-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GV1GnmIblUSYg+9DriBhfTW7TuhwiI+RJ59oey43k/apH14V5WTey9YL6qRxKvOE cG7Y+X5WsghLW5qwbv/+VA== 0001105705-05-000037.txt : 20050611 0001105705-05-000037.hdr.sgml : 20050611 20050607172602 ACCESSION NUMBER: 0001105705-05-000037 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050607 DATE AS OF CHANGE: 20050607 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA ONLINE LATIN AMERICA INC CENTRAL INDEX KEY: 0001100395 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 650963212 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-59485 FILM NUMBER: 05883567 BUSINESS ADDRESS: STREET 1: 6600 N ANDREWS AVE STREET 2: STE 500 CITY: FORT LAUDERDALE STATE: FL ZIP: 10013 BUSINESS PHONE: 9547720002 MAIL ADDRESS: STREET 1: 6600 N ANDREWS AVENUE STREET 2: SUITE 500 CITY: FORT LAUDERDALE STATE: FL ZIP: 10013 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TIME WARNER INC CENTRAL INDEX KEY: 0001105705 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 134099534 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: ONE TIME WARNER CENTER CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124848000 MAIL ADDRESS: STREET 1: ONE TIME WARNER CENTER CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: AOL TIME WARNER INC DATE OF NAME CHANGE: 20000208 SC 13D/A 1 d05-0613daola.txt SCHEDULE 13D AMENDMENT NO. 13 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 13) America Online Latin America, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Class A Common Stock, par value $0.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 02365B100 - -------------------------------------------------------------------------------- (CUSIP Number) Paul T. Cappuccio, Esq. Executive Vice President and General Counsel Time Warner Inc. One Time Warner Center New York, New York 10019 (212) 484-8000 Copy to: Peter S. Malloy, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 25, 2005 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this Schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the following box |_|. CUSIP No. 02365B100 Page 2 of 18 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): Time Warner Inc. 13-4099534 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x] (b) [ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC USE ONLY: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: OO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 114,229,758 (1) ----------------------------------------------------------- BENEFICIALLY ----------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH 136,551,706 (2) ----------------------------------------------------------- REPORTING ----------------------------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 114,229,758 ----------------------------------------------------------- ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 136,791,706 (3) ----------------------------------------------------------- ----------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 251,021,464 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [x] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 72.5% (4) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------- (1) Represents 44,150,105 shares of Class A Common Stock, par value $0.01 per share ("Class A Common Stock"), of America Online Latin America, Inc. ("AOL-LA") into which (ultimately) the $160,000,000 11% senior convertible notes owned by Time Warner Inc. ("Time Warner"), are immediately convertible at an initial conversion price of $3.624 plus 70,079,653 shares of Class A Common Stock into which (ultimately) 70,079,653 shares of Series B Redeemable Convertible Preferred Stock ("Series B Preferred Stock") owned by Time Warner are immediately convertible on a one-for-one basis. (2) Calculated pursuant to Rule 13d-3, includes (i) 40,169,780 shares of Class A Common Stock owned by America Online, Inc. ("AOL"), (ii) 79,840,676 shares of Class A Common Stock into which (ultimately) 79,840,676 shares of Series B Preferred Stock owned by AOL are immediately convertible on a one-for-one basis and (iii) 16,541,250 shares of Class A Common Stock issuable upon exercise of AOL's immediately exercisable warrant. (3) Calculated pursuant to Rule 13d-3, includes the 136,551,706 shares described in number 8 above plus 240,000 shares of Class A Common Stock issuable upon exercise of certain stock options issued by AOL-LA. (4) For purposes of beneficial ownership calculation under Rule 13d-3, the number of outstanding shares includes: (i) the 135,260,715 shares of Class A Common Stock outstanding (including 40,169,780 shares of Class A Common Stock owned by AOL) as of May 10, 2005 based on AOL-LA's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed on May 16, 2005, (ii) 79,840,676 shares of Class A Common Stock into which (ultimately) 79,840,676 shares of Series B Preferred Stock owned by AOL are immediately convertible on a one-for-one basis, (iii) 16,541,250 shares of Class A Common Stock issuable upon exercise of AOL's immediately exercisable warrant, (iv) 240,000 shares of Class A Common Stock issuable upon exercise of certain AOL-LA stock options, (v) 44,150,105 shares of Class A Common Stock issuable upon conversion of Time Warner's $160,000,000 11% senior convertible notes and (vi) 70,079,653 shares of Class A Common Stock into which (ultimately) 70,079,653 shares of Series B Preferred Stock owned by Time Warner are immediately convertible on a one-for-one basis. CUSIP No. 02365B100 Page 3 of 18 14 TYPE OF REPORTING PERSON: HC, CO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP No. 02365B100 Page 4 of 18 