Document:

Exhibit 10.1

 

EXECUTION VERSION

 

SALE AND PURCHASE AGREEMENT

 

BETWEEN

 

LGI INTERNATIONAL INC.

 

AND

 

KDDI CORPORATION

 

DATED AS OF JANUARY 25, 2010

 

 

SALE AND PURCHASE AGREEMENT

 

This
Sale and Purchase Agreement (this “Agreement”), dated as of January 25, 2010 (the “Effective Date”), is entered into by and among LGI
INTERNATIONAL INC., a corporation organized under the laws of the State of
Delaware, U.S.A. (“Seller Parent”)
and KDDI CORPORATION, a corporation organized under the laws of Japan (“Buyer”).  The
foregoing parties are also  sometimes  referred  to  herein  individually  as  a  “Party”  and  collectively  as  the  “Parties”.

 

RECITALS

 

WHEREAS, Seller Parent: (i) indirectly
owns 100% of the issued and outstanding shares of Liberty Japan, Inc.,
a corporation organized under the laws of the State of Delaware, U.S.A. (“Liberty Japan”), (ii) indirectly
owns 85.75% (with the right to acquire 100%)  of
the issued and outstanding common
shares and 100% of the issued and
outstanding preferred shares of
Liberty Jupiter, Inc., a corporation organized under the laws of the State
of Delaware, U.S.A. (“Liberty Jupiter”)
and (iii) directly owns 100% of the issued
and outstanding membership interests of Liberty Global Japan II, LLC, a limited
liability company organized under the laws of the State of Delaware, U.S.A. (“LGJ2”);

 

WHEREAS, Liberty Japan is the sole general partner of LGI/Sumisho Super
Media LP, a limited partnership organized under the laws of the State of
Delaware, U.S.A. (“Super Media”) and holds one (1) general
partner unit in Super Media;

 

WHEREAS,
(i) Liberty Japan and Liberty
Jupiter are limited partners in Super Media and together hold 2,338,835 limited partner units in Super Media,
and (ii) Sumitomo Corporation, a corporation organized under
the laws of Japan (“Sumitomo”) is a limited partner in Super Media and
holds 1,648,402 limited partner
units in Super Media;

 

WHEREAS, LGJ2 owns 253,675
shares of common stock of Jupiter Telecommunications Co., Ltd., a corporation
organized under the laws of Japan (“J:COM”);

 

WHEREAS, Super Media owns 3,987,238 shares of common stock of J:COM, of which 2,338,836 J:COM shares are attributable to the units in Super Media held by Liberty Japan and
Liberty Jupiter, and 1,648,402 J:COM
shares are attributable to the units in Super Media held by Sumitomo;

 

WHEREAS, prior to the Closing, Seller Parent shall cause Liberty Japan and Liberty Jupiter to convert into Liberty Japan
LLC and Liberty Jupiter LLC, respectively, limited liability companies
organized under the laws of the State of Delaware, U.S.A.;

 

WHEREAS, Seller Parent desires
to cause the sale of, and Buyer desires
to buy, all of the issued and outstanding membership interests of Liberty
Japan LLC, Liberty Jupiter LLC and LGJ2, on
the terms and conditions set forth herein;

 

NOW
THEREFORE, in consideration of the foregoing recitals, the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties hereby agree as follows:

 

1

 

Section 1.              Definitions

 

1.1          Defined
Terms.  The capitalized terms below shall have the
following meanings when used in this Agreement:

 

“Affiliate” means, with respect to any Person, (a) any
other Person that is directly or indirectly controlled by, under common control
with or controls such Person; or (b) any other Person owning beneficially
or controlling more than  50% of the voting stock or of the partnership or other ownership
interests of such Person; provided, however, that for purposes of this Agreement Super Media and
J:COM shall not be deemed to be
Affiliates of any Seller Party.  The term “control” means possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of partnership
interests or voting securities, by Contract or otherwise.

 

“Benefit Plans” means any (i) profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plans or Contracts, (ii) benefits
relating to vacation, child care, parenting, sabbatical, sick leave, medical,
dental, hospitalization, life insurance and other types of insurance.

 

“Business Day” means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York, New York or Tokyo, Japan
are authorized or obligated by Regulation or executive order to be closed.

 

“Buyer’s Knowledge” means the actual knowledge of the Buyer’s officers, directors and statutory auditors.

 

“Claim” means any action, claim, suit,
litigation, proceeding, dispute, arbitration or prosecution.

 

“Closing Date” means
the date of the Closing.

 

“Code” shall mean the United States Internal Revenue Code of
1986, as amended.

 

“Contract” means any legally
binding agreement or contract
(whether written or oral).

 

“Damages” means all actual
damages, losses, costs or expenses, including without limitation,
interest, penalties, judgments, settlements and reasonable attorneys’ fees and
expenses of investigation.

 

“Default” means:  (a) any
breach or default; (b) the occurrence of an event that, with the passage
of time or the giving of notice or both, would constitute a breach or default;
or (c) the occurrence of an event that, with or without the passage of
time or the giving of notice or both, would give rise to a right of
termination, renegotiation or acceleration.

 

“Disclosure Schedule” means the Schedules  attached hereto which sets forth exceptions
to the representations and warranties of Seller Parent.

 

“Governmental Authority” means the government of any nation,
state, prefecture, 

 

2

 

city, municipality or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
securities market or securities market regulator.

 

“Indemnified Damages”
means Damages that an Indemnitor is obligated to indemnify under Section 8.

 

“Indemnified Person” means any Buyer Indemnified Person as
defined in Section 8.2 and/or any Seller Parent Indemnified Person
as defined in Section 8.5.

 

“J:COM Group”
means collectively J:COM and its Subsidiaries.

 

“J:COM Group Company”
means J:COM or any of its Subsidiaries.

 

“J:COM Shares”
means any shares of capital stock of J:COM.

 

“JFTC Prior Filing”
means a notification of plan regarding share acquisition (kabushiki
shutoku ni kansuru keikaku todokede) under the provision of Article 10,
Paragraph 2 of the Act Concerning Prohibition of Private Monopolization and
Maintenance of Fair Trade of Japan.

 

“J-Sports LLC”
means J-Sports LLC, a limited liability company organized under the laws of the
State of Delaware, U.S.A.

 

“LGI” means Liberty Global, Inc., a corporation organized under the laws of the State of Delaware,
U.S.A.

 

“LGJ Holdings” means LGJ Holdings LLC, a limited liability
company organized under the laws of the State of Delaware, U.S.A.

 

“Liabilities” means any liability, indebtedness, obligation,
commitment or expense, of any type, known
or unknown, and whether accrued, absolute, contingent, matured, unmatured or
otherwise.

 

“Liberty Attributable J:COM
Shares” means the 2,338,836 J:COM Shares held by Super Media that are attributable to the SM Units held by Liberty
Japan and Liberty Jupiter.

 

“Liberty Japan LLC”
means the limited liability company organized under the laws of the State of
Delaware, U.S.A. into which Liberty Japan
will be converted prior to Closing.

 

“Liberty Jupiter LLC”
means the limited liability company organized under the laws of the State of
Delaware, U.S.A. into which Liberty Jupiter
will be converted prior to Closing.

 

“Lien” means any Claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement, other
right of third parties, or lien of any kind or nature, including whether
voluntarily incurred or arising by operation of law, and includes any agreement
to give any of the foregoing in the future, and any contingent sale or other
title retention agreement or lease in the nature thereof.

 

3

 

“Material Adverse Effect” or “Material Adverse Change” means any material adverse effect on or material adverse change in (a) the business, assets, financial condition or results of
operations of the Target Group Companies and the J:COM Group taken as a whole
or (b) the ability of
Seller Parent and its Affiliates to consummate the Transaction or perform its obligations
hereunder; provided, however, that the terms “Material Adverse
Effect” and “Material Adverse Change” shall not include effects or changes to
the extent they result from or are consequences of (i) changes in
financial, securities or currency markets, changes in prevailing interest rates
or foreign exchange rates, changes in general economic conditions, changes in
cable television, telephony, internet broadband or
television programming markets,
including changes to market prices for commodities, or effects of weather or
meteorological events, (ii) changes in Regulations, or changes in
interpretation thereof, by any Governmental Authority or changes in regulatory conditions in Japan or the United
States, (iii) any “act of God” including natural disasters and
earthquakes, hostilities, acts of war, sabotage or terrorism or military
actions or any escalation or material worsening of any such hostilities, acts
of war, sabotage or terrorism or military actions,
(iv) changes after the Effective Date in accounting standards, principles
or interpretations, (v) events or changes that are consequences of the
negotiation, announcement, execution, delivery, consummation or pendency of
this Agreement or the transactions contemplated by this Agreement or any action
by a Seller Party
or any of its Affiliates,  a
Target Group Company or a J:COM Group Company contemplated
by or required by this Agreement, (vi) any offer to acquire, agreement to
acquire or acquisition of J:COM Shares, directly or indirectly, by any Person; (vii) any tender offer
for J:COM Shares or resulting delisting of J:COM; (viii) actions taken or
not taken by Buyer or any of its Affiliates, or actions taken or not taken at the request of Buyer or with
Buyer’s consent or (ix) the  reduction in Super Media’s ownership of or
ability to influence J:COM due to the
Super Media Unwinding.

 

“Material J:COM Subsidiary”
means a Subsidiary of J:COM that is material to the business of the J:COM Group
as a whole.

 

“Mezzanine Finance
Documents” means the documents listed in Schedule 1.1(M), and all
other documents and agreements between a Mezzanine Lender, any collateral,
security or other agent, and a Target Group Company relating to the Mezzanine
Loan.

 

“Mezzanine Lenders”
means the lenders to LGJ Holdings under the Mezzanine Finance Documents.

 

“Mezzanine Loan”
means the loan borrowed by LGJ Holdings under the Senior Term Loan Facility
Agreement dated as of October 31, 2007 (as amended and restated pursuant
to the Amendment Agreement) among LGJ Holdings, as Borrower, Liberty Japan and
Liberty Jupiter as Guarantors, Liberty Global, Inc., as Limited Recourse
Guarantor, Citibank Japan Ltd., as Facility Agent and Citibank Japan Ltd. as
Security Agent.

 

“Minority Acquisition”
means the acquisition by LGJ Holdings of 14.25% of the issued and outstanding
common shares of Liberty Jupiter to be
completed prior to the Closing.

 

“NDA” means the
Nondisclosure Agreement between Buyer and LGI dated as of December 25,
2009, together with the Addendum to Nondisclosure Agreement between Buyer and
LGI dated as of December 31, 2009, as amended from time to time.

 

4

 

“Option”
means any security convertible or exchangeable into, or exercisable for,
capital stock or equity interests,
including shinkabu hikiukeken and shinkabu yoyakuken.

 

“Order” means any judgment, decision, consent decree,
injunction, arbitration award, ruling or order of any Governmental Authority or
arbitrator that is binding on or with respect to any Person or its property.

 

“Ordinary Course of Business” or “Ordinary
Course” means the ordinary course of business carried out in a
manner that is consistent with past practice.

 

“Organizational Documents” shall mean certificates or articles of
incorporation, memorandum or articles of association, bylaws, certificates of
formation, limited liability company agreements, partnership or limited
partnership agreements, or other formation or governing documents of a
particular entity.

 

“Permits” means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any Governmental
Authority.

 

“Person” means any person or entity, whether an individual,
trustee, corporation, partnership, limited partnership, limited liability
company, trust, unincorporated organization, business association, firm, joint
venture or Governmental Authority.

 

“Post-Closing Tax Period” means any Tax period beginning on
the day after the Closing Date.

 

“Pre-Closing Tax Period” means any Tax period ending on or
before the Closing Date.

 

“Redemption Agreement”
means the Redemption Agreement to be entered into by and among Sumitomo, Super
Media, Liberty Japan, Liberty Jupiter and Seller Parent.

 

“Registration Rights
Agreement” means the Registration Rights Agreement dated as of March 22,
2005 among Super Media, J:COM and Microsoft Holdings V, Inc.

 

“Regulations” means any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions and legal requirements
of any Governmental Authority.

 

“Representative” with respect to any Person means any
officer, director, manager, member, partner, principal, attorney, agent,
employee or other representative of such Person.

 

“Seller” means  LGJ Holdings and Seller Parent individually, and “Sellers” means
both of them collectively.

 

“Seller Parent’s  Knowledge” means the actual knowledge of the personnel of Seller Parent listed on Schedule 1.1(S).

 

“Seller Party”
means Seller Parent and each Seller individually and “Seller
Parties” means all of them collectively.

 

“SM Conversion”
means the conversion of Super Media from a limited liability 

 

5

 

company organized under the laws of
the State of Delaware, U.S.A. to a limited
partnership organized under the laws of the State of Delaware,
U.S.A. that occurred on October 23, 2009.

 

“SM Units” means
partnership units in Super Media.

 

“Straddle Period” means any Tax period beginning before and
ending after the Closing Date.

 

“Subsidiary” of a Person
means any other Person more than fifty percent (50%) of the voting stock (or of
any other form of other voting or controlling equity interest in the case of a
Person that is not a corporation) of which is beneficially owned by the first
Person directly or indirectly through one or more other Persons; provided, however, that
for purposes of this Agreement Super Media and J:COM shall not be
deemed to be Subsidiaries of any Seller Party.

 

“Sumitomo Attributable J:COM
Shares” means the 1,648,402
J:COM Shares held by Super Media that are attributable to the SM Units
held by Sumitomo.

 

“Super Media LPA” means the LGI/Sumisho Super Media LP
Agreement of Limited Partnership dated as of October 23, 2009 among
Liberty Japan, Liberty Jupiter and Sumitomo, as
in effect on the Effective Date.

 

“Super Media Unwinding” means the expiration and unwinding of
the Super Media joint venture among Liberty Japan, Liberty Jupiter and
Sumitomo, including any event of dissolution of
Super Media, redemption of SM Units held by Sumitomo  in exchange for
J:COM Shares, and/or termination of the Super Media LPA.

 

“Target Companies”
means, collectively: (i) before the LLC Conversion, Liberty Japan and from the LLC Conversion, Liberty Japan LLC; (ii) before the LLC
Conversion, Liberty Jupiter  and from the LLC Conversion, Liberty Jupiter LLC; and (iii) LGJ2, in each case, including their respective predecessor
companies, and “Target Company” means any of them
individually.

 

“Target Group Companies” means, collectively, the Target Companies and Super Media and “Target Group Company” means any of them individually. For
the avoidance of doubt, “Target Group Companies” does not include any J:COM
Group Company.

 

“Tax”
or “Taxes” shall mean all national, local,
foreign or other taxes (including, without limitation, income (net or gross),
gross receipts, capital gain, surtax or add-on, windfall profits, severance,
asset, capital, capital stock, intangible, production, excise, franchise,
employment, withholding, transfer, wage, railroad, occupation, goods and
services, ad valorem, value-added or minimum, estimated or any other tax),
custom, duty, fee, assessment or similar charge, imposed by any Taxing
Authority together with any interest and penalties that may become payable in
respect thereof.

 

“Tax Return” means any return, declaration, report, Claim for
refund, or information return or statement relating to Tax that is required to
be filed with any Taxing Authority, including any schedule or attachment thereto.

 

“Taxing
Authority” shall mean any governmental, judicial, legislative,
executive, 

 

6

 

administrative
or regulatory authority of any national, state or local government (including
prefectural and municipal governments), or any subdivision, agency, commission,
office, authority or instrumentality thereof, in
any part in the world that has the jurisdiction and authority to impose Taxes.

 

“U.S. GAAP” means United
States generally accepted accounting principles, consistently applied, as in
effect on the date hereof.

 

“US$” “US Dollars” or “$” means the lawful currency of the United States of
America.

 

“Yen” or “¥” means the lawful currency of Japan.

 

1.2            Additional
Definitions; Interpretation.

 

1.2.1       In
addition, each of the following terms set forth below is defined in the
location set forth opposite such term:

 

	
  Term

  	
   

  	
  Cross-Reference

  
	
  2009 Final Dividend

  	
   

  	
  2.4.1

  
	
  2009 Final Dividend Payment Request

  	
   

  	
  2.4.2

  
	
  2010 AGM

  	
   

  	
  7.3.2

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Alternative Proposal

  	
   

  	
  7.9

  
	
  Alternative Structure

  	
   

  	
  7.3.3

  
	
  Amendment Agreement

  	
   

  	
  Schedule 1.1(M)

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer Financing
  Agreements

  	
   

  	
  6.5

  
	
  Buyer
  Indemnified Persons

  	
   

  	
  8.2.1

  
	
  Buyer Tax Matter

  	
   

  	
  7.8.4

  
	
  Claim Notice

  	
   

  	
  8.8

  
	
  Claim Period

  	
   

  	
  8.1.2

  
	
  Closing

  	
   

  	
  2.1

  
	
  Common Stock

  	
   

  	
  5.20.2

  
	
  Conversion Tax
  Matter

  	
   

  	
  7.8.4

  
	
  Deductible

  	
   

  	
  8.3.1

  
	
  De Minimis
  Threshold

  	
   

  	
  8.3.1

  
	
  Effective Date

  	
   

  	
  Preamble

  
	
  Funding
  Obligations

  	
   

  	
  6.5

  
	
  Funds

  	
   

  	
  6.5

  
	
  Indemnitor

  	
   

  	
  8.7.1

  
	
  J:COM

  	
   

  	
  Recitals

  
	
  J:COM Extraordinary Transaction

  	
   

  	
  3.2.5

  
	
  J:COM Financial Statements

  	
   

  	
  5.20.5

  
	
  LGJ2

  	
   

  	
  Recitals

  
	
  Liberty Japan

  	
   

  	
  Recitals

  
	
  Liberty Jupiter

  	
   

  	
  Recitals

  
	
  LLC Conversions

  	
   

  	
  7.2

  
	
  Mezzanine Loan Payoff

  	
   

  	
  2.3

  

 

7

 

	
  Term

  	
   

  	
  Cross-Reference

  
	
  Parties

  	
   

  	
  Preamble

  
	
  Party

  	
   

  	
  Preamble

  
	
  Purchase Price

  	
   

  	
  2.2

  
	
  Purchased
  Interests

  	
   

  	
  2.1

  
	
  Released Party and Released Parties

  	
   

  	
  7.14.1

  
	
  Relevant Contract

  	
   

  	
  5.14.1

  
	
  Restricted
  Period

  	
   

  	
  7.16.1

  
	
  Schedule 5.20 Update

  	
   

  	
  7.17

  
	
  Seller Group

  	
   

  	
  5.11.7

  
	
  Seller Parent

  	
   

  	
  Preamble

  
	
  Seller Parent
  Indemnified Persons

  	
   

  	
  8.5

  
	
  Seller Parent Tax Matters

  	
   

  	
  7.8.4

  
	
  Sumitomo

  	
   

  	
  Recitals

  
	
  Sumitomo LLC
  Conversion Taxes

  	
   

  	
  8.2.3

  
	
  Sumitomo Redemption

  	
   

  	
  7.3.1

  
	
  Super Media

  	
   

  	
  Recitals

  
	
  Target Company Designees

  	
   

  	
  7.6

  
	
  Target Group
  Financial Statements

  	
   

  	
  5.8.1

  
	
  Tax Matter

  	
   

  	
  7.8.4

  
	
  Tax Refund

  	
   

  	
  7.8.7

  
	
  Transaction

  	
   

  	
  2.1

  

 

1.2.2       Accounting
terms or phrases used but not defined in this Agreement, if such terms or
phrases are ascribed a meaning under U.S. GAAP, shall be ascribed such meanings
as such terms or phrases are used under U.S. GAAP.

