Exhibit 10.3

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: [****]

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EXECUTIVE EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of June 22,
2012, by and between AOL INC. (“Company”), a Delaware Corporation with an
address at 770 Broadway, New York, New York 10003, and Edward Brody
(“Executive”).

WHEREAS, Company retained Executive pursuant to a letter agreement dated
October 29, 2009, as amended by the First Amendment to the Employer Letter
Agreement dated December 22, 2010, and further amended by the Second Amendment
to the Employment Letter Agreement, (the “Prior Agreement”);

WHEREAS, Company desires to retain the services of Executive as the Chief
Executive Officer of Advertising.Com Group, a division of Company, and as an
Executive Vice President of Company; and

WHEREAS, Company and Executive desire to enter into this Agreement, which such
Agreement supersedes and replaces the Prior 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, commencing on June 22, 2012, and shall
continue for a period through and including June 21, 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.

 

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2. Duties; Responsibilities; Reporting Relationships. Executive (a) shall be the
Chief Executive Officer of “Advertising.Com Group”, a division of Company, which
shall include all network properties, which, as of the effective date of this
Agreement, includes Advertising.com, 5Min/AOL Video, Go Viral, Studio Now, and
Pictela (collectively, “Ad.com”) and an Executive Vice President of Company,
(b) 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 Operating
Officer of Company, which duties and authority shall be consistent, and those
normally associated, with Executive’s position, and (c) 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 have independent and autonomous supervisory
responsibility for Ad. com, subject to the exercise of the fiduciary duties of
the Chief Executive Officer of Company, Chief Operating Officer of Company and
the Board of Directors of Company (the “Board”), which responsibilities shall
include (i) determining and implementing Ad.com’s strategic direction;
(ii) managing Ad.com’s day-to-day operations; (iii) creating, proposing and
delivering Ad.com’s budget and profit and loss forecasting; (iv) developing and
maintaining Ad.com’s internal and external client relationships; (v) hiring,
firing, compensating, promoting and developing Ad.com’s employees; and
(vi) overall management of (x) a sales channel strategy (with AOL being one of
the sales channels), (y) marketing, and (z) a matrixed, but dedicated finance
team. Further, two times a year, Executive will present a review of Ad.com’s
strategy and business to the Board. Executive’s principal place of employment
will be at Company’s Washington D.C. office, subject to such travel as may be
required in the performance of Executive’s duties. Executive shall report
directly to the Chief Operating Officer of Company. At any time when the
position of Chief Operating Officer is vacant, the function of the Chief
Operating Officer as described in this Agreement shall be performed by the Chief
Executive Officer.

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, Non-Competition and
Proprietary Rights Agreement effective as of November 4, 2009 (“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.

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

 

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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 only upon mutual consent of
Company and Executive.

B. 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.

(ii) Ad.com Bonus. Executive shall receive a payout for the Company’s fiscal
quarter ending March 31, 2012 pursuant to the terms of the AOL Inc. Key Employee
Ad Revenue Incentive Plan (the “AOL Ad Revenue Plan”), which amount shall be
paid to Executive in accordance with Company’s ordinary practice for the payment
of bonuses under the AOL Ad Revenue Plan. Subject to Compensation Committee
certification, the payout amount is estimated to be $96,000. Effective April 1,
2012, and until a new bonus plan is implemented for Ad.com, Executive shall no
longer participate in the AOL Ad Revenue Plan, but shall participate in the
Interim Key Employee Ad Revenue Incentive Plan attached hereto as Exhibit A.

(iii) Retention Bonus. Executive shall be eligible to receive a retention bonus
subject to the terms and conditions of the retention bonus program attached
hereto as Exhibit B.

C. Equity Incentive Awards.

(i) During Executive’s employment, he will participate in Company’s equity
incentive plans and will receive 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.

(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.

 

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(iii) Notwithstanding clauses (i) and (ii) of this Section 4.C.,

(a) Company shall grant to Executive an equity award (the “Equity Award”) that
shall have an equity value equal to $250,000.00 on the date of grant. Based on
the equity value on the date of grant, 33.33% of the Equity Award will be in the
form of restricted stock units (“RSUs”) (rounded to the nearest whole number of
units), 33.33% of the Equity Award will be in the form of stock options (“Stock
Options”) (rounded down to the nearest whole share), and the remaining 33.33% of
the Equity Award will be in the form 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 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 (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
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
(1st) 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.

