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EXHIBIT 10.5
[Form of]
DEBT INDEMNITY AGREEMENT
This DEBT INDEMNITY AGREEMENT (the "AGREEMENT") dated as of -,
2000, by and among Microsoft Corporation, a Washington corporation (together
with its successors and permitted assigns "MICROSOFT CORP."), Sumitomo
Corporation, a company organized under the laws of Japan (together with its
successors and permitted assigns, "SUMITOMO"), and Liberty Media Corporation, a
Delaware corporation ("LMC") and Jupiter Telecommunications Co., Ltd. a
corporation organized under the laws of Japan ("JUPITER").
RECITALS
WHEREAS, upon the IPO (as defined below), Sumitomo, Microsoft
Holdings V, Inc., a Nevada corporation and a wholly owned subsidiary of
Microsoft Corp. (together with its successors and permitted assigns,
"MICROSOFT"), Itochu Corporation, a company organized under the laws of Japan
("ITOCHU") and Toshiba Corporation, a company organized under the laws of Japan
("TOSHIBA"); Liberty Jupiter, Inc., a Delaware corporation ("LJ"), Liberty
Japan, Inc., a Delaware corporation ("LIBERTY JAPAN") (LJ and Liberty Japan are
referred to herein collectively as "LIBERTY MEDIA") will be the owners of
Jupiter Equity Securities.
WHEREAS, Sumitomo has entered into agreements to guarantee
certain debt obligations of Jupiter.
WHEREAS, Microsoft has entered into agreements to guarantee
certain debt obligations of XXXXX Communications Corporation, a corporation
organized under the laws of Japan and a wholly-owned subsidiary
(kanzen-kogaisha) of Jupiter ("XXXXX").
WHEREAS, Microsoft, Sumitomo and LMC have previously entered
into a debt indemnity agreement with respect to the guarantee of Indebtedness of
XXXXX and Jupiter (the "ORIGINAL AGREEMENT").
WHEREAS, the parties are entering into this Agreement in
connection with the failure to discharge the guarantees which were the subject
of the Original Agreement prior to the IPO.
IT IS HEREBY AGREED as follows:
ARTICLE I.
CERTAIN DEFINITIONS
1.1 Specific Definitions. In addition to those terms defined in the
text, for purposes of this Agreement, the following terms shall have the
meanings set forth below:
"ASSOCIATE": means in relation to any person, another company,
corporation, partnership, joint venture, firm and/or any other person (other
than a director or officer of such person) in which the Parent of such person
directly or indirectly (i) owns Equity Securities of such other person entitling
it to cast fifty percent (50%) or more of the total votes entitled to be cast
generally for the election of directors (or persons of a similar position) of
such other person
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by all the holders of such Equity Securities or (ii) otherwise has the power to
control or direct the management of such other person through a management
agreement or other contractual arrangement that grants management and
operational control irrespective of voting power or equity ownership.
"BACK-UP INDEMNTIY": means the back-up indemnity obligations
set forth in Section 3.1.
"BUSINESS PLAN": means the business plan of Jupiter as
approved by the board of directors of Jupiter.
"EFFECTIVE DATE": means the date of this Agreement.
"EQUITY SECURITIES": means in relation to any Person, any
shares of, or other equity interests in, such Person that entitle the holder
thereof to vote generally for the election of directors (or persons of a similar
position) of such Person.
"GUARANTEE" means any obligation contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part).
"GUARANTORS": means a person that has guaranteed of Jupiter
Debt and/or XXXXX Debt that is party to this Agreement each, a "GUARANTOR".
"INDEBTEDNESS": means, as to any Person, any loan, debt, bond,
note, loan stock, debenture or other obligation for borrowed moneys, any
obligation under any hire purchase, conditional sale or title retention
agreement or lease (other than for payment of rent and service charges not
exceeding a commercial rate under any lease of real property), any liability in
respect of any acceptance credit or note or xxxx discounting facility, any
amount of consideration left outstanding by way of loan or otherwise under any
agreement for the sale or purchase of assets and/or the supply of services
(other than normal trade credit) and any guarantee, indemnity or security.