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): America Online, Inc. 54-1322110 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x] (b) [ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC USE ONLY: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: Not Applicable - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ----------------------------------------------------------- ----------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 136,551,706 (1) EACH ----------------------------------------------------------- ----------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ----------------------------------------------------------- ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 136,791,706 (2) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 136,791,706 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ x ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 59.0% (3) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON: CO - -------------------------------------------------------------------------------- - ------------------ (1) Calculated pursuant to Rule 13d-3, includes (i) 40,169,780 shares of Class A Common Stock owned by AOL, (ii) 79,840,676 shares of Class A Common Stock in which (ultimately) 79,840,676 shares of Series B Preferred Stock owned by AOL are immediately convertible on a one-for-one basis and (iii) 16,541,250 shares of Class A Common Stock issuable upon exercise of AOL's immediately exercisable warrant. (2) Calculated pursuant to Rule 13d-3, includes the 136,551,706 shares described in number 8 above plus 240,000 shares of Class A Common Stock issuable upon exercise of certain AOL-LA stock options. (3) For purposes of beneficial ownership calculation under Rule 13d-3, the number of outstanding shares includes: (i) the 135,260,715 shares of Class A Common Stock outstanding (including 40,169,780 shares of Class A Common Stock owned by AOL) as of May 10, 2005 based on AOL-LA's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed on May 16, 2005, (ii) 79,840,676 shares of Class A Common Stock into which (ultimately) 79,840,676 shares of Series B Preferred Stock owned by AOL are immediately convertible on a one-for-one basis, (iii) 16,541,250 shares of Class A Common Stock issuable (ultimately) upon exercise of AOL's immediately exercisable warrant and (iv) 240,000 shares of Class A Common Stock issuable upon exercise of certain AOL-LA stock options. CUSIP No. 02365B100 Page 5 of 18 Time Warner Inc., a Delaware corporation that was formerly named AOL Time Warner Inc. ("Time Warner"), and its wholly-owned subsidiary, America Online, Inc., a Delaware corporation ("AOL") (collectively, the "Reporting Persons"), hereby file this Amendment No. 13 to amend the statement on Schedule 13D (as so amended, this "Statement") originally filed on August 22, 2000 and amended on January 22, 2001 and February 27, 2001, further amended and restated in its entirety on April 13, 2001 and further amended on April 5, 2002, June 17, 2002, August 29, 2002, October 18, 2002, January 24, 2003, May 6, 2003, October 14, 2003 and further amended and restated in its entirety on July 16, 2004 and further amended on January 13, 2005, with respect to the shares of Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"), of America Online Latin America, Inc., a Delaware corporation ("AOL-LA"). As provided in the Joint Filing Agreement filed as Exhibit 7 to Amendment No. 1 filed on January 22, 2001, the Reporting Persons have agreed pursuant to Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to file one statement on Schedule 13D with respect to their beneficial ownership of the Class A Common Stock. Item 3. Source and Amount of Funds or Other Consideration Item 3 of this Statement is hereby amended by deleting the eighth paragraph thereof and adding the following in lieu thereof: In accordance with the terms of the Convertible Notes, on September 30, 2002, December 31, 2002, March 31, 2003, June 30, 2003, September 30, 2003, December 31, 2003, March 31, 2004, June 30, 2004, September 30, 2004, December 31, 2004 and March 31, 2005, AOL-LA issued 5,681,975, 5,183,668, 10,513,739, 6,962,267, 4,037,502, 3,024,732, 2,878,713, 5,945,725, 10,304,678, 5,772,497 and 9,774,157 shares, respectively, of Series B Preferred Stock to Time Warner as payment of interest due as of such date on the aggregate principal amount of Convertible Notes outstanding at such time. Item 4. Purpose of Transaction Item 4 of this Statement is hereby amended by deleting the second paragraph thereof and adding the following in lieu thereof: AOL and Time Warner, along with the Cisneros Group, exercise their control over AOL-LA through several instruments and agreements, including (i) a Second Amended and Restated Stockholders' Agreement, dated as of March 8, 2002, among AOL, ODC and AOL-LA (the "Second Amended and Restated Stockholders' Agreement"), (ii) an Amended and Restated Registration Rights and Stockholders' Agreement (the "Banco Itau Registration Rights Agreement"), dated as of March 30, 2001, among AOL-LA, the Banco Itau Reporting Persons and, for limited purposes, AOL and ODC, (iii) AOL-LA's Fifth Restated Certificate of Incorporation, as amended from time to time (the "Charter"), (iv) AOL-LA's Amended and Restated By-laws (the "By-laws"), and (v) the Note Purchase Agreement (collectively, the "Governing Documents"). In addition, AOL has entered into various agreements relating to the equity securities issued by AOL-LA, including the Stock Purchase Agreement, the Second Amended and Restated Registration Rights Agreement, dated as of March 8, 2002, by and among AOL-LA, Time Warner, AOL, Aspen, and