Filed pursuant to Rule 424b3
File No. 333-30204
2,741,011 Shares of Common Stock
AMERICA ONLINE, INC.
This prospectus relates to the public offering, which is not being
underwritten, of 2,741,011 shares of our common stock which is held by the
selling stockholders listed on pages 8 through 10. The selling stockholders may
offer their shares of common stock through public or private transactions, on
or off the New York Stock Exchange, at prevailing market prices, or at
privately negotiated prices. We will not receive any of the proceeds from the
sale of the shares.
Our common stock is listed on the New York Stock Exchange, under the
symbol "AOL." On May 22, 2000 the last reported sale price for the common stock
was $52.250 per share.
You should carefully consider the risk factors beginning on page 4 of
this prospectus before purchasing any of the securities offered by this
prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is May 25, 2000.
The Company
Founded in 1985, America Online is the world's leader in interactive
services, Web brands, Internet technologies and electronic commerce services.
America Online has two major lines of businesses organized into four
product groups:
- the Interactive Online Services business, comprised of the Interactive
Services Group, the Interactive Properties Group and the AOL
International Group; and
- the Enterprise Solutions business, comprised of the Netscape Enterprise
Group.
The product groups are described below.
The Interactive Services Group develops and operates branded
interactive services, including:
- the AOL service, a worldwide Internet online service with more than 22
million members;
- the CompuServe service, a worldwide Internet online service with more
than 2.5 million members;
- the Netscape Netcenter, an Internet portal with more than 25 million
registered users;
- the AOL.COM Internet portal; and
- the Netscape Communicator client software, including the Netscape
Navigator browser.
The Interactive Properties Group is built around branded properties
that operate across multiple services and platforms, such as:
- Digital City, Inc., the leading local online network and community
guide on the AOL service and the Internet based on the number of
visitors per month;
- ICQ, the world's leading communications portal that provides instant
communications and chat technology based on the number of registered
users;
- MovieFone, Inc., the nation's No. 1 movie guide and ticketing service
based on the number of users, is provided through an interactive
telephone service and on the AOL service and the Internet; and
- Internet music brands Spinner.com, Winamp and SHOUTcast.
The AOL International Group oversees the AOL and CompuServe operations
outside the United States, as well as the Netscape Online service in the United
Kingdom.
The Netscape Enterprise Group focuses on providing businesses a range
of software products, technical support, consulting and training services. These
products and services enable businesses and users to share information, manage
networks and facilitate electronic commerce.
America Online also has a strategic alliance with Sun Microsystems,
Inc., a leader in network computing products and services, to accelerate the
growth of electronic commerce. Through the alliance, the two companies develop
and market to business enterprises, client software and network application and
server software for electronic commerce, extended communities and connectivity,
including software based in part on the Netscape Enterprise Group code base, on
Sun code and technology and on certain America Online services features.
Recent Developments. On March 17, 2000, America Online and Bertelsmann
AG announced a global alliance to expand the distribution of Bertelsmann's media
content and electronic commerce properties over America Online's interactive
brands worldwide. America Online and Bertelsmann also announced an agreement to
restructure their interests in the AOL Europe and AOL Australia joint ventures.
This restructuring consists of a put and call arrangement for America Online to
purchase, in two installments, Bertelsmann's 50% interest in AOL Europe for
consideration ranging from $6.75 billion to $8.25 billion, payable at America
Online's option in cash, America Online stock (or AOL Time Warner stock, if the
merger has closed) or a combination of cash and stock. Bertelsmann has the right
to require America Online to purchase 80% of its 50% interest in AOL Europe on
January 31, 2002 for $5.3 billion and the remainder on July 1, 2002 for $1.45
billion. If Bertelsmann fails to exercise its put rights, America Online has the
right to purchase 80% of Bertelsmann's 50% interest in AOL Europe between
January 15, 2002 and January 15, 2003 for $6.5 billion and the remainder between
June 30, 2002 and June 30, 2003 for $1.75 billion. In addition, the parties
agreed that America Online would take immediate ownership of Bertelsmann's 50%
interest in the parties' AOL Australia joint venture, subject to receipt of
necessary regulatory approvals. Because Bertelsmann's first put option will not
close until January 31, 2002, if exercised, America Online has not determined
yet how it will fund the payment of the purchase price for its purchases of
Bertelsmann's interest in AOL Europe. America Online cannot predict if
Bertelsmann will exercise its put rights, and America Online's call rights are
not exercisable unless Bertelsmann fails to exercise its put rights. If
Bertelsmann does not exercise its put rights, America Online will consider all
pertinent factors at such time and during the exercisability period of its call
rights in determining whether to exercise its call rights, including the
performance and perceived value of AOL Europe at such time, conditions in the
markets where AOL Europe operates, financial market conditions and America
Online's (or AOL Time Warner's) business plans and financial situation. For the
year ended June 30, 1999, AOL Europe's revenues are less than 10% of America
Online's revenues and AOL Europe's net loss is less than 5% of America Online's
net income. America Online anticipates that the primary impact of the potential
acquisition of Bertelsmann's interest in AOL Europe on results of operations
would be the amortization of $1 billion to $1.5 billion of goodwill each year.
