Disclosure Statement



 






EXHIBIT 10.3



IN THE UNITED STATES BANKRUPTCY COURT




FOR THE DISTRICT OF DELAWARE




	 	 	 	 	 
	- — - — - — - — - — - — - — - — - — - — - — - — - — - — 

	 	x	 	 
	In re:

	 	:	 	 
	 

	 	:
	 	Chapter 11
	AMERICA ONLINE LATIN AMERICA,

	 	:
	 	Case No. 05-11778 (MFW)
	          INC., et al.,1

	 	:	 	 
	 

	 	:
	 	(Jointly Administered)
	 

	 	:	 	 
	Debtors.

	 	:	 	 
	- — - — - — - — - — - — - — - — - — - — - — - — - — - —

	 	x	 	 






DISCLOSURE STATEMENT

PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE

FOR THE DEBTORS’ JOINT PLAN OF REORGANIZATION AND LIQUIDATION




 





IMPORTANT DATES





	•	 	Date by which Ballots must be received: ____________, 2006 at 4:00 p.m. (prevailing Eastern Time)
	 
	•	 	Date by which objections to confirmation of the Plan must be filed and served: ____________, 2006, at 4:00 p.m.
(prevailing Eastern Time)
	 
	•	 	Hearing on confirmation of the Plan: ____________, 2006 at 10:00 a.m. (prevailing Eastern Time)





 





	 	 	 
	SHEARMAN & STERLING LLP
	 	YOUNG CONAWAY STARGATT & TAYLOR, LLP
	Douglas P. Bartner
	 	Pauline K. Morgan (Del. 3650)
	Michael H. Torkin
	 	Edmon L. Morton (Del. 3856)
	Michael Pardo
	 	Margaret B. Whiteman (Del. 4652)
	599 Lexington Avenue
	 	The Brandywine Building
	New York, New York 10022
	 	1000 West Street, 17th Floor
	Telephone: (212) 848-4000
	 	Wilmington, Delaware 19801
	Facsimile: (212) 848-7179
	 	Telephone:  (302) 571-6600
	 
	 	Facsimile:  (302) 571-1253






Co-Counsel for the Debtors and Debtors in Possession




Dated as of January 17, 2006







THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR REJECTIONS MAY
NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. A HEARING
TO CONSIDER THE ADEQUACY OF THIS DISCLOSURE STATEMENT UNDER SECTION 1125 OF THE BANKRUPTCY CODE HAS
BEEN SET BY THE BANKRUPTCY COURT FOR FEBRUARY 23, 2006 AT 3:00 P.M. THE DEBTORS RESERVE THE RIGHT
TO MODIFY OR SUPPLEMENT THIS DISCLOSURE STATEMENT PRIOR TO AND UP TO THE DATE OF SUCH HEARING.








 




			
	1	 	In addition to America Online Latin America, Inc.,
the other debtors herein are AOL Latin America Management LLC, AOL Puerto Rico
Management Services, Inc. and America Online Caribbean Basin, Inc.




 









 










TABLE OF CONTENTS




	 	 	 	 	 
	INTRODUCTION
	 	 	1	 
	A.  Holders of Claims and Equity Interests Entitled to Vote
	 	 	1	 
	B.  Voting Procedures
	 	 	2	 
	C.  Confirmation Hearing
	 	 	3	 
	 
	 	 	 	 
	ARTICLE I OVERVIEW OF PLAN
	 	 	4	 
	A.  Summary of Classification and Treatment of Claims and Equity Interests under the Plan
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II GENERAL INFORMATION
	 	 	7	 
	A.  Background and Current Business Operations
	 	 	7	 
	B.  Equity Ownership and Primary Indebtedness
	 	 	9	 
	C.  Events Leading to Chapter 11 Filing
	 	 	10	 
	D.  Prepetition Negotiations with Creditors and Shareholders
	 	 	11	 
	 
	 	 	 	 
	ARTICLE III HISTORY OF THESE BANKRUPTCY CASES
	 	 	11	 
	A.  General
	 	 	11	 
	B.  First Day Orders
	 	 	12	 
	C.  Employee Matters
	 	 	12	 
	D.  Professionals Retained by the Debtors
	 	 	12	 
	E.  Claims Process and Bar Date
F.  Sale and Wind Down of Non-Debtor Foreign Subsidiaries
	 	 	13	 
	G.  Settlement Agreement with Banco Itaú
	 	 	14	 
	H.  Latino Content Termination Agreement with America Online
	 	 	15	 
	I.  Renewal of Directors and Officers Insurance Policy and Acquisition of Six Year Runoff Coverage
	 	 	15	 
	 
	 	 	 	 
	ARTICLE IV PROGRESS OF THE WIND DOWN FOLLOWING THE PETITION DATE
	 	 	16	 
	A.  Development of Business Initiatives at AOL Spain
	 	 	16	 
	B.  Wind Down of AOL Mexico
	 	 	16	 
	C.  Wind Down of AOL Brazil
	 	 	16	 
	 
	 	 	 	 
	ARTICLE V RELATED PARTY TRANSACTIONS IN CONNECTION WITH THE WIND DOWN
	 	 	17	 
	A.  Transfer of Assets of AOL Puerto Rico
	 	 	17	 
	B.  Post-Effective Date Transfer of AOL Venezuela
	 	 	17	 
	C.  TW Party Claims and payments to the TW Parties
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VI THE PLAN OF REORGANIZATION AND LIQUIDATION
	 	 	18	 
	A.  Introduction
	 	 	18	 
	B.  Rationale Underlying Plan Treatments of Claims
	 	 	18	 
	C.  Support Agreement and Treatment of Unsecured Creditors
	 	 	18	 
	D.  Compromise and Settlement
	 	 	19	 
	E.  Distinguishing Plan from Recent Caselaw
	 	 	20	 
	F.  Substantive Consolidation and Cancellation of Intercompany Claims
	 	 	20	 
	G.  Administrative Claims, Professional Fees and Priority Tax Claims
	 	 	21	 
	H.  Classification and Treatment of Claims and Equity Interests under the Plan
	 	 	23	 
	I.  Means for Implementation of the Plan
	 	 	28	 
	J.  Provisions Governing Distributions
	 	 	39	 
	K.  Procedures for Resolving Disputed Claims
	 	 	42	 
	L.  Conditions Precedent to Confirmation and Effective Date of the Plan
	 	 	44	 
	M.  Legal Effects of Confirmation of the Plan
	 	 	46	 
	N.  Retention of Jurisdiction
	 	 	49	 
	O.  Other Provisions
	 	 	52	 






i









 






	 	 	 	 	 
	ARTICLE VII VOTING PROCEDURES AND REQUIREMENTS
	 	 	55	 
	A.  Holders of Claims
	 	 	55	 
	B.  Classes Entitled to Vote
	 	 	56	 
	C.  Vote Required for Acceptance by Classes of Claims
	 	 	56	 
	 
	 	 	 	 
	ARTICLE VIII CONFIRMATION OF THE PLAN
	 	 	57	 
	A.  Confirmation Hearing
	 	 	57	 
	B.  Requirements for Confirmation of the Plan
	 	 	57	 
	C.  Feasibility
	 	 	59	 
	 
	 	 	 	 
	ARTICLE IX FINANCIAL INFORMATION
	 	 	60	 
	 
	 	 	 	 
	ARTICLE X ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
	 	 	60	 
	A.  Liquidation Under Chapter 7
	 	 	60	 
	B.  Alternative Chapter 11 Plan
	 	 	60	 
	 
	 	 	 	 
	ARTICLE XI CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
	 	 	61	 
	A.  IRS Circular 230 Disclosure
	 	 	61	 
	B.  Certain Federal Income Tax Consequences of the Reorganization
	 	 	61	 
	C.  Certain Federal Income Tax Consequences to GUC Holders
	 	 	61	 
	 
	 	 	 	 
	ARTICLE XII CONCLUSION AND RECOMMENDATION
	 	 	62	 






ii









 






EXHIBITS





			
	Exhibit A  	 	The Plan







			
	Exhibit B  	 	Unaudited Balance Sheet








			
	Exhibit C  	 	Liquidation Analysis









			
	Exhibit D  	 	Proposed Organizational Chart of the Liquidating LLC as of the Effective Date









			
	Exhibit E  	 	Organizational Chart of the AOLA Group as of The Petition Date















 









 








INTRODUCTION




     This disclosure statement (this “Disclosure Statement”) is being furnished by America Online
Latin America, Inc. (“AOLA” or the “Company”), AOL Latin America Management LLC (“AOL Management
LLC”), AOL Puerto Rico Management Services, Inc. (“Puerto Rico Management Services”) and America
Online Caribbean Basin, Inc. (“AOL Caribbean Basin”), debtors and debtors-in-possession (each a
“Debtor” and collectively, the “Debtors”) in these jointly administered chapter 11 cases (these
“Chapter 11 Cases”) in connection with the Debtors’ solicitation of votes to confirm the Debtors’
Joint Plan of Reorganization and Liquidation Pursuant to Chapter 11 of the Bankruptcy Code (the
“Plan”). A copy of the Plan is attached hereto as Exhibit A.2



     The purpose of this Disclosure Statement is to set forth information: (1) regarding the
history of the Debtors, their businesses and these Chapter 11 Cases; (2) concerning the Plan and
alternatives to the Plan; (3) advising the Holders of Claims and Equity Interests of their rights
under the Plan; (4) assisting the Holders of Claims entitled to vote in making an informed judgment
regarding whether they should vote to accept or reject the Plan; and (5) assisting the Bankruptcy
Court in determining whether the Debtors have complied and the Plan complies with the provisions of
chapter 11 of the Bankruptcy Code.



     By Court order dated ____________, 2006 (the “Disclosure Statement Order”), the Bankruptcy Court approved
this Disclosure Statement in accordance with section 1125 of the Bankruptcy Code, as containing
“adequate information” to enable a hypothetical, reasonable investor typical of Holders of Claims
against the Debtors to make an informed judgment as to whether to accept or reject the Plan, and
authorized its use in connection with the solicitation of votes with respect to the Plan. APPROVAL
OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER, CONSTITUTE A DETERMINATION BY THE COURT AS TO THE
FAIRNESS OR MERITS OF THE PLAN. No solicitation of votes may be made except pursuant to this
Disclosure Statement and section 1125 of the Bankruptcy Code. In voting on the Plan, Holders of
Claims entitled to vote should not rely on any information relating to the Debtors and their
businesses, other than that contained in this Disclosure Statement, the Plan and all exhibits
hereto and thereto.



     THIS DISCLOSURE STATEMENT IS NOT INTENDED TO REPLACE A CAREFUL AND DETAILED REVIEW AND
ANALYSIS OF THE PLAN BY EACH HOLDER OF A CLAIM OR EQUITY INTEREST. THIS DISCLOSURE STATEMENT IS
INTENDED TO AID AND SUPPLEMENT THAT REVIEW. THE DESCRIPTION OF THE PLAN HEREIN IS A SUMMARY ONLY.
HOLDERS OF CLAIMS AND EQUITY INTERESTS AND OTHER PARTIES IN INTEREST ARE CAUTIONED TO REVIEW THE
PLAN AND ANY RELATED ATTACHMENTS FOR A FULL UNDERSTANDING OF THE PLAN’S PROVISIONS. THIS
DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN.



A. Holders of Claims and Equity Interests Entitled to Vote




     Pursuant to the provisions of the Bankruptcy Code, only classes of Claims or Equity Interests
which are (i) “impaired” by a plan of reorganization and (ii) entitled to receive a distribution
under such a plan are entitled to vote on the plan. In these Chapter 11 Cases, only Holders of
Claims in Class 3 TW Party Claims and Class 4 General Unsecured Claims are impaired by, and will
receive a distribution from the Debtors under, the Plan and, therefore, are the only classes of
Claims entitled to vote to accept or reject the Plan. Claims in Class 1 Priority Claims and Class
2 Secured Claims are unimpaired by the Plan and the Holders thereof are conclusively presumed to
have accepted the Plan. Holders of Equity Interests





 




			
	2	 	Capitalized terms that are not defined in this
Disclosure Statement shall have the meanings set forth in the Plan.




 









 










and/or Claims in Class 5 Existing Series C Interests, Class 6 Other Equity Interests and Class
7 Subordinated Claims against the Debtors will receive no distribution from the Debtors under the
Plan and are therefore deemed to have rejected the Plan.



B. Voting Procedures




     If you are entitled to vote to accept or reject the Plan, enclosed is a ballot (the “Ballot”)
for the acceptance or rejection of the Plan and a pre-addressed envelope for the return of the
Ballot. BALLOTS FOR ACCEPTANCE OR REJECTION OF THE PLAN ARE BEING PROVIDED ONLY TO HOLDERS OF
CLAIMS IN CLASS 3 TW PARTY CLAIMS AND CLASS 4 GENERAL UNSECURED CLAIMS BECAUSE THEY ARE THE ONLY
HOLDERS OF CLAIMS THAT MAY VOTE TO ACCEPT OR REJECT THE PLAN. If you are the Holder of a Claim in
one of these Classes and did not receive a Ballot, received a damaged or illegible Ballot, or lost
your Ballot, or if you are a party in interest and have any questions concerning this Disclosure
Statement, any of the Exhibits hereto, the Plan or the voting procedures in respect thereof, please
contact:




			
	                    	 	Balloting Agent

Bankruptcy Services, LLC

Attn: AOL Latin America

3rd Floor

757 Third Avenue

New York, NY 10017

Telephone: (646) 282-2500








     THE DEBTORS RECOMMEND THAT THE HOLDERS OF CLAIMS IN ALL SOLICITED CLASSES VOTE TO ACCEPT THE
PLAN. ALL HOLDERS OF CLASS 4 GENERAL UNSECURED CLAIMS WHO VOTE TO ACCEPT THE PLAN AND DO NOT CHECK
THE BOX OPTING OUT OF THE GENERAL RELEASE WILL BE ENTITLED TO A GREATER OVERALL RECOVERY ON THEIR
ALLOWED CLASS 4 GENERAL UNSECURED CLAIMS THAN THOSE HOLDERS OF ALLOWED CLASS 4 GENERAL UNSECURED
CLAIMS THAT EITHER (1) FAIL TO VOTE TO ACCEPT OR REJECT THE PLAN, (2) OPT OUT OF THE GENERAL
RELEASE OR (3) VOTE TO REJECT THE PLAN.



     IT IS CURRENTLY ANTICIPATED THAT THOSE HOLDERS OF ALLOWED CLASS 4 GENERAL UNSECURED CLAIMS WHO
(1) VOTE TO ACCEPT THE PLAN AND (2) DO NOT OPT OUT OF THE GENERAL RELEASE WILL RECEIVE AN AGGREGATE
DISTRIBUTION EQUAL TO 100% OF THE ALLOWED AMOUNT OF THEIR CLASS 4 GENERAL UNSECURED CLAIM.



     After carefully reviewing this Disclosure Statement and the Exhibits attached hereto, please
indicate your vote with respect to the Plan on the enclosed Ballot and return it either by
overnight courier or regular mail in the envelope provided. BALLOTS SUBMITTED BY FACSIMILE OR
OTHER ELECTRONIC TRANSMISSION WILL NOT BE ACCEPTED AND WILL BE VOID. Voting procedures and
requirements are explained in greater detail elsewhere in this Disclosure Statement. PLEASE VOTE
AND RETURN YOUR BALLOT TO:



2









 





	 	 	 
	By first class mail
	 	By overnight courier or for hand deliveries
	AOL Latin America
	 	AOL Latin America
	Ballot Processing Center
	 	Ballot Processing Center
	c/o Bankruptcy Services LLC
	 	c/o Bankruptcy Services LLC
	P.O. Box 5014, FDR Station
	 	3rd Floor
	New York, NY 10150-5014
	 	757 Third Avenue
	 
	 	New York, NY 10017






     IN ORDER TO BE COUNTED, BALLOTS MUST BE RECEIVED BY 4:00 P.M. (PREVAILING EASTERN TIME) ON _______________,
2006. ANY EXECUTED BALLOTS THAT ARE TIMELY RECEIVED BUT DO NOT INDICATE EITHER AN ACCEPTANCE OR
REJECTION OF THE PLAN OR INDICATE BOTH AN ACCEPTANCE AND REJECTION OF THE PLAN SHALL NOT BE
COUNTED.



     EACH HOLDER OF AN ALLOWED CLASS 4 GENERAL UNSECURED CLAIM THAT VOTES TO ACCEPT THE PLAN SHALL
BE DEEMED TO HAVE PROVIDED THE GENERAL RELEASE SET FORTH IN SECTION 11.2 OF THE PLAN UNLESS ANY
SUCH HOLDER SHALL CHECK THE BOX ON ITS BALLOT INDICATING THAT IT ELECTS NOT TO GRANT THE GENERAL
RELEASE, IN WHICH CASE SUCH HOLDER SHALL NOT BE ENTITLED TO THE ENHANCED DISTRIBUTION DESCRIBED
ABOVE.



     The Debtors believe that prompt confirmation and implementation of the Plan is in the best
interests of the Debtors, all Holders of Claims and the Debtors’ chapter 11 estates.



C. Confirmation Hearing




     In accordance with the Disclosure Statement Order and section 1128 of the Bankruptcy Code, the
confirmation hearing will be held on _______________, 2006, at ____ a.m./ p.m. (prevailing Eastern Time), in the United
States Bankruptcy Court for the District of Delaware, 824 Market Street, 5th Floor,
Wilmington, Delaware to consider confirmation of the Plan. Objections, if any, to confirmation of
the Plan must be served and filed so that they are received on or before _______________, 2006 at 4:00 p.m.
(prevailing Eastern Time) in the manner set forth in the Disclosure Statement Order. The hearing
on confirmation of the Plan may be adjourned from time to time without further notice except for
the announcement of the adjourned date and time at the hearing on confirmation or any adjournment
thereof.



     THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE BY THE DEBTORS AS OF THE DATE
HEREOF UNLESS OTHERWISE SPECIFIED HEREIN, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT DOES NOT
IMPLY THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE SUCH DATE. THIS
DISCLOSURE STATEMENT HAS BEEN PREPARED BY THE DEBTORS. THE DEBTORS ARE UNABLE TO WARRANT OR
REPRESENT THAT THIS DISCLOSURE STATEMENT IS WITHOUT ERROR ALTHOUGH, UNDER THE CIRCUMSTANCES, ALL
REASONABLE EFFORTS HAVE BEEN MADE TO ENSURE ITS ACCURACY. HOLDERS OF CLAIMS ENTITLED TO VOTE ON
THE PLAN SHOULD READ THIS DISCLOSURE STATEMENT AND THE PLAN CAREFULLY AND IN THEIR ENTIRETY AND,
WHERE APPROPRIATE, CONSULT WITH COUNSEL OR OTHER ADVISORS PRIOR TO VOTING ON THE PLAN.



3









 





     THIS DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN, WHICH SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PLAN. IF ANY INCONSISTENCY EXISTS BETWEEN THE TERMS
AND PROVISIONS OF THE PLAN AND THIS DISCLOSURE STATEMENT, THE TERMS AND PROVISIONS OF THE PLAN
SHALL CONTROL. CERTAIN OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE FORWARD
LOOKING FORECASTS, BASED UPON CERTAIN ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT
SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES.



ARTICLE I

OVERVIEW OF PLAN




     The following is a brief overview of the material provisions of the Plan and is qualified in
its entirety by reference to the full text of the Plan. For a more detailed description of the
terms and provisions of the Plan, see Article V below, entitled “The Plan of Reorganization.”



     The Plan is a plan of reorganization and liquidation for the Debtors and incorporates the
terms of a compromise by and among the Debtors and AOLA’s principal stockholders, Time Warner Inc.
(“Time Warner”), America Online, Inc. (“America Online”) and the Cisneros Group Parties (as defined
in the Plan)3 (collectively with Time Warner and America Online, the “Principal
Stockholders”). Among other things, the Plan provides that (i) AOLA will be converted to a limited
liability company and continue to exist as Reorganized AOLA LLC, (ii) AOL Management LLC, Puerto
Rico Management Services and AOL Caribbean Basin will be dissolved on the Effective Date and (iii)
a Liquidating LLC will be established which will hold Reorganized AOLA LLC and certain of the
Debtors’ remaining Assets.4 On the Effective Date, LLC Agents will be appointed to
oversee the administration and implementation of the Plan and the liquidation of the Assets. The
LLC Agents will designate an individual as an LLC Administrator to oversee and administer the
day-to-day aspects of the liquidation and wind-down to be effected by the Liquidating LLC.



A. Summary of Classification and Treatment of Claims and Equity Interests under the Plan




     The Plan classifies all Claims and Equity Interests of the Debtors into separate classes (each
a “Class”). The following chart summarizes the classification and status of Claims and Equity
Interests and the treatments afforded under the Plan. The General Bar Date (as defined below) for
Claims was October 28, 2005.5 As of October 28, 2005, the Debtors had received proof of
claims in the amount of approximately $340,000 (not including claims by the TW Parties and a
contingent claim in the amount of $350,000 that the Debtors believe will be withdrawn). The
Debtors are in the process of analyzing the validity of these claims. Until this process is
complete, the Debtors will not be able to state the estimated or projected distributions, except to
the extent set forth in the Debtors’ Schedules.





 




			
	3	 	The Cisneros Group Parties refers to Aspen
Investments LLC, Atlantis Investments LLC and trusts established by Gustavo and
Ricardo Cisneros principally for the benefit of themselves and their families.
	 
	4	 	Attached hereto as Exhibit D is a chart of
the expected organizational structure of the Liquidating LLC and Reorganized
AOLA Group as of the Effective Date, giving effect to the reorganization.
	 
	5	 	Pursuant to the Plan, Holders of D&O Indemnity Claims
are not required to file proofs of claim in respect of such D&O Indemnity
Claims, and are not entitled to vote on the Plan in respect of such D&O
Indemnity Claims.




4









 










	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	Voting	 	 	 	 	 	 	 
	 	Class	 	 	Claim	 	 	Status	 	 	Rights	 	 	Treatment/Distribution	 	 	Estimated Recovery	 
	 	1.

	 	 	Priority

Claims
	 	 	Unimpaired
	 	 	Deemed
to
Accept;
Not
Entitled
to Vote
	 	 	Payment in full in Cash on the
Effective Date equal to the amount
of the Allowed Claim.
	 	 	100%	 
	 	2.

	 	 	Secured

Claims
	 	 	Unimpaired
	 	 	Deemed
to
Accept;
Not
Entitled
to Vote
	 	 	Either (i) return of the Assets on
which the Holder has a security
interest, or (ii) proceeds from
the sale of the Assets to which
the security interest attaches.
	 	 	100%	 
	 	3.

	 	 	TW Party

Claims
	 	 	Impaired
	 	 	Entitled
to Vote
	 	 	The TW Parties will receive:


(1) certain assets related to AOL
Puerto Rico, valued at $15
million; and


(2) one of the two treatments at
the election of the Debtors:


  (a) LLC Option: the TW

  Parties will receive all the

  membership interests in the

  Liquidating LLC other than

  the interests that will go to

  the general unsecured

  creditors


  (b) Cash Option: the TW

  Parties will receive all the

  membership interests in the

  Liquidating LLC. Cash will

  be set aside in a separate

  fund for the general

  unsecured creditors on the

  effective date.


In either case, pursuant to the
Plan (and in accordance with the
terms of the Support Agreement and
the Letter Agreement), Time Warner
will turn over to the Cisneros
Group Parties 40% of their
membership interests in the
Liquidating LLC, subject to an
adjustment based on (i) the value
of the AOL Puerto Rico assets
transferred to the TW Parties,
(ii) the value of certain general
unsecured claims of AOL and (iii)
the payment of all general
unsecured creditors
	 	 	Approximately

14% – 17%	 
	 





5









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	Voting	 	 	 	 	 	 	 
	 	Class	 	 	Claim	 	 	Status	 	 	Rights	 	 	Treatment/Distribution	 	 	Estimated Recovery	 
	 	4.

	 	 	General

Unsecured

Claims
	 	 	Impaired
	 	 	Entitled
to Vote
	 	 	General unsecured creditors will
receive one of two treatments at
the election of the Debtors:


(1) LLC Option: general unsecured
creditors will receive interests
in the Liquidating LLC on the
effective date entitling them to
receive their ratable share of
available cash in future
distributions of cash.


(2) Cash Option: Cash will be set
aside in a separate fund for the
general unsecured creditors on the
effective date, and the general
unsecured creditors will receive
their ratable share of cash from
this fund.


The election of the Debtors of the
LLC Option or the Cash Option will
have no impact on the recovery of
the general unsecured creditors.


IT IS CURRENTLY PROJECTED THAT
THOSE GENERAL UNSECURED CREDITORS
WHO AGREE TO GRANT THE GENERAL
RELEASE (BY RETURNING A BALLOT TO
ACCEPT THE PLAN AND NOT OPTING OUT
OF THE GENERAL RELEASE) WILL
RECEIVE ADDITIONAL CASH PAYMENTS
FROM THE TW PARTIES FOR AN
EXPECTED TOTAL RECOVERY OF 100% OF
THE ALLOWED AMOUNT OF THEIR CLAIM.


General unsecured creditors are
entitled to equal treatment with
the TW Parties and are entitled to
receive, approximately 14% – 17%
of their allowed claim.
	 	 	100% for Class 4

General Unsecured

Claims who grant the

General Release

(this includes a

turnover from Time

Warner equal to

approximately

83% – 86% of the

amount of their

allowed General
Unsecured Claim)


Approximately

14% – 17% for

Holders of General

Unsecured Claims who

do not grant the

General Release	 
	 	5.

	 	 	Existing Series C

Interests
	 	 	Impaired; not entitled to
receive any distribution
from the Debtors under the
Plan
	 	 	Deemed to
Reject; Not
Entitled to Vote
	 	 	No Distribution from
the Debtors under the
Plan.6
	 	 	0%	 
	 	6.

	 	 	Other Equity Interests
(including Existing
Series B Interests)
	 	 	Impaired; not entitled to
receive any distribution
from the Debtors under the
Plan
	 	 	Deemed to
Reject;
Not Entitled to
Vote
	 	 	No Distribution from
the Debtors under the
Plan.
	 	 	0%	 
	 	7.

	 	 	Subordinated Claims
	 	 	Impaired; not entitled to
receive any distribution
from the Debtors under the
Plan
	 	 	Deemed to
Reject; Not
Entitled to Vote
	 	 	No Distribution from
the Debtors under the
Plan.
	 	 	0%	 
	 







 




			
	6	 	On the Effective Date, pursuant to the Plan (and in accordance with the terms of the Support Agreement and
the Letter Agreement), Time Warner (or the LLC Agents on behalf of Time Warner) shall turn over to each of
the Cisneros Group Parties on an equal basis the Series C Beneficial Interests. See Article VI.H.3(e)
“Class 5-Existing Series C Interests” below for a description of the treatment of Class 5 Existing Series C
Interests under the Plan.




6









 










     THE TREATMENT AND DISTRIBUTIONS PROVIDED BY THE DEBTORS TO HOLDERS OF ALLOWED CLAIMS
PURSUANT TO THE PLAN ARE IN FULL AND COMPLETE SATISFACTION OF THE ALLOWED CLAIMS ON ACCOUNT OF
WHICH SUCH TREATMENT IS GIVEN AND DISTRIBUTIONS ARE MADE. NOTHING IN THE PLAN LIMITS THE ABILITY
OF THE DEBTORS TO PAY BEFORE THE EFFECTIVE DATE ADMINISTRATIVE EXPENSE CLAIMS THAT ARE NOT
DISPUTED.



ARTICLE II

GENERAL INFORMATION




A. Background and Current Business Operations




     AOLA was incorporated in Delaware on November 22, 1999. AOL Management LLC, a limited
liability company, was formed in Delaware on January 19, 1999 and is a wholly-owned subsidiary of
AOLA. AOLA is a holding company which directly and indirectly owns a number of domestic and
foreign subsidiaries (collectively, the “AOLA Group”).7 AOL Management LLC administers
the payroll and performs other organizational functions for the headquarters of the AOLA Group.
AOL Caribbean Basin was incorporated in Delaware on October 16, 2000 and is a wholly-owned
subsidiary of AOLA. Puerto Rico Management Services (together with AOL Caribbean Basin, “AOL
Puerto Rico”) was incorporated in Delaware on October 24, 2000 and is a wholly-owned subsidiary of
AOLA. AOL Caribbean Basin is involved in the marketing of the AOL-branded service in Puerto Rico
and Puerto Rico Management Services administers the payroll and performs other organizational
functions for AOL Puerto Rico.



     Prior to August 7, 2000, the Debtors’ Business (as defined below) was conducted by affiliates
of AOL Latin America, S.L. (“AOL Spain”), a limited liability company incorporated under the laws
of Spain. AOL Spain was formed by America Online and the Cisneros Group Parties as a joint
venture. In January 2001, as a result of America Online’s merger with the Time Warner group,
America Online became a wholly-owned subsidiary of Time Warner.



     On August 7, 2000, in connection with AOLA’s initial public offering, the AOLA Group
reorganized its corporate structure. As part of the corporate reorganization, America Online and
the





 




			
	7	 	Attached hereto as Exhibit E is an
organizational chart of the AOLA Group as of the Petition Date.




7









 










     Cisneros Group Parties exchanged their ownership interests in the two holding companies that
owned AOL Spain and its affiliates for, among other things, shares of AOLA’s series B redeemable
convertible preferred stock and series C redeemable convertible preferred stock, respectively. As
a result of the corporate reorganization, AOLA owns 100% of AOL Spain’s outstanding equity
interests.



     The non-debtor principal subsidiaries of the AOLA Group are: (1) AOL Brasil Ltda. (“AOL
Brazil”), a company organized under the laws of the Federative Republic of Brazil, which conducts
business in Brazil; (2) AOL Spain; and (3) AOL S. de R.L. de C.V. (“AOL Mexico”), a company
organized under the laws of Mexico, which conducts business in Mexico. The AOLA Group also
provided Internet services in Argentina through a wholly-owned subsidiary, AOL Argentina, S.A.
(“AOL Argentina”). AOL Brazil, AOL Argentina and AOL Mexico are referred to as the “Non-Debtor
Foreign Subsidiaries.”



     The AOLA Group, through the Non-Debtor Foreign Subsidiaries, provided online Internet services
in the above-mentioned jurisdictions. The AOLA Group derived revenues principally from (a) member
subscriptions to its country services and web-based interactive services, (b) amounts received from
America Online related to the AOL-branded service in Puerto Rico and (c) advertising and other
revenue sources through AOL Puerto Rico and the Non-Debtor Foreign Subsidiaries (collectively, the
“Business”). Other revenue sources have included an advertising agreement with Google (the “Google
Agreement”) based on the volume of queries generated in the search tool of the services provided by
the AOLA Group and revenue sharing agreements with certain local telecommunications providers. The
Google Agreement was terminated pursuant to a termination agreement approved by the Bankruptcy
Court on December 21, 2005.



     Prior to the Petition Date, the AOLA Group conducted its operations in Mexico through a
wholly-owned subsidiary, AOL Mexico S. de R.L. de C.V. (“Old AOL Mexico”). On April 25, 2005, AOLA
and its wholly-owned subsidiary, Latin America Quotaholder, LLC (“Quotaholder”), entered into an
equity purchase agreement (the “Old AOL Mexico Agreement”) with Comunicaciones Nextel de Mexico,
S.A. de C.V. (“Comunicaciones Nextel”), and Servicios NII, S.A. de C.V. (collectively with
Comunicaciones Nextel, “Nextel”). Under the Old AOL Mexico Agreement, AOLA and Quotaholder sold to
Nextel all of the equity interests in Old AOL Mexico. Nextel paid AOLA and Quotaholder
Mxp$155,818,350, or approximately $14.1 million, in consideration for the sale. The business of
Old AOL Mexico was transferred to a newly-formed, wholly -owned subsidiary of AOLA and Quotaholder,
AOL Mexico, on February 1, 2005 so that the only remaining assets of Old AOL Mexico at the time of
the sale were aged accounts receivable, customer information and certain call center assets. On
April 28, 2005, AOLA lent AOL Mexico approximately $14.1 million of the proceeds of the transaction
for AOL Mexico’s ordinary course operating expenses and wind down costs. As of January 4, 2006,
AOL Mexico has repaid approximately $3.5 million of this intercompany loan and the balance of this
intercompany loan was approximately $10.6 million. After payment of all creditors of AOL Mexico
(excluding intercompany obligations) and payment of the liquidation and wind down costs of AOL
Mexico, any funds remaining will be remitted in repayment of the loan to Reorganized AOLA LLC and
the Liquidating LLC for distribution in accordance with the terms of the Plan.



     As further described below, after an extensive process of marketing and negotiation, AOLA and
the management of AOL Argentina, with the assistance of the Company’s financial advisors, Cicerone
(as defined below), identified purchasers for AOL Argentina. On October 18, 2005, AOL Spain and
QuotaHolder, wholly-owned direct and indirect non-debtor subsidiaries of AOLA and the immediate
parent companies of AOL Argentina, entered into an agreement (a) to sell all the outstanding equity
of AOL Argentina to Datco S.A. and Comnet S.A. and (b) to assign certain intercompany debt owed by
AOL Argentina in favor of AOLA and AOL Spain. This transaction was approved by the Bankruptcy
Court on November 7, 2005. The sale of AOL Argentina was consummated on November 15, 2005.



8









 





     As of December 31, 2005, the AOLA Group had approximately 275,000 subscribers to the
AOL-branded country services and web-based interactive services. As of December 31, 2005, the AOLA
Group had approximately 100 full-time employees of whom 52 were located in Brazil (including 17
employees on unpaid medical leave), 15 were located in Mexico and 33 were located in the United
States (including 22 employees in Puerto Rico).8 The AOLA Group also had approximately
120 contract employees as of that date. The Debtors’ employees in the headquarters of the AOLA
Group and in Puerto Rico are employed by AOL Management LLC and Puerto Rico Management Services,
respectively.



     For the 3-month period ended March 31, 2005, AOLA recorded a net loss of approximately $72.6
million on revenues of approximately $12.8 million. AOLA’s accumulated deficit as of March 31,
2005 was approximately $1 billion. As of March 31, 2005, AOLA’s books and records reflected, on a
GAAP basis, total assets and liabilities of approximately $28.5 million and $181.8 million,
respectively.



     Pursuant to the Plan, the AOL Spain Equity Interests, the AOL Brazil Equity Interests, the AOL
Mexico Equity Interests, the AOL Venezuela Equity Interests, the QuotaHolder Equity Interests, the
D&O Insurance Policy and certain other Assets as will be set forth in the Plan Supplement
(collectively, the “Retained Assets”) will be retained by or transferred to Reorganized AOLA LLC,
unless otherwise disposed by the Debtors prior to the Effective Date.



     As described in more detail below, the Debtors expect to sell or completely wind down the
operations of AOL Mexico and AOL Brazil and ultimately liquidate and dissolve these entities in
accordance with applicable laws. As described below, the Debtors have entered into an agreement
with Terra (as defined below) to engage in marketing activities to encourage the subscribers of AOL
Brazil to migrate to the internet services provided by Terra. The Debtors also may seek to enter
into agreements to encourage the existing subscribers of AOL Mexico to migrate to an alternative
Internet service provider. It is expected that a liquidator or administrator will administer all
litigation to which AOL Brazil is or may become a party. Following a resolution of all such
litigation, which the Debtors are advised could take from five to ten years, the liquidator or
administrator will liquidate all the remaining assets of AOL Brazil, dissolve AOL Brazil and
transfer all proceeds from the liquidation to Reorganized AOLA LLC and the Liquidating LLC for
distribution in accordance with the terms of the Plan.



     As further described below, the Debtors are continuing to develop certain business initiatives
at AOL Spain, with a view towards ultimately selling the entity. The Debtors anticipate that any
sale of AOL Spain will depend significantly upon whether AOL Spain successfully develops and
implements a business strategy and the existing market for AOL Spain during that time. No
assurance can be made, however, that the Debtors will be able to successfully develop AOL Spain’s
operating business, consummate a sale of AOL Spain or recover proceeds from any such sale.



B. Equity Ownership and Primary Indebtedness




     Equity Securities



     Time Warner and America Online together own approximately 52.1% of AOLA’s equity and control
approximately 63.4% of the voting power. The Cisneros Group Parties own approximately 31.6% of
AOLA’s equity and control approximately 34.2% of the voting power. The remaining 16.3% of the
equity and 2.4% of the voting power of AOLA is owned and controlled by Banco Itaú S.A. and its
affiliates (“Banco Itaú”) and public stockholders.





 




			
	8	 	In addition, the AOLA Group has one employee formerly
employed by AOL Argentina currently at AOL Spain.




9









 










     As of March 31, 2005, AOLA had issued and outstanding 135,260,715 shares of class A common
stock, par value $0.01 per share, 149,920,329 shares of series B redeemable convertible preferred
stock, which are owned or controlled by America Online and/or Time Warner, and 79,518,702 shares of
series C redeemable convertible preferred stock, all of which are owned or controlled by the
Cisneros Group Parties. As of the Petition Date, none of AOLA’s class B or class C common stock
was issued or outstanding.



     AOLA directly owns 100% of the equity and voting power of each of AOL Management LLC, AOL
Caribbean Basin and Puerto Rico Management Services.



     As specified in AOLA’s Fifth Restated Certificate of Incorporation (the “Restated
Certificate”), the entire board of directors of AOLA (the “Board”) consists of 15 members, of which
Time Warner and America Online, on the one hand, and the Cisneros Group Parties, on the other hand,
each has the right to elect directly five members. Holders of AOLA’s class A common stock, vote
together as a single class with the Holders of AOLA’s series B redeemable convertible preferred
stock and series C redeemable convertible preferred stock with respect to the election of the
remaining Board members. America Online, Time Warner and the Cisneros Group Parties control
approximately 97.6% of the voting power of AOLA’s capital stock and therefore have the power to
elect the remaining Board members. On August 19, 2005, AOLA announced the resignation of six of
the remaining Board members. As a result of the foregoing, the Board currently consists of four
directors, including one director appointed by the Cisneros Group Parties, one director appointed
by America Online and two independent directors. AOLA does not expect to fill the remaining seats
on the Board.



     Pursuant to the Restated Certificate, the Board has a special committee consisting of two
members (the “Special Committee”). One member of the Special Committee is selected by America
Online and Time Warner and the other member is selected by the Cisneros Group Parties, in their
capacities as Holders of AOLA’s series B redeemable convertible preferred stock and series C
redeemable convertible preferred stock, respectively. The Special Committee is required to approve
unanimously certain actions proposed to be taken by AOLA, such as approval of any merger,
consolidation, dissolution or liquidation of AOLA or any subsidiary, or any transaction having the
same effect. The Board has the power to exercise all powers of AOLA, with the exception of the
enumerated powers reserved for the approval of the Special Committee.



     Debt Instruments



     On March 8, 2002, AOLA entered into a note purchase agreement with Time Warner pursuant to
which Time Warner made available to AOLA $160 million in exchange for senior convertible notes due
in March 2007 (the “Senior Notes”). The Senior Notes are convertible into shares of AOLA’s class A
common stock and bear an annual coupon of 11%, payable quarterly in cash or preferred stock. As of
the Petition Date, an aggregate principal amount of $160 million in Senior Notes was outstanding.



C. Events Leading to Chapter 11 Filing




     Since its inception, the AOLA Group as a whole has never been cash flow positive. Other than
the proceeds received from the issuance of the Senior Notes, the Company has relied extensively on
access to equity capital from certain affiliates and third parties and the U.S. public equity
market in order to fund its capital expenditure and working capital needs.



     The AOLA Group as a whole has never been, nor is it projected to ever be, profitable. In
order to avoid the need to file for bankruptcy protection, the AOLA Group attempted, but was not
able to obtain additional financing to continue normal operations. Accordingly, after considering
all of the alternatives available to it, each of the Debtors’ boards of directors and board of
managers, as applicable, authorized



10









 





the wind down of the Business, by either attempting to sell all or a portion of the Business
and closing those businesses that could not be sold (the “Wind Down”).



     The Debtors commenced these Chapter 11 Cases to implement the Wind Down.



D. Prepetition Negotiations with Creditors and Shareholders




     Prior to the Petition Date, the Debtors, the Principal Stockholders and Time Warner, in its
capacity as a stockholder and holder of Senior Notes, held several meetings to negotiate the terms
on which the Principal Stockholders and Time Warner would unanimously support the Wind Down and a
related plan of liquidation.



     On May 25, 2005, the Principal Stockholders executed a letter agreement (the “Letter
Agreement”), which was followed by a support agreement dated June 23, 2005, executed by the
Principal Stockholders and the Debtors (as amended by letter agreements dated September 30, 2005,
November 29, 2005 and December 15, 2005, the “Support Agreement”). Pursuant to the Letter
Agreement and the Support Agreement, the Principal Stockholders agreed to support a plan of
liquidation that provided, among other things, for the subordination of the claims of America
Online and Time Warner to the claims of other general unsecured creditors, if such general
unsecured creditors released from liability (the “General Release”), among others, (a) the
Principal Stockholders and the Principal Stockholders’ affiliates, officers, directors, employees
and members, (b) the Liquidating LLC, the LLC Agents and the LLC Administrator, (c) the Debtors,
(d) the Debtors’ direct and indirect subsidiaries other than the Debtors and (e) the officers,
directors, managers and employees of the Debtors and of each of AOLA’s other subsidiaries, serving
in such capacity as of the Petition Date or the Effective Date.



     The Letter Agreement and Support Agreement further provide that, after payment in full of
administrative expenses, priority claims and the claims of all accepting general unsecured
creditors who do not opt out of the General Release, Time Warner, on the one hand, and the Cisneros
Group Parties, on the other, will receive, taking into account the turnover, 60% and 40% of all
remaining available cash, respectively, subject to an adjustment based on the transfer by the
Debtors to America Online and Time Warner of certain assets used in connection with AOL Puerto Rico
and the Allowed AOL General Unsecured Claim, and subject to an adjustment on account of any
non-accepting general unsecured creditors who may be entitled to receive a pro rata share of all
remaining available cash. The Debtors and the Principal Stockholders believe that the terms of the
Plan comport with the Letter Agreement and the Support Agreement.



ARTICLE III

HISTORY OF THESE BANKRUPTCY CASES




A. General




     On June 24, 2005 (the “Petition Date”), the Debtors commenced voluntary chapter 11 cases
before the Bankruptcy Court. On June 27, 2005, the Debtors’ chapter 11 cases were procedurally
consolidated for administrative purposes only.



     The Debtors continue to operate their businesses and manage their properties as debtors in
possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No official committee of
unsecured creditors has been appointed in these Chapter 11 Cases. No trustee or examiner has been
appointed in these Chapter 11 Cases.



     Since the Petition Date, the Debtors have been engaged in: (i) operating their businesses as
debtors in possession under the Bankruptcy Code; (ii) administering, managing and coordinating the



11









 





Chapter 11 Cases; (iii) winding down and liquidating the Debtors’ Assets and the Assets of the
Non-Debtor Foreign Subsidiaries; and (iv) developing a plan by which the proceeds from the
liquidation of Debtors’ Assets will be distributed to Holders of Claims pursuant to the Bankruptcy
Code and in accordance with the Letter Agreement and the Support Agreement.



B. First Day Orders




     On the Petition Date, the Debtors filed customary “first day motions” which were granted by
the Bankruptcy Court on June 27, 2005. The first day orders included, among others: (i) an order
directing joint administration of the Chapter 11 Cases; (ii) an order authorizing the Debtors to
pay employee wages and other compensation; and (iii) an order authorizing the Debtors to continue
their cash management system.



C. Employee Matters




     1. Key Executive and Key Employee Retention and Severance Plans



     In early 2005, the Debtors determined that, due to the deteriorating financial condition of
the Debtors and their businesses, incentives beyond those provided in their ordinary compensation
scheme were necessary to retain their work force. In June 2005, the Debtors implemented employee
retention and severance plans (the “Retention Plans”) to motivate, retain and reward key executives
and other key employees for their continued service to the Debtors and thereby preserve the
enterprise value of each of the Debtors’ operations.



     On August 5, 2005, the Debtors filed a motion seeking authorization to enter into retention
agreements with certain key employees and pay retention bonuses to certain secured employees. The
retention agreements provided for approximately $969,356 in payments to six employees who were
identified as key to the Debtors’ business or wind down efforts. The Debtors obtained Bankruptcy
Court approval for the retention agreements by an order dated August 25, 2005. Three of the six
key employees voluntarily terminated their employment with the Debtors during September, October
and November 2005. None of these three key employees who voluntarily left their employment
received any amounts pursuant to the retention agreements.



     As a replacement for the three key employees who voluntarily terminated their employment, the
Debtors sought to create an incentive for an additional employee who was identified as key to the
Debtors’ Wind Down efforts. On November 1, 2005, the Debtors filed a motion seeking authorization
to enter into a retention agreement with AOLA’s Treasurer and Controller. The retention agreement
with this officer provided for approximately $205,065 in payments to him. The Debtors obtained
Bankruptcy Court approval to enter into this retention agreement on November 17, 2005.



D. Professionals Retained by the Debtors




     To assist them in carrying out their duties as debtors in possession and to otherwise
represent their interests in the Chapter 11 Cases, the Debtors employed, with authorization from
the Bankruptcy Court, Shearman & Sterling LLP and Young Conaway Stargatt & Taylor, LLP (“Young
Conaway”) as bankruptcy co-counsel.



     The Debtors also retained Cicerone Capital LLC (“Cicerone”) as financial advisors, and agreed
to pay Cicerone a monthly advisory fee of $50,000 commencing on July 1, 2005. The Debtors also
agreed to pay Cicerone success fees of (i) not more than $1.2 million upon the consummation of a
sale of AOLA, (ii) not more than $1 million per transaction in connection with a sale of a
Non-Debtor Foreign Subsidiary



12









 





(other than AOL Brazil) and (iii) $100,000 if AOL Brazil is sold for at least $33,000,000.
The retention of Cicerone expired on November 30, 2005 in accordance with the terms of the
engagement letter with Cicerone. The Debtors anticipate filing an application with the Bankruptcy
Court to extend the retention of Cicerone through January 31, 2006, with the right to extend such
retention for an additional month at the Debtors’ discretion.



E. Claims Process and Bar Date




     1. Schedules and Statements



     On July 29, 2005, the Debtors filed their respective schedules of assets and liabilities and
statements of financial affairs with the Bankruptcy Court. On September 19, 2005, the Debtors
filed amended schedules of assets and liabilities and statements of financial affairs, to correct
and clarify certain information included in, or omitted from, the original schedules and
statements.



     2. Bar Date Order



     On August 26, 2005, the Bankruptcy Court entered an order (the “Bar Date Order”) (i)
establishing October 28, 2005 as the deadline (the “General Bar Date”) for prepetition creditors to
file proofs of claim against the Debtors, (ii) establishing December 21, 2005 as the deadline (the
“Governmental Bar Date”) for all governmental units to file proofs of claim against the Debtor, and
(iii) establishing the date by which proofs of claim relating to the Debtors’ rejection of
executory contracts or unexpired leases must be filed (the “Rejection Bar Date” and, together with
the General Bar Date and the Government Bar Date, the “Bar Dates”). Under the Bar Date Order, all
creditors (including governmental entities) were required to file proofs of claim for all claims
that arose prior to June 24, 2005 no later than the specified Bar Dates, or be barred from
asserting any Claim against the Debtors and from voting upon or receiving distributions under the
Plan. Pursuant to the Plan, Holders of D&O Indemnity Claims are not required to file proofs of
claim in respect of such D&O Indemnity Claims, and are not entitled to vote on the Plan in respect
of such D&O Indemnity Claims. Proofs of claim were not required to be filed by the applicable Bar
Date by the following parties: (A) any party seeking a claim in respect of any proof of claim or
request of administrative expenses arising under enumerated sections of the Bankruptcy Code; (B)
any party employed by the Debtors as of the Petition Date for services fulfilled in the ordinary
course of Debtors’ business; (C) any party having filed a proper request with the Bankruptcy Court
seeking to assert a proof of claim; (D) any party whose claims were previously allowed by, or paid
pursuant to, an order of the Bankruptcy Court; and (E) any party whose claim is listed on the
Debtors’ schedules in a liquidated amount and not designated as “contingent” or “disputed.”



     Pursuant to the Bar Date Order, any party that holds a claim arising from the rejection of an
executory contract or unexpired lease must file a proof of claim based on such rejection on or
before the date set forth in any order authorizing the Debtors’ rejection of such executory
contract or unexpired lease or the later of the General Bar Date and thirty (30) days after the
entry of such rejection order authorizing the Debtors’ rejection of such executory contract.



