EXECUTION COPY
SHARE PURCHASE AGREEMENT
AMONG
SOFTBANK AMERICA INC.,
SOFTBANK FORUMS JAPAN, INC.
AND
KEY3MEDIA EVENTS, INC.
COVERING THE PURCHASE OF ALL OF THE SHARES OF
SOFTBANK FORUMS JAPAN, INC.
DATED AS OF JUNE 1, 2001
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1. PURCHASE, SALE AND EXCHANGE OF SHARES ...............................1
2. CONSIDERATION .......................................................2
2.1 PURCHASE PRICE .............................................2
2.2 PAYMENT METHODOLOGY AND DATES ..............................2
3. CLOSING .............................................................3
3.1 DOCUMENTS TO BE DELIVERED BY SELLER TO BUYER ...............3
3.2 DOCUMENTS TO BE DELIVERED BY BUYER .........................4
3.3 FORM AND SUBSTANCE OF DOCUMENTS ............................4
4. REPRESENTATIONS AND WARRANTIES BY SELLER ............................4
4.1 CORPORATE ORGANIZATION .....................................4
4.2 CAPITALIZATION; STOCK OWNERSHIP ............................4
4.3 EQUITY INVESTMENTS .........................................5
4.4 AUTHORITY ..................................................5
4.5 NO VIOLATION ...............................................5
4.6 FINANCIAL STATEMENTS .......................................5
4.7 NO UNDISCLOSED LIABILITIES, ETC ............................6
4.8 ABSENCE OF CERTAIN CHANGES .................................7
4.9 TITLE TO AND CONDITION OF PROPERTIES AND ASSETS ............8
4.10 CERTAIN PROPERTIES .........................................8
4.11 TAX RETURNS ................................................9
4.12 CONTRACTS .................................................10
4.13 LITIGATION ................................................11
4.14 INTANGIBLE PROPERTY .......................................11
4.15 COMPLIANCE WITH LAWS ......................................12
4.16 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS ...............12
4.17 LABOR MATTERS .............................................12
4.18 CERTAIN TRANSACTIONS ......................................12
4.19 ACCOUNTING PRACTICES ......................................13
4.20 MINUTE BOOKS ..............................................13
4.21 INSURANCE .................................................13
4.22 BANK ACCOUNTS; POWERS OF ATTORNEY .........................13
4.23 BROKERS ...................................................13
4.24 NO UNTRUE STATEMENTS ......................................13
4.25 INTERCOMPANY INDEBTEDNESS .................................13
4.26 APPROVAL FOR TRANSFER OF SHARES ...........................14
5. REPRESENTATIONS AND WARRANTIES BY BUYER ............................14
5.1 CORPORATE ORGANIZATION ....................................14
5.2 AUTHORIZATION OF AGREEMENT; NO VIOLATION ..................14
5.3 LITIGATION ................................................14
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5.4 BROKERS ...................................................15
5.5 AUTHORIZATION AND ISSUANCE OF COMMON STOCK ................15
5.6 FINANCIAL STATEMENTS ......................................15
5.7 NO UNTRUE STATEMENTS ......................................15
6. POST-CLOSING COVENANTS OF SELLER ...................................15
6.1 FINANCIAL STATEMENTS AND CERTIFICATE ......................15
6.2 CONSENTS AND APPROVALS ....................................16
6.3 SERVICES AGREEMENT ........................................16
6.4 AFFILIATE DISCOUNTS .......................................17
6.5 ADDITIONAL POST-CLOSING COVENANTS .........................17
7. COVENANTS OF BUYER: CONSENTS AND APPROVALS .........................17
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO SELL THE SHARES .....17
8.1 BUYER'S PERFORMANCE .......................................17
8.2 OPINION OF COUNSEL ........................................17
8.3 CONSENTS AND APPROVALS ....................................18
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE THE SHARES ..18
9.1 SELLER'S PERFORMANCE ......................................18
9.2 OPINIONS OF COUNSEL .......................................18
9.3 CONSENTS AND APPROVALS ....................................18
9.4 FAIRNESS OPINION ..........................................18
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION ........19
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES ................19
10.2 SELLER'S INDEMNIFICATION OBLIGATIONS ......................19
