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EXHIBIT 2.2
EXECUTION COPY
SHARE EXCHANGE RELATIONSHIP AGREEMENT
AMONG
MICROSOFT HOLDINGS V, INC.,
MICROSOFT CORPORATION,
ITOCHU CORPORATION,
TOSHIBA CORPORATION,
SUMITOMO CORPORATION
LIBERTY JUPITER, INC.,
LIBERTY JAPAN, INC.,
AND
LIBERTY MEDIA CORPORATION.
DATED JUNE 27, 2000
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TABLE OF CONTENTS
RECITAL...................................................................... 1
ARTICLE I CERTAIN DEFINITIONS................................................ 2
1.1 Specific Definitions................................................... 2
1.2 Other Definitional Provisions.......................................... 9
1.3 Treatment of Certain Shares of XXXXX................................... 9
1.4 Covenants to Cause XXXXX or Jupiter to Take Actions.................... 9
ARTICLE II CLOSING........................................................... 10
2.1 Time and Place of Closing.............................................. 10
2.2 Deliveries by XXXXX Shareholder........................................ 10
2.3 Deliveries by Jupiter Shareholder...................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXX
SHAREHOLDERS................................................................. 11
3.1 Corporate Organization of XXXXX Shareholders........................... 11
3.2 Authority Relative to this Agreement and the Transaction Documents..... 11
3.3 Consents and Approvals; No Violations.................................. 13
3.4 Shares of XXXXX Capital Stock.......................................... 14
3.5 Capitalization of XXXXX; Dividends..................................... 15
3.6 Finders' Fees.......................................................... 16
3.7 Corporate Organization of XXXXX; Authority............................. 16
3.8 No Violations of Obligations........................................... 16
3.9 XXXXX Subsidiaries..................................................... 17
3.10 Financial Statements................................................... 17
3.11 Absence of Changes..................................................... 17
3.12 Compliance with Law; Government Licenses............................... 18
3.13 No Undisclosed Liabilities............................................. 18
3.14 Litigation............................................................. 18
3.15 Taxes.................................................................. 19
3.16 Contracts.............................................................. 19
3.17 Properties; Title to Properties........................................ 19
3.18 Intellectual Property.................................................. 20
3.19 Employee Benefits...................................................... 20
3.20 Sufficiency of the Assets.............................................. 20
3.21 Rights to Provide Service.............................................. 20
3.22 Environmental Matters.................................................. 21
3.23 Cable Systems and Subscribers.......................................... 21
3.24 Xxxx-Xxxxx-Xxxxxx...................................................... 22
3.25 No Other Representations or Warranties................................. 23
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF JUPITER SHAREHOLDERS........................ 23
4.1 Corporate Organization of Sumitomo and the Liberty Group...................... 23
4.2 Authority Relative to this Agreement and the Transaction Documents............ 23
4.3 Consents and Approvals; No Violations......................................... 24
4.4 Shares of Jupiter Common Stock................................................ 25
4.5 Capitalization of Jupiter; Dividends.......................................... 26
4.6 Finders' Fees................................................................. 26
4.7 Corporate Organization of Jupiter; Authority.................................. 26
4.8 No Violations of Obligations.................................................. 27
4.9 Jupiter Subsidiaries.......................................................... 27
4.10 Financial Statements.......................................................... 28
4.11 Absence of Changes............................................................ 28
4.12 Compliance with Law; Government Licenses...................................... 28
4.13 No Undisclosed Liabilities.................................................... 29
4.14 Litigation.................................................................... 29
4.15 Taxes......................................................................... 29
4.16 Contracts..................................................................... 30
4.17 Properties; Title to Properties............................................... 30
4.18 Intellectual Property......................................................... 31
4.19 Employee Benefits............................................................. 31
4.20 Sufficiency of the Assets..................................................... 31
4.21 Rights to Provide Service..................................................... 31
4.22 Environmental Matters......................................................... 31
4.23 Cable Systems and Subscribers................................................. 32
4.24 Xxxx-Xxxxx-Xxxxxx............................................................. 33
4.25 Technology.................................................................... 33
4.26 Reorganization................................................................ 34
4.27 No Other Representations or Warranties........................................ 35
ARTICLE V COVENANTS OF THE PARTIES....................................................... 35
5.1 Conduct of XXXXX.............................................................. 35
5.2 Conduct of Jupiter............................................................ 36
5.3 Access to Information......................................................... 38
5.4 Consents and Approvals........................................................ 38
5.5 Filings....................................................................... 38
5.6 Efforts to Consummate......................................................... 39
5.7 Transaction Documents......................................................... 39
5.8 Termination of Agreements..................................................... 39
5.9 Jupiter Shareholders Agreement................................................ 39
5.10 Initial Public Offering....................................................... 39
5.11 Employees; Management......................................................... 39
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5.12 Business Plan.......................................................... 40
5.13 No Sales of Capital Stock.............................................. 40
5.14 Conversion............................................................. 41
5.15 Shareholders Meetings.................................................. 41
5.16 Extensions of Share Exchange Agreement................................. 42
5.17 Further Assurances..................................................... 42
ARTICLE VI CONDITIONS TO PERMIT SHARE EXCHANGE................................. 42
6.1 Conditions of Microsoft, Sumitomo and Liberty Media.................... 42
6.2 Conditions of the Jupiter Shareholders................................. 43
6.3 Conditions of the XXXXX Shareholders................................... 44
ARTICLE VII INDEMNIFICATION AND RELATED MATTERS................................ 45
7.1 Survival............................................................... 45
7.2 Indemnification........................................................ 45
7.3 Limitations on Indemnification......................................... 45
7.4 Indemnification Procedures............................................. 46
7.5 Computation of Losses.................................................. 48
7.6 Mitigation of Damages.................................................. 48
ARTICLE VIII TERMINATION....................................................... 48
8.1 Termination............................................................ 48
8.2 Procedure and Effect of Termination.................................... 49
ARTICLE IX MISCELLANEOUS PROVISIONS............................................ 49
9.1 Amendment and Modification............................................. 49
9.2 Extension; Waiver...................................................... 49
9.3 Entire Agreement; Assignment........................................... 50
9.4 Severability........................................................... 50
9.5 Notices................................................................ 50
9.6 GOVERNING LAW.......................................................... 53
9.7 Mediation; Arbitration................................................. 53
9.8 Publicity.............................................................. 54
9.9 Descriptive Headings................................................... 54
9.10 Counterparts........................................................... 54
9.11 Fees and Expenses...................................................... 54
9.12 Parties in Interest.................................................... 54
9.13 Guarantees............................................................. 55
9.14 Liberty Media.......................................................... 55
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Annex A......................................................................... i
Annex B......................................................................... ii
Annex C.........................................................................iii
Annex D......................................................................... iv
Annex E......................................................................... v
Annex F......................................................................... vi
Annex G.........................................................................vii
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SHARE EXCHANGE RELATIONSHIP AGREEMENT
This SHARE EXCHANGE RELATIONSHIP AGREEMENT (the "AGREEMENT") is entered
into as of June 27, 2000, among Microsoft Holdings V, Inc., a Nevada
corporation (together with its successors and permitted assigns, "MICROSOFT"),
Itochu Corporation, a company organized under the laws of Japan (together with
its successors and permitted assigns, "ITOCHU"), Toshiba Corporation, a company
organized under the laws of Japan (together with its successors and permitted
assigns, "TOSHIBA") (Microsoft, Itochu and Toshiba are referred to herein
collectively as the "XXXXX SHAREHOLDERS"), Sumitomo Corporation, a company
organized under the laws of Japan (together with its successors and permitted
assigns, "SUMITOMO"), Liberty Jupiter, Inc., a Delaware corporation ("LJ"),
Liberty Japan, Inc., a Delaware corporation ("LIBERTY JAPAN") (LJ and Liberty
Japan together with their respective successors and permitted assigns are
referred to herein collectively as, "LIBERTY MEDIA") Sumitomo and Liberty Media
are referred to herein collectively as the "JUPITER SHAREHOLDERS"), solely for
purposes of Section 5.11 and 9.13, Liberty Media Corporation, a Delaware
corporation and the Parent of Liberty Media ("LMC"), Microsoft Corporation, a
Washington corporation and the Parent of Microsoft ("MICROSOFT CORP.").
RECITALS
WHEREAS, the XXXXX Shareholders own on a fully diluted basis 97%, and by
virtue of Section 1.3 are deemed to own all, of the shares of capital stock of
XXXXX Communications Corporation, a corporation organized under the laws of
Japan ("XXXXX");
WHEREAS, the Jupiter Shareholders are the owners of all of the shares of
capital stock of Jupiter Telecommunications Co., Ltd., a corporation organized
under the laws of Japan ("JUPITER");
WHEREAS, the XXXXX Shareholders desire to cause XXXXX to be transferred to
Jupiter, and the Jupiter Shareholders wish to cause Jupiter to become the owner
of all the issued and outstanding shares of capital stock of XXXXX; and
WHEREAS, the XXXXX Shareholders and the Jupiter Shareholders are causing
XXXXX and Jupiter concurrently herewith to enter into a Stock-for-Stock
Exchange Agreement in the form set forth as ANNEX A hereto (the "SHARE EXCHANGE
AGREEMENT"), which provides for a stock for stock exchange transaction between
XXXXX and Jupiter pursuant to the Japanese Commercial Code on the terms and
conditions set forth in the Share Exchange Agreement (the "SHARE EXCHANGE").
NOW, THEREFORE, in consideration of the mutual promises set forth in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
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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:
"AFFILIATE" means, when used with respect to any Person, each other Person
in which the Parent of such Person directly or indirectly (i) owns Equity
Securities of such other Person entitling it to cast 50% or more of the total
votes entitled to be cast generally for the election of directors (or persons
having a similar position) of such other Person by all of the holders of such
Equity Securities or (ii) otherwise has the power to control or direct the
management of such other Person.
"AGREEMENT" has the meaning set forth in the Preamble.
"ATTRIBUTABLE DEBT" means, when used with respect to any Person, the sum
of (i) the amount of Indebtedness of such Person and (ii) the amount of
Indebtedness of each other Person in which such Person or any of its Affiliates
has any direct or indirect equity interest multiplied by the percentage equity
interest of such Person or Affiliate in such other Person.
"BANKRUPTCY AND EQUITY EXCEPTION" has the meaning set forth in Section
3.2(a).
"BASKET" has the meaning set forth in Section 7.3(a).
"BUSINESS DAY" means a day other than a Saturday or Sunday on which banks
are open for business both in New York, New York and Tokyo, Japan.
"CABLE SUBSCRIBER" means, when used with respect to any Franchise System,
a customer that as of the date of measurement is being billed for cable
television provided by such Franchise System.
"CLAIM NOTICE" has the meaning set forth in Section 7.4(a).
"CLOSING DATE" has the meaning set forth in Section 2.1.
"CLOSING" has the meaning set forth in Section 2.1.
"CODE" means the U.S. Internal Revenue Code.
"CONSENT" means a consent, waiver, approval, authorization, registration
or permit whether from a Governmental Entity or otherwise.
"CONVERSION" has the meaning set forth in Section 5.14.
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"EMPLOYEE BENEFIT PLAN" means any written employment, severance or similar
contract, arrangement or any policy or a plan or arrangement providing for
severance, workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, pension, retirement or medical
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that are maintained or
contributed to (or previously contributed to) for the benefit of any Employee.
"EMPLOYEE" means any current or former employee of XXXXX or Jupiter or any
of their respective Subsidiaries or any Person seconded to any of the
foregoing, as the context requires.
"ENCUMBRANCE" means a claim, lien, encumbrance, easement, security
interest, charge or restriction on transfer of any nature whatsoever and,
additionally in respect of shares of capital stock, any voting agreement or
proxy.
"ENVIRONMENTAL LAW" means any Law, now in effect, related to (x) the
protection of human health or the environment (including air, water vapor,
surface water, groundwater, drinking water supply, and surface or subsurface
land), or (y) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, management, release
or disposal of, any Hazardous Substance including, without limitation, the
Labor Safety and Sanitation Law, the Labor Safety Regulations, the Regulations
for Prevention of Sickness from Specific Chemical Substance, Etc., the Law
Concerning the Disposal and Clean-up of Waste Products, and the Air Pollution
Prevention Law. "Environmental Permit" means any permit, license, franchise,
certificate, approval and other authorization of any Governmental Entity
required by any Environmental Law.
"EQUITY SECURITIES" means, when used with respect to any Person, any
shares of capital stock of, or other equity interest in, such Person that
entitle the holder to vote generally for the election of directors (or persons
having a similar position) of such Person.
"FRANCHISE" means a franchise granted or issued by a Governmental
Authority that permits the delivery of cable television, Internet or telephony
services through cable to customers in Japan.
"FRANCHISE HOMES" means, when used with respect to any Franchise System,
the total number of Homes within the geographic area covered by the Franchise
under which such Franchise System operates based on census data as of the date
on which the Franchise was granted.
"FRANCHISE SYSTEMS" means, when used with respect to any Person, all cable
delivery systems that deliver cable television, Internet or telephony services
in Japan pursuant to a Franchise and in which such Person or any other of its
Affiliates have any direct or indirect equity interest.
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"FULLY DILUTED PERCENTAGE" means, with respect to each XXXXX Shareholder,
a fraction (A) the numerator of which is equal to the sum of (x) the number of
shares of XXXXX Common Stock owned by such XXXXX Shareholder and (y) the
product obtained by multiplying (a) the number of shares of XXXXX Convertible
Preferred Stock owned by such XXXXX Shareholder and (b) 1875 and (B) the
denominator of which is equal to the sum of (a) the number of shares of XXXXX
Common Stock issued and outstanding and (b) the product obtained by multiplying
the number of shares of XXXXX Convertible Preferred Stock issued and
outstanding and 1875, in each case as of the date of measurement.
"GOVERNMENTAL ENTITY" means a governmental or regulatory authority, agency
or commission, including courts of competent jurisdiction.
"HAZARDOUS SUBSTANCES" means any substance, material, pollutant,
contaminant or waste that is listed, defined, designated or classified as
hazardous or toxic under applicable Laws or is otherwise regulated pursuant to
Law, including any petroleum, its derivatives, by-products and other
hydrocarbons.
"HOME" means a single family home, condominium, apartment, dormitory or
other dwelling unit in which an individual or family normally resides. If a
building has multiple dwelling units, each unit is a Home. Rooms in hotels,
hospitals or other dwelling units where an individual resides on a temporary
basis are not considered Homes for the purpose of this definition.
"HOMES PASSED" means, when used with respect to any Franchise System, the
number of Homes and business address within the geographic area covered by the
Franchise under which such Franchise System operates that are passed by cables
of the Franchise System whether or not such Homes actually subscribe to the
cable services supplied by such Franchise System.
"HOMES PASSED BY HFC" mean, with respect to any Franchise System, the
number of Homes and business addresses within the geographic area covered by
the Franchise under which such Franchise System operates that are passed by
hybrid fiber coaxial cables of the Franchise System, whether or not such Homes
or business addresses actually subscribe to the cable services supplied by such
Franchise System.
"INDEBTEDNESS" means, as to any Person (i) any indebtedness (including
principal, interest, fees and charges) of such Person for money borrowed or for
the deferred purchase price of property or services and any obligation for the
payment of money, (ii) the available amount of all letters of credit issued for
the account of such Person, (iii) all liabilities secured by any lien on any
property owned by such Person, whether or not such liabilities have been
assumed by such Person, and (iv) any obligation of such Person guaranteeing or
securing or intended to guarantee or secure any Indebtedness leases, dividends
or other obligations of any other Person in any manner, whether directly or
indirectly, provided, however, that Indebtedness shall not include any amounts
required to be capitalized under leases under which such Person is the lessee.
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"INDEMNIFIED PARTY" has the meaning set forth in Section 7.4(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 7.4(a).
"INTERNET SUBSCRIBER" means, when used with respect to any Franchise
System, a customer of that Franchise System that as of the date of measurement
being billed for Internet service provided by such Franchise System.
"ITOCHU" has the meaning set forth in the Preamble.
"JAPANESE GAAP" means generally accepted accounting principles in Japan.
"JUPITER" has the meaning set forth in the Recitals.
"JUPITER AUDITED FINANCIAL STATEMENTS" means the audited consolidated
balance sheet of Jupiter and the related audited consolidated statements of
operations, shareholders, equity and cash flows of Jupiter (including any
related notes) as of and for the fiscal years ended December 31, 1999 and
December 31, 1998 in conformity with US GAAP, and the audited non-consolidated
financial statements including balance sheets, income statement, loss
disposition proposal and business report of Jupiter as of and for the fiscal
year ended December 31, 1999 and December 31, 1998 in conformity with Japanese
GAAP.
"JUPITER BUDGET" means the budget of Jupiter for the twelve months ending
December 31, 2000 as set forth in ANNEX B.
"JUPITER COMMON STOCK" means the common stock, with no par value, of
Jupiter, that will be converted from common stock, par value of 50,000 yen per
share, of Jupiter prior to closing.
"JUPITER DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated the
date hereof, delivered by the Jupiter Shareholders to the XXXXX Shareholders.