F. Sale and Wind Down of Non-Debtor Foreign Subsidiaries




     Prior to the commencement of the Chapter 11 Cases, the Debtors, in consultation with their
legal and financial advisors, considered a variety of strategic options and determined that the
best means to maximize the recovery for their stakeholders was to market the Company and seek
offers to purchase some or all of the Company’s Assets and/or the Non-Debtor Foreign Subsidiaries’
Assets. The Company’s management, together with Cicerone, undertook an extensive marketing process
for the Debtors’ Assets and contacted numerous prospective purchasers. Based on the results of
those efforts, the



13









 





Debtors determined to sell certain of the Company’s Assets and the Non-Debtor Foreign
Subsidiaries’ Assets and wind down certain business it could not sell or it did not make economic
sense to sell.



     1. Sale of AOL Argentina



     After extensive negotiations with various prospective purchasers, on October 18, 2005, AOL
Spain and QuotaHolder, wholly-owned subsidiaries of AOLA, entered into a Framework Agreement with
DATCO S.A. and Comnet S.A. for the sale of 100% of the outstanding equity interests of AOL
Argentina and the assignment by AOL Spain of certain intercompany debt owed by AOL Argentina in
favor of AOL Spain and AOLA (the “AOL Argentina Sale Transaction”). On October 18, 2005, the
Debtors filed a motion seeking approval (i) for AOLA to consent to the AOL Argentina Sale
Transaction, (ii) to assign certain intercompany debt owed by AOL Argentina in favor of AOLA, and
(iii) to enter into, perform under, and assign certain online services agreements with America
Online. The Bankruptcy Court approved AOLA’s consent to the AOL Argentina Sale Transaction by
order entered November 7, 2005. The AOL Argentina Sale Transaction was consummated on November 15,
2005 and is expected to result in a net cash receipt to the AOLA Group of approximately $302,000.



     2. Marketing Operations Coordination Agreement with Terra Networks Brasil S.A.



     For more than twelve months, the Company and the management of AOL Brazil, with the assistance
of Cicerone, were actively engaged in finding alternative solutions to realize value from the
business of AOL Brazil. Among other things, AOLA and the management of AOL Brazil solicited offers
from various Internet service providers in Brazil which management and Cicerone believed could form
strategic relationships with AOL Brazil, and the Company received various expressions of interests.



     On December 22, 2005, AOL Brazil and Terra Networks Brasil S.A. (“Terra”) entered into a
marketing operations coordination agreement (the “Terra Marketing Agreement”) to engage in joint
marketing activities to encourage the subscribers of AOL Brazil’s interactive services provided
through dial-up and broadband access (the “AOL Brazil Subscribers”) to migrate to the services
provided by Terra. Pursuant to the Terra Marketing Agreement, Terra will make four payments to AOL
Brazil which, in the aggregate, are estimated to total approximately 4.5 million reais
(approximately $1.9 million), but will not, in any event, be less than a minimum amount as
calculated on the effective date of the Terra Marketing Agreement, estimated to be approximately
1.8 million reais (approximately $760,000). The amount of the consideration will be based upon (i)
the number of AOL Brazil Subscribers on the effective date of the Terra Marketing Agreement and
(ii) the number of AOL Brazil Subscribers that switch to Terra’s services and pay one monthly bill.
On January 3, 2006, the Debtors filed a motion seeking approval for AOLA to consent to AOL
Brazil’s entry into the Terra Marketing Agreement, which is scheduled to be heard on January 23,
2006. The proceeds of the Terra Marketing Agreement will be retained by AOL Brazil and the
transfer of these proceeds to Reorganized AOLA LLC and/or the Liquidating LLC for distribution in
accordance with the terms of the Plan is subject to the sale or ultimate dissolution of AOL Brazil.



G. Settlement Agreement with Banco Itaú




     AOLA and its wholly-owned subsidiary, AOL Brazil, entered into various agreements (the “Itaú
Agreements”) with Banco Itaú and certain of its affiliates in connection with the establishment of
a co-marketing relationship in Brazil among AOLA, AOL Brazil and the Itaú Parties (as defined
below). Pursuant to the Itaú Agreements, Banco Itaú acquired 10.1% of the class A common stock of
AOLA, and promoted the Internet services provided by AOL Brazil in Brazil to its customers as the
principal means of accessing Banco Itaú’s interactive financial services. Banco Itaú, together
with AOL Brazil, engaged in various marketing activities including establishing kiosks and
point-of-sale displays in bank branches



14









 





and providing customers with promotional materials for the AOL Brazil Internet service,
including CDs with the America Online software customized for the Brazilian market. The Internet
service provided by AOL Brazil to Banco Itaú customers was co-branded with the America Online and
Itaú brands (the “Co-Branded Service”). In addition, Banco Itaú was required to broadcast
television commercials promoting the Co-Branded Service.



     In connection with the Wind Down, AOLA and AOL Brazil negotiated with the Itaú Parties for an
efficient and orderly termination of the Itaú Agreements, and a settlement of all outstanding
issues relating to those agreements. Accordingly, on October 31, 2005, AOLA and AOL Brazil entered
into a Termination Agreement (the “Itaú Termination Agreement”), by and among AOLA, AOL Brazil,
America Online, AOL Spain, Banco Itaú (together with its Cayman Branch), Itaú Bank, Limited (“Itaú
Bank”), Banco Banerji S.A. (“Banerj” and collectively with Banco Itaú and Itaú Bank, the “Itaú
Parties”), Aspen Investments LLC and Atlantis Investments LLC.



     On November 1, 2005, the Debtors filed a motion seeking approval of the Itaú Termination
Agreement. The Bankruptcy Court approved the Itaú Termination Agreement and approved AOLA’s
entering into the Itaú Termination Agreement, by order entered November 17, 2005. The closing of
the Itaú Termination Agreement occurred on December 29, 2005. Pursuant to the Itaú Termination
Agreement, the Itaú Parties paid AOLA approximately $1.4 million and paid AOL Brazil R$4.7 million,
or approximately $2.1 million. The transfer of the proceeds of the Itaú Termination Agreement
retained by AOL Brazil to Reorganized AOLA LLC and/or the Liquidating LLC for distribution in
accordance with the terms of the Plan is subject to the sale or ultimate dissolution of AOL Brazil.



H. Latino Content Termination Agreement with America Online




     On September 2, 2004, AOLA and America Online entered into the Localization Services,
Licensing and Content Programming Agreement (as amended, the “Latino Content Agreement”). Pursuant
to the Latino Content Agreement, AOLA provided America Online Internet content and programming in
the Spanish language used in the Latino content area of the America Online-branded Internet
services in the United States. In addition, AOLA provided product localization services (managing
the translation of words and adapting art into Spanish, as well as providing quality assurance) for
products used by America Online in its Latino service in exchange for AOLA’s right to use such
localized products in Latin America. The Spanish language content and programming provided by AOLA
was produced by dedicated employees of AOL Mexico, retained specifically for such purposes. On
September 30, 2005, AOLA and America Online entered into a termination agreement (the “Latino
Content Termination Agreement”) to terminate the Latino Content Agreement and release each of the
parties from their obligations under the Latino Content Agreement.



     On October 18, 2005, the Debtors filed a motion seeking approval of the Latino Content
Termination Agreement. The Bankruptcy Court approved the Latino Content Termination Agreement by
order entered November 7, 2005. The termination of the Latino Content Agreement was effective as
of September 30, 2005. Termination of the Latino Content Agreement resulted in a net economic
benefit to AOLA and AOL Mexico by allowing AOL Mexico to terminate the dedicated employees retained
to produce the Latino Content, and allowed AOL Mexico to continue implementing the Wind Down.



I. Renewal of Directors and Officers Insurance Policy and Acquisition of Six Year Runoff Coverage




     On July 19, 2005, the Debtors filed a motion to authorize the Debtors to renew AOLA’s existing
directors and officers insurance policy and acquire runoff coverage for a six-year period. An
order granting the requested relief was approved by the Bankruptcy Court on August 4, 2005.



15









 





ARTICLE IV

PROGRESS OF THE WIND DOWN FOLLOWING THE PETITION DATE




A. Development of Business Initiatives at AOL Spain




     The Debtors are continuing to develop certain business initiatives at AOL Spain, including,
but not limited to, providing programming, website development, consulting services or market
research activities for third parties in and outside of Spain, with a view towards ultimately
selling the entity. The Debtors anticipate that any sale of AOL Spain will depend significantly
upon whether AOL Spain successfully develops and implements a business strategy and the existing
market for AOL Spain during that time. No assurance can be made, however, that the Debtors will be
able to successfully develop AOL Spain’s operating business, consummate a sale of AOL Spain or
recover proceeds from any such sale.



B. Wind Down of AOL Mexico




     AOL Mexico and, previously, Old AOL Mexico, together have provided AOL-branded Internet
services in Mexico for approximately five years. As of December 31, 2005, AOL Mexico had 15
full-time employees. AOLA is in the process of negotiation for strategic marketing relationships
for the migration of the subscribers of AOL Mexico. No assurances can be given, however, that the
AOLA Group will be successful in consummating such a transaction or that the AOLA Group will be
able to realize any benefits from such a transaction.



     Pursuant to the Plan, the majority equity interests in AOL Mexico will vest in Reorganized
AOLA LLC. QuotaHolder will retain its minority interest in AOL Mexico. The Debtors expect that,
following the Effective Date, AOL Mexico will be liquidated in accordance with Mexican law. To the
extent any assets remain following the liquidation of AOL Mexico, the proceeds of the liquidation
of such assets will be remitted to Reorganized AOLA LLC and the Liquidating LLC in repayment of an
intercompany loan for distribution in accordance with the terms of the Plan. The Debtors expect
that, if AOL Mexico is not sold, Reorganized AOLA LLC and/or the Liquidating LLC will recover
approximately $1.5 million from the liquidation of AOL Mexico’s assets. No assurance can be made,
however, as to the amount that will ultimately be recovered from the liquidation of AOL Mexico.



C. Wind Down of AOL Brazil




     AOL Brazil has provided AOL-branded Internet services in Brazil for approximately five years.
As of December 31, 2005, AOL Brazil had 52 full-time employees (including 17 employees on unpaid
medical leave). In addition to the strategic relationship entered into with Terra in connection
with the AOL Brazil Subscribers as described above, AOLA is continuing to negotiate for the sale of
the equity of AOL Brazil. No assurances can be given, however, that the AOLA Group will be
successful in consummating a sale of AOL Brazil or that the AOLA Group will be able to realize any
benefits from such a transaction.



     Pursuant to the Plan, the majority equity interests in AOL Brazil will vest in Reorganized
AOLA LLC. QuotaHolder will retain its minority interest in AOL Brazil. The Debtors expect that,
following the Effective Date, an administrator or liquidator will be appointed in accordance with
local laws and practices to administer AOL Brazil, including resolving all litigation to which AOL
Brazil is or may become a party, and ultimately to liquidate AOL Brazil in accordance with
Brazilian law. The Debtors have been advised that the resolution of all litigation to which AOL
Brazil is or may become a party could take from five to ten years. The administrator or liquidator
for AOL Brazil will be able to dissolve AOL Brazil and complete the liquidation of AOL Brazil only
after all litigation in Brazil has been finally resolved. To the extent any assets remain
following the liquidation of AOL Brazil, they will be



16









 





transferred to Reorganized AOLA LLC and/or the Liquidating LLC for distribution in accordance
with the terms of the Plan. Due to the fact that the dissolution and liquidation of AOL Brazil is
conducted pursuant to a foreign legal regime, which dissolution and liquidation could take five to
ten years, the Debtors currently are unable to predict what their ultimate recovery from AOL Brazil
will be.



ARTICLE V

RELATED PARTY TRANSACTIONS IN CONNECTION WITH THE WIND DOWN




A. Transfer of Assets of AOL Puerto Rico




     After negotiating with the Principal Stockholders, the Debtors determined that the best means
to maximize the value of AOL Puerto Rico was to transfer the PR Assets to the TW Parties on account
of a portion of their Allowed TW Party Claims. The PR Assets are valued under the Plan at $15
million. As described in the Plan, AOLA will assume that certain letter agreement between America
Online and AOLA dated as of December 1, 2000, regarding the sharing of revenue from Puerto
Rico-based subscribers (the “PR Agreement”) and assign the PR Agreement to Time Warner (unless
otherwise directed by the TW Parties). Pursuant to the Plan, each Holder of an Allowed Class 4
General Unsecured Claim will receive its pro rata share (based on the Total Allowed Unsecured
Claims) of an aggregate amount of Cash equal to the net value of the PR Assets to be transferred to
the TW Parties pursuant to Section 3.3(c) of the Plan.



     Each of AOL Puerto Rico Management Services, Inc. and America Online Caribbean Basin, Inc.
will be dissolved pursuant to the Plan.



B. Post-Effective Date Transfer of AOL Venezuela




     AOL Venezuela S.R.L. (“AOL Venezuela”), a Venezuelan corporation and a wholly-owned subsidiary
of AOLA, is a company that has never had any assets or operations. Pursuant to the Plan, the
majority equity interests in AOL Venezuela will vest in Reorganized AOLA LLC and QuotaHolder will
retain its minority interest in AOL Venezuela. Pursuant to an agreement among AOLA and the
Principal Stockholders, AOL Venezuela will be transferred to an affiliate of the Cisneros Group
Parties following the Effective Date. Reorganized AOLA LLC will receive only nominal consideration
for the transfer of this company.



C. TW Party Claims and payments to the TW Parties




     Pursuant to the Plan, the TW Party Claims include a general unsecured claim by America Online
against the Debtors in the amount of $1,592,430 (the “Allowed AOL General Unsecured Claim”). The
Allowed AOL General Unsecured Claim includes amounts owed by the Debtors in favor of America Online
for marketing costs in connection with AOL Puerto Rico. The TW Party Claims also include claims by
Time Warner arising under or in connection with the Senior Notes in the amount of $160 million.



     In addition, pursuant to a letter agreement among America Online, Time Warner, the Cisneros
Group Parties, AOLA, AOL Brazil and AOL Mexico dated January 17, 2006 (substantially in the form
attached to the Plan as Exhibit A, the “Shut-Down Costs Letter Agreement”), (i) AOL Mexico will
reimburse America Online up to $300,000 for the actual out-of-pocket costs and expenses incurred by
America Online in assisting AOLA in its efforts to terminate service, discontinue customers and
shut-down operations in connection with the Wind Down of AOL Mexico and (ii) AOL Brazil will
reimburse America Online up to approximately $1 million for the actual out-of-pocket costs and
expenses incurred by America Online in assisting AOLA in its efforts to terminate service,
discontinue customers and shut-



17









 





down operations in connection with the Wind Down of AOL Brazil. The payments in (i) and (ii)
above will be grossed up to account for certain Mexican or Brazilian taxes, as applicable, in
accordance with the terms of the Shut-Down Costs Letter Agreement.



     In addition, to the extent AOL Mexico and/or AOL Brazil fail to make any payments as and when
required to be made under the Shut-Down Costs Letter Agreement (the “Unpaid Costs”), subject to the
following sentence, AOLA will pay any such Unpaid Costs. Unpaid Costs only will be payable by AOLA
(or Reorganized AOLA LLC from and after the Effective Date) from Available Cash (after payment or
reservation of amounts necessary to pay distributions on account of the Series A-1 Beneficial
Interests and the Series A-2 Beneficial Interests, if the LLC Option is elected). Pursuant to the
Shut-Down Costs Letter Agreement, the TW Parties and the Cisneros Group Parties have agreed that
any Unpaid Costs paid by AOLA will be on par with payments made to the Cisneros Group Parties on
account of the Series C Beneficial Interests. For greater certainty, for every $1 paid to AOL in
respect of Unpaid Costs, $1 must be distributed on account of the Series C Beneficial Interests.



ARTICLE VI

THE PLAN OF REORGANIZATION AND LIQUIDATION




A. Introduction




     The following summary and other descriptions in this Disclosure Statement are qualified in
their entirety by reference to the provisions of the Plan and its exhibits, a copy of which is
annexed hereto as Exhibit A. Each Holder of a Claim or Equity Interest is urged to review
carefully the terms of the Plan. In the event of any inconsistency between the provisions of the
Plan and the summary contained herein, the terms of the Plan shall govern. All capitalized terms
not otherwise defined in this Disclosure Statement shall have the respective meanings set forth in
the Plan.



     In general, a chapter 11 plan (i) divides claims and equity interests into separate classes,
(ii) specifies the property that each class is to receive under the plan and (iii) contains other
provisions necessary to the reorganization or liquidation of the debtor. Under the Bankruptcy
Code, “claims” and “equity interests” are classified rather than “creditors” and “shareholders”
because persons may hold claims or equity interests in more than one class. For purposes of this
Disclosure Statement, the term “Holder” refers to the holder of a Claim or Equity Interest,
respectively, in a particular Class under the Plan.



     A chapter 11 plan may specify that certain classes of Claims or Equity Interests are either to
be paid in full upon effectiveness of the plan or are to remain unchanged by the plan. Such
classes are referred to as “unimpaired,” and because of such favorable treatment the holders in
such classes are deemed to accept the plan. Accordingly, it is not necessary to solicit votes from
the holders of claims or equity interests in such classes. A chapter 11 plan may also specify that
certain classes will not receive any distribution or property or retain any claim against a debtor.
Such classes are deemed to have rejected the plan and, therefore, need not be solicited to vote to
accept or reject the plan.



B. Rationale Underlying Plan Treatments of Claims




     The central economic terms of the Plan are derived from the Letter Agreement and the Support
Agreement among the Debtors and the Principal Stockholders. The distributions contemplated by the
Plan represent estimates of distributions accomplished through the compromises set forth in the
Letter Agreement and the Support Agreement.



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C. Support Agreement and Treatment of Unsecured Creditors




     The Plan implements the terms of the Letter Agreement and the Support Agreement. The Debtors
entered into the Support Agreement because, in light of the amount of the TW Claims, Distributions
in full to creditors holding Allowed Class 4 General Unsecured Claims and any Distributions to
Holders of Class 5 Existing Series C Interests would likely not have been possible absent the
turnover by Time Warner of the Series A-1 Beneficial Interests and the Series C Beneficial
Interests. Under the terms of the Letter Agreement and the Support Agreement, the TW Parties
consented to the turnover of a portion of the proceeds of their Distribution to (a) Holders of
Class 4 General Unsecured Claims who vote to accept the Plan and do not check the box opting out of
the General Release and (b) Holders of Class 5 Existing Series C Interests.



D. Compromise and Settlement




     As previously stated, the Plan incorporates an agreement reached among the Debtors and the
Principal Stockholders as to the terms of a consensual liquidation of the Debtors under chapter 11.
The terms of the Letter Agreement and the Support Agreement as embodied by the Plan represent a
proposed compromise and settlement among the TW Parties, Holders of Accepting Class 4 Claims and
the Cisneros Group Parties.



     Specifically, pursuant to the compromise and settlement embodied by the Plan, the TW Parties
have agreed to subordinate their claims to the Holders of General Unsecured Claims (which would
otherwise rank pari passu with the TW Party Claims) if such Holders vote to accept the Plan and
agree to release from liability, among others, (a) the Principal Stockholders and the Principal
Stockholders’ affiliates, officers, directors, employees and members, (b) the Liquidating LLC, the
LLC Agents and the LLC Administrator, (c) the Debtors, (d) the Debtors’ direct and indirect
subsidiaries other than the Debtors and (e) the officers, directors, managers and employees of the
Debtors and of each of AOLA’s other subsidiaries, serving in such capacity as of the Petition Date
or the Effective Date. Such subordination is expected to provide Holders of Accepting Class 4
Claims with a 100% recovery before the TW Parties retain any distributions made under the Plan
other than the PR Agreement and the Other PR Assets.



     The purpose of the Plan is to provide for the winding up of the businesses of AOLA and
subsidiaries and for terminating the AOLA-related relationships among Time Warner, America Online
and the Cisneros Group. The Plan also reflects a global settlement and compromise of all claims
and causes of action, if any, that could be brought by some or all of the Released Parties against
some or all of the other Released Parties, including, without limitation those claims and causes of
action arising out of the Senior Notes, the Principal Stockholders stockholdings and effective
control of AOLA, and the existence and administration of the various commercial agreements by and
among the Released Parties relating to AOLA. To this end, Time Warner has agreed to turn over the
Series C Beneficial Interests to the Cisneros Group Parties, representing an entitlement to 40% of
the proceeds of the liquidation (after the payment of administrative expenses, priority claims, and
the claims of all consenting general unsecured creditors), subject to an adjustment based on the
value of the transfer by the Debtors to Time Warner of certain assets in connection with AOL Puerto
Rico.



     The Plan is deemed to be a motion for approval of the compromise and settlement of the
foregoing issues. The confirmation of the Plan will constitute approval of the motion by the
Bankruptcy Court, and the Confirmation Order will contain findings supporting and conclusions
approving the compromise and settlement as fair and equitable and within the range of
reasonableness. The compromise and settlement is essential to the Plan. Without it, the Plan
could not be accomplished. The



19









 





Debtors believe that the compromise and settlement is fair, equitable, reasonable and in the
best interests of the Debtors, the Debtors’ creditors and the estates.



     The Debtors believe that the consideration provided to Holders of General Unsecured Claims and
Time Warner’s turnover of the Series C Beneficial Interests to the Cisneros Group Parties as a
result of the compromise and settlement proposed by the Plan reflects an appropriate resolution of
their Claims and Interests, taking into account the differing nature and priority of such Claims
and Interests and the fair value of the Debtors’ assets. In addition, the Debtors are realizing
the very significant benefit of accomplishing a consensual liquidation and wind-down in a shorter
time than would otherwise be possible, especially given the possibility of a corporate governance
stalemate and disputed litigation absent an agreement among the Principal Stockholders. This also
benefits all Holders of Claims and Interests, for a prolonged wind-down process would risk severe
deterioration and perhaps destruction of values for all Holders of Claims and Interests.



E. Distinguishing Plan from Recent Caselaw




     The United States Court of Appeals for the Third Circuit recently held that a plan of
reorganization which provided for a turnover of distribution from a class of creditors to a class
of equity holders could not be confirmed in the face of opposition from an intervening creditor
class because it violated the absolute priority rule and no equitable exception to the absolute
priority rule applied. In re Armstrong World Indus., Inc., No. 05-1881, 2005 WL 3544810
(3d Cir. Dec. 29, 2005), aff’g, In re Armstrong World Indus., Inc., 320 B.R. 523
(D. Del. 2005).



     The Debtors believe that their Plan is distinguishable from the Armstrong plan in several key
aspects, and, therefore, assuming it is accepted by the creditors entitled to vote on the Plan, the
Plan should be confirmed notwithstanding that the Plan contains turnover provisions. The turnover
in the Debtors’ Plan between the TW Parties and the Cisneros Group Parties is satisfied solely from
the AOLA assets otherwise payable to the TW Parties under the TW Claims. As a result, such
turnover should not affect the rights and interests of the Holders of Allowed Class 4 General
Unsecured Claims.9 First, it is currently anticipated that Holders of Allowed Class 4
General Unsecured Claims who (1) vote to accept the Plan and (2) do not opt out of the General
Release will receive in the aggregate 100% of the Allowed amount of their Class 4 General Unsecured
Claims. Unlike the Armstrong plan, therefore, Holders of Allowed Class 4 General Unsecured Claims
are expected to be paid in full prior to any turnover of assets to Holders of Class 5 Existing
Series C Interests, if such Holders of Allowed Class 4 General Unsecured Claims grant the General
Release. To the extent any Holder of an Allowed Class 4 General Unsecured Claim fails to return
its Ballot, the Liquidating LLC will endeavor to provide such Holder an opportunity to grant the
General Release at a later date to enable such Holder of Allowed Class 4 General Unsecured Claim to
receive in the aggregate 100% of its Allowed Claim.



     Second, the Third Circuit noted that under the Armstrong plan, the turnover only occurred if
the intervening class voted to reject the plan. Thus, the turnover provisions were expressly
designed to overcome a rejection of the Armstrong plan by the unsecured creditors, who were not
paid in full. The turnover provisions in the Debtors’ Plan are not contingent on any class’s
rejection or acceptance of the Plan. As described above, the turnover provisions were contemplated
in the Letter Agreement and the Support Agreement among the TW Parties and the Cisneros Group
Parties. It is further anticipated that, based upon the recovery provided in the Plan no Holder of
an Allowed Class 4 General Unsecured Claim will object to the treatment set forth in the Plan.





 




			
	9	 	The Plan also contains turnover provisions between
Time Warner and Holders of Accepting Class 4 Claims. This turnover does not
involve a distribution of assets to holders of junior interests and therefore
is not implicated by the holding of the Third Circuit in In re Armstrong
World Industries, Inc.




20









 










     Based on the foregoing, the Debtors believe that the Plan does not violate the absolute
priority rule and that the holding of the Third Circuit in In re Armstrong World Industries,
Inc. is inapplicable to the Plan.



F. Substantive Consolidation and Cancellation of Intercompany Claims




     The Plan is premised upon the substantive consolidation of the Debtors’ estates for the
purposes of voting on, confirmation of, and distributions under, the Plan. On the Effective Date:
(a) all assets and liabilities of the Debtors shall be merged or treated as though they were merged
into and with the assets and liabilities of each other Debtor; (b) all Intercompany Claims shall be
eliminated and extinguished, and no distributions shall be made under the Plan on account of any
Intercompany Claims; (c) any Claims against one or more of the Debtors based upon a guaranty,
indemnity, co-signature, surety or otherwise, of Claims against another Debtor shall be treated as
a single Claim against the consolidated estate of the Debtors and shall be entitled to
Distributions under the Plan only with respect to such single Claim; and (d) all allowed Claims
against the Debtors shall be satisfied from the assets of a single consolidated estate.



     Substantive consolidation is an equitable remedy that a court may be asked to apply in chapter
11 cases involving affiliated debtors. As contrasted with procedural consolidation, substantive
consolidation may affect the substantive rights and obligations of creditors and debtors.
Substantive consolidation involves the pooling and merging of the assets and liabilities of the
affected debtors; all of the debtors in the substantively consolidated group are treated as if they
were a single corporate economic entity. Consequently, a creditor of one of the substantively
consolidated debtors is treated as a creditor of the substantively consolidated group of debtors,
and issues of individual entity-level ownership of property and individual entity-level liability
on obligations are ignored. However, substantive consolidation does not affect the debtors’
separate entity-level existence or independent ownership of property for any purposes other than
for making distributions of property under a plan of reorganization or otherwise as necessary to
implement such plan. Notwithstanding the foregoing, substantive consolidation shall not affect the
obligations of any debtor to pay quarterly fees to the Office of the United States Trustee pursuant
to 28 U.S.C. § 1930(a)(6) until such time as such debtor’s particular case is closed, dismissed or
converted.



     The Plan constitutes a motion by the Debtors for the entry of an order providing for the
substantive consolidation of the Debtors for Plan and Claim purposes. The Debtors posit that an
adequate basis exists for the Bankruptcy Court to grant such relief for several reasons.
Importantly, the Debtors maintained and reported their financial information on a consolidated
basis, filed consolidated tax returns and shared the same management at the highest levels of their
corporate structure. Moreover, each of the Debtors other than AOLA is a wholly-owned direct
subsidiary of AOLA.



     Thus, the Debtors believe that substantive consolidation for purposes of the Plan is
appropriate, will not materially advantage the interests of any creditor over the interests of any
other and will not materially prejudice any of the Debtors’ creditors. In fact, the use of
substantive consolidation solely for purposes of calculating Claims will facilitate an effective
liquidation and foster similarity and fairness of treatment of creditors. In the event the
Bankruptcy Court does not approve the substantive consolidation of all of the Debtors as set forth
in the Plan, the Debtors reserve the right to modify the Plan as the Debtors, in their sole
discretion, deem appropriate.



21









 





G. Administrative Claims, Professional Fees and Priority Tax Claims




     1. Administrative Claims



     Subject to the provisions of sections 330(a), 331 and 503(b) of the Bankruptcy Code, each
Administrative Claim that is Allowed shall be paid by the Debtors or the Liquidating LLC (as the
case may be), in full, in Cash, in such amounts as are incurred in the ordinary course of business
by the Debtors, or in such amounts as such Administrative Claim is Allowed by the Bankruptcy Court
upon (i) the later of the Effective Date or, if such Claim is Allowed after the Effective Date, the
date upon which there is a Final Order allowing such Administrative Claim, (ii) such other terms as
may exist in the ordinary course of such Debtor’s business and in accordance with the terms of any
agreement governing or documents evidencing such Administrative Claim or (iii) as may be agreed
upon between the Holder of such Allowed Administrative Claim and the Debtors or the LLC Agents.



     On or before the Effective Date, the Debtors shall fund the Administrative Claims Reserve Fund
and the Retention Payment Fund. In connection with each Distribution Date, the Debtors or the
Liquidating LLC, as the case may be, shall fund the Disputed Priority Claims Fund.



     Holders of Administrative Claims that have not been paid as of the Effective Date must file a
request for payment of Administrative Claims with the Bankruptcy Court and serve the same upon the
LLC Agents such that it is received no later than the Administrative Claim Bar Date. If an
Administrative Claim is not timely filed by the Administrative Claim Bar Date, then such
Administrative Claim shall be forever barred and shall not be enforceable against Debtors, their
successors, their assigns or their property, the Administrative Claims Reserve Fund or the
Liquidating LLC. The foregoing two sentences shall not apply to (i) Professional Fee Claims, (ii)
Administrative Claims held by present or former employees of the Debtors arising under the
Retention Agreements or the Executive Employment Agreements and (iii) any Administrative Claims
constituting D&O Indemnity Claims, except as otherwise set forth in Section 5.14 of the Plan. An
objection to an Administrative Claim filed pursuant to provision 2.1(c) of the Plan must be filed
within ninety (90) days from the later of the date such Administrative Claim is filed and properly
served or ninety (90) days after the Effective Date. The Debtors reserve the right to seek an
extension of the time to object.



     Subject to the provisions of the Plan, all reasonable fees for services rendered on behalf of
Reorganized AOLA LLC or the Liquidating LLC in connection with the Chapter 11 Cases and the Plan
after the Confirmation Date, including those relating to the resolution of pending Claims, may be
paid by Reorganized AOLA LLC or the Liquidating LLC, as the case may be, without further Bankruptcy
Court authorization.



     2. Statutory Fees



     Without limiting the foregoing, all fees due and payable under 28 U.S.C. § 1930 that have not
been paid shall be paid on or before the Effective Date. Payments after the Effective Date shall
be made as required by statute and shall be paid by the Liquidating LLC.



     3. Professional Fees



     All final applications for Professional Fees for services rendered in connection with the
Chapter 11 Cases prior to the Confirmation Date shall be filed with the Bankruptcy Court not later
than sixty (60) days after the Effective Date. Without limiting the foregoing, Reorganized AOLA
LLC and the Liquidating LLC may pay the charges that they incur on or after the Confirmation Date
for Professionals’



22









 





fees, disbursements, expenses, or related support services without application to or approval
by the Bankruptcy Court.



     4. Priority Tax Claims



     Except to the extent that a Holder of an Allowed Priority Tax Claim has been paid by the
Debtors prior to the Effective Date, each Allowed Priority Tax Claim shall be paid by the Debtors
or the Liquidating LLC (as the case may be) in full, in Cash upon the later of (a) the Effective
Date, (b) the date upon which there is a Final Order allowing such Priority Tax Claim, (c) the date
such an Allowed Priority Tax Claim would have been due and payable if the Chapter 11 Cases had not
been commenced or (d) as may be agreed upon between the Holder of such an Allowed Priority Tax
Claim and the Debtors or the Liquidating LLC (as the case may be); provided, however, that each
Debtor or the Liquidating LLC, may, at its option, in lieu of payment in full of an Allowed
Priority Tax Claim, make Cash payments on account of such Allowed Priority Tax Claim, deferred to
the extent permitted pursuant to section 1129(a)(9)(C) of the Bankruptcy Code and, in such event,
interest shall be paid on the unpaid portion of such Allowed Priority Tax Claim at a rate to be
agreed upon by the Debtors or the Liquidating LLC (as the case may be) and the applicable
governmental unit or as determined by the Bankruptcy Court.



H. Classification and Treatment of Claims and Equity Interests under the Plan




     1. Classification



     The categories of Claims and Equity Interests listed below classify Claims and Equity
Interests for all purposes, including voting, confirmation and distribution pursuant to the Plan
and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest
shall be deemed classified in a particular Class only to the extent that the Claim or Equity
Interest qualifies within the description of that Class and shall be deemed classified in a
different Class to the extent that any remainder of such Claim or Equity Interest qualifies within
the description of such different Class. A Claim or Equity Interest is in a particular Class only
to the extent that such Claim or Equity Interest is Allowed in that Class and has not been paid or
otherwise settled prior to the Effective Date. Intercompany Claims are not classified and shall be
discharged in accordance with Section 5.1 of the Plan.



     The Plan divides the Claims against, and the Equity Interests in, the Debtors into the
following Classes:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Class	 	 	Claim	 	 	Status	 	 	Voting Right	 
	 	 	1	 	 	 	Priority Claims
	 	 	Unimpaired
	 	 	Deemed
to Accept;

Not Entitled to Vote
	 
	 	 	2	 	 	 	Secured Claims
	 	 	Unimpaired
	 	 	Deemed
to Accept;

Not Entitled to Vote
	 
	 	 	3	 	 	 	TW Party Claims
	 	 	Impaired
	 	 	Entitled to Vote
	 
	 	 	4	 	 	 	General Unsecured Claims
	 	 	Impaired
	 	 	Entitled to Vote
	 
	 	 	5	 	 	 	Existing Series C Interests
	 	 	Impaired; not
entitled to receive
any Distribution
from the Debtors
under the Plan
	 	 	Deemed
to Reject;

Not Entitled to Vote
	 
	 	 	6	 	 	 	Other Equity Interests
	 	 	Impaired; not
entitled to receive
any Distribution
from the Debtors
under the Plan
	 	 	Deemed
to Reject;

Not Entitled to Vote
	 
	 	 	7	 	 	 	Subordinated Claims
	 	 	Impaired; not
entitled to receive
any Distribution
from the Debtors
under the Plan
	 	 	Deemed
to Reject;

Not Entitled to
Vote
	 
	 





23









 






     2. Acceptances and Rejections



     Each of Class 1 and Class 2 is Unimpaired under the Plan and Holders of Claims or Equity
Interests in Class 1 and Class 2 are conclusively presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code and not entitled to vote on the Plan. Each of Class 3 and
Class 4 is Impaired and is entitled to vote to accept or reject the Plan. Each of Class 5, Class 6
and Class 7 is Impaired, is deemed to reject the Plan and is not entitled to vote on the Plan.



     3. Treatment of Claims and Equity Interests



     (a) Class 1—Priority Claims against the Debtors




	 	(1)	 	Classification: Class 1 consists of all Claims against the
Debtors accorded priority in right of payment under section 507(a) of the
Bankruptcy Code, other than an Administrative Claim or a Priority Tax Claim.
	 
	 	(2)	 	Treatment: The legal, equitable and contractual rights of the
Holders of Allowed Priority Claims are unaltered by the Plan. Unless the
Holder of an Allowed Priority Claim against the Debtors and the Debtors agree
to a different treatment, each Holder of an Allowed Priority Claim against the
Debtors shall receive one of the following alternative treatments, at the
election of the Debtors or the LLC Agents, as applicable:






	 	(A)	 	to the extent then due and owing on the
Effective Date, such Allowed Priority Claim will be paid in full, in
Cash, by the Debtors or the Liquidating LLC, as applicable; or
	 
	 	(B)	 	to the extent not due and owing on the
Effective Date, such Allowed Priority Claim will be paid in full in
Cash, by the Liquidating LLC when and as such Allowed Priority Claim
becomes due and owing in the ordinary course of business in accordance
with the terms thereof.






	 	(3)	 	Voting: Class 1 is Unimpaired. The Holders of Priority Claims
against the Debtors are conclusively presumed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code and are not entitled to vote
to accept or reject the Plan.





     (b) Class 2—Secured Claims




	 	(1)	 	Classification: Class 2 consists of all Claims against the
Debtors that are secured by Liens on, or security interest in, property of the
Debtors, or that have the benefit of rights of setoff under section 553 of the
Bankruptcy Code, but only to
the extent of the value of the creditor’s interest in the Debtors’ interest
in such property, or to the extent of the amount subject to setoff, which
value shall be determined as provided in section 506 of the Bankruptcy Code.




24









 












	 	(2)	 	Treatment: Unless the Holder of a Class 2 Secured Claim agrees
to a different treatment, each Holder of an Allowed Class 2 Secured Claim shall
receive on the Effective Date, either (i) the return of such Assets on which
the Holder has a senior perfected and indefeasible lien or security interest,
or (ii) all proceeds (up to the amount of the Allowed Class 2 Secured Claim)
from the sale, liquidation, or abandonment of any Asset on account of which the
Holder has a senior, perfected and indefeasible Lien or security interest as
full and complete satisfaction of all Class 2 Secured Claims.
	 
	 	(3)	 	Voting: Class 2 is Unimpaired. The Holders of Secured Claims
against the Debtors are conclusively presumed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code and are not entitled to vote
to accept or reject the Plan.
	 
	 	(4)	 	Subclasses: For convenience, the Plan classifies the Claims in
Class 2 as a single class. This Class is, in fact, a group of subclasses and
each subclass, consisting of an individual Secured Claim, is treated as a
distinct Class for voting and distribution purposes.





     (c) Class 3—TW Party Claims against the Debtors




	 	(1)	 	Classification: Class 3 consists of all Claims against the
Debtors held by the TW Parties, including, but not limited to, the TW Note
Claims and the AOL General Unsecured Claim, but excluding the AOL License
Rejection Claims.
	 
	 	(2)	 	Treatment: Holders of Class 3 TW Party Claims shall receive
the following:






	 	(A)	 	on the PR Transfer Date, AOLA shall assume the
PR Agreement and assign the PR Agreement (without the payment of any
cure costs) to Time Warner (or to such other TW Party as directed by
the TW Parties);
	 
	 	(B)	 	on the PR Transfer Date, the Debtors shall
assign, convey and transfer to AOL (or to such other TW Party as
directed by the TW Parties) the Other PR Assets; and
	 
	 	(C)	 	on the Effective Date, Time Warner shall
receive (a) if the Cash Option is elected, the Turnover Amount, solely
for purposes of turning over such amount to Holders of Accepting Class
4 Claims and (b) the Series B Beneficial Interests and the Series C
Beneficial Interests, provided, that the Series C Beneficial Interests
shall be immediately turned over on the Effective Date, on behalf of
and at the direction of Time Warner, to each of the Cisneros Group
Parties on an equal basis, and, if the LLC Option is elected, the right
to receive the Accepting Class 4 Distribution Amount as encompassed by
the Series B Beneficial Interests shall be immediately turned over on
the Effective Date to the Holders of Accepting Class 4 Claims as
reflected by the Series A-1 Beneficial Interests.




25









 







	 	 	 	The distribution made to Holders of Class 3 TW Party Claims shall be
in respect of the aggregate amount of Class 3 TW Party Claims and any
particular distribution made to a specific TW Party shall be in
respect of an agreement among the TW Parties. Notwithstanding
anything to the contrary contained in the Plan, AOL shall not receive
property or cash hereunder with a fair market value that exceeds the
amount of the AOL General Unsecured Claim held by AOL. Any such
excess received by AOL hereunder shall be delivered to Time Warner in
consideration of the TW Note Claims.






	 	(3)	 	Voting: Class 3 is Impaired and the Holders of TW Party Claims
are entitled to vote to accept or reject the Plan.





     (d) Class 4—General Unsecured Claims against the Debtors




	 	(1)	 	Classification: Class 4 consists of all Claims against the
Debtors that are not Secured Claims, TW Party Claims, AOL License Rejection
Claims, Subordinated Claims, Administrative Claims, Priority Claims or Priority
Tax Claims, but including without limitation, Claims arising from the rejection
of an unexpired lease or executory contract pursuant to Section 6.1(a) of the
Plan or otherwise.
	 
	 	(2)	 	Treatment: On the later of (a) the Effective Date and (b) the
date upon which such Holder’s Class 4 Claim is Allowed, each Holder of an
Allowed Class 4 General Unsecured Claim shall receive:






	 	(A)	 	if the LLC Option is elected, such Holder’s (a)
pro rata share of the Series A-2 Beneficial Interests, and to the
extent such Holder is a Holder of an Accepting Class 4 Claim, its pro
rata share of the Series A-1 Beneficial Interests and (b) the PR
Distribution Amount; or
	 
	 	(B)	 	if the Cash Option is elected, (a) if such
Holder is a Holder of Accepting Class 4 Claims, such Holder’s Accepting
Class 4 Claim Payment and (b) if such Holder is a Holder of
Nonaccepting Class 4 Claims, (i) such Holder’s Nonaccepting Effective
Date Payment and (ii) the right to receive on each Distribution Date,
Cash derived from the Nonaccepting Class 4 Claims Fund equal to such
Holder’s pro rata share of Available Cash available for Distribution on
such Date as determined by the proportion that such Holder’s Allowed
Claim bears to the Total Allowed Unsecured Claims.
	 
	 	 	 	If the LLC Option is elected pursuant to Section 3.3(d)(i)(A) of the
Plan, on or before the Effective Date, the Debtors shall fund the
Disputed General Unsecured Claims Fund. If the Cash Option is
elected pursuant to Section 3.3(d)(i)(B) of the Plan, on or before
the Effective Date, the Debtors shall fund each of the Accepting
Class 4 Claims Fund and the Nonaccepting Class 4 Claims Fund.
	 
	 	(C)	 	The Cash Option shall be presumed to be elected
unless, no later than five (5) days prior to the Effective Date, the
Debtors, with the consent of the Principal Stockholders, file a notice
with the Bankruptcy Court electing the LLC Option.




26









 












	 	(3)	 	Voting: Class 4 is Impaired and the Holders of Class 4 General
Unsecured Claims are entitled to vote to accept or reject the Plan.





     (e) Class 5—Existing Series C Interests




	 	(1)	 	Classification: Class 5 consists of the Equity Interests
arising under or in connection with the Series C Redeemable Convertible
Preferred Stock of AOLA.
	 
	 	(2)	 	Treatment: On the Effective Date all Existing Series C
Interests shall be deemed cancelled. On the Effective Date, Time Warner (or
the LLC Agents on behalf of Time Warner) shall turn over to each of the
Cisneros Group Parties on an equal basis the Series C Beneficial Interests.
	 
	 	(3)	 	Voting: Class 5 is Impaired. The Holders of Existing Series C
Interests are deemed to reject the Plan pursuant to Section 1126 of the
Bankruptcy Code and are not entitled to vote to accept or reject the Plan.





     (f) Class 6—Other Equity Interests




	 	(1)	 	Classification: Class 6 consists of all Equity Interests other
than Existing Series C Interests.
	 
	 	(2)	 	Treatment: On the Effective Date, all Other Equity Interests
will be canceled and each Holder thereof shall not be entitled to receive or
retain any Distribution on account of such Other Equity Interests.
	 
	 	(3)	 	Voting: Class 6 is Impaired. The Holders of Other Equity
Interests are deemed to reject the Plan pursuant to Section 1126(g) of the
Bankruptcy Code and are not entitled to vote to accept or reject the Plan.





     (g) Class 7—Subordinated Claims against the Debtors




	 	(1)	 	Classification: Class 7 consists of all Claims arising in
connection with any Equity Interest, including, without limitation, Claims
arising from the rescission of a purchase or sale of any equity security of
AOLA, for damages arising from the purchase or sale of such security, or for
reimbursement or contribution under section 502 of the Bankruptcy Code on
account of such Claim and attorneys’ fees associated therewith to the extent
subordinated under section 510(b) of the Bankruptcy Code.
	 
	 	(2)	 	Treatment: On the Effective Date, all Subordinated Claims will
be discharged and each Holder thereof shall not receive or retain any
Distribution or property on account of such Subordinated Claim.
	 
	 	(3)	 	Voting: Class 7 is Impaired. The Holders of Subordinated
Claims are deemed to reject the Plan pursuant to Section 1126(g) of the
Bankruptcy Code and are not entitled to vote to accept or reject the Plan.





     Notwithstanding any other provision of the Plan, any Allowed Claim against the Debtors shall
be reduced by the amount, if any, that was paid by the Debtors to the Holder of such Claim in
respect of such Allowed Claim prior to the Effective Date, including pursuant to any Final Order
entered by the



27









 





Bankruptcy Court. Nothing in the Plan shall preclude the Liquidating LLC from paying Claims
that the Debtors were authorized to pay pursuant to any Final Order entered by the Bankruptcy Court
prior to the Confirmation Date.



     Except as otherwise provided in the Plan, the Confirmation Order, any other order of the
Bankruptcy Court or any document or agreement entered into and enforceable pursuant to the terms of
the Plan, nothing shall affect the Debtors’, Reorganized AOLA LLC’s or the Liquidating LLC’s Causes
of Action, rights and defenses, both legal and equitable, with respect to any Unimpaired Claims,
including, but not limited to, all rights with respect to legal and equitable defenses to, setoffs
or recoupments against, Unimpaired Claims and all Causes of Action for the affirmative relief
against the holders thereof.



     4. Cram Down



     With respect to any Impaired Class of Claims or Equity Interests that is deemed to reject the
Plan, the Debtors shall request that the Bankruptcy Court confirm the Plan pursuant to section
1129(b) of the Bankruptcy Code.



I. Means for Implementation of the Plan




     1. Intercompany Claims



     On the Effective Date, all Intercompany Claims shall be eliminated and extinguished.



     2. Vesting of Assets in Reorganized AOLA LLC



     Except as otherwise provided in the Plan or any agreement, instrument or indenture relating
thereto, on or after the Effective Date, after the conversion of AOLA into Reorganized AOLA LLC
pursuant to Section 5.10 of the Plan, the Retained Assets shall vest in Reorganized AOLA LLC, free
and clear of all Claims, Liens, charges or other encumbrances and Interests. On and after the
Effective Date, Reorganized AOLA LLC may operate its business and may use, acquire or dispose of
property and compromise or settle any Claims or Equity Interests, without supervision or approval
by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules,
other than those restrictions expressly imposed by the Plan and the Confirmation Order. Without
limiting the generality of the foregoing, all rights, privileges, entitlements, authorizations,
grants, permits, licenses, easements, franchises, and other similar items which constitute part of,
or are necessary or useful in the operation or the business of AOL Spain, whether in the United
States or elsewhere, shall be vested in Reorganized AOLA LLC, on the Effective Date, and shall
thereafter be exercisable and usable by Reorganized AOLA LLC to the same and fullest extent they
would have been exercisable and usable by the Debtors before the Petition Date.



     Unless otherwise required by law, the holders of beneficial interests in the Liquidating LLC
(and any transferees), the Liquidating LLC, the Debtors and Reorganized AOLA LLC shall treat the
liquidation of the Dissolving Debtors, the conversion of AOLA into Reorganized AOLA LLC, and the
subsequent vesting of the Reorganized AOLA LLC interests into the Liquidating LLC for U.S. federal
income tax purposes as follows (and as occurring in the following order): (i) the liquidation,
under section 332 of the Internal Revenue Code of 1986, as amended, of each of AOL Caribbean Basin
and Puerto Rico Management Services with and into AOLA, (ii) the transfer of the assets of AOLA,
including the Other PR Assets and the PR Agreement, to the TW Parties with respect to the TW Party
Claims (subject to Time Warner’s turnover obligation described in Sections 3.3(c), 3.3(e) and 5.11
of the Plan to the Cisneros Group Parties) and the Holders of Allowed Class 4 General Unsecured
Claims (but, as to the Holders of Allowed Class 4 General Unsecured Claims, if the LLC Option is
elected, excluding the Other



28









 





PR Assets and the PR Agreement and, if the LLC Option is not elected, assets consisting solely
of cash), and (iii) (a) if the LLC Option is elected, the contribution of the assets of AOLA (other
than the Other PR Assets and the PR Agreement) by Time Warner and the Holders of Allowed Class 4
General Unsecured Claims to the Liquidating LLC in exchange for interests in the Liquidating LLC
and the substantially concurrent turnover, on behalf of and at the direction of Time Warner, of the
Series C Beneficial Interest to the Cisneros Group Parties or (b) if the Cash Option is elected,
the turnover of a portion of the AOLA assets to the Cisneros Group Parties and the contribution of
the AOLA assets (other than the Other PR Assets and the PR Agreement) by Time Warner and the
Cisneros Group Parties in exchange for interests in the Liquidating LLC. No holder of a beneficial
interest in the Liquidating LLC (or any transferees), AOLA, Reorganized AOLA LLC or the Liquidating
LLC shall take any position contrary to this paragraph for United States federal income tax
purposes unless otherwise required by law.



     3. Dismissal of Officers and Directors and Dissolution of Dissolving Debtors



     Upon the Effective Date and immediately prior to the conversion of AOLA pursuant to Section
5.10 of the Plan, (i) the existing board of directors and board of managers, as applicable, of each
of the Dissolving Debtors and their respective remaining officers shall be dismissed and (ii) each
of the Dissolving Debtors shall be deemed dissolved without any further action required on the part
of any of the Dissolving Debtors, the shareholders of any of the Dissolving Debtors or the officers
or directors of any of the Dissolving Debtors.