America Online does not anticipate an adverse impact from the potential
acquisition on America Online's financial position because it will have the
ability to pay the purchase price either in stock or cash, or a combination of
the two, at its option. America Online believes it will have adequate resources
from its cash reserves or from accessing the capital markets to make the
required payment upon exercise of a put or call right, should it decide to pay
in cash, and that following the merger, AOL Time Warner will be in a stronger
position to make such payments than America Online alone would be.
On January 10, 2000, America Online entered into a merger agreement with
Time Warner Inc. pursuant to which each of America Online and Time Warner would
become wholly owned subsidiaries of a new parent company named AOL Time Warner
Inc. In that merger, subject to the terms and conditions of the merger agreement
with Time Warner, each share of America Online common stock will be converted
into one share of AOL Time Warner common stock and each share of Time Warner
common stock and series common stock will be converted into 1.5 shares of AOL
Time Warner common stock and series common stock, respectively, and each share
of Time Warner preferred stock will be converted into a substantially identical
share of AOL Time Warner preferred stock. If the merger with Time Warner occurs,
the stockholders of America Online will become stockholders of AOL Time Warner,
whose business will consist of the current businesses of America Online and Time
Warner.
Additionally, on December 21, 1999, America Online and MapQuest.com,
Inc. entered into a merger agreement pursuant to which MapQuest, a leader in
online destination information solutions, will become a wholly owned subsidiary
of America Online. The merger is subject to customary conditions, including
regulatory consents and MapQuest stockholder approval, and is expected to be
completed prior to the merger of America Online and Time Warner.
The mergers with Time Warner and MapQuest are subject to a number of
conditions, including regulatory approvals and, with respect to the merger with
Time Warner, the approval of the stockholders of each of America Online and Time
Warner, and with respect to the merger with MapQuest, the approval of the
stockholders of MapQuest. America Online has filed a registration statement on
Form S-4 relating to the merger with MapQuest and AOL Time Warner has filed a
registration statement on Form S-4 relating to the merger with Time Warner. You
are encouraged to read those documents and the documents filed by America Online
with the Securities and Exchange Commission that are incorporated herein by
reference. See "Where You Can Find More Information" on pages 6 and 7.
America Online has been named as a defendant in several class action
lawsuits that have been filed in state and federal courts. The complaints in
these lawsuits contend that consumers and competing Internet service providers
have been injured because of the default selection features in AOL 5.0. These
cases are at a preliminary stage, but America Online does not believe they have
merit and intends to contest them vigorously.
America Online was incorporated in Delaware on May 24, 1985. The
principal executive offices are located at 22000 AOL Way, Dulles, Virginia
20166-9323. Our telephone number at that address is (703) 265-1000.
Risk Factors
Before purchasing the shares offered by this prospectus, you should
carefully consider the risks described below, in addition to the other
information presented in this prospectus or incorporated by reference into this
prospectus. If any of the following risks actually occur, they could seriously
harm our business, financial condition or results of operations. In such case,
the trading price of our common stock could decline and you may lose all or part
of your investment.
