EXHIBIT 10.14
AMERICA ONLINE LATIN AMERICA, INC.
REGULATION S STOCK SUBSCRIPTION AGREEMENT
June 12, 2000
Banco Itau, S.A Rua Boa Vista 176 Sao Paulo, Brazil
Banco Banerj, S.A. Rua da Alfandega 28 9th Floor Rio de Janeiro, RJ, Brazil
Ladies and Gentlemen:
WHEREAS, America Online Latin America, Inc., a Delaware corporation (hereinafter, the "Company"), has proposed that it issue and sell to Banco Itau, S.A., a Brazilian Sociedade Anonima ("Itau"), and Banco Banerj, S.A., a Brazilian Sociedade Anonima (with Itau, each, a "Purchaser" and collectively, the "Purchasers"), that number of shares (the "Shares") of the Company's Class A Common Stock, $.01 par value per share (the "Class A Common Stock"), as is equal in the aggregate, and calculated immediately after the consummation of the Company's IPO (as defined herein), to twelve percent (12%) of the then outstanding capital stock of the Company after giving effect to each such issuance and sale, calculated on an as converted, fully diluted basis without taking into account (i) the AOL Warrant or any other then outstanding warrants and options to acquire (A) shares of Class A Common Stock or (B) any Common Stock Equivalents or other Equity Securities (each as defined herein), or (ii) any shares of Class A Common Stock or any Common Stock Equivalents or other Equity Securities issued by the Company after the date hereof other than (A) shares of Class A Common Stock issued in the IPO (as defined herein) and (B) shares of Class A Common Stock, Common Stock Equivalents and other Equity Securities issued to AOL, ODC and their Affiliates (each as defined herein) in connection with the Reorganization (as defined herein). As used in this Agreement, the phrase "an as converted, fully diluted basis" means, as of any date, a basis that includes the number of shares of Class A Common Stock of the Company outstanding on such date plus the maximum number of shares of Class A Common Stock that the Company may be required to issue pursuant to obligations under Common Stock Equivalents issued and outstanding as of such date, whether or not then currently exercisable; and
-------------------------------------------------------------------------------- THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) UNLESS SUCH SHARES ARE REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. --------------------------------------------------------------------------------
WHEREAS, the Purchasers wish to purchase the Shares from the Company, with each Purchaser allocated such portion of the Shares as the Purchasers may determine amongst themselves; and
WHEREAS, each of AOL and ODC are executing this Agreement for the limited purpose of joining in the covenants contained in Section 5.04 hereof.
NOW THEREFORE, subject to the terms and conditions set forth below in this Regulation S Stock Subscription Agreement (the "Agreement"), the Company agrees to issue and sell to the Purchasers, and the Purchasers agree to purchase from the Company, the Shares. Terms with initial capital letters used herein without immediate definition shall have the meanings given in Article IV.
ARTICLE I
PURCHASE AND SALE OF SHARES
1.01 The Company agrees to issue and sell to the Purchasers, and the Purchasers agree to purchase, the Shares free and clear of all Liens (other than those created by (i) any action of the Purchasers and (ii) the provisions of the Related Agreements) at a purchase price per Share equal to the initial per share price for the Class A Common Stock in the Company's IPO (as defined herein) (the "Purchase Price"). The closing of the purchase and sale of the Shares shall take place at the offices of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 701
Pennsylvania Ave., N.W., Washington, D.C., 20004 at 10:00 a.m. on the third Business Day after satisfaction or waiver of all of the conditions to closing set forth in Article III hereof, or at such other place, time and date as the Purchasers and the Company shall mutually agree (the "Closing"). At the Closing, the Company will issue and deliver such number of certificates evidencing the Shares as reasonably may be requested by the Purchasers against payment in full of the Purchase Price in such manner as may be agreed by the parties. The parties acknowledge that, absent agreement to the contrary, the Purchase Price shall be paid by means of offsetting payments due to Itau from the Company or its Subsidiaries pursuant to the provisions of the Marketing Agreement (as defined herein).
