruction of Company property by Executive or alleging fraud, embezzlement, or monetary theft by Executive with respect to another party.

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(ii) If Company terminates Executive’s employment and this Agreement for Cause, Company shall have no further obligation to Executive other than (a) to pay, within thirty (30) days of the effective date of termination of Executive’s employment with Company, Executive’s Base Salary and any accrued unused vacation, in accordance with Company policy, through the effective date of termination, and (b) with respect to any rights Executive may have pursuant to any insurance or other benefit plans of Company, but Executive will not be entitled to receive any bonus payments.

C. Death and Disability. Notwithstanding anything to the contrary herein, Executive’s employment and this agreement shall terminate upon Executive’s death, and Company reserves the right to terminate Executive’s employment and this Agreement on account of Executive’s disability (as the term “disability” is defined in Company’s long-term disability plan, but which definition must also constitute a “disability” for purposes of Section 409A of the Code), and in either case Company shall have no further obligation to Executive or Executive’s heirs other than (i) to pay Executive’s Base Salary and any accrued unused vacation, in accordance with Company policy, through the effective date of termination, (ii) subject to the terms of paragraph 4.C.(i), to pay a Bonus payment at the target level under the ABP for the year in which the date of termination occurs, prorated through the effective date of the termination of Executive’s employment, less applicable withholdings, payable within thirty (30) days of the effective date of Executive’s termination (which payment will not be eligible for deferrals to Company’s 401(k) plan), and (iii) with respect to any rights or benefits Executive may have pursuant to any insurance, benefit or other applicable plan of Company, but Executive shall not be entitled to receive any other bonus payments.

D. Resignation Not For Good Reason. Executive may resign employment with Company at any time. If Executive resigns employment and such resignation does not constitute a resignation for Good Reason (defined below) within the meaning of paragraph 5.E herein, Company shall have no further obligation to Executive other than (i) to pay within thirty (30) days of the effective date of termination of Executive’s employment with Company, Executive’s Base Salary and any accrued unused vacation, in accordance with Company policy, through the effective date of the resignation, and (ii) with respect to any rights Executive may have pursuant to any insurance or other benefit plans of Company, but Executive will not be entitled to receive any bonus payments.

E. Resignation for Good Reason. Executive also may resign employment with Company and terminate this Agreement for Good Reason, provided that Executive gives Company written notice of the Good Reason condition within 60 days from the initial existence of the Good Reason condition, which written notice shall provide a 30-day period during which Company may remedy the actions that Executive has identified as the condition constituting grounds for a resignation for Good Reason. If Company has not remedied the Good Reason condition within 30 days following such notice from Executive, then Executive must resign her employment with Company within 30 days of the end of the remedy period or she will have

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forever waived her right to resign for Good Reason for such condition upon that occurrence, but not future occurrences of the same condition. Upon such a termination, Executive will be treated in accordance with paragraph 5.A herein, as if Executive’s employment had been terminated by Company without Cause. For purposes of this Agreement, “Good Reason” means: (i) Executive no longer reports to the Chief Executive Officer of Company; (ii) a relocation of Executive’s principal office at Company to a location that is more than 50 miles from its location as of the date of this Agreement without Executive’s written consent; (iii) a material diminution in Executive’s duties, responsibilities or authority; or (iv) a material diminution in Executive’s then Base Salary.

6. Non-Competition Agreements and Restrictive Covenants.

A. Executive agrees to execute and abide by the enclosed Confidentiality Agreement with Company, which is incorporated herein by reference. Any reference in the Confidentiality Agreement to Executive’s “at will” employment status is superseded by this Agreement.

B. Executive acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character. Executive further acknowledges that the business of Company is international in scope, that its products and services are marketed throughout the world, that Company competes in nearly all of its business activities with other entities that are or could be located in nearly any part of the world and that the nature of Executive’s services, position and expertise are such that Executive is capable of competing with Company from nearly any location in the world.

C. Executive also agrees that, in addition to Executive’s obligations under the Confidentiality Agreement, while Executive is employed by Company and for twelve (12) months following termination of her employment for any reason, Executive shall not, directly or indirectly, except as a shareholder holding less than a one percent (1%) interest in a corporation whose shares are traded on a national securities exchange, participate in the ownership, control, or management of, or perform any services for or be employed by (i) Time Warner, Inc., Yahoo!, Inc., Google, Inc., including its YouTube subsidiary, Microsoft Corporation, IAC/Interactive Corp., News Corp, Facebook, Inc., LinkedIn Corporation, Yelp Inc. and Twitter Inc., or (ii) without the written consent of the Chief Executive Officer or the General Counsel of Company, any entity that engages in any line of business that is substantially the same as any line of business which Company engages in, conducts or, to Executive’s knowledge, has definitive plans to engage in or conduct, and has not ceased to engage in or conduct, or any of their respective subsidiaries, affiliates or successors (any such entity identified by Section 7.C.(ii) is a “Competitive Entity”). Notwithstanding the preceding, in order to be considered a Competitive Entity, the entity must derive fifty percent (50%) or more of its total annual revenues from substantially similar products and services offered by Company.

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D. Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and are no broader than are necessary to maintain the confidential information, trade secrets and the goodwill of Company and to protect the other legitimate business interests of Company and are not unduly restrictive on Executive.

E. The parties agree and intend that the covenants contained in this Agreement, including but not limited to the covenants set forth in this paragraph 6, shall be deemed to be a series of separate covenants and agreements, one for each and every county or political subdivision of each applicable state of the United States and each country of the world. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the governing laws and public policies of the State of New York, and to the extent applicable, each jurisdiction in which enforcement is sought. Accordingly, if any provision in this Agreement or deemed to be included herein shall be adjudicated to be invalid or unenforceable, such provision, without any action on the part of the parties hereto, shall be deemed amended to delete or to modify (including, without limitation, a reduction in duration, geographical area or prohibited business activities) the portion adjudicated to be invalid or unenforceable, such deletion or modification to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made, and such deletion or modification to be made only to the extent necessary to cause the provision as amended to be valid and enforceable.

7. Representations and Warranties of Executive. Executive hereby represents and warrants to Company as follows: (i) Executive has the legal capacity and unrestricted right to execute and deliver this Agreement and to perform all of her obligations hereunder; (ii) the execution and delivery of this Agreement by Executive and the performance of Executive’s obligations hereunder will not violate or be in conflict with any fiduciary or other duty, instrument, agreement, document, arrangement, or other understanding to which Executive is a party or by which Executive is or may be bound or subject; (iii) the execution and delivery of, and Executive’s performance under, this Agreement and as an employee of Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Executive prior to her employment with Company; (iv) the execution and delivery of, and Executive’s performance under, this Agreement and as an employee of Company does not and will not breach any prior agreement not to compete with the business of any other company; (v) Executive will not disclose to Company or induce Company to use any confidential or proprietary information or material belonging to any previous employer or other person or entity; (vi) Executive is not a party to any other agreement that will interfere with Executive’s full compliance with this Agreement; and (vii) Executive will not enter into any agreement, whether written or oral, in conflict with the provisions of this Agreement.

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8. Employment Obligations.

A. Company Property. All records, files, lists, including computer-generated lists, drawings, documents, equipment, and similar items relating to Company’s business that Executive shall prepare or receive from Company shall remain Company’s sole and exclusive property. Upon termination of this Agreement, or upon Company’s request, Executive shall promptly return to Company all property of Company in her possession. Executive further represents that she will not copy, cause to be copied, print out, or cause to be printed out any software, documents, or other materials originating with or belonging to Company. Executive additionally represents that, upon termination of her employment with Company, she will not retain in her possession any such software, documents, or other materials.

B. Cooperation. Executive agrees that during her employment she shall, at the request of Company, render all assistance and perform all lawful acts that Company considers necessary or advisable in connection with any litigation involving Company or any director, officer, employee, shareholder, agent, representative, consultant, client, or vendor of Company. Executive’s reasonable expenses in connection therewith shall be paid by Company, including attorney’s fees in accordance with the applicable provisions of Company’s Bylaws and Certificate of Incorporation.

9. Arbitration. Except as provided in paragraph 10.B. herein or as otherwise excluded herein, any dispute or controversy arising under or relating to this Agreement and Executive’s employment hereunder (whether based on contract or tort or other common law or upon any federal, state or local statute or regulation, including, without limitation, claims of discrimination, harassment and retaliation under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act and similar federal, state and local fair employment practices laws) shall, at the election of either Executive or Company, be submitted to JAMS for resolution in arbitration in accordance with the then-current rules and procedures of JAMS for employment-related disputes. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 30 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy), and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this paragraph 9. Any such arbitration proceedings shall take place in New York, New York before a single arbitrator (rather than a panel of arbitrators), pursuant to any available streamlined or expedited (rather than a comprehensive) arbitration process and in accordance with an arbitration process which, in the judgment of such arbitrator, shall have the effect of reasonably limiting or reducing the cost of such arbitration for both parties. The resolution of any such dispute or controversy by the arbitrator appointed in accordance with the procedures of JAMS shall be final and binding. Judgment upon the award rendered by such arbitrator may be entered in any court having jurisdiction thereof, and

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the parties consent to the jurisdiction of the courts of New York for this purpose; provided, however, the parties may agree after the commencement of a proceeding to hold the arbitration in another jurisdiction. If at the time any dispute or controversy arises with respect to this Agreement JAMS is no longer providing arbitration services, then the American Arbitration Association shall be substituted for JAMS for purposes of this paragraph 9, and the arbitration will be conducted in accordance with the then current AAA Employment Arbitration Rules & Mediation Procedures.

10. Miscellaneous.

A. Captions. The section, paragraph and subparagraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

B. Specific Remedy. In addition to such other rights and remedies as Company may have at equity or in law with respect to any breach of this Agreement, if Executive commits a material breach of any provision of this Agreement or the Confidentiality Agreement, Company shall have the right and remedy to have such provision specifically enforced by any court having competent jurisdiction, it being acknowledged that any such breach or threatened breach will cause irreparable injury to Company.

C. Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of New York, without regard to the conflicts of law rules thereof.

D. Jurisdiction. Each of the parties hereto hereby irrevocably consents and submits to the jurisdiction of the Supreme Court of the State of New York, in New York, New York, and the United States District Court for the Southern District of New York in connection with any suit, action, arbitration or other proceeding concerning the interpretation of this Agreement or enforcement of paragraph 6 of this Agreement. Executive waives and agrees not to assert any defense of lack of jurisdiction, that venue is improper, inconvenient forum, or otherwise. To the extent allowable by law, Executive waives the right to a jury trial and agrees to accept service of process by certified mail at Executive’s last known address.

E. Successors and Assigns. Neither this Agreement, nor any of Executive’s rights, powers, duties, or obligations hereunder, may be assigned by Executive. This Agreement shall be binding upon and inure to the benefit of Executive and her heirs and legal representatives and Company and its successors. Successors of Company shall include, without limitation, any company or companies acquiring, directly or indirectly, all or substantially all of the assets of Company, whether by merger, consolidation, purchase, lease, or otherwise, and such successor shall thereafter be deemed “Company” for the purpose hereof.

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F. Notices. All notices, requests, demands, and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first class, registered mail, return receipt requested, postage and registry fees prepaid, to the applicable party and addressed as follows:

Company:

AOL Inc.