America Online has Entered Into Merger Agreements With Time Warner and MapQuest
America Online has entered into a merger agreement with Time Warner
Inc. pursuant to which each of America Online and Time Warner would become
wholly owned subsidiaries of a new parent company named AOL Time Warner. In that
merger, subject to the terms and conditions of the merger agreement with Time
Warner, each share of America Online common stock will be converted into one
share of AOL Time Warner common stock and each share of Time Warner common stock
and series common stock will be converted into 1.5 shares of AOL Time Warner
common stock and series common stock, respectively, and each share of Time
Warner preferred stock will be converted into a substantially identical share of
AOL Time Warner preferred stock. If the merger with Time Warner occurs, each
stockholder of America Online will become a stockholder of AOL Time Warner,
whose business will consist of the current businesses of America Online and Time
Warner.
Additionally, America Online entered into a merger agreement with
MapQuest.com, Inc., pursuant to which MapQuest would be merged into a newly
formed subsidiary of America Online and become a wholly owned subsidiary of
America Online. The merger with MapQuest is expected to be completed prior to
the completion of the merger with Time Warner.
The mergers with Time Warner and MapQuest are subject to a number of
conditions. There can be no assurance that the mergers with Time Warner and
MapQuest will occur or, if they do occur, their effect on the stock price,
results of operations or financial condition of America Online or AOL Time
Warner.
The Price of our Common Stock is Volatile
The trading price of our common stock has been and may continue to be
subject to wide fluctuations over short and long periods of time. During the
twelve months ending December 31, 1999, the closing sale prices of our common
stock on the New York Stock Exchange ranged from $35.11 to $93.94. Our stock
price may fluctuate in response to a number of events and factors, such as:
- quarterly variations in financial results and membership growth and
usage
- the announcement of technological innovations, mergers, acquisitions,
strategic partnerships or new product offerings by America Online or
its competitors
- the entrance of new competitors into the online services market
- changes in financial estimates and recommendations by securities
analysts and news reports relating to trends in the Internet-related
markets
- the operating and stock price performance of other companies that
investors may deem comparable
In addition, the market prices for Internet-related companies have
experienced volatility that often has not been directly related to the operating
performance of such companies. Market and industry fluctuations may adversely
affect the price of our common stock, regardless of our operating performance.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file with the Commission at the Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Commission at 1-800-SEC-0330 for further information on the public reference
room. Our Commission filings are also available to the public at the
Commission's web site at http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Commission under Sections 13(a), 13(c ), 14 or 15(d) of the
Securities Exchange Act prior to the termination of the offerings described in
this prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999, as filed with the Commission on August 13, 1999
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (File No. 001-12143).
(b) The Company's Quarterly Report on Form 10-Q, for the quarterly period
ended September 30, 1999, as filed with the Commission on November 2,
1999, pursuant to the Exchange Act (File No. 001-12143).
(c) The Company's Quarterly Report on Form 10-Q, for the quarterly period
ended December 31, 1999, as filed with the Commission on February 14,
2000, pursuant to the Exchange Act (File No. 001-12143).
(d) The Company's Quarterly Report on Form 10-Q/A, for the quarterly
period ended March 31, 2000, which contains financial statements and
related information that restate and supersede the financial
statements and related information in America Online's Annual Report
on Form 10-K for the fiscal year ended June 30, 1999, filed with the
Commission on August 13, 1999, pursuant to the Exchange Act (File No.
001-12143).
(e) The Company's Proxy Statement on Schedule 14A for the Company's 1999
Annual Meeting (File No. 001-12143 and filing date of September 24,
1999).
(f) The Company's Current Report on Form 8-K dated December 1, 1999 (File
No. 001-12143 and filing date of December 2, 1999).
(g) The Company's Current Report on Form 8-K dated December 21, 1999 (File
No. 001-12143 and filing date of January 3, 2000).
(h) The Company's Current Report on Form 8-K dated January 10, 2000 (File
No. 001-12143 and filing date of January 14, 2000).
(i) The Company's Current Report on Form 8-K dated January 19, 2000 (File
No. 001-12143 and filing date of January 20, 2000).
(j) The Company's Current Report on Form 8-K dated January 10, 2000 (File
No. 001-12143 and filing date of February 11, 2000).
(k) The Company's Current Report on Form 8-K dated March 17, 2000 (File
No. 001-12143 and filing date of March 24, 2000).