Atlantis (the "Second Amended and Restated AOL-ODC Registration Rights Agreement") (as described in Item 6 of this Statement) and the CUSIP No. 02365B100 Page 6 of 18 Letter Agreement, dated as of May 25, 2005, by and among Time Warner, AOL, Aspen, and Atlantis (the "Liquidation Letter Agreement"). Item 4 of this Statement is hereby further amended by deleting the seventeenth paragraph thereof and adding the following in lieu thereof: In its Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 ("Form 10-Q"), AOL-LA stated that it had $16.6 million of available cash on hand as of March 31, 2005 and that its available cash will only be sufficient to fund operations into the third quarter of 2005. AOL-LA further stated in its Form 10-Q that to continue normal operations beyond such time, it would need an additional, substantial capital infusion and that it will not be able to obtain such additional financing from any source. In the Form 10-Q, AOL-LA discussed the strategic alternatives it has explored and the potential actions it would take if it is not successful in completing transactions to sell all or part of its businesses. AOL-LA stated that if it is not successful in selling its businesses in a timely manner, it expects to cease operating the businesses and that it may determine that it is advantageous to file a petition for bankruptcy under the U.S. bankruptcy laws or other jurisdictions in which it operates businesses. AOL-LA stated that any such voluntary filing would require the consent of its Series B Preferred Stock and Series C Preferred Stock, in addition to the authorization of its Board of Directors. In connection with AOL-LA's stated inability to fund its operations beyond the third quarter of 2005 and its statements that it expects to sell its businesses or cease operating them and that it potentially would file a petition under U.S. bankruptcy laws, the Reporting Persons and ODC began negotiating the terms of an agreement for their mutual cooperation regarding the wind-down of AOL-LA. Accordingly, on May 25, 2005, the Reporting Persons and ODC entered into the Liquidation Letter Agreement, which sets forth the terms and conditions on which the Reporting Persons and ODC would support the wind-down of AOL-LA. Pursuant to the Liquidation Letter Agreement, the Reporting Persons and ODC agreed to cooperate with and support AOL-LA's management in the implementation of a wind-down and liquidation plan, and agreed to cause their respective representatives on AOL-LA's Board of Directors, subject to their fiduciary obligations, to take all necessary actions to implement and execute such plan. Essentially, the Reporting Persons and ODC agreed that, after distributions on account of (or reservation for payment of) operating and wind-down expenses, including Chapter 11 administrative expenses and other priority claims required to be paid, and certain general unsecured claims against AOL-LA (excluding any general unsecured claims of AOL against AOL-LA), the proceeds of the liquidation would be split on a 60-40 basis, with the Reporting Persons receiving 60% of the distributions and ODC receiving 40% of the distributions. Additionally, the Reporting Persons agreed to assume ownership of AOL-LA's Puerto Rico assets at an agreed upon net value of $15 million (subject to certain working capital and other adjustments as described in the Liquidation Letter Agreement). In exchange for the Reporting Persons receiving this "value" attributable to AOL-LA's Puerto Rico assets, ODC would be entitled to receive the first actual dollars generated by the liquidation of AOL-LA's other assets in an amount up to 40% of the difference between (x) the value of the Puerto Rico assets and (y) the amount of general unsecured claims of AOL against AOL-LA. Thus, after the payment of the unsecured creditor and priority claims described above, the Reporting Persons would receive 60% of the value generated by the liquidation (including the Puerto Rico assets, in CUSIP No. 02365B100 Page 7 of 18 respect of which the Reporting Persons would assume ownership), while ODC would receive 40% of the value generated by the liquidation. The Reporting Persons and ODC expect to continue discussions of more detailed terms in connection with a wind-down of AOL-LA and its businesses consistent with the broader terms of the Liquidation Letter Agreement, and may enter into additional agreements, instruments or term sheets to set forth such detailed terms. The Liquidation Letter Agreement does not require AOL-LA to wind-down or to file a bankruptcy petition and is not binding on AOL-LA, which is not a party to the agreement. It is an agreement between the Reporting Persons and ODC. Any decision to cease operations and begin the wind-down of the businesses of AOL-LA or for AOL-LA to file a petition in bankruptcy under U.S. insolvency laws would be made by the Board of Directors of AOL-LA with the consent of the Reporting Persons and ODC. Item 4 of this Statement is hereby further amended by deleting the last paragraph thereof and adding the following in lieu thereof: References to, and descriptions of, the Note Purchase Agreement, the Convertible Notes, the Charter, the By-laws, the Second Amended and Restated AOL-ODC Registration Rights Agreement, the Second Amended and Restated Stockholders Agreement, the Banco Itau Registration Rights Agreement and the Liquidation Letter Agreement are qualified in their entirety by reference to the copies of such documents filed as exhibits to this Statement, and are incorporated in this Item 4 in their entirety where such references and descriptions appear. Item 5. Interest in Securities