1.02 The Purchasers hereby represent, warrant and agree, jointly and severally, as follows as of the date hereof and as of the date of the Closing:
(a) Investment Representations. Each Purchaser is acquiring the Shares for
-------------------------- its own account as the sole beneficial owner thereof for the purpose of investment and not with a view to distribution or resale thereof except pursuant to the provisions of Regulation S (as defined below) registration under the Securities Act or exemption therefrom. The acquisition by each Purchaser of the Shares acquired by it shall constitute a confirmation of this representation by such Purchaser. Each Purchaser further represents that it understands and agrees that all certificates evidencing any of the Shares, whether upon initial issuance or upon any transfer thereof shall, until such Shares are registered under the Securities Act or may be transferred in the United States without registration thereunder pursuant to the provisions of Regulation S as promulgated by the Securities Exchange Commission (the "SEC") under the Securities Act ("Regulation S"), shall bear a legend, prominently stamped or printed thereon, reading substantially as follows:
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"These securities have not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be offered, sold, pledged or
otherwise transferred except in accordance with the provisions of
Regulation S promulgated under the Act, pursuant to registration under
the Act, or pursuant to an available exemption from registration under
the Act. In addition, hedging transactions involving these securities
may not be conducted unless in compliance with the Act."
The Company agrees to remove such legend from a certificate evidencing the Shares reasonably promptly upon request of the registered holder thereof if the securities evidenced thereby have been registered under the Securities Act or may be publicly sold in the United States and to U.S. persons without registration under the Securities Act. Upon the reasonable request of the Company, any holder making such a request shall be required to deliver to the Company an opinion of counsel, in form and substance, and from counsel, reasonably satisfactory to the Company, that the securities evidenced thereby may be so publicly sold without registration under the Securities Act.
In addition, each certificate representing the Shares shall, until such Shares are registered under the Securities Act or otherwise may be publicly sold without registration under the Securities Act, shall bear a legend, prominently stamped or printed thereon, reading substantially as follows:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be offered, sold, pledged or
otherwise transferred except pursuant to registration under the Act or
pursuant to an available exemption from registration under the Act."
The Company agrees to remove such legend from a certificate evidencing the Shares reasonably promptly upon request of the registered holder thereof if the securities evidenced thereby have been registered under the Securities Act or may be publicly sold without registration under the Securities Act. Upon the reasonable request of the Company, any holder making such a request shall be required to deliver to the Company an opinion of counsel, in form and substance, and from counsel, reasonably satisfactory to the Company, that the securities evidenced thereby may be so publicly sold without registration under the Securities Act.
In addition, each certificate representing the Shares shall, for so long as the Shares are subject to the restrictions contained in Section 10.1 of the Registration Rights and Stockholders' Agreement, to be dated the date of the Closing, by and between the Purchasers and the Company (the "Registration Rights Agreement"), bear a legend substantially similar to the following:
"The securities represented by this certificate are also subject to
restrictions contained in that certain Registration Rights and
Stockholders' Agreement, dated as of _____, 2000, by and between the
Company, Banco Itau, S.A. and Banco Banerj, S.A.,
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and may not be sold, pledged or otherwise transferred except upon
compliance with the terms thereof. The Company will furnish a copy of
the full text of such Registration Rights and Stockholders' Agreement
to the registered holder of this certificate upon written request and
without charge."
The Company agrees to remove such legend from a certificate evidencing any of the Shares reasonably promptly upon request of the registered holder thereof if the restrictions contained in such agreement are no longer applicable to all of the Shares evidenced by such certificate.
(b) Transfer Restrictions Imposed by Securities Laws. Each Purchaser
------------------------------------------------ understands and agrees that (i) no U.S. or foreign federal, state or local governmental authority has made any finding or determination relating to the fairness of the terms of the investment in the Company proposed hereunder and the Shares have not been registered under the Securities Act and applicable state or foreign securities laws, and, therefore, cannot be resold unless they are subsequently registered under the Securities Act and applicable state and foreign securities laws or unless an exemption from such registration is available; (ii) such Purchaser may not resell or otherwise dispose of all or any part of the Shares except as permitted by law, including, without limitation, Regulation S and all other regulations promulgated under the Securities Act and applicable state and foreign securities laws; (iii) except as is expressly set forth in the Registration Rights Agreement, the Company does not have any obligation to register the Shares under the Securities Act and applicable state and foreign securities laws, and the Company has no present intention of effecting any such registration; and, (iv) without prejudice to the Company's obligations pursuant Section 9.5 of the Registration Rights Agreement, Regulation S, Rule 144 or Rule 144A under the Securities Act may not be available to such Purchaser as a basis for exemption from registration of the Shares under the Securities Act. Each Purchaser agrees not to engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act. Each Purchaser agrees not to engage in any "directed selling efforts" (as such term is defined in Rule 902(c) of Regulation S) with respect to any of the Shares until the expiration of the "distribution compliance period" (as such term is defined in Rule 902(f) of Regulation S). The Company and the Purchasers agree and acknowledge that the Company is required to, and shall refuse to, register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration under the Securities Act.