(d) Subject to achievement of performance objectives, Performance Shares shall
vest following the Committee’s certification of performance following the end of
the three-year performance period, provided, that Executive is continuously
employed with Company from the grant date to the 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.

 

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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 location where Executive’s principal office is located.

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 C (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 to Executive an amount equal to eighteen (18) months of
Executive’s then current Base Salary, less applicable withholdings. This amount
will be paid in a lump sum on the sixtieth (60th) 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 prior to
the payment of a Bonus for any previously completed year under the APB, Company
will pay to Executive any such Bonus under the ABP for such previously completed
year (“Prior Year”) at the same rate that continuing employees receive their
bonus payments, less applicable tax withholdings, but in no event shall such
Bonus exceed 100% of Executive’s target payout for the applicable year; provided
that (i) Company pays a Bonus to eligible employees under Company’s ABP for the
Prior Year, (ii) a Bonus has not already been paid to Executive for the Prior
Year at the time of termination of Executive’s employment, and (iii) Executive
was otherwise eligible for the applicable 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
(60th) 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, Company will pay to
Executive a Bonus payment under the ABP for the year in which Executive’s
termination of employment occurs, which shall be paid if and at the same time
that bonuses under the APB 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 (60th) 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 upon Company’s reasonable request, in
connection with any litigation, investigation or other matter involving
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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.

(vii) Executive agrees not to make any disparaging or untruthful remarks or
statements about Company or its products, services, officers, directors, or
employees. Company shall instruct its senior executives (defined as the Chief
Executive Officer and all direct reports to the Chief Executive Officer) not to
make any disparaging or untruthful remarks or statements about Executive’s
employment with Company. 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), 5.A.(vii), 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
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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, whether described under paragraph 4.B.
or otherwise.

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.B, 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. Except as set forth in paragraph 5.F. below, 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

 

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(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, whether described under paragraph 4.B. or otherwise.

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 Operating Officer of Company (unless Executive then
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 100
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; (iv) a material diminution in Executive’s then
Base Salary; or (v) Company’s requiring Executive to engage in unlawful conduct
upon express direction of the Board.

As part of the consideration for entering into this Agreement with Company, by
executing and becoming a party to this Agreement, Executive hereby (i) waives
any right to resign for “Good Reason” under the Prior Agreement and/or this
Agreement as a result of Executive accepting the position described in this
Agreement (including, without limitation, any changes to Executive’s duties,
responsibilities, title, offices, reporting relationship and location) as
contemplated by this Agreement. Such waiver shall apply to any and all
compensation arrangements, bonus plans, equity award plans or other arrangements
established by Company in which the Executive participates, including, without
limitation, this Agreement and the Prior Agreement.

F. Retention Payment. In consideration for waiving any rights that Executive may
have under the Prior Agreement and for entering into this Agreement with
Company, Executive may resign employment with Company for any reason or no
reason and be treated as if his employment with Company had terminated in
accordance with paragraph 5.A. herein, provided that Executive provides Company
with at least sixty (60) days prior written notice of his intention to terminate
his employment (the “Retention Termination Notice”), in the following
circumstances: (i) if Executive remains continuously employed with Company
through December 31, 2012 and then provides a Retention Termination Notice
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beginning on January 1, 2013 and ending on January 31, 2013; (ii) if Executive
remains continuously employed with Company through June 30, 2013 and then
provides a Retention Termination Notice within the period beginning on July 1,
2013 and ending on July 31, 2013; and (iii) if Executive remains continuously
employed with Company through December 31, 2013 and then provides a Retention
Termination Notice within the period beginning on January 1, 2014 and ending on
January 31, 2014. For the avoidance of doubt and for purposes of Section 409A of
the Code, in the event Executive provides a Retention Termination Notice,
Executive shall remain continuously employed during the notice period set forth
in the Retention Termination Notice and the parties agree that the first day as
of which Executive’s commitment to perform substantial future services lapses
will be the last day of the notice period set forth in the Retention Termination
Notice. For the avoidance of doubt, in the event Executive resigns his
employment with Company without Good Reason pursuant to this paragraph 5.F, he
shall not be entitled to the Retention Bonus and shall be required to repay any
paid Retention Bonus as described in paragraph 2.B.(iii) and in Exhibit B.

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 his 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 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 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.

 

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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
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 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 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.