10.3 BUYER'S INDEMNIFICATION OBLIGATIONS .......................20
10.4 LIABILITY FOR TAXES .......................................20
10.5 PROCEDURE FOR INDEMNIFICATION CLAIMS ......................21
10.6 SETOFF ....................................................21
11. NONCOMPETITION .....................................................21
12. MISCELLANEOUS ......................................................22
12.1 ASSURANCE OF FURTHER ACTION ...............................22
12.2 EXPENSES ..................................................22
12.3 WAIVER ....................................................22
12.4 NOTICES ...................................................23
12.5 ENTIRE AGREEMENT ..........................................23
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12.6 RIGHTS UNDER THIS AGREEMENT; NONASSIGNABILITY .............23
12.7 GOVERNING LAW, JURISDICTION AND VENUE .....................23
12.8 HEADINGS; REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES ..24
12.9 APPLICABLE CURRENCY .......................................24
12.10 COUNTERPARTS/FACSIMILES ...................................24
12.11 SEVERABILITY; CONSTRUCTION ................................24
12.12 NO THIRD PARTY BENEFICIARIES ..............................24
SHARE PURCHASE AGREEMENT
This share purchase agreement (the "Agreement") dated as of this first
day of June, 2001, is entered into by and among KEY3MEDIA EVENTS, INC., a
Delaware corporation, or its designee ("Buyer"), SOFTBANK AMERICA, INC., a
Delaware corporation ("Seller") and SOFTBANK FORUMS JAPAN, INC., a corporation
formed under the laws of Japan ("SB Forums").
RECITALS
WHEREAS, the Seller owns all of the 70,600 outstanding share capital
(the "Shares") of SB Forums;
WHEREAS, Buyer desires to purchase the Shares from Seller, and Seller
desires to sell the Shares to Buyer in exchange for newly issued common stock of
Buyer's parent, Key3Media Group, Inc., a Delaware corporation (the "KME
Parent"), all upon the terms and conditions hereinafter set forth;
WHEREAS, Buyer desires that SOFTBANK Media & Marketing Corp., a
corporation formed under the laws of Japan, ("SBMM") to continue to provide
services to SB Forums in exchange for the fees set forth in Schedule 6.3;
WHEREAS, Buyer and Seller intend for the transactions contemplated by
this Agreement to qualify as a tax-free exchange pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement, and to set forth
certain additional agreements related to the transactions contemplated hereby;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. PURCHASE, SALE AND EXCHANGE OF SHARES.
Upon the terms and conditions of this Agreement, Buyer agrees to
purchase and accept delivery from Seller of, and Seller agrees to sell, convey,
assign, transfer and deliver to Buyer, at the Closing (as defined below)
provided for in Section 3, all of Seller's right, title and interest in and to
the Shares, free and clear of any liens. After the Closing (as defined below),
KME Parent will promptly commence a solicitation of its shareholders in order to
approve the issuance of the KME Shares (as defined below) to Buyer in accordance
with Section 312.03 of the New York Stock Exchange Listed Company Manual (the
"Shareholder Approval"). Promptly upon receipt of the requisite Shareholder
Approval, the KME Shares will be delivered to Seller.
2. CONSIDERATION.
2.1 PURCHASE PRICE.
(a) As consideration for the Shares, and subject to Section 1 of this
Agreement, Buyer agrees to pay to Seller for the Shares and the Seller agrees
to accept from Buyer as the purchase price for the Shares (the "Purchase
Price") such number of shares of newly issued common stock, par value $.01
per share, of the KME Parent, free and clear of any liens (the "KME Shares")
as shall have a Fair Market Value (as defined below) equal to the following
amount:
Purchase Price = EBITDA x 10
Where:
EBITDA = (a) the net income of SB Forums for the fiscal year ended
December 2001, determined in accordance with generally accepted
accounting principles in the United States of America, consistently
applied ("GAAP"), without giving effect to: (i) extraordinary gains and
losses from sales, exchanges and other dispositions of assets or
securities not in the ordinary course of business, and (ii) nonrecurring
items, plus, to the extent deducted in calculating net income, (b) the
sum of, without duplication, (i) depreciation expense, (ii) amortization
expense, (iii) interest expense and (iv) national and local income tax
expense.