(c) Access to Information. Each Purchaser has had the opportunity to ask
--------------------- questions and receive answers from the officers and other employees of the Company regarding the terms and conditions of this Agreement, the transactions contemplated hereby (including, without limitation, its acquisition of Shares), as well as the affairs of the Company and its Subsidiaries and related matters.
(d) Corporate Representation. (i) The individual(s) executing this
------------------------ Agreement on each Purchaser's behalf have been duly authorized to execute and deliver this Agreement and the other agreements contemplated hereby, including, without limitation, the Registration Rights Agreement, the Strategic Interactive Services and Marketing Agreement of even date herewith by and between the Company, America Online Brasil, Ltda. ("AOLB"), and Itau (the "Marketing
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Agreement"), and the related Escrow Agreement, to be dated the date of the Closing, by and among the Company, AOLB, Itau and The Bank of New York, as escrow agent (collectively, the "Related Agreements"); (ii) the signature of each such individual is binding upon such Purchaser; (iii) such Purchaser is duly organized, validly existing and in good standing in its jurisdiction of incorporation or organization and has all requisite power and authority to execute and deliver this Agreement and each of the Related Agreements; (iv) this Agreement is, and upon the execution and delivery thereof, each of the Related Agreements will be, legal, valid and binding obligations of each Purchaser, enforceable in accordance with its terms, subject to laws of general application from time to time in effect affecting creditors' rights and the exercise of judicial discretion in accordance with general equitable principles; (v) the execution and delivery of this Agreement and the Related Agreements and the purchase of the Shares hereunder will not result in the violation of, constitute a breach or default under, or conflict with, any term or provision of the Estatutos, bylaws or other similar governing document of either of the Purchasers or, to its knowledge, a breach or default under any material agreement or any judgment, decree, order, law, rule, statute or regulation by which it is bound or which is applicable to it; and (vi) all corporate or other action on the part of the Purchasers necessary for the authorization, execution, delivery and performance of this Agreement and the Related Agreements has been taken.
(e) No Reliance on Prospectus. Each Purchaser understands that the
------------------------- Company filed a Registration Statement on Form S-1 with the SEC on January 20, 2000, File No. 333-95051, as amended by Amendment No. 1 thereto filed with the SEC on February 10, 2000, and as further amended by Amendment No. 2 thereto filed with the SEC on March 14, 2000, Amendment No. 3 thereto filed with the SEC on March 21, 2000, Amendment No. 4 thereto filed with the SEC on March 24, 2000 and Amendment No. 5 thereto filed with the SEC on March 31, 2000 (as so amended, together with all exhibits thereto, the "Registration Statement"), related to the contemplated initial public offering of the Company's Class A Common Stock (the "IPO"). Each Purchaser further understands that the Company's preliminary prospectus included as part of the Registration Statement (the "Prospectus") is subject to revision before the Registration Statement is declared effective, that the Prospectus in its current form may contain untrue statements of material fact, may contain statements that are materially misleading or may omit to state material facts that are necessary to make the statements contained therein not misleading, and such Purchaser acknowledges that it is not relying on any of the information contained in the Registration Statement or the Prospectus in connection with its decision to execute this Agreement and the Related Agreements and to make an investment in the Shares.