"JUPITER EMPLOYEE PLAN" has the meaning set forth in Section 4.19(a).
"JUPITER FINANCIAL STATEMENTS" means the Jupiter Audited Financial
Statements and the Jupiter Unaudited Financial Statements.
"JUPITER FRANCHISE SYSTEMS" has the meaning set forth in Section 4.23(a).
"JUPITER FRANCHISES" has the meaning set forth in Section 4.23(c).
"JUPITER ORGANIZATIONAL DOCUMENTS" means all governing documents of
Jupiter and its Subsidiaries, including their articles of incorporation and any
agreements among any of their shareholders that survive the Closing.
"JUPITER REVENUES" means, as of any date of measurement, the product of
(a) the revenues of the Jupiter Franchise Systems for most recently ended
three month period based on
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management accounts (excluding compensation or poor reception revenues)
determined on a basis consistent with the Jupiter Audited Financial Statements
and in accordance with US GAAP and (b) four.
"JUPITER SHAREHOLDERS INDEMNIFIED PARTIES" has the meaning set forth in
Section 7.2(a).
"JUPITER SHAREHOLDERS MEETING" has the meaning set forth in Section
5.15(b).
"JUPITER SHAREHOLDERS" has the meaning set forth in the Preamble.
"JUPITER UNAUDITED FINANCIAL STATEMENTS" means the unaudited
non-consolidated balance sheet of Jupiter and the related unaudited
non-consolidated statements of operations, shareholders equity and cash flows
of Jupiter as of and for the three months ended March 31, 2000.
"LAW" means an applicable principle of common law, and any statute,
ordinance, rule, regulation, code or other law, or any order, judgment,
injunction or decree, promulgated, issued, adjudged or decreed by the
applicable Governmental Entity.
"LIBERTY GROUP" shall mean collectively Liberty Japan, LJ and LMC.
"LIBERTY JAPAN" has the meaning set forth in the Preamble.
"LIBERTY MEDIA" has the meaning set forth in the Preamble.
"LIMIT" has the meaning set forth in Section 7.3(b).
"LJ" has the meaning set forth in the Preamble.
"LMC" has the meaning set forth in the Preamble.
"LOSS" has the meaning set forth in Section 7.2(a).
"LOSSES" has the meaning set forth in Section 7.2(a).
"MATERIAL ADVERSE EFFECT" means, when used with respect to any Person,
any material adverse effect on the business, assets, liabilities, financial
condition or results of operations of such Person and its Subsidiaries taken as
a whole; provided, however, that Material Adverse Effect shall exclude any
effect after the date hereof due to the (i) execution and performance of this
Agreement, (ii) general economic conditions in Japan or (iii) conditions in the
cable television industry in Japan that affect other companies providing cable
television service in a manner and to an extent similar to their effect on such
Person.
"MICROSOFT CORP." has the meaning set forth in the Preamble.
"MICROSOFT" has the meaning set forth in the Preamble.
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"MPT" has the meaning set forth in Section 3.21.
"NEW JUPITER SHAREHOLDERS AGREEMENT" means the agreement substantially in
the form attached hereto as ANNEX C, and to be executed by and among the
parties specified therein.
"NOTICE PERIOD" has the meaning set forth in Section 7.4(a).
"OBLIGATION" means an indenture, mortgage, note, bond, license, government
registration, contract, lease, agreement or other instrument.
"ORDER" means an order, writ, judgment, injunction, decree, statute,
ordinance, rule or regulation.
"PARENT" means with respect to (i) Sumitomo, Sumitomo, (ii) Microsoft,
Microsoft Corp., (iii) Toshiba, Toshiba, (iv) Itochu, Itochu, (v) Liberty
Media, LMC, (vi) Jupiter, Jupiter and (vii) XXXXX, XXXXX.
"PERSON" means any individual, corporation, limited liability company,
partnership, trust or other entity of whatever nature.
"PREFERRED STOCK AGREEMENT" means the Preferred Stock Agreement, dated
June 30, 1999, by and among MediaOne International Holdings, Inc., Itochu,
Toshiba, and XXXXX, as amended on April 7, 2000 to add Microsoft, and to delete
MediaOne International Holdings, Inc. as a party thereto.
"RETURNS" means all applicable Japanese national income and other material
tax returns and statements.
"SCHEDULE 8 AGREEMENTS" means the agreements defined as such in the XXXXX
Shareholders Agreement.
"SHARE EXCHANGE" has the meaning set forth in the Recitals.
"SHARE EXCHANGE AGREEMENT" has the meaning set forth in the Recitals.
"SUBSCRIBERS" means, with respect to any Franchise System, the aggregate
Cable Subscribers, Internet Subscribers and Telephone Subscribers of that
Franchise System as of the date of measurement.
"SUBSIDIARY" means, when used with respect to any Person, each other
Person in which such Person directly or indirectly owns Equity Securities of
such other Person entitling it to cast 50% or more of the total votes entitled
to be cast generally for the election of directors (or Persons having a similar
position) of such other Person.
"SUMITOMO" has the meaning set forth in the Preamble.
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"TELEPHONE SUBSCRIBER" means, when used with respect to any
Franchise System, a customer that as of the date of measurement is being billed
for telephone services provided by such Franchise System.
"XXXXX" has the meaning set forth in the Recitals.
"XXXXX AUDITED FINANCIAL STATEMENTS" means the audited consolidated
balance sheet of XXXXX and the related audited consolidated statements of
operations, shareholders equity and cash flows of XXXXX (including any related
notes) as of and for the fiscal years ended March 31, 2000 and March 31, 1999
in conformity with US GAAP, and the audited non-consolidated financial
statements including balance sheets, income statement, loss disposition
proposal and business report of XXXXX as of and for the fiscal year ended March
31, 2000 and March 31, 1999 in conformity with Japanese GAAP.
"XXXXX BUDGET" means the budget of XXXXX for the twelve months
ending on March 31, 2001 set forth in ANNEX D.
"XXXXX COMMON STOCK" means the common stock, both with a par value
of Yen 50,000 per share and without par value, of XXXXX.
"XXXXX CONVERTIBLE PREFERRED STOCK" means the Convertible Preferred
Stock, par value Yen 50,000 per share, of XXXXX.
"XXXXX DISCLOSURE SCHEDULE" means the disclosure schedule, dated
the date hereof, delivered by the XXXXX Shareholders to the Jupiter
Shareholders.
"XXXXX EMPLOYEE PLAN" has the meaning set forth in Section 3.19(a).
"XXXXX FRANCHISE" has the meaning set forth in Section 3.23(c).
"XXXXX FRANCHISE SYSTEMS" has the meaning set forth in Section
3.23(a).
"XXXXX ORGANIZATIONAL DOCUMENTS" means all governing documents of
XXXXX and its Subsidiaries, including their articles of incorporation and any
agreements among any of their shareholders that will survive the Closing.
"XXXXX REVENUES" means, as of any date of measurement, the product
of (a) the revenues of the XXXXX Franchise System for most recently ended three
month period based on management accounts (excluding compensation or poor
reception revenues) determined on a basis consistent with the XXXXX Audited
Financial Statements and in accordance with US GAAP and (b) four.
"XXXXX SHAREHOLDER INDEMNIFIED PARTIES" has the meaning set forth
in Section 7.2(a).
"XXXXX SHAREHOLDERS" has the meaning set forth in the Preamble.
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"XXXXX SHAREHOLDERS AGREEMENT" means the Shareholders' Agreement dated
June 30, 1999 by and among MediaOne International Holdings, Inc., Itochu,
Toshiba and XXXXX, as provided to Jupiter Shareholders, as amended by the
Adherence Agreement, by and among Microsoft, Itochu, Toshiba, XXXXX and
MediaOne International Holdings, Inc., and dated as of April 7, 2000.
"XXXXX SHAREHOLDERS MEETING" has the meaning set forth in Section 5.15(a).
"TOSHIBA" has the meaning set forth in the Preamble.
"TRANSACTION DOCUMENTS" shall mean (i) the Share Exchange Agreement (ii)
the New Jupiter Shareholders Agreement and (iii) each other agreement or
instrument delivered by the Jupiter Shareholders of the XXXXX Shareholders, or
any combination of them, contemporaneously with or pursuant to this Agreement.
"US GAAP" means U.S. generally accepted accounting principles.
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) The terms "YEN" and [yen symbol] shall mean Japanese Yen.
(d) The term "DOLLARS" and "$" shall mean United States Dollars.
(e) All references herein to the "transaction contemplated hereby" shall
be deemed to include the Share Exchange.
1.3 TREATMENT OF CERTAIN SHARES OF XXXXX.
The parties acknowledge that prior to the date of this Agreement,
Microsoft has agreed to transfer to Xxx Xxxxxxx 36,596 shares of XXXXX Common
Stock and the parties agree that for all purposes of this Agreement (i) such
shares shall be deemed to be owned beneficially and of record by Microsoft,
(ii) Microsoft shall have all rights, privileges and obligations in respect of
such shares and (iii) the agreements between Microsoft and Xxx Xxxxxxx
attached as ANNEX E shall not be deemed to be Encumbrances.
1.4 COVENANTS TO CAUSE XXXXX OR JUPITER TO TAKE ACTIONS.
(a) The parties agree that any covenant herein by a XXXXX Shareholder to
cause XXXXX to take or refrain from taking any action shall only require such
XXXXX Shareholder to exercise all rights which it has as a holder of XXXXX
Common Stock or XXXXX
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Convertible Preferred Stock or under the XXXXX Shareholder Agreement to cause
XXXXX to take or refrain from taking such action and such XXXXX Shareholder
shall not have any liability if XXXXX fails to take or refrain from taking such
action except to the extent such failure is attributable to its breach of such
obligation. In no event shall any XXXXX Shareholder be liable for any failure
by any other XXXXX Shareholder to comply with its obligations in respect of any
such covenant.
(b) The parties agree that any covenant herein by a Jupiter
Shareholder to cause Jupiter to take or refrain from taking any action shall
only require such Jupiter Shareholder to exercise all rights which it has as a
holder of Jupiter Common Stock or under the existing shareholder agreement
between the Jupiter Shareholders to cause Jupiter to take or refrain from
taking such action and such Jupiter Shareholder shall not have any liability
if Jupiter fails to take or refrain from taking such action except to the
extent such failure is attributable to its breach of such obligation. In no
event shall any Jupiter Shareholder be liable for any failure by the other
Jupiter Shareholder to comply with its obligations in respect of any such
covenant.
1.5 NO LIABILITY OF CERTAIN PERSONS
Notwithstanding anything herein to the contrary, neither
Jupiter, XXXXX nor any of their respective directors, officers, employees or
statutory auditors shall have any liability to any Person under or as a result
of this Agreement.
1.6 DISCLOSURE SCHEDULES
A disclosure in any particular part of the XXXXX Disclosure
Schedule or the Jupiter Disclosure Schedule shall be deemed to be disclosed in
other parts of such document to the extent that such disclosure could be
reasonably expected to apply to such other parts.
ARTICLE II
CLOSING
2.1 TIME AND PLACE OF CLOSING.
Upon the terms and subject to the conditions contained in this
Agreement, the closing in respect of the transactions contemplated by the Share
Exchange Agreement (the "CLOSING") will take place at the principal offices of
Sumitomo in Tokyo, Japan, at 10:00 P.M. (Tokyo time) on the day prior to the
day specified in the Share Exchange Agreement as the day on which the Share
Exchange will occur (as such date may be extended from time to time as provided
in the Share Exchange Agreement), (the time and date of the Closing is referred
to herein as the "CLOSING DATE").
2.2 DELIVERIES BY XXXXX SHAREHOLDER.
(a) At the Closing, each XXXXX Shareholder will deliver or
cause to be delivered the following to the Jupiter Shareholders:
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(i) the certificates contemplated by Section 6.2(a) and (b) as
applicable to such XXXXX Shareholder; and
(ii) the Transaction Documents to which such XXXXX Shareholder is
a party, duly executed by such XXXXX Shareholder.
2.3 DELIVERIES BY JUPITER SHAREHOLDER.
(a) At the Closing, each Jupiter Shareholder will deliver or cause
to be delivered to the XXXXX Shareholders:
(i) the certificates contemplated by Section 6.3(a) and (b)
hereof as applicable to such Jupiter Shareholder; and
(ii) the Transaction Documents to which such Jupiter Shareholder
is a party, duly executed by such Jupiter Shareholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXX SHAREHOLDERS
A. Microsoft (as to Sections 3.1(a), 3.2(a), 3.3(a) and 3.4(a)), Itochu
(as to Sections 3.1(b), 3.2(b), 3.3(b) and 3.4(b)), and Toshiba (as to Sections
3.1(c), 3.2(c), 3.3(c), and 3.4(c)) severally represent and warrant to the
Jupiter Shareholders as of the date hereof and as of the Closing Date as
follows:
3.1 CORPORATE ORGANIZATION OF XXXXX SHAREHOLDERS.
(a) Microsoft and Microsoft Corp. each is duly incorporated, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation and each has all requisite corporate power and authority to own
and operate its properties and assets and to conduct its business as is now
being conducted.
(b) Itochu is a corporation (kabushiki kaisha) duly organized and
validly existing under the Laws of Japan and has all requisite corporate power
and authority to own and operate its properties and assets and to conduct its
business as it is now being conducted.
(c) Toshiba is a corporation (kabushiki kaisha) duly organized and
validly existing under the Laws of Japan and has all requisite corporate power
and authority to own and operate its properties and assets and to conduct its
business as it is now being conducted.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE TRANSACTION
DOCUMENTS.
(a) Microsoft and Microsoft Corp. each has all requisite corporate
authority and power to execute and deliver this Agreement and each Transaction
Document to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions
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contemplated hereby and thereby. The execution, delivery and performance by
each of Microsoft and Microsoft Corp. of this Agreement and each Transaction
Document to which it is a party and the consummation by each of Microsoft and
Microsoft Corp. of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and approvals on the part of
Microsoft and Microsoft Corp. and no additional corporate action or approval is
required in connection with the execution and delivery by Microsoft or
Microsoft Corp. of this Agreement or the Transaction Documents to which it is a
party or the performance by Microsoft or Microsoft Corp. of its obligations
under this Agreement and each of the Transaction Documents to which it is a
party. Each of this Agreement and the Transaction Documents to which Microsoft
or Microsoft Corp. is a party has been (with respect to those Transaction
Documents executed on or prior to the date hereof) or will be (with respect to
the Transaction Documents executed after the date hereof) duly and validly
executed and delivered by Microsoft or Microsoft Corp., as the case may be,
and, assuming the due authorization, execution and delivery by the other
parties or party hereto and thereto, each of this Agreement and the Transaction
Documents constitutes or, with respect to those Transaction Documents executed
after the date hereof, will constitute, as the case may be, a valid and binding
agreement of Microsoft and Microsoft Corp., enforceable against each of
Microsoft and Microsoft Corp. in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "BANKRUPTCY AND EQUITY
EXCEPTION").
(b) Itochu has all requisite corporate authority and power to
execute and deliver this Agreement and each Transaction Document to which it is
a party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Itochu of this Agreement and each Transaction Document to which
it is a party and the consummation by Itochu of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
and approvals on the part of Itochu and no additional corporate action or
approval is required in connection with the execution and delivery by Itochu of
this Agreement or the Transaction Documents to which it is a party or the
performance by Itochu of its obligations under this Agreement and each of the
Transaction Documents to which it is a party. Each of this Agreement and the
Transaction Documents to which Itochu is a party has been (with respect to
those Transaction Documents executed on or prior to the date hereof) or will be
(with respect to the Transaction Documents executed after the date hereof) duly
and validly executed and delivered by Itochu and, assuming the due
authorization, execution and delivery by the other parties or party hereto and
thereto, each of this Agreement and the Transaction Documents constitutes or,
with respect to those Transaction Documents executed after the date hereof,
will constitute, as the case may be, a valid and binding agreement of Itochu,
enforceable against Itochu in accordance with their respective terms, subject
to the Bankruptcy and Equity Exception.
(c) Toshiba has all requisite corporate authority and power to
execute and deliver this Agreement and each Transaction Document to which it is
a party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Toshiba of this Agreement and each
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Transaction Document to which it is a party and the consummation by Toshiba of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and approvals on the part of Toshiba and no
additional corporate action or approval is required in connection with the
execution and delivery by Toshiba of this Agreement or the Transaction Documents
to which it is a party or the performance by Toshiba by its obligations under
this Agreement and each of the Transaction Documents to which it is a party.
Each of this Agreement and the Transaction Documents to which Toshiba is a party
has been (with respect to those Transaction Documents executed on or prior to
the date hereof) or will be (with respect to the Transaction Documents executed
after the date hereof) duly and validly executed and delivered by Toshiba and,
assuming the due authorization, execution and delivery by the other parties or
party hereto and thereto, each of this Agreement and the Transaction Documents
constitutes or, with respect to those Transaction Documents executed after the
date hereof, will constitute, as the case may be, a valid and binding agreement
of Toshiba, enforceable against Toshiba in accordance with their respective
terms, subject to the Bankruptcy and Equity Exception.