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 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

 

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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
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

With a copy (which shall not constitute notice) to:

Morrison Cohen LLP

909 Third Avenue

New York, NY 10022

Attn: Jeff Laska

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.

 

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

K. Entire Agreement.

(i) This Agreement, including Exhibit A, Exhibit B, Exhibit C 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,
including but not limited to the Prior 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.

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

 

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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 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)

 

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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:  

Executive Vice President

EDWARD BRODY

/s/ Edward Brody

 

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EXHIBIT A

INTERIM KEY EMPLOYEE AD REVENUE INCENTIVE PLAN

AOL Inc.

Interim

Key Employee Ad Revenue Incentive Plan

 

LOGO [g526786ex10_3pg19.jpg]

 

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1. Introduction

This AOL Inc. Interim Key Employee Ad Revenue Incentive Plan (“Plan”) sets forth
the terms and conditions under which one or more key employees selected by the
Compensation Committee of AOL’s Board of Directors (each a “Participant”), will
be paid bonuses based upon Global Third Party network revenue for the portion of
AOL’s 2012 fiscal year that begins April 1, 2012. This Plan document supersedes
in full any and all previous discussions, negotiations, agreements, or
contracts, if any, between AOL and a Participant or any other party relating to
sales incentive compensation for the Participant (including, for the avoidance
of doubt, the AOL Inc. Key Employee Ad Revenue Incentive Plan).

PLAN PURPOSE

The purpose of the Plan is to reward Participants for their efforts towards the
achievement of Global Third Party network revenue objectives. The Plan comprises
part of a competitive compensation package for Participants that also includes
base salary, annual bonus and long-term equity incentives.

PLAN DESCRIPTION

Ad Revenue Incentive Bonuses under the Plan are earned based on increases in
Quarterly network revenue from Ad.com, Sponsored Listings, Video, Canada, EU,
and goviral (excluding Japan Mitsui Ad.com).

EFFECTIVE DATE

The Plan shall be effective upon its approval by the Board and shall apply for
the portion of calendar year 2012 that begins April 1, 2012 (the “Effective
Date”).

 

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2. Definitions

AD REVENUE INCENTIVE BONUS

“Ad Revenue Incentive Bonus” means, the cash bonus payable to a Participant
under the Plan, subject to the terms and conditions set forth in the Plan.

AOL

“AOL” means, AOL Inc.

ANNUAL CALCULATED AMOUNT

“Annual Calculated Amount” means, the aggregate annual Bonus amount potentially
payable to a Participant for FY 2012, as determined by the application of the
formula set forth in Section 3 of the Plan.

BONUS

“Bonus” means, an Ad Revenue Incentive Bonus.

BONUS LIMIT

“Bonus Limit” has the meaning set forth in Section 3.

CALCULATED AMOUNT

“Calculated Amount” means, the Bonus amount potentially payable to a Participant
with respect to a Quarter, as determined by the application of the formula set
forth in Section 3 of the Plan.

COMMITTEE

“Committee” means, the Compensation Committee of the Board of Directors of AOL
Inc.

FIRST HALF BONUS

“First Half Bonus” means, the Bonus amount payable under the Plan in respect of
Q2 of FY 2012.

FY 2012

“FY 2012” means, the 2012 fiscal year of AOL.

GLOBAL MARGIN THRESHOLD

“Global Margin Threshold” means, for any Quarter, a margin of [****]% on Network
Revenue, as such margin is determined for AOL financial planning and budgeting
purposes. The Global Margin Threshold is the minimum margin on Network Revenue
that must be attained for a Quarter in order for any Participant to be eligible
for a Bonus amount for such Quarter.

 

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GLOBAL THIRD PARTY NETWORK

“Global Third Party Network” means, Ad.com, Sponsored Listings, Video, Canada,
EU, and goviral (excluding Japan Mitsui Ad.com), as such terms are used by AOL
for financial planning and budgeting purposes.

MAXIMUM AMOUNT

“Maximum Amount” means, the maximum amount that may be paid to a Participant as
a Bonus in respect of a Quarter or for all of FY 2012, as applicable, as set
forth in Section 5 of the Plan.

NETWORK REVENUE

“Network Revenue” means, all third-party revenue from the Global Third Party
Network, determined net of agency fees, as such terms are used by AOL for
financial planning and budgeting purposes.

NETWORK REVENUE GROWTH PERCENTAGE

“Network Revenue Growth Percentage” means, for any Quarter, the percentage, to
the nearest decimal place, by which Network Revenue for the Quarter has either
increased, or increased from the corresponding Quarter for the prior fiscal
year.

