February 13, 2001
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000
Aspen Investments LLC
Atlantis Investments LLC
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Banco Itau, S.A.--Cayman Branch
Itau Bank Limited
Xxx Xxx Xxxxx 000
Xxx Xxxxx, Xxxxxx
Ladies and Gentlemen:
This letter is intended to confirm the agreement by and among
America Online Latin America, Inc. ("AOLA") and each of America Online,
Inc. ("AOL"), Aspen Investments LLC and Atlantis Investments LLC
(collectively, "ODC") and Banco Itau, S.A.--Cayman Branch and Itau Bank
Limited (collectively, "Banco Itau," and together with AOL and ODC, the
"Purchasers") regarding the proposed sale of equity securities of AOLA to
each of AOL, ODC and Banco Itau.
Each of the Purchasers agrees to contribute to the capital of AOLA
the amounts set forth opposite its respective name on the term sheet
attached hereto as Exhibit A and agrees to the other terms set forth
therein. Counsel for AOLA will prepare the definitive draft documents
necessary to implement this agreement, including without limitation (the
"Definitive Documents"):
o purchase agreement(s),
o a certificate of designation for the Series D Preferred Stock and,
if necessary, an amendment to AOLA's Certificate of Incorporation,
o amendments to the Stockholders' Agreement and Registration Rights
Agreement among AOLA, AOL and ODC, and
o an amendment to the existing Registration Rights and Stockholders'
Agreement between AOLA and Banco Itau (pursuant to such amendment,
among other things, Banco Itau will have the right to effect
repurchase transactions at its sole discretion with respect to all
or any part of the securities to be purchased hereunder on the
terms and conditions to be agreed to in the Definitive Documents).
Each of the parties acknowledges and agrees that it will proceed
in good faith in negotiating the Definitive Documents, which may include
refinements and clarifications of the terms and conditions set forth on
Exhibit A, as well as additional terms that, although not specified herein,
are customary in equity investments of this type and consistent with the
existing documents evidencing the Purchasers' current investments in AOLA;
provided, that if the Definitive Documents are not executed on or prior to
April 15, 2001, this letter agreement shall terminate; provided, further,
that such termination shall not relieve any party from liability for any
obligation it may have failed to perform prior to such termination.
The signing of the definitive agreements will be conditioned on
the Board of Directors of AOLA having approved this transaction (which will
require, at a minimum, that the Board receive a favorable recommendation to
the Board of Directors by a special committee of the Board constituted to
advise the Board on this transaction (which committee will seek a "fairness
opinion" from an investment bank to be retained by that committee)). The
equity securities will be issued by AOLA to the Purchasers pursuant to
Regulations D and S promulgated under the Securities Act of 1933, as
amended.
AOLA shall reimburse each Purchaser in an amount not to exceed
US$25,000 per Purchaser for legal fees and other out-of-pocket expenses
incurred by such Purchaser in connection with the negotiation and execution
of this letter and the transactions described herein, whether or not the
transactions described herein are completed. Except as set forth in the
preceding sentence, all parties shall be responsible for their own costs
and expenses.
This agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware and may be modified only
pursuant to a writing signed by all of the parties hereto.
If you determine that the foregoing is satisfactory in principle,
we would appreciate acknowledgment of that determination by the execution
and delivery to us of the enclosed copy of this letter.
Very truly yours,
America Online Latin America, Inc.
By:
-------------------------------
[Name and title]
The foregoing is agreed to and accepted.
America Online, Inc.
By:
-------------------------------
[Name and title]
Dated, February 13, 2001
Aspen Investments LLC
By:
-------------------------------
[Name and title]
Dated, February 13, 2001
Atlantis Investments LLC
By:
-------------------------------
[Name and title]
Dated, February 13, 2001
Banco Itau, S.A.--Cayman Branch
By:
-------------------------------
[Name and title]
Dated, February 13, 2001
Itau Bank Limited
By:
-------------------------------
[Name and title]
Dated, February 13, 2001
EXHIBIT A
TERM SHEET
AMERICA ONLINE LATIN AMERICA, INC.
