ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of August 22, 2000
Goldman Sachs International and Itau Bank Ltd. have entered and/or
anticipate entering into one or more transactions (each a "Transaction")
that are or will be governed by this Master Agreement, which includes the
schedule (the "Schedule"), and the documents and other confirming evidence
(each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master
Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the
Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this
("Agreement"), and the parties would not otherwise enter into any
Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agree ment.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been
effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to
which such change applies unless such other party gives timely notice of a
reasonable objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise have
been payable by the other party, replaced by an obligation upon the party
by whom the larger aggregate amount would have been payable to pay to the
other party the excess of the larger aggregate amount over the smaller
aggregate amount.
The parties may elect in respect of two or more Transactions that a net
amount will be determined in respect of all amounts payable on the same
date in the same currency in respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The
election may be made in the Schedule or a Confirmation by specifying that
subparagraph (ii) above will not apply to the Transactions identified as
being subject to the election, together with the starting date (in which
case subparagraph (ii) above will not, or will cease to, apply to such
Transactions from such date). This election may be made separately for
different groups of Transactions and will apply separately to each pairing
of Offices through which the parties make and receive payments or
deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without
any deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as
modified by the practice of any relevant governmental revenue author
ity, then in effect. If a party is so required to deduct or withhold,
then that party ("X") will:
(1) promptly notify the other party ('Y") of such requirement;
(2) pay to the relevant authorities the full amount required to
be deducted or withheld (including the full amount required to
be deducted or withheld from any additional amount paid by X to
Y under this Section 2(d)) promptly upon the earlier of
determin ing that such deduction or withholding is required or
receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documenta tion reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition
to the payment to which Y is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure
that the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will
equal the full amount Y would have received had no such
deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that
it would not be required to be paid but for:
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (1) any action taken by a
taxing authority, or brought in a court of competent
jurisdic tion, on or after the date on which a
Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to
this Agree ment) or (11) a Change in Tax Law.
(ii) LIABILITY. If:
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X would
not be required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the
amount of such liability (including any related liability for
interest, but including any related liability for penalties only if Y
has failed to comply with or perform any agreement contained in
Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section
6(c), be required to pay interest (before as well as after judgment) on the
overdue amount to the other party on demand in the same currency as such
overdue amount, for the period from (and including) the original due date
for payment to (but excluding) the date of actual payment, at the Default
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed. If, prior to the occurrence or
effective designation of an Early Termination Date in respect of the
relevant Transaction, a party defaults in the performance of any obligation
required to be settled by delivery, it will compensate the other party on
demand if and to the extent provided for in the relevant Confirmation or
elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be
deemed to be repeated by each party on each date on which a Transaction is
entered into and, in the case of the representations in Section 3(f), at
all times until the termination of this Agreement) that:
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws
of the jurisdiction of its organization or incorporation and, if
relevant under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorize such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required
to have been obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party have been obtained and
are in full force and effect and all conditions of any such consents
have been complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles
of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law)).
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as
a result of its entering into or performing its obligations under this
Agreement or any Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or
proceeding at law or in equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is likely to affect the
legality, validity or enforceability against it of this Agreement or any
Credit Support Document to which it is a party or its ability to perform
its obligations under this Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of
the date of the information, true, accurate and complete in every material
respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and
true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may
have any obligation under this Agreement or under any Credit Support
Document to which it is a party:
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or
taxing authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to
make a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of
any Tax or with such deduction or withholding at a reduced rate (so
long as the completion, execution or submission of such form or
document would not materially prejudice the legal or commercial
position of the party in receipt of such demand), with any such form
or document to be accurate and completed in a manner reasonably
satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or,
if none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and will
use all reasonable efforts to obtain any that may become necessary in the
future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations under
this Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section I 1, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated, organized,
managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this
Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the
other party against any Stamp Tax levied or imposed upon the other party or
in respect of the other party's execution or performance of this Agreement
by any such Stamp Tax Jurisdiction which is not also a Stamp Tax
Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any of the following events constitutes
an event of default (an "Event of Default") with respect to such party:
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to
be complied with or performed by it in accordance with any
Credit Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of this
Agreement (in either case other than in accordance with its
terms) prior to the satisfaction of all obligations of such
party under each Transaction to which such Credit Support
Document relates without the written consent of the other
party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been
made or repeated by the party or any Credit Support Provider of such
party in this Agreement or any Credit Support Document proves to have
been incorrect or misleading in any material respect when made or
repeated or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment.
delivery or exchange date of, or any payment on early termination of,
a Specified Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice requirement or
grace period) or (3) disaffirms, disclaims, repudiates or rejects, in
whole or in part, a Specified Transaction (or such action is taken by
any person or entity appointed or empowered to operate it or act on
its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a
default, event of default or other similar condition or event
(however described) in respect of such party, any Credit Support
Provider of such party or any applicable Specified Entity of such
party under one or more agreements or instruments relating to
Specified Indebtedness of any of them (individually or collectively)
in an aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of
being declared, due and payable under such agreements or instruments,
before it would otherwise have been due and payable or (2) a default
by such party, such Credit Support Provider or such Specified Entity
(individually or collectively) in making one or more payments on the
due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments
(after giving effect to any applicable notice requirement or grace
period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy
or the entry of an order for relief or the making of an order
for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of
the institution or presentation thereof; (5) has a
resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation,
amalgamation or merger); (6) seeks or becomes subject to the
appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses
(1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation, amalgamation,
merger or transfer-
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit Support
Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other
party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its
obligations under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes an
Illegality if the event is specified in (i) below, a Tax Event if the event
is specified in (ii) below or a Tax Event Upon Merger if the event is
specified in (iii) below, and, if specified to be applicable, a Credit
Event
Upon Merger if the event is specified pursuant to (iv) below or an
Additional Termination Event if the event is specified pursuant to (v)
below:
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation
by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes
unlawful (other than as a result of a breach by the party of Section
4(b)) for such party (which will be the Affected Party):
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which the
party (or such Credit Support Provider) has under any Credit
Support Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on
the next succeeding Scheduled Payment Date (1) be required to pay to
the other party an additional amount in respect of an lndemnifiable
Tax under Section 2(d)(i)(4) (except in respect of interest under
Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which
an amount is required to be deducted or withheld for or on account of
a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) and no additional amount is required to be paid in respect of
such Tax under Section 2(d)(i)(4) (other than by reason of Section
2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If Credit Event Upon Merge is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity
of X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event"' is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party
or Affected Parties shall be as specified for such Additional
Termination Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also
constitutes an Illegality, it will be treated as an Illegality and will not
constitute an Event-of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred
and is then continuing, the other party (the "Non-defaulting Party") may,
by not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
outstanding Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termination
Date in respect of all outstanding Transactions will occur immediately upon
the occurrence with respect to such party of an Event of Default specified
in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto,
(8), and as of the time immediately preceding the institution of the
relevant proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will
give notice to the other party to that effect within such 20 day
period, whereupon the other party may effect such a transfer within
30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the
other party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party
will use all reasonable efforts to reach agreement within 30 days
after notice thereof is given under Section 6(b)(i) on action to
avoid that Termination Event.
(iv) RIGHT TO TERMINATE. If:
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected
with respect to all Affected Transactions within 30 days after
an Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than
one Affected Party, or the party which is not the Affected Party in
the case of a Credit Event Upon Merger or an Additional Termination
Event if there is only one Affected Party may, by not more than 20
days notice to the other party and-provided that the relevant
Termination Event is then continuing, designate a day not earlier
than the day such notice is effective as an Early Termination Date in
respect of all Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the
date so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e)) and
(2) giving details of the relevant account to which any amount
payable to it is to be paid. In the absence of written confirmation
from the source of a quotation obtained in determining a Market
Quotation, the records of the party obtaining such quotation will be
conclusive evidence of the existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of an
Early Termination Date which is designated or occurs as a result of
an Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before
as well as after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either 'Market Quotation" or "Loss", and a
payment method, either the 'First Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the
Schedule, it will be deemed that "Market Quotation" or the "Second Method",
as the case may be, shall apply. The amount, if any, payable in respect of
an Early Termination Date and determined pursuant to this Section will be
subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party over (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal to
(A) the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it
is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply,an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount
to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is
not the Affected Party, respectively, and, if Loss applies and
fewer than all the Transactions are being terminated, Loss
shall be calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be payable
equal to (1) the sum of (a) one-half of the difference
between the Settlement Amount of the party with the
higher Settlement Amount ("X") and the Settlement Amount
of the party with the lower Settlement Amount ("Y") and
(b) the Termination Currency Equivalent of the Unpaid
Amounts owing to X less (11) the Termination Currency
Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss
in respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of
the party with the higher Loss ("X") and the Loss of the
party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of
that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and the loss of protection against future risks
and except as otherwise provided in this Agreement neither party will
be entitled to recover any additional damages as a consequence of
such losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of
all or substantially all its assets to, another entity (but without
prejudice to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in
any currency other than the Contractual Currency, except to the extent such
tender results in the actual receipt by the party to which payment is owed,
acting in a reasonable manner and in good faith in converting the currency
so tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this Agreement.
If for any reason the amount in the Contractual Currency so received falls
short of the amount in the Contractual Currency payable in respect of this
Agreement, the party required to make the payment will, to the extent
permitted by applicable law, immediately pay such additional amount in the
Contractual Currency as may be necessary to compensate for the shortfall.
If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount
of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this
Agreement, (ii) for the payment of any amount relating to any early
termination in respect of this Agreement or (iii) in respect of a judgment
or order of another court for the payment of any amount described in (i) or
(ii) above, the party seeking recovery, after recovery in full of the
aggregate amount to which such party is entitled pursuant to the judgment
or order, will be entitled to receive immediately from the other party the
amount of any shortfall of the Contractual Currency received by such party
as a consequence of sums paid in such other currency and will refund
promptly to the other party any excess of the Contractual Currency received
by such party as a consequence of sums paid in such other currency if such
shortfall or such excess arises or results from any variation between the
rate of exchange at which the Contractual Currency is converted into the
currency of the judgment or order for the purposes of such judgment or
order and the rate of exchange at which such party is able, acting in a
reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with
the amount of the currency of the judgment or order actually received by
such party. The term "rate of exchange" includes, without Limitation, any
premiums and costs of exchange payable in connection with the purchase of
or conversion into the Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected
by judgment being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and
supersedes all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing
evidenced by a facsimile transmission) and executed by each of the parties
or confirmed by an exchange of telexes or electronic messages on an
electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative
and not exclusive of any rights, powers, remedies and privileges provided
by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed
an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate
as a waiver, and a single or partial exercise of any right, power or
privilege will not be presumed to preclude any subsequent or further
exercise, of that right, power or privilege or the exercise of any other
right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken
into consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or
home office represents to the other party that, notwithstanding the place
of booking office or jurisdiction of incorporation or Organization of such
party, the obligations of such party are the same as if it had entered into
the Transaction through its head or home office. This representation will
be deemed to be repeated by such party on each date on which a Transaction
is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office
through which it makes and receives payments or deliveries with respect to
a Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including
legal fees and Stamp Tax, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any Credit
Support Document to which the Defaulting Party is a party or by reason of
the early termination of any Transaction, including, but not limited to,
costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice
or other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient
in legible form (it being agreed that the burden of proving receipt
will be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail
is delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt,
as applicable, is not a Local Business Day or that communication is
delivered (or attempted) or received, as applicable, after the close of
business on a Local Business Day, in which case that communication shall be
deemed given and effective on the first following day that is a Local
Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details
at which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan
in New York City, if this Agreement is expressed to be governed by
the laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings
in any other jurisdiction (outside, if this Agreement is expressed to be
governed by English law, the Contracting States, as defined in Section 1(3)
of the Civil Jurisdiction and Judgments Act 1982 or any modification,
extension or re- enactment thereof for the time being in force) nor will
the bringing of Proceedings in any one or more jurisdictions preclude the
bringing of Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and
on its behalf, service of process in any Proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly
notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to
service of process given in the manner provided for notices in Section 12.