770 Broadway

New York, NY 10003

Attn: General Counsel

Executive:

At the address shown on the records of Company for Executive

Addresses may be changed by notice in writing signed by the addressee.

G. Amendment. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by Executive and the CEO or the General Counsel, subject to, if necessary, approval of the Compensation Committee of the Board.

H. Waiver. Any waiver or consent from Company with respect to any term or provision of this Agreement or any other aspect of Executive’s conduct or employment shall be effective only in the specific instance and for the specific purpose for which given and shall not be deemed, regardless of frequency given, to be a further or continuing waiver or consent. The failure or delay of Company at any time or times to require performance of, or to exercise any of its powers, rights, or remedies with respect to, any term or provision of this Agreement or any other aspect of Executive’s conduct or employment in no manner (except as otherwise expressly provided herein) shall affect Company’s right at a later time to enforce any such term or provision.

I. Severability. In addition to the provisions set forth in paragraph 6.E., if any provision of this Agreement is held to be invalid, the remainder of this Agreement shall not be affected thereby.

J. Survival. Paragraphs 5.A., 5.C. and 5.E., and paragraphs 6, 7, 8, 9, 10, 11 and 12 shall survive termination of this Agreement.

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K. Entire Agreement.

(i) This Agreement, including Exhibit A and the Confidentiality Agreement, embodies the entire agreement of the parties hereto with respect to its subject matter and merges with and supersedes all prior discussions, agreements, commitments, or understandings of every kind and nature relating thereto, whether oral or written, between Executive and Company. Neither party shall be bound by any term or condition of this Agreement other than as is expressly set forth herein. If there is any conflict between the express terms of this Agreement and the Confidentiality Agreement, the terms of this Agreement shall prevail.

(ii) Executive represents and agrees that she fully understands her right, and Company has advised Executive, to discuss all aspects of this Agreement with Executive’s attorney, that to the extent she desired, she availed herself of this right, that she has carefully read and fully understands all of the provisions of the Agreement, that she is competent to execute this Agreement, that her decision to execute this Agreement has not been obtained by any duress, that she freely and voluntarily enters into this Agreement, and that she has read this document in its entirety and fully understands the meaning, intent, and consequences of this Agreement.

L. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

M. Tax Withholding. Company may withhold from any and all amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

11. Limitation on Certain Payments.

A. Calculation and Possible Benefit Reduction. If at any time or from time to time, it shall be determined by independent tax professionals selected by Company (“Tax Professional”) that any payment or other benefit to Executive pursuant to paragraph 5 of this Agreement or otherwise (“Potential Parachute Payment”) is or will, but for the provisions of this paragraph 11, become subject to the excise tax imposed by Section 4999 of the Code or any similar tax payable under any state, local, foreign or other law, but expressly excluding any income taxes and penalties or interest imposed pursuant to Section 409A of the Code (“Excise Taxes”), then Executive’s Potential Parachute Payment shall be either (a) provided to Executive in full, or (b) provided to Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Taxes, whichever of the foregoing amounts, after taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Executive, on an after- tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Taxes (“Payments”).

15

B. Implementation and Any Benefit Reduction Under Paragraph 11.A. In the event of a reduction of benefits pursuant to paragraph 11.A., the Tax Professional shall determine which benefits shall be reduced so as to achieve the principle set forth in paragraph 11.A. For purposes of making the calculations required by paragraph 11.A., the Tax Professional may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code and other applicable legal authority. Company and Executive shall furnish to the Tax Professional such information and documents as the Tax Professional may reasonably request in order to make a determination under paragraph 11.A. Company shall bear all costs the Tax Professional may reasonably incur in connection with any calculations contemplated by paragraph 11.A.

C. Potential Subsequent Adjustments.

(i) If, notwithstanding any calculations performed or reduction in benefits imposed as described in paragraph 11.A., the IRS determines that Executive is liable for Excise Taxes as a result of the receipt of any payments made pursuant to paragraph 5 of this Agreement or otherwise, then Executive shall be obligated to pay back to Company, within thirty (30) days after a final IRS determination or in the event that Executive challenges the final IRS determination, a final judicial determination, a portion of the Payments equal to the “Repayment Amount.” The Repayment Amount shall be the smallest such amount, if any, as shall be required to be paid to Company so that Executive’s net after-tax proceeds with respect to the Payments (after taking into account the payment of the Excise Taxes and all other applicable taxes imposed on such benefits) shall be maximized. The Repayment Amount shall be zero if a Repayment Amount of more than zero would not result in Executive’s net after-tax proceeds with respect to the Payments being maximized. If the Excise Taxes are not eliminated pursuant to this paragraph 11.C, Executive shall pay the Excise Taxes.

(ii) Notwithstanding any other provision of this paragraph 11, if (i) there is a reduction in the payments to Executive as described above in this paragraph 11, (ii) the IRS later determines that Executive is liable for Excise Taxes, the payment of which would result in the maximization of Executive’s net after-tax proceeds (calculated based on the full amount of the Potential Parachute Payment and as if Executive’s benefits had not previously been reduced), and (iii) Executive pays the Excise Tax, then Company shall pay to Executive those payments which were reduced pursuant to paragraph 11.A. or subparagraph 11.C.(i) as soon as administratively possible after Executive pays the Excise Taxes to the extent that Executive’s net after-tax proceeds with respect to the payment of the Payments are maximized.

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12. Code Section 409A. This Agreement is intended to be exempt from Section 409A of the Code, as amended and will be interpreted in a manner intended to reflect that intention.

A. Notwithstanding anything herein to the contrary, if any amounts payable pursuant to this Agreement are determined to be subject to Section 409A of the Code, then with respect to such amounts: (i) if at the time of Executive’s separation from service from Company, Executive is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of the payment of such amounts on account of such separation from service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then Company will defer the commencement of the payment of any such amounts hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six months following Executive’s separation from service from Company (or the earliest date as is permitted under Section 409A of the Code), and (ii) each payment of two or more installment payments made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code. Any amounts of deferred compensation that are payable by reason of Executive’s termination of employment shall not be paid unless such termination of employment also constitutes a “separation from service” for purposes of Section 409A of the Code and references to the employee’s “termination,” or “termination of employment” and words and phrases of similar meaning shall be construed to require a “separation from service” for purposes of Section 409A of the Code.

B. If any other payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by Company, that does not cause such an accelerated or additional tax.

C. To the extent any reimbursements or in-kind benefits due Executive under this Agreement constitutes “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv).

D. Company shall consult with Executive in good faith regarding the implementation of the provisions of this paragraph; provided that neither Company nor any of its employees or representatives shall have any liability to Executive with respect thereto.

(Signature Page to Follow)

17

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

AOL INC.
By:	/s/ John B. Reid-Dodick
Name:	John Reid-Dodick
Title:	EVP
KAREN E. DYKSTRA
/s/ Karen E. Dykstra

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EXHIBIT A

RELEASE AND WAIVER

In exchange and consideration for the Company’s promises to me in paragraph 5.A. of my Executive Employment Agreement dated September 19, 2012 (the “Agreement”) and other valuable consideration, I, Karen E. Dykstra, agree to release and discharge unconditionally the Company and its past and present subsidiaries, affiliates, related entities, successors, predecessors, assigns, merged entities and parent entities, and its and their respective past and present officers, directors, stockholders, employees, benefit plans and their administrators and trustees, agents, attorneys, insurers, representatives, affiliates, and all of their respective successors and assigns, in their individual and official capacities, from any and all claims, actions, causes of action, demands, obligations or damages of any kind arising from my employment with the Company and my separation from employment or otherwise, whether known or unknown by me, which I ever had or now have upon or by reason of any matter, cause or thing, up to an including the day I sign this Release and Waiver. Without limiting the generality of the foregoing, the claims I am waiving include, but are not limited to, all claims arising out of or related to any stock options held by me or granted to me by the Company; all claims for unreimbursed business-related expenses (except in California); all claims under Title VII of the Civil Rights Act of 1964, as amended; all claims under the Worker Adjustment and Retraining Notification Act (WARN) and similar state and local statutes, all as amended; all claims under the Americans with Disabilities Act, as amended; all claims under the Age Discrimination in Employment Act (“ADEA”), as amended; all claims under the Older Workers Benefit Protection Act (“OWBPA”), as amended; all claims under the National Labor Relations Act, as amended; all claims under the Family and Medical Leave Act and similar state and local leave laws, all as amended; all claims under the Employee Retirement Income Security Act, as amended (except with respect to accrued vested benefits under any retirement or 401(k) plan in accordance with the terms of such plan and applicable law); all claims under 42 U.S.C. § 1981, as amended; all claims under the Sarbanes-Oxley Act of 2002, as amended; all claims of discrimination, harassment, and retaliation in connection with my employment, the terms and conditions of such employment and my separation from employment under any federal, state and local fair employment, non-discrimination or civil rights law or regulation, including, without limitation, the New York State and City Human Rights Laws, the Texas Human Rights law, the Illinois Human Rights Act, the Chicago Human Rights Ordinance, the Cook County Human Rights Ordinance, the Illinois Equal Pay Act, and the Illinois Worker’s Compensation Retaliation Law, all as amended; all claims of whistle blowing and retaliation under federal, state and local laws, including, without limitation, the New Jersey Conscientious Employee Protection Act and the Illinois Whistleblower Act, as amended and applicable; all claims under other analogous foreign, federal, state, and local laws, regulation, statutes and ordinances; all claims under any principle of common law or sounding in tort or contract; all claims concerning any right to reinstatement; and all claims for any type of relief from the Company, whether foreign, federal, state or local, whether statutory, regulatory or common law, and whether tort, contract or otherwise, to the fullest extent permitted by law, through the date I sign this Release and Waiver. Further, each of the persons and entities released herein is intended to be a third-party beneficiary of this Agreement.

This release of claims does not affect and I do not release or waive any claim for (i) payments and benefits provided under the Agreement that are contingent upon the execution by me of this Release and Waiver or otherwise expressly survive termination thereof, (ii) any indemnification rights I may have in accordance with Company’s governance instruments or under any director and officer liability insurance maintained by Company with respect to liabilities arising as a result of my service as an officer and employee of Company, (iii) workers’ compensation benefits, unemployment benefits, or other legally non-waivable rights or claims, (iv) my vested rights, if any, in the Company’s 401(k) plan in accordance with the terms of such plan and applicable law, (v) my rights to own and exercise any and all Company stock options or other equity awards held by me in accordance with all other terms of those options and awards and plans, agreements, and notices under which such awards were granted, or (vi) claims related to the enforcement of the Agreement. Additionally, nothing in this Release and Waiver waives or limits my right to file a charge with, provide information to or cooperate in any investigation of or proceeding brought by a government agency, including without limitation the EEOC, (though I acknowledge I am not entitled to recover money or other relief with respect to the claims waived in this Waiver and Release).

I agree that I have been paid and/or received all leave (paid or unpaid), compensation, wages, bonuses, severance or termination pay, commissions, notice period, and/or benefits to which I may have been entitled and that no other remuneration or benefits are due to me, except the benefits I will receive under paragraph 5.A. of my Agreement dated September 19, 2012. I affirm that I have had no known workplace injuries or occupational diseases. I also represent that I have disclosed to the Company any information I have concerning any fraudulent or unlawful conduct involving the persons and entities I am releasing herein.