 

1.2.3       Whenever
the words “include,” “includes”
or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without
limitation.”

 

1.2.4       The words “hereof,” “herein” and “herewith” and
words of similar import shall, unless otherwise stated, be construed to refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references are
to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified.

 

1.2.5       References to “Agreement”
or “this Agreement” include the exhibits and schedules to this
Agreement.

 

1.2.6       The
meaning assigned to each term defined herein shall be equally applicable to
both the singular and the plural forms of such term, and words denoting any
gender shall include all genders.  Where
a word or phrase is defined in this Agreement, each of its other grammatical
forms shall have a corresponding meaning.

 

1.2.7       A
reference to any Party to this Agreement or any other agreement or document
shall include such Party’s successors and permitted assigns.

 

8

 

1.2.8       A
reference to any legislation or to any provision of any legislation shall
include any amendment to, and any modification or reenactment thereof, and all
regulations and statutory instruments issued thereunder or pursuant thereto.

 

1.2.9       The
Parties have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any provisions of this Agreement.

 

1.2.10     Time is of
the essence in this Agreement.  Whenever
this Agreement refers to a number of days, such number shall refer to calendar
days unless Business Days are specified. 
Whenever any action must be taken hereunder on or by a day that is not a
Business Day, then such action may be validly taken on or by the next day that
is a Business Day.

 

Section 2.              Closing Transactions

 

2.1          Transaction.  On the Closing Date, subject to the
satisfaction or waiver of the conditions set forth in Section 3
of
this Agreement, Seller Parent shall cause the Sellers to transfer to Buyer in
exchange of the payment of the Purchase Price by Buyer, and Buyer shall receive
from the Sellers, all of the right, title and interest of the Sellers in and to
all of the issued and outstanding membership
interests of Liberty Japan LLC, Liberty Jupiter LLC and LGJ2 (such membership
interests, the “Purchased Interests” and such
transaction together with the other transactions contemplated by this
Agreement, the “Transaction”). Seller Parent shall
cause the Sellers to transfer good and valid title in and to the Purchased
Interests to Buyer at the Closing, free and clear of all
Liens (other than Liens created by or at the behest of Buyer). Sellers’ transfer
of the Purchased Interests to Buyer shall constitute the closing of the
Transaction (the “Closing”). The
Closing shall be held in Tokyo, Japan, at the offices
of Seller Parent’s legal counsel, or such other location as mutually agreed by
Seller Parent and Buyer.

 

2.2          Purchase Price.  As payment for the Purchased
Interests and as compensation for the other obligations of Seller Parent under
this Agreement, Buyer shall pay to the Sellers the following amounts (the
aggregate of such amounts, the “Purchase Price”):

 

2.2.1       to LGJ Holdings, in respect of the Purchased Interests issued by
Liberty Japan LLC, the amount of ¥287,849,322,000 (TWO HUNDRED EIGHTY SEVEN BILLION,
EIGHT HUNDRED FORTY NINE MILLION, THREE HUNDRED TWENTY TWO THOUSAND YEN);

 

2.2.2       to LGJ Holdings, in respect of the Purchased Interests issued by
Liberty Jupiter LLC, the amount of ¥38,418,300,000 (THIRTY EIGHT BILLION,
FOUR HUNDRED EIGHTEEN MILLION, THREE HUNDRED THOUSAND YEN); and

 

2.2.3       to Seller Parent, in respect of the
Purchased Interests issued by  LGJ2, the amount of ¥35,387,662,500 (THIRTY FIVE BILLION, THREE HUNDRED EIGHTY SEVEN MILLION,
SIX HUNDRED SIXTY TWO THOUSAND, FIVE HUNDRED YEN).

 

9

 

For
the avoidance of doubt, notwithstanding the foregoing allocation of the
Purchase Price, the Closing shall not occur, and Seller Parent shall have no
obligation to transfer any of the Purchased Interests, unless and until the
Buyer pays the Purchase Price in full, which shall include paying a portion of
the Purchase Price in accordance with Section 2.3.

 

2.3          Mezzanine
Loan Payoff.  During the
Closing, the portion of the Purchase Price required to pay off the Mezzanine
Loan in full, as designated by Seller Parent (and substantiated by payoff
documentation provided by the Mezzanine Lenders) shall be transferred by the
Buyer, on behalf of LGJ Holdings, to repay the Mezzanine Loan in full without
expense to or liability of Buyer, any of its Affiliates or any Target Group
Company (the “Mezzanine Loan Payoff”).  Immediately upon the Mezzanine Loan Payoff,
Seller Parent shall obtain customary documentation from the Mezzanine Lenders
evidencing the release of all Liens in favor of the Mezzanine Lenders under the
Mezzanine Finance Documents on the Purchased Interests or any assets of the
Target Group Companies.

 

2.4                                       2009
J:COM Dividend.

 

2.4.1       The Parties agree that, as
between Seller Parent, Sellers and Buyer, the year end dividend (kimatsu haitou) to be paid by J:COM for
the fiscal year ending December 31, 2009 (the “2009 Final Dividend”), up to ¥490 per J:COM Share, less any
applicable withholding taxes deducted by J:COM, shall, with respect to the
J:COM Shares held by LGJ2 or the Liberty Attributable J:COM Shares, be for the
account of Seller Parent. Buyer shall be entitled to retain any portion of the
2009 Final Dividend with respect to the J:COM Shares held by LGJ2 or the
Liberty Attributable J:COM Shares that exceeds ¥490 per J:COM Share.

 

2.4.2       At or before the Closing,
Super Media shall deliver a request to J:COM in substantially the form attached
as Schedule 2.4.2 (“2009 Final
Dividend Payment Request”) to pay directly:

 

(a)                                  to Seller
Parent: (i) 58.658% of the 2009 Final Dividend payable to Super Media and (ii) 100%
of the 2009 Final Dividend payable to LGJ2, in each case up to ¥490 per J:COM
Share;

 

(b)                                 to Sumitomo,
41.342% of the 2009 Final Dividend payable to Super Media; and

 

(c)                                  to Super Media,
any portion of the 2009 Final Dividend with respect to the J:COM Shares held by
LGJ2 or the Liberty Attributable J:COM Shares that exceeds ¥490 per J:COM
Share.

 

2.4.3       Following the Closing, if
J:COM does not pay the applicable portion of the 2009 Final Dividend directly
to Seller Parent in accordance with the 2009 Final Dividend Payment Request,
and instead pays it to Super Media and to LGJ2, then Buyer shall:

 

(a)                                  cause Super
Media to pay over to Seller Parent 58.658% of the 2009 Final Dividend received
by Super Media, up to ¥490 per J:COM Share;

 

(b)                                 cause Super
Media to pay over to Sumitomo 41.342% of the 2009 Final Dividend received by
Super Media; and

 

10

 

(c)                                  cause LGJ2 to
pay over to Seller Parent 100% of the 2009 Final Dividend received by LGJ2, up
to ¥490 per J:COM Share;

 

in
each case less any applicable withholding taxes deducted by J:COM. Buyer shall
cause such payments to be made within five (5) Business Days after receipt
of the 2009 Final Dividend.

 

2.5          Payments.  All payments to a Party due under this Section 2
shall be made by wire transfer in Yen of immediately available funds to the
account(s) specified by the payee in writing at least five (5) days
prior to such payment, without setoff, deduction or withholding (except as set
forth in Section 2.4.3); provided, that the Mezzanine Loan Payoff
shall be made to the bank account specified by the Mezzanine Lenders.  Each Party shall bear all wire transfer
charges of its own bank.

 

2.6          Closing
Date.   The Parties intend that the
Closing Date will be February 10, 2010 or as soon as practicable
thereafter, and each Party shall use its reasonable best efforts to achieve
this objective.  If the Closing Date
cannot be achieved by February 10, 2010, the Closing Date shall be on or
prior to the later of February 18, 2010 and the seventh (7th) Business Day
following the date of the Sumitomo Redemption or completion of the Alternative
Structure (as the case may be), or such other date as may be agreed in writing
by the Parties.

 

Section 3.              Conditions
Precedent to Closing Obligations

 

3.1          Conditions
to Each Party’s Obligation to Effect the Closing. The respective obligation
of each Party to effect the Closing is subject to the fulfillment, at or prior
to the Closing, of each of the following conditions:

 

3.1.1       The LLC Conversions shall
have been completed in accordance with Section 7.2;

 

3.1.2       The Sumitomo Redemption or
the Alternative Structure shall have been completed in accordance with Section 7.3;
and

 

3.1.3       No law or regulation shall
have been enacted or promulgated after the Effective Date by any Governmental
Authority in Japan, the United States or the European Union which prohibits the
consummation of the Transaction.

 

3.2          Conditions
to Obligation of Buyer to Effect the Closing.  The obligation of Buyer to effect the Closing
is further subject to the fulfillment, at or prior to the Closing, of each of
the following additional conditions (all or any of which may be waived in whole
or in part by Buyer in its sole discretion):

 

3.2.1       (i) The representations
and warranties made by Seller Parent contained in this Agreement (other than
the representations and warranties contained in Section 5.20) shall
be true and correct on and as of the Effective Date and the Closing Date
(except in the case of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such earlier date), except for
any failures of such representations and warranties to be so true and correct
that, individually or in the aggregate, would not reasonably be expected to
result in Buyer incurring Indemnified Damages exceeding ¥5 billion, and (ii) 

 

11

 

Seller Parent shall have
delivered to Buyer a certificate, dated the Closing Date and executed in the
name and on behalf of Seller Parent to such effect.

 

3.2.2       (i) The representations
and warranties made by Seller Parent contained in Section 5.20
shall be true and correct on and as of the Effective Date and the Closing Date
(except in the case of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such earlier date), except for
such failures of representations and warranties to be so true and correct that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, and (ii) Seller Parent shall have delivered to
Buyer a certificate, dated the Closing Date and executed in the name and on
behalf of Seller Parent to such effect.

 

3.2.3       Seller Parent shall have
performed and complied with, in all material respects, the agreements,
covenants and obligations which are required by this Agreement to be so
performed or complied with by Seller Parent or its Affiliates at or prior to
the Closing and Seller Parent shall have delivered to Buyer a certificate,
dated the Closing Date and executed in the name and on behalf of Sellers to
such effect.

 

3.2.4       Since the Effective Date,
there shall not have occurred and be continuing a Material Adverse Change.

 

3.2.5       Since the Effective Date,
Super Media shall not have voted any Liberty Attributable J:COM Shares in favor
of any transaction listed in Schedule 3.2.5 (each, a “J:COM Extraordinary Transaction”). Since
the Effective Date, no Target Company Designee shall have (i) proposed
that the J:COM board of directors approve any J:COM Extraordinary Transaction,
or (ii) voted as a director of J:COM in favor of any J:COM Extraordinary
Transaction, except where failure to vote for such J:COM Extraordinary
Transaction would reasonably be expected to constitute a breach of fiduciary
duty by such Target Company Designee.

 

3.2.6       Since the Effective Date,
neither J:COM nor any Material J:COM Subsidiary shall have approved or entered
into any new material Contract with Seller Parent or any of its Affiliates on
terms that are materially worse for such J:COM Group Company than arm’s length,
fair market terms.

 

3.2.7       Since the Effective Date, no
J:COM Extraordinary Transaction described in paragraph 6 of Schedule 3.2.5
shall have occurred.

 

3.3          Conditions
to Obligation of Seller Parent to Effect the Closing.  The obligation of Seller Parent to effect the
Closing is further subject to the fulfillment, at or prior to the Closing, of
each of the following additional conditions (all or any of which may be waived
in whole or in part by Seller Parent in its sole discretion):

 

3.3.1       (i) The representations
and warranties made by Buyer in this Agreement shall be true and correct on and
as of the Effective Date and the Closing Date (except in the case of
representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date), except for any failures of such
representations and warranties to be so true and correct that, individually or
in the aggregate, would not reasonably be expected to result in Seller Parent
incurring Indemnified Damages exceeding ¥5 billion, and 

 

12

 

(ii) Buyer
shall have delivered to Seller Parent a certificate, dated the Closing Date and
executed in the name and on behalf of Buyer to such effect.

 

3.3.2       Buyer shall have performed
and complied with, in all material respects, the agreements, covenants and
obligations required by this Agreement to be so performed or complied with by
Buyer at or prior to the Closing, and Buyer shall have delivered to Seller
Parent a certificate, dated the Closing Date and executed in the name and on
behalf of Buyer to such effect.

 

3.4          Frustration
of Closing Conditions. 
Neither Party may rely, either as a basis for not consummating the
Transaction or terminating this Agreement, on the failure of any condition set
forth in Sections 3.1, Section 3.2 or Section 3.3,
as the case may be, to be satisfied if such failure was caused by such Party’s
breach of any provision of this Agreement or failure to use its commercially
reasonable efforts to consummate the Transactions.

 

Section 4.              Closing
Deliveries

 

4.1          Deliveries
at Closing by Seller Parent.  At the Closing,
Seller Parent shall deliver, or cause to be delivered, to Buyer, the following:

 

4.1.1       an assignment of the
Purchased Interests, in the form attached as Schedule 4.1.1, duly
executed by each Seller;

 

4.1.2       a certificate from the
Secretary of each of Liberty Japan LLC, Liberty Jupiter LLC and LGJ2 certifying
as to their respective Organizational Documents;

 

4.1.3       written resignations or
removals as of the Closing, without the expense or liability of any Target
Company, of any individuals serving as managers, directors or officers of each
Target Company;

 

4.1.4       written resignations or
removals as of the Closing, without the expense or liability of any Target
Group Company or any J:COM Group Company, of all individuals (except Yasushige
Nishimura) nominated or appointed by Seller Parent or its Affiliates and
serving as managers, officers, directors or statutory auditors of Super Media
or any Subsidiary of J:COM; provided,
that directors and statutory auditors of J:COM nominated by Seller Parent or
its Affiliates may retain any incentive stock options previously granted by
J:COM;

 

4.1.5       the form of 2009 Final
Dividend Payment Request to be delivered by Super Media;

 

4.1.6       documents required by the
Mezzanine Lenders to effectuate the payoff of the Mezzanine Loan and documents
confirming the discharge of the Liens of the Mezzanine Lenders;

 

4.1.7       all minute books and stock
ledgers of the Target Group Companies in the possession of the Seller Parent or
any of its Affiliates (other than a Target Group Company); and

 

4.1.8       any other documents or
certificates required to be delivered hereunder by 

 

13

 

Seller
Parent or Sellers by the Closing.

 

4.2          Deliveries
at Closing by Buyer.  At the Closing,
Buyer shall deliver, or cause to be delivered, to Seller Parent, the following:

 

4.2.1       a certificate from the
Secretary of Buyer certifying as to the Buyer’s Organizational Documents; and

 

4.2.2       any other documents or
certificates required to be delivered hereunder by Buyer by the Closing.

 

Section 5.              Representations
and Warranties of Seller Parent.

 

Subject to the limitations,
qualifications and disclosures in this Agreement, Seller Parent makes the
following representations and warranties to Buyer as of the Effective Date, and
such representations shall be deemed to be repeated on the Closing Date:

 

5.1          Existence.

 

5.1.1       Seller Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, U.S.A. 
LGJ Holdings is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, U.S.A.

 

5.1.2       As of the Effective Date,
Liberty Japan is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, U.S.A. As of the Closing
Date, Liberty Japan LLC shall be a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
U.S.A.

 

5.1.3       As of the Effective Date,
Liberty Jupiter is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, U.S.A. As of the Closing
Date, Liberty Jupiter LLC shall be a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
U.S.A.

 

5.1.4       LGJ2 is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, U.S.A.

 

5.1.5       Super Media is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware, U.S.A.

 

5.1.6       Each of Seller Parent, LGJ
Holdings, Liberty Japan, Liberty Jupiter, LGJ2 and Super Media is as of the
Effective Date, and each of Seller Parent, LGJ Holdings, Liberty Japan LLC,
Liberty Jupiter LLC, LGJ2 and Super Media will be as of the Closing Date, duly
qualified or licensed to do business in each other jurisdiction where the
operation of its business makes such qualification or licensing necessary,
except in those jurisdictions where the failure to be so qualified or licensed
would not reasonably be expected to have a material adverse effect on the power
or ability of a Seller Party to consummate the Transaction.

 

5.2          Authorization.  This Agreement has been duly authorized,
executed and delivered by Seller Parent. 
The execution and delivery by Seller Parent of this Agreement, and the 

 

14

 

performance by Seller Parent of its obligations
hereunder, have been duly and validly authorized by all necessary corporate
action.  Assuming that this Agreement is
a valid and binding obligation of Buyer, this Agreement constitutes a valid and
binding obligation of Seller Parent, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Regulations affecting the
enforcement of creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).  Seller Parent has the
direct and/or indirect power and authority to cause the Sellers to transfer the
Purchased Interests and to cause each of its Affiliates to comply with its
obligations set forth in this Agreement.

 

5.3          No
Conflicts.  Neither the
execution or delivery of this Agreement, nor the performance by any Seller
Party of its obligations in connection with the Transaction, or the fulfillment
of the terms and conditions hereof by any Seller Party will: (i) conflict
with or violate any provision of such Seller Party’s Organizational Documents, (ii) conflict
with, violate or result in a breach of any Regulation applicable to such Seller
Party and currently in effect, or (iii) conflict with, violate or result
in a breach of, constitute a Default under any term or condition of any Contract
to which such Seller Party is a party or by which it or any of its properties
or assets are bound (which, for the avoidance of doubt, do not include any
Contracts to which any J:COM Group Company is a party or by which its
properties or assets are bound); except
(A) the Mezzanine Loan Payoff is required to transfer the Purchased
Interests issued by Liberty Japan and Liberty Jupiter and (B) the transfer
of the Purchased Interests issued by Liberty Japan and Liberty Jupiter, if made
prior to the Sumitomo Redemption, would constitute an event of dissolution of
Super Media under Section 11.1(g) of the Super Media LPA.

 

5.4             No
Proceedings.  There are no
legal or governmental proceedings pending, or to the Seller Parent’s Knowledge,
threatened, to which any Seller Party or Target Group Company is a party or to
which any of the properties of a Seller Party or a Target Group Company is
subject that would reasonably be expected to have a material adverse effect on
the power or ability of a Seller Party to consummate the Transactions.

