MEMORANDUM OF UNDERSTANDING
MEMORANDUM OF UNDERSTANDING, dated as of February 1, 2002 (this
"Memorandum"), by and among United Pan-Europe Communications N.V., a corporation
organized under the laws of The Netherlands ("UPC"), UnitedGlobalCom, Inc., a
corporation organized under the laws of the State of Delaware ("UGC"), UGC
Holdings, Inc., a corporation organized under the laws of the State of Delaware
and a subsidiary of UGC ("UGC Holdings"). UGC and its subsidiaries are referred
to as the "UGC Group".
The parties have determined that it is in the best interest of UGC and
UPC to effect a restructuring of the capital structure of UPC through the
conversion into UPC ordinary shares of all or a substantial amount of its
outstanding public senior notes and senior discount notes ("UPC Notes"). This
Memorandum is intended to evidence the mutual intent of the UGC Group, on the
one hand, and UPC, on the other hand, to promptly devise a restructuring
transaction taking into account the matters set forth in this Memorandum.
1. Conversion to Equity. The UGC Group agrees in principle to convert
the 6% Guaranteed Discount Notes due 2007 of Belmarken Holding B.V. (the
"Belmarken Notes") into UPC ordinary shares as part of the restructuring
transaction. Holders of UPC Notes will be given the opportunity to exchange the
UPC Notes for UPC ordinary shares in proportions to be established by the
parties and through negotiation with holders of UPC Notes. The UGC Group will
exchange UPC Notes owned by it in the exchange offer. Holders of UPC's
outstanding Series 1 Preference Shares A (the "UPC Preference Shares") will be
given the opportunity to exchange the UPC Preference Shares for UPC ordinary
shares in proportions to be established by the parties and through negotiation
with holders of UPC Preference Shares. The UGC Group will exchange UPC
Preference Shares owned by it in the exchange offer.
2. Conditions. The restructuring will be subject to customary
commercial conditions and to (a) establishing a structure for the
recapitalization that minimizes the effect of Dutch and U.S. taxes incurred as a
result of the restructuring transaction, (b) confirmation by the required
lenders under the existing senior secured credit facility of UPC Distribution
B.V. (the "Senior Secured Credit Facility") that, as a result of the
consummation of the financial restructuring of UPC and its subsidiaries, no
defaults or events of default will be existing thereunder, (c) the receipt of
tenders of 95% of all UPC Notes outstanding in the exchange offer for the UPC
Notes contemplated in Section 1; and (d) agreement by the parties to the terms
and conditions of the exchange offers for the UPC Notes, the UPC Preference
Shares and the Belmarken Notes and to the treatment of UPC common equityholders.
The parties agree to promptly work with their advisors to determine an optimal
tax structure and establish the relative economic terms to be proposed to
holders of UPC Notes and the UPC Preference Shares in the restructuring
transaction.
3. Waiver. Pending such satisfactory resolution, UGC agrees, as holder
of the Belmarken Notes, that it will waive any default arising as a result of
the failure of UPC to pay interest on UPC Notes on or after the date of this
Memorandum and prior to the expiration of the waiver. The waiver will expire on
the earlier of (a) 90 days after the date of this letter, (b) the expiration of
the time period for the waiver of any default given by the lenders under the
Senior
Secured Credit Facility; (c) such time as the lenders under the Senior Secured
Credit Facility accelerate the indebtedness thereunder, (d) such time as any
indebtedness under the UPC Notes is accelerated, and (e) the conversion of the
Belmarken Notes into UPC ordinary shares in accordance with the terms hereof.
4. Definitive Documentation. This Memorandum is a memorandum of
understanding only and shall not be deemed to be self-executory. The parties
intend to negotiate mutually acceptable definitive transaction documentation
giving effect to the terms of this Memorandum (the "Definitive Documents"), to
be bound only when those documents are signed, and that no liability shall
accrue to any party hereto except in accordance with the terms of, and upon the
execution and delivery of, the Definitive Documents.
In connection with the negotiation of the Definitive Documents, each of
the parties hereto will promptly enter into negotiations with the holders of the
UPC Notes, the holders of the UPC Preference Shares and such other third parties
as are necessary to the consummation of the transactions contemplated hereby,
with respect to the terms of the transactions contemplated hereby, and shall
cooperate with the other parties hereto with respect to the consummation of the
such transactions.
5. Publicity. Each Of UPC and UGC will confer with the others prior to
making any public announcement of this Memorandum or the transactions. Except as
required by applicable law, rule or regulation (including the rules and
regulations of any applicable stock exchange) or as is necessary to implement
the transactions, no party hereto shall make any disclosure with respect to the
transactions described above or the status of the negotiations of the Definitive
Documents without the express written consent of the other parties hereto.
6. Applicable Law, Etc. This Memorandum will be governed by and
construed in accordance with the laws of the State of New York without reference
to the conflicts of law rules of that jurisdiction.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first written above.
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Board of Management Member
and CFO
By: /s/Anton A.M. Tuijten
-------------------------------------
Name: Anton A.M. Tuijten
Title: Senior Vice President
and General Counsel
UNITEDGLOBALCOM, INC.
By: /s/Xxxxxxxxx X. Xxxxxxxxx, III
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx, III
Title: Chief Financial Officer
UGC HOLDINGS, INC.
By: /s/Xxxxxxxxx X. Xxxxxxxxx, III
-------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx, III
Title: Chief Financial Officer
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