(l) The Company's Current Report on Form 8-K dated April 3, 2000 (File No.
001-12143 and filing date of April 3, 2000).
(m) The Company's Current Report on Form 8-K dated April 18, 2000 (File
No. 001-12143 and filing date of April 21, 2000).
(n) The Company's Current Report on Form 8-K dated May 23, 2000 (File No.
001-12143 and filing date of May 23, 2000).
(o) The descriptions of the Company's Common Stock, including preferred
stock purchase rights, which are contained in registration statements
on Forms 8-A under the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning as follows:
America Online, Inc.
Attention: Investor Relations
22000 AOL Way
Dulles, VA 20166
(703) 265-2741
AOL [email protected]
This prospectus is part of a registration statement on Form S-3 we
filed with the SEC under the Securities Act. You should rely only on the
information or representations provided in this prospectus. We have authorized
no one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of the document.
Forward-Looking Statements
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by us. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and variations of these words or similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, our actual results could differ materially
from those expressed or forecasted in any forward-looking statements as a result
of a variety of factors, including those set forth in "Risk Factors" above and
elsewhere in, or incorporated by reference into, this prospectus. We undertake
no obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
Use of Proceeds
The selling stockholders are offering all of the shares of common stock
covered by this prospectus. We will not receive any proceeds from the sale of
these shares.
Selling Stockholders
The following table sets forth the number of shares owned by each of
the selling stockholders and the number of shares issuable to certain
stockholders upon exercise by those stockholders of warrants held by such
stockholders. All information contained in the table below is based upon their
beneficial ownership as of February 11, 2000. We are not able to estimate the
amount of shares that will be held by the selling stockholders after the
completion of this offering because the selling stockholders may offer all or
some of their shares and because there currently are no agreements, arrangements
or understandings with respect to the sale of any of their shares. The following
table assumes that all of the shares being registered will be sold. The selling
stockholders are not making any representation that any shares covered by the
prospectus will be offered for sale. The selling stockholders reserve the right
to accept or reject, in whole or in part, any proposed sale of shares.
<TABLE>
Number of Shares Number of Shares Percent of Outstanding
Beneficially Registered for Shares After
Name of Selling Stockholder Owned Sale Hereby The Offering
--------------------------- ----- ----------- ------------
<S> <C> <C> <C>
Acorn Ventures Inc. (1) 36,218 25,806 --
Scott Anderson (2) 49,230 34,589 --
Christopher T. Bayley 24,897 16,806 --
Bear, Stearns International Limited 284,322 284,322 --
Kennet Belenky 90 61 --
Thomas J. and Lucille F. Boyle 9,054 6,112 --
Richard Burns 1,099 1,099 --
C.G.M.K. Holding Company, L.L.C. 81,493 61,120 --
Douglas Cameron 679 459 --
Cedar Grove Investments 24,897 16,806 --
City National Bank, Trustee 4,527 3,056 --
Christopher Clark 18,109 12,449 --
Geoffrey M. Clark 9,054 6,112 --
Donald Bruce Davidge 10,865 7,334 --
John Faul 26,972 18,206 --
First Washington Corp. Profit Sharing 12,448 8,403 --
Fluke Capital Management, L.P. 184,217 124,347 --
Phillip Frink, Jr. 30,183 20,373 --
Elizabeth A. Frink Trust U/A 3,771 2,546 --