 

5.5                               Ownership.

 

5.5.1       As of the Closing Date, the
Purchased Interests will have been duly authorized and validly issued. As of
the Closing Date, the Purchased Interests will constitute 100% of the
membership interests in the Target Companies, and after the Mezzanine Loan
Payoff, shall be held by the Sellers free and clear of all Liens. Upon Buyer’s
payment of the Purchase Price, and completion of the Mezzanine Loan Payoff and
the Closing, Buyer shall own the Purchased Interests free and clear of all
Liens (other than Liens created by or at the behest of Buyer).

 

5.5.2       As of the Effective Date,
LGJ Holdings owns all of the issued and outstanding shares of Liberty
Japan.  As of the Closing Date, LGJ
Holdings will own 100% of the issued and outstanding membership interests of
Liberty Japan LLC. There are no Options or other rights of any kind or nature
to subscribe for or otherwise acquire shares of Liberty Japan or membership
interests in Liberty Japan LLC, except (i) the rights of the Mezzanine
Lenders under the Mezzanine Finance Documents, which will be discharged in full
during the Closing following Buyer’s payment of the Purchase Price, and (ii) in
favor of Buyer as provided in 

 

15

 

this
Agreement.

 

5.5.3       As of the Effective Date,
LGJ Holdings owns 85.75% of the issued and outstanding common shares and all of
the issued and outstanding preferred shares of Liberty Jupiter. As of the
Closing Date, LGJ Holdings will own 100% of the issued and outstanding
membership interests of Liberty Jupiter LLC. There are no Options or other
rights of any kind or nature to subscribe for or otherwise acquire shares of
Liberty Jupiter or membership interests in Liberty Jupiter LLC, except (i) the
rights of the Mezzanine Lenders under the Mezzanine Finance Documents, which
will be discharged in full during the Closing following the Mezzanine Loan
Payoff, (ii) agreements to effect the Minority Acquisition and (iii) in
favor of Buyer as provided in this Agreement.

 

5.5.4       Seller Parent owns all of
the issued and outstanding membership interests of LGJ2. There are no Options
or other rights of any kind or nature to subscribe for or otherwise acquire
membership interests in LGJ2, except in favor of Buyer as provided in this
Agreement.

 

5.5.5       Super Media.

 

(a)                                  As of the
Effective Date, there are 3,987,238 SM Units outstanding and: (i) Liberty
Japan is the sole general partner and a limited partner of Super Media and owns
2,063,436 SM Units; (ii) Liberty Jupiter owns 275,400 SM Units; and (iii) Sumitomo
owns 1,648,402 SM Units.

 

(b)                                 Except as may
be agreed by the Parties pursuant to an Alternative Structure, following the
LLC Conversion and the Sumitomo Redemption, on the Closing Date there will be
2,338,836 SM Units outstanding, and: (i) Liberty Japan LLC will be the
sole general partner and a limited partner of Super Media and will own
2,063,436 SM Units; and (ii) Liberty Jupiter LLC will be a limited partner
and own 275,400 SM Units, in each case free and clear of all Liens, except (A) the
rights of the Mezzanine Lenders under the Mezzanine Finance Documents, which
will be discharged in full during the Closing following the Mezzanine Loan
Payoff and (B) the Liens in favor of Buyer arising under this Agreement.
All of the SM Units to be held by Liberty Japan LLC and Liberty Jupiter LLC
will be duly authorized and validly issued.

 

(c)                                  There are no
Options or other rights to subscribe for or otherwise acquire partnership
interests in Super Media, except (i) as provided in the Super Media LPA
and the Redemption Agreement, and (ii) for the rights of the Mezzanine
Lenders under the Mezzanine Finance Documents, which will be discharged in full
during the Closing following the Mezzanine Loan Payoff.

 

5.5.6       J:COM Shares.

 

(a)                                  As of the
Effective Date, Super Media owns 3,987,238 J:COM Shares, of which 2,338,836
J:COM Shares are Liberty Attributable J:COM Shares, and 1,648,402 J:COM Shares
are Sumitomo Attributable J:COM Shares.

 

(b)                                 Except as may
be agreed by the Parties pursuant to an Alternative Structure, following the
LLC Conversion and the Sumitomo Redemption, on the Closing 

 

16

 

Date Super Media will own 2,338,836 J:COM Shares,
all of which will be Liberty Attributable J:COM Shares and free and clear of
all Liens, except (i) the rights of the Mezzanine Lenders under the
Mezzanine Finance Documents, which will be discharged in full during the
Closing following the Mezzanine Loan Payoff and (ii) the Liens in favor of
Buyer arising under this Agreement. The Liberty Attributable J:COM Shares were
validly issued, and have been fully paid up.

 

(c)                                  LGJ2 owns
253,675 J:COM Shares free and clear of all Liens, except the Liens in favor of
Buyer arising under this Agreement. The 253,675 J:COM Shares held by LGJ2 were
validly issued, and have been fully paid up.

 

5.5.7       Holding Company Status.  Seller Parent has provided the Buyer with a
true and correct description of the ownership structure of the Target Group
Companies. Except for the SM Conversion, the LLC Conversions, the Sumitomo
Redemption, the Minority Acquisition, and the transfer of the ownership of LGJ2
from Liberty Global Japan, LLC, a limited liability company organized under the
laws of the State of Delaware, U.S.A. to Seller Parent prior to the Effective
Date, such ownership structure has not changed since January 1, 2008. From
January 1, 2008, each of the Target Group Companies has not engaged in any
line of business other than holding (directly or indirectly) J:COM Shares and
exercising the rights of a J:COM shareholder.

 

5.6                               Shareholder
Agreements.

 

5.6.1       Except for the agreements
listed on Schedule 5.6, no Seller Party or Target Company is currently
bound by any shareholders agreements, voting trusts, proxies or similar
Contracts with respect to the shares or membership interests of the Target
Companies.

 

5.6.2       No Seller Party or Target
Group Company is currently bound by any shareholders agreements, voting trusts,
proxies or similar Contracts with respect to the SM Units, except the Mezzanine
Finance Documents (which will be terminated at the Closing), the Super Media
LPA and the Redemption Agreement (after it is entered into).

 

5.6.3       No Seller Party or Target
Group Company is currently bound by any shareholders agreements, voting trusts,
proxies or similar Contracts with respect to the J:COM Shares, except the
Mezzanine Finance Documents (which will be terminated at the Closing), the
Super Media LPA, the Redemption Agreement (after it is entered into) and the
Registration Rights Agreement.

 

5.7          Subsidiaries
and Equity Investments.  Except as
described in Section 5.5, no Target Group Company directly owns any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity.

 

5.8          Financial
Statements.

 

5.8.1       Seller Parent has provided
to Buyer true and correct copies of the standalone unaudited balance sheets as
of September 30, 2009, and the related statements of profits and loss for
the 9-month period ended as of September 30, 2009 for each Target Group
Company (collectively, the “Target Group
Financial Statements”).

 

17

 

5.8.2       The Target Group Financial
Statements: (a) have been prepared in conformity with U.S. GAAP applied on
a consistent basis, (b) have been based upon the information concerning
each Target Group Company and contained in such Target Group Company’s books
and records, and (c) present fairly in all material respects the financial
condition and results of operations of such Target Group Company as of the
times and for the periods referred to therein in accordance with U.S. GAAP (in
each case, subject to normal year-end adjustments and the absence of
footnotes); provided, however, that to the extent that the
Target Group Financial Statements incorporate financial information of the
J:COM Group, such representation is made to Seller Parent’s Knowledge.

 

5.9                               Title
to Assets.

 

5.9.1       No Target Group Company owns
or has ever owned any material tangible personal property, other than cash and
an intercompany promissory note in favor of Liberty Japan that will be
distributed to LGJ Holdings prior to the Closing.

 

5.9.2       No Target Group Company is
or has ever been a party to any material leases of real property or personal
property.

 

5.9.3       No Target Group Company owns
or has ever owned any real property.

 

5.10        Liabilities.  The current business purpose
of the Target Group Companies is solely to hold the SM Units and the J:COM
Shares. Except as set forth in Schedule 5.10, following the Mezzanine
Loan Payoff and upon consummation of the Closing in accordance with this
Agreement, no Target Group Company will have:

 

(a)                                  any off-balance sheet
financing or similar financing arrangements;

 

(b)                                 any Liabilities (other than
those created at the behest of the Buyer); or

 

(c)                                  any Liability under the
Mezzanine Financing Documents.

 

5.11        Taxes.

 

5.11.1     All Tax Returns required to
be filed by each of the Target Group Companies, including any combined,
consolidated or unitary Tax Returns that includes a Target Company, were filed
in a timely manner (within any applicable extension periods) with the
appropriate Taxing Authority.  All such
Tax Returns are true, correct and complete in all material respects; and all
Taxes due and payable by the Target Group Companies have been paid in full; provided,
however, that to the extent that such Taxes or Tax Returns pertain to
the Sumitomo LLC Conversion Taxes, such representations are made to Seller
Parent’s Knowledge.

 

5.11.2     No material adjustments to
the Tax liability of any of the Target Group Companies have been proposed in
writing by any Taxing Authority which adjustments are currently pending.  All deficiencies asserted or assessments made
by a Taxing Authority with respect to Taxes of the Target Group Companies have
been fully paid or settled, or are being contested in good faith through
appropriate proceedings.

 

5.11.3     There are no Liens for Taxes
(other than for current Taxes not yet due and 

 

18

 

payable)
on any of the assets of the Target Group Companies.

 

5.11.4     After the consummation of
the LLC Conversions and the Sumitomo Redemption, each of the Target Group
Companies will be properly classified as a disregarded entity for United States
federal income Tax purposes pursuant to Treasury Regulation
§301.7701-3(b)(1)(ii).

 

5.11.5     All material Taxes that each
of the Target Group Companies was required to withhold or collect have been
duly withheld or collected, and to the extent required, have been paid to the
proper Taxing Authority on a timely basis.

 

5.11.6     (i) No Target Group
Company has in force any waiver of any statute of limitations in respect of
Taxes or any extension of time with respect to a Tax assessment or deficiency
(excluding statutory extensions that arise as a result of filing Tax Returns
within the statutory extension period), and (ii) there are no pending or
active audits or legal proceedings involving Taxes of a Target Group Company
or, to the Seller Parent’s Knowledge, threatened audits or proposed
deficiencies or other Claims for unpaid Taxes of the Target Group Companies.

 

5.11.7     None of the Target Group
Companies has been a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code (other than a member of an affiliated
group of which the common parent is LGI (the “Seller
Group”).  None of the Target
Group Companies is liable for the Taxes of any other Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee, successor, by contract or otherwise (other than
for Taxes of other members of the Seller Group).  Excluding Tax sharing agreements between the
Target Group Companies and any member of the of the Seller Group, none of the
Target Group Companies is a party to an agreement that obligates it to make any
payment for Taxes of any other Person.

 

5.11.8     None of the Target Group
Companies shall be required to include in a Tax period that ends after the
Closing Date taxable income attributable to income of the Target Group
Companies that accrued in a period that ends on or prior to the Closing Date
but was not recognized in such period as a result of (i) the installment
method of accounting, (ii) the long-term contract method of accounting or (iii) a
“closing agreement” as described in Section 7121 of the Code (or any
similar provision of state, local or foreign law).  None of the Target Group Companies has agreed
to or is required to make any adjustment to Section 481(a) of the
Code (or any similar provision of state, local or foreign law) by reason of a
change in accounting method or otherwise.

 

5.11.9     None of the Target Group
Companies has participated in a “listed transaction” as defined in Treasury
Regulation Section 1.6011-4(b) with respect to which a disclosure
statement is or was required to be filed with a Taxing Authority.

 

5.12        No
Claims.  No Target Group Company has received
written notice of any pending Claims to which a Target Group Company is a
party, and to Seller Parent’s Knowledge, there are no Claims threatened against
any Target Group Company. No Target Group Company is a party to or subject to
any Order.

 

5.13        Absence
of Certain Changes or Events.  Since the date of the Target Group Financial 

 

19

 

Statements, each of the Target Group Companies have
conducted their business in the Ordinary Course, and there has not been,
occurred or arisen any change in or event affecting the Target Group Companies
that has had or would reasonably be expected to have a Material Adverse Effect;
provided, however, with respect to any change in or
event affecting the J:COM Group Companies that in turn affects the Target Group
Companies, the foregoing representation is made solely as of the Effective Date
and to Seller Parent’s Knowledge. 
Without limiting the generality of the foregoing, since the date of the
Target Group Financial Statements, except as required or contemplated by this
Agreement, there has not been any:

 

5.13.1     change in accounting methods
or practices by any Target Group Company, except as required by Regulation or
U.S. GAAP;

 

5.13.2     acquisition of any equity
interest in any Person by any Target Group Company, except the SM Conversion;

 

5.13.3     amendment of the
Organizational Documents of any Target Group Company, other than amendments in
connection with the SM Conversion, the LLC Conversions or amendments that are
ministerial in nature or otherwise immaterial;

 

5.13.4     with respect to the Target
Group Companies, (i) split, combination or reclassification of their
respective capital stock, (ii) redemption, repurchase or other acquisition
of any shares of their respective capital stock, equity interest, or any Option
or (iii) issuance, delivery or sale of any shares of their respective
capital stock, equity interest or any Option, in each case except in accordance
with the SM Conversion, the LLC Conversions, the Sumitomo Redemption and
agreements to effect the Minority Acquisition;

 

5.13.5     action by any Target Group
Company of the type described in Section 7.5; or

 

5.13.6     agreement by any Target
Group Company to do any of the foregoing, except agreements to consummate the
SM Conversion, the LLC Conversions, the Sumitomo Redemption and the Minority
Acquisition.

 

5.14        Contracts.

 

5.14.1     Schedule 5.14.1 lists
each Contract to which a Target Group Company is a party, other than: (i) Contracts
that have been substantively performed prior to the Effective Date and for
which there are no material residual Liabilities, and (ii) Contracts that
will terminate on or before the Closing Date with no further material Liability
to a Target Group Company (“Relevant Contract”).  Seller Parent has made available to Buyer
true and correct copies of each Relevant Contract.

 

5.14.2     Each Relevant Contract is in
full force and effect in all material respects and constitutes a legal, valid
and binding obligation of the applicable Target Group Company and, to Seller
Parent’s Knowledge, of the other parties thereto, except in each case where the
failure to be in full force and effect or constitute a binding obligation would
not reasonably be expected to have a Material Adverse Effect.  No Target Group Company is in material
Default under any Relevant Contract, and no event has occurred or circumstance
exists which would constitute a material Default by a Target Group Company
under any Relevant Contract.  To Seller
Parent’s Knowledge, no party other than a Target Group Company is in Default
under any Relevant Contract in a manner that would reasonably be expected to
have

 

20

 

a
Material Adverse Effect.

 

5.15                        Organizational
Documents. Seller Parent has made available to Buyer true and
correct copies of the Organizational Documents of each Target Group Company as
currently in effect.

 

5.16                        Books
and Records.  Each Target
Group Company has made and kept true, correct and complete books and records
and accounts, which are in reasonable detail and accurately and fairly reflect
the activities and operations of its business in all material respects. Seller
Parent has made available to Buyer true and correct copies of such books,
records and accounts that have been requested by Buyer.

 

5.17                        No
Employees.  The Target
Group Companies have had no employees or Benefit Plans since at least January 1,
2006.

 

5.18                        Compliance
with Law.  No Target Group
Company has violated in any material respect any Regulations or Orders.  No Target Group Company has received written
notice that it or the conduct of its business fails to comply in any material
respect with any such Regulations or Orders.

 

5.19                        Permits.  Each Target Group Company
has obtained and is in compliance in all material respects with all Permits
that are necessary in connection with the operation of its business as
currently conducted, and all of such Permits are in full force and effect.  There is no pending or, to Seller Parent’s
Knowledge, threatened Claim with respect to the suspension, termination,
revocation, cancellation or limitation of any such Permit, and no fines or
penalties are due and payable in respect of any such Permit or any violation
thereof.

 

5.20                        J:COM.  Except as set forth in Schedule
5.20:

 

5.20.1              Existence.

 

(a)                                  To the Seller
Parent’s Knowledge, each J:COM Group Company is validly existing under the laws
of Japan, except J-Sports LLC. To the Seller Parent’s Knowledge, J-Sports LLC
is duly organized, validly existing and in good standing under the laws of the
State of Delaware, U.S.A.

 

(b)                                 To the Seller
Parent’s Knowledge, each J:COM Group Company is duly qualified to do business
in Japan, except J-Sports LLC. To the Seller Parent’s Knowledge, J-Sports LLC
is duly qualified to do business in the State of Delaware, U.S.A.

 

5.20.2              Capitalization.  To Seller Parent’s Knowledge: (i) as of
the Effective Date, the authorized capital of J:COM consists of 15,000,000
shares of common stock (“Common Stock”)
and 5,000,000 shares of preferred stock, of which 6,860,110 shares of Common
Stock were issued and outstanding as of December 31, 2009, 80,000 shares
of Common Stock were issued and held as treasury stock of J:COM as of December 31,
2009, and as of the Effective Date no shares of preferred stock were issued or
are outstanding, (ii) as of December 31, 2009, Options to purchase
approximately 85,000 shares of Common Stock were granted and outstanding and (iii) as
of the Effective Date, there are no other outstanding Options, preemptive
rights or other rights to purchase or otherwise acquire from J:COM any 

 

21

 

J:COM
Shares pursuant to Contracts to which J:COM is a party.

 

5.20.3              No
Conflicts.  To the
Seller Parent’s Knowledge, neither the execution or delivery of this Agreement
nor the consummation of the Transaction will: (i) conflict with, violate
or result in a breach of any Regulation applicable to any J:COM Group Company
and currently in effect, or (ii) conflict with, violate or result in a
breach of or constitute a Default under any term or condition of any Contract
to which any J:COM Group Company is a party or by which a J:COM Group Company
or any of its properties or assets are bound, in each case except for matters
that would not reasonably be expected to have a Material Adverse Effect. The
Target Company Designees have, from time to time, instructed J:COM that it is
the policy of Seller Parent that no J:COM Group Company shall enter into
Contracts with “change of control” or similar clauses that would materially
impede the ability of the Sellers to transfer the Purchased Interests.

 

5.20.4              No
Proceedings or Claims.  To
the Seller Parent’s Knowledge, there are no legal proceedings pending to which
any J:COM Group Company is a defendant or to which any of the properties of any
J:COM Group Company is subject for which Damages are reasonably expected to
exceed ¥1 billion. To the Seller Parent’s Knowledge, (i) there are no
pending material Claims to which any J:COM Group Company is a party, (ii) there
are no material Claims threatened against any J:COM Group Company and (iii) no
J:COM Group Company is a party to or subject to any material Order, in each
case except for matters that would not reasonably be expected to have a
Material Adverse Effect.