Nothing in this Agreement will affect the right of either party to serve
process in any other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement
of any judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and
irrevocably agrees, to the extent permitted by applicable law, that it will
not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSITIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b)
with respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose,
"control" of any entity or person means ownership of a majority of the
voting power of the entity or person.
"APPLICABLE RATE" means:
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after
the date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is
specified as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if
it were to fund or of funding the relevant amount plus 1 % per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with
Section 6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be
imposed in respect of a payment under this Agreement but for a present or
former connection between the jurisdiction of the government or taxation
authority imposing such Tax and the recipient of such payment or a person
related to such recipient (including, without limitation, a connection
arising from such recipient or related person being or having been a
citizen or resident of such jurisdiction, or being or having been
organized, present or engaged in a trade or business in such jurisdiction
or having or having had a permanent establishment or fixed place of
business in such jurisdiction, but excluding a connection arising solely
from such recipient or related person having executed, delivered, performed
its obligations or received a payment under, or enforced, this Agreement or
a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the
case of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" and "unlawful" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) (a) in relation to any obligation
under Section 2(a)(i), in the place(s) specified in the relevant
Confirmation or, if not so specified, as otherwise agreed by the parties in
writing or determined pursuant to provisions contained, or incorporated by
reference, in this Agreement, (b) in relation to any other payment, in the
place where the relevant account is located and, if different, in the
principal financial center, if any, of the currency of such payment, (c) in
relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address
for notice provided by the recipient and, in the case of a notice
contemplated by Section 2(b), in the place where the relevant new account
is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant
locations for performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to
be its total losses and costs (or gain, in which case expressed as a
negative number) in connection with this Agreement or that Terminated
Transaction or group of Terminated Transactions, as the case may be,
including any loss of bargain, cost of funding or, at the election of such
party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related
trading position (or any gain resulting from any of them). Loss includes
losses and costs (or gains) in respect of any payment or delivery required
to have been made (assuming satisfaction of each applicable condition
precedent) on or before the relevant Early Termination Date and not made,
except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or
6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not
reasonably practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in
the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated
Transactions and a party making the determination, an amount determined on
the basis of quotations from Reference Market-makers. Each quotation will
be for an amount, if any, that would be paid to such party (expressed as a
negative number) or by such party (expressed as a positive number) in
consideration of an agreement between such party (taking into account any
existing Credit Support Document with respect to the obligations of such
party) and the quoting Reference Market-maker to enter into a transaction
(the "Replacement Transaction") that would have the effect of preserving
for such party the economic equivalent of any payment or delivery (whether
the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) by the parties under
Section 2(a)(i) in respect of such Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group
of Terminated Transactions are to be excluded but, without limitation, any
payment or delivery that would, but for the relevant Early Termination
Date, have been required (assuming satisfaction of each applicable
condition precedent) after that Early Termination Date is to be included.
The Replacement Transaction would be subject to such documentation as such
party and the Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable
as of the same day and time (without regard to different time zones) on or
as soon as reasonably practicable after the relevant Early Termination
Date. The day and time as of which those quotations are to be obtained will
be selected in good faith by the party obliged to make a determination
under Section 6(e), and, if each party is so obliged, after consultation
with the other. If more than three quotations are provided, the Market
Quotation will be the arithmetic mean of the quotations, without regard to
the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation
remaining after disregarding the highest and lowest quotations. For this
purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation
in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof
or evidence of any actual cost) to the Non-defaulting Party (as certified
by it) if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's
bead or home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of
notice or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer
or to make an extension of credit and (b) to the extent practicable, from
among such dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions
(a) in which the party is incorporated, organized, managed and controlled
or considered to have its seat, (b) where an Office through which the party
is acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to
be made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of
retention or withholding or similar right or requirement to which the payer
of an amount under Section 6 is entitled or subject (whether arising under
this Agreement, another contract, applicable law or otherwise) that is
exercised by, or imposed on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early
Termination Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation cannot be determined
or would not (in the reasonable belief of the party making the
determination) produce a commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety
or otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party)
and the other party to this Agreement (or any Credit Support Provider of
such other party or any applicable Specified Entity of such other party)
which is a rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect
to any of these transactions), (b) any combination of these transactions
and (c) any other transaction identified as a Specified Transaction in this
Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any government or other taxing
authority in respect of any payment under this Agreement other than a
stamp, registration, documentation or similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date
(a) if resulting from a Termination Event, all Affected Transactions and
(b) if resulting from an Event of Default, all Transactions (in either
case) in effect immediately before the effectiveness of the notice
designating that Early Termination Date (or, if "Automatic Early
Termination" applies, immediately before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount
denominated in the Termination Currency, such Termination Currency amount
and, in respect of any amount denominated in a currency other than the
Termination Currency (the "Other Currency"), the amount in the Termination
Currency determined by the party making the relevant determination as being
required to purchase such amount of such Other Currency as at the relevant
Early Termination Date, or, if the relevant Market Quotation or Loss (as
the case may be), is determined as of a later date, that later date, with
the Termination Currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of
such Other Currency with the Termination Currency at or about 11:00 a.m.
(in the city in which such foreign exchange agent is located) on such date
as would be customary for the determination of such a rate for the purchase
of such Other Currency for value on the relevant Early Termination Date or
that later date. The foreign exchange agent will, if only one party is
obliged to make a determination under Section 6(e), be selected in good
faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable, a Credit Event Upon Merger or an
Additional Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of
the cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on
or prior to such Early Termination Date and which remain unpaid as at such
Early Termination Date and (b) in respect of each Terminated Transaction,
for each obligation under Section 2(a)(i) which was (or would have been but
for Section 2(a)(iii)) required to be settled by delivery to such party on
or prior to such Early Termination Date and which has not been so settled
as at such Early Termination Date, an amount equal to the fair market value
of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding)
such Early Termination Date, at the Applicable Rate. Such amounts of
interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation
referred to in clause (b) above shall be reasonably determined by the party
obliged to make the determination under Section 6(e) or, if each party is
so obliged, it shall be the average of the Termination Currency Equivalents
of the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date specified on the
first page of this document.
Goldman Sachs International Itau Bank Ltd.
---------------------------- ---------------
(Name of Party) (Name of Party)
By: /s/ Daniel B. O'Rourke By: /s/ Paulo Roberto Soares
--------------------------- ---------------------------
Name: Daniel B. O'Rourke Name: Paulo Roberto Soares
Title: Title: Director
Date: Date: Sao Paulo 28, 2000
Execution Copy
SCHEDULE
TO THE
ISDA MASTER AGREEMENT
DATED AS OF AUGUST 17, 2000
BETWEEN
GOLDMAN SACHS INTERNATIONAL,
A COMPANY ORGANIZED UNDER THE LAW OF ENGLAND AND WALES
("GSI"),
AND
ITAU BANK LTD.,
A CORPORATION ORGANIZED UNDER THE LAWS OF THE CAYMAN ISLAND
("ITAU").
PART 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY"
(i) means, in relation to GSI, Goldman, Sachs & Co.,
Goldman Sachs Capital Markets, L.P., J. Aron & Company,
Goldman Sachs International Finance and Goldman Sachs
(Asia) Finance for the purpose of Section 5(a)(v), and
shall not apply for purposes of Sections 5(a)(vi),
5(a)(vii) and 5(b)(iv); and
(ii) means, in relation to ITAU, Banco Itau, S.A..
(b) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will
apply to GSI and to ITAU as such provisions are amended
below.
"THRESHOLD AMOUNT" means (i) in relation to GSI, 3% of the
stockholders' equity of The Goldman Sachs Group, Inc.
("Goldman Group") and (ii) in relation to ITAU, 3% of the
stockholders' equity of ITAU.
(c) The "CREDIT EVENT UPON MERGER" provisions of Section
5(b)(iv) shall apply to GSI and to ITAU. The parties hereby
agree that, notwithstanding anything to the contrary in
Section 5(b)(iv), no Termination Event will occur if (i) X
is the acquiring party or the surviving party in any such
consolidation, amalgamation or merger or (ii) X retains at
least 50% of its total assets in any such transfer of
assets.
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will not apply to GSI and will not apply to ITAU; provided,
however, where the Event of Default specified in Section
5(a)(vii)(1), (3), (4), (5), (6) or to the extent analogous
thereto, (8) of the Agreement, is governed by a system of
law which does not permit termination to take place after
the occurrence of the relevant Event of Default, then the
Automatic Early Termination provision of Section 6(a) of the
Agreement will apply to GSI and ITAU.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e):
(i) Market Quotation will apply to each Transaction having
an original maturity of less than or equal to 90 days.
Loss will apply to each Transaction having an original
maturity of greater than 90 days.
(ii) The Second Method will apply.
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) The parties agree to amend the following subsections of
Section 5(a) as follows:
(i) Clause (i): payment or delivery defaults will be
subject to a cure period of one Local Business Day;
provided that if such failure is the result of a
technical difficulty where the party has the ability to
perform, such payment or delivery default will be
subject to a cure period of two Local Business Days;
(ii) Clause (vi): delete, the clause "or becoming capable at
such time of being declared," in line seven so that
only Specified Indebtedness which has been accelerated
triggers this event;
(iii) Clause (vii)(4): delete, following the word
"liquidation" in line 9, the clause beginning with
"and, in the case of" and ending with the word
"thereof" in line 13; and in Clause (vii)(7): delete,
following the word "assets" in line 19, the clause
beginning with "and such secured party" and ending with
the word "thereafter" in line 21, to eliminate the
30-day grace period;
(iv) Clause (vii)(4)(A): insert, following the word
"liquidation" in line 12 the words ", or the filing of
a protest in respect of a debt instrument of ITAU in a
principal amount greater than the Threshold Amount at
the Registry of Protests of Deeds and Documents,";
(v) Clause (vii): insert new section (7) as follows and
re-number the remaining sections accordingly: "is
subject to any event that would give rise to the
intervention or extrajudicial liquidation of ITAU by
the Central Bank of Brazil of it, pursuant to Law No.
6024 of March 13, 1974, including, but not limited to
(a) losses which may represent a risk to its creditors;
(b) repeated or serious infringement by its management
of Brazilian laws and regulations; (c) failure to pay
its debts when due; (d) it being deemed insolvent; or
(e) if, upon cancellation of its operating
authorization, its statutory liquidation proceedings
not being carried out in due course or being carried
out with delay representing a risk to its creditors,";
(vi) The parties also agree to add a new clause (ix) as
follows:
(ix) ADEQUATE ASSURANCE. A party ("X") fails to provide
adequate assurance of its ability to perform all
of its outstanding obligations hereunder to the
other party ("Y") on or before the second Local
Business Day after a request for such assurance is
made by Y when Y has reasonable grounds for
insecurity. It is understood and agreed that one
acceptable form of adequate assurance will be the
provision by X of a letter of credit from a bank
and in a form acceptable to Y.
(h) The parties agree to amend Section 6(a): insert, following
the word "petition" in line 9 the words ", or the filing of
a protest in respect of a debt instrument of ITAU in a
principal amount greater than the Threshold Amount at the
Registry of Protests of Deeds and Documents,".
(i) EARLY TERMINATION. Notwithstanding anything to the contrary
in Section 6(a), the parties agree that, except with respect
to Transactions (if any) that are subject to Automatic Early
Termination, the Non-defaulting Party is not required to
liquidate the Transactions on a single day, but rather may
liquidate the Transactions over a commercially reasonable
period of time (not to exceed twenty days) (the "Early
Termination Period"). The last day of the Early Termination
Period shall be the Early Termination Date for purposes of
Section 6; provided, however, that interest shall accrue on
the Transactions liquidated during the Early Termination
Period prior to the Early Termination Date at the Default
Rate.