of the Issuer Item 5 of this Statement is hereby amended and restated to read in its entirety as follows: The information set forth or incorporated by reference in Items 2, 3, 4, 6 and 7 is hereby incorporated herein by reference. As of May 10, 2005, based on AOL-LA's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed on May 16, 2005, there were 135,260,715 shares of Class A Common Stock outstanding. No shares of AOL-LA's Class B Common Stock or Class C Common Stock were outstanding. For purposes of Rule 13d-3 under the Exchange Act, the Class A Common Stock issuable, directly or indirectly, upon conversion of the Series B Preferred Stock currently held by AOL, upon exercise of the AOL Warrant, and upon exercise by the Employees (defined below) of their options, (i) with respect to percentage ownership calculations made herein for AOL, increase the number of shares of Class A Common Stock outstanding to 231,882,641(1) and (ii) together with the 114,229,758 shares of Class A Common Stock issuable, directly or indirectly, upon conversion of (x) the Convertible Notes and (y) the 70,079,653 shares of Series B Preferred Stock issued to Time Warner by AOL-LA as payment of interest due on the Convertible Notes with respect to percentage ownership calculations made - --------------------- (1) Includes (i) the 135,260,715 shares of Class A Common Stock outstanding (including 40,169,780 shares of Class A Common Stock owned by AOL), (ii) 79,840,676 shares of Class A Common Stock into which (ultimately) 79,840,676 shares of Series B Preferred Stock owned by AOL are immediately convertible on a one-for-one basis, (iii) 16,541,250 shares of Class A Common Stock issuable upon exercise of AOL's immediately exercisable warrant and (iv) 240,000 shares of Class A Common Stock issuable upon exercise of certain AOL-LA stock options. CUSIP No. 02365B100 Page 8 of 18 herein for Time Warner, increase the number of Class A Common Stock outstanding to 346,112,399. As of the date hereof, the Reporting Persons (i) beneficially own 40,169,780 shares of Class A Common Stock held by AOL and (ii) pursuant to Rule 13d-3(a) promulgated under the Exchange Act, may be deemed to beneficially own an additional 96,381,926 shares of Class A Common Stock, which are issuable upon conversion, directly or indirectly, of all of the shares of Series B Preferred Stock held by AOL and upon exercise of the AOL Warrant. Shares of Series B Preferred Stock are convertible into shares of Class B Common Stock at any time, initially on a one-for-one basis, and such Class B Common Stock is convertible into Class A Common Stock at any time, initially on a one-for-one basis. Pursuant to Rule 13d-3(a) promulgated under the Exchange Act, the Reporting Persons may also be deemed to beneficially own options to purchase an aggregate of 240,000 shares of Class A Common Stock. As stated in Item 6 below, upon consummation of the Offering, J. Michael Kelly and Gerald Sokol, Jr., employees of AOL, were each granted an option to purchase 60,000 shares of Class A Common Stock in connection with their appointment to the Board. In addition, David Gang and Joseph A. Ripp, employees of AOL, were each granted an option to purchase 60,000 shares of Class A Common Stock in connection with their subsequent appointment to the Board. On December 20, 2004, J. Michael Kelly and Joseph A. Ripp resigned as members of the Board and, in connection therewith, the options to purchase shares of Class A Common Stock issued to them expired on February 18, 2005. Joseph M. Redling and Neil Smit, employees of AOL (each an "Employee" and along with Messrs. Gang and Sokol, the "Employees"), were appointed to fill the vacancies created by the resignations of Messrs. Kelly and Ripp. Messrs. Redling and Smit were each granted an option to purchase 60,000 shares of Class A Common Stock in connection with their appointment to the Board. On May 17, 2005, David Gang resigned as a member of the Board and, in connection therewith, the options to purchase shares of Class A Common Stock issued to him will expire on or around July 16, 2005. Under the Reporting Persons' conflicts of interest standards, each such Employee must transfer the economic benefit of his options to AOL. Although each such Employee is the record holder of the option, AOL and Time Warner hold or share the disposition power with respect to all of the shares of Class A Common Stock underlying the options. The filing of this Statement and any amendment, however, shall not be construed as an admission for the purposes of Sections 13(d) and 13(g) of the Exchange Act and Regulation 13D-G promulgated thereunder that any of such Employees is the beneficial owner of any securities of AOL-LA other than the options and shares of Class A Common Stock underlying the options issued to such Employee. Pursuant to Rule 13d-3(a) promulgated under the Exchange Act, Time Warner may also be deemed to beneficially own an additional 114,229,758 shares of Class A Common Stock which are issuable upon conversion, directly or indirectly, of (i) the Convertible Notes at the conversion price of $3.624 per share, as the same may be adjusted in accordance with the terms of the Convertible Notes and (ii) the shares of Series B Preferred Stock issued to Time Warner by AOL-LA as payment of interest due on the Convertible Notes. As further described in Item 6, the Convertible Notes are convertible at any time into Applicable Shares (as defined in Item 6 of this Statement), which may be shares of Series B Preferred Stock or Class A Common Stock, in any case at a conversion price of $3.624 per share. CUSIP No. 02365B100 Page 9 of 18 AOL and