(f) Litigation. There is no action, suit, claim, litigation, proceeding,
---------- investigation, arbitration or governmental inquiry, at law or in equity, or before or by any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or arbitration involving private parties (collectively, a "Proceeding") pending or, to the knowledge of the Purchasers, threatened against either Purchaser or any of its Subsidiaries or Affiliates or affecting any of its or their properties or assets, which does or likely would, if adversely determined against a Purchaser or any of its Subsidiaries or Affiliates adversely affect the ability of the Purchasers to consummate the transactions contemplated hereby and by the Related Agreements. There are no Proceedings pending or, to either Purchaser's knowledge, threatened against a Purchaser or any of its Subsidiaries which might call into question the validity of this Agreement or any of the Related Agreements.
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(g) Governmental Filings and Consents. No registration or filing with, or
--------------------------------- consent or approval of or other action by, any Federal, state or other governmental agency or instrumentality, domestic or foreign, under laws and regulations thereof as now in effect (including, without limitation, the Securities Act) is or will be necessary for the valid execution, delivery and performance by the Purchasers of this Agreement and the Related Agreements other than filings required to be made pursuant to the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act"), the notifications required under Law 8.884 of June 11, 1994 and Resolution #15/98 of the Conselho Administrativo de Defesa Economica promulgated thereunder (the "BAT Law"), and any approval of the Brazilian Central Bank that may be required in connection with any payment by the Purchasers of any funds in U.S. Dollars, except for such registrations, filings, approvals and consents, which the failure to make or obtain would not, either individually or in the aggregate, have a material adverse effect on the ability of the Purchasers to consummate the transactions contemplated hereby and by the Related Agreements. No consents of any Person will be necessary for the valid execution, delivery and performance by the Purchasers of this Agreement and the Related Agreements, and the purchase by the Purchasers of the Shares except for such consents, which the failure to obtain would not, either individually or in the aggregate, have an adverse effect on the ability of the Purchasers to consummate the transactions contemplated hereby and by the Related Agreements.
(h) Regulation S. Neither Purchaser is a "U.S. person" as such term is
------------ defined in Rule 902(k) promulgated under Regulation S. Neither Purchaser is acquiring the Shares for the account or benefit of a U.S. person. Neither Purchaser is a "Distributor" or a "Dealer" as such terms are defined in Rule 902 promulgated under Regulation S of the Securities Act. Each Purchaser covenants that neither it nor any Affiliate, nor any other person or entity acting on its or their behalf, has the intention of entering, or will enter into any hedging transaction in violation of the provisions of Regulation S.
(i) Banco Banerj. Not less than seventy five percent (75%) of (a)
------------ the outstanding equity securities of and (b) the voting power entitled to be cast at elections for directors ("Voting Power") of, Banco Banerj is held, directly or indirectly, by Itau and/or Itausa -Investimentos Itau, S.A., a Brazilian Sociedade Anonima ("Itausa").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and agrees as follows as of the date hereof and as of the date of the Closing:
2.01 Incorporation, Standing and Qualification of the Company. The
-------------------------------------------------------- Company and each of its Subsidiaries is a corporation or other entity duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its Subsidiaries has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. The Company and each of its Subsidiaries is qualified as a foreign corporation and in
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good standing in all U.S. states and foreign countries, except in such jurisdictions where the failure to be so duly qualified or licensed or in good standing has not had and is not likely to have, either individually or in the aggregate, a material adverse effect on the business, assets, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole (a "Company Material Adverse Effect").
2.02 Subsidiaries. Except as set forth on Schedule 2.02 of the disclosure
------------ ------------- letter delivered by the Company to the Purchasers on or prior to the date hereof (the "Disclosure Letter"), the Company does not have any Subsidiaries or otherwise (i) own of record or beneficially, directly or indirectly, (A) any shares of capital stock of any other corporation or (B) any participating interest in any partnership, joint venture or other non-corporate business enterprise, or (ii) control, directly or indirectly, any other Person.
2.03 Corporate Power and Authority. The Company has the requisite
----------------------------- power and authority to execute and deliver this Agreement and the Related Agreement, to perform its obligations hereunder and thereunder, and to engage in the transactions contemplated hereby and thereby. All corporate action on the part of the Company necessary for the authorization, execution delivery and performance of this Agreement and the Related Agreements and the authorization, sale, issuance and delivery of the Shares has been taken. The individuals executing this Agreement, the Related Agreements and the Shares on its behalf have been duly authorized to execute and deliver this Agreement, the Related Agreements and the Shares and the signature of each such individual is valid and binding upon the Company. This Agreement is, and upon the execution and delivery thereof, each of the Related Agreements will be, legal, valid and binding obligations of the Company, enforceable in accordance with its terms, subject to laws of general application from time to time in effect affecting creditors' rights and the exercise of judicial discretion in accordance with general equitable principles.