(j) Additional Termination Event: Additional Termination Event
shall apply and the following shall constitute an Additional
Termination Event:
With respect to Party B, at any time and for any reason Banco
Itau, S.A. ceases to own benefically and of record (directly or
indirectly) at least fifty-one percent (51%) (determined on a
fully diluted basis) of the capital stock of each class of stock
of Party B. In which case Party B is the affected party
PART 2. TAX REPRESENTATIONS.
(a) PAYER TAX REPRESENTATIONS. For the purposes of Section 3(e),
GSI and ITAU make the following representation:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment
(other than interest under Section 2(e), 6(d)(ii), or 6(e)
of this Agreement) to be made by it to the other party under
this Agreement. In making this representation, it may rely
on (i) the accuracy of any representations made by the other
party pursuant to Section 3(f) of this Agreement, (ii) the
satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of this Agreement, and the accuracy and
effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement,
and (iii) the satisfaction of the agreement of the other
party contained in Section 4(d) of this Agreement, provided
that it shall not be a breach of this representation where
reliance is placed on Clause (ii) and the other party does
not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial
position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f),
each Party will make the representation specified below, if
any:-
It is fully eligible for the benefits of the "Business Profits" or
"Industrial and Commercial Profits" provision, as the case may be, the
"Interest" provision or the "Other Income" provision (if any) of the
Specified Treaty with respect to any payment described in such provisions
and received or to be received by it in connection with this Agreement and
no such payment is attributable to a trade or business carried on by it
through a permanent establishment in the Specified Jurisdiction.
If such representation applies, then:
Specified Treaty means the double taxation convention between the
countries in which the parties are resident or domiciled for the
purposes of their actions under this Agreement.
Specified Jurisdiction means the country in which the other party
is resident or domiciled.
PART 3. AGREEMENT TO DELIVER DOCUMENTS
(a) For the purpose of Section 4(a):
Tax forms, documents, or certificates to be delivered are:
Not applicable
(b) Other documents to be delivered are:
---------------------------------------------------------------------------
PARTY FORM/DOCUMENT/CERTIFICATE DATE BY COVERED BY
REQUIRED TO WHICH TO SECTION 3(D)
DELIVER BE REPRESENTATION
DELIVERED
---------------------------------------------------------------------------
Party A & Evidence reasonably satisfactory At Yes
Party B to the other party of the signing execution
authority and specimen signature of this
of any individual executing this Agreement
Agreement, any Credit Support and
Document and any Confirmation on thereafter
its behalf on request
---------------------------------------------------------------------------
GSI Guaranty of The Goldman Sachs Upon No
Group, Inc. or its successor execution
("Goldman Group") in the form of of this
Exhibit A hereto Agreement
---------------------------------------------------------------------------
GSI Copy of the most recent, publicly Promptly Yes
available audited Annual Statement following
of Financial Condition of reasonable
Goldman Group demand by
Itau
---------------------------------------------------------------------------
GSI Copy of the most recent, publicly Promptly Yes
available quarterly report following
containing audited financial reasonable
statements of Goldman Group, demand by
prepared in accordance with the GSI
generally accepted accounting
principles in the country in which
the party is organized
---------------------------------------------------------------------------
ITAU A legal opinion with respect to Promptly Yes
Itau in a form acceptable to GSI following
reasonable
demand by
GSI
---------------------------------------------------------------------------
ITAU Copy of the most recent, publicly Promptly Yes
available annual report following
containing audited financial reasonable
statements prepared in accordance demand by
with the generally accepted GSI
accounting principles in the
country in which the party is organized
---------------------------------------------------------------------------
PART 4. MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to GSI:
Address for notices or communications to Party A:-
Address: Peterborough Court, 133 Fleet Street, London EC4A 2BB
Attention: Swaps Administration Facsimile No. 0171-774 5115
Equity Derivatives Facsimile No. 0171-774 1500
Telex No: 887902 GSLL Telephone No. 0171-774-1000
With a copy to:
Address: Goldman Sachs & Co.
1 New York Plaza
37th Floor
New York, New York 10004
Attention: General Counsel of Equities Division
Telephone: (212) 902-1000
Address for notices or communications to ITAU:
Address: Banco ITAU S.A., Sao Paulo
Rua Boa Vista 176
Andar 11, Corpo 5
Sao Paulo CEP 01014-919
Brazil
Attention: General Manager - Foreign Exchange Desk
Telephone: 55-11-237-4100
Facsimile: 55-11-237-2324
(b) PROCESS AGENT. For the purpose of Section 13(c):
GSI appoints as its Process Agent: Not applicable.
ITAU appoints as its Process Agent in the Borough of Manhattan,
City, County and State of New York:
Banco Itau S.A., New York Branch
540 Madison Avenue, 24th Floor
New York, NY 10022
Telephone: 212-486-1280
Facsimile: 212-888-9342
(c) OFFICES. The provisions of Section 10(a) will apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
GSI is not a Multibranch Party.
ITAU is a Multibranch Party and may act through its Head Office
in Sao Paulo and its Cayman Islands Branch.
(e) CALCULATION AGENT. The Calculation Agent is GSI.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document,
each of which are incorporated by reference in, and made part of,
this Agreement and each Confirmation (unless provided otherwise
in a Confirmation) as if set forth in full in this Agreement or
such Confirmation:
Guaranty by Goldman Group in favor of ITAU as beneficiary
thereof, in the form of Exhibit A hereto.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means, in
relation to GSI, Goldman Group. Credit Support Provider means in
relation to ITAU, Not applicable.
(h) GOVERNING LAW AND JURISDICTION. SECTIONS 13(A) AND (B) ARE HEREBY
REPLACED WITH THE FOLLOWING:
(a) GOVERNING LAW. THIS AGREEMENT AND EACH TRANSACTION ENTERED
INTO HEREUNDER WILL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE.
(b) JURISDICTION. WITH RESPECT TO ANY ACTION, SUIT OR
PROCEEDINGS RELATING TO THIS AGREEMENT ("PROCEEDINGS"), EACH
PARTY IRREVOCABLY: (I) SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW
YORK CITY, AND (II) WAIVES ANY OBJECTION WHICH IT MAY HAVE
AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDINGS
BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT SUCH
PROCEEDINGS HAVE BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH
PROCEEDINGS, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER
SUCH PARTY. NOTHING IN THE AGREEMENT PRECLUDES EITHER PARTY
FROM BRINGING PROCEEDINGS IN ANY OTHER JURISDICTION IN ORDER
TO ENFORCE ANY JUDGMENT OBTAINED IN ANY PROCEEDINGS REFERRED
TO IN THE PRECEDING SENTENCE, NOR WILL THE BRINGING OF SUCH
ENFORCEMENT PROCEEDINGS IN ANY ONE OR MORE JURISDICTIONS
PRECLUDE THE BRINGING OF ENFORCEMENT PROCEEDINGS IN ANY
OTHER JURISDICTION.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) will not
apply to Transactions.
PART 5. OTHER PROVISIONS.
(a) ABSENCE OF LITIGATION. Section 3(c) is hereby amended by deleting
the words "any of its Affiliates" and replacing them with "its
Credit Support Provider, if applicable."
(b) ACCURACY OF SPECIFIED INFORMATION. Section 3(d) is hereby amended
by adding in the third line thereof after the word "respect" and
before the period, the phrase "or, in the case of audited or
unaudited financial statements, a fair presentation of the
financial condition of the relevant person."
(c) SCOPE OF AGREEMENT. Notwithstanding anything contained in this
Agreement to the contrary, any transaction which may otherwise
constitute a "Specified Transaction" for purposes of this
Agreement which has been or will be entered into between GSI and
ITAU shall constitute a "Transaction" which is subject to,
governed by, and construed in accordance with the terms of this
Agreement, unless the Confirmation thereto expressly provides
otherwise.
(d) ADDITIONAL REPRESENTATIONS. The parties agree to amend Section 3
by adding new Sections 3(g), (h), (i), (j), (k) and (l) as
follows:
(g) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap
participant" as defined in the Part 35 Regulations of the
Commodity Futures Trading Commission (the "CFTC").
(h) NON-RELIANCE. It is acting for its own account, and it has
made its own independent decisions to enter into that
Transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary.
It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation
to enter into that Transaction; it being understood that
information and explanations related to the terms and
conditions of a Transaction shall not be considered
investment advice or a recommendation to enter into that
Transaction. No communication (written or oral) received
from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction.
(i) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the
merits of and understanding (on its own behalf or through
independent professional advice), and understands and
accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes,
the risks of that Transaction.
(j) STATUS OF PARTIES. The other party is not acting as a
fiduciary for or an adviser to it in respect of that
Transaction.
(k) PLACE OF CONTRACT. Solely for purposes of Article 9 of
Brazilian Decree-law No. 4657 dated September 4, 1942, GSI
represents and ITAU expressly agrees that (i) this Agreement
and each Transaction entered into hereunder has been
constituted in England, (ii) GSI is the proponent of this
Agreement and each Transaction entered into hereunder and
(iii) GSI has requested that ITAU execute and deliver this
Agreement as a condition to GSI entering into Transactions
with ITAU.
(l) HEDGING TRANSACTIONS. When entering into Transactions
through its head office or any other office located in
Brazil, ITAU represents that it is entering into this
Agreement and each Transaction hereunder to protect its
rights and obligations against interest and currency
exchange fluctuations, as well as against variations in
commodities prices, in the international markets and that
ITAU is allowed to hedge such exposures and does so pursuant
to and strictly in accordance with Resolution 2012 of the
Brazilian National Monetary Counsel dated July 30, 1993, and
Circular No. 2348 of the Brazilian Central Bank dated July
30, 1993.
(e) TRANSFER.
The parties also agree to amend Section 7 by adding new Sections
7(c) and (d) as follows:
(c) in addition to, and not in lieu of, the preceding transfer
of rights, GSI may transfer this Agreement (in whole or in
part) to any of GSI's Affiliates, provided, that if such
transfer or assignment is to an entity other than Goldman
Group, ITAU shall be furnished, upon its request, with a
guaranty of the Goldman Group substantially in the form of a
guaranty provided to ITAU in connection with this Agreement
or with an agreement in writing of Goldman Group that the
existing guaranty will apply to the obligations of the
assignee under this Agreement; and
(d) any transfer of all or any part of the obligations of either
party made in compliance with this Section will constitute
an acceptance and assumption of such obligations by the
transferee, a novation of the transferee in place of the
transferor with respect to such obligations (and any related
interests so transferred), and a release and discharge by
the non-transferring party of the transferor from, and an
agreement by the non-transferring party not to make any
claim for payment, liability, or otherwise against the
transferor with respect to, such obligations from and after
the effective date of the transfer.
(f) CONSENT TO RECORDING. The parties agree to amend Section 9 by
adding a new Section 9(h) as follows:
(h) CONSENT TO RECORDING. The parties agree that each may
electronically record all telephone conversations between
them, with or without the use of a warning tone, and that
any such recordings may be submitted in evidence to any
court or in any Proceeding for the purpose of establishing
the formation or existence of any Transaction and the terms
thereof.
(g) DEFINITIONS. The following amendments are hereby made to Section
14:
(i) "DEFAULT RATE" shall be the overnight London Interbank
Offered Rate, as determined by the relevant payee in a
commercially reasonable manner plus 1%, and;
(ii) The definition of "TERMINATION CURRENCY EQUIVALENT" in
Section 14 is hereby amended by deleting in its entirety the
text after the first three lines thereof and replacing it
with the following:
by the party making the relevant determination in any
commercially reasonable manner as being required to purchase
such amount of such Other Currency as at the relevant Early
Termination Date, or, if the relevant Loss or Market
Quotation, as applicable, is determined as of a later date,
that later date, for value on the date the payment or
settlement payment is due.
