COURT OF CHANCERY OF THE S AM G LASSCOCK III V ICE C HANCELLOR STATE OF DELAWARE C OURT OF C HANCERY C OURTHOUSE 34 T HE C IRCLE G EORGETOWN , D ELAWARE 19947 Date Submitted: October 8, 2015 Date Decided: October 8, 2015 Derrick B. Farrell, Esquire James R. Banko, Esquire Faruqi & Faruqi, LLP 20 Montchanin Road, Suite 145 Wilmington, DE 19807 Rudolf Koch, Esquire Christopher H. Lyons, Esquire Elizabeth A. DeFelice, Esquire Richards, Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801 Kevin R. Shannon, Esquire Jaclyn Levy, Esquire Potter Anderson & Corroon LLP 1313 N. Market Street Hercules Plaza, 6 th Floor Wilmington, DE 19899

Re: Nguyen v. Barrett , Civil Action No. 11511-VCG

Dear Counsel: This matter came before me today on the Plaintiff’s request for preliminary injunctive relief, seeking to enjoin the closing of a tender offer pending disclosure of certain financial information to the Plaintiff, and to a purported class of stockholders of Millennial Media, Inc. After argum ent, and in light of the briefing, I denied the requested injunction. The Plaintiff i mmediately made this oral Motion for an Emergency Certification of Interlocutory App eal (the “Emergency Motion”).2

The Defendants noted their opposition to the motion . For the reasons that follow, pursuant to Supreme Court Rule 42, certification is denied. The action filed by Plaintiff An Nguyen challenges an all-cash tender offer (the “Tender Offer”) by Mars Acquisition Sub, Inc. (“Merger Sub”)—a wholly owned subsidiary of AOL Inc. (“AOL”)—to purchase al l of the outstanding stock of Millennial Media, Inc. (“Millennial” or the “Compan y”), upon the completion of which Merger Sub will merge with and into the Compa ny, with the Company continuing as the surviving corporation and as a wh olly owned subsidiary of AOL. On September 18, 2015, Millennial filed a Schedule 14D-9 (the “Proxy” or “Recommendation Statement”) in connection with the Tender Offer, which is due to close on October 16, 2015. Plaintiff’s Amended Complaint, filed September 24, 2015, alleges that (1) the merger consideration and the sales process were fun damentally unfair to Millennial’s stockholders; (2) the merger agreement included unreasonable deal protection provisions; and (3) the Proxy was materi ally incomplete and misleading, in that it fails to adequately disclose material in formation related to the Tender Offer, including the process leading up to the consummatio n of the Tender Offer; the financial analyses conducted by the Board’s financi al advisor, LUMA Securities LLC (“LUMA”), in support of its fairness opinion; a nd the Company’s financial projections.3

The number of disclosure violations alleged is extr aordinary: the Amended Complaint identifies several specific areas where t he Proxy is allegedly materially incomplete and misleading, listing what Plaintiff b elieves to be the missing disclosures. A full recitation of those missing di sclosures follows. In the “Background to the Merger” section, the Plai ntiff alleges that the Proxy fails to disclose: (a) “[w]hether the implied per s hare value ranges LUMA calculated in connection with the various financial analyses i t performed to determine the fairness of AOL’s $2.10 per share offer were the sa me as the implied per share value ranges it calculated in connection with AOL’s $1.75 per share offer, and if not, the value ranges LUMA calculated in connection with AOL ’s $2.10 per share offer ( see Recommendation Statement at 18)”; (b) “[w]hy the st rategic committee determined that AOL’s initial proposal of $2.00 per share was ‘not in the best interest of the Company’s stockholders,’” which Plaintiff alleges i s “material given that the Board ultimately agreed to accept the significantly lower Merger Consideration of $1.75 per share ( see Recommendation Statement at 15)”; (c) “[a]n explana tion concerning why Company A and Company C were informed that the ‘Company’s strategic process was nearing conclusion’ sometime between Ju ne 2 and June 15, when the Company had not even received an offer it deemed ac tionable from AOL at that point in time (Recommendation Statement at 15)”; (d ) “[a] fair summary of the ‘possibility of interest from any other parties’ as discussed by the strategic4