Pursuant to the OWBPA, I acknowledge and warrant the following: (i) that I am waiving rights and claims for age discrimination under the ADEA and OWBPA, in exchange for the consideration described above, which is not otherwise due to me; (ii) I am hereby advised to consult and have had the opportunity to consult with an attorney before signing this Release and Waiver; (iii) I am not waiving rights or claims for age discrimination that may arise after the effective date of this Release and Waiver; (iv) I have been given a period of at least twenty-one (21) days in which to consider this Release and Waiver and the waiver of any claims I have or may have under law, including my rights under the ADEA and OWBPA, before signing below; and (v) I understand that I may revoke the waiver of my age discrimination claims under the ADEA and OWBPA within seven (7) days after my execution of this Release and Waiver, and that such waiver shall not become effective or enforceable until seven (7) days after the date on which I execute this Release and Waiver. Any such revocation must be made in writing and delivered by certified mail to both the Chairman & Chief Executive Officer and the General Counsel of AOL Inc., at the following address: AOL Inc., 770 Broadway, New York, New York 10003. If I do not revoke my waiver of my age discrimination claims under the ADEA and OWBPA according to the terms herein within seven (7) days, the eighth day following my execution will be the “effective date” of this Release and Waiver.

2

By signing below, I acknowledge that I have carefully reviewed and considered this Release and Waiver; that I fully understand all of its terms; and that I voluntarily agree to them.

KAREN E. DYKSTRA

Date:

3

EX-10.6

Exhibit 10.6

AOL Inc. Annual Bonus Plan – U.S.

2012

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 1

1. Objective

The success of AOL Inc. (“AOL”), along with its subsidiaries and affiliates (together the “Company”), is to a great extent dependent on the caliber of its employees. The AOL Inc. Annual Bonus Plan is a critical tool in rewarding outstanding Company performance, individual performance and behaviors that contribute to the achievement of corporate objectives.

The AOL Inc. Annual Bonus Plan provides eligible employees (other than employees whose participation is governed by the AOL Inc. Annual Incentive Plan for Executive Officers (the “Executive AIP”) and Section 6 herein) with the opportunity to receive cash incentives based on the financial and operational performance of the Company as well as their own individual performance.

The guidelines provided in the AOL Inc. Annual Bonus Plan – U.S. are applicable generally to eligible employees of entities formed within the United States. The terms “ABP” and “this plan” as used herein refer to this plan document. A separate plan document governs the participation of eligible employees of entities formed outside the United States (the “International ABP”).

2. Eligibility

Employees of AOL, or an AOL subsidiary or affiliate formed within the United States, with employee job grades A through J are eligible to participate in the ABP, subject to the terms of the ABP and the following conditions (each such employee, a “Participant”).

a. Employees must be scheduled to work a minimum of 25 hours or more per week to be eligible to participate.

b. Employees eligible to participate in any other Company cash incentive plan, including but not limited to the International ABP, sales incentive plans and bonus plans (e.g., the Patch Annual Bonus Plan, etc.) are not eligible to participate in the ABP.

c. New employees who are hired on or after October 1 of a plan year are not eligible to participate in the ABP for such plan year.

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 2

d. Certain individuals, including but not limited to anyone classified by the Company as interns, fixed term employees, MBA interns, contractors, freelancers, bloggers and temporary workers, and any individuals who are not considered employees of the Company, are not eligible to participate in the ABP, unless required by state or local law. This list is not intended to be all inclusive and may be updated without prior notice. Additionally, any individual who is subject to the terms of or is a signatory to any contract, letter agreement, or other document that acknowledges his or her status as an independent contractor or who is not otherwise classified by the Company for U.S. federal payroll tax purposes as a common law employee is not eligible to participate in the ABP, even if such individual is later determined to be a common law employee.

e. The eligibility of a Participant who is a participant in the Executive AIP will be determined pursuant to Section 6 of the Executive AIP.

f. Notwithstanding anything to the contrary herein, an employee who meets the eligibility requirements set forth in this Section 2 shall, if so designated by the Company in its sole discretion, participate in the International ABP in lieu of this plan (notwithstanding the eligibility requirements set forth in the International ABP).

3. Target Incentive

The ABP target incentive for Participants in job grades A through J is reflected as a percentage of such Participant’s annual base salary. If a Participant in grades A through J is a participant in the Executive AIP, then the applicable ABP target incentive for such Participant will be a component in the criteria used by the Compensation Committee of AOL Inc.’s Board of Directors (and any successor thereto) (the “Committee”) to apply negative discretion in determining the actual annual incentive payable to such Participant pursuant to the terms of the Executive AIP. No annual incentive payment will be made to a participant in the Executive AIP unless and until the performance goal specified in Section 3.2 of the Executive AIP is achieved.

Actual annual incentive payouts, if granted, with respect to a plan year will be calculated based on a Participant’s annual base salary rate as of December 31 of the plan year, in accordance with the administrative guidelines of the ABP.

4. Performance Measures & Weighting

ABP target incentive payouts are calculated based on the following factors:

a. For Participants who are the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”), the Chief Operating Officer (“COO”) or an Executive Vice-President (“EVP”), the Company’s financial and operational performance is weighted at 75%.

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 3

b. For Participants who are Senior Vice Presidents (each, an “SVP”) and below, the Company’s financial and operational performance is weighted at 50%.

c. For Participants who are the CEO, CFO, COO or an EVP, individual performance, as measured against approved performance measures, is weighted at 25%.

d. For Participants who are SVPs and below, individual performance as measured by a Participant’s overall rating in his or her annual performance review is weighted at 50%. Participants are rated on a performance scale against pre-determined individualized goals and may also be calibrated against other ratings within the EVP’s organization and/or against Company-wide performance standards. Employees in the lowest performance category (as determined by management in its sole discretion) will not be eligible for a bonus under this plan.

e. With respect to a Participant who is a participant in the Executive AIP, the foregoing performance measures may be used by the Committee to apply negative discretion to determine the actual bonus payable to such Participant (as set forth in Section 3.4 of the Executive AIP); provided, however, that the Company has satisfied the performance goal specified in Section 3.2 of the Executive AIP.

5. Funding

The Company’s total ABP funding is based on the Company’s operating income before depreciation and amortization (“Adjusted OIBDA”) and Free Cash Flow achievement level, excluding for each performance metric: (a) non-cash impairments of goodwill; intangible and fixed assets and investments; (b) gains and losses on sales of operating assets and investments; (c) externally expensed transaction costs and the direct impact related to mergers, acquisitions, investments or dispositions, as well as costs related to retention arrangements and contingent consideration related to such transactions; (d) amounts related to securities litigation, government investigations, natural disasters and terrorism; (e) restructuring charges or reductions in restructuring charges greater than $3 million; (f) reserves larger than $3 million established in connection with litigation, fraud investigations, tax audits and similar governmental proceedings; (g) recoveries greater than $3 million in litigation and similar proceedings; (h) gains or losses recognized from the forgiveness of debt; (i) the impact of current year changes to accounting standards and tax laws; (j) gains or losses related to the recognition of cumulative foreign currency translation adjustments; (k) non-cash equity based compensation; (l) any other extraordinary item under GAAP; and (m) the impact of taxes on the items described in (a) through (l). The Adjusted OIBDA and Free Cash Flow goals are determined at the beginning of each plan year by the Company, and are approved by the Committee.

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 4

The ABP funding levels at various levels of the Company’s achievement are determined at the beginning of each plan year.

In general, both the Adjusted OIBDA and Free Cash Flow metrics must meet the minimum threshold associated with a targeted funding level in order for Participants to be eligible for a bonus payable at the targeted funding level. There is no guarantee of payout if the threshold is not met. Of the Company performance metrics, weight will be given to Adjusted OIBDA and Free Cash Flow as follows: Adjusted OIBDA – 70%; Free Cash Flow – 30%.

Generally, final ABP funding is at the discretion of the CEO, with the approval of the Committee; however, final ABP funding as to the CEO, the CFO, the COO and any employee subject to the Committee’s purview is also subject to approval of the Committee.

6. Participation In The Executive AIP

This Section 6 will apply only to those Participants who are also participants in the Executive AIP, which determination will be made by the Committee. Only with respect to annual incentives payable to such Participants should the ABP be considered a sub-plan of the Executive AIP. The eligibility of such Participants will be determined pursuant to Section 5 of the Executive AIP and the performance goals for such Participants will be determined pursuant to Section 3 of the Executive AIP. In addition, this sub-plan for Participants who are participants in the Executive AIP will be administered in accordance with Section 4 of the Executive AIP. The method, timing and/or form of any annual incentive payouts to such Participants will be as set forth in the Executive AIP. Once the Committee determines in writing that performance goals have been achieved (pursuant to Section 3 of the Executive AIP), the Committee may use negative discretion to finalize the annual incentive payouts to such Participants, pursuant to the guidelines established under the ABP. Any capitalized terms used in this section (and throughout the ABP with respect to a Participant who is a participant in the Executive AIP) but not otherwise defined herein, in connection with determining the annual incentive payouts for such Participant only, will have the meaning set forth in the Executive AIP. In the event of a conflict between any term or provision contained in the ABP and a term or provision of the Executive AIP, with respect to a Participant who is a participant in the Executive AIP, the terms and provisions of the Executive AIP will govern and prevail.

7. Administrative Guidelines

a. The ABP is an annual bonus plan based on Company and individual performance from January 1, 2012 through December 31, 2012 (the “plan year”).

b. Any payouts with respect to a plan year will be distributed once a year, no later than March 15^th of the year immediately following the end of such plan year.

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 5

c. Bonus payouts, if any, under the ABP will be made to a Participant by his or her employer. Subject to Section 7(h) herein, Participants must be continuously employed by the Company on the date of payout in order to be eligible to receive a payout. A Participant whose employment with the Company has terminated, or who has received a notice of termination from the Company or delivered a notice of resignation to the Company, in each case on or prior to the date of payout, is not eligible to receive a payout, unless otherwise required by state or local law.

d. Employees promoted or transferred into an ABP eligible position may participate in the ABP effective as of the first day they were employed in an ABP eligible position. The ABP payment will be prorated daily based on the length of time such employee works in the ABP eligible position during the plan year.

e. Participants transferring from an ABP eligible position to non-ABP eligible positions will be eligible to receive an ABP payout, prorated on a daily basis for the portion of the plan year in which they were employed in an ABP eligible position, provided that the Company pays a bonus under the ABP to other Participants for that plan year.

f. Participants who are promoted or transferred from one ABP bonus target level to another during the plan year will be eligible to receive an ABP payout, prorated on a daily basis based on the length of time at each ABP bonus target level during the year.

g. A bonus payable under the ABP may not exceed 200% of a Participant’s bonus target.

h. In the event a Participant dies during the plan year, the Participant’s beneficiaries will receive a prorated ABP payout based on the number of days the Participant spent in an ABP eligible position during such plan year. In addition, if a Participant dies after the end of the plan year, but before payout, the Participant’s beneficiaries will receive the full ABP payout, at target levels, if an ABP payout is approved for such plan year. Any such ABP payouts will be made at the same time as other payouts would otherwise be payable to Participants under the terms of the ABP.

i. There is no guaranteed ABP payout. Any payments under the ABP are at the sole discretion of the Company.