Laurie E. Frink Trust U/A 3,771 2,546 --
Lloyd D. Frink Trust U/A 3,771 2,546 --
G3 Investments, L.P. 24,897 16,806 --
Robert J. and Penelope W. Genise 41,953 28,319 --
Glory B. Farms Living Trust 9,054 6,112 --
Bill F. Green 7,473 5,045 --
Dale Grover 120,295 81,200 --
Lawrence L. Grover 2,010 1,357 --
Mary Joyce Grover 2,010 1,357 --
Cheryl Grunbock 31,691 21,392 --
Mary-Jean Hart 24,897 16,806 --
Robert S. and Lizabeth C. Hart 6,247 4,217 --
Thomas S. Huseby & Janice Magee Huseby 12,448 8,403 --
Joel R. Hussey & Christi Hussey 6,338 4,279 --
Mark C. Illing 16,298 11,002 --
Inland Northwest Investors, L.P. 46,834 31,613 --
Scot Jarvis (3) 49,203 34,589 --
George King 76,965 51,952 --
Martin King 597,734 403,471 --
Kirlan 1, L.P. 45,273 30,560 --
Kirlan Venture Partners II, L.P. 107,720 72,711 --
Cliff Kushler 187,649 126,664 --
Elizabeth M. Kushler Revocable Trust 19,920 13,446 --
Robert Kushler, Jr. 19,467 13,141 --
Robert H. Kushler Revocable Trust 19,920 13,446 --
Larry L. and Sandra LaBossier 9,054 6,112 --
George Lightbody 3,621 2,444 --
Christina Lorenz 5,432 3,667 --
Nicholas J. and Robin H. Lynch 9,054 6,112 --
Shannon Maher and Cindy Bellomy 12,448 8,403 --
William H. McAleer 4,527 3,056 --
Meigs/Meyer Trust 12,448 8,403 --
Charles H. Morse 62,243 42,014 --
Mundt MacGregor, L.L.P. 3,621 2,444 --
New Pacific Partners, LLC 13,582 10,187 --
Newport Hill Chiropractic Center, P.S. 15,393 10,391 --
Norman Nie 2,868 1,937 --
Northwest Venture Partners II, L.P. 69,925 47,200 --
Oak Investment Partners VIII L.P. 761,374 513,928 --
Oak VIII Affiliates Fund L.P. 14,746 9,954 --
Kathleen B. Ogle 18,109 12,224 --
Mary Jo Oresti 1,368 925 --
Greg Pass 15,223 15,223 --
Miriam Pierce 76,910 51,914 --
R. Alex Polson and Diane K.H. Polson 17,022 11,490 --
Roger Putnam 9,054 6,112 --
Andrew A. Quartner 23,044 15,555 --
Soochon Radee 1,264 1,264 --
Radigan & Garnett, P.C. 550 550 --
Robert A. Ratliffe (4) 12,676 8,964 --
R. Stockton Rush, III 14,954 10,094 --
SCC Investments, Inc. (5) 45,273 31,918 --
Richard Henry Scheel 2,716 1,834 --
SeaPoint Ventures (6) 29,974 22,481 --
Ruth Marie Seeley-Scheel 2,716 1,834 --
Justin Shimada 2,263 1,528 --
Spanish Caravan Investments, LLC 13,582 9,168 --
John M. Steel 6,224 4,202 --
Steve Walker & Associates, L.L.C. 2,525 2,525 --
Arthur V. Strom 24,447 16,502 --
Strom Associates, LLC 18,109 12,224 --
Barton W. Stuck and Mary-Jane Cross 12,448 8,403 --
Stephen Sulzbacher 51,008 34,431 --
Christopher John Szyba 905 611 --
Julie Ann Szyba 1,810 1,222 --
TWG Investors I, LLC 31,142 21,021 --
Voyager Capital Fund I, L.P. 106,453 71,856 --
Voyager Capital Founder's Fund I, L.P. 5,780 3,902 --
Walker Investment Fund I, L.L.C. 6,818 6,818 --
Dennis Weibling 13,582 9,168 --
Thomas Wilson 54 37 --
Carol Wood 550 550 --
Frank Wood 15,223 15,223 --
----------------------------
</TABLE>
(1) Includes 13,582 shares issuable upon exercise of a warrant held by Acorn
Ventures Inc.
(2) Includes 13,582 shares issuable upon exercise of a warrant held by Scott
Anderson.
(3) Includes 13,582 shares issuable upon exercise of a warrant held by Scot
Jarvis.
(4) Includes 4,075 shares issuable upon exercise of a warrant held by Robert
Ratliff.
(5) Includes 13,582 shares issuable upon exercise of a warrant held by SCC
Investments Inc.
(6) Includes 22,481 shares issuable upon exercise of a warrant held by SeaPoint
Ventures.
The selling stockholders received their shares of common stock pursuant
to either our merger with Tegic Communications, Inc. which occurred on November
30, 1999, or our merger with ToFish! Incorporated, which occurred on January 18,
2000, or hold warrants exercisable for common stock that were assumed by America
Online in connection with the merger with Tegic.