     The Confirmation Order shall provide that on the Effective Date, Final Decrees shall be
entered in the Chapter 11 Cases of the Dissolving Debtors.



     4. Vesting of Assets in the Liquidating LLC



     Except as otherwise provided in the Plan or any agreement, instrument or indenture relating
thereto, on the Effective Date, all of the Debtors’ Assets (excluding the Retained Assets, which
will be held by Reorganized AOLA LLC directly), any Assets acquired by the Debtors or the
Liquidating LLC under the Plan and all the limited liability company interests in Reorganized AOLA
LLC, shall vest in the Liquidating LLC, free and clear of all Claims, Liens, charges or other
encumbrances, and the Liquidating LLC shall own all of the limited liability company interests in
Reorganized AOLA LLC. The Liquidating LLC Expense Reserve, the Administrative Claims Reserve Fund,
the Retention Payment Fund, the Disputed Priority Claims Fund, and if the LLC Option is elected,
the Disputed General Unsecured Claims Fund or if the Cash Option is elected, the Nonaccepting Class
4 Claims Fund and the Accepting Class 4 Claims Fund, as applicable, shall all be assets of the
Liquidating LLC, but Distributions from such funds shall be governed by the terms of the Plan.
Subject to the provisions of the Plan and the Liquidating LLC Agreement, the Assets in the
Liquidating LLC shall be managed and used for the sole purposes of carrying out the Plan and
effectuating the Distributions provided for in the Plan.



     5. Transfer of Other PR Assets to AOL



     On the PR Transfer Date, the Other PR Assets shall be assigned, conveyed and transferred to
AOL (or to such other TW Party as directed by the TW Parties) free and clear of all Claims, Liens,
charges or other encumbrances and interests (as such terms are used in Section 363(f) of the
Bankruptcy Code) on an as-is, where is basis, and without any representations or warranties,
continuing obligations or indemnities of the Debtors, except as set forth in Section 10.2(j) of the
Plan. The Debtors are authorized to execute and deliver, and are empowered to fully perform under,
consummate and implement, the Plan, together with all additional instruments and documents that may
be reasonably necessary or desirable to implement the transfer of the Other PR Assets to AOL (or to
such other TW Party as directed by the TW Parties) on the PR Transfer Date, and to take all further
actions as may be requested by the TW Parties for



29









 





the purpose of transferring the Other PR Assets to AOL (or to such other TW Party as directed
by the TW Parties), or as may be necessary or appropriate to the performance of the obligations as
contemplated by the Plan in connection with the transfer of the Other PR Assets to AOL (or to such
other TW Party as directed by the TW Parties) on the PR Transfer Date. The Confirmation Order
shall provide that the transfer of the Other PR Assets to AOL (or to such other TW Party as
directed by the TW Parties) is a transfer pursuant to section 1146(c) of the Bankruptcy Code, and
accordingly, pursuant to section 1146(c) of the Bankruptcy Code, the transfer of the Other PR
Assets and the execution, delivery and/or recordation of any and all documents or instruments
necessary or desirable to consummate the transfer of the Other PR Assets shall be exempt from the
imposition and payment of all recording fees and taxes, stamp taxes and/or sales, use, transfer,
documentary, registration or any other similar taxes. The Confirmation Order shall provide that
each and every federal, state and local governmental agency or department is directed to accept any
and all documents and instruments necessary and appropriate to consummate the transfer of the Other
PR Assets to AOL (or to such other TW Party as directed by the TW Parties), all without imposition
or payment of any stamp tax, transfer tax or similar tax.



     6. Restructuring Transactions



     Subject to obtaining the consent of the Principal Stockholders (other than AOL), prior to, on
or after the Effective Date, Reorganized AOLA LLC or the Liquidating LLC may enter into such
transactions and may take such actions as may be necessary or appropriate to effect a corporate
restructuring of their respective subsidiaries, to otherwise simplify the overall corporate
structure of Reorganized AOLA LLC or the Liquidating LLC, to reincorporate or otherwise amend the
legal form of certain of their subsidiaries or to reincorporate certain of their respective
subsidiaries under the laws of jurisdictions other than the laws of which such subsidiaries are
presently incorporated; provided, however, that no action shall be taken that would cause the
Liquidating LLC or Reorganized AOLA LLC to be treated as other than a partnership or disregarded
entity for U.S. federal income tax purposes. Such restructuring may include one or more mergers,
consolidations, restructures, reincorporations, dispositions, liquidations, or dissolutions, as may
be determined by the Liquidating LLC or Reorganized AOLA LLC to be necessary or appropriate
(collectively, the “Restructuring Transactions”). The actions to effect the Restructuring
Transactions may include (i) the execution and delivery of appropriate agreements or other
documents of merger, consolidation, restructuring, disposition, liquidation, or dissolution
containing terms that are consistent with the terms of the Plan and that satisfy the applicable
requirements of applicable state law and such other terms to which the applicable entities may
agree; (ii) the execution and delivery of appropriate instruments of transfer, assignment,
assumption, or delegation of any asset, property, right, liability, duty, or obligation on terms
consistent with the terms of the Plan and having such other terms to which the applicable entities
may agree; (iii) the filing of appropriate certificates or articles of merger, consolidation, or
dissolution pursuant to applicable state law; and (iv) all other actions that the applicable
entities determine to be necessary or appropriate, including making filings or recordings that may
be required by applicable state or foreign law in connection with such transactions. The
Restructuring Transactions may include one or more mergers, consolidations, restructures,
reincorporations, dispositions, liquidations, or dissolutions, as may be determined by the
Liquidating LLC or Reorganized AOLA LLC to be necessary or appropriate to result in substantially
all of the respective assets, properties, rights, liabilities, duties, and obligations of the
Liquidating LLC, Reorganized AOLA LLC or their subsidiaries vesting in one or more surviving,
resulting, or acquiring corporations.



     7. Authority to Effectuate Plan



     Upon the entry of the Confirmation Order by the Bankruptcy Court, all matters provided under
the Plan shall be deemed to be authorized and approved without further approval from the Bankruptcy
Court. The Liquidating LLC and the LLC Agents shall be authorized, without further application to
or



30









 





order of the Bankruptcy Court, to take whatever action is necessary to achieve consummation of
the Plan and carry out the Plan and to effectuate the transfers and Distributions provided for
hereunder, subject to the provisions of the Plan, including Article V of the Plan. The Liquidating
LLC and the LLC Agents are expressly authorized to sell or dispose of any and all Assets and to pay
all costs and expenses associated with such sale or disposition without further order of the
Bankruptcy Court, subject to the provisions of the Plan.



     8. Cancellation of Notes, Instruments, Debentures and Equity Interests



     On the Effective Date, except to the extent provided elsewhere in the Plan or the Confirmation
Order, and provided that the treatments provided for in the Plan and the Distributions contemplated
by Article VIII of the Plan are made, all notes, instruments, certificates and other documents
evidencing Claims (including, without limitation, the TW Notes) and all Equity Interests in all of
the Debtors shall be canceled and deemed terminated, without any further act or action under any
applicable agreement, law, regulation, order, rule or otherwise, and the limited liability company
interests in Reorganized AOLA LLC shall vest in and be held by the Liquidating LLC.



     9. Execution of Related Documents



     On the Effective Date, all Plan Documents including, without limitation, the Liquidating LLC
Agreement, the AOLA Certificate of Conversion to Limited Liability Company, the AOLA Limited
Liability Company Agreement and any other agreement entered into or instrument issued in connection
with any of the foregoing or any other Plan Document, shall be executed and delivered by the
Debtors or the Liquidating LLC, as the case may be, and shall become effective and binding in
accordance with their respective terms and conditions upon the parties thereto and as specified in
the Plan.



     10. Conversion of AOLA to Reorganized AOLA LLC, Sole Member of Reorganized AOLA LLC and
Corporate Action



     The Confirmation Order shall provide that, pursuant to section 266 of the Delaware General
Corporation Law and section 18-214 of the Delaware Limited Liability Company Act, AOLA shall be
converted to a limited liability company and shall continue to exist as Reorganized AOLA LLC. The
Confirmation Order shall further provide that, except as otherwise provided in the Plan, (i)
pursuant to section 18-214 of the Delaware Limited Liability Company Act, the conversion of AOLA to
Reorganized AOLA LLC shall not be deemed to constitute a dissolution of AOLA, (ii) Reorganized AOLA
LLC, for all purposes of the laws of the State of Delaware, shall be deemed to be the same entity
as AOLA, (iii) pursuant to section 266 of the Delaware General Corporation Law, the rights,
privileges, powers and interest in the Retained Assets of AOLA shall not be deemed, as a
consequence of the conversion of AOLA to a limited liability company pursuant to the Plan, to have
been transferred to Reorganized AOLA LLC for any purpose of the laws of the State of Delaware and
(iv) Reorganized AOLA LLC shall continue to exist after the Effective Date as a separate corporate
entity, with all the powers of a limited liability company under the laws of the State of Delaware
and without prejudice to any right to alter or terminate such existence (whether by merger or
otherwise) under such applicable state law.



     On the Effective Date, the Debtors shall file the AOLA Limited Liability Company Agreement and
the AOLA Certificate of Conversion to Limited Liability Company with the Secretary of State of the
State of Delaware in accordance with section 266 of the Delaware General Corporation Law and
sections 18-201 and 18-214 of the Delaware Limited Liability Company Act. After the Effective
Date, Reorganized AOLA LLC may amend and restate the AOLA Limited Liability Company Agreement and
other constituent documents as permitted by their terms and by the Delaware Limited Liability
Company



31









 





Act. As of the Effective Date, the sole member of Reorganized AOLA LLC shall be the
Liquidating LLC.



     As of the Effective Date, the initial officer of Reorganized AOLA LLC shall be the LLC
Administrator. As of the Effective Date, Reorganized AOLA LLC shall have no board of managers.
Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will disclose, on or prior to
the Confirmation Date, the identity and affiliations of the Person proposed to serve as the LLC
Administrator and the nature of any compensation for such Person.



     On the Effective Date, the filing of the AOLA Limited Liability Company Agreement and the AOLA
Certificate of Conversion to Limited Liability Company with the Secretary of State of the State of
Delaware and all other actions contemplated by the Plan (whether to occur before, on or after
Effective Date of the Plan) shall be authorized and approved in all respects (subject to the
provisions of the Plan). All matters provided for in the Plan involving the corporate structure of
the Debtors or Reorganized AOLA LLC, and any corporate action required by the Debtors or
Reorganized AOLA LLC in connection with the Plan, shall be deemed to have occurred and shall be in
effect, without any requirement of further action by the security holders or directors of the
Debtors or the sole member of Reorganized AOLA LLC. On the Effective Date, the appropriate
officers of the Debtors and Reorganized AOLA LLC, the members of the boards of directors of the
Debtors and the sole member of Reorganized AOLA LLC are authorized and directed to issue, execute
and deliver the agreements, documents, securities and instruments contemplated by the Plan in the
name of and on behalf of the Debtors or Reorganized AOLA LLC, as applicable. The authorizations
and approvals of the corporate actions in Section 5.10 of the Plan shall be effective
notwithstanding any requirements under the Delaware General Corporation Law, the Delaware Limited
Liability Company Act or other applicable non-bankruptcy law.



     11. Distributions by the Liquidating LLC; Turnover by Time Warner to Accepting Class 4 Claims
and the Cisneros Group Parties



     In order to implement the Distribution scheme contemplated by the Plan, the LLC Agents shall
make Distributions in accordance with the following mechanics:



     (a) On the Effective Date, the LLC Agents shall (1) establish and fund: (i) the
Administrative Claims Reserve Fund, (ii) the Liquidating LLC Expense Reserve (iii) the Retention
Payment Fund, and (iv) if the Cash Option is elected, the Nonaccepting Class 4 Claims Fund and the
Accepting Class 4 Claims Fund and (2) pay, or reserve for the payment of, the Priority Tax Claims,
Allowed Class 1 Claims and Allowed Class 2 Claims.



     (b) On the PR Transfer Date, AOLA shall (i) assume the PR Agreement (without the payment of
any cure costs) and assign the PR Agreement to Time Warner (or to such other TW Party as directed
by the TW Parties) and (ii) assign, convey and transfer the Other PR Assets to AOL (or to such
other TW Party as directed by the TW Parties). AOLA shall have no further liability under the PR
Agreements or any executory contracts and unexpired leases that constitute Other PR Assets
following the assignment thereof.



     (c) On the Effective Date or, in the case of Distributions made pursuant to clause (i) of this
subsection (c), on the later of the Effective Date and the date upon which there is a Final Order
allowing such Class 4 General Unsecured Claim, the Liquidating LLC shall transfer (i)(a) if the LLC
Option is elected, to each Holder of an Allowed Class 4 General Unsecured Claim, its PR
Distribution Amount and Series A-2 Beneficial Interests and, to the extent such Holder is the
Holder of an Accepting Class 4 Claim, such Holder’s Series A-1 Beneficial Interests, or (b) if the
Cash Option is elected, such Holder’s PR Distribution Amount and Additional Distribution Amount
and, to the extent such Holder is the Holder



32









 





of an Accepting Class 4 Claim, such Holder’s pro rata portion of the Turnover Amount, and (ii)
to Time Warner, the Series B Beneficial Interests and the Series C Beneficial Interests; provided,
that the LLC Agents are hereby authorized and directed by Time Warner to immediately turn over, on
the Effective Date, on Time Warner’s behalf, (1) to the Holders of Accepting Class 4 Claims, Time
Warner’s Series A-1 Beneficial Interests which represents the right to receive the Accepting Class
4 Distribution Amount referred to in clause (i) of this subsection (c), if the LLC Option is
elected, or the Turnover Amount, if the Cash Option is elected, and (2) to the Cisneros Group
Parties, the Series C Beneficial Interests.



     (d) If the LLC Option is elected, as a result of the Distribution by the LLC Agents of the
Liquidating LLC Interests and other consideration described above, Cash in the Liquidating LLC
shall be distributed or reserved in the following manner:




first, from Cash on hand, the LLC Agents shall pay or fund a reserve for payment of
all Allowed Administrative Claims, Allowed Priority Claims, Allowed Priority Tax
Claims, Allowed Class 1 Claims and Allowed Class 2 Claims, shall establish the
Liquidating LLC Expense Reserve and shall fund the Retention Payment Fund and, based
upon an assessment of the projected payments to be made by the Liquidating LLC to
Holders of Allowed Class 4 General Unsecured Claims, shall fund the Disputed General
Unsecured Claims Fund and the Disputed Priority Claims Fund. Any Cash on hand
remaining in the Liquidating LLC after the payments and reserves described above
shall constitute Available Cash;




second, each Holder of an Allowed Class 4 General Unsecured Claim shall receive its
PR Distribution Amount from Available Cash;




third, after the payment of the PR Distribution Amount, (1) each Holder of an
Allowed Class 4 General Unsecured Claim shall receive, on account of such Holder’s
Series A-2 Beneficial Interests, such Holder’s pro rata share of the remaining
Available Cash based on the proportion its Allowed Class 4 General Unsecured Claim
bears to Total Allowed Unsecured Claims and (2) each Holder of an Accepting Class 4
Claim shall receive, on account of such Holder’s Series A-1 Beneficial Interests,
additional distributions of Available Cash that would have otherwise been
distributed to Time Warner on account of the TW Note Claims prior to the turnover
until such Accepting Class 4 Claims are paid in full; and




fourth, following the payment in full of all Accepting Class 4 Claims, Available
Cash shall be distributed ratably to Time Warner and each Holder of an Allowed Class
4 General Unsecured Claim that is not an Accepting Class 4 Claim based on the
proportion that such Allowed Claim bears to the aggregate amount of TW Party Claims
and the Allowed Class 4 General Unsecured Claims; provided, that the Cisneros Group
Parties shall be entitled to receive all amounts payable with respect to the Series
C Beneficial Interests, which consists of the first $5,363,028 of the amounts that,
prior to the turnover of the Series C Beneficial Interests, would have otherwise
been allocable to Time Warner under this clause fourth and, thereafter, 40% of the
amounts that, prior to the turnover of the Series C Beneficial Interests, would have
otherwise been additionally allocable to Time Warner under this clause fourth.



     (e) If the Cash Option is elected, then



33









 






	 	(i)	 	on the Effective Date, the LLC Agents shall pay or fund or
reserve for payment the funds and reserves pursuant to subsection (d)(i) of
Section 5.11 of the Plan(other than the Disputed General Unsecured Claims
Fund);
	 
	 	(ii)	 	on the Effective Date, Holders of Allowed Accepting Class 4
Claims shall receive, from Available Cash, payments equal to 100% of such
Holder’s Allowed Accepting Class 4 Claim, comprised of such Holder’s PR
Distribution Amount, such Holder’s Additional Distribution Amount and such
Holder’s pro rata share of the Turnover Amount; provided, that Holders of
Allowed Accepting Class 4 Claims whose claims are Allowed after the Effective
Date, shall receive payments equal to 100% of such Holder’s Allowed Accepting
Class 4 Claim from the Accepting Class 4 Claims Fund on the date upon which
such Holder’s Accepting Class 4 Claim is Allowed. Holders of Allowed
Nonaccepting Class 4 Claims shall receive pari passu treatment with the TW
Parties, comprised of the payment on the Effective Date of such Holder’s PR
Distribution Amount and such Holder’s Additional Distribution Amount and pro
rata payments on each Distribution Date from the Nonaccepting Class 4 Claims
Fund in an amount sufficient to maintain pari passu treatment with the TW Party
Claims to the extent Time Warner or the Cisneros Group Parties receive
Distributions from Net Available Cash on account of their Series B Beneficial
Interests and Series C Beneficial Interests, respectively. The LLC Agents
shall fund the Nonaccepting Class 4 Claims Fund and the Accepting Class 4
Claims Fund on the Effective Date. Any Cash on hand remaining in the
Liquidating LLC after funding of the Nonaccepting Class 4 Claims Fund and the
Accepting Class 4 Claims Fund and the payments and reserves described in
subsection (d)(i) of Section 5.11 of the Plan (other than the Disputed General
Unsecured Claims Fund) shall constitute Available Cash; and
	 
	 	(iii)	 	following the payment in full of all Accepting Class 4 Claims,
Available Cash shall be distributed to Time Warner; provided, that the Cisneros
Group Parties shall be entitled to receive all amounts payable with respect to
the Series C Beneficial Interests, which consists of the first $5,363,028 of
the amounts that, prior to the turnover of the Series C Beneficial Interests,
would have otherwise been allocable to Time Warner under subsection (e)(iii) of
Section 5.11 of the Plan and, thereafter, 40% of the amounts that, prior to the
turnover of the Series C Beneficial Interests, would have otherwise been
additionally allocable to Time Warner under subsection (e)(iii) of Section 5.11
of the Plan.





     (f) To the extent there is excess Cash in the Administrative Claims Reserve Fund, the
Liquidating LLC Expense Reserve, the Disputed Priority Claims Fund, the Retention Fund, and, if the
LLC Option is elected, the Disputed General Unsecured Claims Fund or if the Cash Option is elected,
the Nonaccepting Class 4 Claims Fund and the Accepting Class 4 Claims Fund, after the payment of
all amounts required to be paid from such reserve or fund, such Cash shall constitute Available
Cash and shall be distributed to the Holders of Allowed Class 4 General Unsecured Claims (to the
extent not already paid in full), Time Warner and the Cisneros Group Parties in accordance with the
terms of the Plan and the waterfall described above.



     12. Status Reports



     Not later than ninety (90) days following the occurrence of the entry of the Effective Date,
the LLC Agents shall file with the Bankruptcy Court and serve on counsel to the Principal
Stockholders



34









 





status reports and a detailed accounting explaining what progress has been made toward entry
of the Final Decree. The status reports shall also be served on the US Trustee, and those parties
who have requested special notice post-confirmation. Until entry of the Final Decree, further
status reports shall be filed every one hundred twenty (120) days and served on the same entities.
Each status report shall include a description of Assets sold or otherwise realized upon, gross and
net proceeds received, Distributions made, expenses incurred and paid, remaining Budget funds and
projected Budget expenses, and cash on hand, as well as a detailed reporting of claims objections
and the status of all contested matters and litigation.



     13. Elimination of Classes



     Any Class of Claims or Equity Interests that is not occupied as of the date of the
commencement of the Confirmation Hearing by an Allowed Claim or an Allowed Equity Interest, or a
Claim or Equity Interest temporarily allowed under Rule 3018 of the Bankruptcy Rules, shall be
deemed deleted from the Plan for all purposes.



     14. Late Claims



     In accordance with the Bar Date Order, unless otherwise specifically ordered by the Bankruptcy
Court, any entity that was required to but did not file (a) a proof of claim in respect of a Claim
in compliance the procedures and deadlines established by the Bar Date Order or (b) a request for
payment of an Administrative Claim in compliance with Section 2.1 of the Plan, shall not be treated
as a creditor with respect to such Claim for the purposes of voting and distribution with respect
to the Plan.



     Notwithstanding anything to the contrary contained in the Bar Date Order, Holders of D&O
Indemnity Claims shall not be required to file a proof of claim in respect of such D&O Indemnity
Claims except as set forth in a further order of the Bankruptcy Court. Holders of D&O Indemnity
Claims shall not be entitled to vote with respect to the Plan, in respect of such D&O Indemnity
Claims.



     15. Creation of the Liquidating LLC



     On the Effective Date, after the conversion of AOLA into Reorganized AOLA LLC pursuant to
Section 5.10 of the Plan, (i) the Liquidating LLC shall be created and established by the execution
and delivery of the Liquidating LLC Agreement and any other necessary action, subject to the
provisions of the Plan, and (ii) all Rights of Action and other Assets (excluding the Retained
Assets), any assets acquired by the Debtors or the Liquidating LLC under the Plan and all limited
liability company interests in Reorganized AOLA LLC, shall be transferred to the Liquidating LLC,
free of all Claims, Liens and interests. The costs and expenses incurred by the Liquidating LLC on
and after the Effective Date shall be paid by the Liquidating LLC.



     As of the Effective Date, the Liquidating LLC shall be responsible for (i) the winding up of
the Debtors’ Estates, (ii) liquidating or otherwise reducing to Cash the Assets and/or the Retained
Assets in accordance with the Liquidating LLC Agreement, (iii) filing, prosecuting and settling the
Rights of Action, (iv) making Distributions in accordance with the Plan to Holders of Allowed
Claims and Interests and (v) settling, resolving and objecting to Claims. The Liquidating LLC
shall have the authority without further Bankruptcy Court approval to liquidate the Assets, to hire
and pay professional fees and expenses of counsel and other advisors, to prosecute and settle
objections to Disputed Claims, to pursue any preserved Rights of Action, and otherwise to take such
other actions as shall be necessary to administer the Chapter 11 Cases and effect the closing of
the Chapter 11 Cases.



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     The Liquidating LLC Interests shall not be transferable; provided, that Liquidating LLC
Interests received by (i) Time Warner may be transferred to any TW Party or any affiliate of any TW
Party and (ii) any Cisneros Group Party may be transferred to any other Cisneros Group Party or any
affiliate of the Cisneros Group Parties.



     The Liquidating LLC shall indemnify and hold harmless the LLC Agents and their professionals
from and against any and all liabilities, expenses, claims, damages or losses incurred by them as a
direct result of acts or omissions taken by them in their capacities as LLC Agents or agents of the
LLC Agents, except for acts judicially determined by Final Order to have been undertaken in bad
faith, by willful misconduct or by gross negligence.



     16. The LLC Agents



     The TW Parties and the Cisneros Group Parties shall each designate one individual to serve as
a LLC Agent, and the Debtors shall disclose such selections in the Plan Supplement. Following the
Effective Date, the LLC Agents shall act as agents on behalf of the Liquidating LLC to carry out
its obligations and exercise its rights in accordance with and subject to the Plan, the
Confirmation Order and the Liquidating LLC Agreement. The LLC Agents shall not be compensated for
their services except as set forth in the Liquidating LLC Agreement. Any objection to the
designation of the LLC Agents shall be raised at the Confirmation Hearing. The Confirmation Order
shall state that without the permission of the Bankruptcy Court, no judicial, administrative,
arbitration or other action or proceeding shall be commenced against the LLC Agents in their
official capacities, with respect to their status, duties, powers, acts or omissions as LLC Agents
in any forum other than the Bankruptcy Court. The LLC Agents shall be vested with the rights,
powers and benefits set forth in the Liquidating LLC Agreement, which shall include, without
limitation, all rights, powers, and benefits afforded to a “trustee” under sections 704 and 1106 of
the Bankruptcy Code, subject to the terms of the Plan. The LLC Agents shall be deemed to be
successors to the Debtors and estate representatives pursuant to section 1123(b)(3) of the
Bankruptcy Code. Subject to the provisions of the Liquidating LLC Agreement, the Liquidating LLC
and the LLC Agents shall be entitled to hire such professionals as the LLC Agents deem necessary to
assist the Liquidating LLC and the LLC Agents in carrying out their duties, including, without
limitation, the LLC Administrator, with the fees and expenses of such professionals (including,
without limitation, the LLC Administrator) to be borne by the Liquidating LLC. All references in
the Plan to the LLC Agents shall include the LLC Administrator, as designee of the LLC Agents.



     In addition to reporting requirements set forth in Section 5.11 of the Plan, the LLC Agents
shall regularly monitor the liquidation of Assets.



     Upon the date that all Claims have either become Allowed Claims or been resolved by Final
Order and all Distributions in respect of such Allowed Claims have been made, the balance of the
Administrative Claims Reserve Fund, the Retention Payment Fund, the Disputed Priority Claims Fund,
and, if the Debtors elect the LLC Option, the Disputed General Unsecured Claims Fund or if the
Debtors elect the Cash Option, the Nonaccepting Class 4 Claims Fund and the Accepting Class 4
Claims Fund shall constitute Available Cash.



     Subject to the terms of the Plan, the LLC Agents shall be authorized and empowered to pursue
and prosecute, to settle, or to decline to pursue, the Rights of Action, including all pending
adversary proceedings and contested matters, whether or not such Causes of Action have been
commenced prior to the Effective Date, and shall be substituted as the real party in interest in
any such action, commenced by or against the Debtors, the Debtors’ Estates or the Principal
Stockholders. The LLC Agents may pursue or decline to pursue the Rights of Action and may settle,
release, sell, assign, otherwise transfer or compromise such Rights of Action, in the LLC Agents’
business judgment, subject to the provisions of



36









 





the Plan without Bankruptcy Court approval. Except as otherwise set forth in the Plan, the
LLC Agents may, but shall not be required to, set off against any Claim and the Distributions to be
made pursuant to the Plan in respect of such Claim, any Rights of Action the Estates may have
against the Holder of the Claim, but neither the failure to do so nor the allowance of any Claim
hereunder shall constitute a waiver or release by the LLC Agents of any such Rights of Action,
set-off or recoupment which the Debtors may have against such Holder.



     The LLC Agents may be removed and replaced in accordance with the terms of the Liquidating LLC
Agreement.



     17. Treatment of Executory Contracts and Unexpired Leases



     (a) Assumption/ Rejection of Executory Contracts and Unexpired Leases



     Any executory contracts or unexpired leases entered into by the Debtors prior to the Petition
Date which have not expired by their own terms on or prior to the Effective Date, which have not
been assumed and assigned or rejected with the approval of the Bankruptcy Court, which are not (i)
the subject of a motion to assume the same pending as of the Effective Date, (ii) listed in the
Plan Supplement, (iii) in the case of executory contracts or unexpired leases relating to the Other
PR Assets, otherwise listed in the Plan Supplement, which contracts and leases shall be assumed by
the Debtors on the Effective Date and assigned to AOL (or to such other TW Party as directed by the
TW Parties) or (iv) otherwise to be assumed pursuant to the Plan, shall be deemed rejected by the
Debtors on the Effective Date or as otherwise agreed upon by the parties. The entry of the
Confirmation Order by the Bankruptcy Court shall constitute approval of such rejections pursuant to
sections 365(a) and 1123 of the Bankruptcy Code.



     The PR Agreement shall be expressly assumed by AOLA as of the Effective Date and assigned to
Time Warner (or to such other TW Party as directed by the TW Parties) pursuant to Section 3.3(c) of
the Plan; provided, however, that to the extent the Effective Date occurs prior to June 30, 2006,
(i) AOL shall remit (on a monthly basis) to the Liquidating LLC the net amounts that AOLA would
have otherwise been entitled to receive thereunder through and including June 30, 2006, had the PR
Agreement remained in effect as between AOL and AOLA (which net amounts shall be calculated and
determined in good faith between AOL and Reorganized AOLA LLC and shall take into consideration the
costs of operating AOL Puerto Rico in a manner substantially similar to historical practices) and
(ii) the Liquidating LLC shall be entitled to exercise all of AOLA’s rights and enforce any
remedies available to AOLA under the PR Agreement for the period beginning on the Effective Date
through and including June 30, 2006; provided, further, however, that (x) on or before the
Effective Date, AOL shall remit to the Liquidating LLC all accrued and unpaid amounts, or a good
faith estimate thereof, owing by AOL in favor of the Debtors pursuant to the PR Agreement as of the
last business day of the preceding calendar month and (y) within 30 days of the Effective Date, AOL
shall remit to the Liquidating LLC all accrued and unpaid amounts owing by AOL in favor of the
Debtors pursuant to the PR Agreement as of the Effective Date not theretofore paid. The LLC Agents
shall use all proceeds received pursuant to Section 6.1(b) of the Plan in accordance with the terms
of the Plan and the Liquidating LLC Agreement.



     The AOL License shall be expressly rejected by the Debtors on the Effective Date; provided,
however, that the effective date of such rejection, as to each country, shall be the earlier of (i)
the transfer of that country’s operations or final wind-down of operations and (ii) June 30, 2006.



     On and after the Effective Date, each of the TW Parties shall be deemed to have released
unconditionally each of the Debtors, Reorganized AOLA LLC and the Liquidating LLC from the AOL
License Rejection Claims.



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     The Executive Employment Agreements shall be assumed by the Debtors pursuant to the provisions
of sections 365 and 1123 of the Bankruptcy Code and assigned to the Liquidating LLC as of the
Effective Date.



     The Retention Agreements shall be assigned by the Debtors pursuant to sections 365 and 1123 of
the Bankruptcy Code to the Liquidating LLC as of the Effective Date. The Liquidating LLC shall pay
all Retention Payments as they become due and payable to each Key Employee from the Retention
Payment Fund, and, except as set forth in Section 5.11(f) of the Plan, the proceeds in the
Retention Payment Fund shall be used solely for the purpose of making Retention Payments.



     On the Effective Date, the Shut-Down Costs Letter Agreement shall be assumed (without the
payment of any cure costs) and assigned by the Debtors or Reorganized AOLA LLC, as applicable, to
the Liquidating LLC, pursuant to sections 365 and 1123 of the Bankruptcy Code. AOLA or Reorganized
AOLA LLC, as applicable, shall perform its obligations under the Shut-Down Costs Letter Agreement.



     (b) Rejection Damage Claims



     Notwithstanding anything in the Bar Date Order to the contrary, Claims arising out of the
rejection of executory contracts or unexpired leases rejected as of the Effective Date pursuant to
the Plan must be filed and served on the Liquidating LLC pursuant to the procedures specified in
the Confirmation Order or another order of the Bankruptcy Court, no later than thirty (30) days
after the Effective Date. Any Claim not filed within such time will be forever barred from
assertion against the Liquidating LLC, the Debtors, and their Estates, their respective successors
or their respective properties. Unless otherwise ordered by the Bankruptcy Court, all Claims
arising from the rejection of executory contracts and unexpired leases shall be treated as
Unsecured Claims under the Plan.



     (c) Indemnification of Directors, Officers and Employees



     The obligations of the Debtors to indemnify the Indemnified Employees shall be deemed and
treated as executory contracts and shall be assumed by the Debtors (and, if such contract is
assumed by a Debtor other than AOLA, assigned to Reorganized AOLA LLC) pursuant to the Plan and
section 365 of the Bankruptcy Code as of the Effective Date. The obligations of Reorganized AOLA
LLC to indemnify the Indemnified Employees shall be funded, to the extent necessary, by the
Liquidating LLC. Accordingly, such indemnification obligations shall survive unimpaired and
unaffected by entry of the Confirmation Order, irrespective of whether such indemnification is owed
for an act or event occurring before or after the Petition Date, except if such claim or liability
is determined pursuant to a Final Order to have resulted from the gross negligence, willful
misconduct, fraud or criminal conduct of such indemnified Person. To the extent the D&O Insurance
Policy is an executory contract, the D&O Insurance Policy shall be assumed by AOLA pursuant to the
Plan and section 365 of the Bankruptcy Code as of the Effective Date. To the extent the D&O
Insurance Policy is not an executory contract, the D&O Insurance Policy shall vest in Reorganized
AOLA LLC pursuant to Section 5.2 of the Plan. To the extent the existence of Reorganized AOLA LLC
is terminated (whether by merger, dissolution, liquidation or otherwise) prior to the expiry of the
D&O Insurance Policy, the Liquidating LLC and Reorganized AOLA LLC shall take all necessary
measures to ensure that the D&O Insurance Policy remains in full force and effect until the expiry
of the D&O Insurance Policy in accordance with the terms thereof.



     (d) Benefits, Compensation and Severance



     The Assumed Benefit Plans shall be treated as executory contracts and shall be assumed by the
Debtors (and, if such contract is assumed by a Debtor other than AOLA, assigned to Reorganized AOLA



38









 





LLC) pursuant to the Plan and sections 365 and 1123 of the Bankruptcy Code. The Assumed
Benefit Plans shall continue to be funded, to the extent necessary, by the Liquidating LLC. The
Debtors are not aware of, after having made diligent inquiry, any obligation to pay “retiree
benefits” as defined in section 1114(a) of the Bankruptcy Code.



     Executive Employment Agreements. To the extent not paid or fully performed prior to the
Effective Date, from and after the Effective Date, the Debtors, Reorganized AOLA LLC or the
Liquidating LLC, as applicable, shall pay all amounts required to be paid by the Debtors under the
Executive Employment Agreements and perform all obligations thereunder in accordance with the terms
thereof.



     Severance. To the extent not paid or fully performed prior to the Effective Date, from and
after the Effective Date, the Debtors, Reorganized AOLA LLC or the Liquidating LLC, as applicable,
shall pay all amounts agreed in writing to be paid by the Debtors to any employee terminated by the
Debtors or any employee who mutually agrees with any Debtor to leave such Debtors’ employ on or
after the Petition Date (and to perform any obligations set forth in such writing) in accordance
with the terms of such written agreement.



J. Provisions Governing Distributions




     1. Distribution to Creditors



     Subject to the provisions of any Final Order, the Liquidating LLC will make Distributions to
all Holders of Allowed Claims in accordance with the terms of the Plan. All Distributions shall be
made by the Liquidating LLC without any requirement for bond or surety with respect thereto.



     2. Claims Allowed as of the Effective Date



     Except as otherwise provided in the Plan, or as may be ordered by the Bankruptcy Court, for
those Claims that are Allowed as of the Effective Date and are entitled to receive Distributions
under the Plan, Distribution shall be made on the Effective Date (or as soon thereafter as is
practicable) by the Debtors or the LLC Agents, as applicable. Distributions on account of Claims
that become Allowed after the Effective Date shall be made by the LLC Agents pursuant to the
provisions of the Plan.



     3. Disputed Priority Claims Fund; Disputed General Unsecured Claims Fund; Nonaccepting Class 4
Claims Fund and Accepting Class 4 Claims Fund



     Subject to Sections 9.4 and 9.5 of the Plan, the Liquidating LLC shall maintain, in accordance
with the Liquidating LLC’s powers and responsibilities under the Plan and the Liquidating LLC
Agreement, (i) the Disputed Priority Claims Fund, (ii) if the LLC Option is elected, the Disputed
General Unsecured Claims Fund and (iii) if the Cash Option is elected, the Nonaccepting Class 4
Claims Fund and the Accepting Class 4 Claims Fund.



     4. Delivery of Distributions



     Subject to the provisions of Bankruptcy Rule 2002(g) and except as otherwise provided under
the Plan, Distributions to Holders of Allowed Claims shall be made at the address of each such
Holder as set forth on the Schedules filed with the Bankruptcy Court unless superseded by the
address set forth on proofs of claim filed by such Holders, or if the Debtors or the Liquidating
LLC have been notified in writing of a change of address.



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     5. Undeliverable Distributions



     Holding of Undeliverable Distributions: If any Distribution to any Holder of an Allowed
Unsecured Claim is returned to the Debtors or the Liquidating LLC as undeliverable, no further
Distributions shall be made to such Holder unless and until the LLC Agents are notified, in
writing, of such Holder’s then-current address. Subject to Section 8.5(b) of the Plan,
undeliverable Distributions shall remain in the possession of the Liquidating LLC until such time
as a Distribution becomes deliverable. All persons ultimately receiving undeliverable Cash shall
not be entitled to any interest or other accruals of any kind. Nothing contained in the Plan shall
require the Liquidating LLC to attempt to locate any Holder of an Allowed Claim.



     Failure to Claim Undeliverable Distributions: Within ten (10) Business Days after the later
of the first anniversary of the Effective Date or the first Distribution under the Plan, the
Liquidating LLC shall file a list with the Bankruptcy Court setting forth the names of those
Entities for which Distributions have been attempted hereunder and have been returned as
undeliverable as of the date thereof. Any Holder of an Allowed Claim that does not assert its
rights pursuant to the Plan to receive a Distribution within two (2) months from and after the
filing of such list shall have its Claim for such undeliverable Distribution discharged and shall
be forever barred from asserting any such Claim against the Debtors or the Liquidating LLC. In
such case, any consideration held for Distribution on account of such Claim shall revert to the
Liquidating LLC for Distribution to the beneficiaries in accordance with the terms of the Plan.



     6. Compliance with Tax Requirements/Allocation



     In connection with the Plan, to the extent applicable, the LLC Agents in making Distributions
under the Plan shall comply with all tax withholding and reporting requirements imposed on the
Liquidating LLC by any governmental unit, and all Distributions pursuant to the Plan shall be
subject to such withholding and reporting requirements. The LLC Agents may withhold the entire
Distribution due to any Holder of an Allowed Claim until such time as such Holder provides to the
LLC Agents the necessary information to comply with any withholding requirements of any
governmental unit. Any property so withheld will then be paid by the LLC Agents to the appropriate
authority. If the Holder of an Allowed Claim fails to provide to the LLC Agents the information
necessary to comply with any withholding requirements of any governmental unit within six months
after the date of first notification by the LLC Agents to the Holder of the need for such
information or for the Cash necessary to comply with any applicable withholding requirements, then
the Holder’s Distribution shall be treated as an undeliverable Distribution in accordance with the
Plan.



     In connection with the turnover by Time Warner pursuant to Section 5.11(c) of the Plan, the
Holders of the Accepting Class 4 claims and the Cisneros Group Parties shall provide to Time Warner
information necessary to comply with any withholding requirements of any governmental unit, and
failure to provide such information shall cause the turnover to such party to be treated as an
undeliverable Distribution in accordance with the Plan.



     The LLC Agents shall, and shall cause Reorganized AOLA LLC, AOL Spain, AOL Brazil, AOL Mexico,
QuotaHolder and any other Person or Entity whose equity interests are held directly or indirectly
by the Liquidating LLC, to (i) comply with all tax withholding and reporting requirements imposed
on it or them by any governmental unit and (ii) file (or cause to be filed) returns for the
Liquidating LLC as a partnership for U.S. federal income tax purposes. The Liquidating LLC
Agreement shall set forth allocations of income in accordance with each party’s economic interest
of the Liquidating LLC.



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     The holders of beneficial interests in the Liquidating LLC (and any transferees), the
Liquidating LLC, the Debtors and Reorganized AOLA LLC intend for the Liquidating LLC to be treated
as a partnership for U.S. federal income tax purposes, and such holders of beneficial interests in
the Liquidating LLC (and any transferees), the Liquidating LLC, the Debtors and Reorganized AOLA
LLC agree that (i) they will take no contrary position for U.S. federal income tax purposes unless
otherwise required by law and (ii) they will not merge, convert or take any action that would cause
the Liquidating LLC or Reorganized AOLA LLC to be treated as other than a partnership or
disregarded entity, as applicable, for U.S. federal income tax purposes.



     Unless otherwise required by law, the holders of beneficial interests in the Liquidating LLC
(and any transferees), the Liquidating LLC, the Debtors and Reorganized AOLA LLC agree that (i) the
property transferred to the Liquidating LLC and the beneficial interests in such Liquidating LLC
distributed by the LLC Agents to such holders will be valued consistently by all holders of
beneficial interests in the Liquidating LLC (and any transferees), the Liquidating LLC, the Debtors
and Reorganized AOLA LLC for U.S. federal income tax purposes, (ii) the assumption and assignment
of the PR Agreement and any other contracts or agreements assumed pursuant to the Plan will be
valued consistently by all holders of beneficial interests in the Liquidating LLC (and any
transferees), the Liquidating LLC, the Debtors and Reorganized AOLA LLC for U.S. federal income tax
purposes and (iii) the Other PR Assets assigned, conveyed and transferred to AOL (or to such other
TW Party as directed by the TW Parties) will be valued consistently by all holders of beneficial
interests in the Liquidating LLC (and any transferees), the Liquidating LLC, the Debtors and
Reorganized AOLA LLC for U.S. federal income tax purposes.



     7. Fractional Dollars, De Minimis Distributions



     Notwithstanding anything contained in the Plan to the contrary, payments of fractions of
dollars will not be made. Whenever any payment of a fraction of a dollar under the Plan would
otherwise be called for, the actual payment made will reflect a rounding of such fraction to the
nearest dollar (up or down), with half dollars being rounded down. The Liquidating LLC, as
successor to the Debtors shall have the discretion not to make payments of less than twenty-five
($25) dollars on account of any Allowed Unsecured Claim, unless a specific request is made in
writing to the Liquidating LLC on or before ninety (90) days after Allowance of such Claim. In
addition, after the first Distribution Date, the Liquidating LLC shall not be required to make any
Distribution on account of any Claim in the event that the costs of making such Distribution
payment exceed the amount of such Distribution payment, and all cash that otherwise would have been
distributed to the Holders of such de minimis claims shall otherwise be distributed in accordance
with the terms of the Plan.



     8. Set-Offs and Recoupments



     The Liquidating LLC, as successor to the Debtors may, pursuant to section 553 of the
Bankruptcy Code or applicable non-bankruptcy law, set off or recoup against any Allowed Claim and
the Distributions to be made pursuant to the Plan on account thereof (before any Distribution is
made on account of such Claim), the claims, rights and Causes of Action of any nature that the
Debtors may hold against the Holder of such Allowed Claim. The Holders of Claims may, pursuant to
section 553 of the Bankruptcy Code or applicable non-bankruptcy law, set off or recoup any Allowed
Claims such Holder possesses against any claim, rights or Causes of Action of any nature that the
Liquidating LLC, as successor to the Debtors, may hold against such Holder. Neither the failure to
effect such a set-off or recoupment nor the allowance of any Claim hereunder shall constitute a
waiver or release by the Debtors or such Holders of any such claims, rights and Causes of Action
that such parties may possess under section 553 of the Bankruptcy Code.



41









 





     9. Time Bar to Cash Payments



     Checks issued by the Liquidating LLC on account of Allowed Claims shall be null and void if
not negotiated within ninety (90) days from and after the date of issuance thereof. Requests for
reissuance of any check shall be made directly to the Liquidating LLC by the Holder of the Allowed
Claim with respect to which such check originally was issued. Any Claim in respect of such a
voided check shall be made on or before the later of (a) the first anniversary of the Effective
Date or (b) ninety (90) days after the date of issuance of such check, if such check represents a
final Distribution hereunder on account of such Claim. After such date, all Claims in respect of
voided checks shall be discharged and forever barred and the right to all moneys from the voided
checks shall revert to the Liquidating LLC for Distribution under the Plan.



     10. Manner of Payment Under Plan of Reorganization



     At the option of the LLC Agents or the Debtors, any Cash payment to be made hereunder may be
made by a check or wire transfer or as otherwise required or provided in applicable agreements.



K. Procedures for Resolving Disputed Claims




     1. Prosecution of Objections to Claims



     Unless otherwise ordered by the Bankruptcy Court after notice and a hearing, and except as set
forth in the Plan, the Liquidating LLC shall have the right to make, file and prosecute objections
to Unsecured Claims, Administrative Claims and Priority Claims; provided, that the Liquidating LLC
shall not have the right, power or authority to pursue the Released Claims. The Liquidating LLC
shall have the right to prosecute objections to Claims previously filed by the Debtors. All
Disputed Claims shall be determined, resolved or adjudicated in the manner in which such Claim
would have been determined, resolved or adjudicated if the Chapter 11 Case had not been commenced,
unless the LLC Agents, at their election, choose to determine, resolve or adjudicate such Disputed
Claim in the Bankruptcy Court.



     Unless another time is set by order of the Bankruptcy Court, all objections to Claims shall be
filed with the Bankruptcy Court and served upon the Holders of each of the Claims to which
objections are made by the later of (a) ninety (90) days after the Effective Date; or (b) ninety
(90) days after a timely Proof of Claim or request for payment with respect to such Claim is filed;
provided, however, that the Liquidating LLC may seek an extension of such time to object.



     Except as set forth in the Plan, nothing in the Plan, the Disclosure Statement, the
Confirmation Order or any order in aid of Confirmation, shall constitute, or be deemed to
constitute, a waiver or release of any claim, cause of action, right of setoff, or other legal or
equitable defense that Debtors had immediately prior to the commencement of the Chapter 11 Cases,
against or with respect to any Claim or Equity Interest. Except as set forth in the Plan, upon
Confirmation, the Debtors shall have, retain, reserve and be entitled to assert all such claims,
Causes of Action, rights of setoff and other legal or equitable defenses of the Debtors, which
shall be vested in and assigned to the Liquidating LLC as of the Effective Date.



     2. Estimation of Claims



     The Liquidating LLC may, at any time, request that the Bankruptcy Court estimate any
contingent or unliquidated Claim pursuant to section 502(c) of the Bankruptcy Code regardless of
whether the Debtors or the Liquidating LLC previously objected to such Claim or whether the
Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction
to



42









 





estimate any Claim at any time during litigation concerning any objection to any Claim,
including during the pendency of any appeal relating to any such objection. In the event that the
Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated amount will
constitute either the Allowed amount of such Claim or a maximum limitation on such Claim (including
for purposes of determining the Disputed Priority Claims Fund, Disputed General Unsecured Claims
Fund, Nonaccepting Class 4 Claims Fund and Accepting Class 4 Claims Fund, as applicable), as
determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on
such Claim, the Liquidating LLC may elect to pursue any supplemental proceedings to object to any
ultimate payment on such Claim.



     3. Cumulative Remedies



     All of the aforementioned Claims objection, estimation and resolution procedures are
cumulative and not necessarily exclusive of one another. Claims may be estimated and subsequently
compromised, settled, withdrawn or resolved or provided in the Plan or by any mechanism approved by
the Bankruptcy Court. Until such time as such a Claim becomes Allowed, such Claim shall be treated
as a Disputed Claim for purposes related to allocations, Distributions and voting under the Plan.



     4. Payments and Distributions on Disputed Claims



     Notwithstanding any provision in the Plan to the contrary, except as otherwise agreed by the
LLC Agents in their sole discretion, no partial payments and no partial distributions will be made
with respect to a Disputed Claim until the resolution of such dispute by settlement or Final Order.
Subject to the provisions of Article IX of the Plan, as soon as practicable after a Disputed Claim
becomes an Allowed Claim, the Holder of such Allowed Claim will receive all payments and
Distributions to which such Holder is then entitled under the Plan as the Holder of an Allowed
Claim. Notwithstanding the foregoing, any Person or Entity who holds both an Allowed Claim(s) and
a Disputed Claim(s) will receive the appropriate payment or distribution on the Allowed Claim(s),
although, except as otherwise agreed by the Liquidating LLC in its sole discretion, no payment or
distribution will be made on the Disputed Claim(s) until such dispute is resolved by settlement or
Final Order.



     Following the resolution of a dispute by settlement or Final Order pursuant to Section 9.4(a)
of the Plan, if a Disputed Priority Claim becomes an Allowed Claim after the Effective Date, the
amount of the Disputed Priority Claims Fund attributable to such Disputed Priority Claim shall be
released from the Disputed Priority Claims Fund for purposes of making Distributions as required by
the Plan to the Holder of such Allowed Claim and any excess shall constitute Available Cash. If a
Disputed Priority Claim becomes Disallowed after the Effective Date, the entire amount of the
Disputed Priority Claims Fund attributable to such Disputed Priority Claim shall constitute
Available Cash.