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 6

8. Miscellaneous

a. Participation in the ABP does not constitute a contract of employment or a contractual agreement for payout, and does not guarantee employment for any duration of time. Participation in the ABP in any plan year does not guarantee participation in any following plan year. All elements of the ABP are at the discretion of the Company. The Company reserves the right to modify, revoke, suspend, terminate, or disregard all plan practices, policies or procedures, in whole or in part, published or unpublished, at any time, with or without notice, unless otherwise required by state or local law. The ABP may, or may not, be renewed on a yearly basis, whether in whole or in part.

b. Subject to Committee approval when required, the Company reserves the right to exercise discretion in calculating the ABP payout, and in setting or adjusting any values or factors used in the calculation of the ABP payout. Such discretion for Participants who are either participants in the Executive AIP and/or whose compensation must be reviewed and approved by the Committee resides solely with the Committee.

c. In the event of any inconsistency or conflict between the provisions of any other communications and the terms of this plan document, the terms outlined in this plan document will prevail.

d. Participants will not have the right to assign, pledge, or otherwise transfer any payments to which they may be entitled under the ABP.

e. The Company reserves the right to deduct any moneys owed to the Company by a Participant from any payout under the ABP prior to distribution, unless state or local laws require otherwise.

f. The Company will be entitled to withhold from any payment due to a Participant any and all applicable income and employment taxes.

g. The ABP is intended to be exempt from Internal Revenue Code Section 409A (“Code Section 409A”) and shall be administered and interpreted accordingly. Notwithstanding any other provision of the ABP, if any provision of the ABP conflicts with the requirements of Code Section 409A, the requirements of Code Section 409A shall supersede any such provision. In no event will the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Code Section 409A or any damages for failing to comply with Code Section 409A.

h. If any provision of the ABP shall be held to be void, invalid, illegal or unenforceable, in whole or in part, such provision shall be replaced with a provision that is as close as possible in effect to such invalid, illegal or unenforceable provision, and still be valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions of the ABP shall not in any way be affected or impaired thereby.

AOL INC. ANNUAL BONUS PLAN – U.S. (2012) 7

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Timothy M. Armstrong, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 of AOL Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2012	By:	/s/ Timothy M. Armstrong
		Name:	Timothy M. Armstrong
		Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Karen Dykstra, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 of AOL Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2012	By:	/s/ Karen Dykstra
		Name:	Karen Dykstra
		Title:	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 of AOL Inc. (“the Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his respective knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2012	/s/ Timothy M. Armstrong
	Timothy M. Armstrong
	Chairman and Chief Executive Officer (Principal Executive Officer)
Date: November 6, 2012	/s/ Karen Dykstra
	Karen Dykstra
	Chief Financial Officer (Principal Financial Officer)

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Goodwill (Details) (USD $) In Millions, unless otherwise specified			9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Gross Goodwill [Member]	Sep. 30, 2012 Impairments [Member]	Sep. 30, 2012 Net Goodwill [Member]
Goodwill Disclosure [Line Items]
December 31, 2011	$ 1,076.5	$ 1,064.0	$ 36,689.1	$ (35,625.1)	$ 1,064.0
Acquisitions			18.7	0	18.7
Translation adjustments			(6.2)	0	(6.2)
September 30, 2012	$ 1,076.5	$ 1,064.0	$ 36,701.6	$ (35,625.1)	$ 1,076.5

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Goodwill

9 Months Ended

Sep. 30, 2012

Goodwill Disclosure [Abstract]

Goodwill Disclosure [Text Block]

<>NOTE 3—GOODWILL<>

	A summary of changes in the Company's goodwill during the nine months ended September 30, 2012
is as follows (in millions):
		Gross Goodwill		Impairments		Net Goodwill
December 31, 2011		$	36,689.1	$	(35,625.1)	$	1,064.0
Acquisitions			18.7		-		18.7
Translation adjustments			(6.2)		-		(6.2)
September 30, 2012		$	36,701.6	$	(35,625.1)	$	1,076.5

The increase in goodwill for the nine months ended September 30, 2012 was due primarily to acquisitions, including AOL's purchase of a controlling interest in Ad.com Japan. See “Note 4” for additional information on this acquisition.

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Equity-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Equity Based Compensation [Abstract]
Share Based Compensation Arrangement By Share Based Payment Award Award Vesting Period	3 to 4 year period from the date of grant
Share Based Compensation Arrangement By Share Based Payment Award Award Expiration Dating	10 years from grant date
Share Based Compensation Arrangement By Share Based Payment Award Number Of Shares Authorized	21,800,000		21,800,000
Equity Based Compensation Authorized Awards Per Participant Limit	1.61		1.61
Stock options	$ 4.7	$ 5.1	$ 13.5	$ 15.7
RSUs and PSUs	6.4	5.2	14.8	16.0
Total equity-based compensation expense	11.1	10.3	28.3	31.7
Tax benefit recognized	4.4	4.1	11.2	12.5
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number	7,800,000		7,800,000
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Number	3,200,000		3,200,000
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price	$ 21.32		$ 21.32
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Weighted Average Grant Date Fair Value	$ 24.68		$ 24.68
Employee Service Share Based Compensation Nonvested Option Awards Total Compensation Cost Not Yet Recognized	29.9		29.9
Employee Service Share Based Compensation Nonvested Option Awards Total Compensation Cost Not Yet Recognized Period For Recognition	2.4		2.4
Employee Service Share Based Compensation Nonvested Awards Other Than Options Total Compensation Cost Not Yet Recognized	$ 49.7		$ 49.7
Employee Service Share Based Compensation Nonvested Awards Other Than Options Total Compensation Cost Not Yet Recognized Period For Recognition	2.2		2.2
Expected volatility			39.10%	36.80%
Expected term to exercise from grant date			5.10	5.51
Risk-free rate			1.10%	2.40%
Expected dividend yield			0.00%	0.00%

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Stockholders' Equity (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	0 Months Ended				3 Months Ended			9 Months Ended		14 Months Ended
	Oct. 25, 2012	Aug. 30, 2012	Jun. 28, 2012	Aug. 10, 2011	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Aug. 02, 2012	Dec. 31, 2011
Stockholders Equity Disclosure [Line Items]
Stock Authorized All Classes					660.0			660.0		660.0
Preferred Stock Shares Authorized					60.0			60.0		60.0
Preferred Stock Par Or Stated Value Per Share					$ 0.01			$ 0.01		$ 0.01
Common Stock Shares Authorized					600.0			600.0		600.0
Common Stock Par Or Stated Value Per Share					$ 0.01			$ 0.01		$ 0.01		$ 0.01
Preferred Stock Shares Authorized Designation					0.1			0.1		0.1
Preferred Stock Shares Authorized Designation Par Value					$ 0.01			$ 0.01		$ 0.01
Common Stock Shares Issued					109.2			109.2		109.2		107.0
Common Stock Shares Outstanding					90.1			90.1		90.1		94.3
Amounts related to equity-based compensation, net of tax withholdings (See Note 6)								$ 26,900,000	$ 39,000,000
Share Based Compensation					11,100,000		10,300,000	28,300,000	31,700,000
Compensation Expense Pre Combination Service									3,600,000
Share Based Compensation Expense Accelerated Vesting									4,000,000
Stock Repurchase Program Authorized Amount				250,000,000
Treasury Stock Shares Acquired						2.1				14.8
Treasury Stock Acquired Average Cost Per Share								$ 17.29		$ 14.11
Repurchase of common stock						35,800,000		698,700,000	69,200,000	209,400,000
Dutch Tender Offer Aggregate Purchase Price Authorized			400,000,000
Dutch Tender Offer Purchase Price Per Share Range			$27.00 to $30.00
Dutch Tender Offer Shares Purchased											0.3
Dutch Tender Offer Amount Paid Per Share											$ 30.00
Dutch Tender Offer Total Amount Paid											8,800,000
Accelerated Share Repurchase Amount Paid Including Dividends		654,100,000
Accelerated Share Repurchase Amount Paid For Estimated Dividend		54,100,000
Accelerated Share Repurchase Shares Delivered	6.5	4.0
Accelerated Share Repurchases, Settlement Payment or Receipt					131,700,000			131,700,000		131,700,000
Cash dividends declared per common share					$ 5.15		$ 0	$ 5.15	$ 0
Dividends declared								(445,100,000)
Tax Asset Protection Plan Ownership Threshold					4.90%			4.90%		4.90%
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 100			$ 100		$ 100

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Restructuring Costs (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Restructuring Costs Disclosure [Line Items]
Restructuring Charges	$ 0.4	$ 7.1	$ 7.7	$ 35.5
Restructuring Reserve Line Items
Restructuring Reserve Current	3.7		3.7
Restructuring Reserve Noncurrent	0.3		0.3
Employee Severance [Member]
Restructuring Reserve Line Items
Liability at December 31, 2011			5.6
Restructuring expense			7.8
Foreign currency translation and other adjustments			1.0
Cash paid			(13.6)
Liability at September 30, 2012	0.8		0.8
Other Exit Costs [Member]
Restructuring Reserve Line Items
Liability at December 31, 2011			7.1
Restructuring expense			(0.1)
Foreign currency translation and other adjustments			0.2
Cash paid			(4.0)
Liability at September 30, 2012	3.2		3.2
Total Restructuring [Member]
Restructuring Reserve Line Items
Liability at December 31, 2011			12.7
Restructuring expense			7.7
Foreign currency translation and other adjustments			1.2
Cash paid			(17.6)
Liability at September 30, 2012	$ 4.0		$ 4.0

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Commitments And Contingencies Disclosure [Abstract]
Payments for Legal Settlements	$ 13.5
Tax Settlement Incremental Expense Recognized		$ 9.6

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Income (Loss) per Common Share

9 Months Ended

Sep. 30, 2012

Income Per Common Share Text Block [Abstract]

Income (Loss) Per Common Share [Text Block]

<>NOTE 2—INCOME(LOSS) PER COMMON SHARE

<>Basic income (loss) per common share is calculated by dividing net income (loss) attributable to AOL Inc. common stockholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted income (loss) per common share by application of the treasury stock method, only in periods in which such effect would have been dilutive for the period.

For thethree and nine months ended September 30, 2012, the Company had 1.0 million and 5.1 million, respectively, of weighted-averagepotentially dilutive common shares that were not included in the computation of diluted earnings per share because to do so would be anti-dilutive for that period. For the three and nine months ended September 30, 2011, the Company had 10.1million and 9.5 million, respectively, of weighted-average potentially dilutive common shares that were not included in the computation of diluted earnings per share because to do so would be anti-dilutive for that period.