(b) The "Fair Market Value" of the KME Shares is equal to $10.00 per
share, which is based upon the following formula: the average of the closing
prices of the KME Shares on the New York Stock Exchange (the "NYSE") during
the ten (10) consecutive trading day period immediately preceding the Closing
Date (as defined below); provided, however, in the event that the average
closing price of the KME Shares for the ten (10) consecutive trading day
period immediately preceding the Closing Date is equal to or less than $10.00
per share, then the Fair Market Value shall be equal to $10.00 per share;
provided further, in the event that the average closing price of the KME
Shares on the NYSE during the ten (10) consecutive trading day period
immediately preceding the Closing Date is equal to or greater than $12.00 per
share, then the Fair Market Value shall be $12.00 per share.
2.2 PAYMENT METHODOLOGY AND DATES.
(a) Seller represents and warrants that its initial good faith estimate
of EBITDA (the "Estimated EBITDA") is Three Million Dollars ($3,000,000) and
the estimated Purchase Price (the "Estimated Purchase Price") is Thirty
Million ($30,000,000). Buyer shall deliver to Seller the Estimated Purchase
Price in KME Shares, as adjusted pursuant to Section 2.3 of this Agreement,
in accordance with Section 1 of this Agreement.
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(b) Subsequent to December 31, 2001 and prior to or on April 1, 2002,
Buyer shall calculate the actual EBITDA and Purchase Price, which shall be
definitive and binding for the purposes of this Agreement.
(c) Buyer will engage Ernst & Young LLP to conduct an audit based on GAAP
to determine the actual EBITDA of SB Forums for the fiscal year ending
December 31, 2001. In the event that the actual EBITDA as calculated from
such audit is greater than or equal to $2,800,000 and less than or equal to
$3,200,000, then the Purchase Price shall be deemed paid in full. In the
event that EBITDA (i) is less than $2,800,000, then Seller shall promptly pay
to Buyer in KME Shares the difference between (a) the Estimated Purchase
Price and (b) the product of the actual EBITDA multiplied by 10; or (ii) is
greater than $3,200,000, then Buyer shall promptly pay to Seller in KME
Shares the difference between (a) the Estimated Purchase Price and (b) the
product of the actual EBITDA multiplied by 10. Any fractional share resulting
from the calculations hereunder shall be rounded up to the next whole share.
The number of KME Shares to be paid by Buyer to Seller, or returned by Seller
to Buyer, shall be based upon the Fair Market Value of the KME Shares as of
the Closing Date set forth in Section 2.1(b) above. This paragraph shall be
subject, in all cases, to Section 1 of this Agreement.
2.3 PURCHASE PRICE AND CORPORATE OVERHEAD ADJUSTMENT. The Purchase Price
shall be reduced by the amount of $450,000 (i.e., 45,000 KME Shares) in order to
compensate Buyer for the cash deficit of SB Forums. This reduction shall be
taken from the first delivery of the KME Shares to Seller.
3. CLOSING.
The closing of the purchase and sale of the Shares ("Closing") shall take
place at the office of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or at such other place as the parties may mutually agree) at 5:00 o'clock
p.m., local time, on June 1, 2001 ("Closing Date"). The Closing Date may be
postponed to a later time and date by mutual agreement of the parties. If the
Closing Date is postponed, all references to the Closing Date in this Agreement
shall refer to the postponed date.