committee on June 8, 2015 (Recommendation Statement at 16),” which the Plaintiff alleges is “material to stockholders to determine w hether the Board’s decision to ultimately finalize a deal with AOL for significant ly less consideration than it initially offered was reasonable and in their best interests”; (e) “[a] fair summary of the discussion led by Company management on August 26 concerning ‘the reasons stated by AOL for the reduction in the per share pu rchase price,’” which the Plaintiff alleges is “material for stockholders to determine whether AOL’s purported reasons for lowering its offer by $0.40 per share were actu ally supported by AOL’s due diligence results and the Company’s recent financia l performance (Recommendation Statement at 21)”; and (f) “[t]he i dentity of the seven other Company employees with whom AOL entered into Offer Letters (Recommendation Statement at 19),” which the Plaintiff alleges is “ material for stockholders to determine whether the sale and negotiation process was improperly influenced by

conflicts of interest.” Additionally, the Plaintiff alleges that the Proxy, “fails to provide any information concerning the number of outstanding sh ares beneficially owned by

Millennial’s directors and executive officers as of the date the Merger Agreement was signed, and the aggregate cash consideration th ey will receive for such shares,” arguing that “[s]uch information is material for Mi llennial’s stockholders to determine whether the sale and negotiation process was improperly influenced by5

the Board’s desire to quickly cash out their otherw ise illiquid shares in the Company.” With respect to LUMA’s Selected Companies Analysis , found in the Proxy at pages 29–31, the Plaintiff alleges that the Proxy f ails to disclose: (a) “[t]he specific criteria utilized to select the 14 companies that w ere used for the analysis,” which the Plaintiff alleges is “material given the signif icant differences in the multiples that were calculated for each of the three categories of companies ( i.e . Advertising Technology – Managed Media, Advertising Technology- Platform, and Digital Media/Interactive Marketing)”; (b) “[t]he LTM Reven ue and CY 2015 Revenue multiples observed for each of the companies utiliz ed for the analysis,” which the Plaintiff alleges is “material for stockholders to determine whether the multiple ranges selected by LUMA were reasonable and appropr iate”; and (c) “[t]he basis for LUMA’s decision to utilize the lowest multiple rang es associated with the ‘Advertising Technology-Managed Media’ companies, w hen much higher multiples were observed for the two other categories of compa nies, including the Digital Media/Interactive Marketing group, of which AOL was included,” arguing that “[s]uch information is material given that LUMA’s d ecision to utilize the lowest range of trading multiples resulted in much lower i mplied per share value ranges.” With respect to LUMA’s Selected Transactions Analysis , found in the Proxy at pages 31–32, the Plaintiff alleges that the Prox y fails to disclose: (a) “[t]he specific6

criteria utilized to select the 6 transactions that were used for the analysis,” which the Plaintiff alleges is “material given the signif icant differences in the multiples that were calculated for each of the transactions”; and (b) “[t]he enterprise value to current year revenue multiple calculated for each o f the transactions utilized in this analysis, and the mean and median of the multiples observed,” which the Plaintiff alleges are “material to stockholders because such information provides a necessary guidance point for stockholders to determine the mo st appropriate multiple to utilize for purposes of calculating an implied per share va lue range.” With respect to LUMA’s Illustrative Discounted Cash Flow Analyses , found in the Proxy at pages 32–33, the Plaintiff alleges that the Proxy fails to disclose: (a) “the illustrative terminal values calculated for pu rposes of the analysis”; (b) “the basis for LUMA’s decision to use an end-of-year dis counting methodology, rather than the nearly universally used mid-period discoun ting convention”; (c) “the present value of Millennial’s net operating loss ca rry-forwards, which was a benefit that was excluded from the analysis”; and (d) “quan tification of the assumptions underlying LUMA’s weighted average cost of capital calculation.” With respect to LUMA’s Premiums Paid Analysis , found in the Proxy at page 33, the Plaintiff alleges that the Proxy fails to d isclose: (a) “[t]he specific acquisitions that were utilized for purposes of the analysis,” w hich the Plaintiff alleges is