The following table is a reconciliation of basic and diluted net income (loss) attributable to AOL Inc. common stockholders per common share (in millions, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net income (loss) attributable to AOL Inc. common stockholders	$	20.8	$	(2.6)	$	1,012.7	$	(9.7)
Shares used in computing basic income (loss) per common share		92.6		106.2		93.6		106.7
Dilutive effect of equity-based awards		3.4		-		1.6		-
Shares used in computing diluted income (loss) per common share		96.0		106.2		95.2		106.7
Basic net income (loss) per common share	$	0.22	$	(0.02)	$	10.82	$	(0.09)
Diluted net income (loss) per common share	$	0.22	$	(0.02)	$	10.64	$	(0.09)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Statement of Income and Comprehensive Income Abstract
Advertising	$ 340.0	$ 317.7	$ 1,007.9	$ 950.4
Subscription	173.5	191.9	531.1	608.6
Other	18.2	22.1	53.2	66.3
Total revenues	531.7	531.7	1,592.2	1,625.3
Costs of revenues	382.3	397.9	1,163.1	1,190.2
General and administrative	97.2	95.5	301.2	333.5
Amortization of intangible assets	9.0	22.6	28.6	73.5
Restructuring costs	0.4	7.1	7.7	35.5
Income from licensing of intellectual property	0	0	(96.0)	0
(Gain) loss on disposal of assets, net	(0.3)	0	(946.1)	1.6
Operating income (loss)	43.1	8.6	1,133.7	(9.0)
Other income (loss), net	2.0	(1.5)	9.3	(2.6)
Income (loss) from operations before income taxes	45.1	7.1	1,143.0	(11.6)
Income tax provision (benefit)	24.4	9.7	130.7	(1.9)
Net income (loss)	20.7	(2.6)	1,012.3	(9.7)
Net (income) loss attributable to noncontrolling interests	0.1	0	0.4	0
Net income (loss) attributable to AOL Inc.	20.8	(2.6)	1,012.7	(9.7)
Basic net income (loss) per common share	$ 0.22	$ (0.02)	$ 10.82	$ (0.09)
Diluted net income (loss) per common share	$ 0.22	$ (0.02)	$ 10.64	$ (0.09)
Shares used in computing basic income (loss) per common share	92.6	106.2	93.6	106.7
Shares used in computing diluted income (loss) per common share	96.0	106.2	95.2	106.7
Cash dividends declared per common share	$ 5.15	$ 0	$ 5.15	$ 0
Comprehensive income (loss)	22.6	(7.1)	1,000.0	0.6
Comprehensive (income) loss attributable to noncontrolling interests	0.1	0	0.6	0
Comprehensive income (loss) attributable to AOL Inc.	$ 22.7	$ (7.1)	$ 1,000.6	$ 0.6

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CONSOLIDATED STATEMENTS OF EQUITY (USD $) In Millions	Total	Common Stock [Member]	Additional Paid In Capital [Member]	Accumulated Other Comprehensive Income [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]
Balance at Dec. 31, 2010	$ 2,286.9	$ 1.1	$ 3,376.6	$ (287.9)	$ (802.9)
Balance Shares at Dec. 31, 2010		106.7
Net income (loss)	(9.7)				(9.7)
Foreign currency translation adjustments	10.3			10.3
Comprehensive income (loss)	0.6			10.3	(9.7)
Amounts related to equity-based compensation, net of tax withholdings (See Note 6)	39.0		39.0
Issuance of common stock	0.3		0.3
Issuance of common stock (shares)		0.3
Repurchase of common stock	(69.2)					(69.2)
Repurchase of common stock (shares)		(5.0)
Balance at Sep. 30, 2011	2,257.6	1.1	3,415.9	(277.6)	(812.6)	(69.2)
Balance Shares at Sep. 30, 2011		102.0
Balance at Dec. 31, 2011	2,172.6	1.1	3,422.4	(287.5)	(789.8)	(173.6)
Balance Shares at Dec. 31, 2011		94.3
Net income (loss)	1,012.4				1,012.7		(0.3)
Unrealized gain on equity method investments	0.4			0.4
Foreign currency translation adjustments	(12.5)			(12.5)
Comprehensive income (loss)	1,000.3			(12.1)	1,012.7		(0.3)
Amounts related to equity-based compensation, net of tax withholdings (See Note 6)	26.9		26.9
Issuance of common stock	26.1		26.1
Issuance of common stock (shares)		2.2
Repurchase of common stock	(698.7)		(522.4)			(176.3)
Repurchase of common stock (shares)		(6.4)
Dividends declared	(445.1)				(445.1)
Balance at Sep. 30, 2012	$ 2,082.1	$ 1.1	$ 2,953.0	$ (299.6)	$ (222.2)	$ (349.9)	$ (0.3)
Balance Shares at Sep. 30, 2012		90.1

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Restructuring Costs (Tables)

9 Months Ended

Sep. 30, 2012

Restructuring Reserve [Abstract]

Schedule Of Restructuring Reserve By Type Of Cost Text Block

	Employee Terminations		Other Exit Costs		Total
Liability at December 31, 2011	$	5.6	$	7.1	$	12.7
Restructuring expense		7.8		(0.1)		7.7
Foreign currency translation and other adjustments		1.0		0.2		1.2
Cash paid		(13.6)		(4.0)		(17.6)
Liability at September 30, 2012	$	0.8	$	3.2	$	4.0

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Income (Loss) per Common Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share Basic And Diluted [Abstract]
Net income (loss) attributable to AOL Inc.	$ 20.8	$ (2.6)	$ 1,012.7	$ (9.7)
Shares used in computing basic income (loss) per common share	92.6	106.2	93.6	106.7
Dilutive effect of equity-based awards	3.4	0	1.6	0
Shares used in computing diluted income (loss) per common share	96.0	106.2	95.2	106.7
Basic net income (loss) per common share	$ 0.22	$ (0.02)	$ 10.82	$ (0.09)
Diluted net income (loss) per common share	$ 0.22	$ (0.02)	$ 10.64	$ (0.09)
Income Per Common Share Text Block [Abstract]
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount	1.0	10.1	5.1	9.5

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Organization Consolidation And Presentation Of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block]

<>NOTE 1—DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

<>Description of Business

For a description of the business of AOL Inc. (“AOL” or the “Company”), see “Note 1” to the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”).<>

Basis of Presentation

<>Basis of Consolidation

<>The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of AOL and all voting interest entities in which AOL has a controlling voting interest (“subsidiaries”)and variable interest entities in which AOL is the primary beneficiaryin accordance with the consolidation accounting guidance. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation. The consolidated balances of the Company's variable interest entities are not material to the Company's consolidated financial statements for the periods presented.

<>The financial position and operating results of the majority ofAOL's foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the consolidated balance sheet as a component of accumulated other comprehensive income (loss), net.

<>Redeemable Noncontrolling Interest

The noncontrolling interest in a joint venture between Mitsui & Company Ltd. (“Mitsui”) and AOL (“Ad.com Japan”) is classified outside of permanent equity in the Company's consolidated balance sheet as of September 30, 2012, due to a redemption right available to the noncontrolling interest holder in the future. The noncontrolling interest holder's right to redeem its stock is exercisable any time between July 1 and July 30 of any year, commencing with July 1, 2014. Net income in the consolidated statement of comprehensive income for the three and nine months ended September 30, 2012 reflects 100 percent of the results of Ad.com Japan as the Company has a controlling interest in the entity. Net income is subsequently adjusted to exclude AOL's noncontrolling interests to arrive at net income attributable to AOL Inc.

<>Changes in Basis of Presentation

The Company has changed the classification of certain amounts within the accompanying consolidated statement of cash flows for thenine months ended September 30, 2011. The revisions, related to accrued liabilities and capital expenditures, do not have a material impact on the consolidated statement of cash flows.

<>Use of Estimates

<>The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include asset impairments, reserves established for doubtful accounts, equity-based compensation, depreciation and amortization, business combinations, income taxes, litigation matters and contingencies.

<>Interim Financial Statements

<>The interim consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, the results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of AOL in the Annual Report.

Information about Geographical Areas
	Revenues in different geographical areas are as follows (in millions):
		Three Months Ended September 30,(a)				Nine Months Ended September 30,(a)
		2012		2011		2012		2011
United States		$	475.2	$	483.1	$	1,426.0	$	1,480.9
United Kingdom			23.5		24.4		71.1		73.3
Germany			7.3		9.2		24.4		28.2
Canada			10.7		9.3		27.7		27.2
Japan			9.8		0.2		24.7		0.7
Other international			5.2		5.5		18.3		15.0
	Total international		56.5		48.6		166.2		144.4
Total		$	531.7	$	531.7	$	1,592.2	$	1,625.3
(a)	Revenues are attributed to countries based on the location of customers.

<>Recent Accounting Standards

<>Goodwill Impairment

In September 2011, new guidance was issued related to assessing goodwill impairment. Under the new guidance, a company is permitted to make a qualitative assessment of whether goodwill impairment exists before applying the two-step goodwill impairment test. If the conclusion from the qualitative assessment is that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the company would be required to conduct the current two-step goodwill impairment test. Otherwise, it would not need to apply the two-step test.

This new guidance became effective for the Company in January 2012. Given the proximity of the book value and fair value of the Company's sole reporting unit as of the date of its 2011 annual goodwill impairment test, this guidance is not expected to result in a material change to the way the Company performsits analysis for goodwill.

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and equivalents	$ 867.1	$ 407.5
Accounts receivable, net of allowances of $7.2 and $8.3, respectively	303.1	311.5
Prepaid expenses and other current assets	27.9	36.9
Deferred income taxes	38.1	53.7
Total current assets	1,236.2	809.6
Property and equipment, net	487.3	505.2
Goodwill	1,076.5	1,064.0
Intangible assets, net	129.2	135.2
Long-term deferred income taxes	169.0	259.2
Other long-term assets	62.7	51.8
Total assets	3,160.9	2,825.0
Current liabilities:
Accounts payable	72.6	74.9
Accrued compensation and benefits	117.2	152.8
Accrued expenses and other current liabilities	163.3	171.6
Dividends payable	445.1	0
Deferred revenue	68.6	70.9
Current portion of obligations under capital leases	49.4	44.6
Total current liabilities	916.2	514.8
Long-term portion of obligations under capital leases	60.8	66.2
Long-term deferred income taxes	6.7	3.5
Other long-term liabilities	81.0	67.9
Total liabilities	1,064.7	652.4
Commitments and contingencies
Redeemable Noncontrolling Interest Abstract
Redeemable noncontrolling interest (see Note 1)	14.1	0
Equity:
Common stock, $0.01 par value, 108.7 million shares issued and 93.9 million shares outstanding as of June 30, 2012 and 107.0 million shares issued and 94.3 million shares outstanding as of December 31, 2011	1.1	1.1
Additional paid-in capital	2,953.0	3,422.4
Accumulated other comprehensive income (loss), net	(299.6)	(287.5)
Retained earnings (accumulated deficit)	(222.2)	(789.8)
Treasury Stock, at cost, 14.8 million shares at June 30, 2012 and 12.7 million shares at December 31, 2011	(349.9)	(173.6)
Total stockholders' equity	2,082.4	2,172.6
Noncontrolling interest	(0.3)	0
Total equity	2,082.1	2,172.6
Total liabilities, redeemable noncontrolling interest and equity	$ 3,160.9	$ 2,825.0

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Business Description And Basis Of Presentation [Text Block]

<>Description of Business

For a description of the business of AOL Inc. (“AOL” or the “Company”), see “Note 1” to the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”).<>

Basis of Presentation

<>Basis of Consolidation

<>The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of AOL and all voting interest entities in which AOL has a controlling voting interest (“subsidiaries”)and variable interest entities in which AOL is the primary beneficiaryin accordance with the consolidation accounting guidance. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation. The consolidated balances of the Company's variable interest entities are not material to the Company's consolidated financial statements for the periods presented.

<>The financial position and operating results of the majority ofAOL's foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the consolidated balance sheet as a component of accumulated other comprehensive income (loss), net.