3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except as set forth in Schedule 3.3(a) of the XXXXX Disclosure
Schedule, neither the execution, delivery and performance by Microsoft or
Microsoft Corp. of this Agreement and any of the Transaction Documents to which
Microsoft or Microsoft Corp. is a party nor consummation of the transactions
contemplated hereby or thereby by Microsoft or Microsoft Corp. will (i)
conflict with or violate any provision of the certificate of incorporation or
by-laws, or equivalent governance documents of Microsoft or Microsoft Corp., or
the articles of incorporation of XXXXX or any of its Subsidiaries or any
agreements among the XXXXX Shareholders with respect to XXXXX, (ii) require any
material Consent of, or filing with or notification to, any Governmental
Entity, (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration of any obligation to repay)
under, any of the terms, conditions or provisions of any material Obligation to
which Microsoft or Microsoft Corp. is a party or by which Microsoft or
Microsoft Corp. or its respective properties or assets may be bound, (iv)
violate any order of any Governmental Entity applicable to Microsoft, Microsoft
Corp. or XXXXX or (v) result in the creation of any Encumbrance against or with
respect to the shares of XXXXX Common Stock or XXXXX Preferred Stock owned by
Microsoft, except, in the case of clauses (ii), (iii) or (iv), for those
consents, breaches, violations or creations that would not be reasonably likely
to prevents or materially impair or delay the consummation of the transactions
contemplated herein and that would not be reasonably likely to, individually or
in the aggregate, have a Material Adverse Effect on XXXXX.
(b) Except as set forth in Schedule 3.3(b) of the XXXXX Disclosure
Schedule, neither the execution, delivery and performance by Itochu of this
Agreement and any of the Transaction Documents to which Itochu is a party nor
consummation of the transactions contemplated hereby or thereby by Itochu will
(i) conflict with or violate any provision of the certificate of incorporation
or equivalent governance documents of Itochu, or the articles of incorporation
or bylaws of XXXXX or any of its Subsidiaries or any agreements among the XXXXX
Shareholders with respect to XXXXX, (ii) require any material Consent of, or
filing with
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or notification to, any Government Entity, (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration of any obligation to repay) under, any of the terms, conditions or
provisions of any material Obligation to which Itochu is a party or by which
Itochu or its properties or assets may be bound, (iv) violate any Order of any
Governmental Entity applicable to Itochu or XXXXX or (v) result in the creation
of any Encumbrance against or with respect to the shares of XXXXX Common
Stock owned by Itochu, except, in the case of clauses (ii), (iii) or (iv), for
those consents, breaches, violations or creations that would not be reasonably
likely to prevent or materially impair or delay the consummation of the
transactions contemplated herein and that would not be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect on XXXXX.
(c) Except as set forth in Schedule 3.3(c) of the XXXXX Disclosure
Schedule, neither the execution, delivery and performance by Toshiba of this
Agreement and any of the Transaction Documents to which Toshiba is a party nor
consummation of the transactions contemplated hereby or thereby by Toshiba
will (i) conflict with or violate any provision of the certificate of
incorporation or equivalent governance documents of Toshiba, or the articles of
incorporation or bylaws of XXXXX or any of its Subsidiaries or any agreements
among the XXXXX Shareholders with respect to XXXXX, (ii) require any material
Consent of, or filing with or notification to, any Governmental Entity, (iii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration of any obligation to repay) under, any of the
terms, conditions or provisions of any material obligation to which Toshiba is
a party or by which Toshiba or its properties or assets may be bound, (iv)
violate any Order of any Governmental Entity applicable to Toshiba or XXXXX or
(v) result in the creation of any Encumbrance against or with respect to the
shares of XXXXX Common Stock owned by Toshiba, except, in the case of clauses
(ii), (iii) or (iv), for those consents, breaches, violations or creations
that would not be reasonably likely to prevent or materially impair or delay
the consummation of the transactions contemplated herein and that would not be
reasonably likely to, individually or in the aggregate, have a Material Adverse
Effect on XXXXX.
3.4 SHARES OF XXXXX CAPITAL STOCK.
(a) Microsoft is the registered and beneficial owner of that number of
shares of XXXXX Common Stock and XXXXX Convertible Preferred Stock set forth
across from its name on Schedule 3.4(a) attached hereto and is not the
registered and beneficial owner of any other Equity Securities of XXXXX, and
Microsoft has good and valid title to those shares of XXXXX Common Stock, free
and clear of all Encumbrances, except Encumbrances relating to the XXXXX Common
Stock arising out of or relating to the XXXXX Shareholders Agreement. The
number of such shares of XXXXX Common Stock and XXXXX Convertible Preferred
Stock owned by Microsoft, when added together with the numbers of such shares
owned by Itochu and Toshiba as set forth in Schedules 3.4(b) and (c),
respectively, constitute all of the outstanding Equity Securities of XXXXX.
Microsoft has duly filed all United States Internal Revenue Service Forms 5471
with respect to XXXXX required to be filed by or with respect to it and such
forms were true, complete and accurate in all material respects when filed.
Microsoft expects that, barring any unforeseen change in the conduct of XXXXX'x
business, XXXXX will not have, as of the Closing
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Date, a material amount of Subpart F income for the taxable year of XXXXX that
includes the Closing Date. "Subpart F income" means any income required to be
taken into account under Sections 951 through 964 of the United States Internal
Revenue Code of 1986, as amended.
(b) Itochu is the registered and beneficial owner of that number of
shares of XXXXX Common Stock set forth across from its name on Schedule 3.4(b)
attached hereto, and Itochu has good and valid title to those shares, free and
clear of all Encumbrances, except Encumbrances relating to the XXXXX Common
Stock arising out of or relating to the XXXXX Shareholders Agreement. The number
of shares of XXXXX Common Stock and XXXXX Convertible Preferred Stock owned by
Itochu, when added together with the number of shares owned by Microsoft and
Toshiba as set forth in Schedules 3.4(a) and (c), respectively, constitute all
of the outstanding Equity Securities of XXXXX as of the date hereof.
(c) Toshiba is the registered and beneficial owner of that number of
shares of XXXXX Common Stock forth across from its name on Schedule 3.4(c)
attached hereto, and Toshiba has good and valid title to those shares free and
clear of all Encumbrances, except Encumbrances relating to the XXXXX Common
Stock arising out of or relating to the XXXXX Shareholders Agreement. The number
of shares of XXXXX Common Stock owned by Toshiba, when added together with the
number of shares of XXXXX Common Stock and XXXXX Convertible Preferred Stock
owned by Microsoft and Itochu as set forth in Schedules 3.4(a) and (b),
respectively, constitute all of the outstanding Equity Securities of XXXXX as of
the date hereof.
B. Each of the XXXXX Shareholders hereby severally represents and
warrants to Jupiter Shareholders as of the date hereof and as of the Closing
Date as follows:
3.5 CAPITALIZATION OF XXXXX; DIVIDENDS.
(a) As of the date of this Agreement, the authorized capital stock
of XXXXX consists of (i) 1,244 shares of XXXXX Convertible Preferred Stock of
which 325 shares are issued and outstanding and (ii) 1,940,756 shares of XXXXX
Common Stock of which 610,500 are issued and outstanding. All of the issued and
outstanding shares of capital stock of XXXXX are duly authorized, validly issued
and fully paid and were issued in compliance with all applicable Japanese Laws
and not in violation of any preemptive rights and are owned by the XXXXX
Shareholders. Except for the XXXXX Convertible Preferred Stock outstanding on
the date hereof and except as set forth in Schedule 3.5 of the XXXXX Disclosure
Schedule, there are no outstanding (x) securities convertible into or
exchangeable for any shares of capital stock of XXXXX, (y) options, warrants or
other rights to purchase or subscribe for shares of capital stock of XXXXX from
XXXXX or any of the XXXXX Shareholders or any Affiliate of any of the XXXXX
Shareholders or that otherwise require the issuance of shares of capital stock
of XXXXX or (z) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance or repurchase of any shares
of capital stock of XXXXX, any such convertible or exchangeable securities or
any such options, warrants or rights which, in any of the foregoing cases, is
binding upon XXXXX. True and complete copies of all the XXXXX Organizational
Documents and the Preferred Stock Agreement, as presently in effect, have been
heretofore made available to Jupiter Shareholders.
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(b) Since March 31, 2000, there has not been paid or declared any
dividend or distribution in respect of the capital stock of XXXXX.
3.6 FINDERS' FEES.
There is no investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of any of the XXXXX
Shareholders or XXXXX who will be entitled to any fee or commission with
respect to the transactions contemplated by this Agreement.
3.7 CORPORATE ORGANIZATION OF XXXXX; AUTHORITY.
Each of XXXXX and its Subsidiaries is a corporation duly organized and
validly existing under the Laws of Japan and has all requisite corporate power
and authority to conduct its business as it is now being conducted and to own,
lease and operate its property and assets, except such failures to have power
and authority to conduct business which have not and would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect on
XXXXX or prevent or materially impair or delay the consummation of the
transactions contemplated hereby. XXXXX has all requisite corporate authority
and power to execute and deliver each Transaction Document to which it is a
party, to perform its obligations thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
XXXXX of each Transaction Document to which it is a party and the consummation
by XXXXX of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and approvals on the part of XXXXX
and, except for the approval of the Share Exchange Agreement by the XXXXX
Shareholders required at the XXXXX Shareholders' Meeting, no additional
corporate action or approval is required in connection with the execution and
delivery by XXXXX of the Transaction Documents to which it is a party or the
performance by XXXXX of the transactions contemplated hereby, its obligations
under each of the Transaction Documents to which it is a party. Each of the
Transaction Documents to which XXXXX is a party has been (with respect to those
Transaction Documents executed on or prior to the date hereof) or will be (with
respect to the Transaction Documents executed after the date hereof) duly and
validly executed and delivered by XXXXX and, assuming the due authorization,
execution and delivery by the other parties or party thereto, each of such
Transaction Documents constitutes or, with respect to those such Transaction
Documents executed after the date hereof, will constitute, as the case may be,
a valid and binding agreement of XXXXX, enforceable against XXXXX in accordance
with their respective terms, subject to the Bankruptcy and Equity Exception.
3.8 NO VIOLATIONS OF OBLIGATIONS.
Except as set forth in Schedule 3.8 of the XXXXX Disclosure Schedule,
neither the execution, delivery and performance by any of the XXXXX
Shareholders of this Agreement and the execution, delivery and performance by
XXXXX or any of the XXXXX Shareholders of any of the Transaction Documents to
which XXXXX or any of the XXXXX Shareholders is a party nor any XXXXX
Shareholders' consummation of the transactions contemplated hereby or thereby
will result in a violation or breach of, or constitute (with or without due
notice or lapse of time or
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both) a default (or give rise to any right of termination, cancellation or
acceleration of any obligation to repay) under, any of the terms, conditions or
provisions of any material Obligation to which XXXXX or its Subsidiaries is a
party or by which XXXXX or its Subsidiaries or their respective properties or
assets may be bound, except such violations, breaches and defaults which would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on XXXXX or prevent or materially impair or delay the
consummation of the transactions contemplated hereby.
3.9 XXXXX SUBSIDIARIES.
Each Subsidiary of XXXXX is listed on Schedule 3.9(a) of the
XXXXX Disclosure Schedule together with its jurisdiction or organization and
the percentage interest held directly or indirectly by XXXXX. All issued and
outstanding shares of capital stock of each Subsidiary of XXXXX are validly
issued and fully paid and were issued in compliance with all applicable
Japanese Laws, and, except as set forth in Schedule 3.9(b) of the XXXXX
Disclosure Schedule, are owned by XXXXX, free and clear of all Encumbrances.
Except as set forth in Schedule 3.9(c) of the XXXXX Disclosure Schedule, there
are no outstanding (a) securities convertible into or exchangeable for shares
of capital stock or membership interests or other equity interests of any
Subsidiary of XXXXX, (b) options, warrants or other rights to purchase or
subscribe for shares of capital stock, membership interests or other equity
interests of any Subsidiary of XXXXX from such Subsidiary of XXXXX or that
otherwise require issuance of capital stock, membership interests or other
equity interests, or (c) Obligations of any kind relating to the issuance or
repurchase of any shares of capital stock, membership interests or other equity
interests of any Subsidiary of XXXXX, any such convertible or exchangeable
securities, membership interest or other equity interests or any such options,
warrants or rights which, in any of the foregoing cases, is binding upon XXXXX
or its Subsidiaries.
3.10 FINANCIAL STATEMENTS.
(a) Schedule 3.10 of the XXXXX Disclosure Schedule sets forth
true and correct copies of the XXXXX Audited Financial Statements and the XXXXX
Audited Financial Statements fairly present the consolidated financial
position, shareholders' equity and earnings and cash flows of XXXXX and its
Subsidiaries as of the dates and for the periods presented therein,
respectively, in conformity with US GAAP, and the non-consolidated financial
position, shareholders' equity and earnings of XXXXX as of the dates and for
the periods presented therein, respectively, in conformity with Japanese GAAP,
in each case applied on a consistent basis, except as otherwise noted therein.
(b) As of March 31, 2000, the Attributable Debt of XXXXX did
not exceed Yen 30,391,299,700. As of the Closing Date, the Attributable Debt of
XXXXX will not exceed Yen 39,680,508,400.
3.11 ABSENCE OF CHANGES.
Except as set forth in Schedule 3.11 of the XXXXX Disclosure
Schedule, since March 31, 2000, XXXXX and its Subsidiaries have conducted their
respective businesses in the
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ordinary and usual course of such business consistent with past practice and
since such date there has not occurred any event or circumstance that,
individually or in the aggregate, has had, or would be reasonably likely to
result in, a Material Adverse Effect on XXXXX.
3.12 COMPLIANCE WITH LAW; GOVERNMENT LICENSES.
Except as set forth in Schedule 3.12(a) of the XXXXX Disclosure
Schedule, the business of each of XXXXX and its Subsidiaries is in compliance
with all applicable Laws and Orders of any Governmental Entity, except where
the failure to so comply, individually or in the aggregate, has not had and
would not reasonably be likely to have a Material Adverse Effect on XXXXX or
prevent or materially delay the consummation of the transactions contemplated
by this Agreement. Except as set forth in Schedule 3.12(b) of the XXXXX
Disclosure Schedule, each of XXXXX and its Subsidiaries has and is in
compliance with all governmental licenses and permits necessary to conduct
their respective businesses, except where the failure to comply with any such
licenses and permits, individually or in the aggregate, has not had and would
not be reasonably likely to have a Material Adverse Effect with respect to
XXXXX or prevent or materially impair or delay the consummation of the
transactions contemplated hereby.
3.13 NO UNDISCLOSED LIABILITIES.
Neither XXXXX nor any of its Subsidiaries has any liability (whether
accrued, absolute, contingent or otherwise and whether known or unknown) other
than liabilities (i) of a nature not required to be disclosed or reflected in a
balance sheet prepared in accordance with US GAAP or in the notes thereto, (ii)
reflected on or reserved against in the XXXXX Audited Financial Statements (or
in the notes thereto), (iii) incurred or arising in the ordinary course of
business since March 31, 2000 (none of which, individually or in the aggregate,
has had or would be reasonably likely to have, a Material Adverse Effect on
XXXXX) or (iv) specified on Schedule 3.13 of the XXXXX Disclosure Schedule.
3.14 LITIGATION.
(a) Except as set forth in Schedule 3.14 of the XXXXX Disclosure
Schedule there are no actions, suits, demands, claims, hearings or proceedings
by or before any Governmental Entity or arbitrator pending or, to the knowledge
of XXXXX or the XXXXX Shareholders, threatened, against XXXXX or any of its
Subsidiaries which if decided adversely would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on XXXXX or
which would prevent or materially delay or impair the ability of any of the
XXXXX Shareholders or XXXXX to consummate the transactions contemplated hereby.
(b) None of the properties or assets of XXXXX or any of its
Subsidiaries is subject to any Order other than those that, individually or in
the aggregate, have not had and would not be reasonably likely to have a
Material Adverse Effect with respect to XXXXX or prevent or materially impair
or delay the consummation of the transactions contemplated hereby.
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3.15 TAXES
Each of XXXXX and its Subsidiaries has duly and timely (after giving
effect to extensions) filed all material Returns required to be filed by it,
and all such Returns were at the time of filing true and complete in all
material respects. XXXXX and its Subsidiaries have timely paid in full all
taxes shown due on such Returns, no deficiencies with respect to any such
Returns have been asserted and no waivers of statutes of limitations have been
given or requested with respect to any taxes with respect to such Returns. No
audit or other proceeding by any Governmental Entity is, to the knowledge of
the XXXXX Shareholders or XXXXX, pending with respect to any Returns and no
notice of assessment has been received by XXXXX.