"INDEMNITY PAYMENTS": means the LMC-Microsoft Indemnity
Payment, the LMC-Sumitomo Indemnity Payment, the Microsoft-LMC Indemnity
Payment, the Microsoft-Sumitomo Indemnity Payment; the Sumitomo-LMC Indemnity
Payment and the Sumitomo-Microsoft Indemnity Payment, and each an "INDEMNITY
PAYMENT".
"IPO": means the consummation of the first public offering of
the Jupiter Equity Securities representing ten percent (10%) or more of the
outstanding Jupiter Equity Securities
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after such offering and listing of such Jupiter Equity Securities on a
recognised securities exchange.
"JUPITER EQUITY SECURITIES": means in relation to Jupiter, any
shares of, or other equity interest in, Jupiter that entitle the holder to vote
generally for the election of the directors (or persons having a similar
position) of Jupiter.
"JUPITER DEBT": means all of the Indebtedness of Jupiter, its
Associates and the Jupiter Franchise Systems existing as of the Effective Date
other than XXXXX Debt.
"JUPITER DEBT GUARANTEES": means all of the Guarantees (other
than any Back-up Indemnity) of Jupiter Debt issued by the Parties or any of
their Associates.
"JUPITER MAJOR SHAREHOLDERS' AGREEMENT": means the
shareholders' agreement dated the date hereof by and among Sumitomo; LMC;
Liberty Media.; Microsoft Corp. and Microsoft as amended from time to time.
"LMC-MICROSOFT INDEMNITY PAYMENT": means the indemnity payment
owed by LMC to Microsoft Corp. stated in Section 3.1(b)(ii).
"LMC-SUMITOMO INDEMNITY PAYMENT": means the indemnity payment
owed by LMC to Sumitomo stated in Section 3.1(a)(i).
"LMC'S RELATIVE PERCENTAGE ENTITLEMENT": means (i) the
Percentage Entitlement of Liberty Media and its Associates, divided by (ii) the
sum of the Percentage Entitlements of the Guarantors and their respective
Associates multiplied by, (iii) 100.
"MICROSOFT'S RELATIVE PERCENTAGE ENTITLEMENT": means (i) the
Percentage Entitlement of Microsoft and its Associates, divided by (ii) the sum
of the Percentage Entitlements of the Guarantors and their respective Associates
multiplied by, (iii) 100.
"MICROSOFT-LMC INDEMNITY PAYMENT": means the indemnity payment
owed by Microsoft Corp. to LMC stated in Section 3.1(c)(ii).
"MICROSOFT-SUMITOMO INDEMNITY PAYMENT": means the indemnity
payment owed by Microsoft Corp. to Sumitomo stated in Section 3.1(a)(ii).
"PARTY" or "PARTIES" means a party or parties to this
Agreement.
"PARENT" means with respect to (i) Sumitomo, Sumitomo or its
successor (ii) Microsoft, Microsoft Corp. or its successor (iii) Liberty Media,
LMC or its successor (iv) Jupiter, Jupiter or its successor, and (v) XXXXX,
XXXXX or its successor.
"PERCENTAGE ENTITLEMENT" means in relation to each of
Sumitomo, Liberty Media and Microsoft, the percentage (rounded to two decimal
places) equal to (i) the total number of votes that such Person and its
Associates is entitled to cast generally in the election of directors of Jupiter
in respect of Jupiter Equity Securities owned by such Person and its
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Associates, divided by (ii) the total number of votes that all shareholders of
Jupiter are entitled to cast generally in the election of directors in respect
of Jupiter Equity Securities, multiplied by (iii) one hundred (100).
"PERSON": means any individual, firm, company or other
incorporated or unincorporated entity.
"RELATIVE PERCENTAGE ENTITLEMENT": means Sumitomo's Relative
Percentage Entitlement, LMC's Relative Percentage Entitlement or Microsoft's
Relative Percentage Entitlement, as the case may be.
"SUMITOMO-LMC INDEMNITY PAYMENT": means the indemnity payment
owed by Sumitomo to LMC stated in Section 3.1(c)(i).
