Exhibit 10.1
TERM SHEET
February 22, 2001
Revisions
Objectives: To modify the existing structure described in the agreement,
dated June 25, 2000, as amended, (the "June 25 Agreement")
to eliminate the provisions for the transfer of Liberty's or
LMI's indirect interest in Telewest (including any right of
first offer with respect thereto, and any Additional
Interests), to provide in lieu thereof for the acquisition
by Liberty of convertible preferred stock of United for cash
and to provide for the transfer of the Latin American assets
to be closed separately and structured to be taxable or
non-taxable depending upon whether Liberty would recognize
gain on the transaction. The new structure described herein
shall supersede in its entirety the structure contemplated
by the June 25 Agreement.
Investment in Liberty would acquire in the aggregate 100,000 shares of a
United: new series of participating convertible preferred stock of
United (described below) ("Series E Preferred Stock") at two
closings for a total purchase price of U.S. $1.4 billion
payable in cash. At the first closing which will occur
promptly after necessary regulatory approvals are received,
Liberty will acquire 71,428.57 shares of Series E Preferred
Stock for $1 billion. At the second closing, which will
occur only when and if United acquires Cablevision S.A.,
Pramer SCA and TyC as contemplated by the June 25 Agreement
(the "Principal Acquired Assets"), Liberty will acquire the
balance of the shares of Series E Preferred Stock.
Use of Proceeds: United will invest 1 billion euros to purchase additional
equity securities of UPC pursuant to a rights offering to be
made by UPC on terms to be agreed with United.
Latin America The Latin American assets, referenced on Exhibit B to the
Transfers June 25 Agreement as the "Acquired Assets," would be
transferred to United through the transfer of Contributed
LA Subs in one or more transactions once necessary
regulatory and other approvals have been received. The 49%
interest in Liberty Cablevision of Puerto Rico, Inc. will
not be transferred to United, notwithstanding the provisions
of the June 25 Agreement to the contrary. Whether or not
Premium Movie Partnership will be transferred will be
subject to mutual agreement. The aggregate purchase price
payable for the transfer of the remaining Acquired Assets
will be the sum of the respective numbers of shares of
United's Class B common stock provided therefore in the June
25 Agreement (subject to adjustment), with the purchase
price of each individual Acquired Asset being as set forth
therein. If bondholder consent has not been received so that
Liberty and LMI may acquire Class B common stock (including
upon conversion of the Series E Preferred Stock), the
purchase price will be paid in shares of a new series of
participating convertible preferred stock of United
(described below) ("Series F Preferred Stock") convertible
into such number of shares. Liberty will use its best
commercially reasonable efforts to obtain all required third
party consents and waivers of its rights of first refusal
and similar rights needed to close the transactions
described in the Agreement. Xxxxxxx will involve United as
an active participant in all decisions, discussions and
negotiations regarding the consents and waivers. If Liberty
is unable after using its best commercially reasonable
efforts to obtain the waiver of a right of first refusal or
similar right, it will not be obligated to transfer the
applicable Acquired Asset. The obligation to close the
transfer of any Principal Acquired Asset will be subject to
the prior or contemporaneous closing of the transfers of
each of the Principal Acquired Assets. The provisions of the
Letter Agreement relating to the Chile Puts and Chile Calls
will be revised to read as provided in Annex B-1 hereto.
Preferred Stock The Series E Preferred Stock issued to Liberty for $1
billion and $400 million would be convertible at the
election of the holder into, respectively, an aggregate of
38,651,398 shares and 15,460,559 shares of Class A common
stock of United (subject to adjustment). The Series E
Preferred Stock will vote on an as converted basis, provided
that until the events described in the next paragraph occur,
Xxxxxxx's voting power in United will be capped at 50% of
the votes entitled to vote in the election of directors.
Subject to the foregoing limit, the Series E Preferred Stock
may be converted at the election of the holder at any time
or from time to time in part into shares of Class B common
stock, in lieu of Class A common stock, of United.
The Series E Preferred Stock would be automatically
converted into shares of Class B common stock of United, in
lieu of Class A common stock, on the first to occur of (i)
termination of the Stockholders Agreement in accordance with
its terms (for reasons other than the passage of time); (ii)
redemption in full of the currently outstanding bonds issued
by United and certain of its subsidiaries operating in
Poland ("Current Bonds"); (iii) a Change of Control within
the meaning of the indentures governing the Current Bonds in
effect on the date hereof (the "Current Indentures") occurs,
or (iv) with respect to each of the Current Indentures,
either (A) United or the applicable subsidiary issuer of
such Current Bonds, shall have effected a covenant
defeasance of the applicable provisions of such Current
Indenture in accordance with the terms thereof so that
neither United nor, if applicable, one of its subsidiaries
would be required to make a Change of Control Offer to the
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holders of the Current Bonds subject to such Current
Indenture if the Series E Preferred Stock were converted
into shares of Class B common stock, or (B) a waiver or
amendment of the applicable provisions of the Current
Indenture shall have been effected so that neither United
nor, if applicable, one of its subsidiaries would be
required to make a Change of Control Offer to any of the
holders of the Current Bonds subject to such Current
Indenture if the Series E Preferred Stock were converted
into shares of Class B common stock. Commencing June 25,
2010, if the Series E Preferred Stock shall not theretofore
have become convertible into Class B common stock, the
number of shares of Class A common stock of United into
which the Series E Preferred stock shall thereafter be
convertible at the option of the holder shall be increased
(subject to adjustment) by 24,920,031 shares, if 71,428.57
shares of Series E Preferred Stock were issued, and by
34,888,043 shares if 100,000 shares of Series E Preferred
Stock were issued.