<>Redeemable Noncontrolling Interest

The noncontrolling interest in a joint venture between Mitsui & Company Ltd. (“Mitsui”) and AOL (“Ad.com Japan”) is classified outside of permanent equity in the Company's consolidated balance sheet as of September 30, 2012, due to a redemption right available to the noncontrolling interest holder in the future. The noncontrolling interest holder's right to redeem its stock is exercisable any time between July 1 and July 30 of any year, commencing with July 1, 2014. Net income in the consolidated statement of comprehensive income for the three and nine months ended September 30, 2012 reflects 100 percent of the results of Ad.com Japan as the Company has a controlling interest in the entity. Net income is subsequently adjusted to exclude AOL's noncontrolling interests to arrive at net income attributable to AOL Inc.

<>Changes in Basis of Presentation

The Company has changed the classification of certain amounts within the accompanying consolidated statement of cash flows for thenine months ended September 30, 2011. The revisions, related to accrued liabilities and capital expenditures, do not have a material impact on the consolidated statement of cash flows.

<>Use of Estimates

<>The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include asset impairments, reserves established for doubtful accounts, equity-based compensation, depreciation and amortization, business combinations, income taxes, litigation matters and contingencies.

<>Interim Financial Statements

<>The interim consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, the results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of AOL in the Annual Report.

Earnings Per Share Policy [Text Block]

<>Basic income (loss) per common share is calculated by dividing net income (loss) attributable to AOL Inc. common stockholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted income (loss) per common share by application of the treasury stock method, only in periods in which such effect would have been dilutive for the period.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Sep. 30, 2012	Nov. 02, 2012	Jun. 30, 2011
Document Information [Abstract]
Document Type	10-Q
Document period end date	Sep. 30, 2012
Document Period end focus	Q3
Amendment flag	false
DocumentFiscalYearFocus	2012
Current fiscal year end date	--12-31
Entity central index key	0001468516
Entity current reporting status	Yes
Entity filer category	Large Accelerated Filer
Entity registrant name	AOL Inc.
Entity voluntary filers	No
Entity well known seasoned issuer	Yes
Entity common stock shares outstanding		83,696,734
Entity public float			$ 2,100.0

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule Of Revenue From External Customers Attributed To Foreign Countries By Geographic Area Text Block

Information about Geographical Areas
	Revenues in different geographical areas are as follows (in millions):
		Three Months Ended September 30,(a)				Nine Months Ended September 30,(a)
		2012		2011		2012		2011
United States		$	475.2	$	483.1	$	1,426.0	$	1,480.9
United Kingdom			23.5		24.4		71.1		73.3
Germany			7.3		9.2		24.4		28.2
Canada			10.7		9.3		27.7		27.2
Japan			9.8		0.2		24.7		0.7
Other international			5.2		5.5		18.3		15.0
	Total international		56.5		48.6		166.2		144.4
Total		$	531.7	$	531.7	$	1,592.2	$	1,625.3
(a)	Revenues are attributed to countries based on the location of customers.

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CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $) In Millions, except Per Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Balance Sheet Parenthetical [Abstract]
Allowance For Doubtful Accounts Receivable Current	$ 7.2	$ 8.3
Common Stock Par Value	$ 0.01	$ 0.01
Common Stock Shares Issued	109.2	107.0
Common Stock Shares Outstanding	90.1	94.3
Treasury Stock Shares	19.1	12.7

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Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity [Text Block]

<>NOTE 6—STOCKHOLDERS' EQUITY

AOL is authorized to issue up to 660.0million shares of all classes of stock, consisting of 60.0million shares of preferred stock, par value $0.01per share (“Preferred Stock”), and 600.0million shares of common stock, par value $0.01per share.In August 2012, in connection with the Tax Asset Protection Plan discussed further below, AOL filed a Certificate of Designation to its Amended and Restated Certificate of Incorporation creating a series ofapproximately 0.1million shares of Preferred Stock designated as Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”). The Series A Preferred Stock has the voting and such other rights as provided for in the Certificate of Designation. Rights and privileges associated with shares of Preferred Stock are subject to authorization by the Company's Board of Directors and may differ from those of any and all other series at any time outstanding. All shares of common stock will be identical and will entitle the holders thereof to the same rights and privileges.

<>As of September 30, 2012, 109.2million shares of common stock were issued and 90.1million shares of common stock were outstanding.

During the nine months ended September 30, 2011, the Company recorded $39.0 million of equity-based compensation that resulted in an increase in additional paid-in capital. Included in this amount was $31.7 million related to expense incurred under AOL's equity-based compensation plan, $3.6 million related to the fair value of unvested Huffington Post Plan options held by The Huffington Post employees that were converted into AOL stock options and related to pre-combination service, as well as $4.0 million related to the accelerated vesting of stock options related to terminated employees.

Stock Repurchase Program

On August 10, 2011, the Company's Board of Directors approved a stock repurchase program, which authorized the Company to repurchase up to $250.0 million of its outstanding shares of common stock from time to time through August 2012. Repurchases were subject to market conditions, share price and other factors. Repurchases were made in accordance with applicable securities laws in the open market or in private transactions and may include derivative transactions, or pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. For the nine months ended September 30, 2012, the Company paid $35.8 million to repurchase 2.1 million shares at a weighted average price of $17.29 per share as part of this program. From the inception of the program through September 30, 2012, the Company repurchased a total of14.8 million shares at a weighted average price of $14.11 per share as part of this program, for total consideration of $209.4 million. Shares repurchased under the program were recorded as treasury stock on the Company's consolidated balance sheet. The shares repurchased under this program during the nine months ended September 30, 2012 were not the result of an accelerated share repurchase agreement and did not result in any derivative transactions. Management has not made a decision on whether shares purchased under this program will be retired or reissued.The Company's Board of Directors re-authorized the purchase of the remaining shares under this program to be purchased as part of the accelerated stock repurchase agreement entered into on August 26, 2012 as defined below.

Dutch Auction Tender Offer

On June 28, 2012, AOL announced a $400.0 million modified Dutch auction tender offer.The tender offer began on the date of the announcement, June 28, 2012, and expired on August 2, 2012.Through the Dutch tender offer, AOL's shareholders had the opportunity to tender some or all of their shares at a price within the range of $27.00 to $30.00 per share. Upon expiration, approximately 0.3million shares were tendered through the offerat a final purchase price of $30.00 per share, for a total purchase price of approximately $8.8 million. We accounted for the repurchase of these shares as treasury stock on the Company's consolidated balance sheet during the third quarter of 2012.

Accelerated Stock Repurchase Agreement

On August 26, 2012, the Company entered into a fixed dollar collared accelerated stock repurchase agreement with Barclays Capital Inc. (“Barclays”), as agent for Barclays Bank PLC, effective August 27, 2012 (the “ASR Agreement”). Under the ASR Agreement, on August 30, 2012, AOL paid $654.1 million from cash on hand to Barclays to repurchase outstanding shares ofcommon stock. The consideration paid to Barclays to repurchase shares included $54.1 million in contemplation of the special cash dividend announced by the Company on August 27, 2012 and discussed further below, which was calculated as the present value of the special cash dividend with respect to those shares deliverable under the ASR Agreement prior to the ex-dividend date of December 3, 2012.Since the ASR Agreement is indexed to the Company's stock and the Company has the option to settle in cash or shares at the Company's discretion, the Company has accounted for shares repurchased under the ASR Agreement within equity in its consolidated balance sheet. As such, the $654.1 million payment to Barclays was initially recorded as a reduction to additional paid in capital (“APIC”) prior to the shares being delivered. As the shares are delivered by Barclays, AOL will transfer an amount equal to the estimated value of the shares delivered from APIC to treasury stock, such that upon completion of the ASR Agreement, the entire $654.1 million will be recorded as treasury stock. On August 30, 2012, Barclays delivered 4.0 million shares to AOL at an estimated value of $131.7 million and that amount was recorded as treasury stock on the Company's consolidated balance sheet.Barclays delivered an additional 6.5 million shares on October 24, 2012.

The specific number of shares that AOL ultimately will repurchase under the ASR Agreement will be based generally on the share price of AOL common stock over a valuation period in accordance with the terms of the ASR Agreement, subject to a floor and cap provision that establishes a minimum and maximum number of repurchased shares, and subject to the agreed adjustment for the value of the special cash dividend. The minimum and maximum share number depends generally on the share price at which Barclays purchased shares of AOL's common stock during the initial hedging period, during which Barclays established an initial hedge position in respect of its obligations to deliver shares under the ASR Agreement. Barclays will be required to make additional share deliveries under the ASR Agreement, and AOL expects to receive delivery of a substantial majority of shares underlying the transaction before the end of the year. On final settlement of the ASR Agreement, AOL may be entitled to receive additional shares of AOL common stock, or, if it elects, cash, from Barclays, or under certain circumstances specified in the ASR Agreement, AOL may be required to deliver shares or make a cash payment, at its option, to Barclays. In connection with this transaction, Barclays has purchased and is expected to continue to purchase AOL common stock in the open market.

Special Cash Dividend

On August 26, 2012, AOL declared the payment of a special, one-time, cash dividend of $5.15 per share, payable on December 14, 2012 to shareholders of record at the close of business on December 5, 2012 (the “Special Cash Dividend”). In connection with the payment of the Special Cash Dividend and in accordance with and pursuant to the Company's Amended and Restated 2010 Stock Incentive Plan (“2010 SIP”), the Company plans to make an equitable adjustment to outstanding stock options, such that both the fair value and intrinsic value of employee awards immediately following the Special Cash Dividend will be essentially unchanged from the fair value and intrinsic value prior to the Special Cash Dividend. In addition, individuals who hold restricted stock units (“RSUs”) and performance stock units (“PSUs”) will be paid out the Special Cash Dividendas the respective RSUs and PSUs vest. The Company does not expect to record any material incremental compensation expense in connection with the adjustment of stock options or payment of dividends on RSUs and PSUs.As a result of the declaration of the Special Cash Dividend, AOL recorded an estimated dividend payableof $445.1 million as of September 30, 2012 with an offsetting reduction to retained earnings in the Company's consolidated balance sheet, reflecting the estimated amount of the Special Cash Dividend based on shares expected to be outstanding on December 5, 2012.This amount is subject to change based on the actual number of shares outstanding on December 5, 2012. The Company expects to announce the anticipated treatment of the Special Cash Dividend for tax purposes prior to the ex-dividend date of December 3, 2012.

Tax Asset Protection Plan

As of September 30, 2012, AOL hassignificant domestic tax attributes, including both net operating loss deferred tax assets and capital loss carry-forward deferred tax assets. Unless otherwise restricted, AOL can utilize these tax attributes in certain circumstances to offset future U.S. taxable income, including in connection with capital gains that may be generated from a potential asset sale.Should a “change of control” be triggered under Section 382 of the Internal Revenue Code of 1986, as amended, the Company may not be able to utilize these tax attributes to offset future U.S. taxable income, or such utilization could be significantly delayed. As a result, during the third quarter of 2012, the Company adopted a Tax Asset Protection Plan (the “TAPP”) that is intended to act as a deterrent to any individual, individual fund or family of funds with common dispositive power acquiring 4.9% or more of the Company's outstanding shares without the approval of the Company's Board of Directors.