(h) SEVERABILITY. If any term, provision, covenant, or condition of
this Agreement, or the application thereof to any party or
circumstance, shall be held to be invalid or unenforceable (in
whole or in part) for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with
the invalid or unenforceable portion eliminated, so long as this
Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject
matter of this Agreement and the deletion of such portion of this
Agreement will not substantially impair the respective benefits
or expectations of the parties to this Agreement; provided,
however, that this severability provision shall not be applicable
if any provision of Sections 1(c), 2, 5, 6 or 13 (or any
definition or provision in Section 14 to the extent it relates
to, or is used in or in connection with any such Section) shall
be so held to be invalid or unenforceable.
(i) SET-OFF. The parties agree to amend Section 6 by adding a new
Section 6(f) as follows:
(f) Any amount (the "Early Termination Amount") payable to one
party (the Payee) by the other party (the Payer) under
Section 6(e), in circumstances where there is a Defaulting
Party, will, at the option of the party ("X") other than the
Defaulting Party (and without prior notice to the Defaulting
Party), be reduced by its set-off against any amount(s) (the
"Other Agreement Amount") payable (whether at such time or
in the future or upon the occurrence of a contingency) by
the Payee to the Payer (irrespective of the currency, place
of payment or booking office of the obligation) under any
other agreement(s) between the Payee and the Payer or
instrument(s) or undertaking(s) issued or executed by one
party to, or in favor of, the other party (and the Other
Agreement Amount will be discharged promptly and in all
respects to the extent it is so set-off). X will give notice
to the other party of any set-off effected under this
Section 6(f).
For this purpose, either the Early Termination Amount or the
Other Agreement Amount (or the relevant portion of such
amounts) may be converted by X into the currency in which
the other is denominated at the rate of exchange at which
such party would be able, acting in a reasonable manner and
in good faith, to purchase the relevant amount of such
currency.
If any obligation is unascertained, X may in good faith
estimate that obligation and set-off in respect of the
estimate, subject to the relevant party accounting to the
other when the obligation is ascertained.
Nothing in this Section 6(f) shall be effective to create a
charge or other security interest. This Section 6(f) shall
be without prejudice and in addition to any right of
set-off, combination of accounts, lien or other right to
which any party is at any time otherwise entitled (whether
by operation of law, contract or otherwise).
(j) ESCROW. Either party may at its option and in its sole discretion
notify the other party that payments or deliveries on any date
are to be made in escrow. In such case, the deposit of the
payment or delivery due earlier on that date shall be made by
2:00 p.m. (local time at the place for the earlier payment or
delivery) on that date with an escrow agent that is a commercial
bank, independent of either party, with a minimum net worth of US
$100,000,000 or its equivalent in another currency, selected by
such notifying party, accompanied by irrevocable payment or
delivery instructions (i) to release the deposited payment or
delivery to the intended recipient upon receipt by the escrow
agent of the required deposit of the corresponding payment or
delivery from the other party on the same date accompanied by
irrevocable payment or delivery instructions to the same effect,
or (ii) if the required deposit of the corresponding payment or
delivery is not made on that same date, to return the payment or
delivery deposited to the party that paid or delivered into
escrow. The notifying party shall pay the costs of the escrow
arrangements and shall cause those arrangements to provide that
interest shall be paid thereon.
(k) DEFINITIONS. This Agreement, each Confirmation and each
Transaction are subject to the 1991 ISDA Definitions, as
published by the International Swaps and Derivatives Association,
Inc. ("ISDA") and the 1998 FX and Currency Option Definitions as
published by ISDA, the Emerging Markets Traders Association and
the Foreign Exchange Committee and the 1996 Equity Derivatives
Definitions, each as amended, supplemented, updated, and
superseded from time to time (together, the "Definitions"), and
will be governed in all respects by the Definitions (except that
references to "Swap Transactions" in the Definitions will be
deemed to be references to "Transactions"). The Definitions, as
so modified, are incorporated by reference in, and made part of,
this Agreement and each Confirmation as if set forth in full in
this Agreement and such Confirmations. In the event of any
inconsistency between the provisions of this Agreement and the
Definitions, this Agreement will prevail. Subject to Section
1(b), in the event of any inconsistency between the provisions of
any Confirmation, this Agreement, and the Definitions, such
Confirmation will prevail for the purpose of the relevant
Transaction.
(l) WAIVER OF TRIAL BY JURY. Each party hereby irrevocably waives any
and all right to trial by jury in any Proceeding.
(m) INCONVERTIBILITY. If, in the reasonable opinion of either GSI or
ITAU, an event (a "Disruption Event") occurs and is continuing on
any payment date, payment exchange date or settlement date of any
Transaction under this Agreement, in the jurisdiction (the "Event
Currency Jurisdiction") of any one currency for payment specified
in such Transaction (the "Event Currency") that generally makes
it impossible to either (i) convert the Event Currency into U.S.
Dollars or any other currency which is the subject of such
Transaction (the "Non-Event Currency") through customary legal
channels, (ii) deliver the Non-Event Currency from accounts
inside the Event Currency Jurisdiction to accounts outside the
Event Currency Jurisdiction or (iii) deliver the Event Currency
between accounts inside the Event Currency Jurisdiction or to a
party that is a non-resident of the Event Currency Jurisdiction,
then such payment, exchange or settlement shall be made in U.S.
Dollars in an amount as determined in the manner described below.
Payments of any corresponding amounts due in the Non-Event
Currency shall be made on the date such U.S. Dollars are paid.
With respect to any Transaction to be settled in U.S. Dollars
according to the previous paragraph, the payment, exchange or
settlement amount shall be calculated based on the settlement
rate which shall be the average of the Mid Rates provided on the
Valuation Date of such Transaction by three internationally
recognized dealers or banks in the relevant market as mutually
agreed by the parties hereto, applying only the offshore rates
quoted by such dealers or banks; provided, that if quoted rates
are available from only two such dealers or banks, the settlement
rate shall be the average of the Mid Rates quoted by such dealers
or banks, and that if quoted rates are available from only one
such dealer or bank or if no rate is available, the parties shall
mutually determine the settlement rate in good faith and in a
commercially reasonable manner. The "Mid Rate" shall mean the
average of the bid and offer rates at which the Non-Event
Currency can be exchanged for the Event Currency on such
Valuation Date for settlement in accordance with standard market
practice. If the unit used to measure exchange rates between the
Event Currency and the Non-Event Currency is changed, the
calculations herein shall be adjusted accordingly. No dealer or
bank selected shall be an affiliate of either party. "Valuation
Date" shall mean the date that is the original settlement date
for such Transaction in respect of which a settlement rate is to
be determined, and the new settlement date for such Transaction
shall be two Business Days after such Valuation Date.
If, with respect to such Transaction, a Disruption Event would
otherwise constitute an Illegality, Impossibility, force majeure
or other similar event, then such event or circumstance will be
treated as a Disruption Event and will be deemed not to
constitute an Illegality, Impossibility, force majeure or other
similar event, as the case may be, for purposes of such
Transaction and this Agreement.
(n) FINANCIAL SERVICES ACT: MONEY MARKET REGULATION. Party A has been
accepted by the Financial Services Authority (formerly by the
Bank of England) as a listed money market institution under
Section 43 of the Financial Services Act 1986 ("FSA"). As a
result, certain Transactions hereunder, including interest rate
and currency swaps, are exempt from the provisions of the FSA
(including its investor protection regime), and Party B will be
deemed a "wholesale counterparty" under the Financial Services
Authority's supervisory regime for listed institutions. Such
regime is regulated under the Financial Services Authority's
London Code of Conduct (a free copy of which is obtainable by
telephoning the Wholesale Markets Supervision Division on +44 171
676 5846).
(o) OTC OPTIONS. With respect to any Transactions which are
over-the-counter options on a security, group of securities, or
index of securities ("Options"), the following provisions shall
apply:
(i) Party A and Party B each acknowledge that the offer and sale
of Options to it is intended to be exempt from registration
under the Securities Act of 1933, as amended (the
"Securities Act"), by virtue of Section 4(2) thereof and the
provisions of Regulation D thereunder. In furtherance
thereof, the Party A and Party B each represents and
warrants to, and agrees with, the other that (i) it has the
financial ability to bear the economic risk of its
investment in Options and has adequate means for providing
for its current needs and personal or other contingencies
and (ii) it qualifies as an "accredited investor" as that
term is defined under Regulation D.
(ii) With respect to any Options hereunder, Goldman, Sachs & Co.
("GS&Co.") will act as agent for Party A and Party B
pursuant to instructions from Party A and Party B. GS&Co.
shall have no responsibility or personal liability to Party
A or Party B arising from any failure by Party A or Party B
to pay or perform any obligation hereunder. Each of Party A
and Party B agrees to proceed solely against the other to
collect or recover any amount owing to it or enforce any of
its right in connection with or as a result of Options
entered into hereunder.
Notwithstanding the above, for purposes of applicable rules of
The Securities and Futures Authority ("SFA") Party A shall treat
GS&Co. alone as its customer. As a consequence, most of the
customer protections available under SFA rules will not be
available to Party B, and Party B should therefore look
exclusively for Party B's protection to such obligations as
GS&Co. may owe to Party B under U.S. law.
Notwithstanding any provisions of this Agreement, the parties
hereby agree that any and all notices, demands or communications
of any kind relating to Options entered into hereunder shall be
transmitted exclusively through GS&Co. at the addresses specified
herein.
(iii) Party A and Party B each acknowledge and agree to be bound
by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. applicable to transactions in
Options, and further agree not to violate the position and
exercise limits set forth therein.
PART 6. FX TRANSACTIONS AND CURRENCY OPTIONS.
(a) SCOPE. This Part 6 is applicable to all FX Transactions and
Currency Option Transactions as defined in the 1998 FX and
Currency Option Definitions published by the International Swaps
and Derivatives Association, Inc., the Emerging Markets Traders
Association and the Foreign Exchange Committee (the "1998 FX
Definitions") as well as any other Transaction agreed by the
parties to be an FX Transaction or a Currency Option Transaction.
In the event of any inconsistency with any other part of this
Agreement this Part 6 shall prevail. This Agreement and this Part
6 shall apply (unless agreed otherwise in relation to any
specific Transaction and specifically stated in the relevant
Confirmation) to FX Transactions and Currency Option Transactions
outstanding between the parties as of the date this Agreement is
effective and entered into by the parties on and after such date.
In addition to the 1991 ISDA Definitions, this Agreement, and
each FX Transaction and Currency Option Transaction to which it
relates, shall be subject to and incorporate the 1998 FX
Definitions (as amended in this Part 6) except that in the event
of inconsistency: (A) the 1998 FX Definitions as amended herein
shall prevail over the 1991 ISDA Definitions; and (B) this Part 6
shall prevail over both the 1991 ISDA Definitions and the 1998 FX
Definitions.