3.1 DOCUMENTS TO BE DELIVERED BY SELLER TO BUYER. At the Closing, Seller
shall:
(a) deliver to Buyer or Buyer's designee certificates representing the
Shares;
(b) keep all SB Forums' contracts, books, records, and other data
relating to the SB Forums' operations (with any electronic data being in a
format compatible with the operating systems of Buyer) at the office of SB
Forums; and
(c) deliver such other documents, instruments or certificates as Buyer
may reasonably request.
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3.2 DOCUMENTS TO BE DELIVERED BY BUYER.
Promptly upon receipt of the requisite Shareholder Approval, Buyer will
deliver to Seller certificates representing the Estimated Purchase Price in KME
shares, duly endorsed in blank by the KME Parent (the "KME Certificates").
3.3 FORM AND SUBSTANCE OF DOCUMENTS. The documents and instruments referred
to in Sections 3.1 and 3.2 shall be in form and substance satisfactory to
counsel for the party to whom they are delivered.
4. REPRESENTATIONS AND WARRANTIES BY SELLER.
Seller and SB Forums jointly and severally represent and warrant to Buyer as
follows:
4.1 CORPORATE ORGANIZATION. SB Forums is a corporation duly organized and
validly existing under the laws of Japan and has the corporate power and
authority to carry on its business as now being conducted and to own and operate
the properties and assets now owned and being operated by it. SB Forums has
delivered to Buyer a complete and correct copy of SB Forums' Articles of
Incorporation as in effect on the date hereof and a certified copy of the
commercial registry of SB Forums issued by the Minato Branch of the Tokyo Legal
Affairs Bureau. SB Forums does not have any subsidiaries. No amendment or other
document relating to or affecting such Articles of Incorporation or such
commercial registry has been made or filed in any office of the Legal Affairs
Bureau, and no action has been taken by SB Forums or its stockholders, directors
or officers in contemplation of the making or filing of any such amendment or
other document or in contemplation of the liquidation or dissolution of SB
Forums. SB Forums has delivered to Buyer true copies of all resolutions duly
adopted by its board of directors and stockholders which approved the transfer
of all the issued and outstanding shares of the Company by Seller to Buyer and
the execution by SB Forums of this Agreement; such resolutions have not been
amended, modified or rescinded and remain in full force and effect and are the
only resolutions adopted by SB Forums board of directors or any committee
thereof or its stockholders relating to this Agreement.
4.2 CAPITALIZATION; STOCK OWNERSHIP. The Shares constitute all of the
outstanding share capital and outstanding equity interest, and rights to obtain
any equity interest, in SB Forums. All of the Shares are owned, of record and
beneficially, by Seller, free and clear of any liens or encumbrances. No
individual, trust, estate, partnership, association, company or corporation
(collectively, a "Person") other than Seller is or will be entitled to receive
any payment with respect to the Shares. SB Forums holds no shares of its own
capital. The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
share capital of SB Forums are as set forth in its commercial registry and
Articles of Incorporation or other organizational documents, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable corporate laws. All of the outstanding securities of SB Forums were
issued in compliance with all applicable laws of Japan. None of such outstanding
securities have been issued in violation of any preemptive rights, rights of
first refusal or similar rights. There are no outstanding options, warrants,
convertible
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securities, calls, rights, commitments, preemptive rights or agreements or
instruments or understandings of any kind, character or nature whatsoever to
which SB Forums is a party or by which SB Forums is bound, obligating SB Forums
to issue, deliver or sell, or cause to be issued, delivered or sold,
contingently or otherwise, additional shares of its share capital or any
securities or obligations convertible into or exchangeable for such shares or to
grant, extend or enter into any such option, warrant, convertible security,
call, right, commitment, preemptive right or agreement. There are no outstanding
obligations, contingent or otherwise, of SB Forums to purchase, redeem or
otherwise acquire any shares of such entity's share capital. There are no voting
trust agreements or other contracts, agreements, arrangements, commitments,
plans or understandings restricting or otherwise relating to voting, dividend or
other rights with respect to any of the Shares. SB Forum has no subsidiary in
Japan or any other jurisdiction.