Pursuant to the TAPP, the Company declared a dividend of one right on each outstanding share of common stock held of record as of the close of business on September 7, 2012. One right will also be issued together with each share of common stock issued after September 7, 2012 but before the date the rights are exercisable and, in certain circumstances, after such date. Subject to the terms, provisions and conditions of the TAPP, if the rights become exercisable, each right would initially represent the right to purchase from the Company one ten-thousandth of a share of Series A Preferred Stock for a purchase price of $100. If issued, each fractional share of Series A Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of common stock. However, prior to exercise, a right does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation rights.

The rights will expire on August 27, 2015, or such earlier time as the Company's Board of Directors determines that the Company has no remaining designated tax attributes as of the beginning of a taxable year. The Company intends to submit the TAPP for stockholder approval at its next annual meeting of stockholders. The adoption of the TAPP did not have a material impact on the Company's financial statements as of and for the three months ended September 30, 2012.

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes Disclosure [Abstract]

Income Taxes [Text Block]

<>NOTE 5—INCOME TAXES

The Company recorded pre-tax income from operations of $45.1 million and related income tax expense of $24.4 million, which resulted in an effective tax rate of 54.1% for the three months ended September 30, 2012, as compared to aneffective tax rate of 136.6% for the three months ended September 30, 2011. The effective tax rate for the three months ended September 30, 2011and the three months ended September 30, 2012 differed substantially from the statutory U.S. federal income tax rate of 35.0% primarily due to foreign lossesthat did not produce a tax benefit.

The Company recorded pre-tax income from operations of $1,143.0 million and related income tax expense of $130.7 million, which resulted in an effective tax rate of 11.4% for the nine months ended September 30, 2012, as compared to the effective tax rate of 16.4% for the nine months ended September 30, 2011. The effective tax rate for the nine months ended September 30, 2012 differed substantially from the statutory U.S. federal income tax rate of 35.0% primarily due to the tax impact of the patent transaction with Microsoft during the second quarter of 2012.No material cash taxes will be paid on the patent transaction due to existing net operating losses which offset substantially all of the ordinary income generated by the patent transaction. However, for book purposes, this transaction resulted in income tax expense of $71.2 million. The patent transaction consisted of two elements:  first, the sale of patents and the stock of a subsidiary, and second, the licensing of AOL's retained patent portfolio, resulting in pre-tax income of $1,042.1 million.The tax expense relates primarily to ordinary income realized on the transaction, the majority of which is due to the licensing portion. In addition, the transaction created a significant capital loss due to the tax basis in the disposed subsidiary. The Company does not believe it is currently more likely than not that this capital loss will be realized, and accordingly, has recorded a full valuation allowance on the capital loss generated by the patent transaction. In addition the effect of the patent transaction on income tax expense, the Company also had foreign losses that did not produce a tax benefit. The effective tax rate for thenine months ended September 30, 2011 differed from the statutory U.S. federal income tax rate of 35.0% due toincome tax benefits related to a worthless stock deduction and escrow disbursements from prior acquisitions, partiallyoffset by foreign losses that did not produce a tax benefit.

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Total revenues	$ 531.7	$ 531.7	$ 1,592.2	$ 1,625.3
United States [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	475.2	483.1	1,426.0	1,480.9
United Kingdom [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	23.5	24.4	71.1	73.3
Germany [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	7.3	9.2	24.4	28.2
Canada [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	10.7	9.3	27.7	27.2
Japan [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	9.8	0.2	24.7	0.7
Other International [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	5.2	5.5	18.3	15.0
Total International [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Entitys Country Of Domicile	$ 56.5	$ 48.6	$ 166.2	$ 144.4

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Income (Loss) per Common Share (Tables)

9 Months Ended

Sep. 30, 2012

Income Per Common Share Text Block [Abstract]

Schedule Of Earnings Per Share Basic And Diluted [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net income (loss) attributable to AOL Inc. common stockholders	$	20.8	$	(2.6)	$	1,012.7	$	(9.7)
Shares used in computing basic income (loss) per common share		92.6		106.2		93.6		106.7
Dilutive effect of equity-based awards		3.4		-		1.6		-
Shares used in computing diluted income (loss) per common share		96.0		106.2		95.2		106.7
Basic net income (loss) per common share	$	0.22	$	(0.02)	$	10.82	$	(0.09)
Diluted net income (loss) per common share	$	0.22	$	(0.02)	$	10.64	$	(0.09)

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments And Contingencies Disclosure [Abstract]

Commitments And Contingencies [Text Block]

<>NOTE 9 – COMMITMENTS AND CONTINGENCIES

Commitments

For a description of AOL's commitments see “Note 10” to the Company's audited consolidated financial statements included in the Annual Report.

Contingencies

During the second quarter of 2012, the Company paid $13.5 million to settle a sales tax matter with the Virginia Department of Taxation covering the period from February 1995 through December 2011.  In connection with the resolution of this matter, the Company recorded incremental sales and use tax expense within general and administrative expense of $9.6 million for the nine months ended September 30, 2012.

AOL is a party to a variety of claims, suits and proceedings that arise in the normal course of business, including actions with respect to intellectual property claims, tax matters, labor and unemployment claims, commercial claims, claims related to the Company's business model for content creation and other matters. With respect to tax matters, AOL has received tax assessments in certain states related to sales and use taxes on its business operations. AOL has appealed these tax assessments and plans to vigorously contest these matters. In addition, AOL has received assessments in certain foreign countries related to income tax and transfer pricing, and plans to vigorously contest these matters as well. In certain instances, the Company was required to pay a portion of the tax assessment in order to proceed with the dispute of the assessment. While the results of such normal course claims, suits and proceedings cannot be predicted with certainty, management does not believe that, based on current knowledge and the likely timing of resolution of the various matters, any additional reasonably possible potential losses above the amount accrued for such matters would be material to the Company's financial statements. Regardless of the outcome, legal proceedings can have an adverse effect on us because of defense costs, diversion of management resources and other factors.

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Equity-Based Compensation

9 Months Ended

Sep. 30, 2012

Equity Based Compensation [Abstract]

Equity-Based Compensation [Text Block]

<>NOTE 7—EQUITY-BASED COMPENSATION

<>Pursuant to the Company's 2010 SIP stock options are granted to employees, advisors and non-employee directors of AOL with exercise prices equal to the quoted market value of the common stock at the date of grant. Performance stock options are also granted to certain senior level executives. Generally, the stock options vest ratably over a three to four year vesting period and expire ten years from the date of grant. Certain stock option awards provide for accelerated vesting upon an election to retire after reaching a specified age and years of service, as well as certain additional circumstances for non-employee directors.

<>Also pursuant to the 2010 SIP, AOL may also grant shares of common stock, RSUs or PSUs to its employees, advisors and non-employee directors, which generally vest ratably over a three to four year period from the date of grant. Holders of restricted stock, RSU and PSU awards are generally entitled to receive cash dividends or dividend equivalents, respectively, at the discretion of the Board of Directors, if paid by the Company during the period of time that the restricted stock, RSU or PSU awards are unvested. Certain of the Company's PSU awards are subject to quarterly remeasurement of expense with corresponding adjustments to cumulative recognized compensation expense, as the service inception date precedes the grant date for these awards.

<>The Company is authorized to grant equity awards to employees, advisors and non-employee directors covering an aggregate of 21.8 millionshares of AOL common stock under the 2010 SIP. Shares that are subject to Restricted Stock Awards or Other Stock-Based Awards (as such terms are defined in the 2010 SIP) shall be counted against the share authorization limit and the per participant limit as 1.61 shares for every share granted.  Amounts available for issuance pursuant to grants under the 2010 SIP will change over time based on such activities as the conversion of equity awards into common stock, the forfeiture of equity awards and the cancellation of equity awards, among other activities.

<>Upon the (i) exercise of a stock option award, (ii) vesting of a RSU, (iii) grant of restricted stock or (iv) vesting of a performance share, shares of AOL common stock are issued from authorized but unissued shares or from treasury stock.

Equity-Based Compensation Expense
	Compensation expense recognized by AOL related to its equity-based compensation plans is as follows
(in millions):
		Three Months Ended September 30,				Nine Months Ended September 30,
		2012		2011		2012		2011
Stock options		$	4.7	$	5.1	$	13.5	$	15.7
RSUs and PSUs			6.4		5.2		14.8		16.0
Total equity-based compensation expense		$	11.1	$	10.3	$	28.3	$	31.7
Tax benefit recognized		$	4.4	$	4.1	$	11.2	$	12.5

As ofSeptember 30, 2012, the Company had 7.8 million stock options and 3.2 million RSUs/PSUsoutstanding to employees, advisors and non-employeedirectors. The weighted-average exercise price of the stock options and the weighted-average grant date fair value of the RSUs/PSUs outstanding as of September 30, 2012 were $21.32 and $24.68, respectively.

As of September 30, 2012,total unrecognized compensation cost related to unvested AOL stock option awardswas $29.9 million and is expected to be recognized over a weighted-average period of approximately 2.4 years. Total unrecognized compensation cost as of September 30, 2012related to unvested RSUs/PSUs was $49.7 million and is expected to be recognized over a weighted-average period of approximately 2.2 years. To the extent the actual forfeiture rate is different from what the Company has estimated, equity-based compensation expense related to these awards will be different from the Company's expectations.

AOL Stock Options
The assumptions presented in the table below represent the weighted-average value of the applicable assumption used to value AOL stock options at their grant date:
	Nine Months Ended September 30,
	2012	2011
Expected volatility	39.1%	36.8%
Expected term to exercise from grant date	5.10 years	5.51 years
Risk-free rate	1.1%	2.4%
Expected dividend yield	0.0%	0.0%

The assumptions above relate to AOL stock options granted during the period. The assumptions for 2011 do not include stock options that were converted in connection with the acquisition of The Huffington Post during the nine months ended September 30,2011.

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Restructuing Costs

9 Months Ended

Sep. 30, 2012

Restructuring Reserve [Abstract]

Restructuring Costs [Text Block]

<>NOTE 8—RESTRUCTURING COSTS

For the nine months ended September 30, 2012, the Company incurred $7.7 million of restructuring costs related to organizational changes made in an effort to improve its ability to execute its strategy. These restructuring costs were primarily related to involuntary employee terminations. <>

<>A summary of AOL's restructuring activity for the nine months ended September 30, 2012is as follows (in millions):

	Employee Terminations		Other Exit Costs		Total
Liability at December 31, 2011	$	5.6	$	7.1	$	12.7
Restructuring expense		7.8		(0.1)		7.7
Foreign currency translation and other adjustments		1.0		0.2		1.2
Cash paid		(13.6)		(4.0)		(17.6)
Liability at September 30, 2012	$	0.8	$	3.2	$	4.0

<>At September 30, 2012, of the remaining liability of$4.0 million,$3.7 million was classified as a current liability within accrued expenses and other current liabilities, with the remaining $0.3 million classified within other long-term liabilities in the consolidated balance sheet. Amounts classified as long-term are expected to be paid through 2014.

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Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information Disclosure [Abstract]

Segment Information [Text Block]

<>NOTE 10—SEGMENT INFORMATION

<>An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses and that has discrete financial information that is regularly reviewed by the chief operating decisionmaker in deciding how to allocate resources and in assessing performance.