(b) The following new section is added to Section 3.4 of the 1998 FX
Definitions:
"(c) Payment of Premium. Unless otherwise agreed in writing by
the Parties, the Buyer shall be obligated to pay the premium
related to an Option no later than its Premium Payment Date. If
any Premium is not received on or before the Premium Payment
Date, the Seller may elect; (i) to accept a late payment of such
Premium; or (ii) to give written notice of such non-payment and,
if such payment shall not be received within two (2) Local
Business Days of such notice, treat the related Currency Option
Transaction as void; or (iii) to give written notice of such
non-payment and, if such payment shall not be received within two
(2) Local Business Days of such notice, treat such nonpayment as
an Event of Default under Section 5(a)(i) of the Master
Agreement. If the Seller elects to act under clause (i) of the
preceding sentence, the Buyer shall pay interest on such Premium
in the same currency as such Premium from the day such Premium
was due until the day paid at the Default Rate. If the Seller
elects to act under clause (ii) of the first sentence hereof, the
Buyer shall pay all out-of-pocket costs and actual damages
incurred in connection with such unpaid or late Premium or void
Currency Option Transaction, including, without limitation,
interest on such Premium from and including the Premium Payment
Date to but excluding the late payment date in the same Currency
as such Premium at the then prevailing market rate and any other
costs or expenses incurred by the Seller in connection with
covering its obligations (including, without limitation, for the
loss of its bargain, its cost of funding, or the loss incurred as
a result of terminating, liquidating, obtaining or
re-establishing a delta hedge or related trading position) with
respect to such Currency Option Transaction."
(c) CONFIRMATIONS. Any FX Transaction or Currency Option Transaction
into which the parties may before the date of this Agreement have
entered, or may in the future enter, where the relevant
Confirmation on its face does not expressly exclude the
application of this Agreement, shall (to the extent not otherwise
provided for in this Agreement) be subject to, governed by and
construed in accordance with this Agreement (in substitution for
any existing terms, if any, whether express or implied). The
parties agree that Confirmations need not follow the form
recommended in the 1998 FX Definitions but may be in such other
form and be exchanged by such other means (including an
electronic messaging system) as may be acceptable to the parties.
Each such FX Transaction and Currency Option shall be a
Transaction, and the documents and other confirming evidence
(including electronic messages on an electronic messaging
service) exchanged between the parties confirming such FX
Transaction or Currency Option Transaction shall each be a
Confirmation (even where not so specified therein), for the
purposes of this Agreement. Each such Confirmation will
supplement, form part of, and be subject to this Agreement and
all provisions in this Agreement will govern the Confirmation and
the definitions and provisions contained in the 1998 FX
Definitions will be incorporated into the Confirmation. In the
event of any inconsistency between the terms of a Confirmation
for a Currency Option Transaction or Non-Deliverable FX
Transaction and this Agreement, the Confirmation shall prevail
for the purpose of the relevant Currency Option Transaction or
Non-Deliverable FX Transaction. In the event of any inconsistency
between the terms of a Confirmation for a Deliverable FX
Transaction and this Agreement, the Agreement shall prevail,
notwithstanding Section l(b) of the Agreement, unless either the
Confirmation explicitly states that it shall prevail over this
Agreement and it has been signed by both Parties or Confirmations
so stating have been exchanged by the Parties.
(d) PAYMENT INSTRUCTIONS. All payments made hereunder in respect of
FX Transactions and Currency Options shall be made in accordance
with the standing payment instructions provided by the parties
(or as otherwise specified in the relevant Confirmation).
IN WITNESS WHEREOF, the parties have executed this document on the
respective dates specified below with effect from the date specified on the
first page of this document.
ITAU BANK LTD. WITNESS
By: /s/ Paulo Roberto Soares By:
--------------------------- -------------------------
Name: Paulo Roberto Soares Name:
Title: Director Title:
Date: Sao Paulo 28, 2000 Date:
ITAU BANK LTD. WITNESS
By: /s/ Daniel B. O'Rourke By: /s/ Oonagh Bradley
--------------------------- -------------------------
Name: Name: Oonagh Bradley
Title: Title:
Date: Sept 1, 2000 Date:
GOLDMAN SACHS INTERNATIONAL WITNESS
By: By:
--------------------------- -------------------------
Name: Name:
Title: Title:
Date: Date:
Place of Execution: England Place of Execution: England
WITNESS
By:
---------------------------
Name:
Date:
Place of Execution: England
-----------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS ABOVE | REGULATED BY
THE SECURITIES AND FUTURES AUTHORITY
-----------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771391 / 1.00.0911.2446
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771391
-----------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Call
Seller: GSI
Buyer: Counterparty
Shares: The Class A Common Stock, $.01 par
value per share of America Online
Latin America, Inc. (the "Issuer")
Number of Options: 1,320,834
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.4704
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures or
options on the Shares are traded.
Procedure for Exercise:
Expiration Time: At the close of the regular trading
session on the Exchange without
regard to after-hours or extended
hours trading.
Expiration Date: August 29, 2001
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction and
Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect of
a Physically-settled Option
Transaction, in the case of a Call,
that the Reference Price is equal
to or greater than the Strike Price
and, in case of a Put, that the
Reference Price is less than the
Strike Price.
Reference Price: The mid-point of the best bid and
ask prices quoted as of the
Expiration Time (or the last such
prices quoted immediately before
the Expiration Time) without regard
to quotations that lock or cross
the dealer exchange or quotation
system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment
Date: 3 Currency Business Days after the
Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the New
Shares are listed on a U.S.
securities exchange or reported by
The Nasdaq National Market, Inc. If
the New Shares are not so listed or
reported then Cancellation and
Payment at the election of GSI in
its sole discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity Definitions,
the amount payable under this
Transaction upon the occurrence of
a Merger Event, Nationalization or
Insolvency shall be calculated by
the Calculation Agent in good faith
in accordance with Section 9.7 of
the Equity Definitions except that
the factors identified in
Subparagraphs (i), (ii) and (iii)
therein are replaced by the
following:
(i) a mid-market implied volatility
for the Shares (as determined by
the Calculation Agent) on the
Exchange Business Day immediately
prior to the Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been paid
in respect of gross ordinary cash
dividends on the relevant Shares in
the calendar year ending on the
Announcement Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to holders
of such Shares at the time of the
Option Value Event (valued as of
the closing of the Option Value
Event); and
(iv) an Option maturity of the
period of time from and including
the Announcement Date to and
including the Expiration Date.
Notwithstanding Section 9.2(b) of
the Equity Definitions, "Merger
Date" means the date of closing of
the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation will
be governed by and construed in
accordance with the laws of the
State of New York (without
reference to its choice of laws
doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, GSI will deposit in an account set up at GSI for the benefit
of Counterparty, a number of Shares equal to the Number of Options and
thereafter maintain with GSI a number of Shares equal to the Number of
Shares (the "GSI Collateral"). GSI hereby grants Counterparty a first
priority security interest in the GSI Collateral as collateral for its
obligations under this Transaction. Upon any default by GSI (including any
default under the Agreement), Counterparty shall have all of the rights
with respect to the GSI Collateral of a secured party under the New York
Uniform Commercial Code. Counterparty shall be entitled to exercise any and
all voting and other consensual rights pertaining to the GSI Collateral
provided that the Counterparty shall give GSI at least five Exchange
Business Days' prior written notice of the manner in which it desires to
exercise any such right.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
-----------------------------------------------------------------------------
Goldman Sachs International | Peterborough Court | 133 Fleet Street |
London EC4A 2BB Tel: 020-7774-1081 | Telex: 887902 | Cable: GOLDSACHS LONDON |
Registered in England No. 2263951 | Registered Office As Above |
Regulated by the Securities and Futures Authority
------------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771433 / 1.00.0911.2458
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771433
-------------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement dated as of August 22, 2000, as amended and
supplemented from time to time (the "Agreement"), between Goldman
Sachs International ("GSI") and Itau Bank Ltd. ("Counterparty"). All
provisions contained in the Agreement govern this Confirmation except
as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Put
Seller: Counterparty
Buyer: GSI
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 1,320,834
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.4704
Premium: [omitted and filed separately
with the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded. Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2001
Automatic Exercise: Applicable; provided that clause (i)
under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price is
equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best
bid and ask prices quoted as of
the Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations that
lock or cross the dealer exchange
or quotation system.
Seller's Telephone Number and
Telex and/or Facsimile Number
and Contact Details for Purpose
of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement
Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the New
Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not so
listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity Definitions, the
amount payable under this Transaction
upon the occurrence of a Merger Event,
Nationalization or Insolvency shall be
calculated by the Calculation Agent in
good faith in accordance with Section
9.7 of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and (iii)
therein are replaced by the following:
(i) a mid-market implied volatility for
the Shares (as determined by the
Calculation Agent) on the Exchange
Business Day immediately prior to the
Announcement Date;
(ii) dividends based on, and payable on
the same dates as, amounts determined
by the Calculation Agent to have been
paid in respect of gross ordinary cash
dividends on the relevant Shares in the
calendar year ending on the
Announcement Date;
(iii) a value ascribed to the relevant
Shares equal to the consideration, if
any, paid in respect of such Shares to
holders of such Shares at the time of
the Option Value Event (valued as of
the closing of the Option Value Event);
and
(iv) an Option maturity of the period
of time from and including the
Announcement Date to and including the
Expiration Date.
Notwithstanding Section 9.2(b) of the
Equity Definitions, "Merger Date" means
the date of closing of the Merger
Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation will be
governed by and construed in accordance
with the laws of the State of New York
(without reference to its choice of
laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, Counterparty will deposit and thereafter maintain with GSI
an amount of cash in United States Dollars equal to the price that
Counterparty sold a number of Shares equal to the Number of Options to GSI
in the Private Placement (the "Counterparty Collateral"). Counterparty
hereby grants GSI a first priority security interest in the Counterparty
Collateral as collateral for its obligations under this Transaction and the
Agreement. Upon any default by Counterparty (including any default under
the Agreement), GSI shall have all of the rights with respect to the
Counterparty Collateral of a secured party under the New York Uniform
Commercial Code. Notwithstanding any limitation otherwise imposed by
Section 9-207(2)(e) of the New York Uniform Commercial Code, GSI shall be
entitled to use in any way, pledge, repledge, hypothecate, rehypothecate or
further assign (collectively, "rehypothecate") any collateral delivered to
GSI by Counterparty pursuant to this Agreement, subject to the obligation
to return such collateral or equivalent collateral to Counterparty.
For the avoidance of doubt GSI shall not be required to pay any interest on
such Counterparty Collateral to Counterparty and it is hereby expressly
agreed for the purposes of Rule 4-52(1) of the Client Money Rules of The
Securities and Futures Authority Limited ("SFA Client Money Rules") that
any money transferred by Counterparty to GSI under this Transaction shall
not be treated as client money and shall not be subject to the protections
conferred by the SFA Client Money Rules. The effect of this is that (a) any
such money will not be segregated from the money of GSI and may be used by
GSI in the course of GSI's business, and (b) in respect of any such money,
Counterparty will rank as a general creditor of GSI.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of and
has made its own independent decisions to enter into the Transaction and as
to whether the Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisers as it has deemed necessary,
including advice from its tax and accounting advisors regarding the tax and
accounting implications (respectively) of this Transaction and the
Transaction Structure. No communication (written or oral) received from GSI
or its affiliates shall be deemed to be an assurance or guarantee as to the
expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain information
from GSI concerning the terms and conditions of the Transaction necessary
in order for the Counterparty to evaluate the merits and risks of the
Transaction and the Transaction Structure. Notwithstanding the foregoing,
Counterparty is not relying on any communication (written or oral) of GSI
as investment advice or as a recommendation to enter into the Transaction;
it being understood that information and explanations related to the terms
and conditions of a Transaction are made incidental to GSI's business and
shall not be considered investment advice or a recommendation to enter in
the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the Shares
delivered in settlement of this Transaction will not be, subject to any
liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in compliance
with the reporting and other requirements of Sections 13 and 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure on
its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the provisions
of Section 10.1 of the Registration Rights Agreement and the
restrictions contained in the Subscription Agreement with respect to
all Shares subject to the Transaction Structure, and to inform any
transferee of any of such Shares in writing of the existence and
exact nature of such restrictions and require any transferee to agree
in writing to be bound by such restrictions, (b) to hold all such
Shares free and clear of all liens, claims and encumbrances of any
kind or nature, other than those securing the Counterparty's
obligations hereunder or under the Transaction Structure, (c) not to
assign or transfer the Transaction Structure or any of its rights,
duties or obligations thereunder to any Person other than an
Affiliate of GSI who agrees in writing to be bound by all of the
terms and conditions of the Transaction Structure, the provisions of
Section 10.1 of the Registration Rights Agreement and the
restrictions contained in the Subscription Agreement with respect to
all Shares subject to such Transaction Structure, and prior to any
such assignment or transfer, identify any proposed assignee or
transferee of any of the Shares subject to the Transaction Structure
or any proposed transferee or assignee of the Transaction Structure
or any of GSI's duties or obligations thereunder and include such
obligation in any similar transaction, and (d) that the Issuer shall
have a right to approve any proposed transferee of Shares or assignee
of the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any Affiliate
of GSI, such approval not to be withheld or delayed unreasonably.