     If the Debtors elect the LLC Option and if a Disputed Class 4 General Unsecured Claim becomes
an Allowed Claim after the Effective Date following the resolution of a dispute by settlement or
Final Order pursuant to Section 9.4(a) of the Plan, the amount of the Disputed General Unsecured
Claims Fund attributable to such Disputed Class 4 General Unsecured Claim shall be released from
the Disputed General Unsecured Claims Fund for purposes of making Distributions as required by the
Plan to the Holder of such Allowed Claim and any excess shall constitute Available Cash. If a
Disputed Class 4 General Unsecured Claim becomes Disallowed after the Effective Date, the entire
amount of the Disputed General Unsecured Claims Fund attributable to such Disputed Class 4 General
Unsecured Claim shall constitute Available Cash.



     If the Debtors elect the Cash Option and if a Disputed Accepting Class 4 Claim becomes an
Allowed Claim after the Effective Date following the resolution of a dispute by settlement or Final
Order pursuant to Section 9.4(a) of the Plan, the amount of the Accepting Class 4 Claims Fund
attributable to



43









 





such Accepting Class 4 Claim shall be released from the Accepting Class 4 Claims Fund for
purposes of making Distributions as required by the Plan to the Holder of such Allowed Accepting
Class 4 Claim and any excess shall constitute Available Cash. If a Disputed Accepting Class 4
Claim becomes Disallowed after the Effective Date, the entire amount of the Accepting Class 4
Claims Fund attributable to such Disputed Accepting Class 4 Claim shall constitute Available Cash.



     If the Debtors elect the Cash Option and if a Disputed Nonaccepting Class 4 Claim becomes an
Allowed Claim after the Effective Date following the resolution of a dispute by settlement or Final
Order pursuant to Section 9.4(a) of the Plan, the amount of the Nonaccepting Class 4 Claims Fund
attributable to such Disputed Nonaccepting Class 4 Claim shall be released from the Nonaccepting
Class 4 Claims Fund for purposes of making Distributions as required by the Plan to the Holder of
such Allowed Claim and any excess shall constitute Available Cash. If a Disputed Nonaccepting
Class 4 Claim becomes Disallowed after the Effective Date, the entire amount of the Nonaccepting
Class 4 Claims Fund attributable to such Disputed Nonaccepting Class 4 Claim shall constitute
Available Cash.



     5. Allowance of Claims



     Disallowance of Claims: Pursuant to sections 105 and 502(d) of the Bankruptcy Code, no
Distributions will be made to Holders of Claims held by Entities from which property is recoverable
under sections 542, 543, 550, 553, 522(f), 522(h), 544, 545, 547, 548, 549 or 724(a) of the
Bankruptcy Code (including the Rights of Action) until such time as such Causes of Action against
that Entity have been settled or resolved by a Final Order and all sums due to the respective
Debtor or the Liquidating LLC are turned over to the Debtors or the Liquidating LLC. Until such
time as any such claim has been settled or resolved by Final Order, the Liquidating LLC shall
maintain a reserve in respect of such claim in accordance with Section 8.3 of the Plan.



     Allowance of Claims: Except as expressly provided in the Plan, no Claim shall be deemed
Allowed by virtue of the Plan, Confirmation, or any order of the Bankruptcy Court in the Chapter 11
Cases, unless and until such Claim is deemed Allowed under the Bankruptcy Code.



L. Conditions Precedent to Confirmation and Effective Date of the Plan




     1. Conditions Precedent to Confirmation



     It shall be a condition to Confirmation of the Plan that all provisions, terms and conditions
of the Plan shall have been approved in the Confirmation Order or waived pursuant to the provisions
of Section 10.3 of the Plan.



     2. Conditions Precedent to Occurrence of the Effective Date



     It shall be a condition to the Effective Date of the Plan that the following conditions shall
have been satisfied or waived pursuant to the provisions of Section 10.3 of the Plan:




	 	(a)	 	the Confirmation Order shall have been approved by the Bankruptcy Court and
duly entered on the docket for the Chapter 11 Cases by the Clerk of the Bankruptcy
Court, shall not be subject to a pending motion pursuant to section 1144 of the
Bankruptcy Code and shall have become a Final Order;
	 
	 	(b)	 	there shall not be in effect any order, law or regulation staying, restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by the Plan;




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	 	(c)	 	all consents, approvals and actions of, filings with and notices to any
governmental or regulatory authority necessary to permit the Liquidating LLC and
Reorganized AOLA LLC to perform their respective obligations under the Plan and to
permit the Liquidating LLC and Reorganized AOLA LLC to consummate the transactions
contemplated hereby shall have been duly obtained, made or given and shall be in full
force and effect, and all terminations or expirations of waiting periods imposed by any
governmental or regulatory authority necessary for the consummation of the transactions
contemplated by the Plan shall have occurred;
	 
	 	(d)	 	the AOLA Limited Liability Company Agreement and the AOLA Certificate of
Conversion to Limited Liability Company shall have been filed with the Secretary of
State of the State of Delaware;
	 
	 	(e)	 	The Debtors shall have sufficient Cash and Assets to permit compliance with the
terms and conditions of the Plan, including the payment or reservation for payment of
the Retention Payment Fund, Administrative Claims Reserve Fund and Allowed Priority
Claims;
	 
	 	(f)	 	If the Cash Option is elected, the Debtors shall have sufficient Cash to pay,
or reserve for the payment of, all Class 4 Claims;
	 
	 	(g)	 	The Liquidating LLC shall have been created pursuant to the terms of the Plan,
the LLC Agents shall have been identified and appointed and the Liquidating LLC
Agreement shall have been duly executed and delivered in form and substance acceptable
to the Debtors and the Principal Stockholders;
	 
	 	(h)	 	AOL and the Debtors shall have agreed in writing on the amounts due by AOL to
be paid to AOLA under the PR Agreement on or after the PR Transfer Date;
	 
	 	(i)	 	AOL shall have paid to the Liquidating LLC all amounts due to be paid to the
Debtors on or prior to the Effective Date pursuant to Section 6.1(b) of the Plan;
	 
	 	(j)	 	The Debtors (1) shall have assumed and assigned the PR Agreement and assigned,
transferred and conveyed substantially all of the Other PR Assets to the applicable TW
Parties in accordance with Section 3.3(c) of the Plan free of any lien, claim or
encumbrance except as otherwise agreed by the TW Parties and except as set forth in
clause (3) below; (2) shall have executed and delivered instruments of assignment and
documents as required by law or as reasonably requested by the TW Parties to evidence
such assignments and transfers; and (3) between January 17, 2006 and the Effective
Date, shall not knowingly have taken any action to further encumber any of the Other PR
Assets except as otherwise agreed by the TW Parties; provided, that any such lien,
claim or encumbrance existing or arising as a result of a pre-existing contractual
provision, applicable law, local practice or specific direction of the Special
Committee of AOLA’s Board of Directors shall not constitute a breach of this clause (3)
or clause (1) above; provided, further, that such assignment, transfer and conveyance
shall be on an as-is where-is basis, without any further representations or warranties
and with no right of indemnity against the Debtors other than indemnity for willful
breach of clause (3) of sub-section (j) of Section 10.2 of the Plan;
	 
	 	(k)	 	The Shut-Down Costs Letter Agreement shall be in full force and effect; and




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	 	(l)	 	all other actions and documents necessary to implement the provisions of the
Plan on the Effective Date shall have been, respectively, effected or duly executed and
delivered.





     3. Waiver of Conditions



     The Debtors, with the consent of the Principal Stockholders, may waive any of the conditions
precedent to Confirmation of the Plan and occurrence of the Effective Date set forth in Article X
of the Plan at any time, without notice, without leave or order of the Bankruptcy Court, and
without any formal action other than a proceeding to confirm and/or consummate the Plan.



     4. Effect of Non-Occurrence of Effective Date Conditions



     If the conditions to occurrence of the Effective Date have not been satisfied or waived in
accordance with Article X of the Plan on or before the first Business Day that is more than 120
days after the Confirmation Date or by such later date as is approved by the Bankruptcy Court after
notice and a hearing, then on motion by the Debtors made prior to the time that all of the
conditions have been satisfied or waived, the Bankruptcy Court may vacate the Confirmation Order
and the Confirmation Order shall be of no force and effect. Notwithstanding the foregoing, the
Confirmation Order shall not be vacated if all of the conditions to the occurrence of the Effective
Date set forth in Article X of the Plan are either satisfied or waived, in accordance with the
terms of the Plan, prior to entry by the Bankruptcy Court of an order granting the relief requested
in such motion.



     If the Confirmation Order is vacated, the Plan shall be null and void in all respects and
nothing contained in the Plan or the Disclosure Statement shall: (1) constitute a waiver or
release of any Claims by or against, or any Equity Interests in, the Debtors; (2) prejudice in any
manner the rights of the Debtors, or (3) constitute an admission, acknowledgment, offer or
undertaking by the Debtors in any respect.



     5. Substantial Consummation of Plan



     Substantial consummation of the Plan under Bankruptcy Code section 1101(2) shall be deemed to
occur on the Effective Date.



M. Legal Effects of Confirmation of the Plan




     1. Releases



     In consideration of (i) the contributions of certain parties to the Chapter 11 Cases and the
waivers of Claims, rights and Causes of Action in Article VII of the Plan, including, but not
limited to, the waiver by certain parties (or their affiliates) of rights against one or more of
the Debtors and (ii) the Series C Beneficial Interests distributed pursuant to Sections 3.3(c),
3.3(e) and 5.11 of the Plan, the Plan provides for certain waivers, exculpations, releases and
injunctions.



     (a) Releases by Debtors and Liquidating LLC.



     On and after the Effective Date, the Debtors, Reorganized AOLA LLC, and the Estates and the
Liquidating LLC hereby release and forever discharge:




	 	(i)	 	all Released Parties and their respective agents (including any attorneys,
accountants, advisors, investment bankers and other representatives or professionals
retained by such Entities or Persons), and any successors or assigns of the foregoing;
and




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	 	(ii)	 	the property of each of the foregoing Persons and Entities,





from any and all Claims and from all Causes of Action that the Debtors or their direct or indirect
subsidiaries would have been legally entitled to assert in their own right (whether individually or
collectively) or on behalf of the Holder of any Claim or Equity Interest or other Person or Entity,
based in whole or in part upon any act or omission, transaction, agreement, event or other
occurrence taking place on or before the Effective Date for Claims or liabilities in connection
with or related to the Debtors, the Debtors’ direct and indirect subsidiaries, the Chapter 11 Cases
or the Plan; provided, however, that the provisions of Section 11.2(a) of the Plan shall have no
effect on the liability of any Person or Entity that results from any such act or omission that is
judicially determined in a Final Order to have constituted gross negligence, willful misconduct,
fraud or criminal conduct.



     (b) Releases by Holders of Claims.



     On and after the Effective Date, each Holder of an Accepting Class 4 Claim shall be deemed to
have unconditionally and fully waived, released and forever discharged the Released Parties and
each of the Released Parties’ respective agents (including any attorneys, accountants, advisors,
investment bankers and other representatives or professionals retained by such Entities or
Persons), and any successors or assigns of the foregoing, and the property of each of the foregoing
Entities or Persons from any and all Claims or Causes of Action based in whole or in part upon any
act or omission, transaction, agreement, event or other occurrence taking place on or before the
Effective Date in any way relating to or pertaining to (i) the Debtors, the Liquidating LLC or the
LLC Agents, (ii) the Chapter 11 Cases and (iii) the negotiation, formulation and preparation of the
Plan; provided, however, that the provisions of Section 11.2(b) of the Plan shall have no effect on
the liability of any Person or Entity that results from any such act or omission that is judicially
determined in a Final Order to have constituted gross negligence, willful misconduct, fraud or
criminal conduct.



     (c) Mutual Releases by and of the Principal Stockholders and the Senior Officers.



     On and after the Effective Date, in accordance with the Secured Retention Bonuses Orders, each
Senior Officer and each of the Principal Stockholders, shall be deemed to have released each other,
and the property of each other from any and all Claims or Causes of Action whatsoever based in
whole or in part upon any act or omission, transaction, agreement, event or other occurrence taking
place on or before the Effective Date in any way relating to or pertaining to (i) the Debtors, the
Liquidating LLC or the LLC Agents, (ii) the Chapter 11 Cases and (iii) the negotiation, formulation
and preparation of the Plan; provided, however, that the foregoing shall have no effect on the
liability of any Person or Entity that results from any such act or omission that is judicially
determined in a Final Order to have constituted gross negligence, willful misconduct, fraud or
criminal conduct.



     (d) Mutual Releases by and of the Released Parties.



     On and after the Effective Date, each of the Released Parties shall be deemed to have released
unconditionally each of the other Released Parties, and the property of each of foregoing Persons
or Entities from any and all Claims or Causes of Action based in whole or in part upon any act or
omission, transaction, agreement, event or other occurrence taking place on or before the Effective
Date in any way relating to or pertaining to (i) the Debtors, the Liquidating LLC or the LLC
Agents, (ii) the Chapter 11 Cases and (iii) the negotiation, formulation and preparation of the
Plan; provided, however, that the provisions of Section 11.2(c) of the Plan shall have no effect on
the liability of any Person or Entity that results from any such act or omission that is judicially
determined in a Final Order to have constituted gross negligence, willful misconduct, fraud or
criminal conduct.



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     Notwithstanding any provision of the Plan to the contrary, the provisions of Section 11.2 of
the Plan shall not act to release the Debtors, Reorganized AOLA LLC, the Liquidating LLC or any
other Person from any amounts expressly payable by the Debtors, Reorganized AOLA LLC, the
Liquidating LLC or such Person under the Plan or any express obligations by the Debtors,
Reorganized AOLA LLC, the Liquidating LLC or such Person pursuant to the Plan.



     2. Exculpation and Limitation of Liability



     None of the Debtors, the Estates, the Released Parties, nor any of the foregoing Entities’ or
Persons’ respective agents (including any attorneys, accountants, advisors, investment bankers and
other representatives or professionals retained by such Entities or Persons), and no successors or
assigns of the foregoing, shall have or incur any liability to any Person or Entity, whether
arising under contract, tort, federal or state securities laws, whether known or unknown, foreseen
or unforeseen, existing or arising in the future, for any pre-petition or post-petition act or
omission in connection with, relating to, or arising out of the Chapter 11 Cases, including,
without limitation, the formulating, negotiating or implementing of the Plan, the solicitation of
acceptances of the Plan, the pursuit of confirmation of the Plan, the confirmation of the Plan, the
consummation of the Plan, or the administration of the Plan or the property to be distributed under
the Plan, except for any such act or omission that is determined in a Final Order to have
constituted gross negligence, willful misconduct, fraud or criminal conduct and, in all respects,
shall be entitled to rely upon the advice of counsel with respect to their duties and
responsibilities in the Chapter 11 Cases and under the Plan.



     Notwithstanding any other provision of the Plan, no Holder of a Claim or Equity Interest, no
other party in interest, none of their respective agents, employees, representatives, financial
advisors, attorneys, or affiliates, and no successors or assigns of the foregoing, shall have any
right of action against the Liquidating LLC, the LLC Agents, or any of their respective present or
former members, officers, directors, employees, advisors or attorneys, for any act or omission in
connection with, relating to, or arising out of, the Chapter 11 Cases, formulating, negotiating or
implementing the Plan, the consummation of the Plan, the confirmation of the Plan, or the
administration of the Plan or the property to be distributed under the Plan, except to the extent
any such act or omission is judicially determined in a Final Order to have constituted gross
negligence, willful misconduct, fraud or criminal conduct or except on account of a Beneficial
Interest distributed to such Holder under the Plan.



     3. Injunction



     On and after the Effective Date, except as otherwise expressly provided in the Plan or the
Confirmation Order, all Persons and Entities who have held, currently hold or may hold a Claim
against or Equity Interest in the Debtors (whether directly or indirectly and whether as a
beneficial holder of such Claim or Equity Interest or as a holder of record of such Claim or Equity
Interest or otherwise) are permanently enjoined, from and after the Confirmation Date and subject
to the occurrence of the Effective Date, from: (i) commencing or continuing in any manner
(including by directly or indirectly assisting or facilitating the commencement or continuation of)
any action or other proceeding of any kind on any such Claim or Equity Interest against the
Debtors, the Estates, Reorganized AOLA LLC, the Liquidating LLC, the LLC Agents or their respective
properties; (ii) enforcing, attaching, collecting or recovering in any manner or means of any
judgment, award, decree or order against the Debtors, the Estates, Reorganized AOLA LLC, the
Liquidating LLC, the LLC Agents or their respective properties on account of any such Claim or
Equity Interest; (iii) creating, perfecting, or enforcing any Lien or encumbrance of any kind
against the Debtors, the Estates, Reorganized AOLA LLC, the Liquidating LLC or the LLC Agents or
against the property or interests in property of any of the foregoing Persons or Entities on
account of any such Claim or Equity Interest; (iv) asserting any setoff, right of subrogation or
recoupment of any kind against any obligation due from the Debtors, the Estates, Reorganized AOLA
LLC, the Liquidating LLC,



48









 





the LLC Agents or against the properties or interests in property of any of the foregoing
Persons or Entities on account of any such Claim or Equity Interest; (v) authenticating, delivering
or facilitating the delivery of any certificate, including any global note or certificate or other
documents evidencing a Holder’s TW Notes or interest in the TW Notes; and (vi) commencing,
continuing or in any manner taking part or participating in any action, proceeding or event
(whether directly or indirectly) that would be in contravention of the terms, conditions and intent
of the Plan, including the releases and exculpations provided in Section 11.2 and Section 11.3 of
the Plan. The foregoing injunction will extend to the benefit of the successors of the Debtors
(including, without limitation, Reorganized AOLA LLC), the Liquidating LLC, the LLC Agents and the
Persons and Entities entitled to the benefit of the releases and exculpations provided in Section
11.2 and Section 11.3 of the Plan, and their respective properties and interests in property. Any
person injured by any willful violation of such injunction may recover actual damages, including
costs and attorneys’ fees and, in appropriate circumstances, may recover punitive damages from the
willful violator.



     All injunctions or stays contained in the Plan or any Final Order shall remain in full force
and effect in accordance with their terms, or as provided in the Bankruptcy Code.



     With respect to the matters within the scope of Section 12.1(w) of the Plan, all Persons and
Entities shall be and are permanently enjoined from commencing or continuing any such matter except
in the Bankruptcy Court and the Bankruptcy Court shall retain jurisdiction over such matters as set
forth in Article XII of the Plan.



     4. Indemnification



     The Liquidating LLC shall indemnify and hold harmless (i) the LLC Agents, (ii) all Persons
employed by the Liquidating LLC, and (iii) all professionals and other agents retained by the
Liquidating LLC and/or the LLC Agents (collectively, the “Indemnified Parties”), from and against
and with respect to any and all liabilities, losses, damages, claims, costs and expenses, including
but not limited to attorneys’ fees arising out of or due to their actions or omissions, or
consequences of such actions or omissions, with respect to the Debtors or the implementation or
administration of the Plan, if the Indemnified Parties acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the Debtors, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe its conduct was unlawful.
To the extent the Liquidating LLC indemnifies and holds harmless the Indemnified Parties as
provided above, the legal fees and costs related to the defense of such claims giving rise to the
right of indemnification shall be paid by the Liquidating LLC.



     5. Term of Existing Injunctions or Stays



     Unless otherwise provided, all injunctions or stays provided for in the Chapter 11 Cases
pursuant to sections 105, 362 or 525 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective Date, and thereafter
shall be annulled, except as provided for in the Plan.



N. Retention of Jurisdiction




     Notwithstanding the entry of the Confirmation Order or the occurrence of the Effective Date,
the Bankruptcy Court shall retain exclusive jurisdiction (except with respect to the matters within
the scope of Sections 12.1(u), (v), (w), (x) and (y) of the Plan, as to which jurisdiction shall be
non-exclusive to the extent such matters are not specifically related to the Chapter 11 Cases, the
Plan or any transaction contemplated in the Plan), over all matters arising out of, and related to,
the Plan, the Confirmation Order



49









 





and the Chapter 11 Cases to the fullest extent permitted by law, including, without
limitation, jurisdiction to:




	 	(a)	 	Hear and determine any timely objections to Administrative
Claims or to proofs of Claims and Interests filed, both before and after the
Effective Date, including any objections to the classification of any Claim or
Interest, and to allow, disallow, determine, liquidate, classify, estimate or
establish the priority of, or secured or unsecured status of, any Claim, in
whole or in part;
	 
	 	(b)	 	Grant or deny any applications for allowance of compensation
for services rendered and reimbursement of expenses authorized pursuant to the
Bankruptcy Code or the Plan, for periods ending on or before the Effective
Date;
	 
	 	(c)	 	Resolve any matters related to the assumption, assumption and
assignment or rejection of any executory contract or unexpired lease to which
any of the Debtors was or is a party or with respect to which the Debtors may
be liable and to hear, determine and, if necessary, liquidate, any Claims
arising therefrom, including those matters related to the amendment after the
Effective Date pursuant to Article VI of the Plan to add any executory
contracts or unexpired leases to the list of executory contracts and unexpired
leases to be rejected;
	 
	 	(d)	 	Ensure that distributions to Holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan, including ruling on any
motion filed pursuant to Article VIII of the Plan;
	 
	 	(e)	 	Decide or resolve any and all motions, adversary proceedings,
applications and contested or litigated matters that may be pending on the
Effective Date or that, pursuant to the Plan, may be instituted by the
Liquidating LLC after the Effective Date (to the extent such venue is selected
by the Liquidating LLC);
	 
	 	(f)	 	Enter such orders and take other actions as may be necessary or
appropriate to implement or consummate the provisions of the Plan and the
Confirmation Order, including, but not limited to, modification or amendment
thereof pursuant to Section 13.3 of the Plan, and all contracts, instruments,
releases, transactions and other agreements or documents created in connection
with the Plan;
	 
	 	(g)	 	Resolve any cases, controversies, suits or disputes that may
arise in connection with or relating to the Plan, the interpretation,
implementation or enforcement of the Plan, or any Person’s or Entity’s
obligations incurred in connection with the Plan;
	 
	 	(h)	 	Issue injunctions, enter and implement other orders or take
such other actions as may be necessary or appropriate to restrain interference
by any Person or Entity with the occurrence of the Effective Date or
enforcement of the Plan, except as otherwise provided in the Plan;
	 
	 	(i)	 	Resolve any cases, controversies, suits or disputes with
respect to the releases, injunction and other provisions contained in Article X
of the Plan and enter such orders as may be necessary or appropriate to
implement such releases, injunction and other provisions;




50









 












	 	(j)	 	Enter and implement such orders as are necessary or appropriate
if the Confirmation Order is for any reason modified, stayed, reversed, revoked
or vacated;
	 
	 	(k)	 	Determine any other matters that may arise in connection with
or relate to the Plan, the Disclosure Statement, the Confirmation Order or any
contract, instrument, release or other agreement or document created in
connection with the Plan or the Disclosure Statement;
	 
	 	(l)	 	Enter an order or Final Decree concluding the Chapter 11 Cases;
	 
	 	(m)	 	Resolve any disputes concerning whether a Person or Entity had
sufficient notice of the Chapter 11 Cases, the applicable Claims Bar Date, if
any, the hearing on the approval of the Disclosure Statement as containing
adequate information, the hearing on the Confirmation of the Plan for the
purpose of determining whether a Claim or Equity Interest is discharged
hereunder or for any other purpose;
	 
	 	(n)	 	Recover all assets of the Debtors and property of the Estate,
wherever located, including any Causes of Action under sections 554 through 550
of the Bankruptcy Code;
	 
	 	(o)	 	Hear and resolve all matters concerning state, local, and
federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy
Code;
	 
	 	(p)	 	Hear and resolve all matters involving the nature, existence or
scope of the Debtors’ discharge;
	 
	 	(q)	 	Effectuate performance of or payment of all obligations under
the Plan;
	 
	 	(r)	 	Consider any modifications of the Plan, to cure any defect or
omission, or reconcile any inconsistency in any order of the Bankruptcy Court,
including the Confirmation Order;
	 
	 	(s)	 	Issue orders in aid of execution of the Plan;
	 
	 	(t)	 	Hear any other matter or for any purpose specified in the
Confirmation Order that is not inconsistent with the Bankruptcy Code, including
the allowance or disallowance and classification of late-filed proofs of claim
in accordance with Rule 9006(b) of the Bankruptcy Rules;
	 
	 	(u)	 	Resolve matters that may arise in connection with the
Liquidating LLC or the Liquidating LLC Agreement;
	 
	 	(v)	 	Issue orders and hear matters in connection with Reorganized
AOLA LLC’s sale or disposition of AOL Spain, AOL Brazil or AOL Mexico;
	 
	 	(w)	 	Issue orders or hear matters in connection with the dissolution
of QuotaHolder;
	 
	 	(x)	 	Resolve any actions or controversies by the LLC Agents or the
LLC Administrator;




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	 	(y)	 	Resolve any actions or controversies against the LLC Agents or
the LLC Administrator; and
	 
	 	(z)	 	Resolve any matter relating to or arising out of any action or
act taken or omission in connection with or related to the formulation,
preparation, dissemination, implementation, administration, confirmation or
consummation of the Plan, the Disclosure Statement or any contract, instrument,
release or other agreement or document created or entered into in connection
with the Plan or any other act or omission taken or to be taken in connection
with the Chapter 11 Cases commenced against any party in the Chapter 11 Cases,
including, without limitation, the Liquidating LLC, the Debtors, Reorganized
AOLA LLC, the Principal Stockholder and their respective current and former
directors and officers, members, agents, advisors, attorneys, advisors and
other professionals and Entities employed pursuant to sections 327 and 1103 of
the Bankruptcy Code.





O. Other Provisions




     1. Title to Assets



     Except as otherwise provided by the Plan, on the Effective Date, title to all Assets shall
vest in the Liquidating LLC in accordance with section 1141 of the Bankruptcy Code, for purposes of
distribution in accordance with the Plan and the Liquidating LLC Agreement.



     2. Releases of All Liens



     On the Effective Date, all Liens on any of the Assets shall be deemed to be released and
Claims related thereto shall be paid pursuant to the Plan.



     3. Modification of Plan



     Subject to obtaining the approval of the Principal Stockholders, the Debtors reserve the
right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to alter, amend or modify
the Plan prior to the entry of the Confirmation Order. After the entry of the Confirmation Order,
subject to obtaining the approval of the Principal Stockholders, the Debtors or the LLC Agents, as
the case may be, may amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy
Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as
may be necessary to carry out the purpose and intent of the Plan. A Holder of a Claim that has
accepted the Plan shall be deemed to have accepted the Plan as altered, amended, modified or
clarified in accordance with Article XIII of the Plan, unless the proposed alteration, amendment,
modification or clarification adversely changes the treatment of the Claim of such Holder.



     4. Discharge of Debtors



     Consistent with section 1141(d)(3) of the Bankruptcy Code, the Plan does not grant AOL
Caribbean Basin, AOL Management LLC and Puerto Rico Management Services a discharge.
Notwithstanding the foregoing, except as otherwise provided in the Plan, (1) the rights afforded in
the Plan and the treatment of all Claims and Equity Interests shall be in exchange for and in
complete satisfaction, discharge and release of such Claims and Equity Interests of any nature
whatsoever, including any interest accrued on such Claims from and after the Petition Date, against
the Debtors, the Liquidating LLC and any of their Assets or properties, and (2) on the Effective
Date, all such Claims



52









 





against, and Equity Interests in the Debtors shall be satisfied and released in full and (3)
all Persons and Entities shall be precluded from asserting against the Debtors, the Liquidating LLC
or any of their Assets or properties any other or further Claims or Equity Interests based upon any
act or omission, transaction or other activity of any kind or nature that occurred before the
Confirmation Date.



     5. Revocation of Plan



     The Debtors reserve the right to revoke and withdraw the Plan at any time prior to the
Confirmation Date. If the Plan is so revoked or withdrawn, or if the Effective Date does not
occur, then the Plan shall be deemed null and void, and of no force or effect.



     6. Successors and Assigns



     The rights, benefits and obligations of any Person or Entity named or referred to in the Plan
shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor
or assign of such Person or Entity.



     7. Post-Effective Date Fees and Expenses



     From and after the Effective Date, the Liquidating LLC may, in the ordinary course of business
and without the necessity for any approval by the Bankruptcy Court, pay the reasonable professional
fees and expenses incurred by the LLC Agents and the Liquidating LLC related to implementation and
consummation of the Plan.



     8. Allocation of Payments



     Unless otherwise required by law, to the extent that any Allowed Claim entitled to a
distribution under the Plan is comprised of indebtedness and accrued but unpaid interest thereon,
such distribution shall be allocated, for income tax purposes, to the principal amount of the Claim
first and then, to the extent the consideration exceeds the principal amount of the Claim, to the
portion of such Claim representing accrued but unpaid interest.



     9. Section 1145 Exemption



     Pursuant to section 1145(a) of the Bankruptcy Code, the offer, issuance, transfer or exchange
of any security under the Plan, or the making or delivery of an offering memorandum or other
instrument of offer or transfer under the Plan, shall be exempt from section 5 of the Securities
Act or any similar state or local law requiring the registration for offer or sale of a security or
registration or licensing of an issuer or a security.



     10. Governing Law



     Except to the extent that other federal law is applicable, or to the extent that an exhibit
hereto or to the Plan Supplement provides otherwise, the rights, duties and obligations arising
under the Plan shall be governed by, and construed and enforced in accordance with, the Bankruptcy
Code and, to the extent not inconsistent therewith, the laws of the State of New York.



     11. Severability



     If, prior to entry of the Confirmation Order, any term or provision of the Plan is held by the
Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court, at the request of the



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Debtors (upon the prior written consent of the Principal Stockholders), shall have the power
to alter and interpret such term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held to be invalid, void
or unenforceable, and such term or provision shall then be applicable as so altered or interpreted.
Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and
provisions of the Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated by such holding, alteration or interpretation. The Confirmation Order
shall constitute a judicial determination and shall provide that each term and provision of the
Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.



     12. Implementation



     The Debtors shall take all steps, and execute all documents, including appropriate releases,
necessary to effectuate the provisions contained in the Plan.



     13. Inconsistency



     In the event of any inconsistency among the Plan, the Disclosure Statement, any exhibit to the
Plan or to the Plan Supplement or any other instrument or document created or executed pursuant to
the Plan, the provisions of the Plan shall govern.



     14. Further Assurances



     The Debtors, Reorganized AOLA LLC, the Liquidating LLC, the LLC Agents and all Holders of
Claims and Equity Interests receiving Distributions under the Plan and all other parties in
interest shall, from time to time, prepare, execute and deliver any agreements or documents and
take any other actions as may be necessary or advisable to effectuate the provisions and intent of
the Plan.



     15. Exemption from Certain Transfer Taxes



     Pursuant to section 1146 of the Bankruptcy Code: (a) the issuance, transfer or exchange of
any securities, instruments or documents; (b) the creation of any other Lien, mortgage, deed of
trust or other security interest; (c) the making or assignment of any lease or sublease or the
making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance
of, or in connection with the Plan, including, without limitation, any deeds, bills of sale or
assignments executed in connection with any of the transactions contemplated under the Plan or the
reinvesting, transfer or sale of any real or personal property of the Debtors pursuant to, in
implementation of, or as contemplated in the Plan, and (d) the issuance, renewal, modification or
securing of indebtedness by such means, and the making, delivery or recording of any deed or other
instrument of transfer under, in furtherance of, or in connection with, the Plan, including,
without limitation, the Confirmation Order, shall not be taxed under any law imposing a stamp tax
or similar tax. Consistent with the foregoing, each recorder of deeds or similar official for any
county, city or governmental unit in which any instrument hereunder is to be recorded shall,
pursuant to the Confirmation Order, be ordered and directed to accept such instrument without
requiring the payment of any stamp tax or similar tax.



     16. Compromise of Controversies



     Pursuant to Bankruptcy Rule 9019, and in consideration for the classification, distribution
and other benefits provided under the Plan, the provisions of the Plan shall constitute a good
faith compromise and settlement of all Claims or controversies resolved pursuant to the Plan. The
entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of each of the
foregoing compromises or



54









 





settlements, and all other compromises and settlements provided for in the Plan, and the
Bankruptcy Court’s findings shall constitute its determination that such compromises and
settlements are in the best interests of the Debtors, Reorganized AOLA LLC, the Estates, and any
Entity holding Claims against the Debtors.



     17. No Admissions



     Notwithstanding anything in the Plan to the contrary, nothing contained in the Plan shall be
deemed as an admission by an Entity with respect to any matter set forth in the Plan.



     18. Filing of Additional Documents



     On or before the Effective Date, the Debtors may file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan.



     19. Continuing Viability of Other Orders



     Except to the extent expressly modified by the Plan, all Final Orders shall continue in full
force and effect.



     20. Closing of Cases



     The LLC Agents shall, promptly upon the full administration of the Chapter 11 Cases, file with
the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the
Bankruptcy Court to obtain a Final Decree closing the Chapter 11 Cases.



ARTICLE VII

VOTING PROCEDURES AND REQUIREMENTS




A. Holders of Claims




     IT IS IMPORTANT THAT HOLDERS OF CLAIMS ENTITLED TO VOTE EXERCISE THEIR RIGHT TO VOTE TO ACCEPT
OR REJECT THE PLAN. All known Holders of Claims entitled to vote on the Plan have been sent a
Ballot together with this Disclosure Statement. Such Holders should read the Ballot carefully and
follow the instructions contained therein. Please use only the official Ballot (or Ballots) that
accompanies this Disclosure Statement.



     FOR YOUR VOTE TO COUNT, YOUR BALLOT MUST ACTUALLY BE RECEIVED BY THE BALLOTING AGENT SET FORTH
BELOW, NO LATER THAN 4:00 P.M. PREVAILING EASTERN TIME ON ____________, 2006. IF YOU MUST RETURN YOUR BALLOT
TO YOUR BANK OR BROKER, OR THE AGENT OF EITHER, YOU MUST RETURN YOUR BALLOT TO THEM IN SUFFICIENT
TIME FOR THEM TO PROCESS IT AND RETURN IT TO THE BALLOTING AGENT BY THE VOTING DEADLINE.



     ANY BALLOT WHICH IS EXECUTED AND RETURNED BUT WHICH DOES NOT INDICATE AN ACCEPTANCE OR
REJECTION OF THE PLAN, OR INDICATES BOTH AN ACCEPTANCE AND REJECTION OF THE PLAN, WILL NOT BE
COUNTED. IF YOU HAVE ANY QUESTIONS CONCERNING VOTING PROCEDURES OR IF A BALLOT IS DAMAGED OR LOST,
YOU MAY CONTACT THE BALLOTING AGENT AT THE ADDRESS SPECIFIED BELOW:



55









 






			
	                              	 	Balloting Agent

Bankruptcy Services, LLC

Attn: AOL Latin America

3rd Floor

757 Third Avenue

New York, NY 10017

Telephone: (646) 282-2500








     If you wish to obtain an additional copy of the Plan, this Disclosure Statement or any
exhibits to such documents, at your own expense, unless otherwise specifically required by
Bankruptcy Rule 3017(d), please submit your request to Bankruptcy Services, LLC at the foregoing
address. In addition, copies of the Plan, this Disclosure Statement and their exhibits is
available online at http://www.aola.com.10



B. Classes Entitled to Vote




     Subject to the provisions of the Disclosure Statement Order, any Holder of a Claim against the
Debtors as of the Petition Date in Class 3 TW Party Claims and Class 4 General Unsecured Claims
which Claim has not been Disallowed by order of the Bankruptcy Court or is not Disputed, shall be
entitled to vote to accept or reject the Plan if either (i) such Holder’s Claim has been scheduled
by the Debtors (and such Claim is not scheduled as disputed, contingent or unliquidated), or (ii)
such Holder has filed a proof of claim on or before the Bar Date.



     Holders of Claims in Class 1 Priority Claims and Class 2 Secured Claims are not entitled to
vote to accept or reject the Plan because such Classes are unimpaired by the Plan. Holders of
Equity Interests and/or Claims in Class 5 Existing Series C Interests, Class 6 Other Equity
Interests and Class 7 Subordinated Claims are not entitled to vote to accept or reject the Plan
because Class 5 Existing Series C Interests, Class 6 Other Equity Interests and Class 7
Subordinated Claims are deemed to have rejected the Plan pursuant to section 1126(g) of the
Bankruptcy Code.



     Unless otherwise permitted in the Plan, the Holder of any Disputed Claim is not entitled to
vote with respect to such Disputed Claim, unless the Bankruptcy Court, upon application by such
Holder, temporarily allows such Disputed Claim for the limited purpose of voting to accept or
reject the Plan. Any such application must be heard and determined by the Bankruptcy Court prior
to the Confirmation Hearing. A vote on the Plan may be disregarded if the Bankruptcy Court
determines, after notice and a hearing, that such vote was not solicited or procured in good faith
or in accordance with the provisions of the Bankruptcy Code.



C. Vote Required for Acceptance by Classes of Claims




     The Bankruptcy Code defines acceptance of a plan by a class of claims as acceptance by holders
of at least two-thirds in dollar amount and more than one-half in number of the claims of that
class which actually cast ballots for acceptance or rejection of the Plan. Thus, acceptance by a
class of claims occurs only if at least two-thirds in dollar amount and a majority in number of the
Holders of such claims voting cast their ballots in favor of acceptance.





 




			
	10	 	Copies of the Plan and the Disclosure Statement will
be available online on AOLA’s website after entry of the Disclosure
Statement Order.




56









 










     CREDITORS AND OTHER PARTIES IN INTEREST ARE CAUTIONED TO REVIEW THE DISCLOSURE STATEMENT ORDER
AND THE PLAN FOR A FULL UNDERSTANDING OF VOTING REQUIREMENTS, INCLUDING, WITHOUT LIMITATION, USE OF
BALLOTS.



ARTICLE VIII

CONFIRMATION OF THE PLAN




     Under the Bankruptcy Code, the following steps must be taken to confirm the Plan.



A. Confirmation Hearing




     Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after notice, to hold a
hearing on confirmation of a plan. By order of the Bankruptcy Court, the Confirmation Hearing has
been scheduled for ____________ at ________ a.m./p.m. (prevailing Eastern Time) before the Hon. Mary F. Walrath in United
States Bankruptcy Court for the District of Delaware, 824 Market Street, 5th Floor,
Wilmington, Delaware. The Confirmation Hearing may be adjourned from time to time by the
Bankruptcy Court without further notice except for an announcement made at the Confirmation Hearing
or any adjournment thereof.



     Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to
confirmation of a plan. Any objection to confirmation of the Plan must be in writing, conform to
the Federal Rules of Bankruptcy Procedure and the Local Rules of the Bankruptcy Court and set forth
the name of the objecting party, the nature and amount of the Claim or Equity Interest held or
asserted by the objecting party against the Debtors’ estates or property, the basis for the
objection and the specific grounds therefor. The objection, together with proof of service
thereof, must then be filed with the Bankruptcy Court, with a copy to chambers, and served upon (i)
co-counsel to the Debtors, Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022
(Attn: Douglas P. Bartner, Esq./Michael H. Torkin, Esq.); (ii) co-counsel to the Debtors, Young
Conaway Stargatt & Taylor LLP, The Brandywine Building, 1000 West Street, 17th Floor, P.O. Box 391,
Wilmington, Delaware 19801 10036 (Attn: Pauline K. Morgan, Esq./Edmon L. Morton, Esq.); (iii) the
Office of the United States Trustee, J. Caleb Boggs Federal Building, 844 King Street, 2nd Floor,
Wilmington, Delaware 19801 (Attn: David Klauder, Esq.); (iv) counsel to Time Warner Inc. and
America Online, Inc., Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York
10017 (Attn: Elisha D. Graff, Esq.); and (v) counsel to the Cisneros Group Parties, Kaye Scholer
LLP, 425 Park Avenue, New York, NY 10022 (Attn: Benjamin Mintz, Esq.).



     Objections to confirmation of the Plan are governed by Federal Rule of Bankruptcy Procedure
9014. UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY AND PROPERLY SERVED AND FILED BY _____________, 2006 AT
4:00 P.M. (PREVAILING EASTERN TIME), IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT.



57









 





B. Requirements for Confirmation of the Plan




     At the Confirmation Hearing, the Bankruptcy Court will confirm the Plan only if all of the
requirements of section 1129 of the Bankruptcy Code are met. Among the requirements for
confirmation are that the Plan (a) is accepted by all impaired Classes of Claims and Equity
Interests or, if rejected by an impaired Class, that the Plan “does not discriminate unfairly” and
is “fair and equitable” as to such Class, (b) is feasible and (c) is in the “best interests” of
Holders of Claims and Equity Interests impaired under the Plan.



     1. Acceptance



     Claims in Class 1 and Class 2 are unimpaired by the Plan, and the Holders thereof are
conclusively presumed to have accepted the Plan.



     Claims in Class 3 and Class 4 are impaired and the Holders of such Claims are entitled to vote
on the Plan. Pursuant to the Support Agreement, Time Warner and AOL have agreed to vote to accept
a plan of reorganization or liquidation that constitutes a “Qualified Plan” as such term is defined
in the Support Agreement. The Debtors and the TW Parties agree that the Plan constitutes a
“Qualified Plan.” Accordingly, the Debtors believe that, consistent with their obligations under
the Support Agreement, Holders of Class 3 TW Party Claims will vote to accept the Plan.



     Holders of Class 5 and Class 6 Equity Interests and Holders of Class 7 Subordinated Claims are
deemed to have rejected the Plan because they will not receive a Distribution from the Debtors
under the Plan.



     2. Fair and Equitable Test



     The Debtors will seek to confirm the Plan notwithstanding the nonacceptance or deemed
nonacceptance of the Plan by any impaired Class of Claims or Interests. To obtain such
confirmation, it must be demonstrated to the Bankruptcy Court that the Plan “does not discriminate
unfairly” and is “fair and equitable” with respect to such dissenting impaired Class. A plan does
not discriminate unfairly if the legal rights of a dissenting class are treated in a manner
consistent with the treatment of other classes whose legal rights are substantially similar to
those of the dissenting class and if no class receives more than it is entitled to for its claims
or equity interests. The Debtors believe that the Plan satisfies this requirement.



     The Bankruptcy Code establishes different “fair and equitable” tests for secured claims,
unsecured claims and equity interests, as follows:



     (a) Secured Claims: Either the plan must provide: (i) for the holders of such claims
to retain the liens securing such claims, whether the property subject to such liens is retained by
the debtor or transferred to another entity, to the extent of the allowed amount of such claims,
and each holder of a claim receives deferred cash payments totaling at least the allowed amount of
such claim, of a value, as of the effective date of the plan, of at least the value of such
holder’s interest in the estate’s interest in such property; (ii) for the sale of any property that
is subject to the liens securing such claims, free and clear of such liens, with such liens to
attach to the proceeds of such sale; or (iii) for the realization by such holders of the
indubitable equivalent of such claims.



     (b) Unsecured Claims: Either (i) each holder of an impaired unsecured claim receives
or retains under the plan property of a value equal to the amount of its allowed claim or (ii) the
holders of



58









 





claims and equity interests that are junior to the claims of the dissenting class will not
receive any property under the plan.



     (c) Equity Interests: Either (i) each equity interest holder will receive or retain
under the plan property of a value equal to the greater of (y) the fixed liquidation preference or
redemption price, if any, of such stock or (z) the value of the stock, or (ii) the holders of
equity interests that are junior to the stock will not receive any property under the plan.



     THE DEBTORS BELIEVE THAT THE PLAN MAY BE CONFIRMED ON A NON-CONSENSUAL BASIS (PROVIDED AT
LEAST ONE IMPAIRED CLASS OF CLAIMS VOTES TO ACCEPT THE PLAN). THE DEBTORS BELIEVE THAT, CONSISTENT
WITH THEIR OBLIGATIONS UNDER THE SUPPORT AGREEMENT, HOLDERS OF CLASS 3 TW PARTY CLAIMS WILL VOTE TO
ACCEPT THE PLAN. ACCORDINGLY, THE DEBTORS BELIEVE THEY WILL DEMONSTRATE AT THE CONFIRMATION
HEARING THAT THE PLAN SATISFIES THE REQUIREMENTS OF SECTION 1129(b) OF THE BANKRUPTCY CODE AS TO
ANY NON-ACCEPTING CLASS.



C. Feasibility




     The Bankruptcy Code requires that confirmation of a plan is not likely to be followed by the
liquidation or the need for further financial reorganization of a debtor other than as set forth in
such plan. The Plan contemplates that all Assets of the Debtors, excluding the Retained Assets,
will be transferred to the Liquidating LLC. The Retained Assets will vest in Reorganized AOLA LLC.
The Liquidating LLC will hold 100% of the limited liability company interests of Reorganized AOLA
LLC. The Debtors believe that all the Assets of the Debtors, including the Retained Assets,
ultimately will be disposed of and all proceeds of the Assets will be distributed by the
Liquidating LLC in accordance with the terms of the Plan. Since no further financial
reorganization of the Debtors will be possible, the Debtors believe that the Plan meets the
feasibility requirement. In addition, based upon the availability of Assets for distribution, the
Debtors believe that sufficient funds will exist at confirmation to make all payments required by
the Plan including to fund the development of AOL Spain’s operating business and to fund the wind
downs contemplated by the Plan.



     “Best Interests” Test



     With respect to each impaired Class of Claims and Equity Interests, confirmation of the Plan
requires that each Holder of an impaired Claim or Equity Interest either (a) accepts the Plan or
(b) receives or retains under the Plan property of a value, as of the Effective Date of the Plan,
that is not less than the value such Holder would receive or retain if the Debtors were liquidated
under chapter 7 of the Bankruptcy Code.



     This analysis requires the Bankruptcy Court to determine what the Holders of Allowed Claims
and Allowed Equity Interests in each impaired Class would receive from the liquidation of the
Debtors’ Assets and properties in the context of chapter 7 liquidation cases. The value available
for distribution to unsecured creditors and the Holders of Equity Interests would be reduced by the
costs and expenses of the liquidation and by such additional administrative and priority claims
that may result from the termination of the Debtors’ business and the use of chapter 7 for the
purposes of liquidation.



     The Debtors’ costs of liquidation under chapter 7 would include the fees payable to a trustee
in bankruptcy, as well as those payable to attorneys, real estate brokers, accountants and other
professionals that such a trustee may engage, plus any unpaid expenses incurred by the Debtors
during the Chapter 11



59









 





Cases, such as compensation for attorneys, financial advisors, accountants and costs and
expenses of members of any official committees that are allowed in the chapter 7 cases.



     The foregoing types of Claims and such other claims which may arise in the liquidation cases
or result from the pending Chapter 11 Cases would be entitled to be paid in full from the
unencumbered liquidation proceeds, if any, before the balance of those proceeds would be made
available to pay prepetition Claims.



     To determine if the Plan is in the best interests of each impaired class, the value of the
distributions from the proceeds of the liquidation of the Debtors’ unencumbered assets and
properties (after subtracting the amounts attributable to the aforesaid claims) is then compared
with the value offered to such classes of Claims and Equity Interests under the Plan.



     After consideration of the effects that a chapter 7 liquidation would have on the ultimate
proceeds available for distribution to creditors, including (a) the increased costs and expenses of
a liquidation under chapter 7 arising from fees payable to a trustee in bankruptcy and professional
advisors to such trustee and (b) the anticipated erosion in value of assets in a chapter 7 case
resulting from the “forced sale” atmosphere that would prevail, the Debtors believe that
confirmation of the Plan will provide each Holder of an Allowed Claim with more than the amount it
would receive pursuant to liquidation of the Debtors under chapter 7 of the Bankruptcy Code.



ARTICLE IX

FINANCIAL INFORMATION




     The Debtors have filed Statements of Financial Affairs and Schedules of Assets and Liabilities
with the Bankruptcy Court as required by the Bankruptcy Code. As debtors in possession, the
Debtors have filed and will continue to file monthly operating reports required by the United
States Trustee operating guidelines. This financial information may be examined in the Bankruptcy
Court Clerk’s Office. Also, attached to this Disclosure Statement as Exhibit B is the
Debtors’ most current unaudited balance sheet.



ARTICLE X

ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN




     If the Plan is not confirmed and consummated, the alternatives include (a) liquidation of the
Debtors under chapter 7 of the Bankruptcy Code or (b) dismissal of the Chapter 11 Cases.



A. Liquidation Under Chapter 7




     If no plan can be confirmed, the Chapter 11 Cases may be converted to cases under chapter 7 of
the Bankruptcy Code, in which case a trustee would be elected or appointed to liquidate any
remaining assets of the Debtors for distribution to their creditors. The Debtors believe that
conversion of the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code would result in
diminished distributions to creditors due to the projected reduced value the Debtors’ estates would
realize from their remaining assets due to the “forced sale” environment of a chapter 7 liquidation
and the increased costs of administration. Moreover, the enhanced distribution to Holders of Class
4 General Unsecured Claims described above and the turnover to Holders of Class 5 Existing Series C
Interests would not be available in a chapter 7 proceeding. The Debtors’ liquidation analysis is
attached to this Disclosure Statement as Exhibit C.