Time Warner have shared power to vote and dispose of 40,169,780 shares of Class A Common Stock held by AOL, the 79,840,676 shares of Class A Common Stock issuable upon conversion, directly or indirectly, of all of the Series B Preferred Stock held by AOL, and 16,541,250 shares of Class A Common Stock issuable upon exercise of the AOL Warrant. AOL and Time Warner share the power to dispose of the 240,000 shares of Class A Common Stock issuable upon exercise of the stock options that were granted to the Employees. Time Warner has sole power to vote and dispose of the 114,229,758 shares of Class A Common Stock that are issuable upon conversion, directly or indirectly, of both the Convertible Notes acquired by Time Warner pursuant to the Note Purchase Agreement and the shares of Series B Preferred Stock issued to Time Warner as payment of interest due on the Convertible Notes. Consequently, under Rule 13d-3(a), upon conversion of the B Stock held by AOL, the exercise of the AOL Warrant and the exercise of the stock options granted to the Employees, AOL would beneficially own 136,791,706 shares of Class A Common Stock in the aggregate, or approximately 59.0% of the 231,882,641 shares of Class A Common Stock that would be issued and outstanding. Upon conversion of the B Stock held by AOL, the exercise of the AOL Warrant, the exercise of the stock options granted to the Employees, the conversion of the B Stock held by Time Warner and the conversion of the Convertible Notes, Time Warner would beneficially own 251,021,464 shares of Class A Common Stock in the aggregate, or approximately 72.5% of the 346,112,399 shares of Class A Common Stock that would be issued and outstanding. However, assuming (i) the conversion of all B Stock and C Stock, (ii) the conversion of all of the Convertible Notes and (iii) the exercise and conversion of all outstanding warrants and stock options held by the Reporting Persons and the Cisneros Group, AOL and Time Warner would beneficially own approximately 32.1% and 59.0%, respectively, of the 425,751,101 shares of Class A Common Stock of AOL-LA that would be issued and outstanding. Pursuant to Rule 13d-5(b)(1) promulgated under the Exchange Act, to the extent a "group" is deemed to exist by virtue of the Second Amended and Restated Stockholders' Agreement and the Second Amended and Restated AOL-ODC Registration Rights Agreement (each as defined in Item 6 of this Statement), the Reporting Persons may be deemed to have beneficial ownership, for purposes of Sections 13(d) and 13(g) of the Exchange Act, of all of the equity securities of AOL-LA beneficially owned by the Cisneros Group. According to the Cisneros Group's Amendment No. 6 to the statement on Schedule 13D filed on January 17, 2003, members of the Cisneros Group individually beneficially own 35,895,292 shares of Class A Common Stock, 79,518,702 shares of Series C Preferred Stock, which represents all of such Series C Preferred Stock outstanding, and currently exercisable options to purchase 120,000 shares of Class A Common Stock. Shares of Series C Preferred Stock are convertible into AOL-LA's Class C Common Stock at any time, initially on a one-for-one basis, and such Class C Common Stock is convertible into Class A Common Stock at any time, initially on a one-for-one basis. Consequently, upon conversion of the C Stock and the exercise of the options held by the Cisneros Group, the Cisneros Group would beneficially own an aggregate of 115,533,994 shares of Class A Common Stock. Such beneficial ownership represents approximately 27.1% of the 425,751,101 shares of Class A Common Stock that would be issued and outstanding, assuming (i) the conversion of all B Stock and C Stock, (ii) the conversion of all of the Convertible Notes and (iii) the exercise and conversion of all outstanding warrants and stock options held by the Reporting Persons and the Cisneros Group. The Cisneros Group has sole power to vote and dispose of its 35,895,292 shares of Class A Common Stock, 79,518,702 shares of Series C CUSIP No. 02365B100 Page 10 of 18 Preferred Stock and currently exercisable options to purchase 120,000 shares of Class A Common Stock. The Reporting Persons disclaim beneficial ownership of any AOL-LA securities owned directly or indirectly by the Cisneros Group. Pursuant to Rule 13d-5(b)(1) promulgated under the Exchange Act, to the extent a "group" is deemed to exist by virtue of the Banco Itau Registration Rights Agreement, the Reporting Persons may be deemed to have beneficial ownership, for purposes of Sections 13(d) and 13(g) of the Exchange Act, of all of the equity securities of AOL-LA beneficially owned by the Banco Itau Reporting Persons. According to Banco Itau's Amendment No. 10 to the statement on Schedule 13D filed on November 12, 2003, Banco Itau beneficially owns 35,937,840 shares of Class A Common Stock. Such beneficial ownership represents approximately 8.4% of the 425,751,101 shares of Class A Common Stock that would be issued and outstanding, assuming (i) the conversion of all B Stock and C Stock, (ii) the conversion of all of the Convertible Notes and (iii) the exercise and conversion of all outstanding warrants and stock options held by the Reporting Persons and the Cisneros Group. The Reporting Persons disclaim beneficial ownership of any AOL-LA securities owned directly or indirectly by the Banco Itau Reporting Persons. Other than as set forth herein, to the best of the Reporting Persons' knowledge as of the date hereof, (i) neither the Reporting Persons nor any subsidiary or affiliate of the Reporting Persons nor any of the Reporting Persons' executive officers or directors, beneficially owns any shares of Class A Common Stock, and (ii) there have been no transactions in the shares of Class A Common Stock effected during the past 60 days by the Reporting Persons, nor to the best of the Reporting Persons' knowledge, by any subsidiary or affiliate of the Reporting Persons or any of the Reporting Persons' executive officers or directors. References to, and descriptions of, the Note Purchase Agreement, the Convertible Notes, the Second Amended and Restated AOL-ODC Registration Rights Agreement, the Second Amended and Restated Stockholders Agreement and the Banco Itau Registration Rights Agreement are qualified in their entirety by reference to the copies of such documents included as exhibits to this Statement and are incorporated in this Item 5 in their entirety where such references and descriptions appear. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer Item 6 of this Statement is hereby amended by deleting the second paragraph thereof and adding the following in lieu thereof: Upon consummation of the Offering, J. Michael Kelly and Gerald Sokol, Jr., employees of AOL, were each granted an option to purchase 60,000 shares of Class A Common Stock in connection with their appointment to the Board at the offering price of $8.00. In addition, David Gang and Joseph A. Ripp, employees of AOL, were each granted an option to purchase 60,000 shares of Class A Common Stock in connection with their subsequent appointment to the Board at the exercise price of $0.98 and $1.49, respectively. On December 20, 2004, J. Michael Kelly and Joseph A. Ripp resigned as members of the Board and, in connection therewith, the options to purchase shares of Class A Common Stock issued to them expired on February 18, 2005. Joseph M. Redling and Neil Smit, employees of AOL, were appointed to fill the vacancies created by the resignations of Messrs. Kelly and Ripp. Messrs. CUSIP No. 02365B100 Page 11 of 18 Redling and Smit were each granted an option to purchase 60,000 shares of Class A Common Stock in connection with their appointment to the Board at the exercise price of $0.85. On May 17, 2005, David Gang resigned as member of the Board and, in connection therewith, the options to purchase shares of Class A Common Stock issued to him will expire on or around July 16, 2005. Item 6 of this Statement is hereby further amended by deleting the fourteenth paragraph thereof and adding the following in lieu thereof: Pursuant to the Liquidation Letter Agreement, the Reporting Persons and ODC agreed to cooperate with and support AOL-LA's management in the implementation of a wind-down and liquidation plan, and agreed to cause their respective representatives on AOL-LA's Board of Directors, subject to their fiduciary obligations, to take all necessary actions to implement and execute such plan. Essentially, the Reporting Persons and ODC agreed that, after distributions on account of (or reservation for payment of) operating and wind-down expenses, including Chapter 11 administrative expenses and other priority claims required to be paid, and certain general unsecured claims against AOL-LA (excluding any general unsecured claims of AOL against AOL-LA), the proceeds of the liquidation would be split on a 60-40 basis, with the Reporting Persons receiving 60% of the distributions and ODC receiving 40% of the distributions. Additionally, the Reporting Persons agreed to assume ownership of AOL-LA's Puerto Rico assets at an agreed upon net value of $15 million (subject to certain working capital and other adjustments as described in the Liquidation Letter Agreement). In exchange for the Reporting Persons receiving this "value" attributable to AOL-LA's Puerto Rico assets, ODC would be entitled to receive the first actual dollars generated by the liquidation of AOL-LA's other assets in an amount up to 40% of the difference between (x) the value of the Puerto Rico assets and (y) the amount of general unsecured claims of AOL against AOL-LA. Thus, after the payment of the unsecured creditor and priority claims described above, the Reporting Persons would receive 60% of the value generated by the liquidation (including the Puerto Rico assets, in respect of which the Reporting Persons would assume ownership), while ODC would receive 40% of the value generated by the liquidation. The Reporting Persons and ODC expect to continue discussions of more detailed terms in connection with a wind-down of AOL-LA and its businesses consistent with the broader terms of the Liquidation Letter Agreement, and may enter into additional agreements, instruments or term sheets to set forth such detailed terms. The Liquidation Letter Agreement does not require AOL-LA to wind-down or to file a bankruptcy petition and is not binding on AOL-LA, which is not a party to the agreement. It is an agreement between the Reporting Persons and ODC. Any decision to cease operations and begin the wind-down of the businesses of AOL-LA or for AOL-LA to file a petition in bankruptcy under U.S. insolvency laws would be made by the Board of Directors of AOL-LA. References to, and descriptions of, the Note Purchase Agreement, the Convertible Notes, the Charter, the By-laws, the Second Amended and Restated AOL-ODC Registration Rights Agreement, the Second Amended and Restated Stockholders Agreement, the Banco Itau Registration Rights Agreement and the Liquidation Letter Agreement are qualified in their entirety by reference to the copies of such documents filed as exhibits to this Statement, which are incorporated in this Item 6 in their entirety where such references and descriptions appear. CUSIP No. 02365B100 Page 12 of 18 Item 7. Material to be Filed as Exhibits Item 7 of this Statement is hereby amended and restated to read in its entirety as follows: Exhibit Description Number 1. America Online Latin America, Inc.'s Fifth Restated Certificate of Incorporation (filed as Exhibit 3.1 to America Online Latin America, Inc.'s Quarterly Report on Form 10-Q filed on August 16, 2004 and incorporated by reference herein). 