3.16 CONTRACTS.
(a) Except for the Obligations set forth in Schedule 3.16(a) of the
XXXXX Disclosure Schedule, neither XXXXX nor any of its Subsidiaries is a party
to or bound by:
(i) any Obligation under which XXXXX or any of its Subsidiaries
will, or is reasonably likely to, make or receive aggregate payments in
excess of Yen 32,000,000 per annum or Yen 106,000,000 over the remaining
term of the Obligation;
(ii) any partnership, joint venture or other similar agreement
or arrangement that is material to XXXXX and its Subsidiaries, taken as a
whole;
(iii) any Obligation relating to the acquisition or disposition
of its business (whether by merger, sale of stock, sale of assets or
otherwise); or
(iv) any non-compete agreement or similar agreement which
restricts the ability of XXXXX or any of its Subsidiaries to conduct
businesses.
(b) Each Obligation disclosed on Schedule 3.16(a) is a valid and
binding agreement of XXXXX and/or its Subsidiaries party thereto, as the case
may be, enforceable against XXXXX and/or such Subsidiary and, to the knowledge
of XXXXX or the XXXXX Shareholders, the relevant counterparty in accordance
with its respective terms, and none of XXXXX, any Subsidiary of XXXXX or, to
the knowledge of XXXXX or the XXXXX Shareholders, any other party thereto is in
material default or breach under any such Obligation, and, to the knowledge of
XXXXX or the XXXXX Shareholders, no event or circumstance has occurred that,
with notice or lapse of time or both, would be reasonably likely to constitute
any material default or breach thereunder.
3.17 PROPERTIES; TITLE TO PROPERTIES.
Each of XXXXX and its Subsidiaries has good, valid and legal title to
all of the assets and properties which it owns and good, valid and subsisting
leasehold interests in all of the assets and properties it leases, in each case
free and clear of all Encumbrances, except for (a) Encumbrances listed in
Schedule 3.17 of the XXXXX Disclosure Schedule, (b) liens for current taxes not
yet due and payable or for taxes the validity of which is being contested in
good faith,
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(c) Encumbrances reflected on the Financial Statements, (d) mechanics',
materialmen's and other Encumbrances which have arisen in the ordinary course
of business and which, are not material in the aggregate to XXXXX and its
Subsidiaries, taken as a whole, (e) zoning, entitlement, building and other
land use and environmental regulations by any Governmental Entity, provided
that such regulations have not been violated in any material manner, (f) such
other imperfections in title which, individually or in the aggregate, have not
had and would not be reasonably likely to have a Material Adverse Effect on
XXXXX and (g) with respect to assets and properties which are leased by XXXXX,
Encumbrances created by the terms of the related lease which do not materially
detract from the value of or materially interfere with the present use of such
assets and properties by XXXXX and its Subsidiaries.
3.18 INTELLECTUAL PROPERTY.
Each of XXXXX and its Subsidiaries owns or possesses licenses or other
rights to use all patents, trademarks, trade names, service marks, copyrights,
licenses and product licenses or registrations (including applications for any
of the foregoing) used in connection with its business as currently conducted,
except those the lack of which, individually or in the aggregate, would not
reasonably be likely to have a Material Adverse Effect with respect to XXXXX.
3.19 EMPLOYEE BENEFITS.
Schedule 3.19 of the XXXXX Disclosure Schedule identifies each material
Employee Benefit Plan of XXXXX ("XXXXX EMPLOYEE BENEFIT PLAN"). XXXXX has made
available to Jupiter Shareholders copies of each XXXXX Employee Benefit Plan.
Each XXXXX Employee Benefit Plan has been maintained in substantial compliance
with its terms and with the requirements prescribed by applicable Japanese
Laws, except for any failures to so maintain such Employee Benefit Plans as
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on XXXXX. Other than as mandated by Japanese Law or as
disclosed in Schedule 3.19 of the XXXXX Disclosure Schedule, there has been no
amendment to, or material change in employee participation or coverage under,
any XXXXX Employee Benefit Plan that would increase materially the expense of
maintaining such XXXXX Employee Benefit Plan above the level of expense
incurred in respect thereof for the most recent fiscal year ended prior to the
date hereof. In addition, except as set forth on Schedule 3.19(a), the amount
set forth on the US GAAP reconciliation to the XXXXX Audited Financial
Statements represents, as of March 31, 2000, the amount of retirement allowance
required to be accrued under US GAAP.
3.20 SUFFICIENCY OF THE ASSETS.
The assets of XXXXX and of its Subsidiaries are in reasonable condition,
given their age and the normal wear and tear of operating conditions and are
sufficient for the operation of their respective businesses as currently
conducted.
3.21 RIGHTS TO PROVIDE SERVICE.
The XXXXX Shareholders have caused XXXXX to make available to the Jupiter
Shareholders true and correct copies of all material applications and
notifications made by
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XXXXX or its Subsidiaries to the Ministry of Post and Telecommunications of
Japan (the "MPT") and all material permissions and licenses received by XXXXX
from the MPT which together constitute the licenses under which XXXXX and its
Subsidiaries provide cable television, telephony and Internet services in their
respective service areas. Each of the service areas served by XXXXX and its
Subsidiaries are set forth in Schedule 3.21 of the XXXXX Disclosure Schedule by
type of service provided.
3.22 ENVIRONMENTAL MATTERS.
Except as disclosed in Schedule 3.22 of the XXXXX Disclosure
Schedule:
(a) Insofar as it is material to XXXXX and its Subsidiaries taken
as a whole, XXXXX and its Subsidiaries are and have at all times been in
compliance with all Environmental Laws and possesses all Environmental Permits
necessary for the operation of their respective businesses and all such
Environmental Permits are in full force and effect and will not be terminated
or become terminable or be materially impaired as a result of the transactions
contemplated by this Agreement or the Transaction Documents;
(b) Insofar as it is material to XXXXX and its Subsidiaries taken
as a whole, no notice, notification, demand, request for information, citation,
summons or order has been received by XXXXX or any of its Subsidiaries, no
complaint has been filed, no penalty has been assessed and no action, claim,
suit, proceeding or, to the knowledge of XXXXX or the XXXXX Shareholders,
investigation or review is pending by or before any Governmental Entity or, to
the knowledge of XXXXX or the XXXXX Shareholders, threatened by any
Governmental Entity or other Person with respect to any matters relating to or
arising out of any Environmental Law;
(c) there are no liabilities of any kind whatsoever, whether
accrued, contingent, absolute, determined or determinable, arising under or
relating to any Environmental Law, except for liabilities which, individually
or in the aggregate, have not had and would not be reasonably likely to have a
Material Adverse Effect on XXXXX; and
(d) Insofar as it is material to XXXXX and its Subsidiaries taken
as a whole, to the knowledge of XXXXX or the XXXXX Shareholders, no portion of
the property currently or formerly owned by XXXXX or any of its Subsidiaries
has ever been used for the business of creating "industrial waste products" or
"specially monitored industrial waste products" as defined in the Law
Concerning the Disposal and Clean-up of Waste Products.
3.23 CABLE SYSTEMS AND SUBSCRIBERS.
(a) As of March 31, 2000, the Franchise Systems of XXXXX and its
Affiliates (collectively, the "XXXXX FRANCHISE SYSTEMS") had, and as of the
Closing Date they will have, not less than the number of Franchise Homes, Homes
Passed, Homes Passed by HFC, Subscribers and XXXXX Revenues indicated in the
following table. For any XXXXX Franchise System in which XXXXX and its
Affiliates collectively have less than a 100% equity interest, such amounts
shall be calculated by multiplying the amounts for such XXXXX Franchise System
by the percentage equity interest in such Franchise System owned by XXXXX and
its Affiliates.
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Item: Amount:
----- -------
Franchise Homes 1,150,762
Homes Passed 766,827
Homes Passed by HFC 619,674
Subscribers 92,045
Revenues Yen 7,255,454,360
(b) The direct or indirect percentage ownership of XXXXX in each of
the XXXXX Franchise Systems at March 31, 2000 and as of the date hereof is set
forth on Schedule 3.23(b) of the XXXXX Disclosure Schedule.
(c) Except for matters which, individually or in the aggregate, have
not had and would not be reasonably likely to have a Material Adverse Effect on
XXXXX, (i) each of the Franchises of XXXXX and its Subsidiaries ("XXXXX
FRANCHISE") is valid, in full force and effect and enforceable in accordance
with its terms; (ii) XXXXX and/or its Affiliates have fulfilled when due, or
have taken all action necessary to enable it to fulfill when due, all of their
obligations under the XXXXX Franchises; (iii) there has not occurred any breach
by XXXXX and/or any of its Affiliates of or to the knowledge of XXXXX or the
XXXXX Shareholders, by any other party thereto, under any of the XXXXX
Franchises; (iv) neither XXXXX and/or any of its Affiliates nor, to the
knowledge of XXXXX or the XXXXX Shareholders, any other party thereto, is in
arrears in the performance or satisfaction of its obligations under any of the
XXXXX Franchises and no waiver or indulgence has been granted to XXXXX or any of
its Subsidiaries by any of the parties thereto; (v) none of the Governmental
Entities that has issued any XXXXX Franchise has notified XXXXX or any of its
Subsidiaries in writing (A) of its intent to modify, revoke, terminate or fail
to renew any such XXXXX Franchise, now or in the future, or (B) that XXXXX or
any of its Subsidiaries is in violation of the terms of any such XXXXX
Franchise, and, to the knowledge of XXXXX or the XXXXX Shareholders, no action
has been threatened with respect thereto; and (vi) there is not pending or, to
the knowledge of XXXXX or the XXXXX Shareholders, threatened any proceeding,
application, petition, objection or other pleading with any Governmental Entity
that questions the validity of any XXXXX Franchise or which presents a
substantial risk that, if accepted or granted, would result in the revocation,
cancellation, suspension or any adverse modification of any XXXXX Franchise.
3.24 XXXX-XXXXX-XXXXXX.
XXXXX does not have its principal offices within the United States.
XXXXX, together with all Persons that it controls directly or indirectly, (i)
does not hold assets located in the United States (other than cash, deposits in
financial institutions, money market instruments, instruments evidencing
government obligations, and stockholdings in corporations not controlled by
XXXXX) having an aggregate book value of $15,000,000 or more and (ii) did not
make aggregate sales of $25,000,000 or more in or into the United States in
XXXXX'x most recent fiscal year. As used in this Section 3.24, the term
"control" means (i) with respect to a corporation, holding 50% or more of its
outstanding voting securities; (ii) with respect to a partnership or a limited
liability company, having the right to 50% or more of the Person's profits, or
having the right in
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the event of dissolution to 50% or more of the Person's assets; or (iii) having
the contractual power presently to designate 50% or more of the directors of a
corporation, or in the case of an unincorporated Person, of individuals
exercising similar functions.
3.25 NO OTHER REPRESENTATIONS OR WARRANTIES.
Except for the representations and warranties contained in this
Agreement, none of the XXXXX Shareholders nor any other Person makes any other
express or implied representation or warranty on behalf of any of the XXXXX
Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF JUPITER SHAREHOLDERS
A. Sumitomo (as to Sections 4.1(a), 4.2(a), 4.3(a) and 4.4(a)) and
Liberty Media (as to Sections 4.1(b), 4.2(b) and 4.4(b)) severally represent and
warrant to the XXXXX Shareholders as of the date hereof and as of the Closing
Date as follows:
4.1 CORPORATE ORGANIZATION OF SUMITOMO AND THE LIBERTY GROUP.
(a) Sumitomo is duly incorporated and validly existing under the
Laws of Japan and has all requisite corporate power and authority to own and
operate its properties and assets and to conduct its business as it is now
being conducted.
(b) Each member of the Liberty Group is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate its properties and assets and to conduct its
business as it is now being conducted.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE TRANSACTION
DOCUMENTS.
(a) Sumitomo has all requisite corporate authority and power to
execute and deliver this Agreement and each Transaction Document to which it is
a party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Sumitomo of this Agreement and each Transaction Document to
which it is a party and the consummation by Sumitomo of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and approvals on the part of Sumitomo and no additional
corporate action or approval is required in connection with the execution and
delivery by Sumitomo of this Agreement or the Transaction Documents to which it
is a party or the performance by Sumitomo of its obligations under this
Agreement and each of the Transaction Documents to which it is a party. Each of
this Agreement and the Transaction Documents to which Sumitomo is a party has
been (with respect to those Transaction Documents executed on or prior to the
date hereof) or will be (with respect to the Transaction Documents executed
after the date hereof) duly and validly executed and delivered by Sumitomo and,
assuming the due authorization, execution and
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delivery by the other parties or party hereto and thereto, each of this
Agreement and the Transaction Documents constitutes or, with respect to those
Transaction Documents executed after the date hereof, will constitute, as the
case may be, a valid and binding agreement of Sumitomo, enforceable against
Sumitomo in accordance with their respective terms, subject to the Bankruptcy
and Equity Exception.
(b) Each member of the Liberty Group has all requisite corporate
authority and power to execute and deliver this Agreement and each Transaction
Document to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by each member of the Liberty Group of
this Agreement and each Transaction Document to which it is a party and the
consummation by each member of the Liberty Group of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and approvals on the part of each member of the Liberty Group
and no additional corporate action or approval is required in connection with
the execution and delivery by any member of the Liberty Group of this Agreement
or the Transaction Documents to which it is a party or the performance by any
member of the Liberty Group of its obligations under this Agreement and each of
the Transaction Documents to which it is a party. Each of this Agreement and
the Transaction Documents to which any member of the Liberty Group is a party
has been (with respect to those Transaction Documents executed on or prior to
the date hereof) or will be (with respect to the Transaction Documents executed
after the date hereof) duly and validly executed and delivered by the
appropriate member of the Liberty Group and, assuming the due authorization,
execution and delivery by the other parties or party hereto and thereto, each
of this Agreement and the Transaction Documents constitutes or, with respect to
those Transaction Documents executed after the date hereof, will constitute, as
the case may be, a valid and binding agreement of the Liberty Group,
enforceable against each member of the Liberty Group in accordance with their
respective terms, subject to the Bankruptcy and Equity Exception.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except as set forth in Schedule 4.3(a) of the Jupiter Disclosure
Schedule, neither the execution, delivery and performance by Sumitomo of this
Agreement and any of the Transaction Documents to which Sumitomo is a party nor
consummation of the transactions contemplated hereby or thereby by Sumitomo will
(i) conflict with or violate any provision of the certificate of incorporation,
or equivalent governance documents of Sumitomo, or the articles of incorporation
of Jupiter or any of its Subsidiaries or any agreements among the Jupiter
Shareholders with respect to Jupiter, (ii) require any material Consent of, or
filing with or notification to, any Governmental Entity, (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration of any obligation to repay) under, any of the terms, conditions
or provisions of any material Obligation to which Sumitomo is a party or by
which Sumitomo or its properties or assets may be bound, (iv) violate any order
of any Governmental Entity applicable to Sumitomo or Jupiter or (v) result in
the creation of any Encumbrance against or with respect to the Jupiter Common
Stock owned by Sumitomo, except, in the case of clauses (ii), (iii) or (iv), for
those consents, breaches, violations or creations that would not be reasonably
likely to prevent or materially impair or delay the consummation of the
transactions
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contemplated herein and that would not be reasonably likely to, individually or
in the aggregate, have a Material Adverse Effect on Jupiter.
(b) Except as set forth in Schedule 4.3 (b) of the Jupiter
Disclosure Schedule, neither the execution, delivery and performance by any
member of the Liberty Group of this Agreement and any of the Transaction
Documents to which any member of the Liberty Group is a party nor consummation
of the transactions contemplated hereby or hereby by any member of the Liberty
Group will (i) conflict with or violate any provision of the certificate of
incorporation or equivalent governance documents of each member of the Liberty
Group, or the articles of incorporation or bylaws of Jupiter or any of its
Subsidiaries or any agreements among the Jupiter Shareholders with respect to
Jupiter, (ii) require any material Consent of, or filing with or notification
to, any Governmental Entity, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration of any
obligation to repay) under, any of the terms, conditions or provisions of any
material Obligation to which any member of the Liberty Group is a party or by
which the Liberty Group or its properties or assets may be bound, (iv) violate
any Order of any Governmental Entity applicable to any member of the Liberty
Group or Jupiter or (v) result in the creation of any Encumbrance against or
with respect to the Jupiter Common Stock, except, in the case of clauses (ii),
(iii) or (iv), for those consents, breaches, violations or creations that would
not be reasonably likely to prevent or materially impair or delay the
consummation of the transactions contemplated herein and that would not be
reasonably likely to, individually or in the aggregate, have a Material Adverse
Effect on Jupiter.
4.4 SHARES OF JUPITER COMMON STOCK.
(a) Sumitomo is the registered and beneficial owner of that
number of shares of Jupiter Common Stock, set forth across from its name on
Schedule 4.4(a) attached hereto, and Sumitomo has good and valid title to those
shares of Jupiter Common Stock, free and clear of all Encumbrances relating to
the Jupiter Common Stock and is not the registered or beneficial owner of any
other Equity Securities of Jupiter. The number of shares of Jupiter Common Stock
owned by Sumitomo, when added together with the number of shares of Jupiter
Common Stock owned by Liberty Media as set forth on Schedule 4.4(b) hereof,
constitutes all of the outstanding shares of Equity Securities of Jupiter as of
the date hereof.