4.3 EQUITY INVESTMENTS. SB Forums owns no direct or indirect beneficial or
legal interest in any corporation, limited liability company, partnership, joint
venture or other similar entity or venture.
4.4 AUTHORITY. This Agreement has been duly executed on behalf of Seller and
SB Forums, and constitutes a legal, valid and binding obligation of Seller and
SB Forums enforceable against Seller and SB Forums in accordance with its terms.
4.5 NO VIOLATION. Neither the execution, delivery or performance of this
Agreement nor consummation of any of the transactions contemplated hereby (i)
will violate or conflict with the certificate of incorporation or bylaws of
Seller or the Articles of Incorporation of SB Forums, or (ii) will result in any
breach of or default under any provision of any contract or agreement of any
kind to which Seller or SB Forums is a party or by which Seller or SB Forums is
bound or to which any property or asset of either of them is subject, (iii) is
prohibited by or requires Seller or SB Forums to obtain or make any consent,
authorization, approval, registration or filing under any statute, law,
ordinance, regulation, rule, judgment, decree or order of any court or
governmental agency, board, bureau, body, department or authority, or of any
other person, (iv) will cause any acceleration of maturity of any note,
instrument, or other obligation to which Seller or SB Forums is a party or by
which Seller or SB Forums is bound or with respect to which Seller or SB Forums
is an obligor or guarantor or (v) will result in the creation or imposition of
any lien, claim, charge, restriction, equity or encumbrance of any kind
whatsoever upon or give to any other person any interest or right (including any
right of termination or cancellation) in or with respect to any of the
properties, assets, businesses, agreements or contracts of Seller or SB Forums.
4.6 FINANCIAL STATEMENTS. SB Forums has delivered to Buyer copies of the
following financial statements:
(a) The audited balance sheet of SB Forums as at December 31, 2000 and
related statements of income and retained earnings and changes in financial
position for the fiscal year ended on such date, together with supporting
schedules and the reports thereon of SB Forums' certified public accountants
(the audited balance sheet of SB Forums as at December 31, 2000 is referred
to as the "Audited Balance Sheet" and December 31, 2000 is referred to as the
"Audited Balance Sheet Date"); and
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(b) The unaudited balance sheet of SB Forums as at April 30, 2001 and
related statements of income and retained earnings and changes in financial
position for the three-month period ended on such dates together with
supporting schedules, certified by the President and Chief Financial Officer
of SB Forums (the unaudited balance sheet of SB Forums as at April 30, 2001
is referred to as the "Unaudited Balance Sheet" and April 30, 2001 is
referred to as the "Unaudited Balance Sheet Date").
(c) All of such financial statements are complete and correct and present
fairly and accurately the financial position of SB Forums as at the
respective dates of said balance sheets and the results of operations and
changes in financial position of SB Forums for the respective periods then
ended in conformity with GAAP applied on a basis consistent with that of the
preceding periods. No uncollectible accounts receivable are reflected on any
of said balance sheets without provision for an adequate reserve for
uncollectible amounts; and as at April 30, 2001, there was no liability of
any nature or in any amount that should properly be reflected or reserved
against in a balance sheet prepared in conformity with GAAP applied on a
basis consistent with that of the preceding periods which is not fully
reflected or reserved against in the balance sheet of SB Forums referred to
in this Section 4.6.
(d) SB Forums has also delivered to Buyer an annual financial plan,
including projected cash flows and projected EBITDA (as set forth in Section
2.2(a) of this Agreement), of SB Forums for the calendar year 2001. Such
financial plan was prepared in good faith by the management of SB Forums, is
based, where available, upon financial information for the calendar year
2001, and represents the current plans, objectives, intentions, forecasts and
views of the management of SB Forums as to the environments in which SB
Forums will conduct its business, its future business operations and its
future performance. Nothing has come to the attention of Seller or SB Forums
that causes it to believe that such annual financial plan is no longer
accurate. For purposes of this Section 4.6 only, "GAAP" means Japanese GAAP;
however, Seller represents and warrants that the financial statements
prepared in accordance with Japanese GAAP do not differ materially from what
such financial statements would state if they were prepared in accordance
with United States GAAP.