60









 





B. Alternative Chapter 11 Plan




     If the Plan is not confirmed, the Debtors or any of the parties in interest could attempt to
formulate a different chapter 11 plan. In light of the additional administrative expenses
attendant to an alternative plan, it is doubtful that sufficient funds would be available to pay
such expenses and confirm an alternative plan. The Debtors believe that the Plan described herein
will provide the greatest and most expeditious return to creditors.



ARTICLE XI

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN




     The following is a discussion of certain significant U.S. federal (“federal”) income tax
considerations of the Plan under the Internal Revenue Code of 1986, as amended (the “Code”) to the
Holders of Class 4 General Unsecured Claims (“GUC Holders”). This general description does not,
except to the limited extent provided in the second following paragraph, discuss any aspects of
federal income taxation that may be relevant to the TW Parties, the Cisneros Group or AOLA. In
addition, this general discussion does not address all aspects of federal income taxation that may
be relevant to the GUC Holders and does not discuss any aspect of state, local or foreign taxation.
This discussion is based upon laws, regulations, rulings and decisions now in effect and upon
proposed regulations all of which are subject to change (possibly with retroactive effect) by
legislation, administrative action or judicial decision. Moreover, substantial uncertainties,
resulting from the lack of a definitive judicial or administrative authority and interpretation,
apply to various tax aspects of the transactions discussed herein. THE TW PARTIES, THE CISNEROS
GROUP AND THE GENERAL UNSECURED CREDITORS ARE EACH URGED TO CONSULT THEIR OWN INDEPENDENT TAX
ADVISOR FOR THE TAX CONSEQUENCES PARTICULAR TO THEM FROM THE IMPLEMENTATION OF THE PLAN.



A. IRS Circular 230 Disclosure




     To ensure compliance with requirements imposed by the Internal Revenue Service, any tax advice
contained in this disclosure statement is not intended or written to be used, and cannot be used,
by any person for the purpose of avoiding tax-related penalties that may be imposed on the person.
Tax advice contained in this disclosure statement is written to support the matters addressed by
the disclosure statement. Each taxpayer should seek advice based on the taxpayer’s particular
circumstances from an independent tax advisor.



B. Certain Federal Income Tax Consequences of the Reorganization




     The liquidation of the Dissolving Debtors, the conversion of AOLA into Reorganized AOLA LLC,
and the subsequent vesting of the Reorganized AOLA LLC interests into Liquidating LLC should be
treated for federal income tax purposes as follows (and as occurring in the following order): (i)
the liquidation, under section 332 of the Code, of each of AOL Caribbean Basin and Puerto Rico
Management Services with and into AOLA, (ii) the transfer of the assets of AOLA, including the
Other PR Assets and the PR Agreement, to the TW Parties with respect to the TW Party Claims
(subject to Time Warner’s turnover obligation described in Sections 3.3(c), 3.3(e) and 5.11 of the
Plan to the Cisneros Group Parties) and the GUC Holders (but, as to the GUC Holders, if the LLC
Option is elected, excluding the Other PR Assets and the PR Agreement and, if the LLC Option is not
elected, assets consisting solely of cash), and (iii) (a) if the LLC Option is elected, the
contribution of the assets of AOLA (other than the Other PR Assets and the PR Agreement) by Time
Warner and the GUC Holders to Liquidating LLC in exchange for interests in Liquidating LLC and the
substantially concurrent turnover, on behalf of and at the direction of Time Warner, of the Series
C Beneficial Interest to the Cisneros Group



61









 





Parties or (b) if the Cash Option is elected, the turnover of a portion of the AOLA assets to
the Cisneros Group Parties and the contribution of the AOLA assets (other than the Other PR Assets
and the PR Agreement) by Time Warner and the Cisneros Group Parties in exchange for interests in
Liquidating LLC. Under the plan, each holder of a beneficial interest in the Liquidating LLC (or
any transferees), AOLA, Reorganized AOLA LLC or the Liquidating LLC has agreed to take the position
described in this paragraph for federal income tax purposes unless otherwise required by law.



C. Certain Federal Income Tax Consequences to GUC Holders




     In general, a GUC Holder will recognize gain or loss in an amount equal to the difference
between (i) the amount of cash (or the fair market value of the property if the LLC Option is
elected) received by such GUC Holder in satisfaction of its Claim (other than in respect of any
Claim for accrued but unpaid interest) and (ii) the GUC Holder’s adjusted tax basis in its Claim
(other than any Claim for accrued but unpaid interest).



     Pursuant to the Plan, distributions to any GUC Holder will be allocated first to the original
principal amount of such Claim as determined for federal income tax purposes, and then, to the
extent the consideration exceeds such amount, to accrued but unpaid interest. However, there is no
assurance that the IRS would respect such allocation for federal income tax purposes.



     In general, to the extent that an amount received by a GUC Holder is received in satisfaction
of accrued interest during its holding period, such amount will be taxable to the GUC Holder as
interest income (if not previously included in the GUC Holder’s gross income). Conversely, a GUC
Holder generally recognizes a deductible loss to the extent any accrued interest claimed was
previously included in its gross income and is not paid in full. Each GUC Holder is urged to
consult its tax advisor regarding the allocation of consideration and the deductibility of unpaid
interest for federal income tax purposes.



     If a GUC Holder receives an interest in Liquidating LLC, such holder will be a partner in a
partnership for U.S. federal income tax purposes. As an entity taxed as a partnership, Liquidating
LLC itself will not be subject to U.S. federal income tax. Liquidating LLC will file an annual
partnership information return with the IRS that reports the results of its operations. Each
member of Liquidating LLC, including the GUC Holders if they receive interests in Liquidating LLC,
will be required to take into account on the member’s income tax return the member’s distributive
share of Liquidating LLC’s net long-term capital gain or loss, net short-term capital gain or loss
and all items of ordinary income or loss. Each member will be taxed on the member’s distributive
share of Liquidating LLC’s taxable income and gain regardless of whether the member has received or
will receive a distribution from Liquidating LLC. A member may have taxable income for a taxable
year for which it has incurred an economic loss with respect to its interest in Liquidating LLC.



ARTICLE XII

CONCLUSION AND RECOMMENDATION




     The Debtors and the Principal Stockholders all believe that the Plan is in the best interests
of all Holders of Claims and urge the Holders of impaired Claims in Class 3 TW Party Claims and
Class 4 General Unsecured Claims to vote to accept the Plan and to evidence such acceptance by
returning their ballots to the Balloting Agent at the address set forth in Article VII of this
Disclosure Statement so that they will be actually received by the Balloting Agent on or before
4:00 p.m., prevailing Eastern Time, on _______________, 2006.



62









 






			
	Dated:  	 	Wilmington, Delaware

January 17, 2006








	 	 	 	 	 
	 	Respectfully Submitted,



AMERICA ONLINE LATIN AMERICA, INC.

 	 
	 	By:  	/s/ Charles M. Herington
 	 
	 	 	Name:  	Charles M. Herington 	 
	 	 	Title:  	President and CEO 	 
	 
	 	AOL PUERTO RICO MANAGEMENT SERVICES, INC.

 	 
	 	By:  	/s/ Mario Martin Lanzoni
 	 
	 	 	Name:  	Mario Martin Lanzoni 	 
	 	 	Title:  	Treasurer 	 
	 
	 	AMERICA ONLINE CARIBBEAN BASIN, INC.

 	 
	 	By:  	/s/ Mario Martin Lanzoni
 	 
	 	 	Name:  	Mario Martin Lanzoni 	 
	 	 	Title:  	Treasurer 	 
	 
	 	AOL LATIN AMERICA MANAGEMENT LLC

 	 
	 	By:  	/s/ Charles M. Herington
 	 
	 	 	Name:  	Charles M. Herington 	 
	 	 	Title:  	Manager 	 



63









 






	 	 	 	 	 



EXHIBIT A




JOINT PLAN OF REORGANIZATION AND LIQUIDATION PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE




 









 








IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE




	 	 	 	 	 
	-
— - — - — - — - — - — - — - — - — - — - — - — - — - — 

	 	x	 	 
	In re:

	 	:	 	 
	 

	 	:
	 	Chapter 11
	AMERICA ONLINE LATIN AMERICA,

	 	:
	 	Case No. 05-11778 (MFW)
	          INC., et al.,1

	 	:	 	 
	 

	 	:
	 	(Jointly Administered)
	 

	 	:	 	 
	Debtors.     

	 	:	 	 
	- — - — - — - — - — - — - — - — - — - — - — - — - — - — 

	 	x	 	 






JOINT PLAN OF REORGANIZATION AND LIQUIDATION PURSUANT TO

CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE




SHEARMAN & STERLING LLP

Douglas P. Bartner

Michael H. Torkin

Michael Pardo

599 Lexington Avenue

New York, New York 10022

Telephone: (212) 848-4000

Facsimile: (212) 848-7179




          – and –




YOUNG CONAWAY STARGATT

& TAYLOR, LLP

Pauline K. Morgan (Del. 3650)

Edmon L. Morton (Del. 3856)

Margaret B. Whiteman (Del. 4652)

The Brandywine Building

1000 West Street, 17th Floor

Wilmington, Delaware 19801

Telephone: (302) 571-6600

Facsimile: (302) 571-1253




Co-Counsel for the Debtors and Debtors in Possession




Dated: January 17, 2006






 




			
	1	 	In addition to America Online Latin America,
Inc., the other debtors herein are AOL Latin America Management LLC, AOL Puerto
Rico Management Services, Inc. and America Online Caribbean Basin, Inc.




 









 










TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I  DEFINED TERMS, RULES OF INTERPRETATION AND COMPUTATION OF TIME	 	 	1	 
	 	 	 	 	 	 	 	 	 
	Section 1.1 	 	Defined Terms
	 	 	1	 
	 	 	 	 	 	 	 	 	 
	Section 1.2 	 	Rules of Interpretation and Computation of Time
	 	 	12	 
	 	 	 	 	 	 	 	 	 
	ARTICLE II  ADMINISTRATIVE CLAIMS, PROFESSIONAL FEES AND PRIORITY TAX CLAIMS	 	 	12	 
	 	 	 	 	 	 	 	 	 
	Section 2.1 	 	Administrative Claims
	 	 	12	 
	 	 	 	 	 	 	 	 	 
	Section 2.2 	 	Statutory Fees
	 	 	13	 
	 	 	 	 	 	 	 	 	 
	Section 2.3 	 	Professional Fees
	 	 	13	 
	 	 	 	 	 	 	 	 	 
	Section 2.4 	 	Priority Tax Claims
	 	 	13	 
	 	 	 	 	 	 	 	 	 
	ARTICLE III  CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS	 	 	13	 
	 	 	 	 	 	 	 	 	 
	Section 3.1 	 	Classification
	 	 	13	 
	 	 	 	 	 	 	 	 	 
	Section 3.2 	 	Acceptances and Rejections
	 	 	14	 
	 	 	 	 	 	 	 	 	 
	Section 3.3 	 	Treatment of Claims and Equity Interests
	 	 	14	 
	 	 	 	 	 	 	 	 	 
	Section 3.4 	 	Miscellaneous
	 	 	17	 
	 	 	 	 	 	 	 	 	 
	ARTICLE IV  CRAM DOWN	 	 	17	 
	 	 	 	 	 	 	 	 	 
	ARTICLE V  MEANS FOR IMPLEMENTATION OF THE PLAN	 	 	17	 
	 	 	 	 	 	 	 	 	 
	Section 5.1 	 	Substantive Consolidation for Purposes of Voting, Confirmation and
Distribution
	 	 	17	 
	 	 	 	 	 	 	 	 	 
	Section 5.2 	 	Vesting of Assets in Reorganized AOLA LLC
	 	 	18	 
	 	 	 	 	 	 	 	 	 
	Section 5.3 	 	Dismissal of Officers and Directors and Dissolution of Dissolving Debtors
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	Section 5.4 	 	Vesting of Assets in the Liquidating LLC
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	Section 5.5 	 	Transfer of Other PR Assets to AOL
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	Section 5.6 	 	Restructuring Transactions
	 	 	20	 
	 	 	 	 	 	 	 	 	 
	Section 5.7 	 	Authority to Effectuate Plan
	 	 	20	 
	 	 	 	 	 	 	 	 	 
	Section 5.8 	 	Cancellation of Notes, Instruments, Debentures and Equity Interests
	 	 	20	 
	 	 	 	 	 	 	 	 	 
	Section 5.9 	 	Execution of Related Documents
	 	 	20	 
	 	 	 	 	 	 	 	 	 
	Section 5.10	 	Conversion of AOLA to Reorganized AOLA LLC, Sole Member of Reorganized
AOLA LLC and Corporate Action
	 	 	21	 






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Section 5.11	 	Distributions by the Liquidating LLC; Turnover by Time Warner to
Accepting Class 4 Claims and the Cisneros Group Parties
	 	 	21	 
	 	 	 	 	 	 	 	 	 
	Section 5.12	 	Status Reports
	 	 	23	 
	 	 	 	 	 	 	 	 	 
	Section 5.13	 	Elimination of Classes
	 	 	24	 
	 	 	 	 	 	 	 	 	 
	Section 5.14	 	Late Claims
	 	 	24	 
	 	 	 	 	 	 	 	 	 
	Section 5.15	 	Creation of the Liquidating LLC
	 	 	24	 
	 	 	 	 	 	 	 	 	 
	Section 5.16	 	The LLC Agents
	 	 	24	 
	 	 	 	 	 	 	 	 	 
	ARTICLE
VI  TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES	 	 	25	 
	 	 	 	 	 	 	 	 	 
	Section 6.1 	 	Assumption/Rejection of Executory Contracts and Unexpired Leases
	 	 	25	 
	 	 	 	 	 	 	 	 	 
	Section 6.2 	 	Rejection Damage Claims
	 	 	26	 
	 	 	 	 	 	 	 	 	 
	Section 6.3 	 	Indemnification of Directors, Officers and Employees
	 	 	26	 
	 	 	 	 	 	 	 	 	 
	Section 6.4 	 	Benefits, Compensation and Severance
	 	 	27	 
	 	 	 	 	 	 	 	 	 
	ARTICLE VII  RIGHTS OF ACTION	 	 	27	 
	 	 	 	 	 	 	 	 	 
	Section 7.1 	 	Maintenance of Rights of Action
	 	 	27	 
	 	 	 	 	 	 	 	 	 
	Section 7.2 	 	Preservation of All Rights of Action Not Expressly Settled or Released
	 	 	27	 
	 	 	 	 	 	 	 	 	 
	ARTICLE VIII  PROVISIONS GOVERNING DISTRIBUTIONS	 	 	28	 
	 	 	 	 	 	 	 	 	 
	Section 8.1 	 	Distribution to Creditors
	 	 	28	 
	 	 	 	 	 	 	 	 	 
	Section 8.2 	 	Claims Allowed as of the Effective Date
	 	 	28	 
	 	 	 	 	 	 	 	 	 
	Section 8.3 	 	Disputed Priority Claims Fund; Disputed General Unsecured Claims Fund;
Nonaccepting Class 4 Claims Fund and Accepting Class 4 Claims Fund
	 	 	28	 
	 	 	 	 	 	 	 	 	 
	Section 8.4 	 	Delivery of Distributions
	 	 	28	 
	 	 	 	 	 	 	 	 	 
	Section 8.5 	 	Undeliverable Distributions
	 	 	29	 
	 	 	 	 	 	 	 	 	 
	Section 8.6 	 	Compliance with Tax Requirements/Allocation
	 	 	29	 
	 	 	 	 	 	 	 	 	 
	Section 8.7 	 	Fractional Dollars, De Minimis Distributions
	 	 	30	 
	 	 	 	 	 	 	 	 	 
	Section 8.8 	 	Set-Offs and Recoupments
	 	 	30	 
	 	 	 	 	 	 	 	 	 
	Section 8.9 	 	Time Bar to Cash Payments
	 	 	30	 
	 	 	 	 	 	 	 	 	 
	Section 8.10	 	Manner of Payment Under Plan of Reorganization
	 	 	30	 
	 	 	 	 	 	 	 	 	 
	ARTICLE IX  PROCEDURES FOR RESOLVING DISPUTED CLAIMS	 	 	31	 
	 	 	 	 	 	 	 	 	 
	Section 9.1 	 	Prosecution of Objections to Claims
	 	 	31	 






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Section 9.2 	 	Estimation of Claims
	 	 	31	 
	 	 	 	 	 	 	 	 	 
	Section 9.3 	 	Cumulative Remedies
	 	 	31	 
	 	 	 	 	 	 	 	 	 
	Section 9.4 	 	Payments and Distributions on Disputed Claims
	 	 	31	 
	 	 	 	 	 	 	 	 	 
	Section 9.5 	 	Allowance of Claims
	 	 	32	 
	 	 	 	 	 	 	 	 	 
	ARTICLE X  CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE OF THE PLAN	 	 	33	 
	 	 	 	 	 	 	 	 	 
	Section 10.1	 	Conditions Precedent to Confirmation
	 	 	33	 
	 	 	 	 	 	 	 	 	 
	Section 10.2	 	Conditions Precedent to Occurrence of the Effective Date
	 	 	33	 
	 	 	 	 	 	 	 	 	 
	Section 10.3	 	Waiver of Conditions
	 	 	34	 
	 	 	 	 	 	 	 	 	 
	Section 10.4	 	Effect of Non-Occurrence of Effective Date Conditions
	 	 	34	 
	 	 	 	 	 	 	 	 	 
	Section 10.5	 	Substantial Consummation of Plan
	 	 	34	 
	 	 	 	 	 	 	 	 	 
	ARTICLE XI  RELEASE, INJUNCTIVE AND RELATED PROVISIONS	 	 	34	 
	 	 	 	 	 	 	 	 	 
	Section 11.1	 	Subordination
	 	 	34	 
	 	 	 	 	 	 	 	 	 
	Section 11.2	 	Releases
	 	 	35	 
	 	 	 	 	 	 	 	 	 
	Section 11.3	 	Exculpation and Limitation of Liability
	 	 	36	 
	 	 	 	 	 	 	 	 	 
	Section 11.4	 	Injunction
	 	 	36	 
	 	 	 	 	 	 	 	 	 
	Section 11.5	 	Indemnification
	 	 	37	 
	 	 	 	 	 	 	 	 	 
	Section 11.6	 	Term of Existing Injunctions or Stays
	 	 	37	 
	 	 	 	 	 	 	 	 	 
	ARTICLE XII  RETENTION OF JURISDICTION	 	 	37	 
	 	 	 	 	 	 	 	 	 
	Section 12.1	 	Retention of Jurisdiction
	 	 	37	 
	 	 	 	 	 	 	 	 	 
	ARTICLE XIII  MISCELLANEOUS PROVISIONS	 	 	39	 
	 	 	 	 	 	 	 	 	 
	Section 13.1	 	Title to Assets
	 	 	39	 
	 	 	 	 	 	 	 	 	 
	Section 13.2	 	Releases of All Liens
	 	 	39	 
	 	 	 	 	 	 	 	 	 
	Section 13.3	 	Modification of Plan
	 	 	40	 
	 	 	 	 	 	 	 	 	 
	Section 13.4	 	Discharge of Debtors
	 	 	40	 
	 	 	 	 	 	 	 	 	 
	Section 13.5	 	Revocation of Plan
	 	 	40	 
	 	 	 	 	 	 	 	 	 
	Section 13.6	 	Successors and Assigns
	 	 	40	 
	 	 	 	 	 	 	 	 	 
	Section 13.7	 	Retention and Destruction of Records
	 	 	40	 
	 	 	 	 	 	 	 	 	 
	Section 13.8	 	Post-Effective Date Fees and Expenses
	 	 	40	 






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Section 13.9 	 	Section 1145 Exemption
	 	 	40	 
	 	 	 	 	 	 	 	 	 
	Section 13.10	 	Headings
	 	 	41	 
	 	 	 	 	 	 	 	 	 
	Section 13.11	 	Governing Law
	 	 	41	 
	 	 	 	 	 	 	 	 	 
	Section 13.12	 	Severability
	 	 	41	 
	 	 	 	 	 	 	 	 	 
	Section 13.13	 	Implementation
	 	 	41	 
	 	 	 	 	 	 	 	 	 
	Section 13.14	 	Inconsistency
	 	 	41	 
	 	 	 	 	 	 	 	 	 
	Section 13.15	 	Further Assurances
	 	 	41	 
	 	 	 	 	 	 	 	 	 
	Section 13.16	 	Service of Documents
	 	 	42	 
	 	 	 	 	 	 	 	 	 
	Section 13.17	 	Exemption from Certain Transfer Taxes
	 	 	43	 
	 	 	 	 	 	 	 	 	 
	Section 13.18	 	Compromise of Controversies
	 	 	43	 
	 	 	 	 	 	 	 	 	 
	Section 13.19	 	No Admissions
	 	 	43	 
	 	 	 	 	 	 	 	 	 
	Section 13.20	 	Filing of Additional Documents
	 	 	43	 
	 	 	 	 	 	 	 	 	 
	Section 13.21	 	Continuing Viability of Other Orders
	 	 	43	 
	 	 	 	 	 	 	 	 	 
	Section 13.22	 	Closing of Cases
	 	 	44	 
	 	 	 	 	 	 	 	 	 
	Exhibit A     	 	Shut-Down Costs Letter Agreement
	 	 	 	 






 









 






DEBTORS’ JOINT PLAN OF REORGANIZATION AND LIQUIDATION

UNDER CHAPTER 11 OF THE BANKRUPTCY CODE




     America Online Latin America, Inc., AOL Latin America Management LLC, AOL Puerto Rico
Management Services, Inc. and America Online Caribbean Basin, Inc., debtors and debtors in
possession in the above-captioned cases, hereby respectfully propose the following Joint Plan of
Reorganization and Liquidation under chapter 11 of the Bankruptcy Code. The only Persons and
Entities entitled to vote on the Plan are the Holders of Class 3 Claims and Class 4 Claims and such
Holders are encouraged to read the Plan and the accompanying Disclosure Statement and their
respective exhibits in their entirety before voting to accept or reject the Plan. No materials
other than the Plan, the Disclosure Statement and their respective exhibits and schedules, if any,
attached thereto or referenced therein have been authorized by the Debtors for use in soliciting
acceptances or rejections of the Plan.



ARTICLE I




DEFINED TERMS, RULES OF INTERPRETATION AND COMPUTATION OF TIME





			
	Section 1.1	 	Defined Terms








     Unless the context otherwise requires, the following terms shall have the following meanings
when used in capitalized form in the Plan:



     “Accepting Class 4 Claim” means an Allowed Class 4 General Unsecured Claim entitled to vote on
this Plan that (a) during the Solicitation Period, votes to accept this Plan and does not expressly
“opt out” of the General Release by returning a Ballot electing to “opt out” of such General
Release or (b) following the Solicitation Period, executes an agreement, in form and substance
reasonably satisfactory to the TW Parties, providing the General Release.



     “Accepting Class 4 Claims Fund” means, if the Cash Option is elected, a fund, which shall be
held by the Liquidating LLC to ensure that Disputed Accepting Class 4 Claims receive their ratable
Distribution if such Claims ultimately become Allowed, consisting of an amount in Cash equal to the
difference between (a) the aggregate amount of Accepting Class 4 Claims, minus (b) the aggregate
amount paid to Accepting Class 4 Claims on the Effective Date.



     “Accepting Class 4 Distribution Amount” means the aggregate of the Supplemental Distribution
Amounts for all Accepting Class 4 Claims.



     “Accepting Class 4 Claim Payment” means, as to each Holder of an Accepting Class 4 Claim, an
amount of Cash equal to (a) such Holder’s PR Distribution Amount, (b) such Holder’s Additional
Distribution Amount and (c) such Holder’s pro rata share of the Turnover Amount, which collectively
shall equal 100% of the Allowed amount of such Accepting Class 4 Claim Holder’s Allowed Claim.



     “Additional Distribution Amount” means, as to each Holder of a Class 4 General Unsecured
Claim, an amount of Cash that such Holder is entitled to receive in order to maintain pari passu
treatment with the TW Parties as a result of the TW Parties’ agreement to turn over the Turnover
Amount or any actual distribution on the Effective Date of Net Available Cash on account of the
Series B Beneficial Interests or Series C Beneficial Interests.



     “Administrative Claim” means a Claim for costs and expenses of administration under section
503(b)(1) or 507(b) of the Bankruptcy Code, including for: (a) the actual and necessary costs and
expenses incurred after the Petition Date of preserving the Estates and operating the businesses of
the Debtors; (b) compensation for services and reimbursement of expenses under section 330(a) or
331 of the Bankruptcy Code and other Professional Fees; (c) any indebtedness or obligations
incurred by or assumed by the Debtors during the Chapter 11 Cases; and (d) all fees and charges
assessed against the Estates under 28 U.S.C. §§ 1911-1930.



1









 





     “Administrative Claim Bar Date” means the date that is forty-five (45) days after the
Effective Date.



     “Administrative Claims Reserve Fund” means such amount of Cash which is allocable to
Administrative Claims (other than Retention Payments) under any applicable line items in the
Budget, as the Debtors shall determine to be necessary to retain on the Effective Date in respect
of unpaid Allowed Administrative Claims (other than Retention Payments) and Professional Fees or,
if Disputed, for the purpose of paying such Disputed amounts to the extent such Disputed amounts
become Allowed. The amount of the Administrative Claims Reserve Fund shall be disclosed in a
notice included in the Plan Supplement.



     “Allowed” means any Claim or portion thereof against any Debtor, (a) proof of which was filed
within the applicable period of limitation, if any, fixed by the Bankruptcy Court in accordance
with Bankruptcy Rule 3003(c)(3) as to which (i) no objection to the allowance thereof, or action to
equitably subordinate or otherwise limit recovery with respect thereto, has been interposed within
the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or
a Final Order, (ii) any objection has been settled, waived, withdrawn or denied by a Final Order or
(iii) if an objection has been interposed, such Claim as has been allowed (whether in whole or in
part) by a Final Order, (b) which, if no proof of claim was so filed, has been listed by a Debtor
in its Schedules, if any, as liquidated in an amount and not disputed or contingent and as to which
(i) no objection to the allowance thereof, or action to equitably subordinate or otherwise limit
recovery with respect thereto, has been interposed within the applicable period of limitation fixed
by the Plan, the Bankruptcy Code, the Bankruptcy Rules or a Final Order, or (ii) any objection has
been settled, waived, withdrawn or denied by a Final Order or (iii) if an objection has been
interposed, such Claim as has been allowed (whether in whole or in part) by a Final Order, (c)
which Claim arises from the recovery of property under section 550 or 553 of the Bankruptcy Code
and is allowed in accordance with section 502(h) of the Bankruptcy Code, (d) which Claim is
expressly allowed under the Plan, (e) which Claim is allowed by a Final Order or (f) which Claim is
not otherwise objected to or disputed; provided, however, that with reference to any Claim, the
term “Allowed” for purposes of distribution under the Plan shall not include, unless otherwise
specified in the Plan, interest on such Claim from and after the Petition Date.



     “AOL” means America Online, Inc.



     “AOL Brazil” means AOL Brasil Ltda.



     “AOL Brazil Equity Interests” means all equity in AOL Brazil owned directly by AOL Spain,
including, but not limited to, all issued, unissued, authorized or outstanding shares, stock or
quotas, together with any warrants, options or contract rights to purchase or acquire such
interests at any time held directly by AOL Spain.



     “AOL Caribbean Basin” means America Online Caribbean Basin, Inc.



     “AOL General Unsecured Claim” means all prepetition Claims against the Debtors held by AOL
(the total of which equals $1,592,430).



     “AOL License” means that certain AOL License Agreement dated as of August 7, 2000, by and
between AOL and AOLA, as amended.



     “AOL License Rejection Claims” means any Claims of the TW Parties arising from the Debtors’
rejection of the AOL License.



     “AOL Management LLC” means AOL Latin America Management LLC.



     “AOL Mexico” means AOL S. de R.L. de C.V.



     “AOL Mexico Equity Interests” means all equity in AOL Mexico owned directly by AOLA,
including, but not limited to, all issued, unissued, authorized or outstanding shares or stock or
quotas, together with any warrants, options or contract rights to purchase or acquire such
interests at any time held directly by AOLA.



     “AOL Puerto Rico” means AOL Caribbean Basin and Puerto Rico Management Services, collectively.



2









 





     “AOL Spain” means AOL Latin America, S.L.



     “AOL Spain Equity Interests” means any equity interest in AOL Spain, including, but not
limited to, all issued, unissued, authorized or outstanding shares or stock or quotas, together
with any warrants, options or contract rights to purchase or acquire such interests at any time.



     “AOL Venezuela” means AOL Venezuela S.R.L.



     “AOL Venezuela Equity Interests” means all equity in AOL Venezuela owned directly by AOLA,
including, but not limited to, all issued, unissued, authorized or outstanding shares or stock or
quotas, together with any warrants, options or contract rights to purchase or acquire such
interests at any time held directly by AOLA.



     “AOLA” means America Online Latin America, Inc.



     “AOLA Certificate of Conversion to Limited Liability Company” means the certificate of
conversion to limited liability company of Reorganized AOLA LLC, which shall be filed with the
Secretary of State of the State of Delaware on or before the Effective Date and which shall be in
form and substance satisfactory to the Debtors and the Principal Stockholders.



     “AOLA Limited Liability Company Agreement” means the limited liability company agreement of
Reorganized AOLA LLC, which shall be filed with the Secretary of State of the State of Delaware on
or before the Effective Date, the form of which shall be filed in the Plan Supplement and which
shall be in form and substance satisfactory to the Debtors and the Principal Stockholders.



     “Assets” means any and all real or personal property of any nature, including, without
limitation, any real estate, buildings, structures, improvements, privileges, rights, easements,
leases, subleases, licenses, goods, materials, supplies, furniture, fixtures, equipment, work in
process, accounts, chattel paper, cash, deposit accounts, reserves, deposits, contractual rights,
intellectual property rights, claims, Rights of Action and any other general intangibles of the
Debtors, as the case may be, of any nature whatsoever, including, without limitation, the property
of the Estates pursuant to section 541 of the Bankruptcy Code.



     “Assumed Benefit Plans” means certain of the Debtors’ employment and severance policies, and
compensation and benefit plans, policies, and programs of the Debtors applicable to their
employees, retirees and non-employee directors and the employees and retirees of its subsidiaries,
including, without limitation, savings plans, retirement plans, healthcare plans, disability plans,
severance benefit plans, and life, accidental death and dismemberment insurance plans that the
Debtors intend to assume pursuant to Section 6.4(a), as shall be disclosed by the Debtors in a
notice to be included in the Plan Supplement.



     “Available Cash” means the Liquidating LLC’s aggregate Cash on hand as of any Distribution
Date, less an amount necessary to pay or reserve for, without duplication (i) the Administrative
Claims Reserve Fund, (ii) the Liquidating LLC Expense Reserve, (iii) if (A) the LLC Option is
elected, a Disputed General Unsecured Claims Fund or (B) if the Cash Option is elected, the
Nonaccepting Class 4 Claims Fund and the Accepting Class 4 Claims Fund, (iv) the Retention Payment
Fund, (v) the Disputed Priority Claims Fund, (vi) the PR Distribution Amount for all Allowed Class
4 General Unsecured Claims, (vii) Priority Tax Claims, (viii) Class 1 Claims and (ix) Class 2
Claims.



     “Ballot” means a ballot for voting to accept or reject the Plan distributed to Holders of
Claims entitled to vote on the Plan.



     “Bankruptcy Code” means title 11 of the United States Code as in effect on the Petition Date,
as it has been or may after the Petition Date be amended to the extent applicable to the Chapter 11
Cases.



     “Bankruptcy Court” means the United States District Court having jurisdiction over the Chapter
11 Cases and, to the extent of any reference made pursuant to section 157 of title 28 of the United
States Code or the General



3









 





Order of such District Court pursuant to section 151 of title 28 of the United States Code,
the bankruptcy unit of such District Court.



     “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure and the General Orders or
local rules of the Bankruptcy Court, each as in effect on the Petition Date and as each has been or
may after the Petition Date be amended to the extent applicable in the Chapter 11 Cases.



     “Bar Date” means the applicable date by which proofs of claim must be filed in the Chapter 11
Cases, as set forth in the Bar Date Order.



     “Bar Date Order” means the Order (1) Fixing Deadlines for the Filing of Proofs of Claim and
(2) Approving the Form and Manner of Notice with Respect Thereto, entered by the Bankruptcy Court
on August 26, 2005.



     “Budget” means the budget included in the Plan Supplement, in form and substance acceptable to
the Principal Stockholders, which sets forth the estimated expenses of the wind-down of the Debtors
(and the Debtors’ contribution, if any, to the wind-down of the Debtors’ non-debtor subsidiaries)
from and after the Effective Date, as the same may be amended from time to time by the LLC Agents
in accordance with (and not in any way inconsistent with) the terms of this Plan, and which is
incorporated by reference in its entirety in this Plan.



     “Business Day” means any day, other than a Saturday, Sunday or a “legal holiday”, as defined
in Bankruptcy Rule 9006(a).



     “Cash” means legal tender of the United States of America or the equivalent thereof, including
bank deposits, checks and cash equivalents.



     “Cash Option” means the election to distribute Cash to Holders of Class 4 General Unsecured
Claims pursuant to Section 3.3(d)(i)(B) of the Plan.



     “Causes of Action” means all actions, causes of action, suits, debts, dues, sums of money,
account, reckonings, rights to legal remedies, rights to equitable remedies, rights to payment and
claims, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises,
variances or trespasses whether known or unknown, reduced to judgment, not reduced to judgment,
liquidated, unliquidated, fixed contingent, matured, unmatured, disputed, undisputed, secured or
unsecured and whether asserted or assertable directly or indirectly or derivatively, in law, equity
or otherwise.



     “Chapter 11 Cases” means the cases under chapter 11 of the Bankruptcy Code commenced by the
Debtors in the Bankruptcy Court, being jointly administered under Case No. 05-11778 (MFW).



     “Cisneros Group Parties” means Aspen Investments LLC, Atlantis Investments LLC and trusts
established by Gustavo and Ricardo Cisneros principally for the benefit of themselves and their
families.



     “Claim” means a claim as defined in section 101(5) of the Bankruptcy Code against any of the
Debtors, whether or not asserted.



     “Class” means a class of Claims or Equity Interests as set forth in Article III of the Plan.



     “Class 4 General Unsecured Claim” means any Claim against any of the Debtors that is not a
Secured Claim, a TW Party Claim, an AOL License Rejection Claim, a Subordinated Claim, an
Administrative Claim, a Priority Claim or a Priority Tax Claim, but including without limitation,
Claims arising from the rejection of an unexpired lease or executory contract pursuant to Section
6.1(a) of the Plan or otherwise.



     “Confirmation” means the confirmation of the Plan by the Bankruptcy Court pursuant to section
1129 of the Bankruptcy Code.



4









 





     “Confirmation Date” means the date upon which the Confirmation Order is entered by the
Bankruptcy Court in its docket, within the meaning of Bankruptcy Rules 5003 and 9021.



     “Confirmation Hearing” means the hearing or hearings to consider Confirmation of this Plan
held pursuant to section 1128 of the Bankruptcy Code.



     “Confirmation Order” means the order of the Bankruptcy Court confirming the Plan pursuant to
section 1129 of the Bankruptcy Code, in form and substance acceptable to the Debtors and the
Principal Stockholders.



     “D&O Indemnity Claim” means any Claim of any Indemnified Employee solely in respect of
indemnification obligations owed to such Indemnified Employee by any Debtor.



     “D&O Insurance Policy” means AOLA’s director and officer insurance policy maintained by
National Union Fire Insurance Company of Pittsburgh, PA, identified as policy number of 493-29-72,
as amended, restated or extended.



     “Debtors” means AOLA, AOL Caribbean Basin, AOL Management LLC and Puerto Rico Management
Services, as debtors and debtors in possession in the Chapter 11 Cases.



     “Delaware General Corporation Law” means title 8 of the Delaware Code, as now in effect or
hereafter amended.



     “Delaware Limited Liability Company Act” means title 6 of the Delaware Code, as now in effect
or hereafter amended.



     “Disallowed” means, as to any Claim against the Debtors, one that has been disallowed, in
whole or in part, by a Final Order, or which has been withdrawn, in whole or in part, by the Holder
thereof.



     “Disclosure Statement” means the disclosure statement for this Plan, filed concurrently
herewith, and approved by the Bankruptcy Court as containing adequate information on or about
February 23, 2006.



     “Disputed” means, with respect to any Claim, any Claim: (a) that is listed on the Schedules
as unliquidated, disputed or contingent; (b) as to which the Debtors or any other party in interest
has interposed a timely objection or request for estimation in accordance with the Bankruptcy Code
and the Bankruptcy Rules or is otherwise disputed by the Debtors in accordance with applicable law,
which objection, request for estimation or dispute has not been settled, waived, withdrawn or
determined by a Final Order; (c) during the period prior to the deadline fixed by the Plan or the
Bankruptcy Court for objecting to such Claim, that exceeds the amount listed on the Schedules other
than as unliquidated, disputed or contingent; or (d) that is neither Allowed nor Disallowed.



     “Disputed General Unsecured Claims Fund” means, if the LLC Option is elected, a fund, which
shall be held by the Liquidating LLC to ensure that Disputed Class 4 General Unsecured Claims
receive their ratable Distribution if such Claims ultimately become Allowed, consisting of such
amount of Cash which is allocable to Disputed Class 4 General Unsecured Claims, as the LLC Agents
shall determine to be necessary to retain in connection with a Distribution to Holders of Allowed
Class 4 General Unsecured Claims (including a Distribution of the PR Distribution Amount).



     “Disputed Priority Claims Fund” means a fund, which shall be held by the Liquidating LLC in
order to ensure that Disputed Priority Claims and Disputed Priority Tax Claims receive their
ratable Distribution if such Claims ultimately become Allowed, consisting of such amount of Cash
which is allocable to Disputed Priority Claims and Disputed Priority Tax Claims, as the LLC Agents
shall determine to be necessary to retain.



     “Dissolving Debtors” means AOL Caribbean Basin, AOL Management LLC and Puerto Rico Management
Services.



5









 





     “Distribution” means the Liquidating LLC Interests, Cash or Assets to be distributed to
Holders of Allowed Claims under the terms of this Plan.



     “Distribution Date” means any date on which the Debtors or the Liquidating LLC make a
Distribution pursuant to this Plan.



     “Effective Date” means the first Business Day on which all conditions specified in Article X
of the Plan have been satisfied or, if capable of being waived, have been waived in accordance with
Section 10.3 hereof.



     “Entity” means an entity as defined in section 101(15) of the Bankruptcy Code.



     “Equity Interest” means any equity interest in one or more of the Debtors, including, but not
limited to, all issued, unissued, authorized or outstanding shares or stock or quotas, together
with any warrants, options or contract rights to purchase or acquire such interests at any time.



     “Estates” means the estates of the Debtors created by section 541 of the Bankruptcy Code upon
the commencement of the Chapter 11 Cases.



     “Exchange Act” means the Securities and Exchange Act of 1934, as amended from time to time,
and the rules and regulations promulgated thereunder.



     “Executive Employment Agreements” means (a) the Letter of Employment between AOLA and Charles
M. Herington, dated July 31, 2000, as amended by the Amendment to Letter of Employment between AOLA
and Charles M. Herington, dated December 15, 2000, (b) the Letter of Employment between AOLA and
Osvaldo Baños, dated July 26, 2002, (c) the Executive Retention Agreement dated as of June 16,
2005, between AOLA and Osvaldo Baños and (d) any separation or similar agreement between AOLA and
Charles M. Herington or Osvaldo Baños, approved by the Special Committee to AOLA’s Board of
Directors.



     “Existing Series C Interests” means the Equity Interests arising under or in connection with
the Series C Redeemable Convertible Preferred Stock of AOLA.



     “Final Decree” means the decree contemplated under Bankruptcy Rule 3022.



     “Final Order” means an order or judgment of the Bankruptcy Court, or other court of competent
jurisdiction with respect to the subject matter, which has not been reversed, stayed, modified or
amended, and as to which such order or judgment (or any revision, modification or amendment
thereof) the time to appeal or seek review, rehearing or certiorari has expired and no appeal or
petition for review, rehearing or certiorari has been timely taken, or as to which any appeal that
has been taken or any petition for review, rehearing or certiorari that has been or may be filed
has been resolved by the highest court to which the order or judgment was appealed or from which
review, rehearing or certiorari was sought.



     “General Release” means the releases granted pursuant to Section 11.2(b) of the Plan.



     “Holder” means the beneficial holder of any Claim or Equity Interest.



     “Impaired” means a Claim or Equity Interest that is impaired within the meaning of section
1124 of the Bankruptcy Code.



     “Indemnified Employee” means any individual entitled to indemnification by the Debtors solely
by reason of such individual’s service as a director, officer or manager (in the case of a limited
liability company) of one or more of the Debtors, or as a director, officer or manager (in the case
of a limited liability company) of any other corporation, partnership, joint venture or other
enterprise, including, without limitation, direct or indirect subsidiaries of the Debtors and any
individual disclosed in a notice to be included in the Plan Supplement, in each case, solely to the
extent provided in the Debtors’ constituent documents, the D&O Insurance Policy, by a written
agreement with the Debtors or pursuant to applicable Delaware General Corporation Law (for the
avoidance of



6









 





doubt, any individual serving as a director or officer of any direct or indirect subsidiary of
AOLA shall be deemed to be serving as such director or officer at the request of AOLA for purposes
of the constituent documents of AOLA).



     “Indemnified Parties” has the meaning set forth in Section 11.5 of the Plan.



     “Intercompany Claim” means (a) any account reflecting intercompany book entries by one Debtor
with respect to any other Debtor, (b) any Claim that is not reflected in such book entries and is
held by one Debtor against any other Debtor or (c) any Equity Interest in a Debtor held by AOLA.



     “Interests” means (a) the Equity Interests and (b) equity securities as defined in section
101(16) of the Bankruptcy Code.



     “Interim Compensation Order” means the Order Pursuant to sections 105(a) and 331 of the
Bankruptcy Code Establishing Procedures for Interim Monthly Compensation and Reimbursement of
Expenses of Professionals entered by the Bankruptcy Court on July 14, 2005.



     “Key Employee” means each of David A. Bruscino, the general counsel of AOLA, Martín Lanzoni,
the treasurer and controller of AOLA, Brian L. Heller, the associate general counsel of AOLA, Jorge
Sanabria, the systems manager of AOLA and any other Person who may in the future be entitled to
amounts payable under a Retention Agreement.



     “Lien” means a lien as defined in section 101(37) of the Bankruptcy Code against property of
any of the Debtors.



     “Liquidating LLC” means the limited liability company created pursuant to the Liquidating LLC
Agreement, Section 5.15 of this Plan and the Confirmation Order.



     “Liquidating LLC Agreement” means the limited liability company agreement that documents the
powers, duties and responsibilities of the LLC Agents, which agreement shall be in form and
substance acceptable to the Debtors and the Principal Stockholders and shall be included in the
Plan Supplement.



     “Liquidating LLC Expense Reserve” means a reserve of Cash in such amount determined from time
to time by the LLC Agents to be sufficient to pay the expenses of the Liquidating LLC. The amount
of the Liquidating LLC Expense Reserve as of the Effective Date shall be equal to an amount to be
disclosed in a notice that will be included in the Plan Supplement and which amount will be revised
from time to time in the discretion of the LLC Agents.



     “Liquidating LLC Interests” means the Series A-1 Beneficial Interests, the Series A-2
Beneficial Interests, the Series B Beneficial Interests and the Series C Beneficial Interests.



     “LLC Administrator” means the individual designated by the LLC Agents to oversee and
administer the day-to-day aspects of the liquidation and wind-down effected by the Liquidating LLC.
If the LLC Option is elected, the identity of the LLC Administrator shall be disclosed in a notice
filed with the Bankruptcy Court on or before the Effective Date.



     “LLC Agents” means the individuals appointed to serve as LLC Agents and administer the
Liquidating LLC. The identity of the LLC Agents shall be disclosed in a notice included in the
Plan Supplement.



     “LLC Option” means the election to distribute Liquidating LLC Interests to Holders of Class 4
General Unsecured Claims pursuant to Section 3.3(d)(i)(A) of the Plan.



     “Net Available Cash” means Available Cash less (x) an amount necessary to pay Distributions on
account of the Series A-1 Beneficial Interests and the Series A-2 Beneficial Interests, if the LLC
Option is elected, and (y) $5,363,028 (which amount was determined by taking 40% of the difference
between (a) the Net PR Value and (b) the amount of the Allowed AOL General Unsecured Claim).



7









 





     “Net PR Value” means $15 million.



     “Nonaccepting Class 4 Claim” means any Class 4 Claim that is not an Accepting Class 4 Claim.



     “Nonaccepting Effective Date Payment” means an amount of Cash equal to the sum of (a) the PR
Distribution Amount plus (b) the Additional Distribution Amount distributed to Holders of Allowed
Nonaccepting Class 4 Claims on the Effective Date.



     “Nonaccepting Class 4 Claims Fund” means, if the Cash Option is elected, an amount of Cash
equal to the difference between (a) the aggregate amount of Nonaccepting Class 4 Claims minus (b)
the aggregate amount of the Nonaccepting Effective Date Payment.



     “Other Equity Interests” means Equity Interests other than Existing Series C Interests.



     “Other PR Assets” means substantially all of AOL Puerto Rico’s Assets (that are anticipated to
be owned or held by AOL Puerto Rico immediately prior to the Effective Date), executory contracts
and unexpired leases, in each case, as set forth in the Plan Supplement ; provided, however, that
Other PR Assets shall not include any executory contracts and unexpired leases to the extent that
such executory contracts or unexpired leases expire in accordance with their terms on or before the
Effective Date.



     “Person” means a person as defined in section 101(41) of the Bankruptcy Code.



     “Petition Date” means June 24, 2005.



     “Plan” means this Joint Plan of Reorganization and Liquidation under chapter 11 of the
Bankruptcy Code, either in its present form or as it may be altered, amended, modified or
supplemented from time to time in accordance with the Plan, the Bankruptcy Code, the Bankruptcy
Rules or a Final Order.



     “Plan Documents” means the agreements, documents and instruments to be entered into on or as
of the Effective Date as contemplated by, and in furtherance of, the Plan substantially in the
forms contained in the exhibits to the Plan, Disclosure Statement and Plan Supplement, and
otherwise in form and substance satisfactory to the Debtors.



     “Plan Supplement” means the compilation of documents and forms of documents and exhibits
substantially in the forms filed with the Bankruptcy Court not less than five (5) days prior to the
conclusion of the Solicitation Period, as such documents and exhibits may be altered, amended,
modified or supplemented from time to time in accordance with the terms hereof and in accordance
with the Bankruptcy Code and the Bankruptcy Rules.



     “PR Agreement” means that certain letter agreement between AOL and AOLA dated as of December
1, 2000, regarding the sharing of revenue from Puerto Rico-based subscribers.



     “PR Distribution Amount” means, with respect to each Allowed Class 4 General Unsecured Claim,
an amount in Cash equal to (a) such Allowed Class 4 General Unsecured Claim multiplied by (b) 9.28%
(which amount was determined by calculating the ratio (expressed as a percentage) that the Net PR
Value bears to the aggregate amount of Allowed TW Party Claims).



     “PR Transfer Date” means the Effective Date.



     “Principal Stockholders” means Time Warner, AOL, Aspen Investments LLC and Atlantis
Investments LLC.



     “Priority Claims” means any Claim accorded priority in right of payment under section 507(a)
of the Bankruptcy Code, other than an Administrative Claim or a Priority Tax Claim.



8









 





     “Priority Tax Claims” means any Claim of a governmental unit accorded priority in right of
payment under section 507(a)(8) of the Bankruptcy Code.



     “Professional Fees” means all allowances of compensation and reimbursement of expenses allowed
to (a) Professionals pursuant to section 330 or 331 of the Bankruptcy Code or (b) any Person making
a claim for compensation under section 503(b) of the Bankruptcy Code.



     “Professionals” means a Person or Entity employed pursuant to a Final Order in accordance with
sections 327 or 1103 of the Bankruptcy Code and to be compensated for services rendered prior to
the Effective Date, pursuant to sections 327, 328, 329, 330 and 331 of the Bankruptcy Code.



     “Puerto Rico Management Services” means AOL Puerto Rico Management Services, Inc.



     “QuotaHolder” means Latin America QuotaHolder, LLC, a Delaware limited liability company.



     “QuotaHolder Equity Interests” means all equity in QuotaHolder, including, but not limited to,
all issued, unissued, authorized or outstanding shares, stock or quotas, together with any
warrants, options or contract rights to purchase or acquire such interests at any time.