“material to stockholders because without such info rmation they cannot determine7

whether the acquisitions selected were actually com parable and appropriate for purposes of the analysis”; and (b) “[t]he low, high , mean and median premiums paid for the entire group of acquisitions that were revi ewed,” which the Plaintiff alleges

is “material to stockholders because such informati on is necessary for them to determine whether the ranges LUMA selected were app ropriate.” The Plaintiff alleges further that the Proxy “fails to disclose the amount of LUMA’s $3.6 million fee that is contingent upon the completion of the Proposed Transaction, which is material for stockholders to determine whether LUMA’s fairness opinion was improperly influenced by its d esire to ensure that the Proposed

Transaction is consummated.” With respect to Millennial’s financial projections, found in the Proxy at pages 34–35, the Plaintiff alleges that the Proxy “fails to disclose the following information,” which the Plaintiff argues “are parti cularly material given that two of the cases of projections resulted in a DCF illustra tive price per share of $0.00”: (a) “[w]hy AOL was not provided with the ‘High Scenario ’ forecast (Recommendation Statement at 34),” which the Plaintiff alleges is “ material given that the High Scenario forecast presented the most favorable pict ure of the Company’s future financial performance and therefore supported a hig her valuation for the Company”; (b) “[w]hy the Mid Scenario Adjusted EBITDA figures provided to AOL were different from the figures in the Millennial Projec tions (Recommendation Statement8

at 35)”; (c) “[t]he standalone unlevered, after-tax free cash flows that the Company was forecasted to generate from 2015-2019 for each of the three forecasts that were prepared (i.e., High Scenario, Mid Scenario, and Lo w Scenario),” which the Plaintiff argues are material “because they are being asked t o exchange their ownership stake in the Company and forego the Company’s future cash flows in exchange for allcash consideration today”; (d) “[s]tock-based compe nsation projections”; (e) “[n]et operating loss balances and utilization”; and (f) “ [a]mortization expense.” With respect to the Cash and Debt Overview of the M illennial Projections, found in the Proxy at pages 35–37, the Plaintiff al leges that the Proxy “fails to disclose why the Mid Scenario and Low Scenario Net Cash figures provided to AOL were different from the figures in the Millennial P rojections (Recommendation Statement at 36).” Finally, the Plaintiff alleges that, with respect t o the table of reconciliation of Adjusted EBITDA to GAAP operating income, found in the Proxy at page 36, the Proxy “fails to provide any detail concerning how t he reconciling adjustments were made, which is material given that two of the cases of projections resulted in a DCF illustrative price per share of $0.00.” By the time this preliminary injunction request was submitted, these alleged disclosure allegations were abandoned, and are ther efore waived, with a single exception, advanced in the alternative. The Plaint iff notes that management9

provided inputs that LUMA, the financial advisor, u sed to derive unlevered, aftertax free cash flows and a discounted cash flow (DCF ) valuation, and that the Company disclosed that fact in the Proxy, but that not all projections and inputs themselves were provided in the Proxy. The Plainti ff contends that the disclosures are misleading, because they imply that management itself (rather than LUMA) produced the projected unlevered, after-tax free ca sh flows, or alternatively, that all management projections and inputs relied on by LUMA must be disclosed as a

matter of law.

DISCUSSION

The Tender Offer is to close on October 16. Given the press of time, I issued a bench ruling directly following oral argument. W ith respect to the argument that the 14D-9 was materially misleading, 1 I found that a fair reading of the Proxy disclosed accurately that management did not prepar e forecasts of unlevered, aftertax free cash flows, but did provide revenue projec tions and other inputs from which LUMA derived unlevered, after-tax free cash flows a nd a DCF valuation. Therefore, I found it unlikely that the Plaintiff could prevai l on the merits on this ground. With respect to the argument that all inputs provid ed by management on

which the financial advisor relied in its DCF valua tion must, as a matter of law, be

1 The Plaintiff argued that an implication that mana gement had projected unlevered, after-tax free cash flows could give stockholders an unwarranted c onfidence in those projections, citing Dias v. Purches , 2012 WL 4503174 (Del. Ch. Oct. 1, 2012).10

disclosed to stockholders, I found such a per se rule inconsistent with our case law. Further, I found that the Plaintiff had failed to d emonstrate under the facts here that the Proxy was materially incomplete or misleading. My understanding of the Plaintiff’s request for certification of an interlo cutory appeal is that it is based solely

on the contention that a per se rule exists, or should exist, that all management inputs relied on by the advisor in crafting a DCF must be disclosed. Supreme Court Rule 42 controls interlocutory appeal s. Earlier this year, the rule was amended to emphasize the exceptional natur e of a grant of interlocutory review. The ground stated orally in the Emergency Motion is consistent with an application under Rule 41 (b) (ii) or (iii), made r elevant here under Rule 42(b)(i), that my bench decision represents a conflict in the decisional law or involves an unsettled question of law. Under Rule 42(b), I mus t determine whether my bench decision determined a substantial issue, establishe s a legal right, and meets one of the grounds stated above.