PARTICIPANT

“Participant” means, any key employee of AOL selected by the Committee to
participate in the Interim Key Employee Ad Revenue Incentive Plan.

SECOND HALF BONUS

“Second Half Bonus” means, the Bonus amount payable under the Plan in respect of
Q3 and Q4 of FY 2012.

QUARTER

“Quarter” means, a fiscal quarter of AOL’s fiscal year commencing on or after
the Effective Date.

YEAR

“Year” means, the fiscal year of AOL and the Plan year, which is the calendar
year.

 

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3. Ad Revenue Incentive Bonus

The Committee has established that, with respect to each Quarter, provided that
(i) the Global Margin Threshold has been attained ([****]%) and (ii) Network
Revenue has not decreased from the corresponding Quarter in AOL’s prior fiscal
year, then if the quarterly year-over-year pro forma Network Revenue Growth
Percentage is positive, for each percentage increase in Network Revenue (rounded
to the nearest whole percentage point), a Participant shall be eligible to earn
$14,000 (the “Calculated Amount”).

Quarterly Results Example:

14.1% year-over-year Network Revenue growth @$14k per incremental % point,
rounded to the nearest whole percentage point = $196k

Following the close of Q2 and the close of FY 2012, the Committee shall
determine whether the requirements under the Plan for payment of a First Half
Bonus and a Second Half Bonus, respectively, to Participants have been
satisfied. The Committee shall certify, in writing, whether and the extent to
which Network Revenue for each applicable Quarter either increased or decreased
Quarter over the Quarter for the prior fiscal year and determine the amount of a
Bonus, if any is payable, as provided below.

A Participant’s actual First Half Bonus or Second Half Bonus shall be determined
by the Committee based upon (i) the Calculated Amount for the applicable
Quarter(s) and (ii) any adjustment that the Committee determines to make, such
adjustment to be in the sole discretion of the Committee. In determining the
amount of any adjustment of the Calculated Amount for any applicable Quarter,
the Committee may give consideration to the contribution made by the Participant
to achievement of AOL’s established objectives, the results of any review
conducted by the Company’s independent auditors as to the calculation of Network
Revenue, and such other matters as it shall deem relevant in exercising such
discretion. In no event may a Participant’s aggregate annual Bonus amount exceed
the lesser of the Annual Calculated Amount or the Maximum Amount for the Plan
year. In no event may any bonus amount with respect to a Quarter exceed the
lesser of (x) the Calculated Amount for such Quarter, or (y) the Maximum Amount
for such Quarter (the lesser of (x) and (y) being the “Quarterly Bonus Limit”).

 

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4. Payment

Ad Revenue Incentive Bonus amounts that have been earned during Q2, Q3 and/or Q4
for FY 2012 shall be paid two times each year for each half year period of
performance to Plan:

The First Half Bonus, if any is payable, will be made in July 2012 – for
performance to Plan April 1 through June 30, 2012

The Second Half Bonus, if any is payable, will be made in January 2013 – for
performance to Plan July 1 through December 31, 2012

Any Ad Revenue Incentive Bonus is not earned until it is paid. Except as
provided below, a Participant must be actively employed through the last day of
the applicable half year period in order to be eligible to receive an Ad Revenue
Incentive Bonus. Prior to any payment of an Ad Revenue Incentive Bonus, the
Committee shall have certified that the Ad Revenue Incentive Bonus in respect of
the applicable Quarter(s) has been earned and the Committee has determined the
actual amount to be paid.

If a Participant’s employment is terminated by AOL for “Cause” or by the
Participant without “Good Reason” (each as defined in the Participant’s
employment agreement) during a Quarter, and the Committee certifies (as provided
in Section 3) that a Bonus is payable for the applicable half-year period, the
bonus amount relating to such Quarter shall be determined by reference to a
Quarterly Bonus Limit that is prorated to reflect the actual number of days that
the Participant is employed by AOL during such Quarter.

If a Participant’s employment is terminated during a Quarter for any reason
other than as specified in the preceding paragraph, the Participant will be
eligible to receive the full bonus amount that he would have otherwise been
eligible to receive in respect of such Quarter had his employment not been
terminated.

No bonus amounts will be payable to a Participant in respect of any Quarter in
which the Participant is not employed by AOL.