The Series F Preferred Stock to be issued in connection with
the acquisition of the Latin American assets would initially
be convertible at the option of the holder into an aggregate
number of shares of Class A common stock of United equal to
the sum of the numbers of shares of United Class B common
stock set forth in the June 25 Agreement, subject to
adjustment for deleted assets and otherwise; would be
convertible in part at the option of the holder; or
automatically converted into an equal number of shares of
Class B common stock subject to the same conditions as apply
to the Series E Preferred Stock described above, and would
vote on an as converted basis subject to the limitation
described above. The number of Class A shares into which the
Series F Preferred Stock would be convertible would,
commencing June 25, 2010, be increased by a number of shares
to be determined on the same basis as for the Series E
Preferred Stock (subject to adjustment), if the Series F
Preferred Stock had not theretofore been converted into
Class B common stock.
The Series E and Series F Preferred Stock would not have a
dividend, but would participate in dividends on common stock
on an as converted basis (calculated as if the contingent
increase in the shares issued upon conversion that would
occur on June 25, 2010 had occurred). The shares would have
a nominal preference on liquidation after the payment in
full of any preference of presently outstanding preferred
stock. After receipt of their liquidation preference, they
would share in liquidation distributions with the common
stock on an as converted basis (calculated as if such
increase had occurred).
The Series E and Series F Preferred Stock will not in any
event become convertible into common stock of United until
United stockholder approval of such conversion and of an
increase in United's authorized common stock has been
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obtained in accordance with United's certificate of
incorporation and the Nasdaq rules and will not become
convertible into, or vote as if converted into, Class B
common stock until the requirements of the HSR Act have been
met if such conversion would result in Liberty's voting
power in the election of directors equaling or exceeding
50%.
The Series E and Series F Preferred Stock and where
appropriate the Stockholders Agreement would contain the
governance terms set forth in the June 25 Agreement, except
the nomination and election of directors would be pursuant
to the Stockholders Agreement.
Stockholders The Stockholder Agreement would be entered into at the time
Agreement: the Series E Preferred Stock is issued. The Stockholders
Agreement would include covenants of United to use its best
commercially reasonable efforts to obtain HSR and
stockholder approval (and covenants of Founders and Liberty
to vote in favor of such stockholder approval). In addition,
United will agree not to take or fail to take, and Founders
will agree not to take, any action that would result in any
additional change of control covenants being applicable to
United and its affiliates, unless Liberty and its affiliates
are exempted therefrom, or that would perpetuate the
existing change of control covenants and United will agree
to use its best commercially reasonable efforts to take such
action as will cause the conditions to the conversion in
full of the Series E Preferred Stock and Series F Preferred
Stock into Class B common stock to be satisfied.
Standstill The Standstill Agreement would be entered into at the time
Agreement: the Series E Preferred Stock is issued. United will agree
not to issue any shares of Class B common stock or rights to
acquire Class B common stock (except to Liberty and its
affiliates) unless and until the Series E and Series F
Preferred Stock have become convertible into Class B common
stock in full, except that (x) the issuance of up to 3
million shares of Class B common stock upon exercise of the
options described below will be permitted and (y) United
may, on majority vote of the Board and compliance with
applicable law, issue shares of another series of Preferred
Stock with terms no more favorable to the holder than the
terms of the Series E Preferred Stock, provided that such
Preferred Stock will not be convertible into Class B common
stock until the Series E Preferred Stock has automatically
converted into Class B common stock and the aggregate number
of shares of Class B common stock issuable upon exercise of
all such Preferred Stock and the options referred to in
clause (x) above shall not exceed the 10% threshold that
would otherwise entitle Liberty to exercise its preemptive
rights under the Stockholders Agreement (it being understood
that such issuances will not be grandfathered for purposes
of determining Liberty's entitlement to exercise such
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preemptive rights). United will further agree not to issue
any options exercisable for Class B common stock without
Liberty's consent other than the options to purchase not
more than 3 million shares of Class B common stock approved
at United's December 6, 2000 Board meeting.. The previously
contemplated provision of the Standstill Agreement limiting
the percentage of the equity of United that may be owned by
Liberty and its controlled affiliates will be revised to
change "47%" to "50%". United acknowledges that Liberty has
requested that such percentage be changed to "60%" and
agrees to negotiate in good faith with Liberty an increase
in such percentage above 50%.
Registration Rights The Registration Rights Agreement would be entered into at
Agreement: the time the Series E Preferred Stock is issued.
UPC: In exchange for the agreement by United to invest 1 billion
euros, UPC will relinquish its rights and release United and
Liberty from their obligations to UPC under the June 25
Agreement and August 1999 letter agreement, and will give
United and other parties to the Stockholder Agreement an
option to acquire for cash unless otherwise agreed at market
the shares in United that UPC or any of its controlled
affiliates owns if United ceases to control UPC. Further,
Xxxxxxx will be entitled to one representative on the
governing body of UPC.
Loan Repayment Liberty will agree to forgo its right to repay its
outstanding $200 million loan from United other than in
cash.
Definitive The parties will promptly complete negotiation of definitive
Documents: documents, subject to satisfactory resolution of the
previously raised issues.
Liberty Media Corporation United GlobalCom, Inc.
by: /s/ Xxxxxxxxx X. Xxxxxxxxx by: /s/ Xxxxxxxxx X. Xxxxxxxxx, III
Senior Vice President Chief Financial Officer
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