(b) LJ and Liberty Japan are the registered and beneficial owner
of that number of shares of Jupiter Common Stock set forth across from their
respective names on Schedule 4.4(b) attached hereto, and each of Liberty Japan
and LJ has good and valid title to such shares of Jupiter Common Stock, free and
clear of all Encumbrances, except Encumbrances relating to the Jupiter Common
Stock arising out of or relating to the Jupiter Shareholders Agreement, and are
not the registered or beneficial owner of any other Equity Securities of
Jupiter. The number of shares of Jupiter Common Stock owned by Liberty Media,
when added together with the number of shares of Jupiter Common Stock owned by
Sumitomo as set forth on Schedule 4.4(a) hereof, constitutes all of the
outstanding Equity Securities of Jupiter Common Stock as of the date hereof.
Liberty Media has filed all United States Internal Revenue Service Forms 5471
with respect to it and such foams were duly filed and were true, complete and
accurate in all material respects when filed. Liberty Media expects that,
barring any unforeseen
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change in the conduct of Jupiter's business, Jupiter will not have, as of the
Closing Date, a material amount of Subpart F income for the taxable year of
Jupiter that includes the Closing Date. "Subpart F income" means any income
required to be taken into account under Sections 951 through 964 of the United
States Internal Revenue Code of 1986, as amended.
B. Each of the Jupiter Shareholders hereby severally represents and
warrants to XXXXX shareholders as of the date hereof and as of the Closing Date
as follows:
4.5 CAPITALIZATION OF JUPITER; DIVIDENDS.
(a) As of the date of this Agreement, the authorized capital
stock of Jupiter consists of (i) 3,500,00 shares of Jupiter Common Stock of
which 918,000 shares are issued and outstanding. All of the issued and
outstanding shares of capital stock of Jupiter are duly authorized, validly
issued and fully paid and were issued in compliance with all applicable Japanese
Laws and not in violation of any preemptive rights and are owned by Sumitomo or
Liberty Media. Except as set forth in Schedule 4.5(a), there are no outstanding
(x) securities convertible into or exchangeable for any shares of capital stock
of Jupiter, (y) options, warrants or other rights to purchase or subscribe for
shares of capital stock of Jupiter from Jupiter or any of the Jupiter
Shareholders or any Affiliate of any of the Jupiter Shareholders or that
otherwise require the issuance of shares of capital stock of Jupiter or (z)
contracts, commitments, agreement, understandings or arrangements of any kind
relating to the issuance or repurchase of any shares of capital stock of
Jupiter, any such convertible or exchangeable securities or any such options,
warrants or rights which, in any of the foregoing cases, is binding upon
Jupiter. True and complete copies of all of the Jupiter Organizational
Documents, as presently in effect, have been heretofore made available to the
XXXXX Shareholders. At the Closing Date the articles of incorporation of Jupiter
shall be in the form attached hereto as Annex F.
(b) Since December 31, 1999, there has not been paid or declared
any dividend or distribution in respect of the capital stock of Jupiter.
(c) Upon issuance of shares of Jupiter Common Stock pursuant to
the terms of this Agreement, such shares of Jupiter Common Stock will be duly
authorized, validly issued, fully paid and nonassessable, and issued in
compliance with all applicable Japanese Laws.
4.6 FINDERS' FEES.
There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of any
of the Jupiter Shareholders or Jupiter who will be entitled to any fee or
commission with respect to the transactions contemplated by this Agreement.
4.7 CORPORATE ORGANIZATION OF JUPITER; AUTHORITY.
Each of Jupiter and its Subsidiaries is a corporation duly
organized and validly existing under the Laws of Japan and has all requisite
corporate power and authority to conduct its business as it is now being
conducted and to own, lease and operate its property and assets,
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except such failures to be duly organized, validly existing, in good standing or
to have power and authority to conduct business which would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect on
Jupiter or prevent or materially impair or delay the consummation of the
transactions contemplated hereby. Jupiter has all requisite corporate authority
and power to execute and deliver each Transaction Document to which it is a
party, to perform its obligations thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Jupiter of each Transaction Document to which it is a party and the consummation
by Jupiter of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and approvals on the part of
Jupiter and, except for the approval of the Share Exchange Agreement and the
amendment to the Jupiter Organizational Documents contemplated thereby by the
Jupiter Shareholders required at the Jupiter Shareholders Meeting no additional
corporate action or approval is required in connection with the execution and
delivery by Jupiter or the Transaction Documents to which it is a party or the
performance by Jupiter of its obligations under each of the Transaction
Documents to which it is a party. Each of the Transaction Documents to which
Jupiter is a party has been (with respect to those Transaction Documents
executed on or prior to the date hereof) or will be (with respect to the
Transaction Documents executed after the date hereof) duly and validly executed
and delivered by Jupiter and, assuming the due authorization, execution and
delivery by the other parties or party thereto, each of such Transaction
Documents constitutes or, with respect to those such Transaction Documents
executed after the date hereof, will constitute, as the case may be, a valid and
binding agreement of Jupiter, enforceable against Jupiter in accordance with
their respective terms, subject to the Bankruptcy and Equity Exception.
4.8 NO VIOLATIONS OF OBLIGATIONS.
Except as set forth in Schedule 4.8 of the Jupiter Disclosure
Schedule, neither the execution, delivery and performance by any of the Jupiter
Shareholders of this Agreement and the execution, delivery and performance by
Jupiter or any of the Jupiter Shareholders of any of the Transaction Documents
to which any of the Jupiter Shareholders is a party nor any Jupiter
Shareholders' consummation of the transactions contemplated hereby or thereby
will result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration of any Obligation to repay) under, any
of the terms, conditions or provisions of any material Obligation to which
Jupiter or any of its Subsidiaries is a party or by which Jupiter or any of its
Subsidiaries or their respective properties or assets may be bound, except such
violations, breaches and defaults which would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on Jupiter or
prevent or materially impair or delay the consummation of the transactions
contemplated hereby.
4.9 JUPITER SUBSIDIARIES.
Each Subsidiary of Jupiter is listed on Schedule 4.9(a) of the
Jupiter Disclosure Schedule together with its jurisdiction of organization and
the percentage interest held directly or indirectly by Jupiter. All issued and
outstanding shares of capital stock of each Subsidiary of Jupiter are validly
issued and fully paid and were issued in compliance with all applicable Japanese
Laws, and, except as set forth in Schedule 4 4.9(b) of the Jupiter Disclosure
Schedule, are
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owned by Jupiter, free and clear of all Encumbrances. Except as set forth in
Schedule 4.9(c) of the Jupiter Disclosure Schedule, there are no outstanding (a)
securities convertible into or exchangeable for shares of capital stock or
membership interests or other equity interests of any Subsidiary of Jupiter, (b)
options, warrants or other rights to purchase or subscribe for shares of capital
stock, membership interests or other equity interests of any Subsidiary of
Jupiter from such Subsidiary of Jupiter or that otherwise require issuance of
capital stock, membership interests or other equity interests, or (c)
obligations of any kind relating to the issuance or repurchase of any shares of
capital stock, membership interests or other equity interests of any Subsidiary
of Jupiter, any such convertible or exchangeable securities, membership interest
or other equity interests or any such options, warrants or rights which, in any
of the foregoing cases, is binding upon Jupiter or its Subsidiaries.
4.10 FINANCIAL STATEMENTS.
(a) Schedule 4.10 of the Jupiter Disclosure Schedule sets forth
true and correct copies of the Jupiter Audited Financial Statements and the
Jupiter Audited Financial Statements fairly present the consolidated financial
position shareholders' equity and operations and cash flows of Jupiter and its
Subsidiaries as of the dates and for the periods presented therein,
respectively, in conformity with US GAAP, and the non-consolidated financial
position, shareholders' equity and operations of Jupiter as of the dates and for
the periods presented therein, respectively, in conformity with Japanese GAAP,
in each case applied on a consistent basis, except as otherwise noted therein.
(b) The Jupiter Unaudited Financial Statements fairly present
the nonconsolidated financial position, shareholders' equity and operations of
Jupiter (subject to normal year-end adjustments) as of the dates and for the
periods presented therein, respectively, in conformity with Japanese GAAP,
applied on a consistent basis, except as otherwise noted therein.
(c) As of March 31, 2000, the Attributable Debt of Jupiter did
not exceed (Yen)58,552,268,000. As of the Closing Date, the Attributable Debt of
Jupiter will not exceed (Yen)77,369,732,000.
4.11 ABSENCE OF CHANGES.
Except as set forth in Schedule 4.11 of the Jupiter Disclosure
Schedule, since December 31, 1999, Jupiter and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course of such business
consistent with past practice and since such date there has not occurred any
event or circumstance that, individually or in the aggregate, has had, or in the
aggregate would be reasonably likely to result in a Material Adverse Effect on
Jupiter.
4.12 COMPLIANCE WITH LAW; GOVERNMENT LICENSES.
Except as set forth in Schedule 4.12(a) of the Jupiter
Disclosure Schedule, the business of each of Jupiter and its Subsidiaries is in
compliance with all applicable Laws and Orders of any Governmental Entity,
except where the failure to so comply, individually or in the
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aggregate, has not had and would not reasonably be likely to have a Material
Adverse Effect on Jupiter or prevent or materially delay the consummation of the
transactions contemplated by this Agreement. Except as set forth in Schedule
4.12(b) of the Jupiter Disclosure Schedule, each of Jupiter and its Subsidiaries
has and is in compliance with all governmental licenses and permits necessary to
conduct their respective businesses, except where the failure or comply with any
such licenses and permits, individually or in the aggregate, has not had and
would not be reasonably likely to have a Material Adverse Effect with respect to
Jupiter or prevent or materially impair or delay the consummation of the
transactions contemplated hereby.
4.13 NO UNDISCLOSED LIABILITIES.
Neither Jupiter nor any of its Subsidiaries has any liability
(whether accrued, absolute, contingent or otherwise and whether known or
unknown) other than liabilities (i) of a nature not required to be disclosed or
reflected in a balance sheet prepared in accordance with US GAAP or in the notes
thereto, (ii) reflected on or reserved against in the Jupiter Financial
Statements (or in the notes thereto), (iii) incurred or arising in the ordinary
coupe of business since December 31, 1999 (none of which, individually or in the
aggregate, has had or would be reasonably likely to have, a Material Adverse
Effect on Jupiter) or (iv) specified on Schedule 4.13 of the Jupiter Disclosure
Schedule.
4.14 LITIGATION.
(a) Except as set forth in Schedule 4.14 of the Jupiter
Disclosure Schedule there are no actions, suits, demands, claims, hearings or
proceedings by or before any Governmental Entity or arbitrator pending on to the
knowledge of the Jupiter Shareholders or Jupiter, threatened, against Jupiter or
any of its Subsidiaries which if decided adversely would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on Jupiter or
which would prevent or materially delay or impair the ability of any of the
Jupiter Shareholders or Jupiter to consummate the transactions contemplated
hereby.
(b) None of the properties or assets of Jupiter or any of its
Subsidiaries is subject to any Order other than those that, individually or in
the aggregate, have not had and would not be reasonably likely to have a
Material Adverse Effect with respect to Jupiter or prevent or materially impair
or delay the consummation of the transactions contemplated hereby.
4.15 TAXES.
Each of Jupiter and its Subsidiaries has duly and timely (after
giving effect to extensions) filed all material Returns required to be filed by
it, and all such Returns were at the time of filing true and complete in all
material respects. Jupiter and its Subsidiaries have timely paid in full all
taxes shown due on such Returns, no deficiencies with respect to any such
Returns have been asserted and no waivers of statutes of limitations have been
given or requested with respect to any taxes with respect to such Returns. No
audit or other proceeding by any Governmental Entity is, to the knowledge of the
Jupiter Shareholders or Jupiter, pending with respect to any Returns and no
notice of assessment has been received by Jupiter.
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4.1 6 CONTRACTS.
(a) Except for the Obligations set forth in Schedule 4.16(a) of
the Jupiter Disclosure Schedule, neither Jupiter nor any of its Subsidiaries is
a party to or bound by:
(i) any Obligation under which Jupiter or any of its
Subsidiaries will, or is reasonably likely to, make or receive aggregate
payments in excess of (Yen)32,000,000 per annum or (Yen)106,000,000 over
the remaining term of the Obligation;
(ii) any partnership, joint venture or other similar
agreement or arrangement that is material to Jupiter and its
Subsidiaries, taken as a whole;
(ii) any Obligation relating to the acquisition or
disposition of its business (whether by merger, sale of stock, sale of
assets or otherwise); or
(iv) any non-compete agreement or similar agreement
which restricts the ability of Jupiter or any of its Subsidiaries to
conduct businesses.
(b) Each Obligation disclosed on Schedule 4.16(a) is a valid and
binding agreement of Jupiter and/or its Subsidiaries party thereto, as the case
may be, enforceable against Jupiter and/or such Subsidiary and, to the knowledge
of Jupiter or the Jupiter Shareholders, the relevant counterparty in accordance
with its respective terms, and none of Jupiter, any Subsidiary of Jupiter on to
the knowledge of Jupiter or the Jupiter Shareholders, any other party thereto is
in material default or breach under any such Obligation, and, to the knowledge
of the Jupiter Shareholders and Jupiter, no event or circumstance has occurred
that, with notice or lapse of tune or both, would be reasonably likely to
constitute any material default or breach thereunder.
4.17 PROPERTIES; TITLE TO PROPERTIES.
Each of Jupiter and its Subsidiaries has good, valid and legal
title to all of the assets and properties which it owns and good, valid and
subsisting leasehold interests in all of the assets and properties it leases, in
each case free and clear of all Encumbrances, except for (a) Encumbrances listed
in Schedule 4.17 of the Jupiter Disclosure Schedule, (b) liens for current taxes
not yet due and payable or for taxes the validity of which is being contested in
good faith, (c) Encumbrances reflected on the Jupiter Financial Statements, (d)
mechanics', materialmen's and other Encumbrances which have arisen in the
ordinary course of business and which, are not material in the aggregate to
Jupiter and its Subsidiaries taken as a whole, (e) zoning, entitlement, building
and other land use and environmental regulations by any Governmental Entity,
provided that such regulations have not been violated in any material manner,
(f) such other imperfections in title which, individually or in the aggregate,
have not had and would not be reasonably likely to have a Material Adverse
Effect on Jupiter and (g) with respect to assets and properties which are leased
by Jupiter, Encumbrances created by the terms of the related lease which do not
materially detract from the value of or materially interfere with the present
use of such assets and properties by Jupiter and its Subsidiaries.
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4.18 INTELLECTUAL PROPERTY.
Each of Jupiter sand its Subsidiaries owns or possesses licenses
or other rights to use all patents, trademarks, trade names, service marks,
copyrights, licenses and product licenses or registrations (including
applications for any of the foregoing) used in connection with its business as
currently conducted, except those the lack of which, individually or in the
aggregate, would not reasonably be likely to have a Material Adverse Effect with
respect to Jupiter.
4.19 EMPLOYEE BENEFITS.
Schedule 4.19 of the Jupiter Disclosure Schedule identifies each
material Employee Benefit Plan of Jupiter (each, a "Jupiter Employee Benefit
Plan"). Jupiter has made available to XXXXX Shareholders copies of each such
Jupiter Employee Benefit Plan. Each Jupiter Employee Benefit Plan has been
maintained in substantial compliance with its terms and with the requirements
prescribed by applicable Japanese Laws, except for any failures to so maintain
such Jupiter Employee Benefit Plans as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on Jupiter.
Other than as mandated by Japanese Law or as disclosed in Schedule 4.19 of the
Jupiter Disclosure Schedule, there has been no amendment to, or material change
in employee participation or coverage under, any Jupiter Employee Benefit Plan
that would increase materially the expense of maintaining such Jupiter Employee
Benefit Plan above the level of expense incurred in respect thereof for the most
recent fiscal year ended prior to the date hereof In addition, except as set
forth on Schedule 4.19(a), the amount set forth on the US GAAP reconciliation to
the Jupiter Audited Financial Statements represents, as of December 31, 1999,
the amount of retirement allowance required to be accrued under US GAAP.
4.20 SUFFICIENCY OF THE ASSETS.
The assets of Jupiter and of its Subsidiaries are in reasonable
condition, given their age and the normal wear and tear of operating conditions
and are sufficient for the operation of their respective businesses as currently
conducted.
4.21 RIGHTS TO PROVIDE SERVICE.
The Jupiter Shareholders have made available to the XXXXX
Shareholders true and correct copies of all material applications and
notifications made by Jupiter or its Subsidiaries to the MPT and all material
permissions and licenses received by Jupiter from the MPT which together
constitute the licenses under which Jupiter and its Subsidiaries provide cable
television, telephony and Internet services in their respective service areas.
Each of the service areas served by Jupiter and its Subsidiaries are set forth
in Schedule 4.21 of the Jupiter Disclosure Schedule by type of service provided.