CAPITAL CONTRIBUTION AND SUBSCRIPTION FOR NEW SHARES
Issuer . . . . . . . . . . . . . . . America Online Latin America, Inc.
(the "Company"), a Delaware
corporation.
Purchasers . . . . . . . . . . . . . A. America Online, Inc. ("AOL"), a
Delaware corporation.
B. Banco Itau, S.A.-Cayman Branch and
Itau Bank Limited (collectively
"Itau").
C. Aspen Investments LLC, and Atlantis
Investments LLC, each a Delaware
limited liability company
(collectively "ODC").
Capital Contributions . . . . . . . A. AOL: US$ 66,338,075;
B. Itau: US$ 19,864,875;
C. ODC: US$ 63,797,050.
Securities . . . . . . . . . . . . A. AOL: Series D Preferred Stock (each
share of which will be convertible
into one share of "High Vote Common
Stock" (as defined in AOLA's current
Certificate of Incorporation))with a
liquidation preference equal to the
amount of AOL's Capital Contributions
hereunder, ranking senior (in
liquidation, but not with respect to
dividends) to other classes of the
Company's Preferred Stock, with voting
rights equal to those of the Company's
other Preferred Stock and with a
dividend rate equal to 3% of the per
share liquidation preference (on terms
consistent with, and pari passu with,
the Company's other Preferred Stock);
B. Itau: Class A Common Stock;
C. ODC: Series C Preferred Stock.
Purchase Price . . . . . . . . . . . For each share of each of the above
classes of stock, the average of the
closing price of the Class A Common
Stock quoted on the Nasdaq National
Market System as published in the Wall
Street Journal for a certain number of
trading days prior to the initial
funding date as may be agreed to by
the parties and specified in the
Definitive Documents.
Target Closing Date . . . . . . . . March 8, 2001
Payment Schedules . . . . . . . . . Capital will be contributed in an
aggregate amount of $150 million on
the following dates: (i) April 1,
2001, (ii) June 1, 2001 and (iii)
August 1, 2001. The amount to be
contributed on each funding date will
be set forth in the Definitive
Documents and will be based on the
projected cash needs of AOLA (plus an
agreed upon "cushion") as demonstrated
by a business plan to be finalized
prior to the execution of the
Definitive Documents; provided, that
the Definitive Documents will provide
that notwithstanding the definitive
amounts established for each funding
date, the Purchasers shall fund such
additional amounts as may be needed by
AOLA (subject to the aggregate limit
of $150 million). On each funding
date, (a) AOL, Itau and ODC will each
make a capital contribution in an
amount equal to their respective pro
rata portions of the aggregate amount
required to be contributed on such
funding date, and (b) in exchange
therefor the Company will issue to
each such entity the applicable number
of shares of the Company's capital
stock.
Definitive Agreements . . . . . . . Purchase Agreement among the Company
and the Purchasers, amendment to the
Stockholders Agreement and the
Registration Rights Agreement among
the Company, AOL and ODC (to make the
newly issued securities subject to
that agreement) and amendment to the
Registration Rights and Stockholders
Agreement between the Company and Itau
(to make the newly issued securities
subject to that agreement as
"Unrestricted Shares", other than
Section 10.1(a) and 10.1(b); provided,
that the documents will provide that
(A) all public sales of the securities
will be subject to Section 10.1(e)(ii)
and (B) all private sales of the
securities will be subject to Section
10.1(e)(iii) and a right of first
refusal in favor of AOLA, AOL and
ODC).
Confidentiality . . . . . . . . . . The terms of this Term Sheet, the
Parties' discussions and their
subject matter are confidential and
shall be disclosed only to the
Parties' employees and outside
advisors who have a need to know such
confidential information, except as
required by law or with the prior
written consent of all the Parties
hereto.