2. Amendment to America Online Latin America, Inc.'s Fifth Restated Certificate of Incorporation (filed as Exhibit 99.1 to America Online Latin America's Current Report on Form 8-K filed on May 5, 2005 and incorporated by reference herein). 3. America Online Latin America, Inc.'s Amended and Restated By-laws (filed as Exhibit 3.2 to America Online Latin America, Inc.'s Quarterly Report on Form 10-Q filed on August 14, 2002 and incorporated by reference herein). 4. Note Purchase Agreement, dated as of March 8, 2002, by and between America Online Latin America, Inc. and Time Warner Inc. (filed as Exhibit 99.2 to America Online Latin America, Inc.'s Current Report on Form 8-K filed on March 11, 2002 and incorporated by reference herein). 5. Amendment No. 1 to the Note Purchase Agreement, dated as of May 20, 2002, between Time Warner Inc. and America Online Latin America, Inc. (filed as Exhibit 14 to the Reporting Persons' Amendment No. 6 to Schedule 13D filed on August 29, 2002 and incorporated by reference herein). 6. Form of Initial Note (filed as Exhibit 10.35 to America Online Latin America, Inc.'s Annual Report on Form 10-K filed on April 1, 2002 and incorporated by reference herein). 7. Second Amended and Restated Stockholders' Agreement, dated as of March 8, 2002, by and among America Online, Inc., Aspen Investments LLC, Atlantis Investments, LLC and America Online Latin America, Inc. and, for limited purposes, Time Warner Inc. (filed as Exhibit 10.2 to America Online Latin America, Inc.'s Annual Report on Form 10-K filed on April 1, 2002 and incorporated by reference herein. Portions of such Exhibit have been omitted and have been filed separately by AOL- LA with the Securities and Exchange Commission pursuant to a request for confidential treatment). 8. Second Amended and Restated Registration Rights Agreement, dated as of March 8, 2002, by and among America Online Latin America, Inc., AOL Time Warner Inc., America Online, Inc., Aspen Investments LLC, and Atlantis Investments LLC. (filed as Exhibit 10.4 to America Online Latin CUSIP No. 02365B100 Page 13 of 18 America, Inc.'s Annual Report on Form 10-K filed on April 1, 2002 and incorporated by reference herein). 9. Amended and Restated Registration Rights and Stockholders' Agreement, dated as of March 30, 2001, by and among America Online Latin America, Inc., Banco Itau S.A., Banco Banerj S.A., Banco Itau S.A.-Cayman Branch, Itau Bank Limited, and for purposes of certain sections thereof, America Online, Inc., Atlantis Investments LLC, and Aspen Investments LLC. (filed as Exhibit 2 to the Reporting Persons' Amendment No. 3 to Schedule 13D filed on April 13, 2001 and incorporated by reference herein). 10. Stock Purchase Agreement, dated as of March 30, 2001, by and among America Online Latin America, Inc., America Online, Inc., Aspen Investments LLC, Atlantis Investments LLC, and Banco Itau, S.A.-Cayman Branch. (filed as Exhibit 8 to the Reporting Persons' Amendment No. 3 to Schedule 13D filed on April 13, 2001 and incorporated by reference herein). 11. Joint Filing Agreement, dated as of January 22, 2001, between Time Warner Inc. and America Online, Inc. (filed as Exhibit 7 to the Reporting Persons' Amendment No. 1 to Schedule 13D filed on January 22, 2001 and incorporated by reference herein). 12. Letter Agreement, dated as of May 25, 2005, between Time Warner Inc., America Online, Inc., Aspen Investments LLC and Atlantis Investments LLC. CUSIP No. 02365B100 Page 14 of 18 SIGNATURES ---------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: June 7, 2005 TIME WARNER INC. By: /s/ Wayne H. Pace ---------------------------------------- Name: Wayne H. Pace Title: Executive Vice President and Chief Financial Officer AMERICA ONLINE, INC. By: /s/ Stephen M. Swad ---------------------------------------- Name: Stephen M. Swad Title: Executive Vice President and Chief Financial Officer CUSIP No. 02365B100 Page 15 of 18 SCHEDULE I ADDRESSES OF THE CISNEROS GROUP AND THE BANCO ITAU REPORTING PERSONS ------------------ Atlantis Investments LLC c/o Finser Corporation 550 Biltmore Way, Suite 900 Coral Gables, FL 33134 Aspen Investments LLC c/o Finser Corporation 550 Biltmore Way, Suite 900 Coral Gables, FL 33134 Banco Itau S.A. Praca Alfredo Egydio de Souza Aranha, 100 Torre Itausa, Parque Jabaquara 04344-902 Sao Paulo (SP), Brazil Banco Banerj S.A. Rua da Alfandega, 28 - 9 andar 20070-000 Rio de Janeiro (RJ), Brazil Itau Bank Ltd. P.O. Box 2587 - GT Ansbacher House - 3rd Floor 20 Genesis Close, Georgetown Grand Cayman, Cayman Islands, B.W.I. Banco Itau S.A.