8. The parties agree that the Issuer shall be a third party beneficiary
under this Transaction entitled to enforce the above noted agreements
against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription
Agreement dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
-----------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS ABOVE | REGULATED BY
THE SECURITIES AND FUTURES AUTHORITY
-----------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771466 / 1.00.0911.2481
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771466
-----------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Call
Seller: GSI
Buyer: Counterparty
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 3,249,250
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.1593
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2002
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best bid
and ask prices quoted as of the
Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment
Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date.
If at any time GSI determines in its good faith discretion that it has a
conflict of interest in any matter that will be the subject of a vote of
the Issuer's shareholders and it cannot assign the Option to another third
party pre-approved by the Issuer prior to the second Exchange Business Day
before the record date of such shareholder vote (the "Record Date"), then
the Expiration Date shall be accelerated to the Exchange Business Day prior
to the Record Date or such other date as agreed between the parties. In
such an event the Calculation Agent shall adjust the Strike Price pro-rata
to preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, GSI will deposit in an account set up at GSI for the benefit
of Counterparty, a number of Shares equal to the Number of Options and
thereafter maintain with GSI a number of Shares equal to the Number of
Shares (the "GSI Collateral"). GSI hereby grants Counterparty a first
priority security interest in the GSI Collateral as collateral for its
obligations under this Transaction. Upon any default by GSI (including any
default under the Agreement), Counterparty shall have all of the rights
with respect to the GSI Collateral of a secured party under the New York
Uniform Commercial Code. Counterparty shall be entitled to exercise any and
all voting and other consensual rights pertaining to the GSI Collateral
provided that the Counterparty shall give GSI at least five Exchange
Business Days' prior written notice of the manner in which it desires to
exercise any such right.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
------------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON
| REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS ABOVE |
REGULATED BY THE SECURITIES AND FUTURES AUTHORITY
------------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771482 / 1.00.0911.2501
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771482
------------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Put
Seller: Counterparty
Buyer: GSI
Shares: The Class A Common Stock, $.01 par
value per share of America Online
Latin America, Inc. (the "Issuer")
Number of Options: 3,249,250
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.1593
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2002
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best bid
and ask prices quoted as of the
Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, Counterparty will deposit and thereafter maintain with GSI
an amount of cash in United States Dollars equal to the price that
Counterparty sold a number of Shares equal to the Number of Options to GSI
in the Private Placement (the "Counterparty Collateral"). Counterparty
hereby grants GSI a first priority security interest in the Counterparty
Collateral as collateral for its obligations under this Transaction and the
Agreement. Upon any default by Counterparty (including any default under
the Agreement), GSI shall have all of the rights with respect to the
Counterparty Collateral of a secured party under the New York Uniform
Commercial Code. Notwithstanding any limitation otherwise imposed by
Section 9-207(2)(e) of the New York Uniform Commercial Code, GSI shall be
entitled to use in any way, pledge, repledge, hypothecate, rehypothecate or
further assign (collectively, "rehypothecate") any collateral delivered to
GSI by Counterparty pursuant to this Agreement, subject to the obligation
to return such collateral or equivalent collateral to Counterparty.
For the avoidance of doubt GSI shall not be required to pay any interest on
such Counterparty Collateral to Counterparty and it is hereby expressly
agreed for the purposes of Rule 4-52(1) of the Client Money Rules of The
Securities and Futures Authority Limited ("SFA Client Money Rules") that
any money transferred by Counterparty to GSI under this Transaction shall
not be treated as client money and shall not be subject to the protections
conferred by the SFA Client Money Rules. The effect of this is that (a) any
such money will not be segregated from the money of GSI and may be used by
GSI in the course of GSI's business, and (b) in respect of any such money,
Counterparty will rank as a general creditor of GSI.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
-----------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS ABOVE |
REGULATED BY THE SECURITIES AND FUTURES AUTHORITY
-----------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771508 / 1.00.0911.2517
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771508
-----------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Call
Seller: GSI
Buyer: Counterparty
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 1,320,833
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.1991
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2003
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best bid
and ask prices quoted as of the
Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date.
If at any time GSI determines in its good faith discretion that it has a
conflict of interest in any matter that will be the subject of a vote of
the Issuer's shareholders and it cannot assign the Option to another third
party pre-approved by the Issuer prior to the second Exchange Business Day
before the record date of such shareholder vote (the "Record Date"), then
the Expiration Date shall be accelerated to the Exchange Business Day prior
to the Record Date or such other date as agreed between the parties. In
such an event the Calculation Agent shall adjust the Strike Price pro-rata
to preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, GSI will deposit in an account set up at GSI for the benefit
of Counterparty, a number of Shares equal to the Number of Options and
thereafter maintain with GSI a number of Shares equal to the Number of
Shares (the "GSI Collateral"). GSI hereby grants Counterparty a first
priority security interest in the GSI Collateral as collateral for its
obligations under this Transaction. Upon any default by GSI (including any
default under the Agreement), Counterparty shall have all of the rights
with respect to the GSI Collateral of a secured party under the New York
Uniform Commercial Code. Counterparty shall be entitled to exercise any and
all voting and other consensual rights pertaining to the GSI Collateral
provided that the Counterparty shall give GSI at least five Exchange
Business Days' prior written notice of the manner in which it desires to
exercise any such right.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell. 7. In connection with
the entering into of this Transaction and the Transaction Structure, GSI
agrees: (a) to comply with the provisions of Section 10.1 of the
Registration Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to the
Transaction Structure, and to inform any transferee of any of such Shares
in writing of the existence and exact nature of such restrictions and
require any transferee to agree in writing to be bound by such
restrictions, (b) to hold all such Shares free and clear of all liens,
claims and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure or any
of its rights, duties or obligations thereunder to any Person other than an
Affiliate of GSI who agrees in writing to be bound by all of the terms and
conditions of the Transaction Structure, the provisions of Section 10.1 of
the Registration Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or transfer,
identify any proposed assignee or transferee of any of the Shares subject
to the Transaction Structure or any proposed transferee or assignee of the
Transaction Structure or any of GSI's duties or obligations thereunder and
include such obligation in any similar transaction, and (d) that the Issuer
shall have a right to approve any proposed transferee of Shares or assignee
of the Transaction Structure or any of its rights, duties or obligations
thereunder, including, without limitation, any Affiliate of GSI, such
approval not to be withheld or delayed unreasonably. 8. The parties agree
that the Issuer shall be a third party beneficiary under this Transaction
entitled to enforce the above noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
-----------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS
ABOVE | REGULATED BY THE SECURITIES AND FUTURES AUTHORITY
------------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771524 / 1.00.0911.2525
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771524
------------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Put
Seller: Counterparty
Buyer: GSI
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 1,320,833
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.1991
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2003
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best
bid and ask prices quoted as of
the Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, Counterparty will deposit and thereafter maintain with GSI
an amount of cash in United States Dollars equal to the price that
Counterparty sold a number of Shares equal to the Number of Options to GSI
in the Private Placement (the "Counterparty Collateral"). Counterparty
hereby grants GSI a first priority security interest in the Counterparty
Collateral as collateral for its obligations under this Transaction and the
Agreement. Upon any default by Counterparty (including any default under
the Agreement), GSI shall have all of the rights with respect to the
Counterparty Collateral of a secured party under the New York Uniform
Commercial Code. Notwithstanding any limitation otherwise imposed by
Section 9-207(2)(e) of the New York Uniform Commercial Code, GSI shall be
entitled to use in any way, pledge, repledge, hypothecate, rehypothecate or
further assign (collectively, "rehypothecate") any collateral delivered to
GSI by Counterparty pursuant to this Agreement, subject to the obligation
to return such collateral or equivalent collateral to Counterparty.
For the avoidance of doubt GSI shall not be required to pay any interest on
such Counterparty Collateral to Counterparty and it is hereby expressly
agreed for the purposes of Rule 4-52(1) of the Client Money Rules of The
Securities and Futures Authority Limited ("SFA Client Money Rules") that
any money transferred by Counterparty to GSI under this Transaction shall
not be treated as client money and shall not be subject to the protections
conferred by the SFA Client Money Rules. The effect of this is that (a) any
such money will not be segregated from the money of GSI and may be used by
GSI in the course of GSI's business, and (b) in respect of any such money,
Counterparty will rank as a general creditor of GSI.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
-----------------------------------------------------------------------------
Goldman Sachs International | Peterborough Court | 133 Fleet Street |
London EC4A 2BB Tel: 020-7774-1081 | Telex: 887902 | Cable: GOLDSACHS LONDON |
Registered in England No. 2263951 | Registered Office As Above |
Regulated by the Securities and Futures Authority
------------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771540 / 1.00.0911.2535
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771540
---------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement dated as of August 22, 2000, as amended and
supplemented from time to time (the "Agreement"), between Goldman
Sachs International ("GSI") and Itau Bank Ltd. ("Counterparty"). All
provisions contained in the Agreement govern this Confirmation except
as expressly modified below.
2. The terms of the particular Transaction to which this
Confirmation relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Call
Seller: GSI
Buyer: Counterparty
Shares: The Class A Common Stock,
$.01 par value per share
of America Online Latin
America, Inc. (the
"Issuer")
Number of Options: 1,320,833
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.1207
Premium: [omitted and filed separately
with the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded. Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2004
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price is
equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best
bid and ask prices quoted
as of the Expiration Time
(or the last such prices
quoted immediately before
the Expiration Time)
without regard to
quotations that lock or
cross the dealer exchange
or quotation system.
Seller's Telephone Number and
Telex and/or Facsimile Number
and Contact Details for Purpose
of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if
the New Shares are listed
on a U.S. securities
exchange or reported by
The Nasdaq National
Market, Inc. If the New
Shares are not so listed
or reported then
Cancellation and Payment
at the election of GSI in
its sole discretion
(b) Share-for-Other: Cancellation and Payment
at the election of GSI in
its sole discretion
(c) Share-for-Combined: Cancellation and Payment
at the election of GSI in
its sole discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole discretion
Notwithstanding anything to the
contrary in the Equity Definitions, the
amount payable under this Transaction
upon the occurrence of a Merger Event,
Nationalization or Insolvency shall be
calculated by the Calculation Agent in
good faith in accordance with Section
9.7 of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and (iii)
therein are replaced by the following:
(i) a mid-market implied volatility for
the Shares (as determined by the
Calculation Agent) on the Exchange
Business Day immediately prior to the
Announcement Date;
(ii) dividends based on, and payable on
the same dates as, amounts determined
by the Calculation Agent to have been
paid in respect of gross ordinary cash
dividends on the relevant Shares in the
calendar year ending on the
Announcement Date;
(iii) a value ascribed to the relevant
Shares equal to the consideration, if
any, paid in respect of such Shares to
holders of such Shares at the time of
the Option Value Event (valued as of
the closing of the Option Value Event);
and
(iv) an Option maturity of the period
of time from and including the
Announcement Date to and including the
Expiration Date.