4.22 ENVIRONMENTAL MATTERS.
Except as disclosed in Schedule 4.22 of the Jupiter Disclosure
Schedule:
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(a) Insofar as it is material to Jupiter and its Subsidiaries
taken as a whole, Jupiter and its Subsidiaries are and have at all times been in
compliance with all Environmental Laws and possesses all Environmental Permits
necessary for the operation of their respective businesses and all such
Environmental Permits are in full force and effect and will not be terminated or
become terminable or be materially impaired as a result of the transactions
contemplated by this Agreement or the Transaction Documents;
(b) Insofar as it is material to Jupiter and its Subsidiaries
taken as a whole, no notice, notification, demand, request for information,
citation, summons or order has been received by Jupiter or any of its
Subsidiaries, no complaint has been filed, no penalty has been assessed and no
action, claim, suit, proceeding or, to the knowledge of Jupiter or the Jupiter
Shareholders, investigation or review is pending by or before any Governmental
Entity or, to the knowledge of Jupiter Shareholders or Jupiter, threatened by
any Governmental Entity or other Person with respect to any matters relating to
or arising out of any Environmental Law;
(c) there are no liabilities of any kind whatsoever, whether
accrued, contingent, absolute, determined or determinable, arising under or
relating to any Environmental Law, except for liabilities which, individually or
in the aggregate, have not had, and would not be reasonably likely to have a
Material Adverse Effect on Jupiter; and
(d) Insofar as it is material to Jupiter and its Subsidiaries
taken as a whole, to the knowledge of the Jupiter Shareholders, no portion of
the property currently or formerly owned by Jupiter or any of its Subsidiaries
has ever been used for the business of creating "industrial waste products" or
"specially monitored industrial waste products" as defined in the Law Concerning
the Disposal and Clean-up of Waste Products.
4.23 CABLE SYSTEMS AND SUBSCRIBERS.
(a) As of March 31, 2000, the Franchise Systems of Jupiter and
its Affiliates collectively, (the "JUPITER FRANCHISE SYSTEMS") had, and as of
the Closing Date they will have, not less than the number of Franchise Homes,
Homes Passed, Homes Passed by HFC, Subscribers and Jupiter Revenues indicated in
the following table. For any Jupiter Franchise System in which Jupiter and its
Affiliates collectively have less than a 100% equity interest, such amounts
shall be calculated by multiplying the amounts for such Franchise System by the
percentage equity interest in such Franchise System owned by Jupiter and its
Affiliates.
ITEM: AMOUNT:
----- -------
Franchise Homes 2,270,500
Homes Passed 1,752,900
Homes Passed by 1,055,600
HFC
Subscribers 296,700
Revenues Yen 16,537,900,000
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(b) The direct or indirect percentage ownership of Jupiter in
each of the Jupiter Franchise Systems as of March 31, 2000 and the date hereof
is set forth on Schedule 4.23(b) of the Jupiter Disclosure Schedule.
(c) Except for matters which, individually or in the aggregate,
have not had and would not be reasonably likely to have a Material Adverse
Effect on Jupiter, (i) each of the Franchises of Jupiter and its Subsidiaries
("JUPITER FRANCHISES") is valid, in full force and effect and enforceable in
accordance with its terms; (ii) Jupiter and/or its Affiliates have fulfilled
when due, or have taken all action necessary to enable it to fulfill when due,
all of their Obligations under the Jupiter Franchises; (iii) there has not
occurred any breach by Jupiter and/or any of its Affiliates or, to the knowledge
of Jupiter, by any other party thereto, under any of the Jupiter Franchises;
(iv) neither Jupiter and/or any of its Affiliates nor, to the knowledge of
Jupiter or any Jupiter Shareholders, any other party thereto, is in arrears in
the performance or satisfaction of its Obligations under any of the Jupiter
Franchises and no waiver or indulgence has been granted to Jupiter or any of its
Subsidiaries by any of the parties thereto; (v) none of the Governmental
Entities that has issued any Jupiter Franchise has notified Jupiter or any of
its Subsidiaries in writing (A) of its intent to modify, revoke, terminate or
fail to renew any such Jupiter Franchise, now or in the future, or (B) that
Jupiter or any of its Subsidiaries is in violation of the terms of any such
Jupiter Franchise, and, to the knowledge of any Jupiter Shareholder or Jupiter,
no action has been threatened with respect thereto; and (vi) there is not
pending or, to the knowledge of Jupiter or any Jupiter Shareholders, threatened
any proceeding, application, petition, objection or other pleading with any
Governmental Entity that questions the validity of any Jupiter Franchise or
which presents a substantial risk that, if accepted or granted, would result in
the revocation, cancellation, suspension or any adverse modification of any
Jupiter Franchise.
4.24 XXXX-XXXXX-XXXXXX.
Jupiter does not have its principal offices within the United
States. Jupiter, together with all Persons that it controls directly or
indirectly, (i) does not hold assets located in the United States (other than
cash, deposits in financial institutions, money market instruments, instruments
evidencing government obligations, and stockholdings in corporations not
controlled) having an aggregate book value of $15,000,000 or more and (ii) did
not make aggregate sales of $25,000,000 or more in or into the United States in
Jupiter's most recent fiscal year. As used in this Section 4.24, the term
"control" means (i) with respect to a corporation, holding 50% or more of its
outstanding voting securities; (ii) with respect to a partnership or a limited
liability company, having the right to 50% or more of the Person's profits, or
having the right in the event of dissolution to 50% or more of the Person's
assets; or (iii) having the contractual power presently to designate 50% or more
of the directors of a corporation, or in the case of an unincorporated Person,
of individuals exercising similar functions.
4.25 TECHNOLOGY.
Except as disclosed in Schedule 4.25 of the Jupiter Disclosure
Schedule, neither Jupiter nor any of its Subsidiaries is a party to any
Obligation which requires it to use a particular Internet portal or to purchase
advance set top boxes or similar products or any products used in
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connection with advance set top boxes or similar products which is not
terminable by Jupiter or its Subsidiaries on 30 days or less notice without any
material payment or penalty.
4.26 REORGANIZATION
(a) Jupiter has no plan or intention to cause XXXXX to issue
additional shares of XXXXX capital stock (or securities, options, warrants or
instruments giving the holder thereof the right to acquire XXXXX stock) that
would (or if exercised would) result in Jupiter owning less than 80% of the
total combined voting power of all classes of outstanding XXXXX capital stock
entitled to vote and 80% of the total number of shares of each class of
outstanding nonvoting stock of XXXXX.
(b) Neither Jupiter nor any related person (within the meaning
of Treasury Regulations Section 1.368-1(e)(3)) has any plan or intention to, and
will not actually or in substance, directly or indirectly, acquire (by
redemption or otherwise) in connection with the Share Exchange any of the
Jupiter Common Stock issued in the Share Exchange. Jupiter or any related person
(within the meaning of Treasury Regulation Section 1.368-1(e)(3)) has also not
participated, and in connection with the Share Exchange will not participate,
actually or in substance, directly or indirectly, in any acquisition (by
redemption or otherwise) of XXXXX Common Stock made by XXXXX or anyone related
to XXXXX within the meaning of Treasury Regulation Section 1.368-1(e)(3). After
the Share Exchange, no dividends or distributions will be made to the former
holders of XXXXX Common Stock by Jupiter other than regular, normal dividends or
distributions made to all holders of Jupiter Common Stock.
(c) Jupiter has no plan or intention to liquidate XXXXX; to
merge XXXXX with and into another entity; to sell or otherwise dispose of any of
the stock of XXXXX; to contribute the stock of XXXXX to any other entity; or to
cause XXXXX to sell or otherwise dispose of any of its assets or any of the
assets of any Subsidiary of XXXXX held at the time of the Share Exchange, except
for dispositions made in the ordinary course of business or transfers described
in Section 368(a)(2)(C) of the U.S. Internal Revenue Code.
(d) Following the Share Exchange, Jupiter will cause XXXXX to
continue its "historic business" or use a significant portion of its "historic
business" assets in a business (as such terms are defined in Treasury
Regulations section 1.368-1(d)).
(e) Jupiter has not paid and will not pay, directly or
indirectly, any expenses (including transfer taxes) incurred by any holder of
XXXXX stock in connection with or as part of the Share Exchange or any related
transactions.
(f) Jupiter is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(g) Jupiter will acquire XXXXX'x capital stock in the Share
Exchange solely in exchange for voting stock of Jupiter (except for cash paid in
lieu of fractional shares of Jupiter Common Stock). No liabilities of XXXXX or
the XXXXX Shareholders will be assumed by Jupiter in the Share Exchange.
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(h) The payment of cash in lieu of fractional shares of Jupiter
Common Stock in the Share Exchange is solely for the purpose of avoiding the
expense and inconvenience to Jupiter of issuing fractional shares and does not
represent separately bargained-for consideration.
(i) The compensation paid to any shareholder of XXXXX in respect
of services will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's-length for similar services
and has been bargained for independent of negotiations regarding the
consideration to be issued in exchange for XXXXX Common Stock and XXXXX
Convertible Preferred Stock in the Share Exchange.
(j) Jupiter will not take any tax reporting position that is
inconsistent with the treatment of the Share Exchange as a "reorganization"
within the meaning of Section 368(a) of the Code.
4.27 NO OTHER REPRESENTATIONS OR WARRANTIES.
Except for the representations and warranties contained in this
Agreement, none of the Jupiter Shareholders nor any other Person makes any other
express or implied representation or warranty on behalf of any of the Jupiter
Shareholders.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 CONDUCT OF XXXXX.
Except as expressly contemplated by this Agreement or any
Transaction Document, as set forth in Schedule 5.1 of the XXXXX Disclosure
Schedule or with the prior written consent of the Jupiter Shareholders during
the period from the date of this Agreement until the Closing, each XXXXX
Shareholder shall cause XXXXX (to the extent permitted under applicable law) to
conduct its business and operations in the ordinary course of business and in
accordance with the XXXXX Budget and each XXXXX Shareholder shall use its
commercially reasonable efforts (to the extent permitted under applicable law)
to preserve the properties and businesses of XXXXX and its Subsidiaries and
maintain the respective existing relations and goodwill with customers,
suppliers, regulators, distributors, creditors, lessors and business associates
of XXXXX and its Subsidiaries; and in furtherance thereof, except as set forth
in Schedule 5.1 of the XXXXX Disclosure Schedule and unless otherwise agreed to
by each of the Jupiter Shareholders, each XXXXX Shareholder covenants and agrees
to cause XXXXX and its Subsidiaries not to:
(a) take any action that would be reasonably likely to cause
insurance coverage at presently existing levels to cease to be maintained in
full force and effect;
(b) (i) change or amend, in the case of XXXXX, any of the XXXXX
Organizational Documents or, in the case of XXXXX'x Subsidiaries, their
respective articles of
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incorporation or other comparable organizational documents other than pursuant
to the XXXXX Budget, (ii) issue or sell or authorize for issuance and sale any
shares of their respective capital stock or issue or sell or authorize for
issuance and sale any securities convertible into or exchangeable for, or
options with respect to, or warrants to purchase or rights to subscribe for, any
shares of their capital stock or enter into any agreement obligating them to do
any of the foregoing or (iii) declare, set aside or pay any dividend or other
distribution in respect of the shares of capital stock of XXXXX or any capital
stock or other equity interests of XXXXX or its Subsidiaries;
(c) directly or indirectly, redeem, purchase or otherwise
acquire any of their capital stock;
(d) merge or consolidate with or into any other Person or engage
in any business combination of any kind;
(e) adopt or change any material accounting principles,
practices or methods unless required by Japanese GAAP or US GAAP;
(f) grant, except for increases in the ordinary and usual course
of business or as required by Law, any material increase in the compensation
payable by XXXXX or any of its Subsidiaries to any of their directors, officers
or Employees or any material increase in the amount of existing benefits under
any bonus, insurance, pension or other employee benefit plan, payment or
arrangement, for or with any such directors, officers or Employees;
(g) other than any capital expenditure or commitment therefor
not to exceed Yen 200,000,000, enter into or become obligated by any new
material Obligation, terminate any material Obligation or amend, in any material
manner, any material Obligation;
(h) make any sale, assignment or transfer of any material
tangible or intangible asset outside of the ordinary course of business in
excess of Yen 200,000,000;
(i) waive or release any material right or claim;
(j) incur any Indebtedness or assume any obligation, other than
in the ordinary course of business consistent with past practice in accordance
with the XXXXX Shareholders Agreement;
(k) enter into any obligation which would be reasonably likely
to cause XXXXX or any of its Subsidiaries to violate any of the foregoing; and
(l) split, combine or reclassify any of XXXXX'x outstanding
shares of capital stock;
5.2 CONDUCT OF JUPITER.
Except as expressly contemplated by this Agreement or any
Transaction Document, as set forth in Schedule 5.2 of the Jupiter Disclosure
Schedule or with the prior
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written consent of each of the XXXXX Shareholders during the period from the
date of this Agreement until the Closing, Sumitomo and Liberty Media shall cause
Jupiter (to the extent permitted under applicable law) to conduct its business
and operations in the ordinary course of business and in accordance with the
Jupiter Budget and each Jupiter Shareholder shall use its commercially
reasonable efforts to (to the extent permitted under applicable law) preserve
the properties and businesses of Jupiter and its Subsidiaries and maintain the
respective existing relations and goodwill with customers, suppliers,
regulators, distributors, creditors, lessors, and business associates of Jupiter
and its Subsidiaries; and in furtherance thereof, except as set forth in
Schedule 5.2 of the Jupiter Disclosure Schedule, and unless otherwise agreed to
by each of the XXXXX Shareholders, Sumitomo and Liberty Media shall cause
Jupiter and its Subsidiaries not to:
(a) take any action that would be reasonably likely to cause
insurance coverage at presently existing levels to cease to be maintained in
full force and effect;
(b) change or amend, in the case of Jupiter, any of the Jupiter
Organizational Documents or, in the case of Jupiter's Subsidiaries, their
respective articles of incorporation or other comparable organizational
documents other than pursuant to the Jupiter Budget;
(c) directly or indirectly, redeem, purchase or otherwise
acquire any of their capital stock;
(d) merge or consolidate with or into any other Person or engage
in any business combination of any kind;
(e) adopt or change any material accounting principles,
practices or methods unless required by Japanese GAAP or US GAAP;
(f) grant, except for increases in the ordinary and usual course
of business or as required by Law, any material increase in the compensation
payable by Jupiter or any of its Subsidiaries to any of their directors,
officers or Employees or any material increase in the amount of existing
benefits under any bonus, insurance, pension or other employee benefit plan,
payment or arrangement, for or with any such directors, officers or Employees;
(g) other than any capital expenditure or commitment therefor
not to exceed Yen 500,000,000, enter into or become obligated by any new
material Obligation, terminate any material Obligation or amend, in any material
manner, any material Obligation;
(h) make any sale, assignment or transfer of any material
tangible or intangible asset outside of the ordinary course of business in
excess of Yen 500,000,000;
(i) waive or release any material right or claim;
(j) incur any Indebtedness or assume any obligation, other than
in the ordinary course of business consistent with past practice;
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(k) issue any capital or stock other than Jupiter Common Stock,
instruments, including options and warrants, or rights of any kind convertible
into or exercisable or exchangeable for shares of capital stock of Jupiter;
(l) split, combine or reclassify any of Jupiter's outstanding
shares of capital stock; and
(m) enter into any Obligation which would be reasonably likely
to cause Jupiter or any of its Subsidiaries to violate any of the foregoing.
5.3 ACCESS TO INFORMATION.
(a) Each XXXXX Shareholder and each Jupiter Shareholder agrees
that from the date of this Agreement until the Closing Date, each party shall,
use its commercially reasonable efforts to cause XXXXX and Jupiter,
respectively, to give to any other party and any of its authorized
representatives reasonable access upon reasonable notice, to (i) the books and
records and employees and other representatives of XXXXX or Jupiter, as the case
may be, and (ii) the facilities and properties of XXXXX or Jupiter, as the case
may be; provided, however, that any such access shall be conducted during
regular business hours and in such a manner as not to interfere unreasonably
with the operation of the business of XXXXX or Jupiter, as the case may be.
(b) After the Closing, upon reasonable notice, Jupiter will use
its commercially reasonable efforts to give or cause to be given to each XXXXX
Shareholder and its authorized representatives, reasonable access to such
information relating to XXXXX and Jupiter, as is necessary for the preparation
or filing of any tax return, financial statement or report or is otherwise
reasonably requested; provided, however, that any such access shall be conducted
at a reasonable time and in such a manner as not to interfere unreasonably with
the operations of the business of XXXXX and Jupiter.
5.4 CONSENTS AND APPROVALS.
Each party hereto shall use and, where applicable, all parties
hereto acting together shall use its or their commercially reasonable efforts to
obtain as promptly as practicable all Consents required or advisable in
connection with the consummation of the transactions contemplated by this
Agreement and the Transaction Documents, including but not limited to the
Consents identified in Schedule 3.3 and Schedule 4.3 of the XXXXX Disclosure
Schedule and Jupiter Disclosure Schedule respectively.