 

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5. Maximum Annual Amount

The maximum amount that is payable to a Participant under the Plan for any
Quarter is $650,000 and $1,950,000 for FY 2012.

 

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6. Administrative Guidelines

A. GENERAL PROVISIONS

Administration

The Plan shall be administered by the Committee or a subcommittee thereof. The
Committee shall have plenary authority to interpret the Plan, to prescribe,
amend and rescind the rules and regulations relating to it and to make, in its
discretion, all other determinations deemed necessary or advisable for the
administration of the Plan. The determinations of the Committee on the all
matters relating to the Plan shall be conclusive.

Amendment and Termination

The Committee reserves the right at its sole discretion to amend, restate or
terminate the Plan or any of its provisions at any time at AOL’s sole
discretion.

No Right to Employment

A Participant’s employment with AOL is at-will, meaning that the Participant or
AOL may terminate the Participant’s employment at any time for any reason not
prohibited by law, with or without prior notice, subject to the terms and
conditions of any employment agreement between AOL and a Participant that may
exist from time to time. Nothing in this Plan is intended to create a contract
for employment or guarantee of continued employment with AOL for any
Participant. Subject to any employment agreement between AOL and a Participant,
AOL reserves the right to change other terms and conditions of a Participant’s
employment at any time for any reason not prohibited by law, with or without
notice to the Participant.

Non-Exclusivity of the Plan

Neither the adoption of the Plan by the Committee or the Board nor the
submission of the Plan to the stockholders of AOL for approval shall be
construed as creating any limitations on the power of the Committee or the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options, RSUs, or other stock-based
awards, the payment of cash in an annual or long-term incentive arrangement or
otherwise, or the payment or providing of other benefits outside of the Plan,
and such arrangements may be either generally applicable or applicable only in
specific cases. The payment or provision of certain of such incentive
arrangements and benefits may or may not be deductible by AOL. None of the
provisions of this Plan shall be deemed to be an amendment to or incorporated in
any employment agreement between AOL and the Participant.

Payments to a Participant’s Estate

In the event that a Participant dies prior to the payment of a Bonus that the
Committee has awarded to him, such Bonus payment will shall be paid to the
Participant’s estate.

Bonuses Are Discretionary

Any incentive payment made pursuant to this Plan is at AOL’s sole discretion.
For the avoidance of doubt, there is no guarantee that any incentive payment
will be made pursuant to this Plan.

 

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Compliance with Code Section 409A

It is intended that the provisions of the Plan comply with the requirements of
the short-term deferral exception of Section 409A of the Code and Treasury
Regulations Section 1.409A-1(b)(4). Accordingly, to the extent there is any
ambiguity as to whether one or more provisions of the Plan would otherwise
contravene the requirements or limitations of Code Section 409A applicable to
such short-term deferral exception, then those provisions shall be interpreted
and applied in a manner that does not result in a violation of the requirements
or limitations of Code Section 409A and the Treasury Regulations thereunder that
apply to such exception.

B. PLAN IS UNFUNDED

The Plan and incentive opportunities under the Plan will constitute an unfunded
obligation of AOL. Participant has no legal or equitable interest of any kind in
any revenue (including without limitation any Network Revenue) realized by AOL.
Participant has no rights under the Plan as a creditor of AOL. No provision of
the Plan will require AOL, for the purpose of satisfying any obligations under
the Plan, to purchase assets or place any assets in a trust or other entity to
which contributions are made or otherwise to segregate any assets, nor will AOL
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. No incentive opportunity under the Plan may be sold, transferred,
pledged or assigned and Participant has no right to assign, pledge, or otherwise
transfer any Bonus which he has been awarded under the Plan.

C. TAX TREATMENT

All Bonus payments will be net of deductions for taxes and other appropriate
withholdings. The Participant authorizes AOL to deduct any monies owed to AOL
from incentive payments, unless prohibited by law.

Any Bonus payment will be referenced and included in the Participant’s regularly
scheduled paycheck. All taxes applicable to any incentive payments (e.g.,
federal income tax, FICA, state and local taxes) are deducted when the payment
is made. The payout is considered income at the time it is received.

D. GOVERNING LAW

The Plan shall be governed by, and construed in accordance with, the laws of the
State of New York, without regard to principles of conflicts of laws.