 

5.20.5              Financial
Statements.  To Seller’s
Parent’s Knowledge, the J:COM Financial Statements that Seller Parent has made
available to Buyer fairly present in all material respects the financial
condition, results of operations and cash flows of J:COM in accordance with
U.S. GAAP, applied on a consistent basis for all periods presented, in all
cases subject to the absence of footnotes and subsequently recorded
adjustments.  “J:COM Financial
Statements” means the unaudited condensed consolidated balance
sheets, condensed consolidated statements of operations and condensed
consolidated cash flow statements of J:COM as of and for the year ended December 31,
2008, and the unaudited condensed consolidated statements of operations for
each of the first three quarters during the year ended December 31, 2009
and for each quarterly period during the year ended December 31,
2008.  None of the J:COM Financial Statements furnished by the Seller
Parent include footnote disclosures. To the Seller Parent’s Knowledge, as
of the Effective Date, J:COM has no material contingent liabilities or
off-balance sheet debt, arrangements or transactions, except as disclosed on Schedule
5.20 or in an amount less than ¥1 billion.

 

5.20.6              Taxes.  To the Seller Parent’s Knowledge, all
material Tax Returns required to be filed by the J:COM Group Companies were
filed in a timely manner (within any applicable extension periods) with the
appropriate Taxing Authority.  To the Seller
Parent’s Knowledge, all such Tax Returns are true, correct and complete and all
material Taxes due and payable by any J:COM Group Company have been paid in
full, in each case except for matters that would not reasonably be expected to
have a Material Adverse Effect.

 

5.20.7              Absence of
Certain Changes or Events.  To
the Seller Parent’s Knowledge, since September 30, 2009, the J:COM Group
Companies have conducted their business in the Ordinary Course, and there has
not been, occurred or arisen any change in or event affecting 

 

22

 

the
J:COM Group Companies that has had or would reasonably be expected to have a
Material Adverse Effect.

 

5.20.8              Compliance
with Law.  To the
Seller Parent’s Knowledge, no J:COM Group Company has (i) violated any
material Regulations or Orders or (ii) received written notice that it or
the conduct of its business fails to comply with any Regulations or Orders, in
each case except for any single matter or series of related matters that would
not reasonably be expected to result in Damages exceeding ¥2 billion.

 

5.20.9              Permits.  To the Seller Parent’s Knowledge, (i) the
J:COM Group has obtained and is in compliance in all material respects with all
material Permits that are necessary in connection with the operation of its
business as currently conducted and (ii) all of such material Permits are
in full force and effect, in each case except for any single matter or series
of related matters that would not reasonably be expected to result in Damages
exceeding ¥2 billion.

 

5.20.10       Title to
Properties.  To Seller
Parent’s Knowledge, except for property sold since September 30, 2009 in
the Ordinary Course of Business, the J:COM Group Companies have good title to
or the right to use all the properties, rights and assets that it purports to
own, lease or license (tangible and intangible), including all the properties
and assets reflected in J:COM’s standalone balance sheet as of September 30,
2009 and all properties and assets purchased, leased or licensed by the J:COM
Group Companies since September 30, 2009, in each case except for matters
that would not reasonably be expected to have a Material Adverse Effect.

 

5.20.11       Securities
Filings and Timely Disclosures. To Seller Parent’s
Knowledge, J:COM has not failed, in any material respect, to disclose in (i) its
Annual Securities Reports (yukashoken
houkokusho), Semi-Annual Securities Reports (hanki houkokusho), Quarterly Securities
Reports (shihanki houkokusho), or
Extraordinary Reports (rinji houkokusho)
filed since January 1, 2008, or (ii) its Timely Disclosures Materials
(tekiji kaiji shiryo) disclosed
in accordance with JASDAQ’s timely disclosure regulations during the fifteen
(15) months prior to the Effective Date, any material information which J:COM
had a duty to disclose under applicable Regulations or JASDAQ’s timely
disclosure regulations, each as reasonably interpreted in a manner consistent
with custom and practice in Japan.

 

5.21                        No
Brokers.  No Seller Party, Target Group
Company, nor any of their respective Representatives has entered into or will
enter into any Contract with any broker, finder or similar agent or any Person
which will result in the obligation of Buyer, the Target Group Companies or any
of their respective Affiliates after the Closing to pay any finder’s fee,
brokerage fees or commission or similar payment in connection with the
Transaction.

 

5.22                        No
Other Representations. 
Except for the representations and warranties contained in this Section 5
or any certificate delivered by the Seller Parent in accordance with Section 3,
no Seller Party or any of its Representatives or Affiliates makes any express
or implied representation or warranty in connection with the Transaction, or in
respect of the Target Group Companies or the J:COM Group, any of the Target
Group Companies’ or the J:COM Group’s assets, Liabilities, business, finances,
operations, or prospects, notwithstanding the delivery or disclosure to Buyer
or any of its Representatives of any documentation or other information with
respect to the foregoing or any responses to Buyer’s due diligence enquiries.

 

23

 

Section 6.                                          Representations and Warranties of Buyer

 

Subject to the limitations, qualifications and disclosures in this
Agreement, Buyer makes the following representations and warranties to Seller
Parent as of the Effective Date, and such representations shall be deemed to be
repeated on the Closing Date:

 

6.1                               Organization
of Buyer.  Buyer is a
corporation duly organized and validly existing under the laws of Japan.  Buyer is duly qualified or licensed to do
business in each other jurisdiction where the operation of its business makes
such qualification or licensing necessary, except in those jurisdictions where
the failure to be so qualified or licensed would not reasonably be expected to
have a material adverse effect on the power or ability of Buyer to consummate
the Transaction.

 

6.2                               Authorization.  This Agreement has been duly authorized,
executed and delivered by Buyer.  The
execution and delivery by Buyer of this Agreement, and the performance by Buyer
of its obligations hereunder, have been duly and validly authorized by all
necessary corporate action.  Assuming
that this Agreement is a valid and binding obligation of Seller Parent, this
Agreement constitutes a valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Regulations
affecting the enforcement of creditors’ rights generally and general principles
of public policy.  No consent, approval
or authorization of or from any other Person is required in connection with
Buyer’s execution or delivery of this Agreement, or the consummation by Buyer
of the Transaction, except the approval of the board of directors of Buyer,
which has been obtained.

 

6.3                               No
Conflict or Violation. 
Neither the execution or delivery of this Agreement, nor the performance
by Buyer of its obligations in connection with the Transaction, or the
fulfillment of the terms and condition hereof by Buyer will (i) conflict
with or violate any provision of Buyer’s Organizational Documents, (ii) assuming
the accuracy of the representations and warranties contained in Section 5.5.7,
conflict with, violate or result in a breach of any Regulation applicable to
Buyer and currently in effect, or (iii) conflict with, violate or result
in a breach of, constitute a default under any term or condition of any
Contract to which Buyer is a party or by which it or any of its properties or
assets are bound; except in the case of clauses (ii) and (iii) for
any such conflicts, violations, breaches or defaults which would not reasonably
be expected to have a material adverse effect on the power or ability of Buyer
to consummate the Transaction.

 

6.4                               No
Claims.  Buyer has not received written
notice of any pending material Claims to which Buyer is a party, and to Buyer’s
Knowledge, there are no material Claims threatened against Buyer which would
adversely affect Buyer’s performance under this Agreement or the consummation
of the Transaction. Buyer is not a party or subject to any Order related to the
Transaction.

 

6.5                               Financing.  Buyer has available cash and credit capacity,
either through binding and enforceable credit arrangements or borrowing
facilities, or executed financing commitments, and will have sufficient cash on
or prior to the Closing Date to (a) pay the Purchase Price and any
expenses of Buyer related to the Closing, and (b) perform all of its other
obligations hereunder (such obligations, the “Funding
Obligations” and such sufficient cash, the “Funds”). 
The J:COM Group (and, prior to the consummation of the Closing, the
Target

 

24

 

Group
Companies) will not be required to assume or have any obligation or liability
under the financing agreements to be entered into by Buyer to provide the Funds
(the “Buyer  Financing Agreements”).  Buyer has provided to Seller Parent a description
of the Buyer Financing Agreements.  To
the extent that this Agreement must be in a form acceptable to any lender
providing Funds, such lender or lenders have approved this Agreement.

 

6.6                               Investment
Representations.  Buyer is an
investor experienced (or owned or managed by Persons experienced) in evaluating
investments and has the knowledge, experience and resources to enable it to
evaluate and to bear the risks of the investment represented by the Purchased
Interests.

 

6.7                               No
Other Representations.  Except for the representations and warranties
contained in this Section 6 or any certificate delivered by the Buyer in
accordance with Section 3, none of the Buyer or any of its Representatives
or Affiliates makes any express or implied representation or warranty in
connection with the Transaction, notwithstanding the delivery or disclosure to
Seller Parent or any of its Representatives of any documentation or other
information with respect to the foregoing. 
Buyer acknowledges and agrees that the representations and warranties of
Seller Parent set forth in this Agreement terminate as set forth in Section 8.1
or upon the termination of this Agreement pursuant to Section 9,
and that following such termination of the representations and warranties,
Buyer shall have no recourse with respect to any breach of such representations
and warranties.

 

6.8                               No
Brokers.  Neither Buyer nor any of its
Representatives has entered into or will enter into any Contract with any
broker, finder or similar agent or any Person which will result in the
obligation of Seller Parent or any of its Affiliates to pay any finder’s fee,
brokerage fees or commission or similar payment in connection with the
transactions contemplated hereby.

 

Section 7.                                          Covenants and Agreements

 

7.1                               Commercially
Reasonable Efforts.  At all times
following the execution of this Agreement and prior to the Closing, Seller
Parent shall use its commercially reasonable efforts to cause the conditions
set forth in Section 3.2 to be satisfied on a timely basis, including
by taking all steps required under the Mezzanine Finance Documents to permit
the Mezzanine Loan Payoff and release of all Liens thereunder on the
anticipated Closing Date, and Buyer shall use its commercially reasonable
efforts to cause the conditions set forth in Section 3.3 to be
satisfied on a timely basis.

 

7.2                               LLC
Conversions.  Prior to the
Closing, Seller Parent shall cause: (i) Liberty Japan to be converted into
Liberty Japan LLC, and (ii) Liberty Jupiter to be converted into Liberty
Jupiter LLC (collectively, the “LLC
Conversions”). Seller Parent shall cause the LLC Conversions to
occur in accordance with Section 266 of the General Corporation Law of the
State of Delaware, U.S.A and Section 18-214 of the Limited Liability
Company Act of the State of Delaware, U.S.A. Seller Parent shall provide to
Buyer copies of all documents required to effectuate the LLC Conversions.

 

7.3                               Sumitomo
Redemption.

 

7.3.1                     Seller Parent
shall cause Liberty Japan as general partner of Super Media to

 

25

 

use
its commercially reasonable efforts, exercised in accordance with the terms of
the Super Media LPA, to distribute to Sumitomo as expeditiously as feasible on
or following February 18, 2010 (or following an earlier event of
dissolution of Super Media) the Sumitomo Attributable J:COM Shares in
redemption of all SM Units held by Sumitomo, pursuant to Sections 11.3(b) and
12.4 of the Super Media LPA (such redemption, the “Sumitomo Redemption”). Buyer shall use its commercially
reasonable efforts to cooperate with Seller Parent to accomplish the Sumitomo
Redemption. The Parties acknowledge that if the Sumitomo Redemption occurs
after January 30, 2010, a JFTC Prior Filing by Sumitomo with the Japan
Fair Trade Commission and expiration of the applicable waiting period will be
required before the Sumitomo Redemption can take place. Seller Parent shall
notify Buyer promptly upon completion of the Sumitomo Redemption.

 

7.3.2                     In connection
with the Sumitomo Redemption, the Parties acknowledge that Liberty Japan as
general partner of Super Media shall:

 

(a)                                  Request J:COM to recognize
Sumitomo as the holder of the voting rights in respect of the Sumitomo
Attributable J:COM Shares for the annual general meeting of shareholders (teiji soukai) of J:COM to be held in March 2010
(the “2010 AGM”); and

 

(b)                                 Assign to Sumitomo the right
to receive the 2009 Final Dividend in respect of the Sumitomo Attributable
J:COM Shares.

 

7.3.3                     If,
notwithstanding the commercially reasonable efforts of the Parties, Liberty
Japan is unable to effectuate the Sumitomo Redemption, then the Parties shall
discuss in good faith and use commercially reasonable efforts to agree on an
alternative arrangement consistent with the terms of the Super Media LPA that
will enable the Transaction to proceed (the “Alternative
Structure”).

 

7.3.4                     Following the
Closing, Buyer shall not permit Liberty Jupiter LLC, Liberty Japan LLC or Super
Media to dissolve Super Media before April 1, 2010.

 

7.4                               2009 Final Dividend.

 

7.4.1                     Seller Parent
shall cause the individuals that it or its Affiliates have nominated as
directors of J:COM to vote in favor of a 2009 Final Dividend of ¥490 per J:COM
Share.

 

7.4.2                     Following the
Closing, Buyer shall cause Super Media to vote the Liberty Attributable J:COM
Shares at the 2010 AGM in favor of a 2009 Final Dividend of ¥490 per J:COM
Share (or the maximum amount proposed by the J:COM board of directors for the
2009 Final Dividend, if less).

 

7.5                               Interim
Operations of Target Group Companies.  From the Effective Date until the Closing or
earlier termination of this Agreement, and except (i) as contemplated in
or permitted by this Agreement (other than with respect to the Redemption
Agreement), (ii) as may be required to effectuate the LLC Conversions, the
Super Media Unwinding, the Sumitomo Redemption or any Alternative Structure, or
the Minority Acquisition (other than pursuant to the Redemption Agreement), (iii) as
required by applicable Regulation, or (iv) to the extent Buyer shall
otherwise consent, which consent shall not be unreasonably withheld or
conditioned, Seller Parent shall cause each Target Company not to:

 

26

 

7.5.1                     amend its
Organizational Documents, other than amendments that are ministerial in nature
or otherwise immaterial;

 

7.5.2                     (i) split,
combine or reclassify its respective capital stock, (ii) redeem,
repurchase or otherwise acquire any shares of its capital stock, equity
interests or any Option or (iii) issue, deliver or sell any shares of its
capital stock, equity interests or any Option;

 

7.5.3                     make any
acquisition of, or investment in, assets or stock of any other Person;

 

7.5.4                     sell, lease,
license, encumber or otherwise dispose of any of its assets, except that
intercompany loan receivables (and related promissory notes) and cash held by
the Target Companies will be distributed to the respective Sellers prior to the
Closing;

 

7.5.5                     incur any
Liability or indebtedness other than the Mezzanine Loan;

 

7.5.6                     make any
material changes in its financial accounting methods, except as required by
Regulation or U.S. GAAP;

 

7.5.7                     enter into any
new Contract, or modify, amend or terminate any of its existing Contracts or
waive, release or assign any material rights or Claims relating thereto;

 

7.5.8                     make, change or
rescind any election relating to Taxes, or change any method of Tax accounting
or settle or compromise any material Tax Claim if such action would increase
the Tax liability of a Buyer Indemnified Person in a Post-Closing Tax Period or
the portion of any Straddle Period beginning after the Closing Date;

 

7.5.9                     adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization; or

 

7.5.10              enter into any agreement,
Contract, commitment or arrangement to do any of the foregoing.

 

7.6                               Interim
Operations of J:COM.  From the
Effective Date until the Closing or earlier termination of this Agreement, and
except (i) as contemplated in or permitted by this Agreement, (ii) as
required by applicable Regulation, (iii) as required by the Super Media
LPA for so long as it remains in effect, (iv) as required by fiduciary
duties owed to J:COM by the J:COM directors who have been designated by Target
Companies under the Super Media LPA (the “Target
Company Designees”) or (v) to the extent Buyer shall otherwise
consent, which decision shall not be unreasonably withheld or conditioned,
Seller Parent shall not permit any Target Company Designee to propose or vote
as a J:COM director in favor of J:COM taking any of the actions set forth in Schedule
7.6.

 

7.7                               Covenants
of Buyer.  From the
Effective Date until the Closing or earlier termination of this Agreement,
Buyer agrees that, except as expressly contemplated or permitted in this
Agreement or to the extent Seller Parent shall otherwise consent in writing,
which consent shall not be unreasonably withheld or conditioned:

 

7.7.1                     Buyer shall
not, and shall not permit any Affiliate to, (i) offer to acquire, acquire
or agree to acquire any assets or securities, or (ii) offer to acquire,
acquire or agree to acquire, whether by merger, consolidation, by purchasing
any portion of the assets of or

 

27

 

equity
in, or by any other manner, any business or any Person or other business
organization or division thereof, if such offer, the entering into of a
definitive agreement relating thereto or the consummation of such acquisition,
merger or consolidation could reasonably be expected to (A) impose any
delay in the expiration of any applicable waiting period or create a risk that
any authorization, consent, order, declaration or approval of any Governmental
Authority becomes necessary to consummate the Transaction, (B) create a
risk of any Governmental Authority entering an Order prohibiting the
Transaction or (C) delay or impede the consummation of the Transaction;
and

 

7.7.2                     Buyer shall
obtain the Funds, and be in a position to immediately satisfy the Funding
Obligations, in each case as promptly as reasonably practicable and in any
event on or prior to the date following February 9, 2010 on which the last
of the conditions contained in Sections 3.1 and 3.2 is fulfilled or
waived (except for those conditions which by their nature can only be fulfilled
at the Closing).  Buyer shall keep Seller
Parent apprised of all material developments or changes relating to the Buyer
Financing Agreements and the financing contemplated thereby. Upon request by
Seller Parent, prior to the Closing, Buyer shall provide to Seller Parent a
copy of any commitment letters relating to the Buyer Financing Agreements and
all exhibits, annexes and attachments thereto. In the event that the Buyer
Financing Agreements terminate or the lenders parties thereto shall advise
Buyer that they will not or may not be able to provide the financing
contemplated thereby, then Buyer shall promptly notify Seller Parent and obtain
replacement financing arrangements as soon as reasonably practicable to obtain
the Funds and satisfy the Funding Obligations. 
Notwithstanding anything contained in this Agreement to the contrary,
Buyer acknowledges and agrees that its obligations hereunder are not
conditioned in any manner whatsoever upon Buyer obtaining the Funds to satisfy
the Funding Obligations.

 

7.8                               Tax
Matters.

 

7.8.1                     Seller Parent
will cause the taxable income of the Target Companies (including the Target
Companies’ allocable share of partnership items related to its interest in
Super Media for any taxable year of Super Media ending on or before the Closing
Date under Section 706(a) of the Code) to be included in Seller Group’s
consolidated, combined or unitary Tax Returns for all Pre-Closing Tax
Periods.  Seller Parent shall cause to be
prepared and filed all required income Tax Returns of the Target Group Companies
for all Pre-Closing Tax Periods.  Buyer
agrees to cooperate with Seller Parent in the preparation of such Tax Returns
pertaining to the Target Companies and Super Media.