4.7 NO UNDISCLOSED LIABILITIES, ETC. Since April 30, 2001, (except for the
transactions contemplated by this Agreement):
(a) SB Forums has not incurred any liability or obligation (absolute,
accrued, known or unknown, liquidated or unliquidated, due or to become due,
contingent or otherwise) of any nature, other than liabilities and
obligations incurred in the ordinary course of business, that would properly
be reflected or reserved against in a balance sheet prepared in conformity
with GAAP applied on a basis consistent with that used in the preparation of
the Audited Balance Sheet; and
(b) SB Forums has not acquired any amount of accounts receivable that are
or are believed to be uncollectible, and the frequency and amounts of
payments received by SB Forums with respect to the accounts receivable
reflected on the consolidated balance
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sheet of SB Forums referred to in Section 4.6, do not, in retrospect, render
inadequate the reserve for uncollectible accounts set forth on such balance
sheet.
4.8 ABSENCE OF CERTAIN CHANGES. Except for the execution and delivery of this
Agreement, since December 31, 2000, SB Forums has not:
(a) had any change in its condition (financial or otherwise), operations
(present or prospective), business (present or prospective), properties,
assets, or liabilities, other than changes in the ordinary course of
business, none of which, singly or in the aggregate, has had or could
reasonably be expected to have a material adverse change (or occurrence or
condition reasonably likely to produce an adverse change), individually or in
the aggregate, on the condition (financial or otherwise), operations (present
or prospective), business (present or prospective), properties, assets or
liabilities of SB Forums (a "Material Adverse Effect");
(b) issued, sold or otherwise disposed of, or agreed to issue, sell or
otherwise dispose of, any capital stock or any other security of SB Forums
and has not granted or agreed to grant any option, warrant or other right to
subscribe for or to purchase any capital stock or any other security of SB
Forums;
(c) incurred or agreed to incur any indebtedness for borrowed money in
excess of $100,000 in the aggregate;
(d) paid or obligated itself to pay in excess of $100,000 in the
aggregate for fixed assets;
(e) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets having a fair market value at
the time of sale, transfer or disposition of $100,000 or more in the
aggregate, or canceled, or agreed to cancel, any debts or claims, other than
in the ordinary course of business;
(f) mortgaged, pledged or subjected to any charge, lien, claim or
encumbrance, or agreed to mortgage, pledge or subject to any charge, lien,
claim or encumbrance, any of its properties or assets;
(g) declared, set aside or paid any dividend (whether in cash, property
or stock) with respect to any of its capital stock or redeemed, purchased or
otherwise acquired, or agreed to redeem, purchase or otherwise acquire, any
of its capital stock;
(h) increased, or agreed to increase, the compensation or bonuses or
special compensation of any kind of any of its officers, employees or agents
by more than $50,000 over the rate being paid to them on December 31, 2000,
other than normal merit and/or cost-of-living increases pursuant to customary
arrangements consistent with SB Forums' past practice, or adopted or
increased any benefit under any insurance, pension
7
or other employee benefit plan, payment or arrangement made to, for or with any
such officer, employee or agent;
(i) lost any major customer (i.e. comprising more than 3% of SB Forums'
annual revenue) or had any material order canceled or knows of any threatened
cancellation of any material order;
(j) made or permitted any amendment or termination of any material
contract, agreement or license to which it is a party, or entered into any
transaction, other than in the ordinary course of business, or knows of any
threatened cancellation of any such material contract, agreement or license;
(k) made any change in its accounting methods or practices with respect
to its condition, operations, businesses, properties, assets or liabilities;
(l) made any charitable or political contribution or pledge in excess of
$25,000 in the aggregate;
(m) made any change to its tax reporting methods or practices with
respect to its condition, operations, business, properties, assets or
liabilities; or
(n) received any notice of inquiry or audit regarding any Taxes from any
taxing authority.