Notwithstanding Section 9.2(b) of the
Equity Definitions, "Merger Date" means
the date of closing of the Merger
Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs
International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation will be
governed by and construed in accordance
with the laws of the State of New York
(without reference to its choice of
laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI determines in
its good faith discretion that it has a conflict of interest in any matter
that will be the subject of a vote of the Issuer's shareholders and it
cannot assign the Option to another third party pre-approved by the Issuer
prior to the second Exchange Business Day before the record date of such
shareholder vote (the "Record Date"), then the Expiration Date shall be
accelerated to the Exchange Business Day prior to the Record Date or such
other date as agreed between the parties. In such an event the Calculation
Agent shall adjust the Strike Price pro-rata to preserve the economic value
of the Transaction accrued up to this accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, GSI will deposit in an account set up at GSI for the benefit
of Counterparty, a number of Shares equal to the Number of Options and
thereafter maintain with GSI a number of Shares equal to the Number of
Shares (the "GSI Collateral"). GSI hereby grants Counterparty a first
priority security interest in the GSI Collateral as collateral for its
obligations under this Transaction. Upon any default by GSI (including any
default under the Agreement), Counterparty shall have all of the rights
with respect to the GSI Collateral of a secured party under the New York
Uniform Commercial Code. Counterparty shall be entitled to exercise any and
all voting and other consensual rights pertaining to the GSI Collateral
provided that the Counterparty shall give GSI at least five Exchange
Business Days' prior written notice of the manner in which it desires to
exercise any such right.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
------------------------------------------------------
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of and
has made its own independent decisions to enter into the Transaction and as
to whether the Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisers as it has deemed necessary,
including advice from its tax and accounting advisors regarding the tax and
accounting implications (respectively) of this Transaction and the
Transaction Structure. No communication (written or oral) received from GSI
or its affiliates shall be deemed to be an assurance or guarantee as to the
expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain information
from GSI concerning the terms and conditions of the Transaction necessary
in order for the Counterparty to evaluate the merits and risks of the
Transaction and the Transaction Structure. Notwithstanding the foregoing,
Counterparty is not relying on any communication (written or oral) of GSI
as investment advice or as a recommendation to enter into the Transaction;
it being understood that information and explanations related to the terms
and conditions of a Transaction are made incidental to GSI's business and
shall not be considered investment advice or a recommendation to enter in
the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public
material information regarding the Issuer on the Trade Date, provided
that for purposes of this representation the term "Affiliate" shall not
include the Issuer (whether or not the Issuer would otherwise be deemed
to be an Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the Shares
delivered in settlement of this Transaction will not be, subject to any
liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in compliance
with the reporting and other requirements of Sections 13 and 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure on
its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and
the Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights
Agreement and the restrictions contained in the Subscription
Agreement with respect to all Shares subject to the
Transaction Structure, and to inform any transferee of any of
such Shares in writing of the existence and exact nature of
such restrictions and require any transferee to agree in
writing to be bound by such restrictions, (b) to hold all
such Shares free and clear of all liens, claims and
encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the
Transaction Structure, (c) not to assign or transfer the
Transaction Structure or any of its rights, duties or
obligations thereunder to any Person other than an Affiliate
of GSI who agrees in writing to be bound by all of the terms
and conditions of the Transaction Structure, the provisions
of Section 10.1 of the Registration Rights Agreement and the
restrictions contained in the Subscription Agreement with
respect to all Shares subject to such Transaction Structure,
and prior to any such assignment or transfer, identify any
proposed assignee or transferee of any of the Shares subject
to the Transaction Structure or any proposed transferee or
assignee of the Transaction Structure or any of GSI's duties
or obligations thereunder and include such obligation in any
similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or
assignee of the Transaction Structure or any of its rights,
duties or obligations thereunder, including, without
limitation, any Affiliate of GSI, such approval not to be
withheld or delayed unreasonably.
8. The parties agree that the Issuer shall be a third party beneficiary
under this Transaction entitled to enforce the above noted agreements
against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription
Agreement dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August
11, 2000 ("Registration Rights Agreement").
------------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS
ABOVE | REGULATED BY THE SECURITIES AND FUTURES AUTHORITY
------------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771565 / 1.00.0911.2540
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771565
------------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Put
Seller: Counterparty
Buyer: GSI
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 1,320,833
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.1207
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2004
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best bid
and ask prices quoted as of the
Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, Counterparty will deposit and thereafter maintain with GSI
an amount of cash in United States Dollars equal to the price that
Counterparty sold a number of Shares equal to the Number of Options to GSI
in the Private Placement (the "Counterparty Collateral"). Counterparty
hereby grants GSI a first priority security interest in the Counterparty
Collateral as collateral for its obligations under this Transaction and the
Agreement. Upon any default by Counterparty (including any default under
the Agreement), GSI shall have all of the rights with respect to the
Counterparty Collateral of a secured party under the New York Uniform
Commercial Code. Notwithstanding any limitation otherwise imposed by
Section 9-207(2)(e) of the New York Uniform Commercial Code, GSI shall be
entitled to use in any way, pledge, repledge, hypothecate, rehypothecate or
further assign (collectively, "rehypothecate") any collateral delivered to
GSI by Counterparty pursuant to this Agreement, subject to the obligation
to return such collateral or equivalent collateral to Counterparty.
For the avoidance of doubt GSI shall not be required to pay any interest on
such Counterparty Collateral to Counterparty and it is hereby expressly
agreed for the purposes of Rule 4-52(1) of the Client Money Rules of The
Securities and Futures Authority Limited ("SFA Client Money Rules") that
any money transferred by Counterparty to GSI under this Transaction shall
not be treated as client money and shall not be subject to the protections
conferred by the SFA Client Money Rules. The effect of this is that (a) any
such money will not be segregated from the money of GSI and may be used by
GSI in the course of GSI's business, and (b) in respect of any such money,
Counterparty will rank as a general creditor of GSI.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
------------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS
ABOVE | REGULATED BY THE SECURITIES AND FUTURES AUTHORITY
------------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771581 / 1.00.0911.2554
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771581
------------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Call
Seller: GSI
Buyer: Counterparty
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 713,250
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.0784
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2005
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best bid
and ask prices quoted as of the
Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, GSI will deposit in an account set up at GSI for the benefit
of Counterparty, a number of Shares equal to the Number of Options and
thereafter maintain with GSI a number of Shares equal to the Number of
Shares (the "GSI Collateral"). GSI hereby grants Counterparty a first
priority security interest in the GSI Collateral as collateral for its
obligations under this Transaction. Upon any default by GSI (including any
default under the Agreement), Counterparty shall have all of the rights
with respect to the GSI Collateral of a secured party under the New York
Uniform Commercial Code. Counterparty shall be entitled to exercise any and
all voting and other consensual rights pertaining to the GSI Collateral
provided that the Counterparty shall give GSI at least five Exchange
Business Days' prior written notice of the manner in which it desires to
exercise any such right.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August 11, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is capable of
and has made its own independent decisions to enter into the Transaction
and as to whether the Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary, including advice from its tax and accounting advisors regarding
the tax and accounting implications (respectively) of this Transaction and
the Transaction Structure. No communication (written or oral) received from
GSI or its affiliates shall be deemed to be an assurance or guarantee as to
the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all agreements,
contracts or instruments that relate to the Shares and these are listed in
Annex A. Counterparty is not a party to any other agreement, contract or
instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as defined in
Rule 144 of the Securities Act) is in possession of any non-public material
information regarding the Issuer on the Trade Date, provided that for
purposes of this representation the term "Affiliate" shall not include the
Issuer (whether or not the Issuer would otherwise be deemed to be an
Affiliate of Counterparty).
(f) The Transaction Structure will not violate any applicable law,
regulation or rule in Brazil, the Cayman Islands or the United States of
America, and Counterparty will record and account for this Transaction in
its records and financial statements in a manner that complies with
regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and the
Shares delivered in settlement of this Transaction will not be, subject to
any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any regulatory
filings or public disclosures of any information to be made in connection
with the execution of this Transaction and the Transaction Structure
reasonably in advance of such filing or disclosure and will give GSI a
reasonable opportunity to comment on such drafts. With respect to any such
future filings or disclosures, Counterparty shall utilize substantially
similar descriptions of this Transaction and the Transaction Structure
therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the Issuer and
any subsequent transfers between the date of the original purchase of the
shares from the Issuer and the Trade Date, complied in all respects with
(i) the applicable laws, regulations or rules of Brazil and the Cayman
Islands and (ii) any agreement between the Issuer and Counterparty and its
Affiliates (as defined in Rule 144 of the Securities Act of 1933, as
amended).
(k) It will provide any legal opinions required by the Issuer in
connection with the Transaction Structure and the transfers of Shares
thereunder.
(l) It acknowledges that GSI will treat the Transaction Structure
on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
-----------------------------------------------------------------------------
GOLDMAN SACHS INTERNATIONAL | PETERBOROUGH COURT | 133 FLEET STREET |
LONDON EC4A 2BB TEL: 020-7774-1081 | TELEX: 887902 | CABLE: GOLDSACHS LONDON |
REGISTERED IN ENGLAND NO. 2263951 | REGISTERED OFFICE AS ABOVE |
REGULATED BY THE SECURITIES AND FUTURES AUTHORITY
-----------------------------------------------------------------------------
September 11, 2000 Reference: 9ED771607 / 1.00.0911.2733
Itau Bank Ltd
PO Box 10.141 APO
Ansbacher House 3rd Fl
20 Genesis Close George Town
Grand Cayman BWI
A/C: 03319867
RE: CONFIRMATION OF OPTION - REFERENCE: 9ED771607
-----------------------------------------------------------------------------
The purpose of this Confirmation is to confirm the terms and conditions of
the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This Confirmation constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to,
the ISDA Master Agreement dated as of August 22, 2000, as amended
and supplemented from time to time (the "Agreement"), between
Goldman Sachs International ("GSI") and Itau Bank Ltd.
("Counterparty"). All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: August 29, 2000
Effective Date: As of August 29, 2000 (the date the
parties agreed the terms of the
Transaction)
Option Style: European
Option Type: Put
Seller: Counterparty
Buyer: GSI
Shares: The Class A Common Stock, $.01
par value per share of America
Online Latin America, Inc. (the
"Issuer")
Number of Options: 713,250
Option Entitlement: 1 Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 8.0784
Premium: [omitted and filed separately with
the Securities and Exchange
Commission]
Premium Payment Date: September 6, 2000
Exchange: NASDAQ
Related Exchange: Any Exchange upon which futures
or options on the Shares are
traded.
Procedure for Exercise:
Expiration Time: At the close of the regular
trading session on the Exchange
without regard to after-hours or
extended hours trading.
Expiration Date: August 29, 2005
Automatic Exercise: Applicable; provided that clause
(i) under 3.4(b) shall not be
applicable to this Transaction
and Section 3.4(c) of the Equity
Definitions is amended in its
entirety to read as follows:
"In-the-Money" means, in respect
of a Physically-settled Option
Transaction, in the case of a
Call, that the Reference Price
is equal to or greater than the
Strike Price and, in case of a
Put, that the Reference Price is
less than the Strike Price.
Reference Price: The mid-point of the best bid
and ask prices quoted as of the
Expiration Time (or the last
such prices quoted immediately
before the Expiration Time)
without regard to quotations
that lock or cross the dealer
exchange or quotation system.
Seller's Telephone Number
and Telex and/or Facsimile
Number and Contact Details
for Purpose of Giving Notice: To Be Advised
Settlement Terms:
Cash Settlement: Inapplicable
Physical Settlement: Applicable.
Settlement Currency: USD
Physical Settlement Payment Date: 3 Currency Business Days after
the Expiration Date.