I find that the bench decision determined a substan tial issue and established a legal right. The Defendants are, as a result of th at decision, free to proceed with the Tender Offer without disclosing information that th e Plaintiff contends is required by law. Without review, the Plaintiff will be forc ed to decide whether to tender without the information it seeks, although he will retain the right—assuming what he describes as inadequate disclosures prove to hav e been materially misleading,11

causing him to improvidently tender—to seek damages under a quasi-appraisal metric. However, I do not find our case law to be undeveloped or conflicted, and therefore I cannot certify interlocutory appeal. H ere, the Company did not prepare projected unlevered, after-tax free cash flows, and , accordingly, did not provide such projections to its financial advisor. It did provi de projections of earnings, non-cash stock based compensation, and change in net working capital. While these precise inputs were not disclosed in the proxy, the Company did disclose projected net revenues, gross profits, and adjusted EBITDA. The investment advisor, as disclosed in the Proxy, took the management forecasts, adjusted them for amortization of intang ible assets which it obtained from the Company’s form 10-K, made a decision to net out depreciation and amortization against capital expenditure, and thereby derived un levered, after-tax free cash flows, using a formula explicitly set forth in the Proxy. Our case law provides that, where the bankers derive unlevered, after-tax free cash f lows rather than relying on management projections, the inputs on which they re ly are not per se subject to disclosure. As this Court has previously noted, “a disclosure that does not include all financial data needed to make an independent de termination of fair value is not

per se misleading or omitting a material fact. The fact that the financial advisors12

may have considered certain non-disclosed informati on does not alter this analysis.” 2 Therefore, the Plaintiff’s reliance on grounds that the case law is conflicted or undeveloped is misplaced. I do not understand the Plaintiff to contend for purposes of interlocutory appeal that, even in the absence o f a per se disclosure rule, he has

demonstrated that the information he seeks is mater ial under the specific facts of this case, but even if he does, my determination to the contrary is based on my interpretation of the facts submitted in connection with the PI request, and does not

turn on conflicted or unsettled case law. 3 For the foregoing reasons, the Plaintiff’s Emergenc y Motion for Certification of Interlocutory Appeal is denied. An appropriate order is attached.

Sincerely,

/s/ Sam Glasscock III

Sam Glasscock III

2 In re Checkfree Corp. S’holders Litig. , 2007 WL 3262188, at *2 (Del. Ch., Oct. 18, 2007) (internal citations omitted). 3 Id. (noting that a stockholder seeking disclosures mus t explain why “receiving information in addition to the basic financial data already disclo sed” is material to his decision) (internal quotati on omitted).13 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

AN NGUYEN, Individually and On : Behalf of All Other Similarly Situated, : : Plaintiff, : C.A. No. 11511-VCG : v. : : MICHAEL G. BARRETT, THOMAS : R. EVANS, ROBERT P. GOODMAN, : PATRICK KERINS, ROSS B. : LEVINSOHN, WENDA HARRIS : MILLARD, JAMES A. THOLEN, AOL : INC., and MARS ACQUISITION SUB, : INC. : Defendants. :

ORDER DENYING LEAVE TO APPEAL FROM INTERLOCUTORY ORDER

AND NOW, TO WIT, this 8th day of October, 2015, the Plaintiff having made application under Rule 42 of the Supreme Court for an order certifying an appeal from the interlocutory order of this Court, dated October 8, 2015; and the Court having found that such order decides a substantial issue of material impor tance but that the criteria of Supreme Court 42(b)(iii) do not apply, IT IS ORDERED that certification to the Supreme Co urt of the State of Delaware for disposition in accordance with Rule 42 of that Cour t, is DENIED.

/s/ Sam Glasscock III Vice Chancellor