 

7.8.2                     Buyer shall
prepare, or caused to be prepared, and file all Tax Returns of the Target
Companies and Super Media for all Pre-Closing Tax Periods and Straddle Periods
which are required to be filed after the Closing Date, other than Tax Returns
described in Section 7.8.1. 
Buyer shall prepare all Tax Returns pursuant to this Section 7.8.2
consistent with past practices, except as required by applicable law.  Buyer shall permit Seller Parent to review
and comment on each such Tax Return described in the preceding sentence within
a reasonable period prior to filing and Buyer shall make such revisions as are
reasonably requested by Seller Parent, except: 
(i) where a contrary position is required under applicable law or (ii) to
the extent such comments, if incorporated in any such Tax Return, would cause
such Tax Return to be prepared in a manner inconsistent with past Tax Returns.

 

7.8.3                     For purposes of
this Agreement, in the case of any Taxes that are imposed and

 

28

 

are
payable for a Straddle Period, the portion of such Tax which relates to the
portion of such Tax period ending on the Closing Date shall (i) in the
case of ad valorem, property
Taxes or other Taxes measured by the amount, value or level of any item, be
deemed to be the amount of such Taxes determined by multiplying (A) the
amount, value or level of such items immediately prior to the Closing, by (B) a
fraction, the numerator of which is the number of calendar days in the portion
of the Straddle Period ending on the Closing Date and the denominator of which
is the number of calendar days in the entire Straddle Period, and (ii) in
the case of all other Taxes be determined based on an interim closing of the
books as of the close of business on the Closing Date.  The portion of such Tax that is allocable to
the portion of the Straddle Period beginning after the Closing Date shall equal
the total amount of such Tax for the Straddle Period less the amount of Tax
that is allocable to the portion of the Straddle Period ending on the Closing
Date.

 

7.8.4                     Buyer shall
promptly notify Seller Parent, in the manner set forth in Sections 8.8 and
8.9 of this Agreement, as applicable, of any inquiries, Claims,
assessments, audits or similar events with respect to Taxes relating to a
Pre-Closing Tax Period or Straddle Period for which Seller Parent may be liable
under this Agreement (such inquiry, Claim, assessment, audit or similar event,
a “Tax Matter”).  Seller Parent shall have the authority to
represent the interests of the Target Companies and Super Media and shall have
sole control of the defense, compromise or other resolution of any Tax Matter (i) involving
any combined, consolidated or unitary Tax Return of the Seller Group or its
Affiliates that includes the results of operations, the business or the assets
of the Target Companies or Super Media for any Pre-Closing Tax Period or (ii) with
respect to any Tax Return of Super Media for any Pre-Closing Tax Period, other
than any Tax Return of Super Media that was filed with respect to the SM
Conversion (such Tax Matters described in clause (i) and (ii) are
collectively referred to as “Seller Parent
Tax Matters”).  If the
resolution of a Seller Parent Tax Matter that does not involve a consolidated,
combined or unitary Tax Return of the Seller Group of its Affiliates (whether
by discharge, settlement, compromise or other disposition) would reasonably be
expected to have an adverse effect on the Tax liability of a Buyer Indemnified
Party for any Post-Closing Tax Period or the portion of a Straddle Period that
ends after the Closing Date, then such resolution shall not be effected by the
Seller Parent without obtaining the prior written consent of the Buyer (such
consent not to be unreasonably withheld, conditioned or delayed).  Buyer shall have the authority to represent
the interests of the Target Companies and Super Media and shall have control of
the defense, compromise or other resolution of any Tax Matter for any Straddle
Period (a “Buyer Tax Matter”),
provided, Buyer shall keep Seller Parent informed about the progress and
substantive aspects of any Buyer Tax Matter, and Buyer shall not resolve
(whether by discharge, settlement, compromise or other disposition) any Buyer
Tax Matter without obtaining the prior written consent of the Seller Parent,
which consent shall not be unreasonably withheld, conditioned, or delayed.  Seller Parent shall have the right to
participate in, and jointly control with Buyer, any Tax Matter that relates to
the SM Conversion (a “Conversion Tax Matter”).  Such participation and control shall include
the right to attend conferences with Taxing Authorities, being provided with a
reasonable opportunity to comment before submitting any written materials to
Taxing Authorities and making joint decisions with respect to significant
actions, including with respect to settlement, compromise or other disposition
of a Conversion Tax Matter. Notwithstanding any other provision in this Section 7.8.4
to the contrary, Sumitomo, and not the Seller Parent or Buyer, shall have the
right to represent the interests of Super Media in any Tax Matter for which
Sumitomo is indemnifying Super Media pursuant to the Redemption Agreement to
the

 

29

 

extent
established in such agreement. The provisions in this Section 7.8.4
shall govern the rights of Seller Parent and Buyer to control and participate
in any Tax Matters notwithstanding any contrary provision in Section 8.9.

 

7.8.5                     Without the
Seller Parent’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed, the Buyer shall not and it shall not permit
or cause the Target Companies or Super Media to make or change any Tax
election, amend any Tax Return for a Pre-Closing Tax Period or for a Straddle
Period, take any action or enter into any transaction that results in any
increased Tax liability of the Seller Parent or its Affiliates or that would
increase the indemnification obligation of the Seller Parent under this
Agreement unless such election, amendment, action or transaction is required by
applicable law.

 

7.8.6                     If requested by
Seller Parent, Buyer and Seller Parent shall furnish or cause to be furnished
to each other, as promptly as practicable, such information and assistance
relating to the Target Companies and Super Media as is reasonably necessary for
the preparation and filing of any Tax Return, claim for refund or other filings
relating to Tax matters, for the preparation for any Tax audit, for the
preparation for any Tax protest, for the prosecution or defense of any suit or
other proceeding relating to Tax matters. 
Buyer shall use reasonable efforts to assist Seller Parent in obtaining
information and assistance reasonably necessary for Seller Parent and its
Affiliates to make any filings with applicable taxing authorities that may be
necessary as a result of their direct or indirect ownership of J:COM through
the Closing Date including, without limitation, information and assistance
reasonably necessary to prepare and file U.S. Internal Revenue Service Form 5471
relating to the status of J:COM as a CFC and filings to claim tax-credits under
Section 902 of the Code.

 

7.8.7                     Any Tax refund,
credit or similar benefit, including any interest paid or credited with respect
thereto (“Tax Refund”), of a
Target Group Company for a Pre-Closing Tax Period or the portion of a Straddle
Period that ends on or before the date of the Closing Date shall be:

 

(a)                                  the property of
Seller Parent in the case of a refund received by a Target Company;

 

(b)                                 the property of
Seller Parent in the case of a refund received by Super Media attributed to the
SM Units held by Seller Parent or its Affiliates;

 

(c)                                  the property of
Sumitomo in the case of a refund received by Super Media attributed to the SM
Units held by Sumitomo or its Affiliates.

 

If received by Buyer, its Affiliate or a Target
Group Company, a Tax Refund shall be paid over promptly to Seller Parent or
Sumitomo, as the case may be.  Buyer
shall, if Seller Parent so requests and at Seller Parent’s reasonable expense,
cause the applicable Target Company, Super Media or other relevant entity to
file for and use its best efforts to obtain and expedite the receipt of any
refund to which Seller Parent or Sumitomo is entitled under this Section 7.8.7.  Buyer shall permit Seller Parent or Sumitomo
(as the case may be) to participate in (at their own expense) the prosecution
of any such refund claim.

 

7.8.8                     Buyer and
Seller Parent shall treat any indemnification payments made

 

30

 

pursuant
to this Agreement as adjustments to the Purchase Price for Tax purposes.

 

7.8.9                     On or prior to
the Closing Date, all tax sharing agreements between any of the Target
Companies and Super Media, on the one hand, and the Seller Group (other than
the Target Companies), on the other hand, shall be terminated and shall have no
further effect for any Post-Closing Tax Period.

 

7.8.10              Seller Parent and Buyer
shall each be responsible for the timely payment of one-half of all
documentary, stamp, stock transfer and other similar Taxes (“Transfer Taxes”) arising out the transfer
of the membership interests of the Target Companies pursuant to this
Agreement.  Seller Parent and Buyer shall use their respective
commercially reasonable efforts to minimize or avoid the incurrence of
Transfer Taxes.

 

7.9                               No
Solicitation.  Neither
Seller Parent nor any of its Affiliates nor their respective Representatives
shall initiate, solicit or knowingly encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer with respect
to a merger, consolidation or other business combination involving the Target
Group Companies or any acquisition or similar transaction (including, without
limitation, a tender or exchange offer) involving the purchase (or indirect
purchase) of (A) all or any significant portion of the assets of the
Target Group Companies and the J:COM Group taken as a whole or (B) any
shares of capital stock of any Target Group Company or J:COM Group Company (any
such proposal or offer being hereinafter referred to as an “Alternative Proposal”), or engage in any
discussions or negotiations concerning, or provide any confidential information
or data to, any Person or group relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal in each case except as required by applicable Regulations. Seller
Parent shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any third parties with respect to
any of the foregoing.

 

7.10                        Control
of the Company’s Business. 
Prior to the Closing, Sellers shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision over the
Target Group Company operations.

 

7.11                        Pre-Closing
Access to Information by Buyer.  Upon reasonable advance notice, Seller Parent
shall, and shall cause each of the Target Companies to, afford to Buyer and
Buyer’s Representatives reasonable access, during normal business hours
throughout the period prior to the Closing, to all of the Target Group
Companies’ properties, books, contracts and records and, during such period,
Seller Parent shall, and shall cause the Target Companies to, furnish promptly
to Buyer and its Representatives access to all information concerning the
Target Group Companies and all information received as a shareholder of J:COM
as may be reasonably requested by Buyer or its Representatives, in each case in
connection with any filings, applications or approvals required or contemplated
by this Agreement or for any other reason related to the Transaction; provided,
that in no event shall Seller Parent be obligated to provide any access or
information if Seller Parent determines, in good faith, that providing such
access or information may violate applicable Regulation, cause any Seller Party
or its Representatives or Affiliates to breach a confidentiality or fiduciary
obligation to which it is bound or jeopardize any recognized privilege
available to a Seller Party or a Target Group Company.  Any such information or material obtained
pursuant to this Section 7.11 shall be governed by the terms of the
NDA.

 

31

 

7.12                        Post-Closing Access to Information.

 

7.12.1              After the Closing, upon reasonable advance written notice,
Buyer and Seller
Parent shall furnish or cause to be
furnished to each other and their respective Representatives, during normal
business hours, such information (including records pertinent to the Target Group Companies and the J:COM
Group) as is reasonably necessary for
financial reporting and accounting matters in connection with the Transaction,
and, further, each
Party shall, and Buyer shall
cause the Target
Group Companies to,
grant to the other
Party and its
Representatives reasonable cooperation, access (including to make and retain
copies thereof) and staff assistance at all reasonable times and upon
reasonable notice to all books and records of the Target Group Companies
and the
J:COM Group Companies relating to
the period prior to the Closing (including work papers and correspondence with
taxing authorities) that are not otherwise protected by legal privilege; provided,
that in no event shall Buyer be obligated to provide any access or information
if Buyer determines, in good faith, that providing such access or information
may violate applicable Regulation, or cause Buyer or its Representatives
or Affiliates to breach a confidentiality or fiduciary obligation to which it
is bound.  Any such information or
material obtained pursuant to this Section 7.12.1 shall be governed
by confidentiality obligations on the terms similar to those
contained in the NDA.

 

7.12.2              After the Closing, Buyer shall, shall cause the Target Group Companies to, and
shall use its commercially reasonable efforts to cause
J:COM to,
furnish to Seller Parent and its Representatives
such information and
cooperation regarding the Target Group Companies and the J:COM Group as is reasonably requested by Seller Parent  with respect to  LGI’s financial reporting,
accounting and
compliance matters for the period during which the financial
results of the J:COM Group Companies were consolidated with the financial
results of LGI in a manner similar to the information and cooperation provided
by Super Media and J:COM prior to the Closing for similar purposes; provided, that in
no event shall Buyer be obligated to provide any access or information if Buyer
determines, in good faith, that providing such access or information may
violate applicable Regulation, cause Buyer or its Representatives or Affiliates
to breach a confidentiality or fiduciary obligation to which it is bound or
jeopardize any recognized privilege available to Buyer or any of its
Affiliates.  Any such information or
material obtained pursuant to this Section 7.12.2 shall be governed
by confidentiality obligations similar to those contained in the NDA.

 

7.12.3              Buyer
shall use its commercially reasonable efforts to promptly complete its
financial audit of the Target Group Companies for the
year ended December 31, 2009, so as to permit Seller Parent to
timely complete its audit for, and Tax filings with respect to, the same period.

 

7.12.4              Buyer
shall retain all of the books and records of the Target Group Companies
relating to the operation of the Target Group Companies prior to the Closing
Date for a period of seven (7) years after the Closing Date or such longer
time as may be required by Regulation. 
After the end of such period, before disposing of such books or records,
Buyer shall give notice to such effect to Seller Parent and give Seller Parent
an opportunity to remove and retain (at its sole cost and expense) all or any
part of such books or records as Seller Parent may select; provided,
that Seller Parent provides written notice stating its intent to retain such
materials no later than 20 Business Days after having received notice that such
materials are to be disposed of.

 

32

 

7.13                        Regulatory and Other Approvals.

 

7.13.1              Each Party shall cooperate and use its
best efforts to (i) prepare and file as soon as practicable all necessary
documentation with, (ii) effect all necessary applications, notices,
petitions, filings and other documents with, and (iii) obtain all
necessary Permits from, all Governmental Authorities, in each case as required to effectuate the Transaction
and complete the Closing.  The Parties further agree to use best
efforts to take any act or make any undertaking necessary to receive any
clearance or approval required by any Governmental Authorities or applicable
Regulation to
effectuate the Transaction and complete the Closing.

 

7.13.2              For the purpose of effectuating the Transaction
and completing the Closing, each of the Parties
shall (i) respond as promptly as practicable to any inquiries or requests
received from any Governmental Authority for additional information or
documentation, and (ii) not enter into any agreement with any Governmental
Authority not to consummate the Transaction, except with the prior consent of
the other Party.

 

7.14                        Release of
Individual Liability.

 

7.14.1              With
effect from and after the Closing Date, Buyer, for itself, its Affiliates, and the Target Group
Companies, hereby releases and waives, to the
fullest extent permitted under applicable law and their respective
Organizational Documents, any Claims against each
present and former agent, manager, director or officer of the Target Group Companies (each, together with such person’s heirs, executors or administrators,
an “Released Party” and, collectively, the “Released Parties”) arising out of, relating to or in connection with
any action or omission by such Released Party in his or her capacity as an
agent, manager, director  or officer of a Target Group Company on or before the Closing Date (including acts or omissions in connection
with such person’s service as an officer, director, statutory auditor
or other fiduciary of any entity if such service was at the request or for the
benefit of a Target
Group Company) or this Agreement or the
transactions contemplated hereby.

 

7.14.2              The
provisions of this Section 7.14  are
intended to be for the benefit of, and shall be enforceable by, in addition to
Seller Parent, each Released Party, his or her heirs, executors or
administrators and his or her other representatives.

 

7.15                        Liberty Name.  Buyer shall not acquire, nor shall the
Target Group Companies retain, any rights to the name “Liberty”
or “LGI” (or any derivation thereof) or any
trademark, trade name or symbol related thereto.  As soon as reasonably practicable after the
Closing but not later than thirty
(30) days after the Closing Date, Buyer shall
cause the Target Group Companies to remove the name “Liberty”
and “LGI” (or any derivation thereof) and all
trademarks, trade names or symbols related thereto from the properties and
assets of the Target Group Companies and within three (3) days after the
Closing Buyer shall change the name of each of the Target Group Companies to a
name that does not include the name “Liberty”
or “LGI” (or any derivation thereof).

 

7.16                        Non-Competition.

 

7.16.1              Except as provided in Section 7.16.3,
Seller Parent
undertakes
with the Buyer that it and its Affiliates will not, within a
period of three (3) years after the Closing Date (the 

 

33

 

“Restricted Period”),
carry on, be engaged in or be economically interested in any business in the
Japanese market that is directly competitive to the pay television,
telephony and internet broadband access services provided by J:COM as at the Effective Date.

 

7.16.2              Seller Parent undertakes with the Buyer that
it and its Affiliates will not, during the Restricted
Period, induce or seek to induce any present director or employee of
J:COM to
become employed whether as director, employee, consultant or
otherwise by Seller Partner or its Affiliates, whether or not such director or employee would thereby commit a
breach of his contract of service, except for (i) any directors, statutory auditors or employees with whom
Seller Parent or its Affiliates have an employment or consulting relationship
as of the Effective Date, and (ii) a person who responds (without any form of approach or solicitation by
or on behalf of any Seller Parent or its Affiliates) to a
general public advertisement made in the ordinary course of business.

 

7.16.3              The restrictions in this Section 7.16
shall not operate to prohibit any Seller Parent or its Affiliates from:

 

(a)                                  creating,
distributing, licensing or promoting television programming;

 

(b)                                 the
cable television, telephony and internet broadband business of Seller Parent’s
Affiliate serving U.S. military bases in Okinawa;

 

(c)                                  holding the
shares of Sumitomo that are held by Seller Parent or its Affiliates as of
the Effective Date;

 

(d)                                 holding or being interested in
up to three percent (3%) of the outstanding issued share capital of a company
listed on any recognised stock exchange;

 

(e)                                  carrying on, being engaged in
or being economically interested in any business outside of Japan,
except in an entity  whose principal business is the pay television,
telephony and internet broadband business in Japan; or

 

(f)                                    fulfilling any obligation
pursuant to this Agreement.

 

7.16.4              Seller Parent agrees that the restrictions
contained in this Section 7.16 are no greater than is reasonable
and necessary for the protection of the interests of the Buyer and the Target
Group Companies but if any such restriction shall be held to be void but would
be valid if deleted in part or reduced in application, such restriction shall
apply with such deletion or modification as may be necessary to make it valid
and enforceable.

 

7.17                        Updates to Seller Disclosure Schedule. 
From time to time prior to three (3) Business Days preceding the
anticipated Closing Date, Seller Parent may at its option supplement or amend
and deliver updates to the Schedule 5.20  (each a “Schedule 5.20 Update”) that are necessary to complete or
correct any representation or warranty of Seller Parent given in Section 5.20
that has been rendered inaccurate since the date of this Agreement.  Notwithstanding the foregoing, a Schedule
5.20 Update shall not be given effect unless such update is necessitated by
events subsequent to the Effective Date or items that have come to Seller Parent’s Knowledge
after the Effective Date with respect to representations and warranties
repeated or made as of the Closing Date.  In such
event, such written notice shall be deemed to have amended the Disclosure Schedule and to have (i) qualified the 

 

34

 

representations and warranties contained in Section 5.20  for the purposes of determining whether
the Closing conditions
specified in Section 3.2.2  have been satisfied, unless such omission or event would be reasonably
likely to have, individually or in the aggregate with the events described in
other written notices previously received by Buyer, a Material Adverse Effect, and (ii) such written notice shall be deemed to
have amended Schedule 5.20 and modified the representations  and warranties contained in Section 5.20  for purposes of determining Buyer’s right
to make a Claim pursuant to
Section 8.