"SUMITOMO-MICROSOFT CORP. INDEMNITY PAYMENT": means the
indemnity payment owed by Sumitomo to Microsoft Corp. stated in Section
3.1(b)(i).
"SUMITOMO'S RELATIVE PERCENTAGE ENTITLEMENT": means (i) the
Percentage Entitlement of Sumitomo and its Associates, divided by (ii) the sum
of the Percentage Entitlements of the Guarantors and their respective Associates
multiplied by, (iii) 100.
"XXXXX DEBT" means all of the Indebtedness of XXXXX, its
Associates and the XXXXX Franchise Systems existing as of the Effective Date.
"XXXXX DEBT GUARANTEES" means all of the Guarantees (other
than any Back-up Indemnity) of XXXXX Debt issued by Microsoft Corp. and its
Associates.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) Capitalized terms used but not defined in this Agreement have the
meanings assigned to them in the Jupiter Major Shareholders Agreement.
ARTICLE II.
COVENANTS
2.1 EXISTING GUARANTEES.
(a) Sumitomo agrees to maintain in all material respects its
obligations as at the Effective Date in relation to the Jupiter Debt Guarantees
in accordance with the terms and conditions of such Jupiter Debt Guarantees,
provided that on or after the Effective Date,
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Sumitomo, may transfer to LMC up to 50% of the burden of any Jupiter Debt
Guarantees existing at the Effective Date following prior consultation with LMC
and the beneficiaries of such Jupiter Debt Guarantees.
(b) Microsoft Corp. agrees to maintain or cause to be maintained in all
material respects its obligations as at the Effective Date in relation to the
XXXXX Debt Guarantees in accordance with the terms and conditions of such XXXXX
Debt Guarantees.
(c) LMC agrees to maintain or cause to be maintained in all material
respects its obligations, (if any) as at the Effective Date in relation to any
Jupiter Debt Guarantees transferred to it by Sumitomo in accordance with the
terms and conditions of such Jupiter Debt Guarantees as at the time of the
applicable transfer.
2.2 FINANCING DISCUSSIONS
2.3 RELEASE OF GUARANTEES
The Parties agree to discuss, in good faith from time to time,
strategies with respect to Jupiter obtaining adequate financing.
Each of the Parties shall cooperate in good faith with each
other in order to attempt to obtain the release of all Jupiter Debt Guarantees
and XXXXX Debt Guarantees in exchange for commercially reasonable alternative
funding methods.
2.4 PRIOR CONSULTATION.
(a) In the event that a claim has been made against Sumitomo or any of
its Associates in respect of a Jupiter Debt Guarantee, Sumitomo shall promptly
notify Microsoft Corp. and LMC and shall, to the extent reasonably practicable,
not make payment with respect to such claim without first consulting with
Microsoft Corp. and LMC with respect to such claim.
(b) In the event that a claim has been made against Microsoft Corp. or
any of its Associates in respect of a XXXXX Debt Guarantee or a Jupiter Debt
Guarantee, Microsoft Corp. shall promptly notify Sumitomo and LMC and shall, to
the extent reasonably practicable, not make payment with respect to such claim
without first consulting with Sumitomo and LMC with respect to such claim.
(c) In the event that a claim has been made against LMC or any of its
Associates in respect of a Jupiter Debt Guarantee, LMC shall promptly notify
Sumitomo and Microsoft Corp. and shall, to the extent reasonably practicable,
not make payment with respect to such claim without first consulting with
Sumitomo and Microsoft Corp. with respect to such claim.
ARTICLE III.
INDEMNITY
3.1 BACK-UP INDEMNITY AGREEMENT.
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(a) Subject to the provisions of Section 2.4(a), upon written demand,
Sumitomo shall have the right to recover (i) from LMC, an amount equal to LMC's
Relative Percentage Entitlement of any payments made by Sumitomo or its
Associates under any Jupiter Debt Guarantee issued by Sumitomo or its Associates
with interest from and including the date of payment by Sumitomo to but
excluding the date of payment by LMC at the Citibank, Tokyo prime rate for
Japanese Yen and (ii) from Microsoft Corp., an amount equal to Microsoft's
Relative Percentage Entitlement of any payments made by Sumitomo or its
Associates under any Jupiter Debt Guarantee issued by Sumitomo with interest
from and including the date of payment by Sumitomo or its Associates to but
excluding the date of payment by Microsoft Corp. at the Citibank, Tokyo prime
rate for Japanese Yen.