 

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EXHIBIT B

RETENTION BONUS PROGRAM

 

TO:    Edward Brody FROM:    John Reid-Dodick DATE:    June 22, 2012 SUBJECT:   
Retention Bonus Program

 

 

 

You’re eligible to participate in a one-time retention bonus program (“Bonus
Program”) with AOL Inc. and its subsidiaries, (“AOL” or “the Company”). The
details and terms and conditions of the Bonus Program are set forth below.

 

1. The Bonus Program

 

  a. Bonus Period. The Bonus Period begins May 1, 2012 and ends on November 1,
2013 (the “End Date”).

 

  b. Bonus Amount. Subject to the Conditions to Payment below, the total bonus
amount for which you are eligible is $750,000.00, less applicable withholdings.

 

  •  

You will receive a one-time payment of $375,000.00, less applicable withholdings
(the “First Bonus Payment”), on the second regularly scheduled pay date
following the date you execute the employment agreement between you and AOL
dated June 22, 2012 (the “Employment Agreement”); and

 

  •  

You will receive a one-time payment of $375,000.00, less applicable withholdings
(the “Second Bonus Payment”), on the second regularly scheduled pay date
following the End Date.

 

2. Conditions to Payment

To be eligible for a Bonus Payment, you must satisfy the below conditions:

 

  a. Employment. You must be a full-time, active employee of AOL through the End
Date, except:

 

  (i)

If AOL terminates your employment for “Cause” (as defined in the Employment
Agreement) or you resign for any reason other than for “Good Reason” (as defined
in the Employment Agreement) before February 1, 2013, you (x) will not be
eligible to receive the Second Bonus Payment, and (y) agree that you will repay
a portion of the net amount of the First Bonus Payment – such amount to

 

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  be equal to the net amount of (A) $41,666, multiplied by (B) the number of
full months between the date of your resignation or termination of employment
and February 1, 2013, and to be re-paid to the Company within 30 days of your
resignation or termination for Cause. By way of example, if your employment is
terminated by the Company for Cause or you resign for any reason other than for
Good Reason on December 1, 2012, you will be required to pay to the Company an
amount equal to $83,332 (i.e., $41,666 x 2), minus applicable withholding taxes,
no later than December 31, 2012.

 

  (ii) If AOL terminates your employment for Cause or you resign for any reason
other than for Good Reason on or after February 1, 2013 but prior to the End
Date, you (x) will not be eligible to receive the Second Bonus Payment, but
(y) will not be required to re-pay any portion of the First Bonus Payment.

 

  (iii) If AOL terminates your employment without Cause or you resign your
employment for Good Reason before the End Date, in exchange for your execution
and delivery of AOL’s standard separation agreement, you (x) will receive the
Second Bonus Payment as described below, and (y) will not be required to re-pay
any portion of the First Bonus Payment.

 

  b. CNPR Agreement/Non-Disparagement. You agree to comply with the
Confidentiality, Non-Competition and Proprietary Rights Agreement effective Nov.
4, 2009 between you and AOL, and also agree to comply with the Standards of
Business Conduct and all other Company policies. In addition, you agree not to
make any disparaging or untruthful remarks or statements about the Company, its
operations, officers, directors, employees or agents.

 

3. Other Terms

 

  a.

Payment Date and Withholding. Any bonus payment for which you are eligible under
the Bonus Program will be paid, less applicable withholdings, as described in
paragraph 1 above, unless local law requires that it be paid sooner. If AOL
terminates your employment without Cause or you resign for Good Reason before
the End Date, AOL will pay the Second Bonus Payment, less applicable
withholdings, on the sixtieth (60th) day following your termination date.
However, your separation agreement must become effective and irrevocable prior
to the sixtieth (60th) day following your termination date in order for you to
receive this payment.

 

  b. Section 409A. This Bonus Program is intended to be exempt from Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), which is how the
Company intends to administer and interpret the Bonus Program. The Company is
not liable for any tax, interest or penalties that may be imposed on you by
Section 409A of the Code or any damages for failing to comply with Section 409A
of the Code. In this Agreement, a “termination” or a “termination of employment”
means a “separation from service” under Section 409A of the Code and its
regulations.

 

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EXHIBIT C

RELEASE AND WAIVER

In exchange and consideration for the Company’s payment to me of the amounts due
under paragraph 5.A. of my Executive Employment Agreement dated June 22, 2012
(the “Agreement”) and other valuable consideration, I, Edward Brody, 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 for the payments and benefits
that are described in the immediately preceding paragraph that I have not yet
received. 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.

 

 

Edward Brody Date:

 

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