 

7.18                        Target Company Designees  Buyer may make arrangements
with the Target Company Designees to remain in their positions as directors of
J:COM until the 2010 AGM, on terms that may be mutually agreed between Buyer
and each Target Company Designee.

 

7.19                        Further Assurances.  Upon
the terms and subject to the conditions contained herein, the Parties agree (i) to
use all commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the Transaction; (ii) to
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the Transaction; and (iii) to
cooperate with each other in connection with the foregoing.

 

Section 8.                                          Indemnification

 

8.1                               Survival of Representations and Warranties.

 

8.1.1                     The representations and warranties of Seller Parent contained
in Section 5 and the representations and warranties of Buyer
contained in Section 6 shall survive for (and
any Claim for breach of such representations and warranties must be asserted
within) a period of eighteen
(18) months from the Closing Date and
shall thereafter be of no further force or effect; provided,
however, that:

 

(a)                                  the representations and warranties contained in Sections
5.2, 5.5.1, 5.5.5(b),
5.5.5(c), 5.5.6(b), 5.5.6(c) and
6.2  shall
survive for (and any Claim for breach of such representations and warranties
must be asserted within) a period of five (5) years from the Closing Date;

 

(b)                                 the representations and warranties of Seller Parent set forth
in Section 5.11 shall survive until (and any Claim for breach of
such representations and warranties must be asserted no later than) thirty (30) days after the expiration of the applicable
statute of limitations (giving effect to any waiver or extension thereof);

 

(c)                                  the representations and warranties contained in Section 5.3 (with respect to any Claim by
Sumitomo) shall survive for (and any Claim
for breach of such representations and warranties must be asserted within) a
period of one hundred eighty (180) days from the Closing Date; and

 

(d)                                 the representations and warranties contained in Section 5.20 shall
survive for (and any Claim for breach of such representations and warranties
must be asserted within) a period of one (1) year from the
Closing Date.

 

35

 

8.1.2                     Each period set forth in Section 8.1.1
during which a Claim may be made by a
Party for breach of the  respective representations
and warranties is
referred to herein as a “Claim Period”.

 

8.1.3                     The covenants set forth in Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.9, 7.10, 7.11
and 7.13 of this Agreement shall not
survive the Closing. Any covenant that is to be performed
after the Closing shall survive until the last date on which such covenant is
to be performed.

 

8.1.4                     If written notice of a Claim meeting the requirements of Section 8.8
has been given prior to the expiration of the applicable Claim Period by a Party in whose favor such
representations, warranties or covenants were made, then the relevant
representations, warranties or covenants shall survive as to such Claim, until
the Claim has been finally resolved.

 

8.2                               General Indemnification by Seller Parent.

 

8.2.1                     Seller Parent shall indemnify and hold harmless Buyer, its
Affiliates and their respective Representatives, successors and assigns
(collectively, the “Buyer Indemnified Persons”)
from and against any and all Damages as a result of, based upon or arising
from:

 

(a)                                  Any breach of any representation or warranty by Seller Parent
contained in this Agreement  or in any certificate delivered by
or on behalf of Seller Parent pursuant to this Agreement;

 

(b)                                 Any breach by Seller Parent of, or any failure by Seller
Parent to perform or comply with, any of its obligations contained in this
Agreement;

 

(c)                                  Any Taxes imposed on a Target Group Company for any
Pre-Closing Tax Period and the portion of any Straddle Period ending on the
Closing Date, including such Taxes imposed on a Target Group Company under
Treasury Regulation Section 1.1502-6, as a transferee, successor or by
contract; or

 

(d)                                 The Mezzanine Loan or the Mezzanine Financing Documents.

 

8.2.2                     Except as provided in Section 8.2.3 or Claims by Sumitomo or its
Affiliates related to the Transaction, Seller
Parent shall also indemnify and hold harmless each of the Buyer Indemnified
Persons from and against any and all Damages resulting from, based upon or
arising from the ownership, management or operations of any Target Group
Company prior to the Closing Date.

 

8.2.3                     Notwithstanding any provision to the contrary in this Agreement, Seller
Parent shall not indemnify or hold harmless any Buyer Indemnified Person under
this Section 8.2 from any Damages incurred as a result of, based
upon or arising from the SM Conversion to the extent such Damages are
attributable to Taxes imposed on Sumitomo or imposed on Super Media with
respect to Sumitomo’s interest in Super Media (together, the “Sumitomo LLC Conversion Taxes”).

 

8.3                               Seller Parent Liability Limitations.

 

8.3.1                     Notwithstanding any other provision in this Agreement to the
contrary, Seller 

 

36

 

Parent
shall not have any liability for breach of its representations and warranties related to the Transaction
unless: (i) the
Damages with respect to the particular act, circumstance, development, event,
fact, occurrence or omission exceeds ¥100,000,000 (One Hundred Million Yen)
(the “De Minimis Threshold”), aggregating all
Damages arising from all related acts, circumstances, developments, events,
facts, occurrences or omissions, and (ii) the aggregate of all Damages in
excess of the De Minimis Threshold for which Seller Parent would be liable,
exceeds on a cumulative basis ¥2,000,000,000 (Two Billion Yen) (the “Deductible”), and then only to the extent such Damages
exceed the Deductible.  Furthermore, (A) Seller Parent’s aggregate liability for breach of its representations and
warranties related to the Transaction, other than the representations and
warranties in Sections 5.2 and 5.5,  shall
in no event exceed ¥35,000,000,000 (Thirty Five Billion Yen), and (B) Seller
Parent’s aggregate liability for breach of its representations and warranties related to the
Transaction, including Sections 5.2 and 5.5, shall in no event exceed 100% of the Purchase Price.

 

8.3.2                     Notwithstanding any other provision in this Agreement to the
contrary, no Buyer Indemnified
Person shall be entitled to indemnification for any Damages
relating to any matter to the extent that any Buyer Indemnified Person has
already been compensated for such Damages.

 

8.3.3                     No Buyer Indemnified Person shall be entitled to Claim that any
fact or matter constitutes a breach by Seller Parent of its representations and
warranties under Section 5.20 to the extent that Buyer had
knowledge of such fact or matter prior to the Closing  (and for purposes of this Section 8.3.3, the
documents and materials disclosed to Buyer or its Representatives in the course
of its due diligence, and their contents, are deemed to be known to Buyer) or
such fact or matter is fairly disclosed herein, in the Disclosure Schedules or in
the Schedule 5.20 Update.

 

8.4                               Buyer
Knowledge.  Except as
provided in Section 8.3.3, the right of Buyer Indemnified Persons
to indemnification, payment of Damages or for other remedies based on any
representation, warranty, covenant or obligation of Seller Parent contained in
this Agreement shall not be affected by any investigation conducted with
respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation.

 

8.5                               Indemnification
by Buyer.  Buyer shall indemnify and hold harmless Seller
Parent and its Affiliates
and their respective Representatives, successors and assigns (collectively, the
“Seller Parent Indemnified Persons”)
from and against any and all Damages as a result of, based upon or arising
from:

 

8.5.1                     Any breach of any representation or warranty by Buyer
contained in this Agreement or in any certificate delivered by or on behalf of
Buyer pursuant to this Agreement; or

 

8.5.2                     Any breach by Buyer of, or any failure by Buyer to perform or
comply with, any of its obligations contained in this Agreement.

 

8.6                               Buyer
Liability Limitations.  Notwithstanding any other provision in
this Agreement 

 

37

 

to the contrary, Buyer shall not have any liability for breach of its
representations and warranties related to the Transaction unless (i) the Damages with respect
to the particular act, circumstance, development, event, fact, occurrence or
omission exceeds the De Minimis Threshold, aggregating all Damages arising from
all related acts, circumstances, developments, events, facts, occurrences or
omissions, and (ii) the aggregate of all Damages in excess of the De
Minimis Threshold for which Buyer would be liable exceeds on a cumulative basis
the Deductible, and then only to the extent such Damages exceed the Deductible.  Furthermore, (A) Buyer’s aggregate liability for breach of its
representations and warranties related to the Transaction, other than the
representations and warranties in Sections 6.2 and 6.3,  shall in no event exceed ¥35,000,000,000 (Thirty Five
Billion Yen), and (B) Buyer’s aggregate liability for breach of its
representations and warranties related to the Transaction, including Sections
6.2 and 6.3, shall in no event exceed 100% of the
Purchase Price.

 

8.7                               Scope of Damages.

 

8.7.1                     The amount of any Damages payable by
a Party under this Agreement (“Indemnitor”)
shall be net of any amounts actually recovered by the Indemnified Person under
applicable insurance policies or from any other Person alleged to be
responsible therefor.  If the Indemnified
Person is entitled to recover from any insurer or third party any sum in
respect of any matter giving rise to a Claim for indemnification under this
Agreement, the Indemnified Person shall undertake all commercially reasonable
and appropriate steps to enforce such recovery. If the Indemnified Person
receives any amounts under applicable insurance policies, or from any other
Person alleged to be responsible for any Damages, subsequent to an applicable
indemnification payment by the Indemnitor, then such Indemnified Person shall
promptly reimburse the Indemnitor for any payment made or expense incurred by
such Indemnitor in connection with providing such indemnification payment up to
the amount received by the Indemnified Person, net of any expenses incurred by
such Indemnified Person in collecting such amount.  The amount
of any Damages payable by an Indemnitor shall be net of any Tax benefits realized by the
Indemnified Person as a result of such Damages.

 

8.7.2                     Restriction on Claims. The
remedies expressly set forth in this Agreement shall provide the exclusive
remedies for, and each Party hereby waives any Claim for any other remedy with
respect to, any misrepresentation, breach of representation, warranty or
covenant, or other Claim arising out of this Agreement or the Transaction,
including, without limitation, any Claim in respect of any certificate or other
document delivered pursuant to this Agreement; provided,
however, that it is understood and
agreed that, in addition to the remedies specifically set forth in this
Agreement, each Party shall be entitled to specific performance and injunctive
relief as a remedy where available under applicable law.  Following the Closing, each Party hereby agrees to limit its
recourse for breach of representation, warranty or covenant by another Party
hereunder, and not make any Claim for any Damages or other matter, under,
relating to or arising out of such breach, whether based on contract, tort,
strict liability, other Regulations or otherwise, except for Claims for
indemnification pursuant to Section 8.2 or Section 8.5.

 

8.7.3       No Consequential Damages. Notwithstanding
anything to the contrary contained in this Agreement, no Party shall be liable
under a Claim of indemnification for special, punitive, exemplary,
consequential, or indirect damages, internal administrative and 

 

38

 

overhead costs, any potential or actual
reduction in value of the Target Group Companies or the J:COM Group Companies beyond
the actual damage incurred, any amounts in connection with arguments that
the Purchase Price was calculated upon incorrect assumptions, or lost profits or revenues, whether based on contract, tort, strict
liability, other Regulations or otherwise, and whether or not arising from another
Party’s sole, joint or concurrent negligence, strict liability or other fault.

 

8.8                               Notice of Claims. 
Any Indemnified Person, if seeking indemnification hereunder, shall
promptly, within the
relevant Claim Period
provided for in Section 8.1, give to the Indemnitor a written notice (a “Claim Notice”) describing in reasonable detail the facts
giving rise to any Claims for indemnification hereunder and shall include in
such Claim Notice (if then known) the amount or the method of computation of
the amount of Damages, and a reference to the provision of this Agreement
or any agreement, certificate or instrument executed pursuant hereto or in
connection herewith upon which such Claim is based; provided,
however, that a Claim Notice in respect
of any action at law or suit in equity by or against a third party as to which
indemnification will be sought shall be given promptly after the action or suit
is commenced; and provided further, that failure to
give such notice shall not relieve the Indemnitor of its obligations hereunder
except to the extent it shall have been prejudiced by such failure.

 

8.9                               Third-Party Claims. 
If a Claim by a third party is made against an Indemnified Person, and
if such Indemnified Person intends to seek indemnity with respect thereto under
this Section 8, such Indemnified Person shall promptly notify the
Indemnitor in writing of such Claims, setting forth such Claims in reasonable
detail.  The Indemnitor shall have twenty
(20) Business Days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and the Indemnified Person shall cooperate with
it in connection therewith; provided, however,
that the Indemnified Person may participate in such settlement or defense
through counsel chosen by such Indemnified Person and paid at its own expense;
and provided further, that if in the
opinion of counsel for such Indemnified Person there is a reasonable likelihood
of a conflict of interest between the Indemnitor and the Indemnified Person,
the Indemnitor shall be responsible for reasonable fees and expenses of one
counsel to such Indemnified Person in connection with such defense.  The Indemnified Person shall not pay or
settle any such Claim without the consent of the Indemnitor.  If the Indemnitor does not notify the
Indemnified Person within twenty (20) Business Days after receipt of the
Indemnified Person’s notice of a Claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Person shall have the right to
undertake, at Indemnitor’s cost, risk and expense, the defense of the Claim but
shall not thereby waive any right to indemnity therefor pursuant to this
Agreement.  The Indemnitor shall not,
except with the consent of the Indemnified Person, enter into any settlement
that includes any obligations of the Indemnified Person other than the payment
of money by the Indemnitor on its behalf and that does not include as an
unconditional term thereof the giving by the Person or Persons asserting such
Claim to all Indemnified Persons (i.e., Seller Parent Indemnified Persons or
Buyer Indemnified Persons, as the case may be) of an unconditional release from
all liability with respect to such Claim or consent to entry of any judgment.

 

39

 

Section 9.                                          Termination

 

9.1                               Termination.

 

9.1.1                     This Agreement may be terminated or abandoned at any time
prior to the Closing:

 

(a)                                  by the mutual written agreement of Buyer and Seller Parent;

 

(b)                                 by Buyer, if there has been a material violation or breach by
Seller Parent of any covenant, representation or warranty contained in this
Agreement  which would prevent the satisfaction of any condition to the
obligations of Buyer to effect the Closing, and such
violation or breach has not been waived by Buyer or cured by Seller Parent
within thirty (30) days after written notice thereof
from Buyer; provided, however,
that if, at the end of such thirty (30) day period, Seller Parent is
endeavoring in good faith, and proceeding diligently, to cure such breach,
Seller Parent shall have an additional thirty (30) days in which to effect such
cure; or

 

(c)                                  by Seller Parent, if there has been a
material violation or breach by Buyer of any covenant, representation or
warranty contained in this Agreement  which would prevent the
satisfaction of any condition to the obligations of Seller Parent to effect the
Closing, and such violation or breach has not been waived by Seller
Parent or cured by Buyer within thirty (30) days
after written notice thereof by Seller Parent (provided
that the failure of Buyer to deliver the Purchase Price at the
Closing as required hereunder shall not be subject to any materiality condition or cure period unless otherwise agreed to in
writing by Seller Parent);

 

(d)                                 by Buyer or Seller Parent, by written notice to the other, on
or after April 30, 2010, or such later date as Buyer and Seller Parent may
agree in writing.

 

9.1.2                     Notwithstanding the above, a Party shall not be allowed to
exercise any right of termination pursuant to Section 9.1.1 if the
event giving rise to the termination right shall be due to the failure of such
Party to perform or observe in any material respect any of the covenants or
agreements hereunder to be performed or observed by such Party.

 

9.1.3                     In the event this Agreement is terminated in accordance with Section 9.1.1,
no Party shall have any further liability hereunder, except for its breach
of this Agreement.  Buyer acknowledges and agrees that
any failure of Buyer for any reason to obtain the Funds, or to be in a position
to immediately satisfy the Funding Obligations, in either case on or prior to
the Closing Date shall be a material breach by Buyer of this Agreement, and
Buyer shall be liable to Sellers for such breach notwithstanding any
termination of this Agreement.

 

9.1.4                     The accrued rights and Liabilities
of the Parties at the date of termination of this Agreement shall not be
affected by the termination or expiration of this Agreement.

 

9.1.5                     Regardless of the reason for termination, the NDA, the last
sentence of Section 7.11, Sections
9.1.3, 9.1.4,
9.1.5, 9.1.6  and Section 10
will survive any termination of this Agreement.

 

9.1.6                     Upon termination of this Agreement by either Party for any
reason, Buyer shall return or destroy all documents and other materials
relating to the Target Group Companies, the assets of the Target Group
Companies, the J:COM Group Companies and the

 

40

 

assets of
the J:COM Group Companies, whether obtained before or after the execution of
this Agreement, and all information received by Buyer from the Seller Parent
with respect to the Target Group Companies, the assets of the Target Group
Companies, the J:COM Group Companies and the assets of the J:COM Group
Companies, shall remain subject to the NDA.

 

Section 10.                                   Miscellaneous

 

10.1                        Assignment.  Neither this
Agreement nor any of the rights or obligations hereunder may be assigned by any Party without
the prior written consent of each other Party. Any attempted assignment shall be void ab initio. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their respective
permitted successors and assigns, and no other Person shall have any right,
benefit or obligation hereunder.

 

10.2                        Notices.

 

10.2.1              Any
notice, request, instruction or other document to be given hereunder by any
Party to another Party shall be in writing and delivered
in person, by courier, by facsimile transmission, sent by a recognized
overnight delivery service or mailed by registered or certified mail, postage
prepaid, return receipt requested to the address for such Party set forth below or
to such other address that the receiving Party may have provided for the
purpose of notice in accordance with this Section 10.2. Any Party
may, from time to time, designate any other address to which any such notice to
it or such Party shall be sent.

 

If to Seller
Parent:

 

LGI
International Inc.

12300 Liberty Boulevard

Englewood, CO 
80112  USA

Attn: Elizabeth M. Markowski

Fax: 
+1-303-220-6691

Email:  liz@lgi.com

 

With copies to:

 

Latham & Watkins

Marunouchi Building, 32nd
Floor

2-4-1 Marunouchi,
Chiyoda-ku

Tokyo 100-6332

Japan

Attn: Michael J. Yoshii

Fax: +81.3.6212.7801

Email:
michael.yoshii@lw.com

 

Sherman &
Howard L.L.C. 

633 17th Street, Suite 2900 

Denver, CO 80202 

Attn: Joanne Norris 

Facsimile: +1-303 298-0940 

E-Mail:
jnorris@shermanhoward.com

 

41

 

If to Buyer:

 

KDDI CORPORATION

Garden Air Tower, 3-10-10,
Iidabashi, Chiyoda-ku,

Tokyo 102-8460, Japan

Attn: Legal Department

Fax: +81.3.6678.0319

Tel: +81.3.6678.0732

 

With a copy to:

 

Skadden Arps

Izumi Garden Tower 21F

Tokyo-to Minato-ku Roppongi
1-6-1

Tokyo 106-6021

Japan

Attn: Mitsuhiro Kamiya

Fax: + 81.3.3568.2626

Email: mitsuhiro.kamiya@skadden.com

 

10.2.2              A notice or other communication
delivered by hand, post or courier shall be deemed to have been given when
delivered.