(b) Subject to the provisions of Section 2.4(b), upon written demand,
Microsoft Corp. shall have the right to recover (i) from Sumitomo, an amount
equal to Sumitomo's Relative Percentage Entitlement of any payments made by
Microsoft Corp. or its Associates under any XXXXX Debt Guarantee or Jupiter Debt
Guarantee issued by Microsoft Corp. or its Associates with interest from and
including the date of payment by Microsoft Corp. to but excluding the date of
payment by Sumitomo or Jupiter, as applicable at the Citibank, Tokyo prime rate
for Japanese Yen; and (ii) from LMC, an amount equal to LMC's Relative
Percentage Entitlement of any payments made by Microsoft Corp. or its Associates
under any XXXXX Debt Guarantee or Jupiter Debt Guarantee issued by Microsoft
Corp. or its Associates, together in each case with interest from and including
the date of payment by Microsoft Corp. to but excluding the date of payment by
Sumitomo or Jupitor, as applicable at the Citibank, Tokyo prime rate for
Japanese Yen.
(c) Subject to the provisions of Section 2.4(c), upon written demand,
LMC shall have the right to recover (i) from Sumitomo, an amount equal to
Sumitomo's Relative Percentage Entitlement of any payments made by LMC or its
Associates under any Jupiter Debt Guarantee issued by LMC or its Associates with
interest from and including the date of payment by Sumitomo to but excluding the
date of payment by Sumitomo at the Citibank, Tokyo prime rate for Japanese Yen
and (ii) from Microsoft Corp., an amount equal to Microsoft's Relative
Percentage Entitlement of any payments made by LMC or its Associates under any
Jupiter Debt Guarantee issued by LMC or its Associates with interest from and
including the date of payment by LMC to but excluding the date of payment by
Microsoft Corp. at the Citibank, Tokyo prime rate for Japanese Yen.
ARTICLE IV.
FEES
4.1 GUARANTEE AND INDEMNITY FEES
(a) As consideration for the Guarantors entering into the Jupiter Debt
Guarantees and the XXXXX Debt Guarantees in respect of the Jupiter Debt or the
XXXXX Debt, as the case may be, Jupiter agrees to pay each of the Guarantors a
fee (the "Fee") payable ten business days after the last day of each calendar
quarter in arrears equal to (i) 1.0% of the total Jupiter Debt and XXXXX Debt
that is subject to a Jupiter Debt Guarantee and/or XXXXX Debt Guarantee given by
such Guarantor ("TOTAL GUARANTEED DEBT").
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(b) Each Guarantor agrees to pay to each person that provides a Back-up
Indemnity in respect of Jupiter Debt Guarantees and XXXXX Debt Guarantors given
by such Guarantor, a fee (the "BACK-UP INDEMNITY FEE") payable ten business days
after receipt of payment by the Guarantor of the Guarantee Fee equal to 0.75% of
the Total Guaranteed Debt multiplied by the Relative Percentage Entitlement of
the person providing the Back-up Indemnity.
(c) For the purposes of calculating the Guarantee Fee and the Back-up
Indemnity Fee, the Total Guaranteed Debt shall be equal to the average of the
Total Guaranteed Debt outstanding on the last day of the month of each of the
three months comprising the relevant calendar quarter. The Guarantee Fee and the
Back-up Indemnity Fee shall be payable in Yen.
ARTICLE V.
EFFECTIVENESS; TERMINATION
5.1 TERMINATION; EFFECT OF TERMINATION.
(a) This Agreement shall terminate upon the payment in full of the
XXXXX Debt, the Jupiter Debt and full discharge of the Indemnity Payments under
this Agreement.