     “Reorganized AOLA LLC” means AOLA, as reorganized and converted to a limited liability company
pursuant to this Plan on and after the Effective Date and any successors thereto, by merger,
consolidation or otherwise, on or after the Effective Date.



     “Released Claims” means all Claims in favor of the Debtors, which the Debtors have agreed to
discharge or not to pursue under this Plan.



     “Released Parties” means the Principal Stockholders and the Principal Stockholders’
affiliates, officers, directors, employees and members, the Liquidating LLC, the LLC Agents, the
LLC Administrator, the Debtors, the Debtors’ direct and indirect subsidiaries other than the
Debtors, and the officers, directors and employees of the Debtors and the officers, directors,
employees, managers and members of each of AOLA’s other such subsidiaries, serving in such capacity
as of or following the Petition Date.



     “Retained Assets” means the AOL Spain Equity Interests, the AOL Brazil Equity Interests, the
AOL Mexico Equity Interests, the AOL Venezuela Equity Interests, the QuotaHolder Equity Interests,
the D&O Insurance Policy and such other of the Debtors’ Assets that are not transferred to either
the Liquidating LLC on the Effective Date or to the TW Parties pursuant to this Plan.



     “Retention Agreements” means the retention agreements approved by the Bankruptcy Court
pursuant to (a) the Order Authorizing the Debtors to (I) Enter into Retention Agreements with
Certain Key Employees and (II) Pay Retention Bonuses to Certain Secured Employees entered by the
Bankruptcy Court on August 25, 2005, (b) the Order Authorizing the Debtors to Enter into a
Retention Agreement with Martín Lanzoni entered by the Bankruptcy Court on November 17, 2005 or (c)
any other similar agreements approved by the Bankruptcy Court.



     “Retention Payment” means any amount payable by the Debtors or the Liquidating LLC, as
applicable, to a Key Employee pursuant to a Retention Agreement.



     “Retention Payment Fund” means an amount of Cash that shall be funded and reserved on the
Effective Date and allocated solely to the payment of unpaid Retention Payments or, if Disputed,
for the purpose of paying such Disputed amounts to the extent such Disputed amounts become Allowed.
The amount of the Retention Payment Fund shall be disclosed in a notice to be included in the Plan
Supplement.



     “Rights of Action” means all actions, Causes of Action, suits, rights of action,
counterclaims, cross-claims, rights of setoff, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages or judgments arising under any theory of law or equity, including, without
limitation, the Bankruptcy Code, including all claims against Creditors or Holders of



9









 





Equity Interests, parties having dealings, relationships or transactions with or related to
the Debtors, any party named or identified in the Schedules or any pleadings filed in the Chapter
11 Cases (including, but not limited to, officers and directors of the Debtors and parties other
than the Released Parties), in each case held by or in favor of any of the Debtors or the Estates
whether or not commenced as of the Effective Date.



     “Schedules” means the schedules, if any, of assets and liabilities, schedules of executory
contracts, and the statement of financial affairs of one or more of the Debtors filed pursuant to
section 521 of the Bankruptcy Code, the Official Bankruptcy Forms and the Bankruptcy Rules, as they
may be amended and supplemented from time to time.



     “Secured Retention Bonuses Orders” means (a) the Order Authorizing the Debtors to Pay
Retention Bonuses to Certain Secured Key Employees entered by the Bankruptcy Court on July 15,
2005, (b) the Order Authorizing the Debtors to (I) Enter into Retention Agreements with Certain Key
Employees and (II) Pay Retention Bonuses to Certain Secured Employees entered by the Bankruptcy
Court on August 25, 2005, (c) the Order Authorizing the Debtors to Enter into a Retention Agreement
with Martín Lanzoni entered by the Bankruptcy Court on November 17, 2005 and (d) any other similar
order entered by the Bankruptcy Court.



     “Secured Claim” means, with respect to any Debtor, a Claim that is secured by a Lien on, or
security interest in, property of any such Debtor, or that has the benefit of rights of setoff
under section 553 of the Bankruptcy Code, but only to the extent of the value of the creditor’s
interest in such Debtor’s interest in such property, or to the extent of the amount subject to
setoff, which value shall be determined as provided in section 506 of the Bankruptcy Code.



     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.



     “Senior Officers” means each of Charles Herington, the president and chief executive officer
of AOLA, Osvaldo Baños, the executive vice president and chief financial officer of AOLA, David A.
Bruscino, the general counsel of AOLA, João Felix, the director of systems of AOL Puerto Rico,
Martín Lanzoni, the treasurer and controller of AOLA and Brian L. Heller, the associate general
counsel of AOLA.



     “Series A-1 Beneficial Interests” means the beneficial interests in the Liquidating LLC
representing the right of the Holder (as turned over to such Holder by the TW Parties) to receive
its pro rata share of Available Cash remaining after deducting Distributions paid on account of or
reserved for the Series A-2 Beneficial Interests, up to such Holder’s Supplemental Distribution
Amount.



     “Series A-2 Beneficial Interests” means the beneficial interests in the Liquidating LLC
representing the right of the Holder to receive such Holder’s pro rata share of Available Cash as
determined by the ratio of the Allowed Claims of such Holder to the Total Allowed Unsecured Claims.



     “Series B Beneficial Interests” means the beneficial interests in the Liquidating LLC
representing the right of the Holders thereof to receive, in the aggregate, (a) if the Debtors
elect the LLC Option, the Accepting Class 4 Distribution Amount and (b) 60% of Net Available Cash,
if any.



     “Series C Beneficial Interests” means the beneficial interests in the Liquidating LLC
representing the right to receive, in the aggregate, (a) 100% of Available Cash less an amount
necessary to pay on account of the Series A-1 Beneficial Interests and the Series A-2 Beneficial
Interests, if the LLC Option is elected (which shall not, in any event, exceed $5,363,028 (which
amount was determined by taking 40% of the difference between (a) the Net PR Value and (b) the
amount of the Allowed AOL General Unsecured Claim)) plus (b) 40% of Net Available Cash, if any;
provided, that, to the extent there are any “Unpaid Costs” payable by AOLA to AOL under the
Shut-Down Costs Letter Agreement, AOL shall be entitled to receive payment of such costs from
Available Cash (after payments of amounts necessary to pay or reserve for the payment of
distributions on account of the Series A-1 Beneficial Interests and the Series A-2 Beneficial
Interests, if the LLC Option is elected) on a par with amounts payable on account of the Series C
Beneficial Interests, at the rate of 50% of such Available Cash to AOL, on the one hand, and 50% of
such Available Cash to the Holders of the Series C Beneficial Interests, on the other hand,



10









 





until any such Unpaid Costs are paid in full. For greater certainty, for every $1 paid to AOL
in respect of Unpaid Costs, $1 shall distributed to the Holders of the Series C Beneficial
Interests.



     “Shut-Down Costs Letter Agreement” means the letter agreement dated January 17, 2006 among the
TW Parties, the Cisneros Group Parties, AOLA, AOL Brazil and AOL Mexico, substantially in the form
attached to this Plan as Exhibit A.



     “Solicitation Period” means the period during which the Debtors will seek to solicit votes to
accept or reject this Plan.



     “Subordinated Claim” means any Claim arising in connection with any Equity Interest,
including, without limitation, Claims arising from the rescission of a purchase or sale of any
equity security of AOLA, for damages arising from the purchase or sale of such security, or for
reimbursement or contribution under section 502 of the Bankruptcy Code on account of such Claim and
attorneys’ fees associated therewith to the extent subordinated under section 510(b) of the
Bankruptcy Code.



     “Substantive Consolidation Order” means the order, or provision of the Confirmation Order,
substantively consolidating the Chapter 11 Cases (for voting, confirmation and distribution
purposes only and as more particularly provided in Section 5.1 of this Plan).



     “Supplemental Distribution Amount” means, with respect to each Accepting Class 4 Claim, an
amount equal to the difference between a Holder’s Accepting Class 4 Claim and the amount received
by such Holder on account of such Holder’s Series A-2 Beneficial Interests with respect to such
Accepting Class 4 Claim.



     “Time Warner” means Time Warner Inc.



     “Total Allowed Unsecured Claims” means the sum of the Allowed TW Party Claims and the
aggregate amount of Allowed Class 4 General Unsecured Claims.



     “Turnover” means, if the Cash Option is elected, the distribution of the Turnover Amount by
the Liquidating LLC on behalf of Time Warner to Holders of Allowed Accepting Class 4 Claims, and,
if the LLC Option is elected, the distribution of Series A-1 Beneficial Interests by the
Liquidating LLC on behalf of the TW Parties to Holders of Allowed Accepting Class 4 Claims.



     “Turnover Amount” means an amount of Cash that Time Warner would otherwise be entitled to
receive had they not agreed to the Turnover, which, when turned over to Holders of Accepting Class
4 Claims, would yield to such Holders, together with the PR Distribution Amount and the Additional
Distribution Amount, an amount equal to 100% of the Allowed amount of each such Holder’s Class 4
Claim.



     “TW Notes” means the 11% Senior Convertible Notes due 2007 issued by AOLA to Time Warner,
pursuant to the Note Purchase Agreement dated March 8, 2002 between AOLA and Time Warner (as
amended, supplemented or otherwise modified from time to time).



     “TW Note Claims” means all Claims by Time Warner arising under or in connection with the TW
Notes.



     “TW Parties” means Time Warner and AOL.



     “TW Party Claims” means all Claims held by the TW Parties, including, but not limited to, the
TW Note Claims and the AOL General Unsecured Claim, but excluding the AOL License Rejection Claims.



     “Unimpaired” means a Claim or Equity Interest that is not Impaired.



     “US Trustee” means the United States Trustee for the District of Delaware.



     “Voting Agent” means Bankruptcy Services, LLC.



11









 






			
	Section 1.2	 	Rules of Interpretation and Computation of Time








     (a) For purposes of the Plan: (i) whenever from the context it is appropriate, each term,
whether stated in the singular or the plural, shall include both the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine
and the neuter gender; (ii) any reference in the Plan to a contract, instrument, release, indenture
or other agreement or document being in a particular form or on particular terms and conditions
means that such document shall be substantially in such form or substantially on such terms and
conditions; (iii) any reference in the Plan to an existing document or exhibit filed, or to be
filed, shall mean such document or exhibit, as it may have been or may be amended, modified or
supplemented; (iv) unless otherwise specified, all references in the Plan to Sections and Articles
are references to Sections and Articles of the Plan; (v) the words “herein” and “hereto” refer to
the Plan in its entirety rather than to a particular portion of the Plan; (vi) captions and
headings to Articles and Sections are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of the Plan; (vii) the rules of
construction set forth in section 102 of the Bankruptcy Code shall apply; and (viii) any term used
in capitalized form in the Plan that is not defined herein but that is used in the Bankruptcy Code
or the Bankruptcy Rules shall have the meaning assigned to such term in the Bankruptcy Code or the
Bankruptcy Rules, as the case may be.



     (b) In computing any period of time prescribed or allowed by the Plan, the provisions of
Bankruptcy Rule 9006(a) shall apply.



ARTICLE II

ADMINISTRATIVE CLAIMS, PROFESSIONAL FEES AND PRIORITY TAX CLAIMS





			
	Section 2.1	 	Administrative Claims








     (a) Subject to the provisions of sections 330(a), 331 and 503(b) of the Bankruptcy Code, each
Administrative Claim that is Allowed shall be paid by the Debtors or the Liquidating LLC (as the
case may be), in full, in Cash, in such amounts as are incurred in the ordinary course of business
by the Debtors, or in such amounts as such Administrative Claim is Allowed by the Bankruptcy Court
upon (i) the later of the Effective Date or, if such Claim is Allowed after the Effective Date, the
date upon which there is a Final Order allowing such Administrative Claim, (ii) such other terms as
may exist in the ordinary course of such Debtor’s business and in accordance with the terms of any
agreement governing or documents evidencing such Administrative Claim or (iii) as may be agreed
upon between the Holder of such Allowed Administrative Claim and the Debtors or the LLC Agents.



     (b) On or before the Effective Date, the Debtors shall fund the Administrative Claims Reserve
Fund and the Retention Payment Fund. In connection with each Distribution Date, the Debtors or the
Liquidating LLC, as the case may be, shall fund the Disputed Priority Claims Fund.



     (c) Holders of Administrative Claims that have not been paid as of the Effective Date must
file a request for payment of Administrative Claims with the Bankruptcy Court and serve the same
upon the LLC Agents such that it is received no later than the Administrative Claim Bar Date. If
an Administrative Claim is not timely filed by the Administrative Claim Bar Date, then such
Administrative Claim shall be forever barred and shall not be enforceable against Debtors, their
successors, their assigns or their property, the Administrative Claims Reserve Fund or the
Liquidating LLC. The foregoing two sentences shall not apply to (i) Professional Fee Claims, (ii)
Administrative Claims held by present or former employees of the Debtors arising under the
Retention Agreements or the Executive Employment Agreements and (iii) any Administrative Claims
constituting D&O Indemnity Claims, except as otherwise set forth in Section 5.14. An objection to
an Administrative Claim filed pursuant to this provision must be filed within ninety (90) days from
the later of the date such Administrative Claim is filed and properly served or ninety (90) days
after the Effective Date. The Debtors reserve the right to seek an extension of the time to
object.



     (d) Subject to the provisions of this Plan, all reasonable fees for services rendered on
behalf of Reorganized AOLA LLC or the Liquidating LLC in connection with the Chapter 11 Cases and
this Plan after the Confirmation Date, including those relating to the resolution of pending
Claims, may be paid by Reorganized AOLA LLC or the Liquidating LLC, as the case may be, without
further Bankruptcy Court authorization.



12









 






			
	Section 2.2	 	Statutory Fees








     Without limiting the foregoing, all fees due and payable under 28 U.S.C. § 1930 that have not
been paid shall be paid on or before the Effective Date. Payments after the Effective Date shall
be made as required by statute and shall be paid by the Liquidating LLC.




			
	Section 2.3	 	Professional Fees








     All final applications for Professional Fees for services rendered in connection with the
Chapter 11 Cases prior to the Confirmation Date shall be filed with the Bankruptcy Court not later
than sixty (60) days after the Effective Date. Without limiting the foregoing, Reorganized AOLA
LLC and the Liquidating LLC may pay the charges that they incur on or after the Confirmation Date
for Professionals’ fees, disbursements, expenses, or related support services without application
to or approval by the Bankruptcy Court.




			
	Section 2.4	 	Priority Tax Claims








     Except to the extent that a Holder of an Allowed Priority Tax Claim has been paid by the
Debtors prior to the Effective Date, each Allowed Priority Tax Claim shall be paid by the Debtors
or the Liquidating LLC (as the case may be) in full, in Cash upon the later of (a) the Effective
Date, (b) the date upon which there is a Final Order allowing such Priority Tax Claim, (c) the date
such an Allowed Priority Tax Claim would have been due and payable if the Chapter 11 Cases had not
been commenced or (d) as may be agreed upon between the Holder of such an Allowed Priority Tax
Claim and the Debtors or the Liquidating LLC (as the case may be); provided, however, that each
Debtor or the Liquidating LLC, may, at its option, in lieu of payment in full of an Allowed
Priority Tax Claim, make Cash payments on account of such Allowed Priority Tax Claim, deferred to
the extent permitted pursuant to section 1129(a)(9)(C) of the Bankruptcy Code and, in such event,
interest shall be paid on the unpaid portion of such Allowed Priority Tax Claim at a rate to be
agreed upon by the Debtors or the Liquidating LLC (as the case may be) and the applicable
governmental unit or as determined by the Bankruptcy Court.



ARTICLE III




CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS





			
	Section 3.1	 	Classification








     The categories of Claims and Equity Interests listed below classify Claims and Equity
Interests for all purposes, including voting, confirmation and distribution pursuant to the Plan
and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest
shall be deemed classified in a particular Class only to the extent that the Claim or Equity
Interest qualifies within the description of that Class and shall be deemed classified in a
different Class to the extent that any remainder of such Claim or Equity Interest qualifies within
the description of such different Class. A Claim or Equity Interest is in a particular Class only
to the extent that such Claim or Equity Interest is Allowed in that Class and has not been paid or
otherwise settled prior to the Effective Date. Intercompany Claims are not classified and shall be
discharged in accordance with Section 5.1.



     Summary of Classification and Treatment of Claims and Equity Interests



	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Class	 	 	Claim	 	 	Status	 	 	Voting Right	 
	 	1

	 	 	Priority Claims
	 	 	Unimpaired
	 	 	Deemed
to Accept;

Not Entitled to Vote	 
	 	2

	 	 	Secured Claims
	 	 	Unimpaired
	 	 	Deemed to Accept;

Not Entitled to Vote	 
	 	3

	 	 	TW Party Claims
	 	 	Impaired
	 	 	Entitled to Vote	 
	 





13









 






	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Class	 	 	Claim	 	 	Status	 	 	Voting Right	 
	 	4

	 	 	General Unsecured Claims
	 	 	Impaired
	 	 	Entitled to Vote	 
	 	5

	 	 	Existing Series C Interests
	 	 	Impaired; not
entitled to receive
any Distribution
from the Debtors
under the Plan
	 	 	Deemed to Reject;

Not Entitled to Vote	 
	 	6

	 	 	Other Equity Interests
	 	 	Impaired; not
entitled to receive
any Distribution
from the Debtors
under the Plan
	 	 	Deemed to Reject;

Not Entitled to Vote	 
	 	7

	 	 	Subordinated Claims
	 	 	Impaired; not
entitled to receive
any Distribution
from the Debtors
under the Plan
	 	 	Deemed to Reject;

Not Entitled to
Vote	 
	 





     Claims (except for Administrative Claims and Priority Tax Claims which are not required to be
classified pursuant to section 1123(a)(i) of the Bankruptcy Code) and Equity Interests and are
classified as follows:




     Claims Against and Equity Interests in the Debtors




	 	(i)	 	Class 1—Priority Claims against the Debtors
	 
	 	(ii)	 	Class 2—Secured Claims against the Debtors
	 
	 	(iii)	 	Class 3—TW Party Claims against the Debtors
	 
	 	(iv)	 	Class 4—General Unsecured Claims against the Debtors
	 
	 	(v)	 	Class 5—Existing Series C Interests
	 
	 	(vi)	 	Class 6—Other Equity Interests
	 
	 	(vii)	 	Class 7—Subordinated Claims against the Debtors






			
	Section 3.2	 	Acceptances and Rejections








     Each of Class 1 and Class 2 is Unimpaired under the Plan and Holders of Claims or Equity
Interests in Class 1 and Class 2 are conclusively presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code and not entitled to vote on the Plan. Each of Class 3 and
Class 4 is Impaired and is entitled to vote to accept or reject the Plan. Each of Class 5, Class 6
and Class 7 is Impaired, is deemed to reject the Plan and is not entitled to vote on the Plan.




			
	Section 3.3	 	Treatment of Claims and Equity Interests








     (a) Class 1—Priority Claims against the Debtors




(i) Treatment: The legal, equitable and contractual rights of the Holders of
Allowed Priority Claims are unaltered by the Plan. Unless the Holder of an Allowed
Priority Claim against the Debtors and the Debtors agree to a different treatment,
each Holder of an Allowed Priority Claim against the Debtors shall receive one of
the following alternative treatments, at the election of the Debtors or the LLC
Agents, as applicable:




	 	(A)	 	to the extent then due and owing on the Effective Date, such
Allowed Priority Claim will be paid in full, in Cash, by the Debtors
or the Liquidating LLC, as applicable; or




14









 












	 	(B)	 	to the extent not due and owing on the Effective Date, such
Allowed Priority Claim will be paid in full in Cash, by the
Liquidating LLC when and as such Allowed Priority Claim becomes due
and owing in the ordinary course of business in accordance with the
terms thereof.






(ii) Voting: Class 1 is Unimpaired. The Holders of Priority Claims against the
Debtors are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code and are not entitled to vote to accept or reject the
Plan.



     (b) Class 2—Secured Claims




(i) Treatment: Unless the Holder of a Class 2 Secured Claim agrees to a different
treatment, each Holder of an Allowed Class 2 Secured Claim shall receive on the
Effective Date, either (i) the return of such Assets on which the Holder has a
senior perfected and indefeasible lien or security interest, or (ii) all proceeds
(up to the amount of the Allowed Class 2 Secured Claim) from the sale, liquidation,
or abandonment of any Asset on account of which the Holder has a senior, perfected
and indefeasible Lien or security interest as full and complete satisfaction of all
Class 2 Secured Claims.




(ii) Voting: Class 2 is Unimpaired. The Holders of Secured Claims against the
Debtors are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code and are not entitled to vote to accept or reject the
Plan.




(iii) Subclasses: For convenience, the Plan classifies the Claims in Class 2 as a
single class. This Class is, in fact, a group of subclasses and each subclass,
consisting of an individual Secured Claim, is treated as a distinct Class for voting
and distribution purposes.



     (c) Class 3—TW Party Claims against the Debtors




(i) Treatment: Holders of Class 3 TW Party Claims shall receive the following:




	 	(A)	 	on the PR Transfer Date, AOLA shall assume the
PR Agreement and assign the PR Agreement (without the payment of any
cure costs) to Time Warner (or to such other TW Party as directed by
the TW Parties);
	 
	 	(B)	 	on the PR Transfer Date, the Debtors shall assign, convey and
transfer to AOL (or to such other TW Party as directed by the TW
Parties) the Other PR Assets; and
	 
	 	(C)	 	on the Effective Date, Time Warner shall receive (a) if the Cash
Option is elected, the Turnover Amount, solely for purposes of
turning over such amount to Holders of Accepting Class 4 Claims and
(b) the Series B Beneficial Interests and the Series C Beneficial
Interests, provided, that the Series C Beneficial Interests shall be
immediately turned over on the Effective Date, on behalf of and at
the direction of Time Warner, to each of the Cisneros Group Parties
on an equal basis, and, if the LLC Option is elected, the right to
receive the Accepting Class 4 Distribution Amount as encompassed by
the Series B Beneficial Interests shall be immediately turned over on
the Effective Date to the Holders of Accepting Class 4 Claims as
reflected by the Series A-1 Beneficial Interests.
	 
	 	 	 	The distribution made to Holders of Class 3 TW Party Claims shall be
in respect of the aggregate amount of Class 3 TW Party Claims and any
particular distribution made to a specific TW Party shall be in
respect of an agreement among the TW Parties. Notwithstanding
anything to the contrary contained herein, AOL shall not receive
property or cash hereunder with a fair market




15









 






	 	 	 	value that exceeds the amount of the AOL General Unsecured Claim held
by AOL. Any such excess received by AOL hereunder shall be delivered
to Time Warner in consideration of the TW Note Claims.






(ii) Voting: Class 3 is Impaired and the Holders of TW Party Claims are entitled to
vote to accept or reject the Plan.



     (d) Class 4—General Unsecured Claims against the Debtors




(i) Treatment: On the later of (a) the Effective Date and (b) the date upon which
such Holder’s Class 4 Claim is Allowed, each Holder of an Allowed Class 4 General
Unsecured Claim shall receive:




	 	(A)	 	if the LLC Option is elected, such Holder’s (a)
pro rata share of the Series A-2 Beneficial Interests, and to the
extent such Holder is a Holder of an Accepting Class 4 Claim, its pro
rata share of the Series A-1 Beneficial Interests and (b) the PR
Distribution Amount; or
	 
	 	(B)	 	if the Cash Option is elected, (a) if such
Holder is a Holder of Accepting Class 4 Claims, such Holder’s Accepting
Class 4 Claim Payment and (b) if such Holder is a Holder of
Nonaccepting Class 4 Claims, (i) such Holder’s Nonaccepting Effective
Date Payment and (ii) the right to receive on each Distribution Date,
Cash derived from the Nonaccepting Class 4 Claims Fund equal to such
Holder’s pro rata share of Available Cash available for Distribution on
such Date as determined by the proportion that such Holder’s Allowed
Claim bears to the Total Allowed Unsecured Claims.
	 
	 	 	 	If the LLC Option is elected pursuant to Section 3.3(d)(i)(A), on or
before the Effective Date, the Debtors shall fund the Disputed
General Unsecured Claims Fund. If the Cash Option is elected
pursuant to Section 3.3(d)(i)(B), on or before the Effective Date,
the Debtors shall fund each of the Accepting Class 4 Claims Fund and
the Nonaccepting Class 4 Claims Fund.
	 
	 	(C)	 	The Cash Option shall be presumed to be elected
unless, no later than five (5) days prior to the Effective Date, the
Debtors, with the consent of the Principal Stockholders, file a notice
with the Bankruptcy Court electing the LLC Option.






(ii) Voting: Class 4 is Impaired and the Holders of Class 4 General Unsecured
Claims are entitled to vote to accept or reject the Plan.



     (e) Class 5—Existing Series C Interests




(i) Treatment: On the Effective Date all Existing Series C Interests shall be
deemed cancelled. On the Effective Date, Time Warner (or the LLC Agents on behalf
of Time Warner) shall turn over to each of the Cisneros Group Parties on an equal
basis the Series C Beneficial Interests.




(ii) Voting: Class 5 is Impaired. The Holders of Existing Series C Interests are
deemed to reject the Plan pursuant to Section 1126 of the Bankruptcy Code and are
not entitled to vote to accept or reject the Plan.



16









 





     (f) Class 6—Other Equity Interests




(i) Treatment: On the Effective Date, all Other Equity Interests will be canceled
and each Holder thereof shall not be entitled to receive or retain any Distribution
on account of such Other Equity Interests.




(ii) Voting: Class 6 is Impaired. The Holders of Other Equity Interests are deemed
to reject the Plan pursuant to Section 1126(g) of the Bankruptcy Code and are not
entitled to vote to accept or reject the Plan.



     (g) Class 7—Subordinated Claims against the Debtors




(i) Treatment: On the Effective Date, all Subordinated Claims will be discharged
and each Holder thereof shall not receive or retain any Distribution or property on
account of such Subordinated Claim.




(ii) Voting: Class 7 is Impaired. The Holders of Subordinated Claims are deemed to
reject the Plan pursuant to Section 1126(g) of the Bankruptcy Code and are not
entitled to vote to accept or reject the Plan.




			
	Section 3.4	 	Miscellaneous








     (a) Notwithstanding any other provision of the Plan, any Allowed Claim against the Debtors
shall be reduced by the amount, if any, that was paid by the Debtors to the Holder of such Claim in
respect of such Allowed Claim prior to the Effective Date, including pursuant to any Final Order
entered by the Bankruptcy Court. Nothing in the Plan shall preclude the Liquidating LLC from
paying Claims that the Debtors were authorized to pay pursuant to any Final Order entered by the
Bankruptcy Court prior to the Confirmation Date.



     (b) Except as otherwise provided in the Plan, the Confirmation Order, any other order of the
Bankruptcy Court or any document or agreement entered into and enforceable pursuant to the terms of
this Plan, nothing shall affect the Debtors’, Reorganized AOLA LLC’s or the Liquidating LLC’s
Causes of Action, rights and defenses, both legal and equitable, with respect to any Unimpaired
Claims, including, but not limited to, all rights with respect to legal and equitable defenses to,
setoffs or recoupments against, Unimpaired Claims and all Causes of Action for the affirmative
relief against the holders thereof.



ARTICLE IV




CRAM DOWN




     With respect to any Impaired Class of Claims or Equity Interests that is deemed to reject the
Plan, the Debtors shall request that the Bankruptcy Court confirm the Plan pursuant to section
1129(b) of the Bankruptcy Code.



ARTICLE V




MEANS FOR IMPLEMENTATION OF THE PLAN





			
	Section 5.1	 	Substantive Consolidation for Purposes of Voting, Confirmation and Distribution








     This Plan contemplates and is predicated upon substantively consolidating the Debtors solely
for the purposes of (i) voting, (ii) confirmation and (iii) distribution. This Plan does not
contemplate the substantive consolidation of the Debtors for any other purpose. On the Effective
Date, (i) all guarantees of any Debtor of the payment, performance, or collection of another Debtor
shall be deemed eliminated and canceled, (ii) any obligation of any Debtor and all guarantees
thereof executed by one or more of the other Debtors shall be treated as a single obligation and
(iii) each Claim against any Debtor shall be deemed to be against the consolidated Debtors and
shall



17









 





be deemed a single Claim against and a single obligation of the consolidated Debtors. On the
Effective Date, and in accordance with the terms of this Plan and the consolidation of the assets
and liabilities of the Debtors, all Claims based upon guarantees of collection, payment, or
performance made by the Debtors as to the obligations of another Debtor shall be released and of no
further force and effect. Except as otherwise provided in the Plan, such substantive consolidation
shall not (other than for purposes related to this Plan) (i) affect the legal and corporate
structures of Reorganized AOLA LLC, (ii) cause any Debtor to be liable for any Claim under this
Plan for which it otherwise is not liable, and the liability for any such Claim shall not be
affected by such substantive consolidation or (iii) affect any obligations under any leases or
contracts assumed in this Plan or otherwise subsequent to the filing of the Chapter 11 Cases.
Notwithstanding the foregoing, substantive consolidation shall not affect the obligations of any
Debtor to pay quarterly fees to the Office of the United States Trustee pursuant to 28 U.S.C. §
1930(a)(6) until such time as such Debtor’s particular case is closed, dismissed or converted.



     On the Effective Date, all Intercompany Claims shall be eliminated and extinguished.



     Unless the Bankruptcy Court has approved the substantive consolidation of the Chapter 11 Cases
by a prior order, this Plan shall serve as, and shall be deemed to be, a motion for entry of an
order substantively consolidating the Debtors as provided in this Section 5.1. If no objection to
substantive consolidation is timely filed and served by any Holder of a Claim that is Impaired by
this Plan as provided herein on or before the deadline for objection to Confirmation of this Plan,
the Substantive Consolidation Order (which may be the Confirmation Order) may be entered by the
Bankruptcy Court. If any such objections are timely filed and served, a hearing with respect to
the substantive consolidation of the Chapter 11 Cases and the objections thereto shall be scheduled
by the Bankruptcy Court, which hearing shall coincide with the Confirmation Hearing.




			
	Section 5.2	 	Vesting of Assets in Reorganized AOLA LLC








     Except as otherwise provided in the Plan or any agreement, instrument or indenture relating
thereto, on or after the Effective Date, after the conversion of AOLA into Reorganized AOLA LLC
pursuant to section 5.10, the Retained Assets shall vest in Reorganized AOLA LLC, free and clear of
all Claims, Liens, charges or other encumbrances and Interests. On and after the Effective Date,
Reorganized AOLA LLC may operate its business and may use, acquire or dispose of property and
compromise or settle any Claims or Equity Interests, without supervision or approval by the
Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other
than those restrictions expressly imposed by the Plan and the Confirmation Order. Without limiting
the generality of the foregoing, all rights, privileges, entitlements, authorizations, grants,
permits, licenses, easements, franchises, and other similar items which constitute part of, or are
necessary or useful in the operation or the business of AOL Spain, whether in the United States or
elsewhere, shall be vested in Reorganized AOLA LLC, on the Effective Date, and shall thereafter be
exercisable and usable by Reorganized AOLA LLC to the same and fullest extent they would have been
exercisable and usable by the Debtors before the Petition Date.



     Unless otherwise required by law, the holders of beneficial interests in the Liquidating LLC
(and any transferees), the Liquidating LLC, the Debtors and Reorganized AOLA LLC shall treat the
liquidation of the Dissolving Debtors, the conversion of AOLA into Reorganized AOLA LLC, and the
subsequent vesting of the Reorganized AOLA LLC interests into the Liquidating LLC for U.S. federal
income tax purposes as follows (and as occurring in the following order): (i) the liquidation,
under section 332 of the Internal Revenue Code of 1986, as amended, of each of AOL Caribbean Basin
and Puerto Rico Management Services with and into AOLA, (ii) the transfer of the assets of AOLA,
including the Other PR Assets and the PR Agreement, to the TW Parties with respect to the TW Party
Claims (subject to Time Warner’s turnover obligation described in Sections 3.3(c), 3.3(e) and 5.11
of this Plan to the Cisneros Group Parties) and the Holders of Allowed Class 4 General Unsecured
Claims (but, as to the Holders of Allowed Class 4 General Unsecured Claims, if the LLC Option is
elected, excluding the Other PR Assets and the PR Agreement and, if the LLC Option is not elected,
assets consisting solely of cash), and (iii) (a) if the LLC Option is elected, the contribution of
the assets of AOLA (other than the Other PR Assets and the PR Agreement) by Time Warner and the
Holders of Allowed Class 4 General Unsecured Claims to the Liquidating LLC in exchange for
interests in the Liquidating LLC and the substantially concurrent turnover, on behalf of and at the
direction of Time Warner, of the Series C Beneficial Interest to the Cisneros Group Parties or (b)
if the Cash Option is elected, the turnover of a portion of the AOLA assets to the Cisneros Group
Parties and the contribution of the AOLA assets (other than the Other PR Assets and the PR
Agreement) by Time Warner and the Cisneros Group Parties in exchange for interests in the
Liquidating LLC. No holder of a beneficial interest in the Liquidating LLC



18









 





(or any transferees), AOLA, Reorganized AOLA LLC or the Liquidating LLC shall take any
position contrary to this paragraph for United States federal income tax purposes unless otherwise
required by law.




			
	Section 5.3	 	Dismissal of Officers and Directors and Dissolution of Dissolving Debtors








     (a) Upon the Effective Date and immediately prior to the conversion of AOLA pursuant to
section 5.10, (i) the existing board of directors and board of managers, as applicable, of each of
the Dissolving Debtors and their respective remaining officers shall be dismissed and (ii) each of
the Dissolving Debtors shall be deemed dissolved without any further action required on the part of
any of the Dissolving Debtors, the shareholders of any of the Dissolving Debtors or the officers or
directors of any of the Dissolving Debtors.



     (b) The Confirmation Order shall provide that on the Effective Date, Final Decrees shall be
entered in the Chapter 11 Cases of the Dissolving Debtors.




			
	Section 5.4	 	Vesting of Assets in the Liquidating LLC








     Except as otherwise provided in the Plan or any agreement, instrument or indenture relating
thereto, on the Effective Date, all of the Debtors’ Assets (excluding the Retained Assets, which
will be held by Reorganized AOLA LLC directly), any Assets acquired by the Debtors or the
Liquidating LLC under the Plan and all the limited liability company interests in Reorganized AOLA
LLC, shall vest in the Liquidating LLC, free and clear of all Claims, Liens, charges or other
encumbrances, and the Liquidating LLC shall own all of the limited liability company interests in
Reorganized AOLA LLC. The Liquidating LLC Expense Reserve, the Administrative Claims Reserve Fund,
the Retention Payment Fund, the Disputed Priority Claims Fund, and if the LLC Option is elected,
the Disputed General Unsecured Claims Fund or if the Cash Option is elected, the Nonaccepting Class
4 Claims Fund and the Accepting Class 4 Claims Fund, as applicable, shall all be assets of the
Liquidating LLC, but Distributions from such funds shall be governed by the terms of this Plan.
Subject to the provisions of this Plan and the Liquidating LLC Agreement, the Assets in the
Liquidating LLC shall be managed and used for the sole purposes of carrying out this Plan and
effectuating the Distributions provided for in this Plan.




			
	Section 5.5	 	Transfer of Other PR Assets to AOL








     On the PR Transfer Date, the Other PR Assets shall be assigned, conveyed and transferred to
AOL (or to such other TW Party as directed by the TW Parties) free and clear of all Claims, Liens,
charges or other encumbrances and interests (as such terms are used in Section 363(f) of the
Bankruptcy Code) on an as-is, where is basis, and without any representations or warranties,
continuing obligations or indemnities of the Debtors, except as set forth in Section 10.2(j) of
this Plan. The Debtors are authorized to execute and deliver, and are empowered to fully perform
under, consummate and implement, this Plan, together with all additional instruments and documents
that may be reasonably necessary or desirable to implement the transfer of the Other PR Assets to
AOL (or to such other TW Party as directed by the TW Parties) on the PR Transfer Date, and to take
all further actions as may be requested by the TW Parties for the purpose of transferring the Other
PR Assets to AOL (or to such other TW Party as directed by the TW Parties), or as may be necessary
or appropriate to the performance of the obligations as contemplated by this Plan in connection
with the transfer of the Other PR Assets to AOL (or to such other TW Party as directed by the TW
Parties) on the PR Transfer Date. The Confirmation Order shall provide that the transfer of the
Other PR Assets to AOL (or to such other TW Party as directed by the TW Parties) is a transfer
pursuant to section 1146(c) of the Bankruptcy Code, and accordingly, pursuant to section 1146(c) of
the Bankruptcy Code, the transfer of the Other PR Assets and the execution, delivery and/or
recordation of any and all documents or instruments necessary or desirable to consummate the
transfer of the Other PR Assets shall be exempt from the imposition and payment of all recording
fees and taxes, stamp taxes and/or sales, use, transfer, documentary, registration or any other
similar taxes. The Confirmation Order shall provide that each and every federal, state and local
governmental agency or department is directed to accept any and all documents and instruments
necessary and appropriate to consummate the transfer of the Other PR Assets to AOL (or to such
other TW Party as directed by the TW Parties), all without imposition or payment of any stamp tax,
transfer tax or similar tax.



19









 






			
	Section 5.6	 	Restructuring Transactions








     Subject to obtaining the consent of the Principal Stockholders (other than AOL), prior to, on
or after the Effective Date, Reorganized AOLA LLC or the Liquidating LLC may enter into such
transactions and may take such actions as may be necessary or appropriate to effect a corporate
restructuring of their respective subsidiaries, to otherwise simplify the overall corporate
structure of Reorganized AOLA LLC or the Liquidating LLC, to reincorporate or otherwise amend the
legal form of certain of their subsidiaries or to reincorporate certain of their respective
subsidiaries under the laws of jurisdictions other than the laws of which such subsidiaries are
presently incorporated; provided, however, that no action shall be taken that would cause the
Liquidating LLC or Reorganized AOLA LLC to be treated as other than a partnership or disregarded
entity for U.S. federal income tax purposes. Such restructuring may include one or more mergers,
consolidations, restructures, reincorporations, dispositions, liquidations, or dissolutions, as may
be determined by the Liquidating LLC or Reorganized AOLA LLC to be necessary or appropriate
(collectively, the “Restructuring Transactions”). The actions to effect the Restructuring
Transactions may include (i) the execution and delivery of appropriate agreements or other
documents of merger, consolidation, restructuring, disposition, liquidation, or dissolution
containing terms that are consistent with the terms of the Plan and that satisfy the applicable
requirements of applicable state law and such other terms to which the applicable entities may
agree; (ii) the execution and delivery of appropriate instruments of transfer, assignment,
assumption, or delegation of any asset, property, right, liability, duty, or obligation on terms
consistent with the terms of the Plan and having such other terms to which the applicable entities
may agree; (iii) the filing of appropriate certificates or articles of merger, consolidation, or
dissolution pursuant to applicable state law; and (iv) all other actions that the applicable
entities determine to be necessary or appropriate, including making filings or recordings that may
be required by applicable state or foreign law in connection with such transactions. The
Restructuring Transactions may include one or more mergers, consolidations, restructures,
reincorporations, dispositions, liquidations, or dissolutions, as may be determined by the
Liquidating LLC or Reorganized AOLA LLC to be necessary or appropriate to result in substantially
all of the respective assets, properties, rights, liabilities, duties, and obligations of the
Liquidating LLC, Reorganized AOLA LLC or their subsidiaries vesting in one or more surviving,
resulting, or acquiring corporations.




			
	Section 5.7	 	Authority to Effectuate Plan








     Upon the entry of the Confirmation Order by the Bankruptcy Court, all matters provided under
this Plan shall be deemed to be authorized and approved without further approval from the
Bankruptcy Court. The Liquidating LLC and the LLC Agents shall be authorized, without further
application to or order of the Bankruptcy Court, to take whatever action is necessary to achieve
consummation of this Plan and carry out this Plan and to effectuate the transfers and Distributions
provided for hereunder, subject to the provisions of this Plan, including this Article V. The
Liquidating LLC and the LLC Agents are expressly authorized to sell or dispose of any and all
Assets and to pay all costs and expenses associated with such sale or disposition without further
order of the Bankruptcy Court, subject to the provisions of this Plan.




			
	Section 5.8	 	Cancellation of Notes, Instruments, Debentures and Equity Interests








     On the Effective Date, except to the extent provided elsewhere in the Plan or the Confirmation
Order, and provided that the treatments provided for herein and the Distributions contemplated by
Article VIII hereof are made, all notes, instruments, certificates and other documents evidencing
Claims (including, without limitation, the TW Notes) and all Equity Interests in all of the Debtors
shall be canceled and deemed terminated, without any further act or action under any applicable
agreement, law, regulation, order, rule or otherwise, and the limited liability company interests
in Reorganized AOLA LLC shall vest in and be held by the Liquidating LLC.




			
	Section 5.9	 	Execution of Related Documents








     On the Effective Date, all Plan Documents including, without limitation, the Liquidating LLC
Agreement, the AOLA Certificate of Conversion to Limited Liability Company, the AOLA Limited
Liability Company Agreement and any other agreement entered into or instrument issued in connection
with any of the foregoing or any other Plan Document, shall be executed and delivered by the
Debtors or the Liquidating LLC, as the case may be, and shall become effective and binding in
accordance with their respective terms and conditions upon the parties thereto and as specified
herein.



20









 






			
	Section 5.10	 	Conversion of AOLA to Reorganized AOLA LLC, Sole Member of Reorganized AOLA LLC and Corporate Action








     (a) The Confirmation Order shall provide that, pursuant to section 266 of the Delaware General
Corporation Law and section 18-214 of the Delaware Limited Liability Company Act, AOLA shall be
converted to a limited liability company and shall continue to exist as Reorganized AOLA LLC. The
Confirmation Order shall further provide that, except as otherwise provided in this Plan, (i)
pursuant to section 18-214 of the Delaware Limited Liability Company Act, the conversion of AOLA to
Reorganized AOLA LLC shall not be deemed to constitute a dissolution of AOLA, (ii) Reorganized AOLA
LLC, for all purposes of the laws of the State of Delaware, shall be deemed to be the same entity
as AOLA, (iii) pursuant to section 266 of the Delaware General Corporation Law, the rights,
privileges, powers and interest in the Retained Assets of AOLA shall not be deemed, as a
consequence of the conversion of AOLA to a limited liability company pursuant to this Plan, to have
been transferred to Reorganized AOLA LLC for any purpose of the laws of the State of Delaware and
(iv) Reorganized AOLA LLC shall continue to exist after the Effective Date as a separate corporate
entity, with all the powers of a limited liability company under the laws of the State of Delaware
and without prejudice to any right to alter or terminate such existence (whether by merger or
otherwise) under such applicable state law.



     (b) On the Effective Date, the Debtors shall file the AOLA Limited Liability Company Agreement
and the AOLA Certificate of Conversion to Limited Liability Company with the Secretary of State of
the State of Delaware in accordance with section 266 of the Delaware General Corporation Law and
sections 18-201 and 18-214 of the Delaware Limited Liability Company Act. After the Effective
Date, Reorganized AOLA LLC may amend and restate the AOLA Limited Liability Company Agreement and
other constituent documents as permitted by their terms and by the Delaware Limited Liability
Company Act. As of the Effective Date, the sole member of Reorganized AOLA LLC shall be the
Liquidating LLC.



     (c) As of the Effective Date, the initial officer of Reorganized AOLA LLC shall be the LLC
Administrator. As of the Effective Date, Reorganized AOLA LLC shall have no board of managers.
Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will disclose, on or prior to
the Confirmation Date, the identity and affiliations of the Person proposed to serve as the LLC
Administrator and the nature of any compensation for such Person.



     (d) On the Effective Date, the filing of the AOLA Limited Liability Company Agreement and the
AOLA Certificate of Conversion to Limited Liability Company with the Secretary of State of the
State of Delaware and all other actions contemplated by the Plan (whether to occur before, on or
after Effective Date of the Plan) shall be authorized and approved in all respects (subject to the
provisions of the Plan). All matters provided for in the Plan involving the corporate structure of
the Debtors or Reorganized AOLA LLC, and any corporate action required by the Debtors or
Reorganized AOLA LLC in connection with the Plan, shall be deemed to have occurred and shall be in
effect, without any requirement of further action by the security holders or directors of the
Debtors or the sole member of Reorganized AOLA LLC. On the Effective Date, the appropriate
officers of the Debtors and Reorganized AOLA LLC, the members of the boards of directors of the
Debtors and the sole member of Reorganized AOLA LLC are authorized and directed to issue, execute
and deliver the agreements, documents, securities and instruments contemplated by the Plan in the
name of and on behalf of the Debtors or Reorganized AOLA LLC, as applicable. The authorizations
and approvals of the corporate actions in this Section 5.10 shall be effective notwithstanding any
requirements under the Delaware General Corporation Law, the Delaware Limited Liability Company Act
or other applicable non-bankruptcy law.




			
	Section 5.11	 	Distributions by the Liquidating LLC; Turnover by Time Warner to Accepting Class 4 Claims and the Cisneros Group Parties








     In order to implement the Distribution scheme contemplated by this Plan, the LLC Agents shall
make Distributions in accordance with the following mechanics:



     (a) On the Effective Date, the LLC Agents shall (1) establish and fund: (i) the
Administrative Claims Reserve Fund, (ii) the Liquidating LLC Expense Reserve (iii) the Retention
Payment Fund, and (iv) if the Cash Option is elected, the Nonaccepting Class 4 Claims Fund and the
Accepting Class 4 Claims Fund and (2) pay, or reserve for the payment of, the Priority Tax Claims,
Allowed Class 1 Claims and Allowed Class 2 Claims.



21









 





     (b) On the PR Transfer Date, AOLA shall (i) assume the PR Agreement (without the payment of
any cure costs) and assign the PR Agreement to Time Warner (or to such other TW Party as directed
by the TW Parties) and (ii) assign, convey and transfer the Other PR Assets to AOL (or to such
other TW Party as directed by the TW Parties). AOLA shall have no further liability under the PR
Agreements or any executory contracts and unexpired leases that constitute Other PR Assets
following the assignment thereof.



     (c) On the Effective Date or, in the case of Distributions made pursuant to clause (i) of this
subsection (c), on the later of the Effective Date and the date upon which there is a Final Order
allowing such Class 4 General Unsecured Claim, the Liquidating LLC shall transfer (i)(a) if the LLC
Option is elected, to each Holder of an Allowed Class 4 General Unsecured Claim, its PR
Distribution Amount and Series A-2 Beneficial Interests and, to the extent such Holder is the
Holder of an Accepting Class 4 Claim, such Holder’s Series A-1 Beneficial Interests, or (b) if the
Cash Option is elected, such Holder’s PR Distribution Amount and Additional Distribution Amount
and, to the extent such Holder is the Holder of an Accepting Class 4 Claim, such Holder’s pro rata
portion of the Turnover Amount, and (ii) to Time Warner, the Series B Beneficial Interests and the
Series C Beneficial Interests; provided, that the LLC Agents are hereby authorized and directed by
Time Warner to immediately turn over, on the Effective Date, on Time Warner’s behalf, (1) to the
Holders of Accepting Class 4 Claims, Time Warner’s Series A-1 Beneficial Interests which represents
the right to receive the Accepting Class 4 Distribution Amount referred to in clause (i) of this
subsection (c), if the LLC Option is elected, or the Turnover Amount, if the Cash Option is
elected, and (2) to the Cisneros Group Parties, the Series C Beneficial Interests.



     (d) If the LLC Option is elected, as a result of the Distribution by the LLC Agents of the
Liquidating LLC Interests and other consideration described above, Cash in the Liquidating LLC
shall be distributed or reserved in the following manner:




(i) first, from Cash on hand, the LLC Agents shall pay or fund a reserve for payment
of all Allowed Administrative Claims, Allowed Priority Claims, Allowed Priority Tax
Claims, Allowed Class 1 Claims and Allowed Class 2 Claims, shall establish the
Liquidating LLC Expense Reserve and shall fund the Retention Payment Fund and, based
upon an assessment of the projected payments to be made by the Liquidating LLC to
Holders of Allowed Class 4 General Unsecured Claims, shall fund the Disputed General
Unsecured Claims Fund and the Disputed Priority Claims Fund. Any Cash on hand
remaining in the Liquidating LLC after the payments and reserves described above
shall constitute Available Cash;




(ii) second, each Holder of an Allowed Class 4 General Unsecured Claim shall receive
its PR Distribution Amount from Available Cash;




(iii) third, after the payment of the PR Distribution Amount, (1) each Holder of an
Allowed Class 4 General Unsecured Claim shall receive, on account of such Holder’s
Series A-2 Beneficial Interests, such Holder’s pro rata share of the remaining
Available Cash based on the proportion its Allowed Class 4 General Unsecured Claim
bears to Total Allowed Unsecured Claims and (2) each Holder of an Accepting Class 4
Claim shall receive, on account of such Holder’s Series A-1 Beneficial Interests,
additional distributions of Available Cash that would have otherwise been
distributed to Time Warner on account of the TW Note Claims prior to the turnover
until such Accepting Class 4 Claims are paid in full; and




(iv) fourth, following the payment in full of all Accepting Class 4 Claims,
Available Cash shall be distributed ratably to Time Warner and each Holder of an
Allowed Class 4 General Unsecured Claim that is not an Accepting Class 4 Claim based
on the proportion that such Allowed Claim bears to the aggregate amount of TW Party
Claims and the Allowed Class 4 General Unsecured Claims; provided, that the Cisneros
Group Parties shall be entitled to receive all amounts payable with respect to the
Series C Beneficial Interests, which consists of the first $5,363,028 of the amounts
that, prior to the turnover of the Series C Beneficial Interests, would have
otherwise been allocable to Time Warner under this clause fourth and, thereafter,
40% of the amounts that, prior to the turnover of the Series C Beneficial Interests,
would have otherwise been additionally allocable to Time Warner under this clause
fourth.