 

10.2.3              A notice given by facsimile shall be
deemed to have been given when the facsimile was sent, provided that an
appropriate machine generated confirmation of full receipt was received by the
sender within the normal office hours of the recipient.

 

10.3                        Choice of Law.  This
Agreement shall be construed, interpreted and the rights of the Parties
determined in accordance with the law of Japan without regard to any conflict of law
principles that would result in the application of any law other than the law
of Japan.

 

10.4                        Entire Agreement; Amendments and Waivers;
Interpretation.  This Agreement, the NDA and all exhibits and schedules hereto
and thereto shall constitute the entire agreement among the Parties pertaining
to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties.  No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
Party to be bound thereby.  No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.  No failure or delay on the part of any Party
hereto to exercise any right or remedy under this Agreement shall operate as a
waiver of such right or remedy, and no single or partial exercise of any such
right or remedy shall preclude any other or further exercise thereof.  No Party shall be deemed to have waived any
Claim arising out of this Agreement, or any right or remedy under this
Agreement, unless the waiver of such Claim, right or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such Party.

 

42

 

10.5                        Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

 

10.6                        Invalidity.  If any
provisions of this Agreement shall be held to be illegal, invalid or
unenforceable, the Parties agree that such provisions will be enforced to the
maximum extent permissible so as to effect the intent of the Parties, and the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.  If necessary to effect the intent of the
Parties, the Parties will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.

 

10.7                        Headings.  The headings
of the Sections herein are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this
Agreement.

 

10.8                        Expenses.  Except as
otherwise specifically provided in this Agreement, each Party will pay its own
expenses incident to this Agreement and the Transaction, including legal and
accounting fees and disbursements.

 

10.9                        Schedules.  The schedules
and exhibits referenced in this Agreement are a material part hereof and shall
be treated as if fully incorporated into the body of the Agreement.  Seller Parent may, at its option, include in
the Disclosure Schedule items that are not material in order to avoid any
misunderstanding, and any such inclusion, or any references to US Dollar or Yen
amounts, shall not be deemed to be an acknowledgment or representation that
such items are material, to establish any standard of materiality or to define
further the meaning of such terms for purposes of this Agreement.  Information disclosed in any section of the
Disclosure Schedule shall constitute a disclosure for purposes of all other sections
of the Disclosure Schedule notwithstanding the lack of specific cross-reference
thereto, but only to the extent the applicability of such disclosure to such
other sections of the Disclosure Schedule is reasonably apparent.  The mere inclusion of an item in the
Disclosure Schedule shall not be deemed an admission by Seller Parent that such
item represents a material exception or fact, event, or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect.

 

10.10                 Public Announcements.

 

10.10.1       Except
as provided in Section 10.10.2, no public announcement or press
release regarding this Agreement or the Transaction shall be made or issued by
or on behalf of any Party or its Affiliates, without the prior written approval
of the other Parties (not to be unreasonably withheld or delayed).

 

10.10.2       Section 10.10.1 shall not apply in the event the public announcement is required
by Regulation or any regulatory body or the rules and regulations of any
recognized stock exchange on which the securities of a Party or its holding
company are listed or quoted; provided that so far as it is lawful and
practical to do so prior to making such public announcement, the Party with an
obligation to make an announcement shall provide a draft of its proposed public announcement
(other than LGI’s Form 8-K filing) to the other Party in advance of such
public announcement and consider in good faith the 

 

43

 

comments of the other Party before making such public announcement.

 

10.11                 No Third-Party Beneficiaries. 
This Agreement is for the sole benefit of the Parties hereto (and their
permitted successors and assigns), and nothing herein expressed or implied
shall give, or be construed to give, to any Person any legal or equitable
rights hereunder, except (i) the Parties hereto and such permitted
successors and assigns, (ii) the Indemnified Persons (with respect to Section 8),
and the Released Parties (with respect to Section 7.14).

 

10.12                 Remedies.  The rights
and remedies of the Parties hereto shall be cumulative (and not
alternative).  Each Party acknowledges
and agrees that the other Party would be damaged irreparably in the event any
of the provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. 
Accordingly, each Party agrees that the other Party shall be entitled to
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action or proceeding in addition to any other remedy
to which it may be entitled, at law or in equity.

 

10.13                 Dispute Resolution.

 

10.13.1       The
Parties shall make a diligent, good faith attempt to resolve any dispute
concerning the validity, interpretation, performance or breach of this
Agreement or otherwise arising in connection with this Agreement before
commencing dispute resolution by arbitration and, with
respect to any dispute regarding amounts owed under this Agreement, pay such
undisputed amounts pursuant to the terms hereof.  If, despite the Parties’ diligent, good faith
attempt to resolve such dispute pursuant to the first sentence of this Section 10.13.1,
the Parties do not resolve such dispute, then at the written request of any
Party, the chief executive officers of each disputing Party (or such other
senior officer that a Party’s chief executive officer designates) shall meet at
any mutually agreed location within thirty (30) days of receipt of such request
to resolve the dispute.  If, despite such
meeting, the Parties do not resolve the dispute, or if no such meeting takes
place within such time despite one Party’s attempts therefor, any Party may
commence an arbitration by submitting a request for arbitration to the other
Parties and the International Chamber of Commerce Secretariat in accordance
with this Section 10.13.1. 
Arbitration shall be the sole remedy for any dispute  arising
out of or in connection with this Agreement, and shall be binding and final
among the Parties.

 

10.13.2       The
arbitration shall be administered by the International Chamber of Commerce and  conducted
in accordance with the ICC Rules.  The
arbitral tribunal shall consist of three arbitrators appointed pursuant to the
ICC Rules, provided
that, in any event, (i) no arbitrator
shall be a present or former employee or agent of, or consultant or counsel to,
any Party or any Affiliate thereof, and (ii) no more than one arbitrator shall be a national of
Japan and no more than one arbitrator shall be a national of the
United States.

 

10.13.3       The seat of the arbitration shall be Singapore and English shall be the language of the
arbitration proceedings.  The arbitrators
shall apply, and shall be bound by, the applicable rules of law and the
terms of this Agreement. Unless the Parties agree otherwise in writing, the
arbitrators shall be permitted to order the Parties and their Affiliates to
engage in discovery (including the taking of depositions).  The arbitrators shall decide the dispute by majority
of the arbitral tribunal and shall state in writing the reasons for its 

 

44

 

decision.  Any monetary award of
the arbitral tribunal shall be paid by the time period specified by the
arbitral tribunal by wire transfer to an account designated in writing by the
Party receiving such award.

 

10.13.4       The Parties waive any rights to appeal or to review
such award by any court or tribunal, and such award shall be final and
binding.  The Parties further undertake
to carry out without delay the provisions of any arbitral award or order, and
each agrees that any such award or order shall be conclusive and may be
enforced in any jurisdiction (and the Parties shall submit to any such
jurisdiction) by suit on the arbitral award or by any other manner provided by
law.  A Party may disclose the contents
of an award of the arbitral tribunal only to Affiliates, its lenders to the
extent required under its financing agreements, governmental authorities or
other Persons as required by applicable Regulation.

 

10.13.5       The costs of such arbitration shall be determined by
and allocated between the Parties by the arbitral tribunal in its award.

 

10.14                 Language.  The English language version of this Agreement shall
be the controlling version.  Any
translations made of this Agreement shall be for the purpose of convenience
only and shall have no legal effect.

 

10.15                 Non-Recourse.  No past, present or future Representative of any Party
or any Affiliate or otherwise related Person of any Party shall have any
liability for any obligations or liabilities of the Parties under this
Agreement of or for any Claim based on, arising out of or relating to, the
negotiation, execution or performance of this Agreement or the Transaction
(whether any such Claim is based on any theory of contract or tort or piercing
of the corporate, limited liability company or limited partnership veil, or
otherwise).

 

[Signature Pages Follow]

 

45

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Sale and Purchase Agreement as of the date first written
above.

 

	
   

  	
  Buyer:

  
	
   

  	
   

  
	
   

  	
  KDDI CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tadashi Onodera

  
	
   

  	
   

  	
  Name:

  	
  Tadashi Onodera

  
	
   

  	
   

  	
  Title:

  	
  President and Chairman

  

 

Signature page to Sale
and Purchase Agreement

 

 

	
   

  	
  Seller Parent:

  
	
   

  	
   

  
	
   

  	
  LGI INTERNATIONAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth M. Markowski

  
	
   

  	
   

  	
  Name:

  	
  Elizabeth M. Markowski

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President, General Counsel & Secretary

  

 

Signature page to Sale
and Purchase Agreement

 

 

Table of Contents

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
  1.2

  	
   

  	
  Additional
  Definitions; Interpretation

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Closing Transactions

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Transaction

  	
   

  	
  9

  
	
  2.2

  	
   

  	
  Purchase Price

  	
   

  	
  9

  
	
  2.3

  	
   

  	
  Mezzanine Loan Payoff

  	
   

  	
  10

  
	
  2.4

  	
   

  	
  2009 J:COM Dividend

  	
   

  	
  10

  
	
  2.5

  	
   

  	
  Payments

  	
   

  	
  11

  
	
  2.6

  	
   

  	
  Closing Date

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Conditions Precedent to Closing Obligations

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Conditions to Each
  Party’s Obligation to Effect the Closing

  	
   

  	
  11

  
	
  3.2

  	
   

  	
  Conditions to
  Obligation of Buyer to Effect the Closing

  	
   

  	
  11

  
	
  3.3

  	
   

  	
  Conditions to
  Obligation of Seller Parent to Effect the Closing

  	
   

  	
  12

  
	
  3.4

  	
   

  	
  Frustration of Closing
  Conditions

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Closing Deliveries

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Deliveries at Closing
  by Seller Parent

  	
   

  	
  13

  
	
  4.2

  	
   

  	
  Deliveries at Closing
  by Buyer

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Representations and Warranties of Seller Parent

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Existence

  	
   

  	
  14

  
	
  5.2

  	
   

  	
  Authorization

  	
   

  	
  14

  
	
  5.3

  	
   

  	
  No
  Conflicts

  	
   

  	
  15

  
	
  5.4

  	
   

  	
  No Proceedings

  	
   

  	
  15

  
	
  5.5

  	
   

  	
  Ownership

  	
   

  	
  15

  
	
  5.6

  	
   

  	
  Shareholder Agreements

  	
   

  	
  17

  
	
  5.7

  	
   

  	
  Subsidiaries and Equity Investments

  	
   

  	
  17

  
	
  5.8

  	
   

  	
  Financial Statements

  	
   

  	
  17

  
	
  5.9

  	
   

  	
  Title to Assets

  	
   

  	
  18

  
	
  5.10

  	
   

  	
  Liabilities

  	
   

  	
  18

  
	
  5.11

  	
   

  	
  Taxes

  	
   

  	
  18

  
	
  5.12

  	
   

  	
  No Claims

  	
   

  	
  19

  
	
  5.13

  	
   

  	
  Absence of Certain
  Changes or Events

  	
   

  	
  19

  
	
  5.14

  	
   

  	
  Contracts

  	
   

  	
  20

  
	
  5.15

  	
   

  	
  Organizational Documents

  	
   

  	
  21

  
	
  5.16

  	
   

  	
  Books and Records

  	
   

  	
  21

  
	
  5.17

  	
   

  	
  No Employees

  	
   

  	
  21

  
	
  5.18

  	
   

  	
  Compliance with Law

  	
   

  	
  21

  
	
  5.19

  	
   

  	
  Permits

  	
   

  	
  21

  
	
  5.20

  	
   

  	
  J:COM

  	
   

  	
  21

  
	
  5.21

  	
   

  	
  No Brokers

  	
   

  	
  23

  
	
  5.22

  	
   

  	
  No Other
  Representations

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Representations and Warranties of Buyer

  	
   

  	
  24

  

 

1

 

	
  6.1

  	
   

  	
  Organization of Buyer

  	
   

  	
  24

  
	
  6.2

  	
   

  	
  Authorization

  	
   

  	
  24

  
	
  6.3

  	
   

  	
  No Conflict or
  Violation

  	
   

  	
  24

  
	
  6.4

  	
   

  	
  No Claims

  	
   

  	
  24

  
	
  6.5

  	
   

  	
  Financing

  	
   

  	
  24

  
	
  6.6

  	
   

  	
  Investment
  Representations

  	
   

  	
  25

  
	
  6.7

  	
   

  	
  No Other
  Representations

  	
   

  	
  25

  
	
  6.8

  	
   

  	
  No Brokers

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Covenants and Agreements

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Commercially Reasonable
  Efforts

  	
   

  	
  25

  
	
  7.2

  	
   

  	
  LLC Conversions

  	
   

  	
  25

  
	
  7.3

  	
   

  	
  Sumitomo Redemption

  	
   

  	
  25

  
	
  7.4

  	
   

  	
  2009 Final Dividend

  	
   

  	
  26

  
	
  7.5

  	
   

  	
  Interim Operations of Target Group Companies

  	
   

  	
  26

  
	
  7.6

  	
   

  	
  Interim Operations of
  J:COM

  	
   

  	
  27

  
	
  7.7

  	
   

  	
  Covenants of Buyer

  	
   

  	
  27

  
	
  7.8

  	
   

  	
  Tax Matters

  	
   

  	
  28

  
	
  7.9

  	
   

  	
  No Solicitation

  	
   

  	
  31

  
	
  7.10

  	
   

  	
  Control of the
  Company’s Business

  	
   

  	
  31

  
	
  7.11

  	
   

  	
  Pre-Closing Access
  to Information by Buyer

  	
   

  	
  31

  
	
  7.12

  	
   

  	
  Post-Closing Access to Information

  	
   

  	
  32

  
	
  7.13

  	
   

  	
  Regulatory and Other
  Approvals

  	
   

  	
  33

  
	
  7.14

  	
   

  	
  Release of Individual Liability

  	
   

  	
  33

  
	
  7.15

  	
   

  	
  Liberty Name

  	
   

  	
  33

  
	
  7.16

  	
   

  	
  Non-Competition

  	
   

  	
  33

  
	
  7.17

  	
   

  	
  Updates to Seller
  Disclosure Schedule

  	
   

  	
  34

  
	
  7.18

  	
   

  	
  Target Company Designees

  	
   

  	
  35

  
	
  7.19

  	
   

  	
  Further Assurances

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Indemnification

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  	
  35

  
	
  8.2

  	
   

  	
  General Indemnification
  by Seller Parent

  	
   

  	
  36

  
	
  8.3

  	
   

  	
  Seller Parent Liability Limitations

  	
   

  	
  36

  
	
  8.4

  	
   

  	
  Buyer Knowledge

  	
   

  	
  37

  
	
  8.5

  	
   

  	
  Indemnification by Buyer

  	
   

  	
  37

  
	
  8.6

  	
   

  	
  Buyer Liability Limitations

  	
   

  	
  37

  
	
  8.7

  	
   

  	
  Scope of Damages

  	
   

  	
  38

  
	
  8.8

  	
   

  	
  Notice of Claims

  	
   

  	
  39

  
	
  8.9

  	
   

  	
  Third-Party Claims

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Termination

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Termination

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Miscellaneous

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Assignment

  	
   

  	
  41

  
	
  10.2

  	
   

  	
  Notices

  	
   

  	
  41

  
	
  10.3

  	
   

  	
  Choice of Law

  	
   

  	
  42

  
	
  10.4

  	
   

  	
  Entire Agreement;
  Amendments and Waivers; Interpretation

  	
   

  	
  42

  

 

2

 

	
  10.5

  	
   

  	
  Counterparts

  	
   

  	
  43

  
	
  10.6

  	
   

  	
  Invalidity

  	
   

  	
  43

  
	
  10.7

  	
   

  	
  Headings

  	
   

  	
  43

  
	
  10.8

  	
   

  	
  Expenses

  	
   

  	
  43

  
	
  10.9

  	
   

  	
  Schedules

  	
   

  	
  43

  
	
  10.10

  	
   

  	
  Public Announcements

  	
   

  	
  43

  
	
  10.11

  	
   

  	
  No Third-Party
  Beneficiaries

  	
   

  	
  44

  
	
  10.12

  	
   

  	
  Remedies

  	
   

  	
  44

  
	
  10.13

  	
   

  	
  Dispute Resolution

  	
   

  	
  44

  
	
  10.14

  	
   

  	
  Language

  	
   

  	
  45

  
	
  10.15

  	
   

  	
  Non-Recourse

  	
   

  	
  45

  

 

	
  Schedules

  	
   

  
	
   

  	
   

  
	
  1.1(M)

  	
  Mezzanine
  Finance Documents

  
	
  1.1(S)

  	
  Seller Parent’s Knowledge

  
	
  2.4.2

  	
  Form of
  2009 Final Dividend Payment Request

  
	
  3.2.5

  	
  J:COM
  Extraordinary Transaction

  
	
  4.1.1

  	
  Form of
  Assignment

  
	
  5.6

  	
  Target Company
  Shareholder Agreements

  
	
  5.10

  	
  Liabilities of
  Target Group Companies

  
	
  5.14.1

  	
  Relevant
  Contracts

  
	
  5.20

  	
  J:COM Disclosures

  
	
  7.6

  	
  Interim
  Operation of J:COM

  

 

3Exhibit 10.1

 

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM

WASHINGTON, D.C.

 

STATE OF COLORADO

DIVISION OF BANKING

DENVER, COLORADO

 

	
  Written Agreement by and among 

  	
  Docket Nos. 

  	
  09-177-WA/RB-HC

  
	
   

  	
   

  	
  09-177-WA/RB-SM

  
	
  GUARANTY BANCORP

  	
   

  
	
  Denver, Colorado

  	
   

  
	
   

  	
   

  
	
  GUARANTY BANK & TRUST COMPANY

  	
   

  
	
  Denver, Colorado

  	
   

  
	
   

  	
   

  
	
  FEDERAL
  RESERVE BANK

  	
   

  
	
  OF
  KANSAS CITY

  	
   

  
	
  Kansas City, Missouri

  	
   

  
	
   

  	
   

  
	
  and

  	
   

  
	
   

  	
   

  
	
  STATE OF COLORADO

  	
   

  
	
  DIVISION OF BANKING

  	
   

  
	
  Denver, Colorado

  	
   

  

 

WHEREAS, in recognition of their common goal to
maintain the financial soundness of Guaranty Bancorp, Denver, Colorado (“Bancorp”),
a registered bank holding company, and its subsidiary, Guaranty Bank &
Trust Company, Denver, Colorado (the “Bank”), a state chartered bank that is a
member of the Federal Reserve System, Bancorp, the Bank, the Federal Reserve
Bank of Kansas City (the “Reserve Bank”), and the Colorado Division of Banking
(the “Division”) have mutually agreed to enter into this Written Agreement (the
“Agreement”); and

 

WHEREAS, on January 22, 2010, the boards of
directors of Bancorp and the Bank, at duly constituted meetings, adopted
resolutions authorizing and directing Daniel M. Quinn, Chief Executive Officer,
to enter into this Agreement on behalf of Bancorp and the Bank, and 

 

 

consenting to compliance with each and every applicable
provision of this Agreement by Bancorp and the Bank, and their
institution-affiliated parties, as defined in Section 3(u) and 8(b)(3) of
the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. § 1813(u) and
1818(b)(3)).