Failure to Deliver: Inapplicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation if the
New Shares are listed on a U.S.
securities exchange or reported
by The Nasdaq National Market,
Inc. If the New Shares are not
so listed or reported then
Cancellation and Payment at the
election of GSI in its sole
discretion
(b) Share-for-Other: Cancellation and Payment at the
election of GSI in its sole
discretion
(c) Share-for-Combined: Cancellation and Payment at the
election of GSI in its sole
discretion
Nationalization or Insolvency: Cancellation and Payment at the
election of GSI in its sole
discretion
Notwithstanding anything to the
contrary in the Equity
Definitions, the amount payable
under this Transaction upon the
occurrence of a Merger Event,
Nationalization or Insolvency
shall be calculated by the
Calculation Agent in good faith
in accordance with Section 9.7
of the Equity Definitions except
that the factors identified in
Subparagraphs (i), (ii) and
(iii) therein are replaced by
the following:
(i) a mid-market implied
volatility for the Shares (as
determined by the Calculation
Agent) on the Exchange Business
Day immediately prior to the
Announcement Date;
(ii) dividends based on, and
payable on the same dates as,
amounts determined by the
Calculation Agent to have been
paid in respect of gross
ordinary cash dividends on the
relevant Shares in the calendar
year ending on the Announcement
Date;
(iii) a value ascribed to the
relevant Shares equal to the
consideration, if any, paid in
respect of such Shares to
holders of such Shares at the
time of the Option Value Event
(valued as of the closing of the
Option Value Event); and
(iv) an Option maturity of the
period of time from and
including the Announcement Date
to and including the Expiration
Date.
Notwithstanding Section 9.2(b)
of the Equity Definitions,
"Merger Date" means the date of
closing of the Merger Event.
Payment Instructions: Citibank, NY
for a/c Goldman Sachs International
for a/c # 40616408
3. Calculation Agent: Goldman Sachs International
4. Governing Law: Unless otherwise provided in the
Agreement, this Confirmation
will be governed by and
construed in accordance with the
laws of the State of New York
(without reference to its choice
of laws doctrine).
5. Additional Provisions:
(a) Each party acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder.
Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment, (ii) it
is an "accredited investor" as that term is defined under Regulation D,
(iii) it will purchase the Transaction for investment and not with a view
to the distribution or resale thereof, and (iv) the disposition of the
Transaction is restricted under this Confirmation, the Securities Act and
state securities laws.
(b) Acceleration of Expiration Date. If at any time GSI
determines in its good faith discretion that it has a conflict of interest
in any matter that will be the subject of a vote of the Issuer's
shareholders and it cannot assign the Option to another third party
pre-approved by the Issuer prior to the second Exchange Business Day before
the record date of such shareholder vote (the "Record Date"), then the
Expiration Date shall be accelerated to the Exchange Business Day prior to
the Record Date or such other date as agreed between the parties. In such
an event the Calculation Agent shall adjust the Strike Price pro-rata to
preserve the economic value of the Transaction accrued up to this
accelerated Expiration Date to GSI.
At any time after 180 calendar days have elapsed since the Trade Date,
Counterparty may elect to accelerate the Expiration Date to the Exchange
Business Day following the Exchange Business Day that Counterparty notifies
GSI of its intention to exercise this right (the "Notification Date") or
such other date as the parties shall agree. As a pre-condition to
exercising such right Counterparty shall pay an early termination fee equal
to 0.25% of the Strike Price to GSI on the Notification Date and the
Calculation Agent shall adjust the Strike Price pro-rata to preserve the
economic value of the Transaction accrued up to this accelerated Expiration
Date to GSI.
If at any time the call option transaction which was executed on the Trade
Date and has the same Expiration Date in connection with the Transaction
Structure is exercised or if an Early Termination Date shall occur with
respect thereto, the Expiration Date with respect to this Transaction shall
accelerate to the date of such exercise or Early Termination Date, as
applicable.
(c) Collateral.
On Trade Date, Counterparty will deposit and thereafter maintain with GSI
an amount of cash in United States Dollars equal to the price that
Counterparty sold a number of Shares equal to the Number of Options to GSI
in the Private Placement (the "Counterparty Collateral"). Counterparty
hereby grants GSI a first priority security interest in the Counterparty
Collateral as collateral for its obligations under this Transaction and the
Agreement. Upon any default by Counterparty (including any default under
the Agreement), GSI shall have all of the rights with respect to the
Counterparty Collateral of a secured party under the New York Uniform
Commercial Code. Notwithstanding any limitation otherwise imposed by
Section 9-207(2)(e) of the New York Uniform Commercial Code, GSI shall be
entitled to use in any way, pledge, repledge, hypothecate, rehypothecate or
further assign (collectively, "rehypothecate") any collateral delivered to
GSI by Counterparty pursuant to this Agreement, subject to the obligation
to return such collateral or equivalent collateral to Counterparty.
For the avoidance of doubt GSI shall not be required to pay any interest on
such Counterparty Collateral to Counterparty and it is hereby expressly
agreed for the purposes of Rule 4-52(1) of the Client Money Rules of The
Securities and Futures Authority Limited ("SFA Client Money Rules") that
any money transferred by Counterparty to GSI under this Transaction shall
not be treated as client money and shall not be subject to the protections
conferred by the SFA Client Money Rules. The effect of this is that (a) any
such money will not be segregated from the money of GSI and may be used by
GSI in the course of GSI's business, and (b) in respect of any such money,
Counterparty will rank as a general creditor of GSI.
(d) Early Termination.
Notwithstanding anything to the contrary in the Agreement, if an Early
Termination Date occurs with respect to this Transaction, such date shall
be deemed an Expiration Date hereunder, and no obligations shall be owed by
either party in connection with such a termination other than payment or
delivery obligations that arise (if any) in connection with the exercise of
this option (if applicable).
6. Additional Counterparty Representations and Covenants.
In connection with (i) the entering into of this Transaction, (ii) the
entering into of other similar Transactions with respect to the Shares
under the Agreement, and (iii) the sale of Shares (purchased by the
Counterparty from the Issuer on August __, 2000) to GSI in a private
placement under the "4(1-1/2)" exemption from registration under the
Securities Act of 1933, as amended (the "Private Placement" and
collectively, the "Transaction Structure"), Counterparty represents,
warrants and agrees that:
(a) Counterparty is acting for its own account, and is
capable of and has made its own independent decisions to enter into the
Transaction and as to whether the Transaction is appropriate or proper for
it based upon its own judgment and upon advice from such advisers as it has
deemed necessary, including advice from its tax and accounting advisors
regarding the tax and accounting implications (respectively) of this
Transaction and the Transaction Structure. No communication (written or
oral) received from GSI or its affiliates shall be deemed to be an
assurance or guarantee as to the expected results of the Transaction.
(b) Counterparty has been given the opportunity to obtain
information from GSI concerning the terms and conditions of the Transaction
necessary in order for the Counterparty to evaluate the merits and risks of
the Transaction and the Transaction Structure. Notwithstanding the
foregoing, Counterparty is not relying on any communication (written or
oral) of GSI as investment advice or as a recommendation to enter into the
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction are made incidental to GSI's
business and shall not be considered investment advice or a recommendation
to enter in the Transaction or the Transaction Structure.
(c) GSI is not acting as a fiduciary for or an adviser to
Counterparty in respect of the Transaction.
(d) Counterparty has furnished GSI with copies of all
agreements, contracts or instruments that relate to the Shares and these
are listed in Annex A. Counterparty is not a party to any other agreement,
contract or instrument relating to any securities of the Issuer.
(e) Neither Counterparty nor any of its Affiliates (as
defined in Rule 144 of the Securities Act) is in possession of any
non-public material information regarding the Issuer on the Trade Date,
provided that for purposes of this representation the term "Affiliate"
shall not include the Issuer (whether or not the Issuer would otherwise be
deemed to be an Affiliate of Counterparty).
(f) The Transaction Structure will not violate any
applicable law, regulation or rule in Brazil, the Cayman Islands or the
United States of America, and Counterparty will record and account for this
Transaction in its records and financial statements in a manner that
complies with regulations and accounting rules applicable to it in Brazil.
(g) The shares sold in the Private Placement are not, and
the Shares delivered in settlement of this Transaction will not be, subject
to any liens, claims or encumbrances (other than those created under the
Agreement, the Subscription Agreement or the Registration Rights Agreement
(as defined in Annex A)).
(h) Counterparty will provide GSI with drafts of any
regulatory filings or public disclosures of any information to be made in
connection with the execution of this Transaction and the Transaction
Structure reasonably in advance of such filing or disclosure and will give
GSI a reasonable opportunity to comment on such drafts. With respect to any
such future filings or disclosures, Counterparty shall utilize
substantially similar descriptions of this Transaction and the Transaction
Structure therein and provide GSI with copies thereof.
(i) Counterparty is, has been, and shall continue be, in
compliance with the reporting and other requirements of Sections 13 and 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(j) The purchase of the Shares by Counterparty from the
Issuer and any subsequent transfers between the date of the original
purchase of the shares from the Issuer and the Trade Date, complied in all
respects with (i) the applicable laws, regulations or rules of Brazil and
the Cayman Islands and (ii) any agreement between the Issuer and
Counterparty and its Affiliates (as defined in Rule 144 of the Securities
Act of 1933, as amended).
(k) It will provide any legal opinions required by the
Issuer in connection with the Transaction Structure and the transfers of
Shares thereunder.
(l) It acknowledges that GSI will treat the Transaction
Structure on its books and records as an equity buy and sell.
7. In connection with the entering into of this Transaction and the
Transaction Structure, GSI agrees: (a) to comply with the
provisions of Section 10.1 of the Registration Rights Agreement
and the restrictions contained in the Subscription Agreement with
respect to all Shares subject to the Transaction Structure, and to
inform any transferee of any of such Shares in writing of the
existence and exact nature of such restrictions and require any
transferee to agree in writing to be bound by such restrictions,
(b) to hold all such Shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than those securing
the Counterparty's obligations hereunder or under the Transaction
Structure, (c) not to assign or transfer the Transaction Structure
or any of its rights, duties or obligations thereunder to any
Person other than an Affiliate of GSI who agrees in writing to be
bound by all of the terms and conditions of the Transaction
Structure, the provisions of Section 10.1 of the Registration
Rights Agreement and the restrictions contained in the
Subscription Agreement with respect to all Shares subject to such
Transaction Structure, and prior to any such assignment or
transfer, identify any proposed assignee or transferee of any of
the Shares subject to the Transaction Structure or any proposed
transferee or assignee of the Transaction Structure or any of
GSI's duties or obligations thereunder and include such obligation
in any similar transaction, and (d) that the Issuer shall have a
right to approve any proposed transferee of Shares or assignee of
the Transaction Structure or any of its rights, duties or
obligations thereunder, including, without limitation, any
Affiliate of GSI, such approval not to be withheld or delayed
unreasonably.
8. The parties agree that the Issuer shall be a third party
beneficiary under this Transaction entitled to enforce the above
noted agreements against GSI.
Please check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified.
Please confirm that the foregoing correctly sets forth the terms of the
agreement between Goldman Sachs International and Counterparty with respect
to the particular Transaction to which this Confirmation relates by signing
in the space provided below and immediately returning a copy of the
executed Confirmation to Equity Options, facsimile number: 212-428-1980.
Very truly yours,
Goldman Sachs International
By: /s/ Kathy Wallis
________________________________
Name:
Title:
Confirmed as of the date first above written:
Itau Bank, Ltd.
By: /s/ Alberto Dias de Mattos Barretto
___________________________________
Name:
Title:
Annex A
1. America Online Latin America Regulation S Stock Subscription Agreement
dated June 12, 2000 ("Subscription Agreement").
2. Registration Rights and Stockholders' Agreement dated August 11, 2000
("Registration Rights Agreement").