4.9 TITLE TO AND CONDITION OF PROPERTIES AND ASSETS. SB Forums has good and
marketable title in and to all of its properties and assets, including, without
limitation, (i) all those used in its business and (ii) those reflected in the
Unaudited Balance Sheet of SB Forums (except as sold or otherwise disposed of in
the ordinary course of business), subject to no mortgage, pledge, conditional
sales contract, lien, security interest, right of possession in favor of any
third party, claim, or other encumbrance, except (i) the lien of current taxes
not yet due and payable; (ii) minor liens and encumbrances which do not
materially detract from the value of the property subject thereto or materially
impair the operation of SB Forums; and (iii) those that have otherwise arisen in
the ordinary course of business. To the best of Seller's knowledge, the
facilities, machinery, furniture, office and other equipment of SB Forums that
are used in its business are in good operating condition and repair, subject
only to the ordinary wear and tear of those assets, and neither SB Forums nor
any property or asset owned or leased by it is in violation of any applicable
ordinance, regulation or building, zoning, environmental or other law in respect
thereof.
4.10 CERTAIN PROPERTIES. SB Forums owns no real estate. SB Forums only leases
real estate pursuant to a sublease arrangement with SBMM for the lease of the
office space referenced in Schedule 6.3. SB Forums has provided to Buyer a true
and complete copy of the lease currently in effect between SBMM and Kajima Corp.
SB Forums has not received any written notice from any governmental agency,
board, bureau, body, department or authority of any United States or foreign
jurisdiction, with respect to the use of the real estate referenced in Schedule
6.3. The sublease pursuant to which SB Forums leases its real property is in
full force
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and effect and is valid and enforceable in accordance with its terms. There is
not under any such lease any default by SB Forums, or any event that with notice
or lapse of time or both would constitute such a default by SB Forums and with
respect to which SB Forums has not taken adequate steps to prevent such default
from occurring. To the best of Seller's knowledge, there is not under any such
lease any default by any other party thereto or any event that with notice or
lapse of time or both would constitute such a default thereunder by such party.
Each property used in the business of SB Forums is reflected in the Unaudited
Balance Sheet in the manner and to the extent required by Japanese GAAP.
4.11 TAX RETURNS.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all Japanese or other jurisdiction taxes, assessments
and other governmental charges, duties, fees, levies, impositions and
liabilities, including without limitation, income, gross receipts, profits,
sales, use and occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise, unemployment
insurance, social security, business license, occupation, business
organization, stamp, environmental, personal property, real property,
worker's compensation, license, lease, service, service use, severance,
windfall profits, customs and other taxes, together with all interest, fines,
penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a
predecessor entity. For purposes of this Agreement, "Tax Returns" means all
reports, returns, declarations, statements or other information required to
be supplied to a taxing authority in connection with Taxes.
(b) SB Forums has (i) timely filed all Tax Returns required to be filed
by it and all such Tax Returns are true and complete in all respects, (ii)
paid all Taxes owed by it (whether or not shown or required to be shown on
such Tax Returns), and (iii) paid all Taxes for which a notice of assessment
or collection has been received (other than amounts being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established on the books of SB Forums), except for any such filings or
payments that are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect. The unpaid Taxes of SB Forums for tax periods
through the date of the Audited Balance Sheet and Unaudited Balance Sheet do
not exceed the accruals and reserves for Taxes set forth on the Audited
Balance Sheet and the Unaudited Balance Sheet by an amount that is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
The unpaid Taxes and the tax preparation fees with respect to such unpaid
Taxes of SB Forums through the Closing Date (including Taxes for such periods
that are not due until after the Closing Date) will not exceed the accruals
or reserves for Taxes on the financial statements and the books and records
of SB Forums on the Closing Date. No taxing authority has asserted any claim
for Taxes, or to the knowledge of Seller, is threatening to assert any claims
for Taxes; no waivers of time to assess any Tax are in effect and no requests
for waiving of the time to assess any Tax are pending. SB Forums has withheld
or collected and paid over to the appropriate
9
governmental authorities (or are properly holding or such payment) all Taxes
required by law to be withheld or collected. There are no liens for Taxes upon
the assets of SB Forums (other than liens for taxes that are not yet due or that
are being contested in good faith by appropriate proceedings).