(b) Upon a termination of this Agreement, no Party shall have any
further obligation to the other parties pursuant to this Agreement, except (i)
to fully discharge each Indemnity Payment, Back-up Indemnity Fee or, in the case
of Jupiter, Guarantee Fee (or any part of a Guarantee Fee or Back-up Indemnity
Fee that is accruing on a daily basis up to the date of termination but not yet
payable) owed by it, as the case may be, and (ii) with respect to any prior
breach hereof.
ARTICLE VI.
ASSIGNMENT
Any Party hereto may assign all of the relevant portion of its
rights and obligations hereunder in connection with a transfer of Jupiter Equity
Securities permitted under the Jupiter Major Shareholders' Agreements if the
Person to whom such obligation or portion thereof is to be assigned has, by
itself or together with any credit enhancements, a credit risk reasonably
comparable to or better than the transferor.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
7.1 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented at any
time by mutual written agreement of the Parties hereto. This Agreement may be
amended only by an instrument in writing signed on behalf of the Parties hereto.
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7.2 EXTENSION; WAIVER.
Any agreement on the part of any Party to any extension of
time for the performance of any of the obligations or other acts of the other
Party or waive compliance with any obligation, covenant or agreement contained
herein shall be valid only if set forth in an instrument in writing signed on
behalf of the Party entitled to the benefits of such extended or waived term or
provision.
7.3 ENTIRE AGREEMENT; ASSIGNMENT.
Upon the Effective Date, this Agreement:
(a) and the Jupiter Major Shareholders Agreement constitute the entire
agreement among the Parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the Parties with respect to the subject matter hereof;
(b) shall be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns.
7.4 SEVERABILITY.
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other Persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
7.5 NOTICES.
All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission (with written confirmation) or
three (3) days after being mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the following addresses
and fax numbers (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof):
(a) if to Jupiter, to
Jupiter Telecommunications Co., Ltd.
Higashi-Ikebukuro Building
4-41-24, Higashi Xxxxxxxxx
Xxxxxxx-Xx, Xxxxx 000-0000
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0
Xxxxx
with copies to:
Xxxxxx & Xxxxxxx
00 Xxxxxxxxxxx,
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Attention: Xxxxx Xxxxx
Fax:x00 00 0000 0000
(b) if to Sumitomo, to:
Sumitomo Corporation
0-0-0 Xxxxxxxxxxxx
Xxxxxxx-xx, Xxxxx 000-0000
Xxxxx
Attention: Tsuguhito Aoki
General Manager,
CATV & Satellite Business Dept.
Fax:x00 0 0000 0000
with a copy to:
Attention: Xxxxx Xxxxx
Deputy General Manager,
Legal Dept.
Fax:x00 0 0000 0000
(c) if to LMC, to:
Liberty Media International, Inc.
0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000
XXX
Attention: Chief Financial Officer
Fax:x0 000 000 0000
with copies to:
Attention: Xxxxx Xxxxxxxx
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Fax:x0 000 000 0000
(d) if to Microsoft Corp., to:
Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
XXX
Telephone:(000) 000-0000
Fax:(000) 000-0000
Attention: Chief Financial Officer
with copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Telephone:(000) 000-0000
Fax:(000) 000-0000
Attention: Xxxxxx X. XxXxxxxxx
7.6 GOVERNING LAW.
This Agreement shall be governed by and construed in
accordance with the laws of Japan.
7.7 DESCRIPTIVE HEADINGS.
The descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
7.8 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement shall be effective upon
execution and delivery of either manually signed or facsimile signed signature
pages.
7.9 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the
benefit of each Party hereto and their respective successors and assigns and
nothing in this Agreement, express or implied, is intended by or shall confer
upon any other Person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be signed by
its duly authorized officers as of the date first above written.
SUMITOMO CORPORATION
By:_____________________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By:_____________________________________
Name:
Title:
MICROSOFT CORPORATION
By:_____________________________________
Name:
Title:
JUPITER TELECOMMUNICATIONS CO., LTD.
By:_____________________________________
Name:
Title:
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