- Grand Cayman Branch P.O. Box 2582 - GT Ansbacher House - 3rd Floor 20 Genesis Close, Georgetown Grand Cayman, Cayman Islands, B.W.I. CUSIP No. 02365B100 Page 16 of 18 SCHEDULE II DIRECTORS AND EXECUTIVE OFFICERS OF TIME WARNER ------------------------------------------------- The following table sets forth the name, business address and present principal occupation or employment of each director and executive officer of Time Warner. Unless otherwise noted, each such person is a U.S. citizen, and the business address of each such person is One Time Warner Center, New York, New York 10019. Board of Directors - ------------------ Name and Title Present Principal Occupation - ------------- ---------------------------- Richard D. Parsons Chairman of the Board and Chief Executive Officer; Time Warner Inc. Kenneth J. Novack Senior Counsel; Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC (law firm) James L. Barksdale President and Chairman of the Board; Barksdale Management Corporation 800 Woodland Parkway, Suite 118 Ridgland, MS 39157 Stephen F. Bollenbach Co-Chairman and Chief Executive Officer; Hilton Hotels Corporation 9336 Civic Center Drive Beverly Hills, CA 90210 Stephen M. Case Chairman and Chief Executive Officer; Revolution LLC 1718 M Street, NW Washington, D.C. 20036 Frank J. Caufield Co-Founder; Kleiner Perkins Caufield & Byers Four Embarcadero Center San Francisco, CA 94111 (a venture capital partnership) Robert C. Clark Distinguished Service Professor; Harvard University 1575 Massachusetts Avenue Cambridge, MA 02138 Jessica P. Einhorn Dean; Paul H. Nitze School of Advanced International Studies of John Hopkins University The Nitze Building 1740 Massachusetts Ave, NW Washington, D.C. 20036 Miles R. Gilburne Managing Member; ZG Ventures L.L.C. 1250 Connecticut Avenue Washington, D.C. 20036 CUSIP No. 02365B100 Page 17 of 18 Carla A. Hills Chairman and Chief Executive Officer; Hills & Company 1200 19th Street, NW Washington, D.C. 20036 (international trade and investment consultants) Reuben Mark Chairman and Chief Executive Officer; Colgate-Palmolive Company 300 Park Avenue New York, NY 10022 (consumer products) Michael A. Miles Former Chairman of the Board and Chief Executive Officer; Phillip Morris Companies Inc.; Director of Various Companies R.E. Turner Founder; Turner Broadcasting System, Inc. Francis T. Vincent, Jr. Chairman; Vincent Enterprises 290 Harbor Drive Stamford, CT 06902 (a private investment firm) Deborah C. Wright Chairman of the Board, President and Chief Executive Officer; Carver Bancorp, Inc. and Carver Federal Savings Bank 75 West 125 Street New York, NY 10027-4512 Executive Officers Who Are Not Directors - ---------------------------------------- Name Title and Present Principal Occupation - ---- -------------------------------------- Jeffrey L. Bewkes Chairman, Entertainment & Networks Group; Time Warner Inc. Don Logan Chairman, Media & Communications Group; Time Warner Inc. Edward I. Adler Executive Vice President, Corporate Communications; Time Warner Inc. Paul T. Cappuccio Executive Vice President and General Counsel; Time Warner Inc. Patricia Fili-Krushel Executive Vice President, Administration; Time Warner Inc. Robert M. Kimmitt Executive Vice President, Global & Strategic Policy; Time Warner Inc. Olaf Olafsson Executive Vice President; Time Warner Inc. * Wayne H. Pace Executive Vice President and Chief Financial Officer; Time Warner Inc. * Citizen of Iceland. CUSIP No. 02365B100 Page 18 of 18 SCHEDULE III DIRECTORS AND EXECUTIVE OFFICERS OF AMERICA ONLINE, INC. -------------------------------------------------------- The following table sets forth the name, business address and present principal occupation or employment of each director and executive officer of America Online, Inc. Unless otherwise noted, each such person is a U.S. citizen, and the business address of each such person is 22000 AOL Way, Dulles, Virginia 20166. Board of Directors - ------------------ Name and Title Present Principal Occupation - -------------- ---------------------------- Don Logan Chairman, Media & Communications Group; Time Warner Inc. One Time Warner Center New York, New York 10019 Jonathan F. Miller Chairman and Chief Executive Officer; America Online, Inc. Wayne H. Pace Executive Vice President and Chief Financial Officer; Time Warner Inc. One Time Warner Center New York, New York 10019 Executive Officers Who Are Not Directors - ---------------------------------------- Theodore J. Leonsis Vice Chairman and President, AOL Audience Business John M. Buckley Executive Vice President, Corporate Communications Stephen M. Swad Executive Vice President and Chief Financial Officer Randall J. Boe Executive Vice President, General Counsel and Secretary John A. McKinley Chief Technology Officer and President, AOL Digital Services Business Lance Miyamoto Executive Vice President, Human Resources Joseph M. Redling Chief Marketing Officer Michael J. Kelly President, Media Networks James P. Bankoff Executive Vice President, AOL Audience Business Michael G. Barrett Executive Vice President, AOL Audience Business Kevin Conroy Executive Vice President, AOL Audience Business Joel M. Davidson Executive Vice President, AOL Access Business Mark. J. Greatrex Executive Vice President, AOL Access Business Carol J. Kline Chief Information Officer Matthew R. Korn Executive Vice President, Network Operations David A. Lebow Executive Vice President, AOL Audience Business Neil Smit President, AOL Access Business Gerald Sokol, Jr. Executive Vice President, AOL Access Business Thomas R. Colan Senior Vice President, Controller and Treasurer EX-12 2 d06-0513daolaex12.txt EXHIBIT 12 LETTER AGREEMENT EXHIBIT 12 May 25, 2005 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 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/ Robert Marcus ------------------------------ Name: Robert Marcus Title: Senior Vice President AMERICA ONLINE, INC. By: /s/ Stephen Swad ----------------------------- Name: Stephen Swad Title: EVP and CFO Acknowledged and Agreed as of the date first written above: ASPEN INVESTMENTS L.L.C. By:/s/ Cristina Pieretti ---------------------------- Name: Cristina Pieretti Title: Executive Vice President ATLANTIS INVESTMENTS L.L.C. By: /s/ Cristina Pieretti ----------------------------- Name: Cristina Pieretti Title: Executive Vice President -----END PRIVACY-ENHANCED MESSAGE-----