On June 29, 2012, the Company announced a plan to form operating units in conjunction with a planned change in management structure. However, the planned operating units are still being finalized, and there is currently no financial data regularly reviewed by the <>Company's chief operating decision maker below the consolidated unit level. The Company has determined that the chief operating decision maker function consists of its Chief Executive Officer and its Chief Operating Officer as of and for the three months ended September 30, 2012. The chief operating decision maker function continues to evaluate performance and make operating decisions about allocating resources based on financial data presented on a consolidated basis. There are no executives who are held accountable by AOL's chief operating decision maker function,or anyone else, for an operating measure of profit or loss for any operating unit below the consolidated unit level. Accordingly, management has determined that the Company has one segment as of and for the nine months ended September 30, 2012.

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Equity-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Equity Based Compensation [Abstract]

Schedule Of Compensation Cost For Share Based Payment Arrangements Allocation Of Share Based Compensation Costs By Plan Table Text Block

Equity-Based Compensation Expense
	Compensation expense recognized by AOL related to its equity-based compensation plans is as follows
(in millions):
		Three Months Ended September 30,				Nine Months Ended September 30,
		2012		2011		2012		2011
Stock options		$	4.7	$	5.1	$	13.5	$	15.7
RSUs and PSUs			6.4		5.2		14.8		16.0
Total equity-based compensation expense		$	11.1	$	10.3	$	28.3	$	31.7
Tax benefit recognized		$	4.4	$	4.1	$	11.2	$	12.5

Schedule Of Share Based Payment Award Stock Options Valuation Assumptions [Table Text Block]

AOL Stock Options
The assumptions presented in the table below represent the weighted-average value of the applicable assumption used to value AOL stock options at their grant date:
	Nine Months Ended September 30,
	2012	2011
Expected volatility	39.1%	36.8%
Expected term to exercise from grant date	5.10 years	5.51 years
Risk-free rate	1.1%	2.4%
Expected dividend yield	0.0%	0.0%

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Business Acquisitions, Dispositions and Other Significant Transactions (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended			9 Months Ended
	Feb. 09, 2012	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Jun. 15, 2012	Dec. 31, 2011
Acquisitions Dispositions And Other Significant Transactions [Line Items]
Joint Venture Interest Purchased	3.00%
Payments To Acquire Interest In Joint Venture	$ 1.2
Joint Venture Interest Before Additional Acquisition	50.00%
Business Combination Acquisition Of Less Than 100 Percent Noncontrolling Interest Fair Value	15.4
Gain Associated With Acquisition Of Additional Interest			10.8
Payable Associated With Redemption Of Noncontrolling Interest Base Denominated In Holder Currency	2,000,000,000 yen
Payable Associated With Redemption Of Noncontrolling Interest Base Denominated In Entity Currency	$26.0 million
Payable Associated With Redemption Of Noncontrolling Interest Threshold For Additional Amount Due								$7.8 million
Minority Interest Ownership Percentage By Noncontrolling Owners	47.00%
Redeemable Noncontrolling Interest Put Option Redemption Value		12.3			12.3
Redeemable Noncontrolling Interest Equity Carrying Amount		14.1			14.1			0
Business Acquisition Purchase Price Allocation Goodwill Amount	9.7
Business Acquisition Purchase Price Allocation Amortizable Intangible Assets	19.2
Patent Agreement Number Of Patents Sold							800 patents
Patent Agreement Price Total							1,056.0
Intellectual Property Carrying Value							3.6
Licensing Income		0		0	96.0	0
Gains (Losses) on Sales of Other Assets		$ 0.3		$ 0	$ 946.1	$ (1.6)
Trade Names [Member]
Acquisitions Dispositions And Other Significant Transactions [Line Items]
Acquired Finite Lived Intangible Asset Weighted Average Useful Life	10
Customer Relationships [Member]
Acquisitions Dispositions And Other Significant Transactions [Line Items]
Acquired Finite Lived Intangible Asset Weighted Average Useful Life	5

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	9 Months Ended		14 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012
Statement Of Cash Flows Abstract
Net income (loss)	$ 1,012.3	$ (9.7)
Adjustments for non-cash and non-operating items:
Depreciation and amortization	134.2	198.6
Asset impairments and write-offs	3.0	5.1
(Gain) loss on step acquisition and disposal of assets, net	(958.7)	2.4
Equity-based compensation	28.3	31.7
Deferred income taxes	103.0	(5.8)
Other non-cash adjustments	(3.2)	4.0
Changes in operating assets and liabilities, net of acquisitions	(30.0)	(29.9)
Cash provided by operating activities	288.9	196.4
Investing Activities
Investments and acquisitions, net of cash acquired	(10.3)	(374.8)
Proceeds from disposal of assets, net	951.5	2.9
Capital expenditures and product development costs	(49.0)	(67.9)
Cash provided (used) by investing activities	892.2	(439.8)
Financing Activities
Repurchase of common stock	(698.7)	(69.2)	(209.4)
Principal payments on capital leases	(41.1)	(36.4)
Tax withholdings related to net share settlements of restricted stock units	(6.3)	(0.3)
Decrease (increase) in cash collateral securing letters of credit	0.3	(12.6)
Proceeds from exercise of stock options	26.1	0.6
Cash used by financing activities	(719.7)	(117.9)
Effect of exchange rate changes on cash and equivalents	(1.8)	3.6
Increase (decrease) in cash and equivalents	459.6	(357.7)
Cash and equivalents at beginning of period	407.5	801.8
Cash and equivalents at end of period	867.1	444.1	867.1
Supplemental disclosures of cash flow information
Cash paid for interest	4.5	4.8
Cash paid for income taxes	$ 9.2	$ 11.5

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Business Acquisitions, Dispositions and Other Significant Transactions

9 Months Ended

Sep. 30, 2012

Acquisitions Dispositions And Other Significant Transactions [Abstract]

Business Acquisitions Dispositions And Other Significant Transactions [Text Block]

<>NOTE 4—BUSINESS ACQUISITIONS, DISPOSITIONS AND OTHER SIGNIFICANT TRANSACTIONS

Ad.com Japan

On February 9, 2012, AOL entered into a share-purchase agreement with Mitsui to purchase an additional 3%interest inAd.com Japanfor approximately $1.2 million. Ad.com Japan, which operates a display advertising network business in Japan, was formed in 2006. Prior to the execution of the share purchase agreement, AOL and Mitsui each owned a 50% interest in Ad.com Japan, and AOL accounted for its 50% interest using the equity method of accounting. As part of this transaction, AOL obtained control of the board and of the day-to-day operations of Ad.com Japan. AOL has accounted for the incremental 3% share purchase as a business combination achieved in stages (“step acquisition”) and consolidated Ad.com Japan beginning on February 9, 2012 (“the closing date”).

Under the accounting guidance for step acquisitions, AOL is required to record all assets acquired, liabilities assumed, and Mitsui's noncontrolling interests at fair value, and recognize the entire goodwill of the acquired business. The step acquisition guidelines also require that AOL remeasure its preexisting investment in Ad.com Japanat fair value, and recognize any gains or losses from such remeasurement. The fair value of AOL's interest immediately before the closing date was $15.4 million, which resulted in the Company recognizing a non-cash gain of approximately $10.8 million within other income (loss), net on the consolidated statement of comprehensive income in the first quarter of 2012. The Company used a combination of the market based approach (guideline public company) and an income approach (discounted cash flow analysis), both of which represent level 3 fair value measurements, to measure both the fair value of AOL's preexisting investment and the fair value of Mitsui's noncontrolling interest. As Mitsui has a right to put its interest to AOL based on a pre-established and determinable price in the future, the noncontrolling interest is presented as redeemable noncontrolling interest outside permanent equity in the Company's consolidated balance sheet.The noncontrolling interest holder's right to redeem its stock is exercisable any time between July 1 and July 30 of any year, commencing with July 1, 2014. The amount payable from AOL to Mitsui if Mitsui were to exercise its redemption right is determined by taking the sum of ¥2,000,000,000 (approximately $26.0 millionas of the closing date) plus any incremental cash over the $7.8 millioncash balance at December 31, 2011, and multiplying that total by Mitsui's percentage ownership of Ad.com Japan (47%at closing).The Company has elected to recognize changes in the redemption value as they occur; however, this has no impact on the carrying value of Mitsui's interest in Ad.com Japan because it exceeds the current redemption value. As of September 30, 2012 the undiscountedredemption value of the put option held by Mitsui was calculated to be approximately $12.3 million, which is below the $14.1 million carrying value of Mitsui's interest in Ad.com Japan.

AOL recorded $9.7million of goodwill (which is not deductible for tax purposes) and $19.2 million of intangible assets associated with this acquisition. The intangible assets associated with this acquisition consist primarily oftrade namesto be amortized on a straight-line basis over a period of ten yearsand advertiser relationships to be amortized over a period of five years. The fair value of the significant identified intangible assets was estimated by using relief from royalty, cost savings and multi-period excess earnings valuation methodologies, which represent level 3 fair value measurements. Inputs used in the methodologies primarily included projected future cash flows, discounted at a rate commensurate with the risk involved.

Unaudited pro forma results of operations assuming this acquisition had taken place at the beginning of each period are not provided because the historical operating results of the acquired company were not significant and pro forma results would not be significantly different from reported results for the periods presented.

Patent Portfolio Sale and License

On June 15, 2012, the Company sold approximately 800 patents and their related patent applications (the “Sold Patents”) to Microsoft Corporation, a Washington corporation (“Microsoft”), and granted Microsoft a non-exclusive license to the Company's retained patent portfolio, for aggregate proceeds of $1,056 million in cash (excluding transaction costs). The transaction was structured as a sale of all of the outstanding shares of a wholly owned non-operating subsidiary and the direct sale of certain other patents not held by the subsidiary. The Company concluded that immediate recognition of all of the proceeds was appropriate as the Company has no ongoing performance obligations with respect to the sold or licensed patents.

The disposed assets had a carrying value of $3.6 million on the Company's balance sheet and accordingly, the Company recorded a gain on the disposition of the Sold Patents of $946.1 million (which represents the consideration allocated to the sale less the carrying value of the disposed assets and transaction costs that were contingent on closing).  With respect to the licensing portion of the transaction, the Company recognized income from licensing its retained patent portfolio of $96.0 million during the three months ended June 30, 2012.

Based on the anticipated utilization of existing deferred tax assets and the fact that the disposition of the Sold Patents generated a capital loss (which is subject to a full valuation allowance), the Company does not expect the$1,056 million in proceeds to result in material cash taxes.

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Taxes Disclosure [Abstract]
Income (loss) from operations before income taxes	$ 45.1	$ 7.1	$ 1,143.0	$ (11.6)
Income Tax Expense (Benefit)	24.4	9.7	130.7	(1.9)
Effective Income Tax Rate Continuing Operations	54.10%	136.60%	11.40%	16.40%
Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate	35.00%	35.00%	35.00%	35.00%
Patent Transaction Income Tax Expense	71.2
Patent Transaction Pretax Income	$ 1,042.1

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Goodwill (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill Disclosure [Abstract]

Goodwill [Text Block]

	A summary of changes in the Company's goodwill during the nine months ended September 30, 2012
is as follows (in millions):
		Gross Goodwill		Impairments		Net Goodwill
December 31, 2011		$	36,689.1	$	(35,625.1)	$	1,064.0
Acquisitions			18.7		-		18.7
Translation adjustments			(6.2)		-		(6.2)
September 30, 2012		$	36,701.6	$	(35,625.1)	$	1,076.5