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     (e) If the Cash Option is elected, then




(i) on the Effective Date, the LLC Agents shall pay or fund a reserve for payment of
the funds and reserves pursuant to subsection (d)(i) of this Section 5.11 (other
than the Disputed General Unsecured Claims Fund);




(ii) on the Effective Date, Holders of Allowed Accepting Class 4 Claims shall
receive, from Available Cash, payments equal to 100% of such Holder’s Allowed
Accepting Class 4 Claim, comprised of such Holder’s PR Distribution Amount, such
Holder’s Additional Distribution Amount and such Holder’s pro rata share of the
Turnover Amount; provided, that Holders of Allowed Accepting Class 4 Claims whose
claims are Allowed after the Effective Date, shall receive payments equal to 100% of
such Holder’s Allowed Accepting Class 4 Claim from the Accepting Class 4 Claims Fund
on the date upon which such Holder’s Accepting Class 4 Claim is Allowed. Holders of
Allowed Nonaccepting Class 4 Claims shall receive pari passu treatment with the TW
Parties, comprised of the payment on the Effective Date of such Holder’s PR
Distribution Amount and such Holder’s Additional Distribution Amount and pro rata
payments on each Distribution Date from the Nonaccepting Class 4 Claims Fund in an
amount sufficient to maintain pari passu treatment with the TW Party Claims to the
extent Time Warner or the Cisneros Group Parties receive Distributions from Net
Available Cash on account of their Series B Beneficial Interests and Series C
Beneficial Interests, respectively. The LLC Agents shall fund the Nonaccepting
Class 4 Claims Fund and the Accepting Class 4 Claims Fund on the Effective Date.
Any Cash on hand remaining in the Liquidating LLC after funding of the Nonaccepting
Class 4 Claims Fund and the Accepting Class 4 Claims Fund and the payments and
reserves described in subsection (d)(i) of this Section 5.11 (other than the
Disputed General Unsecured Claims Fund) shall constitute Available Cash; and




(iii) following the payment in full of all Accepting Class 4 Claims, Available Cash
shall be distributed to Time Warner; provided, that the Cisneros Group Parties shall
be entitled to receive all amounts payable with respect to the Series C Beneficial
Interests, which consists of the first $5,363,028 of the amounts that, prior to the
turnover of the Series C Beneficial Interests, would have otherwise been allocable
to Time Warner under this subsection (e)(iii) of this Section 5.11 and, thereafter,
40% of the amounts that, prior to the turnover of the Series C Beneficial Interests,
would have otherwise been additionally allocable to Time Warner under this
subsection (e)(iii) of this Section 5.11.



     (f) To the extent there is excess Cash in the Administrative Claims Reserve Fund, the
Liquidating LLC Expense Reserve, the Disputed Priority Claims Fund, the Retention Fund, and, if the
LLC Option is elected, the Disputed General Unsecured Claims Fund or if the Cash Option is elected,
the Nonaccepting Class 4 Claims Fund and the Accepting Class 4 Claims Fund, after the payment of
all amounts required to be paid from such reserve or fund, such Cash shall constitute Available
Cash and shall be distributed to the Holders of Allowed Class 4 General Unsecured Claims (to the
extent not already paid in full), Time Warner and the Cisneros Group Parties in accordance with the
terms of this Plan and the waterfall described above.




			
	Section 5.12	 	Status Reports








     Not later than ninety (90) days following the occurrence of the entry of the Effective Date,
the LLC Agents shall file with the Bankruptcy Court and serve on counsel to the Principal
Stockholders status reports and a detailed accounting explaining what progress has been made toward
entry of the Final Decree. The status reports shall also be served on the US Trustee, and those
parties who have requested special notice post-confirmation. Until entry of the Final Decree,
further status reports shall be filed every one hundred twenty (120) days and served on the same
entities. Each status report shall include a description of Assets sold or otherwise realized
upon, gross and net proceeds received, Distributions made, expenses incurred and paid, remaining
Budget funds and projected Budget expenses, and cash on hand, as well as a detailed reporting of
claims objections and the status of all contested matters and litigation.



23









 






			
	Section 5.13	 	Elimination of Classes








     Any Class of Claims or Equity Interests that is not occupied as of the date of the
commencement of the Confirmation Hearing by an Allowed Claim or an Allowed Equity Interest, or a
Claim or Equity Interest temporarily allowed under Rule 3018 of the Bankruptcy Rules, shall be
deemed deleted from the Plan for all purposes.




			
	Section 5.14	 	Late Claims








     (a) In accordance with the Bar Date Order, unless otherwise specifically ordered by the
Bankruptcy Court, any entity that was required to but did not file (a) a proof of claim in respect
of a Claim in compliance the procedures and deadlines established by the Bar Date Order or (b) a
request for payment of an Administrative Claim in compliance with Section 2.1 of this Plan, shall
not be treated as a creditor with respect to such Claim for the purposes of voting and distribution
with respect to this Plan.



     (b) Notwithstanding anything to the contrary contained in the Bar Date Order, Holders of D&O
Indemnity Claims shall not be required to file a proof of claim in respect of such D&O Indemnity
Claims except as set forth in a further order of the Bankruptcy Court. Holders of D&O Indemnity
Claims shall not be entitled to vote with respect to this Plan, in respect of such D&O Indemnity
Claims.




			
	Section 5.15	 	Creation of the Liquidating LLC








     (a) On the Effective Date, after the conversion of AOLA into Reorganized AOLA LLC pursuant to
Section 5.10 of this Plan, (i) the Liquidating LLC shall be created and established by the
execution and delivery of the Liquidating LLC Agreement and any other necessary action, subject to
the provisions of this Plan, and (ii) all Rights of Action and other Assets (excluding the Retained
Assets), any assets acquired by the Debtors or the Liquidating LLC under the Plan and all limited
liability company interests in Reorganized AOLA LLC, shall be transferred to the Liquidating LLC,
free of all Claims, Liens and interests. The costs and expenses incurred by the Liquidating LLC on
and after the Effective Date shall be paid by the Liquidating LLC.



     (b) As of the Effective Date, the Liquidating LLC shall be responsible for (i) the winding up
of the Debtors’ Estates, (ii) liquidating or otherwise reducing to Cash the Assets and/or the
Retained Assets in accordance with the Liquidating LLC Agreement, (iii) filing, prosecuting and
settling the Rights of Action, (iv) making Distributions in accordance with the Plan to Holders of
Allowed Claims and Interests and (v) settling, resolving and objecting to Claims. The Liquidating
LLC shall have the authority without further Bankruptcy Court approval to liquidate the Assets, to
hire and pay professional fees and expenses of counsel and other advisors, to prosecute and settle
objections to Disputed Claims, to pursue any preserved Rights of Action, and otherwise to take such
other actions as shall be necessary to administer the Chapter 11 Cases and effect the closing of
the Chapter 11 Cases.



     (c) The Liquidating LLC Interests shall not be transferable; provided, that Liquidating LLC
Interests received by (i) Time Warner may be transferred to any TW Party or any affiliate of any TW
Party and (ii) any Cisneros Group Party may be transferred to any other Cisneros Group Party or any
affiliate of the Cisneros Group Parties.



     (d) The Liquidating LLC shall indemnify and hold harmless the LLC Agents and their
professionals from and against any and all liabilities, expenses, claims, damages or losses
incurred by them as a direct result of acts or omissions taken by them in their capacities as LLC
Agents or agents of the LLC Agents, except for acts judicially determined by Final Order to have
been undertaken in bad faith, by willful misconduct or by gross negligence.




			
	Section 5.16	 	The LLC Agents








     (a) The TW Parties and the Cisneros Group Parties shall each designate one individual to serve
as a LLC Agent, and the Debtors shall disclose such selections in the Plan Supplement. Following
the Effective Date, the LLC Agents shall act as agents on behalf of the Liquidating LLC to carry
out its obligations and exercise its rights in accordance with and subject to this Plan, the
Confirmation Order and the Liquidating LLC Agreement. The



24









 







LLC Agents shall not be compensated for their services except as set forth in the Liquidating
LLC Agreement. Any objection to the designation of the LLC Agents shall be raised at the
Confirmation Hearing. The Confirmation Order shall state that without the permission of the
Bankruptcy Court, no judicial, administrative, arbitration or other action or proceeding shall be
commenced against the LLC Agents in their official capacities, with respect to their status,
duties, powers, acts or omissions as LLC Agents in any forum other than the Bankruptcy Court. The
LLC Agents shall be vested with the rights, powers and benefits set forth in the Liquidating LLC
Agreement, which shall include, without limitation, all rights, powers, and benefits afforded to a
“trustee” under sections 704 and 1106 of the Bankruptcy Code, subject to the terms of this Plan.
The LLC Agents shall be deemed to be successors to the Debtors and estate representatives pursuant
to section 1123(b)(3) of the Bankruptcy Code. Subject to the provisions of the Liquidating LLC
Agreement, the Liquidating LLC and the LLC Agents shall be entitled to hire such professionals as
the LLC Agents deem necessary to assist the Liquidating LLC and the LLC Agents in carrying out
their duties, including, without limitation, the LLC Administrator, with the fees and expenses of
such professionals (including, without limitation, the LLC Administrator) to be borne by the
Liquidating LLC. All references in this Plan to the LLC Agents shall include the LLC
Administrator, as designee of the LLC Agents.



     (b) In addition to reporting requirements set forth in Section 5.11 hereof, the LLC Agents
shall regularly monitor the liquidation of Assets.



     (c) Upon the date that all Claims have either become Allowed Claims or been resolved by Final
Order and all Distributions in respect of such Allowed Claims have been made, the balance of the
Administrative Claims Reserve Fund, the Retention Payment Fund, the Disputed Priority Claims Fund,
and, if the Debtors elect the LLC Option, the Disputed General Unsecured Claims Fund or if the
Debtors elect the Cash Option, the Nonaccepting Class 4 Claims Fund and the Accepting Class 4
Claims Fund shall constitute Available Cash.



     (d) Subject to the terms of this Plan, the LLC Agents shall be authorized and empowered to
pursue and prosecute, to settle, or to decline to pursue, the Rights of Action, including all
pending adversary proceedings and contested matters, whether or not such Causes of Action have been
commenced prior to the Effective Date, and shall be substituted as the real party in interest in
any such action, commenced by or against the Debtors, the Debtors’ Estates or the Principal
Stockholders. The LLC Agents may pursue or decline to pursue the Rights of Action and may settle,
release, sell, assign, otherwise transfer or compromise such Rights of Action, in the LLC Agents’
business judgment, subject to the provisions of this Plan without Bankruptcy Court approval.
Except as otherwise set forth in this Plan, the LLC Agents may, but shall not be required to, set
off against any Claim and the Distributions to be made pursuant to this Plan in respect of such
Claim, any Rights of Action the Estates may have against the Holder of the Claim, but neither the
failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by
the LLC Agents of any such Rights of Action, set-off or recoupment which the Debtors may have
against such Holder.



     (e) The LLC Agents may be removed and replaced in accordance with the terms of the Liquidating
LLC Agreement.



ARTICLE VI




TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES





			
	Section 6.1	 	Assumption/Rejection of Executory Contracts and Unexpired Leases








     (a) Any executory contracts or unexpired leases entered into by the Debtors prior to the
Petition Date which have not expired by their own terms on or prior to the Effective Date, which
have not been assumed and assigned or rejected with the approval of the Bankruptcy Court, which are
not (i) the subject of a motion to assume the same pending as of the Effective Date, (ii) listed
in the Plan Supplement, (iii) in the case of executory contracts or unexpired leases relating to
the Other PR Assets, otherwise listed in the Plan Supplement, which contracts and leases shall be
assumed by the Debtors on the Effective Date and assigned to AOL (or to such other TW Party as
directed by the TW Parties) or (iv) otherwise to be assumed pursuant to the Plan, shall be deemed
rejected by the Debtors on the Effective Date or as otherwise agreed upon by the parties. The
entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such
rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code.



25









 





     (b) The PR Agreement shall be expressly assumed by AOLA as of the Effective Date and assigned
to Time Warner (or to such other TW Party as directed by the TW Parties) pursuant to Section 3.3(c)
of this Plan; provided, however, that to the extent the Effective Date occurs prior to June 30,
2006, (i) AOL shall remit (on a monthly basis) to the Liquidating LLC the net amounts that AOLA
would have otherwise been entitled to receive thereunder through and including June 30, 2006, had
the PR Agreement remained in effect as between AOL and AOLA (which net amounts shall be calculated
and determined in good faith between AOL and Reorganized AOLA LLC and shall take into consideration
the costs of operating AOL Puerto Rico in a manner substantially similar to historical practices)
and (ii) the Liquidating LLC shall be entitled to exercise all of AOLA’s rights and enforce any
remedies available to AOLA under the PR Agreement for the period beginning on the Effective Date
through and including June 30, 2006; provided, further, however, that (x) on or before the
Effective Date, AOL shall remit to the Liquidating LLC all accrued and unpaid amounts, or a good
faith estimate thereof, owing by AOL in favor of the Debtors pursuant to the PR Agreement as of the
last business day of the preceding calendar month and (y) within 30 days of the Effective Date, AOL
shall remit to the Liquidating LLC all accrued and unpaid amounts owing by AOL in favor of the
Debtors pursuant to the PR Agreement as of the Effective Date not theretofore paid. The LLC Agents
shall use all proceeds received pursuant to this Section 6.1(b) in accordance with the terms of
this Plan and the Liquidating LLC Agreement.



     (c) The AOL License shall be expressly rejected by the Debtors on the Effective Date;
provided, however, that the effective date of such rejection, as to each country, shall be the
earlier of (i) the transfer of that country’s operations or final wind-down of operations and (ii)
June 30, 2006.



     (d) On and after the Effective Date, each of the TW Parties shall be deemed to have released
unconditionally each of the Debtors, Reorganized AOLA LLC and the Liquidating LLC from the AOL
License Rejection Claims.



     (e) The Executive Employment Agreements shall be assumed by the Debtors pursuant to the
provisions of sections 365 and 1123 of the Bankruptcy Code and assigned to the Liquidating LLC as
of the Effective Date.



     (f) The Retention Agreements shall be assigned by the Debtors pursuant to sections 365 and
1123 of the Bankruptcy Code to the Liquidating LLC as of the Effective Date. The Liquidating LLC
shall pay all Retention Payments as they become due and payable to each Key Employee from the
Retention Payment Fund, and, except as set forth in Section 5.11(f), the proceeds in the Retention
Payment Fund shall be used solely for the purpose of making Retention Payments.



     (g) On the Effective Date, the Shut-Down Costs Letter Agreement shall be assumed (without the
payment of any cure costs) and assigned by the Debtors or Reorganized AOLA LLC, as applicable, to
the Liquidating LLC, pursuant to sections 365 and 1123 of the Bankruptcy Code. AOLA or Reorganized
AOLA LLC, as applicable, shall perform its obligations under the Shut-Down Costs Letter Agreement.




			
	Section 6.2	 	Rejection Damage Claims








     Notwithstanding anything in the Bar Date Order to the contrary, Claims arising out of the
rejection of executory contracts or unexpired leases rejected as of the Effective Date pursuant to
this Plan must be filed and served on the Liquidating LLC pursuant to the procedures specified in
the Confirmation Order or another order of the Bankruptcy Court, no later than thirty (30) days
after the Effective Date. Any Claim not filed within such time will be forever barred from
assertion against the Liquidating LLC, the Debtors, and their Estates, their respective successors
or their respective properties. Unless otherwise ordered by the Bankruptcy Court, all Claims
arising from the rejection of executory contracts and unexpired leases shall be treated as
Unsecured Claims under this Plan.




			
	Section 6.3	 	Indemnification of Directors, Officers and Employees








     The obligations of the Debtors to indemnify the Indemnified Employees shall be deemed and
treated as executory contracts and shall be assumed by the Debtors (and, if such contract is
assumed by a Debtor other than AOLA, assigned to Reorganized AOLA LLC) pursuant to the Plan and
section 365 of the Bankruptcy Code as of the



26









 







Effective Date. The obligations of Reorganized AOLA LLC to indemnify the Indemnified
Employees shall be funded, to the extent necessary, by the Liquidating LLC. Accordingly, such
indemnification obligations shall survive unimpaired and unaffected by entry of the Confirmation
Order, irrespective of whether such indemnification is owed for an act or event occurring before or
after the Petition Date, except if such claim or liability is determined pursuant to a Final Order
to have resulted from the gross negligence, willful misconduct, fraud or criminal conduct of such
indemnified Person. To the extent the D&O Insurance Policy is an executory contract, the D&O
Insurance Policy shall be assumed by AOLA pursuant to the Plan and section 365 of the Bankruptcy
Code as of the Effective Date. To the extent the D&O Insurance Policy is not an executory
contract, the D&O Insurance Policy shall vest in Reorganized AOLA LLC pursuant to Section 5.2 of
this Plan. To the extent the existence of Reorganized AOLA LLC is terminated (whether by merger,
dissolution, liquidation or otherwise) prior to the expiry of the D&O Insurance Policy, the
Liquidating LLC and Reorganized AOLA LLC shall take all necessary measures to ensure that the D&O
Insurance Policy remains in full force and effect until the expiry of the D&O Insurance Policy in
accordance with the terms thereof.




			
	Section 6.4	 	Benefits, Compensation and Severance








     (a) The Assumed Benefit Plans shall be treated as executory contracts and shall be assumed by
the Debtors (and, if such contract is assumed by a Debtor other than AOLA, assigned to Reorganized
AOLA LLC) pursuant to the Plan and sections 365 and 1123 of the Bankruptcy Code. The Assumed
Benefit Plans shall continue to be funded, to the extent necessary, by the Liquidating LLC. The
Debtors are not aware of, after having made diligent inquiry, any obligation to pay “retiree
benefits” as defined in section 1114(a) of the Bankruptcy Code.



     (b) Executive Employment Agreements. To the extent not paid or fully performed prior to the
Effective Date, from and after the Effective Date, the Debtors, Reorganized AOLA LLC or the
Liquidating LLC, as applicable, shall pay all amounts required to be paid by the Debtors under the
Executive Employment Agreements and perform all obligations thereunder in accordance with the terms
thereof.



     (c) Severance. To the extent not paid or fully performed prior to the Effective Date, from
and after the Effective Date, the Debtors, Reorganized AOLA LLC or the Liquidating LLC, as
applicable, shall pay all amounts agreed in writing to be paid by the Debtors to any employee
terminated by the Debtors or any employee who mutually agrees with any Debtor to leave such
Debtors’ employ on or after the Petition Date (and to perform any obligations set forth in such
writing) in accordance with the terms of such written agreement.



ARTICLE VII




RIGHTS OF ACTION





			
	Section 7.1	 	Maintenance of Rights of Action








     The Debtors transfer and assign to the Liquidating LLC all rights on behalf of the Debtors to
commence and pursue, as appropriate, any and all Rights of Action, whether arising before or after
the Petition Date, in any court or other tribunal, including, without limitation, in an adversary
proceeding filed in one or more of the Chapter 11 Cases and, in accordance with section 1123(b)(3)
of the Bankruptcy Code, all claims, rights, and Rights of Action that the respective Debtors may
hold against any Entity shall vest in the Liquidating LLC. From and after the Effective Date, the
LLC Agents shall retain and may exclusively enforce any and all such Rights of Action; and shall
have the exclusive right, authority and discretion to pursue, institute, prosecute, abandon,
settle, or compromise any and all such Rights of Action.




			
	Section 7.2	 	Preservation of All Rights of Action Not Expressly Settled or Released








     (a) Unless a Claim or Right of Action against a Creditor or other Entity is expressly waived,
relinquished, released, compromised or settled in this Plan or any Final Order, the Debtors
expressly reserve such claim or Right of Action for later enforcement by the Liquidating LLC
(including, without limitation, claims and Rights of Action not specifically identified or which
Debtors may presently be unaware or which may arise or exist by reason of additional facts or
circumstances unknown to Debtors at this time or facts or circumstances which may change or be
different from those which Debtors now believe to exist) and, therefore, no preclusion doctrine,



27









 







including, without limitation, the doctrines of res judicata, collateral estoppel, issue
preclusion, claim preclusion, waiver, estoppel (judicial, equitable or otherwise) or laches shall
apply to such claims or Rights of Action upon or after the confirmation or consummation of this
Plan based on the Disclosure Statement, this Plan or the Confirmation Order, except where such
claims or Rights of Action have been expressly released in this Plan or other Final Order. In
addition, the Liquidating LLC expressly reserves the right to pursue or adopt any claims,
cross-claims or counterclaims alleged in any lawsuit in which the Debtors are a defendant or an
interested party, against any person or entity, including, without limitation, the plaintiffs or
co-defendants in such lawsuits, subject to the provisions of this Plan or any Final Order.



     (b) Subject to the terms of any Final Order, any Entity to whom the Debtors have incurred an
obligation (whether on account of services, purchase or sale of goods or otherwise), or who has
received services from the Debtors or a transfer of money or property of the Debtors, or who has
transacted business with the Debtors, or leased equipment or property from the Debtors should
assume that such obligation, transfer, or transaction may be reviewed by the Liquidating LLC
subsequent to the Effective Date and may, if appropriate, be the subject of an action after the
Effective Date, whether or not (i) such Entity has filed a proof of claim against the Debtors in
these Chapter 11 Cases, (ii) such Entity’s proof of claim has been the subject of an objection,
(iii) such Entity’s Claim was included in Debtors’ Schedules, or (iv) such Entity’s scheduled claim
has been objected to by the Debtors or has been identified by the Debtors as disputed, contingent
or unliquidated.



ARTICLE VIII




PROVISIONS GOVERNING DISTRIBUTIONS





			
	Section 8.1	 	Distribution to Creditors








     Subject to the provisions of any Final Order, the Liquidating LLC will make Distributions to
all Holders of Allowed Claims in accordance with the terms of this Plan. All Distributions shall
be made by the Liquidating LLC without any requirement for bond or surety with respect thereto.




			
	Section 8.2	 	Claims Allowed as of the Effective Date








     Except as otherwise provided in this Plan, or as may be ordered by the Bankruptcy Court, for
those Claims that are Allowed as of the Effective Date and are entitled to receive Distributions
under this Plan, Distribution shall be made on the Effective Date (or as soon thereafter as is
practicable) by the Debtors or the LLC Agents, as applicable. Distributions on account of Claims
that become Allowed after the Effective Date shall be made by the LLC Agents pursuant to the
provisions of this Plan.




			
	Section 8.3	 	Disputed Priority Claims Fund; Disputed General Unsecured Claims Fund; Nonaccepting
Class 4 Claims Fund and Accepting Class 4 Claims Fund








     Subject to Sections 9.4 and 9.5 of the Plan, the Liquidating LLC shall maintain, in accordance
with the Liquidating LLC’s powers and responsibilities under this Plan and the Liquidating LLC
Agreement, (i) the Disputed Priority Claims Fund, (ii) if the LLC Option is elected, the Disputed
General Unsecured Claims Fund and (iii) if the Cash Option is elected, the Nonaccepting Class 4
Claims Fund and the Accepting Class 4 Claims Fund.




			
	Section 8.4	 	Delivery of Distributions








     Subject to the provisions of Bankruptcy Rule 2002(g) and except as otherwise provided under
this Plan, Distributions to Holders of Allowed Claims shall be made at the address of each such
Holder as set forth on the Schedules filed with the Bankruptcy Court unless superseded by the
address set forth on proofs of claim filed by such Holders, or if the Debtors or the Liquidating
LLC have been notified in writing of a change of address.



28









 






			
	Section 8.5	 	Undeliverable Distributions








     (a) Holding of Undeliverable Distributions: If any Distribution to any Holder of an Allowed
Unsecured Claim is returned to the Debtors or the Liquidating LLC as undeliverable, no further
Distributions shall be made to such Holder unless and until the LLC Agents are notified, in
writing, of such Holder’s then-current address. Subject to Section 8.5(b) of this Plan,
undeliverable Distributions shall remain in the possession of the Liquidating LLC until such time
as a Distribution becomes deliverable. All persons ultimately receiving undeliverable Cash shall
not be entitled to any interest or other accruals of any kind. Nothing contained in this Plan
shall require the Liquidating LLC to attempt to locate any Holder of an Allowed Claim.



     (b) Failure to Claim Undeliverable Distributions: Within ten (10) Business Days after the
later of the first anniversary of the Effective Date or the first Distribution under this Plan, the
Liquidating LLC shall file a list with the Bankruptcy Court setting forth the names of those
Entities for which Distributions have been attempted hereunder and have been returned as
undeliverable as of the date thereof. Any Holder of an Allowed Claim that does not assert its
rights pursuant to this Plan to receive a Distribution within two (2) months from and after the
filing of such list shall have its Claim for such undeliverable Distribution discharged and shall
be forever barred from asserting any such Claim against the Debtors or the Liquidating LLC. In
such case, any consideration held for Distribution on account of such Claim shall revert to the
Liquidating LLC for Distribution to the beneficiaries in accordance with the terms of this Plan.




			
	Section 8.6	 	Compliance with Tax Requirements/Allocation








     (a) In connection with this Plan, to the extent applicable, the LLC Agents in making
Distributions under this Plan shall comply with all tax withholding and reporting requirements
imposed on the Liquidating LLC by any governmental unit, and all Distributions pursuant to this
Plan shall be subject to such withholding and reporting requirements. The LLC Agents may withhold
the entire Distribution due to any Holder of an Allowed Claim until such time as such Holder
provides to the LLC Agents the necessary information to comply with any withholding requirements of
any governmental unit. Any property so withheld will then be paid by the LLC Agents to the
appropriate authority. If the Holder of an Allowed Claim fails to provide to the LLC Agents the
information necessary to comply with any withholding requirements of any governmental unit within
six months after the date of first notification by the LLC Agents to the Holder of the need for
such information or for the Cash necessary to comply with any applicable withholding requirements,
then the Holder’s Distribution shall be treated as an undeliverable Distribution in accordance with
this Plan.



     (b) In connection with the turnover by Time Warner pursuant to Section 5.11(c), the Holders of
the Accepting Class 4 claims and the Cisneros Group Parties shall provide to Time Warner
information necessary to comply with any withholding requirements of any governmental unit, and
failure to provide such information shall cause the turnover to such party to be treated as an
undeliverable Distribution in accordance with this Plan.



     (c) The LLC Agents shall, and shall cause Reorganized AOLA LLC, AOL Spain, AOL Brazil, AOL
Mexico, QuotaHolder and any other Person or Entity whose equity interests are held directly or
indirectly by the Liquidating LLC, to (i) comply with all tax withholding and reporting
requirements imposed on it or them by any governmental unit and (ii) file (or cause to be filed)
returns for the Liquidating LLC as a partnership for U.S. federal income tax purposes. The
Liquidating LLC Agreement shall set forth allocations of income in accordance with each party’s
economic interest of the Liquidating LLC.



     (d) The holders of beneficial interests in the Liquidating LLC (and any transferees), the
Liquidating LLC, the Debtors and Reorganized AOLA LLC intend for the Liquidating LLC to be treated
as a partnership for U.S. federal income tax purposes, and such holders of beneficial interests in
the Liquidating LLC (and any transferees), the Liquidating LLC, the Debtors and Reorganized AOLA
LLC agree that (i) they will take no contrary position for U.S. federal income tax purposes unless
otherwise required by law and (ii) they will not merge, convert or take any action that would cause
the Liquidating LLC or Reorganized AOLA LLC to be treated as other than a partnership or
disregarded entity, as applicable, for U.S. federal income tax purposes.



     (e) Unless otherwise required by law, the holders of beneficial interests in the Liquidating
LLC (and any transferees), the Liquidating LLC, the Debtors and Reorganized AOLA LLC agree that (i)
the property



29









 







transferred to the Liquidating LLC and the beneficial interests in such Liquidating LLC
distributed by the LLC Agents to such holders will be valued consistently by all holders of
beneficial interests in the Liquidating LLC (and any transferees), the Liquidating LLC, the Debtors
and Reorganized AOLA LLC for U.S. federal income tax purposes, (ii) the assumption and assignment
of the PR Agreement and any other contracts or agreements assumed pursuant to this Plan will be
valued consistently by all holders of beneficial interests in the Liquidating LLC (and any
transferees), the Liquidating LLC, the Debtors and Reorganized AOLA LLC for U.S. federal income tax
purposes and (iii) the Other PR Assets assigned, conveyed and transferred to AOL (or to such other
TW Party as directed by the TW Parties) will be valued consistently by all holders of beneficial
interests in the Liquidating LLC (and any transferees), the Liquidating LLC, the Debtors and
Reorganized AOLA LLC for U.S. federal income tax purposes.




			
	Section 8.7	 	Fractional Dollars, De Minimis Distributions








     Notwithstanding anything contained herein to the contrary, payments of fractions of dollars
will not be made. Whenever any payment of a fraction of a dollar under this Plan would otherwise
be called for, the actual payment made will reflect a rounding of such fraction to the nearest
dollar (up or down), with half dollars being rounded down. The Liquidating LLC, as successor to
the Debtors shall have the discretion not to make payments of less than twenty-five ($25) dollars
on account of any Allowed Unsecured Claim, unless a specific request is made in writing to the
Liquidating LLC on or before ninety (90) days after Allowance of such Claim. In addition, after
the first Distribution Date, the Liquidating LLC shall not be required to make any Distribution on
account of any Claim in the event that the costs of making such Distribution payment exceed the
amount of such Distribution payment, and all cash that otherwise would have been distributed to the
Holders of such de minimis claims shall otherwise be distributed in accordance with the terms of
this Plan.




			
	Section 8.8	 	Set-Offs and Recoupments








     The Liquidating LLC, as successor to the Debtors may, pursuant to section 553 of the
Bankruptcy Code or applicable non-bankruptcy law, set off or recoup against any Allowed Claim and
the Distributions to be made pursuant to this Plan on account thereof (before any Distribution is
made on account of such Claim), the claims, rights and Causes of Action of any nature that the
Debtors may hold against the Holder of such Allowed Claim. The Holders of Claims may, pursuant to
section 553 of the Bankruptcy Code or applicable non-bankruptcy law, set off or recoup any Allowed
Claims such Holder possesses against any claim, rights or Causes of Action of any nature that the
Liquidating LLC, as successor to the Debtors, may hold against such Holder. Neither the failure to
effect such a set-off or recoupment nor the allowance of any Claim hereunder shall constitute a
waiver or release by the Debtors or such Holders of any such claims, rights and Causes of Action
that such parties may possess under section 553 of the Bankruptcy Code.




			
	Section 8.9	 	Time Bar to Cash Payments








     Checks issued by the Liquidating LLC on account of Allowed Claims shall be null and void if
not negotiated within ninety (90) days from and after the date of issuance thereof. Requests for
reissuance of any check shall be made directly to the Liquidating LLC by the Holder of the Allowed
Claim with respect to which such check originally was issued. Any Claim in respect of such a
voided check shall be made on or before the later of (a) the first anniversary of the Effective
Date or (b) ninety (90) days after the date of issuance of such check, if such check represents a
final Distribution hereunder on account of such Claim. After such date, all Claims in respect of
voided checks shall be discharged and forever barred and the right to all moneys from the voided
checks shall revert to the Liquidating LLC for Distribution under this Plan.




			
	Section 8.10	 	Manner of Payment Under Plan of Reorganization








     At the option of the LLC Agents or the Debtors, any Cash payment to be made hereunder may be
made by a check or wire transfer or as otherwise required or provided in applicable agreements.



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ARTICLE IX




PROCEDURES FOR RESOLVING DISPUTED CLAIMS





			
	Section 9.1	 	Prosecution of Objections to Claims








     (a) Unless otherwise ordered by the Bankruptcy Court after notice and a hearing, and except as
set forth in this Plan, the Liquidating LLC shall have the right to make, file and prosecute
objections to Unsecured Claims, Administrative Claims and Priority Claims; provided, that the
Liquidating LLC shall not have the right, power or authority to pursue the Released Claims. The
Liquidating LLC shall have the right to prosecute objections to Claims previously filed by the
Debtors. All Disputed Claims shall be determined, resolved or adjudicated in the manner in which
such Claim would have been determined, resolved or adjudicated if the Chapter 11 Case had not been
commenced, unless the LLC Agents, at their election, choose to determine, resolve or adjudicate
such Disputed Claim in the Bankruptcy Court.



     (b) Unless another time is set by order of the Bankruptcy Court, all objections to Claims
shall be filed with the Bankruptcy Court and served upon the Holders of each of the Claims to which
objections are made by the later of (a) ninety (90) days after the Effective Date; or (b) ninety
(90) days after a timely Proof of Claim or request for payment with respect to such Claim is filed;
provided, however, that the Liquidating LLC may seek an extension of such time to object.



     (c) Except as set forth in this Plan, nothing in this Plan, the Disclosure Statement, the
Confirmation Order or any order in aid of Confirmation, shall constitute, or be deemed to
constitute, a waiver or release of any claim, cause of action, right of setoff, or other legal or
equitable defense that Debtors had immediately prior to the commencement of the Chapter 11 Cases,
against or with respect to any Claim or Equity Interest. Except as set forth in this Plan, upon
Confirmation, the Debtors shall have, retain, reserve and be entitled to assert all such claims,
Causes of Action, rights of setoff and other legal or equitable defenses of the Debtors, which
shall be vested in and assigned to the Liquidating LLC as of the Effective Date.




			
	Section 9.2	 	Estimation of Claims








     The Liquidating LLC may, at any time, request that the Bankruptcy Court estimate any
contingent or unliquidated Claim pursuant to section 502(c) of the Bankruptcy Code regardless of
whether the Debtors or the Liquidating LLC previously objected to such Claim or whether the
Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction
to estimate any Claim at any time during litigation concerning any objection to any Claim,
including during the pendency of any appeal relating to any such objection. In the event that the
Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated amount will
constitute either the Allowed amount of such Claim or a maximum limitation on such Claim (including
for purposes of determining the Disputed Priority Claims Fund, Disputed General Unsecured Claims
Fund, Nonaccepting Class 4 Claims Fund and Accepting Class 4 Claims Fund, as applicable), as
determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on
such Claim, the Liquidating LLC may elect to pursue any supplemental proceedings to object to any
ultimate payment on such Claim.




			
	Section 9.3	 	Cumulative Remedies








     All of the aforementioned Claims objection, estimation and resolution procedures are
cumulative and not necessarily exclusive of one another. Claims may be estimated and subsequently
compromised, settled, withdrawn or resolved or provided herein or by any mechanism approved by the
Bankruptcy Court. Until such time as such a Claim becomes Allowed, such Claim shall be treated as
a Disputed Claim for purposes related to allocations, Distributions and voting under this Plan.




			
	Section 9.4	 	Payments and Distributions on Disputed Claims








     (a) Notwithstanding any provision in the Plan to the contrary, except as otherwise agreed by
the LLC Agents in their sole discretion, no partial payments and no partial distributions will be
made with respect to a



31









 







Disputed Claim until the resolution of such dispute by settlement or Final Order. Subject to
the provisions of this Article IX, as soon as practicable after a Disputed Claim becomes an Allowed
Claim, the Holder of such Allowed Claim will receive all payments and Distributions to which such
Holder is then entitled under the Plan as the Holder of an Allowed Claim. Notwithstanding the
foregoing, any Person or Entity who holds both an Allowed Claim(s) and a Disputed Claim(s) will
receive the appropriate payment or distribution on the Allowed Claim(s), although, except as
otherwise agreed by the Liquidating LLC in its sole discretion, no payment or distribution will be
made on the Disputed Claim(s) until such dispute is resolved by settlement or Final Order.



     (b) Following the resolution of a dispute by settlement or Final Order pursuant to Section
9.4(a), if a Disputed Priority Claim becomes an Allowed Claim after the Effective Date, the amount
of the Disputed Priority Claims Fund attributable to such Disputed Priority Claim shall be released
from the Disputed Priority Claims Fund for purposes of making Distributions as required by the Plan
to the Holder of such Allowed Claim and any excess shall constitute Available Cash. If a Disputed
Priority Claim becomes Disallowed after the Effective Date, the entire amount of the Disputed
Priority Claims Fund attributable to such Disputed Priority Claim shall constitute Available Cash.



     (c) If the Debtors elect the LLC Option and if a Disputed Class 4 General Unsecured Claim
becomes an Allowed Claim after the Effective Date following the resolution of a dispute by
settlement or Final Order pursuant to Section 9.4(a), the amount of the Disputed General Unsecured
Claims Fund attributable to such Disputed Class 4 General Unsecured Claim shall be released from
the Disputed General Unsecured Claims Fund for purposes of making Distributions as required by the
Plan to the Holder of such Allowed Claim and any excess shall constitute Available Cash. If a
Disputed Class 4 General Unsecured Claim becomes Disallowed after the Effective Date, the entire
amount of the Disputed General Unsecured Claims Fund attributable to such Disputed Class 4 General
Unsecured Claim shall constitute Available Cash.



     (d) If the Debtors elect the Cash Option and if a Disputed Accepting Class 4 Claim becomes an
Allowed Claim after the Effective Date following the resolution of a dispute by settlement or Final
Order pursuant to Section 9.4(a), the amount of the Accepting Class 4 Claims Fund attributable to
such Accepting Class 4 Claim shall be released from the Accepting Class 4 Claims Fund for purposes
of making Distributions as required by the Plan to the Holder of such Allowed Accepting Class 4
Claim and any excess shall constitute Available Cash. If a Disputed Accepting Class 4 Claim
becomes Disallowed after the Effective Date, the entire amount of the Accepting Class 4 Claims Fund
attributable to such Disputed Accepting Class 4 Claim shall constitute Available Cash.



     (e) If the Debtors elect the Cash Option and if a Disputed Nonaccepting Class 4 Claim becomes
an Allowed Claim after the Effective Date following the resolution of a dispute by settlement or
Final Order pursuant to Section 9.4(a), the amount of the Nonaccepting Class 4 Claims Fund
attributable to such Disputed Nonaccepting Class 4 Claim shall be released from the Nonaccepting
Class 4 Claims Fund for purposes of making Distributions as required by the Plan to the Holder of
such Allowed Claim and any excess shall constitute Available Cash. If a Disputed Nonaccepting
Class 4 Claim becomes Disallowed after the Effective Date, the entire amount of the Nonaccepting
Class 4 Claims Fund attributable to such Disputed Nonaccepting Class 4 Claim shall constitute
Available Cash.




			
	Section 9.5	 	Allowance of Claims








     (a) Disallowance of Claims: Pursuant to sections 105 and 502(d) of the Bankruptcy Code, no
Distributions will be made to Holders of Claims held by Entities from which property is recoverable
under sections 542, 543, 550, 553, 522(f), 522(h), 544, 545, 547, 548, 549 or 724(a) of the
Bankruptcy Code (including the Rights of Action) until such time as such Causes of Action against
that Entity have been settled or resolved by a Final Order and all sums due to the respective
Debtor or the Liquidating LLC are turned over to the Debtors or the Liquidating LLC. Until such
time as any such claim has been settled or resolved by Final Order, the Liquidating LLC shall
maintain a reserve in respect of such claim in accordance with Section 8.3 hereof.



     (b) Allowance of Claims: Except as expressly provided in this Plan, no Claim shall be deemed
Allowed by virtue of this Plan, Confirmation, or any order of the Bankruptcy Court in the Chapter
11 Cases, unless and until such Claim is deemed Allowed under the Bankruptcy Code.



32









 





ARTICLE X




CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE OF THE PLAN





			
	Section 10.1	 	Conditions Precedent to Confirmation








     It shall be a condition to Confirmation of the Plan that all provisions, terms and conditions
of the Plan shall have been approved in the Confirmation Order or waived pursuant to the provisions
of Section 10.3 below.




			
	Section 10.2	 	Conditions Precedent to Occurrence of the Effective Date








     It shall be a condition to the Effective Date of the Plan that the following conditions shall
have been satisfied or waived pursuant to the provisions of Section 10.3 of the Plan:



     (a) the Confirmation Order shall have been approved by the Bankruptcy Court and duly entered
on the docket for the Chapter 11 Cases by the Clerk of the Bankruptcy Court, shall not be subject
to a pending motion pursuant to section 1144 of the Bankruptcy Code and shall have become a Final
Order;



     (b) there shall not be in effect any order, law or regulation staying, restraining, enjoining
or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated
by the Plan;



     (c) all consents, approvals and actions of, filings with and notices to any governmental or
regulatory authority necessary to permit the Liquidating LLC and Reorganized AOLA LLC to perform
their respective obligations under the Plan and to permit the Liquidating LLC and Reorganized AOLA
LLC to consummate the transactions contemplated hereby shall have been duly obtained, made or given
and shall be in full force and effect, and all terminations or expirations of waiting periods
imposed by any governmental or regulatory authority necessary for the consummation of the
transactions contemplated by the Plan shall have occurred;



     (d) the AOLA Limited Liability Company Agreement and the AOLA Certificate of Conversion to
Limited Liability Company shall have been filed with the Secretary of State of the State of
Delaware;



     (e) The Debtors shall have sufficient Cash and Assets to permit compliance with the terms and
conditions of this Plan, including the payment or reservation for payment of the Retention Payment
Fund, Administrative Claims Reserve Fund and Allowed Priority Claims;



     (f) If the Cash Option is elected, the Debtors shall have sufficient Cash to pay, or reserve
for the payment of, all Class 4 Claims;



     (g) The Liquidating LLC shall have been created pursuant to the terms of this Plan, the LLC
Agents shall have been identified and appointed and the Liquidating LLC Agreement shall have been
duly executed and delivered in form and substance acceptable to the Debtors and the Principal
Stockholders;



     (h) AOL and the Debtors shall have agreed in writing on the amounts due by AOL to be paid to
AOLA under the PR Agreement on or after the PR Transfer Date;



     (i) AOL shall have paid to the Liquidating LLC all amounts due to be paid to the Debtors on or
prior to the Effective Date pursuant to Section 6.1(b);



     (j) The Debtors (1) shall have assumed and assigned the PR Agreement and assigned, transferred
and conveyed substantially all of the Other PR Assets to the applicable TW Parties in accordance
with Section 3.3(c) of this Plan free of any lien, claim or encumbrance except as otherwise agreed
by the TW Parties and except as set forth in clause (3) below; (2) shall have executed and
delivered instruments of assignment and documents as required by law or as reasonably requested by
the TW Parties to evidence such assignments and transfers; and (3) between January 17, 2006 and the
Effective Date, shall not knowingly have taken any action to further encumber any of the Other PR
Assets except as otherwise agreed by the TW Parties; provided, that any such lien, claim or



33









 







encumbrance existing or arising as a result of a pre-existing contractual provision,
applicable law, local practice or specific direction of the Special Committee of AOLA’s Board of
Directors shall not constitute a breach of this clause (3) or clause (1) above; provided, further,
that such assignment, transfer and conveyance shall be on an as-is where-is basis, without any
further representations or warranties and with no right of indemnity against the Debtors other than
indemnity for willful breach of clause (3) of this sub-section (j);



     (k) The Shut-Down Costs Letter Agreement shall be in full force and effect; and



     (l) all other actions and documents necessary to implement the provisions of the Plan on the
Effective Date shall have been, respectively, effected or duly executed and delivered.




			
	Section 10.3	 	Waiver of Conditions








     The Debtors, with the consent of the Principal Stockholders, may waive any of the conditions
precedent to Confirmation of the Plan and occurrence of the Effective Date set forth in this
Article X of the Plan at any time, without notice, without leave or order of the Bankruptcy Court,
and without any formal action other than a proceeding to confirm and/or consummate the Plan.




			
	Section 10.4	 	Effect of Non-Occurrence of Effective Date Conditions








     If the conditions to occurrence of the Effective Date have not been satisfied or waived in
accordance with this Article X on or before the first Business Day that is more than 120 days after
the Confirmation Date or by such later date as is approved by the Bankruptcy Court after notice and
a hearing, then on motion by the Debtors made prior to the time that all of the conditions have
been satisfied or waived, the Bankruptcy Court may vacate the Confirmation Order and the
Confirmation Order shall be of no force and effect. Notwithstanding the foregoing, the
Confirmation Order shall not be vacated if all of the conditions to the occurrence of the Effective
Date set forth in this Article X are either satisfied or waived, in accordance with the terms
hereof, prior to entry by the Bankruptcy Court of an order granting the relief requested in such
motion.



     If the Confirmation Order is vacated, the Plan shall be null and void in all respects and
nothing contained in the Plan or the Disclosure Statement shall: (1) constitute a waiver or
release of any Claims by or against, or any Equity Interests in, the Debtors; (2) prejudice in any
manner the rights of the Debtors, or (3) constitute an admission, acknowledgment, offer or
undertaking by the Debtors in any respect.




			
	Section 10.5	 	Substantial Consummation of Plan








     Substantial consummation of the Plan under Bankruptcy Code section 1101(2) shall be deemed to
occur on the Effective Date.



ARTICLE XI




RELEASE, INJUNCTIVE AND RELATED PROVISIONS





			
	Section 11.1	 	Subordination








     The classification and manner of satisfying all Claims and Equity Interests and the respective
Distributions and treatments under the Plan take into account or conform to the relative priority
and rights of the Claims and Equity Interests in each Class in connection with any contractual,
legal and equitable subordination rights relating thereto whether arising under general principles
of equitable subordination, section 510(b) and 510(c) of the Bankruptcy Code or otherwise, and any
and all such rights are settled, compromised and released pursuant to the Plan. The Confirmation
Order shall permanently enjoin, effective as of the Effective Date, all Persons and Entities from
enforcing or attempting to enforce any such contractual, legal and equitable subordination rights
satisfied, compromised and settled pursuant to this Article XI.



34









 






			
	Section 11.2	 	Releases








     In consideration of (i) the contributions of certain parties to the Chapter 11 Cases and the
waivers of Claims, rights and Causes of Action in Article VII, including, but not limited to, the
waiver by certain parties (or their affiliates) of rights against one or more of the Debtors and
(ii) the Series C Beneficial Interests distributed pursuant to Sections 3.3(c), 3.3(e) and 5.11
hereof, the Plan provides for certain waivers, exculpations, releases and injunctions.



     (a) Releases by Debtors and Liquidating LLC. On and after the Effective Date, the Debtors,
Reorganized AOLA LLC, and the Estates and the Liquidating LLC hereby release and forever discharge:




	 	(i)	 	all Released Parties and their respective agents (including any
attorneys, accountants, advisors, investment bankers and other representatives
or professionals retained by such Entities or Persons), and any successors or
assigns of the foregoing; and
	 
	 	(ii)	 	the property of each of the foregoing Persons and Entities,





from any and all Claims and from all Causes of Action that the Debtors or their direct or indirect
subsidiaries would have been legally entitled to assert in their own right (whether individually or
collectively) or on behalf of the Holder of any Claim or Equity Interest or other Person or Entity,
based in whole or in part upon any act or omission, transaction, agreement, event or other
occurrence taking place on or before the Effective Date for Claims or liabilities in connection
with or related to the Debtors, the Debtors’ direct and indirect subsidiaries, the Chapter 11 Cases
or the Plan; provided, however, that the foregoing provisions of this Section 11.2(a) shall have no
effect on the liability of any Person or Entity that results from any such act or omission that is
judicially determined in a Final Order to have constituted gross negligence, willful misconduct,
fraud or criminal conduct.



     (b) Releases by Holders of Claims. On and after the Effective Date, each Holder of an
Accepting Class 4 Claim shall be deemed to have unconditionally and fully waived, released and
forever discharged the Released Parties and each of the Released Parties’ respective agents
(including any attorneys, accountants, advisors, investment bankers and other representatives or
professionals retained by such Entities or Persons), and any successors or assigns of the
foregoing, and the property of each of the foregoing Entities or Persons from any and all Claims or
Causes of Action based in whole or in part upon any act or omission, transaction, agreement, event
or other occurrence taking place on or before the Effective Date in any way relating to or
pertaining to (i) the Debtors, the Liquidating LLC or the LLC Agents, (ii) the Chapter 11 Cases and
(iii) the negotiation, formulation and preparation of the Plan; provided, however, that the
foregoing provisions of this Section 11.2(b) shall have no effect on the liability of any Person or
Entity that results from any such act or omission that is judicially determined in a Final Order to
have constituted gross negligence, willful misconduct, fraud or criminal conduct.