5.5 FILINGS.
Promptly after the execution of this Agreement, each party shall
(and each XXXXX Shareholder shall cause XXXXX to and each Jupiter Shareholder
shall cause Jupiter to) prepare and make or cause to be made any filings,
submissions and notifications under the Laws of any jurisdictions to the extent
that such filings, submissions and notifications are required or advisable for
the consummation of the transactions contemplated hereby, including the Share
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Exchange Agreement. Subject to Laws relating to the exchange of information and
existing confidentiality obligations, each of the parties hereto will furnish to
the other parties and will cause XXXXX or Jupiter, as appropriate, to furnish
such necessary information and reasonable assistance as such other parties may
reasonably request in connection with the foregoing and, subject to such Laws
and other confidentiality-based restrictions each of the parties shall give the
other parties a reasonable period in which to review any such filings,
submissions and notifications of such party, XXXXX or Jupiter prior to filing.
5.6 EFFORTS TO CONSUMMATE.
In addition to the obligations set forth herein, each of the
XXXXX Shareholders and the Jupiter Shareholders shall cooperate with each other
and use (and shall cause their respective Affiliates to use) their respective
commercially reasonable efforts to take or cause to be taken all actions, and do
or cause to be done all things, necessary, proper or advisable on its part under
this Agreement and applicable laws to consummate and make effective the Share
Exchange and the other transfers contemplated by this Agreement, as soon as
reasonably practicable.
5.7 TRANSACTION DOCUMENTS.
The parties agree to enter into at or prior to the Closing Date
the Transaction Documents to which they are a party.
5.8 TERMINATION OF AGREEMENTS.
Each XXXXX Shareholder agrees, as to itself, to terminate all
agreements between the XXXXX Shareholders with respect to XXXXX and each of the
Schedule 8 Agreements as of the time of the Share Exchange. Each Jupiter
Shareholder agrees, as to itself, to terminate all agreements between the
Jupiter Shareholders with respect to Jupiter prior to the Closing Date other
than those to be entered into in connection with the transaction contemplated
hereby.
5.9 NEW JUPITER SHAREHOLDERS AGREEMENT
Each Party agrees to execute and deliver the New Jupiter
Shareholders Agreement at the Closing.
5.10 INITIAL PUBLIC OFFERING.
Each of the XXXXX Shareholders and Jupiter Shareholders hereto
agrees to the extent that the same is within its powers and rights to use its
respective commercially reasonable efforts to cause the public offering of at
least 10% of the issued and outstanding Jupiter Common Stock and listing of such
shares on a recognized securities exchange (the "IPO").
5.11 EMPLOYEES; MANAGEMENT.
(a) LMC shall cause one of its Affiliates to enter into a
service agreement with Xxx X. Xxxxxxx at the Closing in substantially the form
attached hereto as Annex G, provided that, (i) Jupiter agrees to reimburse such
Affiliate of LMC for any amounts it pays
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thereunder, (ii) Microsoft Corp. provides an indemnity to such Affiliate of LMC
for any liabilities arising thereunder in form satisfactory to LMC that provides
for subrogation of Microsoft Corp. to the rights of such Affiliate of LMC under
clause (i) in the event of any payments under such indemnity and (iii) LMC
receives a waiver from AT&T Corporation satisfactory to LMC. Each of the XXXXX
Shareholders and Jupiter Shareholders agrees that it will use its commercially
reasonable efforts to cause Jupiter to enter into, and will vote the Jupiter
Common Stock it receives in the Share Exchange in favor of Jupiter entering
into, an agreement with such Affiliate to provide for the reimbursement
contemplated by clause (i) of the preceding sentence.
(b) Each of the Jupiter Shareholders and XXXXX Shareholders
agrees to take the actions specified in Clause 4.8 of the New Jupiter
Shareholders Agreement promptly after the Closing.
(c) Each of the XXXXX Shareholders and Jupiter Shareholders
agrees that it will use its commercially reasonable efforts to cause Jupiter to
grant to Xxx X. Xxxxxxx in connection with the IPO options at the same time and
with the same exercise prices and other terms and conditions as those on which
options are granted to the other senior executives of Jupiter to acquire an
aggregate number of shares of Jupiter Common Stock equal to 0.3% of the
outstanding shares of Jupiter Common Stock outstanding immediately after the IPO
on a fully diluted basis, and to vote the shares of Jupiter Common Stock it
receives in the Share Exchange in favor of the grant of such options.
5.12 BUSINESS PLAN.
The parties agree that promptly after the date hereof they shall
form a transition team which shall prepare a detailed set of plans for the
period beginning at the Closing through to March 31, 2001 to deal with the
integration of XXXXX into Jupiter, including a budget specifying anticipated
revenues, capital expenditures and cash requirements related thereto.
5.13 NO SALES OF CAPITAL STOCK.
(a) Microsoft agrees that, from the date of this Agreement and
continuing to the Closing Date, it will not sell, transfer or otherwise dispose
of any shares of the capital stock of XXXXX owned by Microsoft to any Person
other than a direct or indirect wholly owned subsidiary of Microsoft Corp. (to
which it sells, transfers or disposes of all of the shares of XXXXX Common Stock
owned by it), or one of the other XXXXX Shareholders, and that it will not make
any such sale, transfer or disposition if it would be reasonably likely to
adversely affect the IPO.
(b) Itochu agrees that, from the date of this Agreement and
continuing to the Closing Date, it will not sell any shares of the capital stock
of XXXXX owned by Itochu to any Person other than a direct or indirect wholly
owned subsidiary of Itochu (to which it sells, transfers or disposes of all of
the shares of XXXXX Common Stock owned by it), or one of the other XXXXX
Shareholders, and that it will not make any such sale, transfer or disposition
if it would be reasonably likely to adversely affect the IPO.
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(c) Toshiba agrees that, from the date of this Agreement and
continuing to the Closing Date, it will not sell any shares of the capital stock
of XXXXX owned by Toshiba to any Person other than a direct or indirect wholly
owned subsidiary of Toshiba (to which it sells, transfers or disposes of all of
the shares of XXXXX Common Stock owned by it), or one of the other XXXXX
Shareholders, and that it will not make any such sale, transfer or disposition
if it would be reasonably likely to adversely affect the IPO.
(d) Sumitomo agrees that, from the date of this Agreement and
continuing to the Closing Date, it will not sell any shares of the capital stock
of Jupiter owned by Sumitomo to any Person other than a direct or indirect
wholly owned subsidiary of Sumitomo, LMC or a direct or indirect wholly owned
subsidiary of LMC and that it will not make any such sale, transfer, or other
disposition if it would be reasonably likely to adversely affect the IPO.
(e) Liberty Media agrees that, from the date of this Agreement
and continuing to the Closing Date, it will not sell any shares of the capital
stock of Jupiter owned by Liberty Media to any Peon other than a direct or
indirect wholly owned Subsidiary of LMC, Sumitomo a direct or indirect wholly
owned subsidiary of Sumitomo or, after August 31, 2000, an Affiliate of Liberty
Media and that it will not make any such sale, transfer or other disposition if
it would be reasonably likely to adversely affect the IPO.
(f) If any Person shall make a sale, transfer or other
disposition under the terms of this Section 5.13, it agrees that it shall cause
the Person making such acquisition to become a party to this Agreement and each
Transaction Document to which it is or is intended to be a party and the Person
making the sale, transfer or other disposition agrees to remain a party hereto.
5.14 CONVERSION.
The Jupiter Shareholders shall, prior to the Closing, take all
actions necessary to cause the Jupiter Common Stock to be converted into non-par
value stock (the "CONVERSION") and shall ensure that none of such actions shall
have an adverse effect on Jupiter following the Closing.
5.15 SHAREHOLDERS MEETINGS.
(a) The XXXXX Shareholders will cause XXXXX, in accordance with
applicable Law and the XXXXX Organizational Documents, to take all actions
necessary to permit the consummation of the Share Exchange in accordance with
the terms and conditions of the Share Exchange Agreement, including convening a
meeting of holders of shares of the XXXXX Common Stock and of the XXXXX
Convertible Preferred Stock (the "XXXXX SHAREHOLDERS' MEETING") as promptly as
practicable after the date hereof to consider the approval of the Share Exchange
Agreement. Each XXXXX Shareholder agrees to vote to approve the Share Exchange
Agreement at the XXXXX Shareholders' Meeting and agrees not to revoke, rescind
or adversely modify its approval of the Share Exchange or the Share Exchange
Agreement.
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(b) The Jupiter Shareholders will cause Jupiter to take, in
accordance with applicable Law and the Jupiter Organizational Documents, to take
all actions necessary to permit the consummation of the Share Exchange in
accordance with the terms and conditions of the Share Exchange Agreement,
including convening a meeting of holders of Jupiter Common Stock (the "JUPITER
SHAREHOLDERS' MEETING") as promptly as practicable after the date hereof to
consider the approval of the Share Exchange Agreement. Each Jupiter Shareholder
agrees to vote to approve the Share Exchange Agreement at the Jupiter
Shareholders' Meeting and agrees not to revoke, rescind or adversely modify its
approval of the Share Exchange or the Share Exchange Agreement.
5.16 EXTENSIONS OF SHARE EXCHANGE AGREEMENT.
If on the Closing Date, any condition specified in Article VI
for the benefit of any party shall not have been satisfied or duly waived (by
all parties entitled to rely upon the satisfaction of such condition) then each
party agrees to take all actions to extend the date specified in Article 7 of
the Share Exchange Agreement by five Business Days (or such shorter or longer
period as the parties may agree in writing); provided that if such extension
would cause such date to be a date after October 1, 2000, such date shall be
deemed to be October 1, 2000.
5.17 FURTHER ASSURANCES.
If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
hereto shall, at their own respective expense, take or cause to be taken all
such necessary action, including, without limitation, the execution and delivery
of such further instruments and documents as may be reasonably requested by any
party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
5.18 XXXXX CONVERTIBLE PREFERRED STOCK.
Microsoft, Toshiba and Itochu agree that no shares of XXXXX
Convertible Preferred Stock will be issued prior to the earlier of the Closing
or the termination of this Agreement.
ARTICLE VI
CONDITIONS TO PERMIT SHARE EXCHANGE
6.1 CONDITIONS OF MICROSOFT, SUMITOMO AND LIBERTY MEDIA.
Subject to Sections 6.2 and 6.3, as applicable, each of
Microsoft, Sumitomo, Liberty Media, Itochu and Toshiba agrees not to deliver a
written notice of termination under Clause 6 of Article 10 of the Share
Exchange Agreement (i) prior to the Closing Date or (ii) on or after the Closing
Date if, as of the Closing Date, (A) all of the following conditions have been
satisfied or duly waived by all parties entitled to rely on the satisfaction
thereof; or (B) such
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party, any of its Affiliates or any other party acting together or with a common
purpose with any of them has breached Section 5.16.
(a) No (i) Order shall have been enacted, entered, promulgated
or enforced by any Governmental Entity which prohibits or materially restricts
the consummation of the transactions contemplated hereby and (ii) action or
proceeding by or before any Governmental Entity shall be pending or threatened
against any party or any of their respective Affiliates, associates, officers or
directors seeking to prevent, delay the transactions contemplated hereby,
challenging any of the material terms or provisions of this Agreement or seeking
material damages or material restrictions on the future operation of Jupiter,
XXXXX or their Subsidiaries in connection therewith that in each case in clause
(ii) would be reasonably likely to have Material Adverse Effect on Jupiter
following the Share Exchange.
(b) All Consents required from any Governmental Entity shall
have been obtained other than those that the failure to obtain would not be
reasonably likely to have a Material Adverse Effect on Jupiter following the
Closing.
(c) The Conversion shall have occurred.
6.2 CONDITIONS OF THE JUPITER SHAREHOLDERS.
Subject to Section 6.1, each of Liberty Media and Sumitomo
agrees not to deliver a written notice of termination under Clause 6 of Article
10 of the Share Exchange Agreement (i) prior to the Closing Date or (ii) on or
after the Closing Date if, as of the Closing Date, (A) all of the following
conditions have been satisfied or waived by the Jupiter Shareholders or (B) such
party, any of its Affiliates or any other party acting together or with a common
purpose with any of them has breached Section 5.16.
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the XXXXX Shareholders made hereunder that are qualified by
materiality shall be true and correct in all respects, and each such
representation and warranty that is not so qualified shall be true and correct
in all material respects, in each case as of the date hereof and as of and as if
made on the Closing Date, except for any representation or warranty expressly
made as of an earlier date, in which case such representation or warranty shall
be so true and correct, only as of such earlier date. The Jupiter Shareholders
shall have received a certificate to that effect dated the Closing Date and
signed on behalf of each XXXXX Shareholder (in each case with respect to matters
relating to it and its Affiliates) by one of their authorized officers.
(b) AGREEMENTS. The XXXXX Shareholders shall have performed and
complied with in all material respects all of their agreements and covenants in
this Agreement or any Transaction Document required to be performed or complied
with by it at or prior to the Closing, and the Jupiter Shareholders shall have
received a certificate to that effect dated the Closing Date and signed on
behalf of each XXXXX Shareholder (with respect to matters relating to it and its
Subsidiaries) by one of their authorized officers.
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(c) TRANSACTION DOCUMENTS. Each of the Transaction Documents to
be executed and delivered by any XXXXX Shareholder or any Affiliate of any XXXXX
Shareholder at the Closing shall be so executed and delivered.
(d) CERTAIN REPRESENTATIONS AND WARRANTIES. Each of Sections
3.10(b) and 3.23(a) shall be true and correct as of and as if made on the
Closing Date.
6.3 CONDITIONS OF THE XXXXX SHAREHOLDERS.
Subject to Section 6.1, each of Microsoft, Itochu and Toshiba
agree not to deliver a written notice of termination under Clause 6 of Article
10 of be Share Exchange Agreement (i) prior to the Closing Date or (ii) on or
after the Closing Date if, as of the Closing Date, (A) all of the following
conditions have been satisfied or waived by the XXXXX Shareholders or (B) such
party, any of its Affiliates or any other party acting in concert with any of
them has breached Section 5.16:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Jupiter Shareholders made hereunder that are qualified by
materiality shall be true and correct in all respects and each such
representation and warranty that is not so qualified shall be true and correct
in all material respects, in each case as of the date hereof and as of and as if
made on the Closing Date, and except for any representation or warranty
expressly made as of an earlier date, in which case such representation or
warranty shall be so true and correct, only as of such earlier date. The XXXXX
Shareholders shall have received a certificate to that effect dated the Closing
Date and signed on behalf of each Jupiter Shareholder by one of their authorized
officers.
(b) AGREEMENTS. The Jupiter Shareholders shall have performed
and complied with in all material respects all of their agreements and covenants
in this Agreement or any Transaction Document required to be performed or
complied with by it at or prior to the Closing, and the XXXXX Shareholders shall
have received a certificate to that effect dated the Closing Date and signed on
behalf of each Jupiter Shareholder by one of their authorized officers.
(c) TRANSACTION DOCUMENTS. Each of the Transaction Documents to
be executed and delivered by any Jupiter Shareholder or any Affiliate of any
Jupiter Shareholder at the Closing shall be so executed and delivered.
(d) CERTAIN REPRESENTATIONS AND WARRANTIES. Each of Section
4.10(d), 4.23(a) and Section 4.26 shall be true and correct as of and as if made
on the Closing Date.
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ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS
7.1 SURVIVAL.
The parties hereto hereby agree that the representations and
warranties contained in this Agreement and all claims and causes of action with
respect thereto shall terminate on the six month anniversary after the Closing
Date; provided that the representations and warranties set forth in Sections
3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7 shall
survive indefinitely and the representations and warranties set forth in
Sections 3.15, 4.15 and 4.26 shall survive until the end of the applicable
statute of limitations, provided that any claim made in writing prior to the end
of such survival period shall not expire until such claim is finally resolved.
7.2 INDEMNIFICATION.
(a) Subject to the provisions of this Article VII, each XXXXX
Shareholder severally agrees to indemnify and hold harmless each Jupiter
Shareholder and each of their respective directors, officers, employees,
representatives, advisors, agents and Affiliates (the "JUPITER SHAREHOLDER
INDEMNIFIED PARTIES"), from and against (i) a portion of each liability,
obligation, damage, loss, deficiency, cost, tax, penalty, interest and expense
(including, without limitation, reasonable accountants' and attorneys' fees) but
excluding consequential damages and lost profits, including, without limitation,
those arising from third-party claims (collectively, "LOSSES" and each a "LOSS")
arising out of, relating to or resulting from the breach of the representations
and warranties set forth in Article III hereof (other than those set forth in
Sections 3.1, 3.2, 3.3 and 3.4) equal to its Fully Diluted Percentage at Closing
and (ii) any and all Losses arising out, of relating to or resulting from the
breach of any of its representations or warranties set forth in Sections 3.1,
3.2, 3.3 and 3.4.
(b) Subject to the provisions of this Article VII, each Jupiter
Shareholder severally agrees to indemnify and hold harmless each of the XXXXX
Shareholders and their respective directors, officers, employees,
representatives, advisors, agents and Affiliates (the "XXXXX SHAREHOLDER
INDEMNIFIED PARTIES") from and against (i) 50% of each Loss arising out of,
relating to or resulting from the breach of the representations or warranties
contained in Article IV hereof (other than Sections 4.1, 4.2, 4.3 and 4.4), and
(ii) any and all Losses arising out of, relating to or resulting from the breach
of any of its representations and warranties contained in Sections 4.1, 4.2, 4.3
and 4.4.