The stockholders who received their shares or warrants pursuant to the
Tegic merger are parties to a Registration Rights Agreement dated as of November
30, 1999, in which we agreed to register a portion of their shares in a
registration statement, and to keep such registration statement effective for a
period of 180 days. Several of those selling stockholders are currently employed
by America Online.
The stockholders who received their shares pursuant to the ToFish!
merger are parties to a Registration Rights Agreement dated as of January 18,
2000, in which we agreed to include their shares in any registration statement
we filed within one year of the date of the Registration Rights Agreement (other
than on Forms S-4 or S-8), and to keep such registration statement effective for
a period of 90 days. Several of those selling stockholders are currently
employed by America Online.
This prospectus also covers any additional shares of common stock that
become issuable in connection with the shares being registered by reason of any
stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase in
the number of our outstanding shares of common stock. In addition, this
prospectus covers the preferred stock purchase rights that currently trade with
America Online's common stock and entitle the holder to purchase additional
shares of common stock under certain circumstances.
Plan of Distribution
We are registering the common stock on behalf of the selling
stockholders. As used in this prospectus, the term "selling stockholders"
includes pledgees, transferees or other successors-in-interest selling shares
received from the selling stockholders as pledgors, borrowers or in connection
with other non-sale-related transfers after the date of this prospectus. This
prospectus may also be used by transferees of the selling stockholders,
including broker-dealers or other transferees who borrow or purchase the shares
to settle or close out short sales of shares of common stock. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner, and size of each sale or non-sale related transfer. We will
not receive any of the proceeds of this offering.
The selling stockholders are offering shares of America Online common
stock that they received either in connection with our mergers with Tegic or
ToFish! or shares of America Online common stock they received or will receive
upon exercise of warrants that America Online assumed in connection with the
merger with Tegic. This prospectus covers their resale of up to 2,741,011 shares
of common stock.
The selling stockholders may sell their shares of common stock directly
to purchasers from time to time. Alternatively, they may from time to time offer
the common stock to or through underwriters, broker/dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the selling stockholders or the purchasers of such securities
for whom they may act as agents. The selling stockholders and any underwriters,
broker/dealers or agents that participate in the distribution of common stock
may be deemed to be "underwriters" within the meaning of the Securities Act and
any profit on the sale of such securities and any discounts, commissions,
concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The common stock may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
sale of the common stock may be effected by means of one or more of the
following transactions (which may involve crosses or block transactions):
- on any national securities exchange, such as the NYSE, or quotation
service on which the common stock may be listed or quoted at the time
of sale,
- in the over-the-counter market,
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market or
- through the purchase and sale of over-the-counter options.
In connection with sales of the common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker/dealers, which may
in turn engage in short sales of the common stock in the course of hedging the
positions they assume. The selling stockholders may also sell common stock short
and deliver common stock to close out such short positions, or loan or pledge
common stock to broker/dealers that in turn may sell such securities.
At the time a particular offering of the common stock is made, a
prospectus supplement, if required, will be distributed which will set forth the
aggregate amount common stock being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers or agents, any
discounts, commissions and other terms constituting compensation from the
selling stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the common stock will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers.
The selling stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the common stock by the
selling stockholders. The foregoing may affect the marketability of such
securities.
Pursuant to the Registration Rights Agreements related to the mergers
with Tegic and ToFish!, all expenses of the registration of the common stock
will be paid by us; provided, however, that the selling stockholders will pay
all registration and filing fees and all underwriting discounts and selling
commissions, if any. The selling stockholders will be indemnified by us against
certain civil liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith. We will be
indemnified by the selling stockholders severally against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
Experts
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements for the three years ended June 30, 1999, incorporated by
reference as Exhibit 99 to our Form 10-Q/A for the quarterly period ended March
31, 2000, as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Our consolidated
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedules of Time Warner Inc. ("Time Warner") and Time
Warner Entertainment Company, L.P. included in Time Warner's Annual Report on
Form 10-K for the year ended December 31, 1999, as set forth in their reports,
which are incorporated by reference in this prospectus and elsewhere in the
registration statement. These consolidated financial statements and schedules
are incorporated by reference in reliance on Ernst & Young LLP's reports, given
on their authority as experts in accounting and auditing.