     (c) Mutual Releases by and of the Principal Stockholders and the Senior Officers. On and
after the Effective Date, in accordance with the Secured Retention Bonuses Orders, each Senior
Officer and each of the Principal Stockholders, shall be deemed to have released each other, and
the property of each other from any and all Claims or Causes of Action whatsoever based in whole or
in part upon any act or omission, transaction, agreement, event or other occurrence taking place on
or before the Effective Date in any way relating to or pertaining to (i) the Debtors, the
Liquidating LLC or the LLC Agents, (ii) the Chapter 11 Cases and (iii) the negotiation, formulation
and preparation of the Plan; provided, however, that the foregoing shall have no effect on the
liability of any Person or Entity that results from any such act or omission that is judicially
determined in a Final Order to have constituted gross negligence, willful misconduct, fraud or
criminal conduct.



     (d) Mutual Releases by and of the Released Parties. On and after the Effective Date, each of
the Released Parties shall be deemed to have released unconditionally each of the other Released
Parties, and the property of each of foregoing Persons or Entities from any and all Claims or
Causes of Action based in whole or in part upon any act or omission, transaction, agreement, event
or other occurrence taking place on or



35









 







before the Effective Date in any way relating to or pertaining to (i) the Debtors, the
Liquidating LLC or the LLC Agents, (ii) the Chapter 11 Cases and (iii) the negotiation, formulation
and preparation of the Plan; provided, however, that the foregoing provisions of this Section
11.2(c) shall have no effect on the liability of any Person or Entity that results from any such
act or omission that is judicially determined in a Final Order to have constituted gross
negligence, willful misconduct, fraud or criminal conduct.



     (e) Notwithstanding any provision of this Plan to the contrary, the foregoing provisions of
this Section 11.2 shall not act to release the Debtors, Reorganized AOLA LLC, the Liquidating LLC
or any other Person from any amounts expressly payable by the Debtors, Reorganized AOLA LLC, the
Liquidating LLC or such Person under this Plan or any express obligations by the Debtors,
Reorganized AOLA LLC, the Liquidating LLC or such Person pursuant to this Plan.




			
	Section 11.3	 	Exculpation and Limitation of Liability








     (a) None of the Debtors, the Estates, the Released Parties, nor any of the foregoing Entities’
or Persons’ respective agents (including any attorneys, accountants, advisors, investment bankers
and other representatives or professionals retained by such Entities or Persons), and no successors
or assigns of the foregoing, shall have or incur any liability to any Person or Entity, whether
arising under contract, tort, federal or state securities laws, whether known or unknown, foreseen
or unforeseen, existing or arising in the future, for any pre-petition or post-petition act or
omission in connection with, relating to, or arising out of the Chapter 11 Cases, including,
without limitation, the formulating, negotiating or implementing of this Plan, the solicitation of
acceptances of this Plan, the pursuit of confirmation of this Plan, the confirmation of this Plan,
the consummation of this Plan, or the administration of this Plan or the property to be distributed
under this Plan, except for any such act or omission that is determined in a Final Order to have
constituted gross negligence, willful misconduct, fraud or criminal conduct and, in all respects,
shall be entitled to rely upon the advice of counsel with respect to their duties and
responsibilities in the Chapter 11 Cases and under this Plan.



     (b) Notwithstanding any other provision of this Plan, no Holder of a Claim or Equity Interest,
no other party in interest, none of their respective agents, employees, representatives, financial
advisors, attorneys, or affiliates, and no successors or assigns of the foregoing, shall have any
right of action against the Liquidating LLC, the LLC Agents, or any of their respective present or
former members, officers, directors, employees, advisors or attorneys, for any act or omission in
connection with, relating to, or arising out of, the Chapter 11 Cases, formulating, negotiating or
implementing this Plan, the consummation of this Plan, the confirmation of this Plan, or the
administration of this Plan or the property to be distributed under this Plan, except to the extent
any such act or omission is judicially determined in a Final Order to have constituted gross
negligence, willful misconduct, fraud or criminal conduct or except on account of a Beneficial
Interest distributed to such Holder under the Plan.




			
	Section 11.4	 	Injunction








     (a) On and after the Effective Date, except as otherwise expressly provided in this Plan or
the Confirmation Order, all Persons and Entities who have held, currently hold or may hold a Claim
against or Equity Interest in the Debtors (whether directly or indirectly and whether as a
beneficial holder of such Claim or Equity Interest or as a holder of record of such Claim or Equity
Interest or otherwise) are permanently enjoined, from and after the Confirmation Date and subject
to the occurrence of the Effective Date, from: (i) commencing or continuing in any manner
(including by directly or indirectly assisting or facilitating the commencement or continuation of)
any action or other proceeding of any kind on any such Claim or Equity Interest against the
Debtors, the Estates, Reorganized AOLA LLC, the Liquidating LLC, the LLC Agents or their respective
properties; (ii) enforcing, attaching, collecting or recovering in any manner or means of any
judgment, award, decree or order against the Debtors, the Estates, Reorganized AOLA LLC, the
Liquidating LLC, the LLC Agents or their respective properties on account of any such Claim or
Equity Interest; (iii) creating, perfecting, or enforcing any Lien or encumbrance of any kind
against the Debtors, the Estates, Reorganized AOLA LLC, the Liquidating LLC or the LLC Agents or
against the property or interests in property of any of the foregoing Persons or Entities on
account of any such Claim or Equity Interest; (iv) asserting any setoff, right of subrogation or
recoupment of any kind against any



36









 







obligation due from the Debtors, the Estates, Reorganized AOLA LLC, the Liquidating LLC, the
LLC Agents or against the properties or interests in property of any of the foregoing Persons or
Entities on account of any such Claim or Equity Interest; (v) authenticating, delivering or
facilitating the delivery of any certificate, including any global note or certificate or other
documents evidencing a Holder’s TW Notes or interest in the TW Notes; and (vi) commencing,
continuing or in any manner taking part or participating in any action, proceeding or event
(whether directly or indirectly) that would be in contravention of the terms, conditions and intent
of the Plan, including the releases and exculpations provided in Section 11.2 and Section 11.3 of
this Plan. The foregoing injunction will extend to the benefit of the successors of the Debtors
(including, without limitation, Reorganized AOLA LLC), the Liquidating LLC, the LLC Agents and the
Persons and Entities entitled to the benefit of the releases and exculpations provided in Section
11.2 and Section 11.3 of this Plan, and their respective properties and interests in property. Any
person injured by any willful violation of such injunction may recover actual damages, including
costs and attorneys’ fees and, in appropriate circumstances, may recover punitive damages from the
willful violator.



     (b) All injunctions or stays contained in this Plan or any Final Order shall remain in full
force and effect in accordance with their terms, or as provided in the Bankruptcy Code.



     (c) With respect to the matters within the scope of Section 12.1(w) herein, all Persons and
Entities shall be and are permanently enjoined from commencing or continuing any such matter except
in the Bankruptcy Court and the Bankruptcy Court shall retain jurisdiction over such matters as set
forth in Article XII.




			
	Section 11.5	 	Indemnification








     The Liquidating LLC shall indemnify and hold harmless (i) the LLC Agents, (ii) all Persons
employed by the Liquidating LLC, and (iii) all professionals and other agents retained by the
Liquidating LLC and/or the LLC Agents (collectively, the “Indemnified Parties”), from and against
and with respect to any and all liabilities, losses, damages, claims, costs and expenses, including
but not limited to attorneys’ fees arising out of or due to their actions or omissions, or
consequences of such actions or omissions, with respect to the Debtors or the implementation or
administration of this Plan, if the Indemnified Parties acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the Debtors, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe its conduct was unlawful.
To the extent the Liquidating LLC indemnifies and holds harmless the Indemnified Parties as
provided above, the legal fees and costs related to the defense of such claims giving rise to the
right of indemnification shall be paid by the Liquidating LLC.




			
	Section 11.6	 	Term of Existing Injunctions or Stays








     Unless otherwise provided, all injunctions or stays provided for in the Chapter 11 Cases
pursuant to sections 105, 362 or 525 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective Date, and thereafter
shall be annulled, except as provided for herein.



ARTICLE XII




RETENTION OF JURISDICTION





			
	Section 12.1	 	Retention of Jurisdiction








     Notwithstanding the entry of the Confirmation Order or the occurrence of the Effective Date,
the Bankruptcy Court shall retain exclusive jurisdiction (except with respect to the matters within
the scope of Sections 12.1(u), (v), (w), (x) and (y), as to which jurisdiction shall be
non-exclusive to the extent such matters are not specifically related to the Chapter 11 Cases, this
Plan or any transaction contemplated herein), over all matters arising out of, and related to, the
Plan, the Confirmation Order and the Chapter 11 Cases to the fullest extent permitted by law,
including, without limitation, jurisdiction to:



37









 





     (a) Hear and determine any timely objections to Administrative Claims or to proofs of Claims
and Interests filed, both before and after the Effective Date, including any objections to the
classification of any Claim or Interest, and to allow, disallow, determine, liquidate, classify,
estimate or establish the priority of, or secured or unsecured status of, any Claim, in whole or in
part;



     (b) Grant or deny any applications for allowance of compensation for services rendered and
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan, for periods
ending on or before the Effective Date;



     (c) Resolve any matters related to the assumption, assumption and assignment or rejection of
any executory contract or unexpired lease to which any of the Debtors was or is a party or with
respect to which the Debtors may be liable and to hear, determine and, if necessary, liquidate, any
Claims arising therefrom, including those matters related to the amendment after the Effective Date
pursuant to Article VI hereof to add any executory contracts or unexpired leases to the list of
executory contracts and unexpired leases to be rejected;



     (d) Ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the
provisions of the Plan, including ruling on any motion filed pursuant to Article VIII;



     (e) Decide or resolve any and all motions, adversary proceedings, applications and contested
or litigated matters that may be pending on the Effective Date or that, pursuant to this Plan, may
be instituted by the Liquidating LLC after the Effective Date (to the extent such venue is selected
by the Liquidating LLC);



     (f) Enter such orders and take other actions as may be necessary or appropriate to implement
or consummate the provisions of the Plan and the Confirmation Order, including, but not limited to,
modification or amendment thereof pursuant to Section 13.3 of the Plan, and all contracts,
instruments, releases, transactions and other agreements or documents created in connection with
this Plan;



     (g) Resolve any cases, controversies, suits or disputes that may arise in connection with or
relating to this Plan, the interpretation, implementation or enforcement of this Plan, or any
Person’s or Entity’s obligations incurred in connection with the Plan;



     (h) Issue injunctions, enter and implement other orders or take such other actions as may be
necessary or appropriate to restrain interference by any Person or Entity with the occurrence of
the Effective Date or enforcement of the Plan, except as otherwise provided herein;



     (i) Resolve any cases, controversies, suits or disputes with respect to the releases,
injunction and other provisions contained in Article X and enter such orders as may be necessary or
appropriate to implement such releases, injunction and other provisions;



     (j) Enter and implement such orders as are necessary or appropriate if the Confirmation Order
is for any reason modified, stayed, reversed, revoked or vacated;



     (k) Determine any other matters that may arise in connection with or relate to the Plan, the
Disclosure Statement, the Confirmation Order or any contract, instrument, release or other
agreement or document created in connection with the Plan or the Disclosure Statement;



     (l) Enter an order or Final Decree concluding the Chapter 11 Cases;



     (m) Resolve any disputes concerning whether a Person or Entity had sufficient notice of the
Chapter 11 Cases, the applicable Claims Bar Date, if any, the hearing on the approval of the
Disclosure Statement as containing adequate information, the hearing on the Confirmation of this
Plan for the purpose of determining whether a Claim or Equity Interest is discharged hereunder or
for any other purpose;



     (n) Recover all assets of the Debtors and property of the Estate, wherever located, including
any Causes of Action under sections 554 through 550 of the Bankruptcy Code;



38









 





     (o) Hear and resolve all matters concerning state, local, and federal taxes in accordance with
sections 346, 505 and 1146 of the Bankruptcy Code;



     (p) Hear and resolve all matters involving the nature, existence or scope of the Debtors’
discharge;



     (q) Effectuate performance of or payment of all obligations under the Plan;



     (r) Consider any modifications of this Plan, to cure any defect or omission, or reconcile any
inconsistency in any order of the Bankruptcy Court, including the Confirmation Order;



     (s) Issue orders in aid of execution of this Plan;



     (t) Hear any other matter or for any purpose specified in the Confirmation Order that is not
inconsistent with the Bankruptcy Code, including the allowance or disallowance and classification
of late-filed proofs of claim in accordance with Rule 9006(b) of the Bankruptcy Rules;



     (u) Resolve matters that may arise in connection with the Liquidating LLC or the Liquidating
LLC Agreement;



     (v) Issue orders and hear matters in connection with Reorganized AOLA LLC’s sale or
disposition of AOL Spain, AOL Brazil or AOL Mexico;



     (w) Issue orders or hear matters in connection with the dissolution of QuotaHolder;



     (x) Resolve any actions or controversies by the LLC Agents or the LLC Administrator;



     (y) Resolve any actions or controversies against the LLC Agents or the LLC Administrator; and



     (z) Resolve any matter relating to or arising out of any action or act taken or omission in
connection with or related to the formulation, preparation, dissemination, implementation,
administration, confirmation or consummation of this Plan, the Disclosure Statement or any
contract, instrument, release or other agreement or document created or entered into in connection
with this Plan or any other act or omission taken or to be taken in connection with the Chapter 11
Cases commenced against any party in the Chapter 11 Cases, including, without limitation, the
Liquidating LLC, the Debtors, Reorganized AOLA LLC, the Principal Stockholder and their respective
current and former directors and officers, members, agents, advisors, attorneys, advisors and other
professionals and Entities employed pursuant to sections 327 and 1103 of the Bankruptcy Code.



ARTICLE XIII




MISCELLANEOUS PROVISIONS





			
	Section 13.1	 	Title to Assets








     Except as otherwise provided by this Plan, on the Effective Date, title to all Assets shall
vest in the Liquidating LLC in accordance with section 1141 of the Bankruptcy Code, for purposes of
distribution in accordance with the Plan and the Liquidating LLC Agreement.




			
	Section 13.2	 	Releases of All Liens








     On the Effective Date, all Liens on any of the Assets shall be deemed to be released and
Claims related thereto shall be paid pursuant to this Plan.



39









 






			
	Section 13.3	 	Modification of Plan








     Subject to obtaining the approval of the Principal Stockholders, the Debtors reserve the
right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to alter, amend or modify
the Plan prior to the entry of the Confirmation Order. After the entry of the Confirmation Order,
subject to obtaining the approval of the Principal Stockholders, the Debtors or the LLC Agents, as
the case may be, may amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy
Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as
may be necessary to carry out the purpose and intent of the Plan. A Holder of a Claim that has
accepted the Plan shall be deemed to have accepted the Plan as altered, amended, modified or
clarified in accordance with this Article XIII, unless the proposed alteration, amendment,
modification or clarification adversely changes the treatment of the Claim of such Holder.




			
	Section 13.4	 	Discharge of Debtors








     Consistent with section 1141(d)(3) of the Bankruptcy Code, this Plan does not grant AOL
Caribbean Basin, AOL Management LLC and Puerto Rico Management Services a discharge.
Notwithstanding the foregoing, except as otherwise provided herein, (1) the rights afforded in this
Plan and the treatment of all Claims and Equity Interests shall be in exchange for and in complete
satisfaction, discharge and release of such Claims and Equity Interests of any nature whatsoever,
including any interest accrued on such Claims from and after the Petition Date, against the
Debtors, the Liquidating LLC and any of their Assets or properties, and (2) on the Effective Date,
all such Claims against, and Equity Interests in the Debtors shall be satisfied and released in
full and (3) all Persons and Entities shall be precluded from asserting against the Debtors, the
Liquidating LLC or any of their Assets or properties any other or further Claims or Equity
Interests based upon any act or omission, transaction or other activity of any kind or nature that
occurred before the Confirmation Date.




			
	Section 13.5	 	Revocation of Plan








     The Debtors reserve the right to revoke and withdraw the Plan at any time prior to the
Confirmation Date. If the Plan is so revoked or withdrawn, or if the Effective Date does not
occur, then the Plan shall be deemed null and void, and of no force or effect.




			
	Section 13.6	 	Successors and Assigns








     The rights, benefits and obligations of any Person or Entity named or referred to in the Plan
shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor
or assign of such Person or Entity.




			
	Section 13.7	 	Retention and Destruction of Records








     From and after the Effective Date, the Debtors, the Liquidating LLC, Reorganized AOLA LLC and
any custodian, attorney, accountant, or other person that holds recorded information, including
books, documents, records, and papers, relating to the Assets, operations or financial affairs of
the Debtors, the Liquidating LLC or Reorganized AOLA LLC may destroy such recorded information in
accordance with applicable law.




			
	Section 13.8	 	Post-Effective Date Fees and Expenses








     From and after the Effective Date, the Liquidating LLC may, in the ordinary course of business
and without the necessity for any approval by the Bankruptcy Court, pay the reasonable professional
fees and expenses incurred by the LLC Agents and the Liquidating LLC related to implementation and
consummation of this Plan.




			
	Section 13.9	 	Allocation of Payments








     Unless required by law, To the extent that any Allowed Claim entitled to a distribution under
the Plan is comprised of indebtedness and accrued but unpaid interest thereon, such distribution
shall be allocated, for income



40









 





tax purposes, to the principal amount of the Claim first and then, to the extent the
consideration exceeds the principal amount of the Claim, to the portion of such Claim representing
accrued but unpaid interest.




			
	Section 13.10	 	Section 1145 Exemption








     Pursuant to section 1145(a) of the Bankruptcy Code, the offer, issuance, transfer or exchange
of any security under the Plan, or the making or delivery of an offering memorandum or other
instrument of offer or transfer under this Plan, shall be exempt from section 5 of the Securities
Act or any similar state or local law requiring the registration for offer or sale of a security or
registration or licensing of an issuer or a security.




			
	Section 13.11	 	Headings








     Headings utilized in the Plan are for the convenience of reference only and shall not
constitute a part of the Plan for any other purpose.




			
	Section 13.12	 	Governing Law








     Except to the extent that other federal law is applicable, or to the extent that an exhibit
hereto or to the Plan Supplement provides otherwise, the rights, duties and obligations arising
under this Plan shall be governed by, and construed and enforced in accordance with, the Bankruptcy
Code and, to the extent not inconsistent therewith, the laws of the State of New York.




			
	Section 13.13	 	Severability








     If, prior to entry of the Confirmation Order, any term or provision of the Plan is held by the
Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court, at the request of the
Debtors (upon the prior written consent of the Principal Stockholders), shall have the power to
alter and interpret such term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held to be invalid, void
or unenforceable, and such term or provision shall then be applicable as so altered or interpreted.
Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and
provisions of the Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated by such holding, alteration or interpretation. The Confirmation Order
shall constitute a judicial determination and shall provide that each term and provision of the
Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.




			
	Section 13.14	 	Implementation








     The Debtors shall take all steps, and execute all documents, including appropriate releases,
necessary to effectuate the provisions contained in this Plan.




			
	Section 13.15	 	Inconsistency








     In the event of any inconsistency among the Plan, the Disclosure Statement, any exhibit to the
Plan or to the Plan Supplement or any other instrument or document created or executed pursuant to
the Plan, the provisions of the Plan shall govern.




			
	Section 13.16	 	Further Assurances








     The Debtors, Reorganized AOLA LLC, the Liquidating LLC, the LLC Agents and all Holders of
Claims and Equity Interests receiving Distributions under the Plan and all other parties in
interest shall, from time to time, prepare, execute and deliver any agreements or documents and
take any other actions as may be necessary or advisable to effectuate the provisions and intent of
this Plan.



41









 






			
	Section 13.17	 	Service of Documents








     Any pleading, notice or other document required by the Plan to be served on or delivered to
the Debtors, Reorganized AOLA LLC or the Liquidating LLC shall be sent by first class U.S. mail,
postage prepaid to:



     On behalf of the Debtors:




			
	          	 	Douglas P. Bartner

Michael H. Torkin

Michael Pardo

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Telephone: (212) 848-4000

Facsimile: (212) 848-7179


          - and –









			
	          	 	Pauline K. Morgan

Edmon L. Morton

Young Conaway Stargatt & Taylor, LLP

The Brandywine Building

1000 West Street, 17th Floor

Wilmington, Delaware 19801

Telephone: (302) 571-6600

Facsimile: (302) 571-1253









     On behalf of the Liquidating LLC and Reorganized AOLA LLC:




			
	          	 	As set forth in a notice to be included in the Plan
Supplement.








     On behalf of the TW Parties:




			
	          	 	Elisha D. Graff

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Telephone: (212) 455-2000

Facsimile: (212) 455-2502









     On behalf of Aspen Investments LLC and Atlantis Investments LLC:




			
	          	 	Aspen Investments LLC and Atlantis Investments LLC

c/o Finser Corp.

555 Biltmore Way, Suite 900

Coral Gables, FL 33134

Attn: Joan Jensen, Esq.


          - and -


Benjamin Mintz

Kaye Scholer LLP

425 Park Avenue

New York, New York 10022








42









 






			
	 	 	
Telephone: (212) 836-8000

Facsimile: (212) 836-6550








     On behalf of the US Trustee:




			
	          	 	Office of the United States Trustee

Attn: David M. Klauder, Esq.

J. Caleb Boggs Federal Building,

844 King Street, 2nd Floor,

Wilmington, Delaware 19801









			
	Section 13.18	 	Exemption from Certain Transfer Taxes








     Pursuant to section 1146 of the Bankruptcy Code: (a) the issuance, transfer or exchange of
any securities, instruments or documents; (b) the creation of any other Lien, mortgage, deed of
trust or other security interest; (c) the making or assignment of any lease or sublease or the
making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance
of, or in connection with the Plan, including, without limitation, any deeds, bills of sale or
assignments executed in connection with any of the transactions contemplated under the Plan or the
reinvesting, transfer or sale of any real or personal property of the Debtors pursuant to, in
implementation of, or as contemplated in the Plan, and (d) the issuance, renewal, modification or
securing of indebtedness by such means, and the making, delivery or recording of any deed or other
instrument of transfer under, in furtherance of, or in connection with, the Plan, including,
without limitation, the Confirmation Order, shall not be taxed under any law imposing a stamp tax
or similar tax. Consistent with the foregoing, each recorder of deeds or similar official for any
county, city or governmental unit in which any instrument hereunder is to be recorded shall,
pursuant to the Confirmation Order, be ordered and directed to accept such instrument without
requiring the payment of any stamp tax or similar tax.




			
	Section 13.19	 	Compromise of Controversies








     Pursuant to Bankruptcy Rule 9019, and in consideration for the classification, distribution
and other benefits provided under the Plan, the provisions of this Plan shall constitute a good
faith compromise and settlement of all Claims or controversies resolved pursuant to the Plan. The
entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of each of the
foregoing compromises or settlements, and all other compromises and settlements provided for in the
Plan, and the Bankruptcy Court’s findings shall constitute its determination that such compromises
and settlements are in the best interests of the Debtors, Reorganized AOLA LLC, the Estates, and
any Entity holding Claims against the Debtors.




			
	Section 13.20	 	No Admissions








     Notwithstanding anything herein to the contrary, nothing contained in the Plan shall be deemed
as an admission by an Entity with respect to any matter set forth herein.




			
	Section 13.21	 	Filing of Additional Documents








     On or before the Effective Date, the Debtors may file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan.




			
	Section 13.22	 	Continuing Viability of Other Orders








     Except to the extent expressly modified by this Plan, all Final Orders shall continue in full
force and effect.



43









 






			
	Section 13.23	 	Closing of Cases








     The LLC Agents shall, promptly upon the full administration of the Chapter 11 Cases, file with
the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the
Bankruptcy Court to obtain a Final Decree closing the Chapter 11 Cases.



44









 






			
	Dated:	 	Wilmington, Delaware

January 17, 2006








	 	 	 	 	 
	 	AMERICA ONLINE LATIN AMERICA, INC.

 	 
	 	By:  	/s/ Charles M. Herington
 	 
	 	 	Name:  	Charles M. Herington 	 
	 	 	Title:  	President and CEO 	 
	 
	 	AOL PUERTO RICO MANAGEMENT SERVICES, INC.

 	 
	 	By:  	/s/ Mario Martin Lanzoni
 	 
	 	 	Name:  	Mario Martin Lanzoni 	 
	 	 	Title:  	Treasurer 	 
	 
	 	AMERICA ONLINE CARIBBEAN BASIN, INC.

 	 
	 	By:  	/s/ Mario Martin Lanzoni
 	 
	 	 	Name:  	Mario Martin Lanzoni 	 
	 	 	Title:  	Treasurer 	 
	 
	 	AOL LATIN AMERICA MANAGEMENT LLC

 	 
	 	By:  	/s/ Charles M. Herington
 	 
	 	 	Name:  	Charles M. Herington 	 
	 	 	Title:  	Manager 	 
	 




45










 



Exhibit A




Shut-Down Costs Letter Agreement




 








 





 




			
	Time Warner Inc.

One Time Warner Center

New York, NY 10019
	 	America Online, Inc.

22000 AOL Way

Dulles, VA 20166






January 17, 2006




America Online Latin America, Inc.

6600 N. Andrews Avenue, Suite 400

Ft. Lauderdale, Florida 33309

Attn: President




Aspen Investments LLC

c/o Finser Corporation

550 Biltmore Way, Suite 900

Coral Gables, FL 33134

Attn: President




Atlantis Investments LLC

c/o Finser Corporation

550 Biltmore Way, Suite 900

Coral Gables, FL 33134

Attn: President




Ladies and Gentlemen:




     The purpose of this letter is to confirm our understandings and agreements relating to the
payment of certain post-petition costs and expenses associated with the wind-down of America Online
Latin America, Inc. (“AOLA”) and its subsidiaries (the “Wind-Down”).



     As you know, AOLA and certain of its subsidiaries (collectively, the “Debtors”) are
debtors in a jointly administered chapter 11 case pending in the United States Bankruptcy Court for
the District of Delaware. On or about January 17, 2006, the Debtors intend to file a Joint Plan of
Reorganization and Liquidation (the “Plan”) which will provide for the implementation of
the Wind-Down. Pursuant to the Wind-Down, certain of AOLA’s non-Debtor subsidiaries, including AOL
S. de R.L. de C.V. (“AOL Mexico”) and AOL Brasil Ltda. (“AOL Brazil”), will be
liquidated and/or dissolved in accordance with applicable local laws. America Online, Inc.
(“AOL”) is expected to incur actual out-of-pocket costs and expenses in assisting AOLA, AOL
Mexico and AOL Brazil in their efforts to terminate service, discontinue customers, and shut down
operations in connection with the Wind-Down of AOL Mexico and AOL Brazil, as set forth in an
estimate delivered by AOL to AOLA (the “Wind-Down Costs”). The parties hereto have agreed
that AOL will be reimbursed for the Wind-Down Costs in a manner consistent with the following terms
and conditions. Capitalized terms used herein and not defined herein shall have the meanings
ascribed to such terms in the Plan.



 









 





     • All payments made by AOL Mexico and/or AOL Brazil to AOL hereunder shall be made
free and clear of, and without deduction or withholding for or on account of, any taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any governmental authority (“Taxes”), excluding any
Taxes imposed by the jurisdiction in which AOL is organized or is located, or in which its
principal executive office is located or by reason of any connection between the jurisdiction
imposing such Tax and AOL other than in connection with AOL having executed, delivered or performed
its obligations hereunder or performed activities described herein (“Non-Excluded Taxes”);
provided, that if any such Non-Excluded Taxes are required to be withheld from, or
otherwise deducted from, any amounts payable to AOL hereunder, the amounts so payable shall be
increased as necessary so that after making all required deductions for Non-Excluded Taxes
(including deductions applicable to additional sums payable under this paragraph), AOL receives an
amount equal to the sum it would have received had no such deductions been made.



     • If any applicable law requires AOL Mexico and/or AOL Brazil to withhold or deduct any
amounts from any Wind-Down Costs paid to AOL hereunder, AOL Mexico and/or AOL Brazil shall effect
such withholding, remit such amounts to the appropriate governmental authorities and deliver to
AOL, within thirty (30) days of payment of such amounts to the governmental authorities, the
original or a certified copy of a tax receipt issued by such governmental authority evidencing the
payment of any such amounts.



     • AOL Mexico and AOL Brazil shall indemnify AOL, within ten (10) days after written demand
therefor, for the full amount of any Non-Excluded Taxes paid by or with respect to AOL on or with
respect to any payment by or on account of any obligation of AOL hereunder (including Non-Excluded
Taxes imposed or asserted on or attributable to amounts payable under this paragraph) and any
penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or
not such Non-Excluded Taxes were correctly or legally imposed or asserted by the relevant
governmental authority; provided, that AOL shall cooperate with AOL Mexico and AOL Brazil
to contest such Non-Excluded Taxes at the reasonable request of AOL Mexico and/or AOL Brazil.



     • If AOL receives a refund in respect of any amounts paid by AOL Mexico or AOL Brazil
hereunder, which refund in the sole discretion of AOL is allocable to such payment, AOL shall
promptly notify AOLA of such refund and shall, within fifteen (15) days after receipt, repay such
refund and any interest with respect thereto (net of any Taxes payable thereon, taking into account
any offsetting deductions, with respect to such refund and interest received with respect thereto)
to AOLA net of all out-of-pocket expenses of AOL; provided, that AOLA, upon the request of
AOL, agrees to repay the amount paid over to AOLA to AOL in the event that AOL is required to repay
such refund and/or interest.



     • Upon reasonable request by AOLA, AOL Mexico or AOL Brazil, and as permitted by applicable
law, AOL shall deliver to such party properly completed and executed documentation so as to
effectuate the terms of this letter and to permit any payments made hereunder to be made without
withholding of Taxes or at a reduced rate.



 









 





     • AOL Mexico agrees, and AOLA agrees to cause AOL Mexico, to reimburse AOL in an amount up to
$300,000 for Wind-Down Costs incurred by AOL in connection with the shut-down of AOL Mexico (the
“AOL Mexico Wind-Down Costs”). AOL will be reimbursed for any AOL Mexico Wind-Down Costs
(up to the $300,000 cap) as and when services resulting in AOL Mexico Wind-Down Costs are performed
and billed to AOL Mexico. AOL and AOLA agree to cooperate to produce a separate agreement between
AOL and AOL Mexico and all other documentation reasonably required to ensure optimal
externalization of funds in respect of the payment of the AOL Mexico Wind-Down Costs. AOL agrees
to take reasonable commercial efforts to minimize the amount of the AOL Mexico Wind-Down Costs and
only to charge AOL Mexico for actual out-of-pocket costs and expenses incurred in connection with
the shut-down of AOL Mexico.



     • AOL Brazil agrees, and AOLA agrees to cause AOL Brazil, to reimburse AOL in an
amount up to $1,004,000 for Wind-Down Costs incurred by AOL in connection with the shut-down of AOL
Brazil (the “AOL Brazil Wind-Down Costs”). AOL will be reimbursed for any AOL Brazil
Wind-Down Costs (up to the $1,004,000 cap) as and when services resulting in AOL Brazil Wind-Down
Costs are performed and billed to AOL Brazil. AOL and AOLA agree to cooperate to produce a
separate agreement between AOL and AOL Brazil and all other documentation reasonably required to
ensure optimal externalization of funds in respect of the payment of the AOL Brazil Wind-Down
Costs. AOL agrees to take reasonable commercial efforts to minimize the amount of the AOL Brazil
Wind-Down Costs and to only charge AOL Brazil for actual out-of-pocket costs and expenses incurred
in connection with the shut-down of AOL Brazil and, to the extent AOL’s actual out-of-pocket costs
and expenses depend upon negotiations with third parties, to take reasonable commercial efforts to
minimize the amount of such costs.



     • To the extent that any payments hereunder have not been paid as and when required
by either AOL Mexico or AOL Brazil (the “Unpaid Costs”), AOLA shall pay the amount of the
Unpaid Costs to AOL from Available Cash (after payment or reservation of amounts necessary to pay
distributions on account of the Series A-1 Beneficial Interests and the Series A-2 Beneficial
Interests, if the LLC Option is elected) on a par with amounts payable on account of the Series C
Beneficial Interests, at the rate of 50% of such Available Cash to AOL, on the one hand, and 50% of
such Available Cash to the holders of the Series C Beneficial Interests, on the other hand, until
any such Unpaid Costs are paid in full.



     • Each of AOLA, AOL Mexico and AOL Brazil represents and warrants, severally and not jointly,
as to itself and not as to any other entity, that it is duly authorized to execute and deliver this
letter agreement and that each of its obligations hereunder are valid, binding and enforceable
against it in accordance with its terms, subject to, in the case of (i) AOLA, the occurrence of the
Effective Date or entry of an order of the Bankruptcy Court (which may be the Confirmation Order)
authorizing this letter agreement, and (ii) AOL Mexico and/or AOL Brazil, applicable foreign
exchange regulations and bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws of general application affecting creditors’ rights.



 









 





     Please confirm that the foregoing sets forth our agreement by signing and returning to us the
duplicate copy of this letter. This letter agreement may be executed in multiple counterparts, any
of which may be transmitted by facsimile or by electronic mail in portable document format, and
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.



	 	 	 	 	 
	 	Very truly yours,





TIME WARNER INC.

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICA ONLINE, INC.

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 







Acknowledged and Agreed as of

the date first written above:




	 	 	 	 	 
	AMERICA ONLINE LATIN AMERICA, INC.

 	 
	By:  	/s/
 	 
	Name:  	 	 
	Title:  	 	 
	 
	AOL S. DE R.L. DE C.V.

 	 
	By:  	/s/
 	 
	Name:  	 	 
	Title:  	 	 
	 
	AOL BRASIL LTDA.

 	 
	By:  	/s/
 	 
	Name:  	 	 
	Title:  	 	 



 









 








EXHIBIT B




UNAUDITED BALANCE SHEET





 









 






AOL
LATIN AMERICA

MONTHLY REPORT TO BANKRUPTCY TRUSTEE


As of and for the Month ended, November 30, 2005




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	AOL Puerto	 	 	America Online	 
	 	 	America Online Latin	 	 	AOL Latin America	 	 	Management	 	 	Caribbean Basin,	 
	 	 	America, Inc.	 	 	Management, LLC	 	 	Services, Inc.	 	 	Inc.	 
	CASE NUMBER	 	05-11778 (MFW)	 	 	05-11779 (MFW)	 	 	05-11780 (MFW)	 	 	05-11781 (MFW)	 
	BALANCE SHEET
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Assets:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Assets:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and Cash equivalents
	 	 	194,144	 	 	 	7,690,279	 	 	 	4,677	 	 	 	—	 
	Short-term Investments
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Other Accounts Receivable
	 	 	—	 	 	 	3,780	 	 	 	188	 	 	 	—	 
	Accounts Receivable — Subscription
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Accounts Receivable — Advertising & E-Commerce
	 	 	—	 	 	 	27,241	 	 	 	—	 	 	 	22,515	 
	Accounts Receivable — PC Financing
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Accounts Receivable — Related Parties
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Less Allowance
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(6,415	)
	Receivable from other AOLA affiliate — Spain
	 	 	—	 	 	 	1,002,906	 	 	 	—	 	 	 	—	 
	Receivable from other AOLA affiliate — Ft. Lauderdale
	 	 	6,718,116	 	 	 	—	 	 	 	—	 	 	 	13,769,333	 
	Receivable from other AOLA affiliate — QuotaHolders
	 	 	—	 	 	 	2,007	 	 	 	—	 	 	 	—	 
	Receivable from other AOLA affiliate — Argentina
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Receivable from other AOLA affiliate — Brazil
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Receivable from other AOLA affiliate — Mexico
	 	 	10,592,281	 	 	 	144,802	 	 	 	—	 	 	 	—	 
	Receivable from other AOLA affiliate — Puerto Rico
	 	 	17,003	 	 	 	2,165,951	 	 	 	144,531	 	 	 	3,587,289	 
	Receivable from other AOLA affiliate — AOLA Inc.
	 	 	—	 	 	 	116,959	 	 	 	—	 	 	 	2,258,212	 
	Receivable from AOL Inc
	 	 	—	 	 	 	67,763	 	 	 	—	 	 	 	—	 
	Receivable from ODC
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Receivable from Itaú
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Inventories
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Value Added Taxes Recoverable
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Other Receivables
	 	 	(0	)	 	 	—	 	 	 	—	 	 	 	—	 
	Prepaid Expenses
	 	 	—	 	 	 	2,426,116	 	 	 	112,090	 	 	 	927	 
	Other Current Assets
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	 	 	 
	Total Current Assets
	 	 	17,521,544	 	 	 	13,647,804	 	 	 	261,487	 	 	 	19,631,861	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Assets:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buildings and Other Depreciable Assets
	 	 	—	 	 	 	956,540	 	 	 	559,864	 	 	 	—	 
	Less Accumulated Depreciation
	 	 	—	 	 	 	(945,823	)	 	 	(478,738	)	 	 	—	 
	Land
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Capitalized product development & localization costs
	 	 	—	 	 	 	1,112,117	 	 	 	—	 	 	 	—	 
	Less Accumulated Amortization
	 	 	—	 	 	 	(1,112,117	)	 	 	—	 	 	 	—	 
	Other Intangible Assets [Amortizable]
	 	 	—	 	 	 	2,863,900	 	 	 	24,789	 	 	 	—	 
	Less Accumulated Amortization
	 	 	—	 	 	 	(2,863,366	)	 	 	—	 	 	 	—	 
	Capitalized IPO — related costs
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Investments in Subsidiaries
	 	 	593,837,810	 	 	 	—	 	 	 	—	 	 	 	—	 
	Investments in Available for sale securities
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Goodwill
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Other Assets
	 	 	—	 	 	 	80,131	 	 	 	25,379	 	 	 	20,150	 
	 	 	 
	Total Other Assets
	 	 	593,837,810	 	 	 	91,382	 	 	 	131,295	 	 	 	20,150	 
	 	 	 
	TOTAL ASSETS
	 	 	611,359,353	 	 	 	13,739,186	 	 	 	392,782	 	 	 	19,652,011	 
	 	 	 






 









 






AOL LATIN AMERICA

MONTHLY REPORT TO BANKRUPTCY TRUSTEE

As of and for the Month ended, November 30, 2005




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	AOL Puerto	 	 	America Online	 
	 	 	America Online Latin	 	 	AOL Latin America	 	 	Management	 	 	Caribbean Basin,	 
	 	 	America, Inc.	 	 	Management, LLC	 	 	Services, Inc.	 	 	Inc.	 
	CASE NUMBER	 	05-11778 (MFW)	 	 	05-11779 (MFW)	 	 	05-11780 (MFW)	 	 	05-11781 (MFW)	 
	Liabilities And Stockholders’ Equity:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Trade Accounts Payable
	 	 	—	 	 	 	166,878	 	 	 	82,934	 	 	 	241,585	 
	Trade Accounts Payable — Related Parties
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Payable to other AOLA affiliate — Spain
	 	 	8,998	 	 	 	—	 	 	 	—	 	 	 	—	 
	Payable to other AOLA affiliate — Ft. Lauderdale
	 	 	116,959	 	 	 	—	 	 	 	1,113,805	 	 	 	—	 
	Payable to other AOLA affiliate — QuotaHolders
	 	 	—	 	 	 	956,045	 	 	 	—	 	 	 	—	 
	Payable to other AOLA affiliate — Argentina
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Payable to other AOLA affiliate — Brazil
	 	 	—	 	 	 	197,889	 	 	 	—	 	 	 	—	 
	Payable to other AOLA affiliate — Mexico
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Payable to other AOLA affiliate — Puerto Rico
	 	 	2,071,212	 	 	 	14,311,877	 	 	 	4,967,459	 	 	 	—	 
	Payable to other AOLA affiliate — AOLA Inc.
	 	 	—	 	 	 	6,718,116	 	 	 	—	 	 	 	—	 
	Payable to AOL Inc
	 	 	4,050,411	 	 	 	3,664,054	 	 	 	—	 	 	 	(1,222,344	)
	Payable to ODC
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Payable to Itaú
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Notes and Bonds payable in less than 1 year
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Deferred Revenue Short-term
	 	 	—	 	 	 	5,000	 	 	 	—	 	 	 	10,448	 
	Accrued Personnel Costs
	 	 	—	 	 	 	1,126,916	 	 	 	188,830	 	 	 	—	 
	Deferred Network Services Credit
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Lease Liability
	 	 	—	 	 	 	102,195	 	 	 	14,155	 	 	 	—	 
	Income Taxes Payable
	 	 	—	 	 	 	(56	)	 	 	362	 	 	 	—	 
	Value Added Taxes Payable
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Other taxes payable
	 	 	—	 	 	 	—	 	 	 	16,209	 	 	 	—	 
	Other accrued expenses and liabilities
	 	 	—	 	 	 	122,778	 	 	 	5,000	 	 	 	127,148	 
	 	 	 
	Total Current Liabilities
	 	 	6,247,580	 	 	 	27,371,691	 	 	 	6,388,753	 	 	 	(843,164	)
	Long-Term Liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loans Payable Intra- AOLA
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Loans Payable to Time Warner
	 	 	160,000,000	 	 	 	—	 	 	 	—	 	 	 	—	 
	Loans Payable to ODC
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Loans Payable to Itaú
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Deferred Revenue Long-term
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Deferred Network Services Credit
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Other Liabilities
	 	 	—	 	 	 	—	 	 	 	17,706	 	 	 	—	 
	 	 	 
	Total Noncurrent Liabilities
	 	 	160,000,000	 	 	 	—	 	 	 	17,706	 	 	 	—	 
	 
	 	 	 
	Total Liabilities
	 	 	166,247,580	 	 	 	27,371,691	 	 	 	6,406,459	 	 	 	(843,164	)
	 	 	 
	Stockholders’ Equity:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Preferred Stock
	 	 	2,294,390	 	 	 	—	 	 	 	—	 	 	 	—	 
	Common Stock
	 	 	1,352,418	 	 	 	—	 	 	 	1	 	 	 	1	 
	Additional Paid In Capital
	 	 	684,005,567	 	 	 	—	 	 	 	6,541,856	 	 	 	5,477,956	 
	Unrealized Loss on Available for Sale Securities
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Accumulated Comprehensive Income -
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Retained Earnings (Accumulated Deficit)
	 	 	(134,765,067	)	 	 	(9,231,432	)	 	 	(11,035,949	)	 	 	9,899,082	 
	Unrealized Translation G/(L)
	 	 	(83,220	)	 	 	26,973	 	 	 	(1,659	)	 	 	—	 
	Adjustments to shareholders’ equity
	 	 	(13,602	)	 	 	—	 	 	 	—	 	 	 	—	 
	Less Dividends Declared
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Current Year Income (loss)
	 	 	(107,678,713	)	 	 	(4,428,046	)	 	 	(1,517,557	)	 	 	5,118,136	 
	 	 	 
	Total Stockholders’ Equity
	 	 	445,111,774	 	 	 	(13,632,505	)	 	 	(6,013,308	)	 	 	20,495,175	 
	 
	 	 	 
	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
	 	 	611,359,354	 	 	 	13,739,186	 	 	 	393,151	 	 	 	19,652,011	 
	 	 	 







 










 








EXHIBIT C




LIQUIDATION ANALYSIS




 









 






AMERICA ONLINE LATIN AMERICA, INC.

LIQUIDATION ANALYSIS

(Amounts in USD)

 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Estimated	 	 	 	 
	 	 	 	 	 	 	Book Value	 	 	 	 
	 	 	 	 	 	 	as of	 	Average	 	Estimated
	 	 	Note	 	November 30, 2005	 	Estimated	 	Liquidation
	 	 	References	 	(unaudited)	 	Recovery Rate	 	Value
	Cash and Cash Equivalents
	 	 	2	 	 	 	7,889,100	 	 	 	100	%	 	 	7,889,069	 
	Accounts Receivable
	 	 	3	 	 	 	47,309	 	 	 	93	%	 	 	44,166	 
	Intercompany Accounts Receivable
	 	 	4	 	 	 	40,519,390	 	 	 	0	%	 	 	144,000	 
	Accounts Receivable from America Online
	 	 	5	 	 	 	67,763	 	 	 	100	%	 	 	67,763	 
	Prepaid Expenses and Other Current Assets
	 	 	6	 	 	 	2,539,134	 	 	 	4	%	 	 	112,090	 
	Furniture, Office Equipment
	 	 	7	 	 	 	117,167	 	 	 	2	%	 	 	2,820	 
	Investment in Subsidiaries
	 	 	8	 	 	 	593,837,810	 	 	 	4	%	 	 	21,640,024	 
	Other Assets
	 	 	9	 	 	 	125,660	 	 	 	46	%	 	 	57,931	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Assets
	 	 	 	 	 	 	645,143,333	 	 	 	5	%	 	 	29,957,863	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Assets to be Collected
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Itau Collection
	 	 	10	 	 	 	1,400,000	 	 	 	100	%	 	 	1,400,000	 
	PR Net Operating Income (Dec’05-Jun’06)
	 	 	11	 	 	 	3,263,232	 	 	 	100	%	 	 	3,263,232	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Other Assets
	 	 	 	 	 	 	4,663,232	 	 	 	100	%	 	 	4,663,232	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Estimated Proceeds Available for Distribution
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Less: Chapter 7 Administrative Claims
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Winddown Costs
	 	 	12	 	 	 	3,367,000	 	 	 	—	 	 	 	3,367,000	 
	Employee Costs
	 	 	13	 	 	 	4,957,370	 	 	 	—	 	 	 	4,957,370	 
	Other Professional Fees
	 	 	14	 	 	 	2,506,296	 	 	 	—	 	 	 	2,506,296	 
	Chapter 7 Trustee Fees
	 	 	15	 	 	 	736,963	 	 	 	—	 	 	 	736,963	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Chapter 7 Administrative Claims
	 	 	 	 	 	 	11,567,629	 	 	 	—	 	 	 	11,567,629	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Estimated Proceeds Available After Administrative Claims
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	23,053,465	 
	Less: Unsecured Claims
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TW Party Claims
	 	 	16	 	 	 	161,592,430	 	 	 	14	%	 	 	23,004,649	 
	Other Unsecured Creditors
	 	 	17	 	 	 	342,903	 	 	 	14	%	 	 	48,816	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Unsecured Claims
	 	 	 	 	 	 	161,935,333	 	 	 	14	%	 	 	23,053,465	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Estimated Proceeds Available for Distribution to
Subordinated Claims and AOLA Common Stock
	 	 	 	 	 	 	 	 	 	 	0.0	%	 	 	—	 


















 








EXHIBIT D




PROPOSED ORGANIZATIONAL CHART OF THE LIQUIDATING LLC AS OF THE EFFECTIVE DATE




 









 








	

Liquidating

LLC

Quota Holder

AOL

Mexico

AOL

Brazil

Cash and
miscellaneous
assets

Reorganized

AOLA LLC

AOL

Spain

TW Parties

Cisneros Group
Parties

40%

60%

100%

99.96%

99.9%

100%

0.1%

0.04%

ORGANIZATIONAL CHART OF THE LIQUIDATING LLC AS OF
THE EFFECTIVE DATE*

* This chart assumes that the Cash Option has been elected and sufficient cash was set aside on the Effective Date for a fund for Holders of Class 4 General Unsecured Claims

(1) AOL Venezula will be transferred to the Cisneros Group after the Effective Date

AOL

Venezuela(1)

99%

100%

1%








 








EXHIBIT E




ORGANIZATIONAL CHART OF THE AOLA GROUP AS OF THE PETITION DATE





 









 








	

AOL Latin

America

Management LLC

America Online

Caribbean

Basin, Inc.

Puerto Rico

Management

 Services Inc.

AOL Brasil

Ltda.

AOL Argentina

S.R.L.

AOL Venezuela

S.R.L.

99.0%

99.96%

100%

100%

100%

100%

100%

99.9%

95.0%

1.0%

0.1%

5.0%

U.S.A.

U.S.A.

U.S.A.

U.S.A.

U.S.A.

Mexico

Argentina

Brazil

Venezuela

Spain

0.04%

AOL Servicios

Profesionales S.

de R.L. de C.V.

Mexico

100%

Non-operating

and in process
of dissolution

ORGANIZATIONAL CHART OF THE AOLA GROUP AS OF THE PETITION DATE

America Online Latin America, Inc.

Latin America

Quota Holder

LLC

AOL Latin

America SL

AOL S. de R.L.

de C.V.