7.3 LIMITATIONS ON INDEMNIFICATION.
(a) No XXXXX Shareholder shall have any liability under Section
7.2(a) unless and until the aggregate amount of Losses to the Jupiter
Shareholder Indemnified Parties finally determined to arise thereunder exceeds
(Yen)3,000,000,000 (the "BASKET") (it being understood that the Basket shall
apply to each XXXXX Shareholder on a several basis with each XXXXX Shareholder
entitled to a percentage of the Basket equal to such XXXXX Shareholder's Fully
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Diluted Percentage at Closing) and, in such event, the XXXXX Shareholders shall
only be required to pay the amount of such Losses in excess of their portion of
the Basket subject to the further limitations set forth in this Article VIII;
provided that Losses related to breaches of Sections 3.1, 3.2, 3.3, 3.4, 3.5,
3.6, 3.7 and 3.15 shall not be subject to the Basket.
(b) The aggregate amount that the Jupiter Shareholder
Indemnified Parties shall be entitled to recover pursuant to this Article VII
for any Loss or Losses shall be limited to Y35,000,000,000 (the "LIMIT") (it
being understood that for liability purposes the Limit shall apply to each XXXXX
Shareholder on a several basis with each XXXXX Shareholder entitled to a
percentage of the Limit equal to such XXXXX Shareholder's Fully Diluted
Percentage at Closing); provided that breaches of Sections 3.1, 3.2, 3.3, 3.4,
3.5, 3.6, 3.7 and 3.15 shall not be subject to the Limit.
(c) The XXXXX Shareholders shall not have any liability under
Section 7.2(a) to the extent that the Losses in question arise, or are
increased, as a result of any increase in rates of taxation or any change in the
law or published practice of a revenue authority made after the Closing with
retrospective effect.
(d) No Jupiter Shareholder shall have any liability under
Section 7.2(b) unless and until the aggregate amount of Losses to the XXXXX
Shareholder Indemnified Parties finally determined to arise thereunder exceeds
the Basket (it being understood that the Basket shall apply to each Jupiter
Shareholder on a several basis with each entitled to 50% of the Basket) and, in
such event, the Jupiter Shareholders shall only be required to pay the amount of
such Losses in excess of their portion of the Basket, subject to the further
limitations set forth in this Article VII; provided that Losses related to
breaches of Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.15 and 4.26 shall not
be subject to the Basket.
(e) The aggregate amount that the XXXXX Shareholder Indemnified
Parties shall be entitled to recover pursuant to this Article VIII for any Loss
or Losses shall be limited to the Limit (it being understood that for liability
purposes the limit shall be applied 50% to Sumitomo and 50% to Liberty Media);
provided that breaches of Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7 and 4.15
shall not be subject to the Limit.
(f) The Jupiter Shareholders shall not have any liability under
Section 7.2(b) to the extent that the Losses in question arise, or are
increased, as a result of any increase in rates of taxation or any change in the
law or published practice of a revenue authority made after the Closing with
retrospective effect.
7.4 INDEMNIFICATION PROCEDURES.
(a) Any Person entitled to make a claim for indemnification
under Section 7.2 (an "INDEMNIFIED PARTY") not involving a claim or demand by a
third party, may make a claim for indemnification by giving written notice of
the assertion of such claim covered by this indemnity to the Person or Persons
from whom it is seeking indemnification (the "INDEMNIFYING PARTY") (it being
understood that for purposes of defending actions Microsoft shall be the
Indemnifying Party for the XXXXX Shareholders (except if such claim is not made
against
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Microsoft), With respect to third-party claims, all claims for indemnification
by any Indemnified Party hereunder shall be asserted and resolved as set forth
below in this Section 7.4. In the event that any written claim or demand by a
third party for which the Indemnifying Party would be liable to any Indemnified
Party hereunder is asserted against or sought to be collected from any
Indemnified Party, such Indemnified Party shall promptly, but in no event more
than thirty (30) days following such Indemnified Party's receipt of such claim
or demand, notify the Indemnifying Party of such claim or demand (the "CLAIM
NOTICE"; provided, however, that the Indemnified Party's failure to so provide
such notice shall not preclude the Indemnified Party from being indemnified for
such claim or demand except to the extent that such failure results in actual
prejudice to the Indemnifying Party. The Indemnifying Party shall have ten (10)
Business days (or such shorter period as may be necessary under the
circumstances) from the personal delivery or mailing of the Claim Notice (the
"NOTICE PERIOD") to notify the Indemnified Party whether or not it desires to
assume the defense of the Indemnified Party against such claim or demand. All
costs and expenses incurred by the Indemnifying Party (or, if it does not elect
to so assume, the Indemnified Party) in defending such claim or demand shall be
deemed Losses. Except as hereinafter provided, in the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to assume the defense of the Indemnified Party against such claim or
demand, the Indemnifying Party shall have the right to defend the Indemnified
Party by appropriate proceedings and shall have the sole power to direct and
control such defense and to settle such claim or demand. If any Indemnified
Party desires to participate in any defense assumed by the Indemnifying Party,
it may do so at its sole cost and expense, except that if the Indemnified Party
advises that in the opinion of its outside legal counsel there are issues which
raise conflicts of interest between or materially different defenses available
to the Indemnifying Party and the Indemnified Party, the Indemnified Party may
retain counsel satisfactory to it, and all reasonable fees and expenses of such
counsel for the Indemnified Party shall be deemed Losses of such Indemnified
Party. The Indemnifying Party shall not without the prior written consent of the
Indemnified Party, settle, compromise or offer to settle or compromise any claim
or demand if such settlement of compromise provides for any material remedy
adverse to the Indemnified Party other than payment of monetary damages. The
Indemnified Party shall not settle a claim or demand and the Indemnifying Party
shall not be liable for any Claim or demand settled without the prior written
consent of the Indemnifying Party. To the extent the Indemnifying Party shall
direct, control or participate in the defense or settlement of any third-party
claim or demand, the Indemnified Party will give the Indemnifying Party and its
counsel, without charge, access to, during normal business hours, the relevant
business records and other documents, during such hours permit them to consult
with the employees of and counsel to the Indemnified Party and use its
commercially reasonable efforts in the defense of all such claims or demands.
(b) Except in the case of fraud, this Article VII shall be the
exclusive remedy of the Indemnified Parties for any Losses arising out of the
breaches of representations and warranties set forth in this Agreement.
(c) Microsoft, when acting as the Indemnifying Party in
connection with any relevant claim, action or demand for indemnity against the
XXXXX Shareholder under Section 7.2 (each a "Claim"), shall:
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(i) take all reasonable steps to notify Toshiba and
Itochu of all material developments relating thereto in as timely a
manner as is reasonably practicable;
(ii) respond in as timely a manner as is reasonably
practicable to reasonable inquiries of Toshiba and Itochu in relation to
any Claim;
(iii) to the extent reasonably practicable, consult with
Toshiba and Itochu as to any material steps to be taken in connection
with any Claim; and
(iv) not without the prior written consent of Toshiba
and Itochu, settle, compromise or offer to settle or compromise any
Claim if such settlement or compromise provides for any remedy
materially adverse to Toshiba or Itochu.
If Toshiba or Itochu has received a written opinion of its
outside legal counsel that there are issues which raise conflicts of interest
between or materially different defenses or legal theories available to
Microsoft and Toshiba or Itochu (as the case may be) in relation to any Claim,
Toshiba or Itochu (as the case may be) may, at its sole cost and expense, retain
counsel satisfactory to it and participate in any defense of such Claim assumed
by Microsoft.
7.5 COMPUTATION OF LOSSES.
The amount of any Loss subject to indemnification under this
Article VII shall be calculated net of any tax benefit recognized by the
Indemnified Party on account of such Loss. In the event that a tax benefit is
recognized or an insurance or other third party recovery is made with respect to
any Loss for which any such Person previously has been indemnified, then a
refund equal to the aggregate amount of the realized tax benefit or recovery
(net of all direct collection expenses, deductibles and taxes payable with
respect thereto) shall be made promptly to the Indemnifying Party. To the
extent any Loss is covered by insurance available to Jupiter or XXXXX, Jupiter
shall (with respect to claims under its policy) and shall cause XXXXX to (with
respect to claims under XXXXX'x policy) take all commercially reasonable action
to recover such Loss under their respective insurance policies,
7.6 MITIGATION OF DAMAGES.
The parties hereto agree to mitigate all of their Losses to the
extent practicable.
ARTICLE VIII
TERMINATION
8.1 TERMINATION.
This Agreement;
(a) may be terminated at any time at or prior to the Closing
Date by the written consent of all XXXXX Shareholders and Jupiter Shareholders.
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(b) may be terminated at any time at or prior to the Closing
Date by any XXXXX Shareholder or any Jupiter Shareholder if the Closing shall
not have occurred on or prior to September 30, 2000; provided that the party
seeking to terminate shall not be in material breach of this Agreement at such
time.
(c) may be terminated at any time at or prior to the Closing
Date by any Jupiter Shareholder, if there has been a violation or breach by any
XXXXX Shareholder of any agreement, representation or warranty contained in this
Agreement which has rendered satisfaction of the condition set forth in either
Section 6.2(a) or 6.2(b) incapable of satisfaction.
(d) may be terminated at any time at or prior to the Closing
Date by any XXXXX Shareholder, if there has been a violation or breach by any of
Sumitomo or Liberty Media of any agreement, representation or warranty contained
in this Agreement which has rendered the satisfaction of the condition set forth
in either Section 6.3(a) or 6.3(b) incapable of satisfaction.
(e) shall terminate automatically upon the termination of the
Share Exchange Agreement.
8.2 PROCEDURE AND EFFECT OF TERMINATION.
In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by any or all of the Parties pursuant to
Section 8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties and this Agreement shall terminate without further action by
any of the parties hereto. If this Agreement is terminated pursuant to Section
8.1 hereof then each of the parties shall be relieved of their duties and
obligations arising under this Agreement and the provisions of this Agreement
shall have no further force or effect after the date of such termination and
such termination shall be without liability to the Parties; provided, however,
that no termination hereof shall relieve any party of any liability for a breach
prior to termination and, provided, further, however, Sections 8.2, 9.2, 9.3,
9.6, 9.7, 9.8 and 9.11 shall remain in effect.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented at any
time by mutual written agreement of the parties. This Agreement may be amended
only by an instrument in writing signed on behalf of the parties.
9.2 EXTENSION; WAIVER.
The party entitled to the benefits of the respective term or
provision may (a) extend the time for the performance of any of the obligations
or other acts of the other party,
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(b) waive any inaccuracies in the representations and warranties contained
herein or in any document, certificate or writing delivered pursuant hereto or
(c) waive compliance with any Obligation, covenant, agreement or condition
contained herein. Any agreement on the part of any party to any such extension
or waiver 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.
9.3 ENTIRE AGREEMENT; ASSIGNMENT.
This Agreement:
(a) and the Transaction Documents, when executed, 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) and the rights and obligations hereunder shall not be
assigned or transferred by any party hereunder by operation of law or otherwise;
and
(c) shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
9.4 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 stable 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.
9.5 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):
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(a) if to Sumitomo, to:
Sumitomo Corporation
0-0-0 Xxxxxxxxxxxx
Xxxxxxx-xx, Xxxxx 000-0000
Xxxxx
Attention: Tsuguhito Aoki
General Manager of CATV
and Satellite Business Department
Fax: 00 0 0000 0000
with copies to.
Attention: Xxxxx Xxxxx
Deputy General Manager
of Legal Department
Fax: 00 0 0000 0000
(b) if to Liberty Media or LMC, to:
c/o Liberty Media International
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
XXX
Telephone:x0 000 000 0000
Fax: x0 000 000 0000
Attention: Xxxxxx Xxxxxx
with copies to:
Liberty Media International
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
XXX
Telephone: x0 000 000 0000
Fax: x0 000 000 0000
Attention: Xxxxx Xxxxxxxx
with copies to:
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Latham & Xxxxxxx
00 Xxxxxxxxxx
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Telephone: 00(00) 0000 0000
Fax: 00(00) 0000 0000
Attention: Xxxxx Xxxxx
(c) if to Microsoft or 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
(d) if to Itochu to:
Itochu Corporation
0-0, Xxxx-Xxxxxx 0-xxxxx, Xxxxxx-xx
Xxxxx 000-00-00
Xx. Xxxxxxx Xxxxxx,
Manager of CATV Business
FAX: 00 0 0000 0000
with copies to:
Xxx Xxxxxx
Xxxxxx & Xxxxx LLP
Akasaka Twin Xxxxx
Xxxx Xxxxx, 000x Xxxxx
00-00 Xxxxxxx 2-chome
00
00
Xxxxxx-xx, Xxxxx 107-0052
Telephone: 00 0 0000 0000
Fax: 00 0 0000 0000
(e) if to Toshiba to:
Toshiba Corporation
0-0, Xxxxxxxx, 0-xxxxx, Xxxxxx-xx, Xxxxx 000-0000 Xxxxx
Attention: Osami Suzuki, General Manager,
Media & Content Division
Fax: 00 0 0000 0000
with copies to:
Attention: Xxxxx Xxxxxxx, Chief Specialist,
Legal Affairs Division
Fax: 00 0 0000 0000
Xxx Xxxxxx
Xxxxxx & Xxxxx LLP
Akasaka Twin Tower
Main Tower, 11th Floor
00-00 Xxxxxxx 0-xxxxx
Xxxxxx-xx, Xxxxx 000-0000
Telephone: 00 0 0000 0000
Fax: 000 0000 0000.
9.6 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
with the laws of Japan.
9.7 MEDIATION; ARBITRATION.
(a) Prior to demanding arbitration as set forth in clause (b)
below, in the event of a dispute between any parties hereto with respect to the
matters set forth herein (including any claim far indemnification), each party
to such dispute shall use their commercially reasonable efforts to resolve such
dispute. If, after 30 days from the first notification of a dispute by a party
to the other parties, the parties involved in such dispute have not resolved
such dispute, the most senior executive officer (Jomu) of each such party shall
discuss the dispute. If they are unable to resolve such dispute within thirty
days after such first 30-day period any such party may demand arbitration as
described in paragraph (b) below.
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(b) Any and all disputes which are not resolved in accordance
with paragraph (a) above may be requested to be resolved by arbitration
conducted in Tokyo under UNCITRAL Arbitration Rules by three (3) arbitrators
none of whom shall be Japanese Nationals or individuals with a demonstrable
predisposition or bias in favor of or against Japan. The award shall be final
and binding on the parties engaged in such arbitration. Except with respect to
equitable relief (including specific performance), arbitration shall be the sole
remedy of the parties hereto with respect to enforcing the provisions of this
Agreement.
9.8 PUBLICITY.
The Jupiter Shareholders and be XXXXX Shareholders will consult
with each other before issuing (or before any of their Affiliates issue), and
provide each other a reasonable opportunity to provide input with respect to any
press release or other public statements with respect to the initial press
releases or other public statements relating to the transactions contemplated by
this Agreement, and shall not issue or permit any Affiliate to issue any such
press release or make any such public statement prior to providing such
opportunity, except as may be required by applicable law, court process or
obligations pursuant to the requirement of any stock exchange upon which the
securities of Jupiter Shareholders or XXXXX Shareholders or their respective
Affiliates are listed.
9.9 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.
9.10 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.
9.11 FEES AND EXPENSES.
Except as otherwise provided in Article VII whether or not the
transactions contemplated by this Agreement or the Transaction Documents are
consummated, all legal, accounting and other costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses; provided, however XXXXX Shareholders shall be
responsible for all stamp duty, transfer or similar taxes incurred by either
party in connection with the consummation of the transactions contemplated by
this Agreement.
9.12 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and, nothing in this Agreement, express or implied,
is intended by or shall confer upon
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any other Person any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.
9.13 GUARANTEES.
(a) Microsoft Corp. hereby unconditionally guarantees (as
primary obligor and not as a surety only) the performance of all obligations
hereunder of Microsoft.
(b) LMC hereby unconditionally guarantees (as primary obligor
and not as a surety only) the performance of all obligations hereunder of
Liberty Media.
9.14 LIBERTY MEDIA.
All of the parties hereto shall be permitted to treat Liberty
Media as one Person for all purposes hereof.
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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: /s/ XXXX XXXXXX
----------------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director General Manager
Media Business Div.
MICROSOFT HOLDINGS V, INC.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President, CEO
ITOCHU CORPORATION
By: /s/ XXXXXX XXXXXXXX
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Attorney-in-Fact
TOSHIBA CORPORATION
By: /s/ XXXXXX XXXXXXX
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Corporate Vice President
MICROSOFT CORPORATION
By: /s/ XXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President, CEO
62
LIBERTY MEDIA CORPORATION
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President &
General Counsel
LIBERTY JUPITER, INC.
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President &
General Counsel
LIBERTY JAPAN, INC.
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President &
General Counsel