2.04 Charter and By-Laws; Letter Agreement.
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(a) The Company and each of its Subsidiaries has made available to the Purchasers true, correct and complete copies of its Certificate of Incorporation and By-Laws or other governing instruments, as applicable, and all amendments to and restatements of each as of the date hereof.
(b) Each of the documents currently held by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., pursuant to the Letter Agreement, dated as of January 20, 2000, by and between the Company, America Online, Inc. ("AOL"), Riverview Media Corp. ("ODC") and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., including, without limitation, the Restated Certificate of Incorporation of the Company (the "Restated Certificate of Incorporation") and the Restated By-Laws of the Company, is in the form of such document filed as an exhibit to the Registration Statement as of the date of this Agreement, if so filed. True and correct copies of such Letter Agreement (the "Letter Agreement"), and the Contribution Agreement, dated as of January 20, 2000, by and between AOL, ODC and the Company (the "Contribution Agreement") have been made available to the Purchasers.
2.05 Litigation; Compliance with Laws; Bankruptcy
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(a) Litigation. Except as set forth on Schedule 2.05 of the Disclosure
---------- ------------- Letter, there is no Proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or Affiliates or affecting any of its or their properties or assets, or, to the Knowledge of the Company, against any officer, employee, consultant or holder of any of the capital stock of the Company relating to the Company or any of its Subsidiaries or Affiliates or its or their businesses, which does or likely would, if adversely determined against the Company or any of its Subsidiaries or Affiliates, (i) have a Company Material Adverse Effect or (ii) adversely affect the ability of the Company to consummate the transactions contemplated hereby and by the Related Agreements. There are no Proceedings pending or, to the Company's Knowledge, threatened which might call into question the validity of this Agreement, any of the Shares, or any of the Related Agreements. Except as set forth on Schedule 2.05 of the Disclosure Letter, there is no Proceeding by
------------- the Company or any of its Subsidiaries pending or threatened against others.
(b) Compliance with Laws. The Company and each of its Subsidiaries has
-------------------- complied with, and is not in violation of or in default (with due notice or lapse of time or both) with respect to, any laws, governmental rules, governmental regulations, governmental orders, judgments, decrees, writs, injunctions and awards of any arbitration, court or governmental authority applicable to it and its business, operations, properties, assets, products and services, the violation of which or default under which would have a Company Material Adverse Effect, and the Company and each of its Subsidiaries has all permits, licenses and other authorizations required to conduct its and their business as currently conducted, except where the failure so to obtain such permits, licenses and other authorizations has not had, and is not likely to have, either individually or in the aggregate, a Company Material Adverse Effect.
(c) Bankruptcy. Neither the Company nor any of its Subsidiaries has
---------- admitted in writing its inability to pay its debts generally as they become due, filed or consented to the filing against it of a petition in bankruptcy or a petition to take advantage of any insolvency act, made an assignment for the benefit of creditors, consented to the appointment of a receiver for itself or for the whole or any substantial part of its property, or had a petition in bankruptcy filed against it, been adjudicated as bankrupt, or filed a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other law or statute of the United States of America or any other jurisdiction.
2.06 Violations of Charter Provisions and Other Instruments. Neither
------------------------------------------------------ the Company nor any of its Subsidiaries is in violation or default (with due notice or lapse of time or both) of its charter, By-laws or other corporate restriction, or of any agreement or instrument to which it is a party, except in the case of such agreements or instruments for such violations or defaults, which, individually or in the aggregate, would not have a Company Material Adverse Effect. Neither the authorization, execution, delivery or performance of this Agreement or the Related Agreements, nor the sale, issuance and delivery of the Shares, nor the consummation of the transactions herein and therein contemplated, nor the fulfillment of or compliance with the terms hereof and thereof, will confl ...