 

NOW, THEREFORE, Bancorp, the Bank, the Reserve Bank,
and the Division agree as follows:

 

Board Oversight

 

1.                                     Within 60 days of this Agreement, the board of directors of
the Bank shall submit to the Reserve Bank and the Division a written plan to
strengthen board oversight of the management and operations of the Bank. The
plan shall, at a minimum, address, consider, and include:

 

(a)                                  The actions that the board of directors will take to improve
the Bank’s condition and maintain effective control over, and supervision of,
the Bank’s major operations and activities, including but not limited to,
credit risk management, processes to mitigate risks associated with credit
concentrations, asset liability management, and earnings;

 

(b)                                 the responsibility of the board of directors to monitor
management’s adherence to approved policies and procedures; and

 

(c)                                  a description of the information and reports that will be
regularly reviewed by the board of directors in its oversight of the operations
and management of the Bank, including information on the Bank’s adversely
classified assets, concentrations of credits, allowance for loan and lease
losses (“ALLL”), capital, liquidity, and earnings.

 

2

 

Credit Risk Management

 

2.                                     Within 60 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division an acceptable written plan to strengthen
credit risk management practices. The plan shall, at a minimum, address,
consider, and include:

 

(a)                                  The responsibility of the board of directors to establish
appropriate risk tolerance guidelines and risk limits;

 

(b)                                 periodic review and revision of risk exposure limits to
address changes in market conditions; and

 

(c)                                  strategies to minimize credit losses and reduce the level of
problem assets.

 

Concentrations of Credit

 

3.                                       Within 60 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division an acceptable written plan to strengthen the
Bank’s management of commercial real estate (“CRE”) concentrations, including
steps to reduce or mitigate the risk of concentrations in light of current
market conditions. The plan shall be consistent with the Interagency Guidance
on Concentrations in Commercial Real Estate Lending, Sound Risk Management
Practices, dated December 12, 2006 (SR 07-1), and, at a minimum, address,
consider, and include:

 

(a)                                  Establishment of concentration of credit risk tolerances or
limits by types of loan products, geographic locations, and other common risk
characteristics or sensitivities;

 

(b)                                 ongoing risk assessments;

 

(c)                                  strategic planning regarding risks associated with CRE
concentrations, including steps to control and mitigate such risks; and

 

(d)                                 enhanced periodic reporting to management and the board of
directors.

 

3

 

Asset Improvement

 

4.                                       The Bank shall not, directly or indirectly, extend, renew, or
restructure any credit to or for the benefit of any borrower, including any
related interest of the borrower, whose loans or other extensions of credit are
criticized in the report of examination of the Bank conducted by the Reserve
Bank that commenced on May 4, 2009 (the “Report of Examination”) or in any
subsequent report of examination, without the prior approval of a majority of
the full board of directors or a designated committee thereof. The board of
directors or its committee shall document in writing the reasons for the
extension of credit, renewal, or restructuring, specifically certifying that: (i) the
Bank’s risk management policies and practices for loan workout activity are
acceptable; (ii) the extension of credit is necessary to improve and
protect the Bank’s interest in the ultimate collection of the credit already
granted and maximize its potential for collection; (iii) the extension of
credit reflects prudent underwriting based on reasonable repayment terms and is
adequately secured; and all necessary loan documentation has been properly and
accurately prepared and filed; (iv) the Bank has performed a comprehensive
credit analysis indicating that the borrower has the willingness and ability to
repay the debt as supported by an adequate workout plan, as necessary; and (v) the
board of directors or its designated committee reasonably believes that the
extension of credit will not impair the Bank’s interest in obtaining repayment
of the already outstanding credit and that the extension of credit or renewal
will be repaid according to its terms. The written certification shall be made
a part of the minutes of the meetings of the board of directors or its
committee, as appropriate, and a copy of the signed certification, together
with the credit analysis and related information that was used in the
determination, shall be retained by the Bank in the borrower’s credit file for
subsequent 

 

4

 

supervisory review. For purposes of this Agreement, the term “related
interest” is defined as set forth in section 215.2(n) of Regulation O of
the Board of Governors (12 C.F.R. § 215.2(n)).

 

5.                                       (a)                                  Within 60 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division an acceptable written plan designed to
improve the Bank’s position through repayment, amortization, liquidation,
additional collateral, or other means on each loan, relationship, or other
asset in excess of $1,000,000, including other real estate owned (“OREO”), that
is past due as to principal or interest more than 90 days as of the date of
this Agreement, is on the Bank’s problem loan list, or was adversely classified
in the Report of Examination.

 

(b)                                 Within 30 days of the date that any additional loan,
relationship, or other asset in excess of $1,000,000, including OREO, becomes
past due as to principal or interest for more than 90 days, is on the Bank’s
problem loan list, or is adversely classified in any subsequent report of
examination of the Bank, the Bank shall submit to the Reserve Bank and the
Division an acceptable written plan to improve the Bank’s position on such
loan, relationship, or asset.

 

(c)                                  Within 30 days after the end of each calendar quarter
thereafter, the Bank shall submit a written progress report to the Reserve Bank
and the Division to update each asset improvement plan, which shall include, at
a minimum, the carrying value of the loan or other asset and changes in the
nature and value of supporting collateral, along with a copy of the Bank’s
current problem loan list, a list of all loan renewals and extensions without
full collection of interest in the last quarter, and past due/non-accrual
report. The board of directors shall review the progress reports before
submission to the Reserve Bank and the Division and shall document the review
in the minutes of the board of directors’ meetings.

 

5

 

Allowance for Loan and Lease Losses

 

6.                                       (a)                                  Within 10 days of this Agreement, the Bank shall eliminate
from its books, by charge-off or collection, all assets or portions of assets
classified “loss” in the Report of Examination that have not been previously
collected in full or charged off. Thereafter the Bank shall, within 30 days
from the receipt of any federal or state report of examination, charge off all
assets classified “loss” unless otherwise approved in writing by the Reserve
Bank and the Division.

 

(b)                                 Within 60 days of this Agreement, the Bank shall review and
revise its ALLL methodology consistent with relevant supervisory guidance,
including the Interagency Policy Statements on the Allowance for Loan and Lease
Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR
06-17), and the findings and recommendations regarding the ALLL set forth in
the Report of Examination, and submit a description of the revised methodology
to the Reserve Bank. The revised ALLL methodology shall be designed to maintain
an adequate ALLL and shall address, consider, and include, at a minimum, the
reliability of the Bank’s loan grading system, the volume of criticized loans,
concentrations of credit, the current level of past due and nonperforming
loans, past loan loss experience, evaluation of probable losses in the Bank’s
loan portfolio, including adversely classified loans, and the impact of market
conditions on loan and collateral valuations and collectability.

 

(c)                                  Within 60 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division an acceptable written program for the
maintenance of an adequate ALLL. The program shall include policies and
procedures to ensure adherence to the Bank’s revised ALLL methodology and
provide for periodic reviews and updates to the ALLL methodology, as
appropriate. The program shall also provide for a review of the ALLL by the
board of directors 

 

6

 

on at least a quarterly calendar basis. Any deficiency found
in the ALLL shall be remedied in the quarter it is discovered, prior to the
filing of the Consolidated Reports of Condition and Income, by additional
provisions. The board of directors shall maintain written documentation of its
review, including the factors considered and conclusions reached by the Bank in
determining the adequacy of the ALLL. During the term of this Agreement, the
Bank shall submit to the Reserve Bank and the Division, within 30 days after
the end of each calendar quarter, a written report regarding the board of
directors’ quarterly review of the ALLL and a description of any changes to the
methodology used in determining the amount of the ALLL for that quarter.

 

Capital Plan

 

7.                                       Within 60 days of this Agreement, Bancorp shall submit to the
Reserve Bank an acceptable written plan to maintain sufficient capital at
Bancorp, on a consolidated basis, and Bancorp and the Bank shall jointly submit
to the Reserve Bank and the Division an acceptable written plan to maintain
sufficient capital at the Bank, as a separate legal entity on a stand-alone
basis. These plans shall, at a minimum, address, consider, and include:

 

(a)                                  Bancorp’s current and future capital needs, including
compliance with the Capital Adequacy Guidelines for Bank Holding Companies:
Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of
Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D);

 

(b)                                 the Bank’s current and future capital needs, including
compliance with the Capital Adequacy Guidelines for State Member Banks:
Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and B of
Regulation H of the Board of Governors (12 C.F.R. Part 208, App. A and B);

 

7

 

 

(c)                                  the adequacy of the Bank’s capital, taking into account the
volume of  classified credits,
concentrations of credit, ALLL, current and projected asset growth, and
projected retained earnings;

 

(d)                                 the source and timing of additional funds to fulfill the
consolidated organization’s and the Bank’s future capital requirements; and

 

(e)                                  the requirements of Section 225.4(a) of Regulation
Y of the Board of Governors (12 C.F.R. § 225.4(a)) that Bancorp serve as a
source of strength to the Bank.

 

8.                                       Bancorp and the Bank shall notify the Reserve Bank and the
Division, in writing, no more than 30 days after the end of any quarter in
which any of Bancorp’s consolidated capital ratios or the Bank’s capital ratios
(total risk-based, Tier 1, or leverage) fall below the approved capital plan’s
minimum ratios. Together with the notification, Bancorp and the Bank shall
submit an acceptable written plan that details the steps Bancorp or the Bank,
as appropriate, will take to increase Bancorp’s or the Bank’s capital ratios
to, or above, the approved capital plan’s minimums.

 

Liquidity/Funds Management

 

9.                                       Within 60 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division an acceptable written plan to improve
management of the Bank’s liquidity position and funds management practices. The
plan shall, at a minimum, address, consider, and include measures to diversify
funding sources and reduce reliance on wholesale funding, including brokered
deposits.

 

10.                                 Within 60 days of this Agreement, the Bank shall revise and
submit to the Reserve Bank and the Division an acceptable written contingency
funding plan that, at a 

 

8

 

minimum, includes adverse scenario planning and identifies
and quantifies available sources of liquidity for each scenario.

 

Brokered Deposits

 

11.                                 (a)                                  At all times during the term of this Agreement that the Bank
is well capitalized, the Bank shall not accept any new brokered deposits. For
purposes of this subparagraph, the term “brokered deposits” is defined as set
forth in Section 337.6(a) of the regulations of the FDIC (12 C.F.R. §
337.6(a)) and includes deposits funded by third party agents or nominees for
depositors; and the term “new brokered deposits” is defined not to include contractual
renewals or rollovers of brokered deposits.

 

(b)                                 Within 30 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division an acceptable written plan for reducing its
reliance on brokered deposits. The plan shall detail the current composition of
the Bank’s brokered deposits by maturity and explain the means by which such
deposits will be paid at maturity.

 

12.                                 The Bank shall comply with the provisions of Section 29
of the FDI Act (12 U.S.C. § 1831f) and the FDIC’s accompanying regulations at
12 C.F.R. § 337 that are applicable to the Bank. The Bank shall notify the
Reserve Bank and the Division, in writing, if the Bank requests any waiver of
the restrictions imposed by Section 29 from the FDIC and shall notify the
Reserve Bank of the FDIC’s disposition of any request for such a waiver.

 

Earnings Plan and Budget

 

13.                                 (a)                                  Within 60 days of this Agreement, the Bank shall submit to
the Reserve Bank and the Division a written business plan for 2010 to improve
the Bank’s earnings and overall condition. The plan, at a minimum, shall
provide for or describe:

 

9

 

(i)                               a realistic and comprehensive budget for calendar year 2010,
including income statement and balance sheet projections; and

 

(ii)                            a description of the operating assumptions that form the
basis for, and adequately support, major projected income, expense, and balance
sheet components.

 

(b)                                 During the term of this Agreement, a business plan and budget
for each calendar year subsequent to 2010 shall be submitted to the Reserve
Bank and the Division at least 30 days prior to the beginning of that calendar
year.

 

Dividends and Distributions

 

14.                                 (a)                                  Bancorp and the Bank shall not declare or pay any dividends
without the prior written approval of the Reserve Bank and the Director of the
Division of Banking Supervision and Regulation of the Board of Governors (the “Director”),
and, as to the Bank, the Division.

 

(b)                                 Bancorp shall not take any other form of payment representing
a reduction in capital from the Bank without the prior written approval of the
Reserve Bank.

 

(c)                                  Bancorp and its nonbank subsidiaries shall not make any
distributions of interest, principal, or other sums on subordinated debentures
or trust preferred securities without the prior written approval of the Reserve
Bank and the Director.

 

(d)                                 All requests for prior approval shall be received at least 30
days prior to the proposed dividend declaration date, proposed distribution on
subordinated debentures, and required notice of deferral on trust preferred
securities. All requests shall contain, at a minimum, current and projected
information, as appropriate, on Bancorp’s capital, earnings, and cash flow; the
Bank’s capital, asset quality, earnings and ALLL needs; and identification of
the sources of funds for the proposed payment or distribution. Bancorp and the
Bank, as appropriate, must also 

 

10

 

demonstrate that the requested declaration or payment of
dividends is consistent with the Board of Governors’ Policy Statement on the
Payment of Cash Dividends by State Member Banks and Bank Holding Companies,
dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).

 

Debt and Stock Redemption

 

15.                                 (a)                                  Bancorp shall not, directly or indirectly, incur, increase,
or guarantee any debt without the prior written approval of the Reserve Bank.
All requests for prior written approval shall contain, but not be limited to, a
statement regarding the purpose of the debt, the terms of the debt, and the
planned source(s) for debt repayment, and an analysis of the cash flow
resources available to meet such debt repayment.

 

(b)                                 Bancorp shall not, directly or indirectly, purchase or redeem
any shares of its stock without the prior written approval of the Reserve Bank.

 

Cash Flow

 

16.                                 Within 60 days of this Agreement, the Bancorp shall submit to
the Reserve Bank a written statement of its planned sources and uses of cash
for debt service, operating expenses, and other purposes (“Cash Flow Projection”)
for 2010. Bancorp shall submit to the Reserve Bank a Cash Flow Projection for
each calendar year subsequent to 2010 at least one month prior to the beginning
of that calendar year.

 

Compliance with Laws and Regulations

 

17.                                 In appointing any new director or senior executive officer,
or changing the responsibilities of any senior executive officer so that the
officer would assume a different senior executive officer position, Bancorp and
the Bank shall comply with the notice provisions of Section 32 of the FDI
Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of 

 

11

 

Governors of the Federal Reserve System (the “Board of
Governors”) (12 C.F.R. §§ 225.71 et seq.).

 

18.                                 Bancorp and the Bank shall comply with the restrictions on
indemnification and severance payments of Section 18(k) of the FDI
Act (12 U.S.C. § 1828(k)) and Part 359 of the Federal Deposit Insurance
Corporation’s regulations (12 C.F.R. Part 359).

 

Compliance with the Agreement

 

19.                                 Within 30 days after the end of each calendar quarter
following the date of this Agreement, Bancorp and the Bank shall submit to the
Reserve Bank and the Division written progress reports detailing the form and
manner of all actions taken to secure compliance with this Agreement and the
results thereof.

 

Approval and Implementation of Plans and
Programs

 

20.                                 (a)                                  The written plans and a program required by paragraphs 2, 3,
5(a), 5(b), 6(c), 7, 8, 9, 10, and 11(b) of this Agreement shall be
submitted to the Reserve Bank and the Division for review and approval.
Acceptable plans and program shall be submitted within the time periods set
forth in the Agreement.

 

(b)                                 Within 10 days of approval by the Reserve Bank and the
Division, the Bank, and as applicable, Bancorp shall adopt the approved plans
and program. Upon adoption, the Bank, and as applicable, Bancorp shall promptly
implement the approved plans and program and thereafter fully comply with them.

 

(c)                                  During the term of this Agreement, the approved plans and
program shall not be amended or rescinded without the prior written approval of
the Reserve Bank and the Division.

 

12

 

Communications

 

21.                                 All communications regarding this Agreement shall be sent to:

 

(a)                                  Ms. Susan E. Zubradt

Vice President

Federal Reserve Bank of Kansas City

1 Memorial Drive

Kansas City, Missouri 64198

 

(b)                                 Mr. Fred J. Joseph

Acting Bank Commissioner

State of Colorado

Division of Banking

1560 Broadway, Suite 975

Denver, Colorado 80202

 

(c)                                  Mr. Daniel M. Quinn

Chief Executive Officer

Guaranty Bancorp and Guaranty Bank &
Trust

1331 Seventeenth Street, Suite 300

Denver, Colorado 80202

 

Miscellaneous

 

22.                                 Notwithstanding any provision of this Agreement, the Reserve
Bank and the Division may, in their sole discretion, grant written extensions
of time to Bancorp and the Bank to comply with any provision of this Agreement.

 

23.                                 The provisions of this Agreement shall be binding upon
Bancorp, the Bank, and their institution-affiliated parties, in their
capacities as such, and their successors and assigns.

 

24.                                 Each provision of this Agreement shall remain effective and
enforceable until stayed, modified, terminated, or suspended in writing by the
Reserve Bank and the Division.

 

25.                                 The provisions of this Agreement shall not bar, estop, or
otherwise prevent the Board of Governors, the Reserve Bank, the Division or any
other federal or state agency from 

 

13

 

taking any other action affecting Bancorp, the Bank, or any
of their current or former institution-affiliated parties and their successors
and assigns.

 

26.                                 Pursuant to Section 50 of the FDI Act (12 U.S.C. §
1831aa), this Agreement is enforceable by the Board of Governors under Section 8
of the FDI Act (12 U.S.C. § 1818).

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the 22nd of January, 2010.

 

 

	
  GUARANTY BANCORP

  	
  FEDERAL RESERVE BANK

  
	
  GUARANTY BANK & TRUST COMPANY

  	
  OF KANSAS CITY

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Daniel M. Quinn

  	
   

  	
  By:

  	
  /s/ Susan E. Zubradt

  
	
   

  	
  Daniel M. Quinn

  	
   

  	
   

  	
  Susan E. Zubradt

  
	
   

  	
  Chief Executive Officer

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STATE OF COLORADO

  
	
   

  	
   

  	
  DIVISION OF BANKING

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred J. Joseph

  
	
   

  	
   

  	
  Fred J. Joseph

  
	
   

  	
   

  	
  Acting Bank Commissioner

  

 

14

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