EXHIBIT 12
May 25, 2005
Aspen Investments LLC
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: President
Atlantis Investments LLC
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: President
Ladies and Gentlemen:
The purpose of this letter is to confirm our understandings and
agreements relating to the wind-down of America Online Latin America, Inc.
("AOLA") and its subsidiaries.
As you know, we hold unsecured claims (the "TW Note Claims")
against AOLA arising under or in connection with the US$160 million of
convertible notes (the "Notes") issued by AOLA pursuant to the Note Purchase
Agreement dated as of March 8, 2002, between AOLA and Time Warner Inc.
("TW"), as amended. We, together with America Online, Inc. ("AOL";
collectively with TW, the "TW Parties"), also hold all of the
outstanding shares of AOLA's Series B Convertible Preferred Stock (the
"Series B Preferred Stock Interests"). You, through your affiliates Aspen
Investments L.L.C. ("Aspen") and Atlantis Investments L.L.C. ("Atlantis";
and collectively with Aspen and all affiliates of Aspen and Atlantis, the "ODC
Parties") hold all of the outstanding shares of AOLA's Series C Convertible
Preferred Stock (the "Series C Preferred Stock Interests"). The ODC Parties
and AOL also hold shares of certain classes of common stock of AOLA. The
Notes, the Series B Preferred Stock Interests and the Series C Preferred Stock
Interests are collectively referred to herein as the "Instruments".
Without in any way impairing the contractual and legal rights
against AOLA of any party arising under or in connection with the
Instruments, and notwithstanding any provisions to the contrary in AOLA's
Restated Certificate of Incorporation or any other AOLA organizational
document, you and we agree to work cooperatively toward the wind-down of
the businesses of AOLA and its subsidiaries in a manner consistent with the
following terms and conditions.
- The TW Parties and the ODC Parties will cooperate with and
support AOLA's management in the implementation of the wind-down and
liquidation plan as outlined in AOLA's presentation dated March 16, 2005
to the AOLA Board of Directors (the "Plan"), with such changes as shall be
directed by the Board of Directors of AOLA. Without limitation, all asset
transfer agreements and retention/severance arrangements must be authorized
specifically by the Board of Directors of AOLA. The TW Parties and the ODC
Parties shall each cause its respective representatives on the
Board of Directors of AOLA, subject to their fiduciary obligations, to take all
necessary actions to implement and execute the Plan.
- The TW Parties and the ODC Parties agree that the TW Parties
will assume the ownership of AOLA's Puerto Rico assets (the "PR Assets") in
partial repayment of the TW Note Claims, such repayment to be in an amount (such
amount, the "Net PR Value") equal to $15 million less any third-party
liabilities assumed by the TW Parties in connection with such assumption, plus
or minus, as the case may be, the Net Subscription Income (as defined in the PR
Agreement referenced below) accrued and unpaid under the Letter Agreement
between AOL and AOLA dated December 1, 2000, regarding the PR Assets (the "PR
Agreement") as of the date of such assumption. The effective date of such
transfer of ownership of the PR Assets shall be the date upon which the
bankruptcy court having jurisdiction over AOLA's Chapter 11 case enters an order
authorizing and approving the transfer of the PR Assets to the TW Parties and
AOLA's rejection of the PR Agreement, as provided for below.
- The TW Parties and the ODC Parties shall agree to have their
designates to the Board of Directors of AOLA, subject to their fiduciary
obligations, approve a bankruptcy filing by AOLA for Chapter 11 protection as
soon as possible in order to further the implementation of the Plan and the
distribution of proceeds of the wind-down in a manner consistent with this
agreement.
- After distributions on account of (or reservation for
payment of) operating and wind-down expenses, including Chapter 11
administrative and other priority claims required to be paid, and general
unsecured claims against AOLA to the extent the holders of such claims vote to
accept the Chapter 11 plan of liquidation proposed by AOLA in its Chapter 11
case and thereby release the TW Parties, but excluding any general unsecured
claims of AOL against AOLA and the TW Note Claims, any available cash or cash
equivalents (excluding the PR Assets) will be distributed to the TW Parties on
account of the TW Note Claims (the amount so distributed, the "TW
Distributions"). The TW Parties agree to turn over promptly to the ODC Parties,
from (and only to the extent of) the TW Distributions, (i) an amount equal to
40% of the difference between (x) the Net PR Value and (y) the amount of the
general unsecured claims of AOL against AOLA, plus (ii) 40% of all TW
Distributions thereafter received; provided that such payments shall be made to
the ODC Parties substantially concurrently with any distribution to the TW
Parties. Under no circumstances, however, will any in-kind distributions be made
by AOLA other than AOL Puerto Rico, nor will the TW Parties make any cash
capital infusion or other cash or non-cash investment or expenditure (as opposed
to forgiveness of obligations) on account of their assumption of the Puerto Rico
operations.
- None of the TW Parties or the ODC Parties will be required
to make any cash capital infusion or other cash or non-cash investment or
expenditure to fund the Plan, the Chapter 11 proceeding, or otherwise.
- The AOL License Agreement dated as of August 7, 2000, and
related service agreements will be rejected by AOLA in the Chapter 11 case, and
AOLA will otherwise relinquish any rights or interests in any AOL intellectual
property and trademarks. In consideration thereof, AOL will offer prospective
purchasers of AOLA country services license terms as set forth on Exhibit A
hereto.
- The PR Agreement and any related service agreements will be
rejected by AOLA in the Chapter 11 case, and AOLA will otherwise relinquish any
rights or interests in the PR Agreement and the PR Assets.
- In exchange for the consideration described above, the TW
Parties and the ODC Parties will exchange mutual releases for any and all claims
relating to or arising in connection with AOLA.
While we regret that this venture has not developed as we had hoped, we
nonetheless look forward to moving forward jointly with you as outlined above.
Please confirm that the foregoing sets forth our agreement by signing and
returning to us the duplicate copy of this letter.
Very truly yours,
TIME WARNER INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Vice President
AMERICA ONLINE, INC.
By: /s/ Xxxxxxx Xxxx
-----------------------------
Name: Xxxxxxx Xxxx
Title: EVP and CFO
Acknowledged and Xxxxxx as of the date first written above:
ASPEN INVESTMENTS L.L.C.
By:/s/ Xxxxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Executive Vice President
ATLANTIS INVESTMENTS L.L.C.
By: /s/ Xxxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Executive Vice President