(c) SB Forums is not bound by any Tax indemnity, Tax sharing or Tax
allocation agreement (whether written or unwritten or arising under operation
of law as a result of being a member of a group filing consolidated, combined
or unitary Tax Returns. SB Forums does not owe, nor will it owe, any amount
under any such agreement or any liability for Taxes of any other Person.
4.12 CONTRACTS. SB Forums is not a party to any written or oral:
(a) contract with any labor union;
(b) consulting contract or other contract for services involving a
payment of more than $100,000 annually;
(c) lease, other than the sublease between SB Forums and SBMM referenced
in Schedule 6.3 hereof;
(d) loan agreement, standby letter of credit, guarantee, performance
bond, or instrument relating to any debt, other than as set forth on the
financial statements of SB Forums;
(e) contract or agreement restricting the ability of any person
(including, but not limited to, any Shareholder) from freely engaging in any
business or competing anywhere in the world;
(f) contract not made in the ordinary course of business involving more
than $100,000; or
(g) other contract, except insubstantial contracts for supplies or
services and which can be terminated within one year without cost.
SB Forums is not a party to any contract with any governmental authority. SB
Forums is not a party to any contract that could have a Material Adverse Effect.
All material contracts or other agreements are in full force and effect and
valid and enforceable by SB Forums in accordance with its terms. SB Forums is
not in default in the observance or the performance of any term or obligation to
be performed by it under any such contract. To the best of Seller's knowledge,
no other person is in default in the observance or the performance of any term
or obligation to be performed by it under any material contract with SB Forums.
Seller does not know of any bid or contract proposal made by SB Forums that, if
accepted or entered into, might result in a loss to SB Forums. SB Forums has
delivered to Buyer true and complete copies of all contracts in effect on the
date hereof.
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4.13 LITIGATION. There are no claims, actions, suits, proceedings,
mediations, arbitrations or investigations, either at law or in equity, or
before any commission or other administrative authority (collectively, a "Legal
Proceeding") in any Japanese or other jurisdiction, of any kind now pending or,
to the best of knowledge of Seller or SB Forums, threatened or proposed in any
manner, or, to the best knowledge of Seller or SB Forums, any circumstances
which should or could reasonably form the basis of any such Legal Proceeding
involving SB Forums or any of the properties or assets of SB Forums. Neither SB
Forums nor any of the SB Forums properties or assets is subject to any judicial
or administrative judgment, order, decree or restraint.
4.14 INTANGIBLE PROPERTY. For the purposes of this Agreement "Intangible
Property" means trademarks, trademark applications, service marks, patents,
patent applications, copyrights, trade names, trade secrets, discoveries,
innovations, know-how, proprietary or confidential information, business
strategies, plans and reports, outlooks, forecasts, copyrights in both published
and unpublished works (including, without limitation, computer software, source
code, object code, firmware, development tools, files and any media on which
such is recorded), customer lists and domain names. Except as set forth in
Schedule 4.14(a), SB Forums does not own or use any Intangible Property. Each
domain name, registered trademark, trade name, trademark application, copyright,
patent or patent application (whether issued by the U.S. Patent and Trademark
Office, European Union or other governmental authority) listed on Schedule
4.14(a) has been validly issued and is owned by SB Forums, and SB Forums has the
exclusive rights to use all such domain names, registered trademarks, trade
names, trademark applications, copyrights, patents or patent applications, free
and clear of any encumbrances. Except as set forth in Schedule 4.14(b), SB
Forums owns all Intangible Property necessary to conduct its operations and
businesses. Neither Seller nor SB Forums knows of any claim, or any basis of any
claim, that SB Forums has infringed any Intangible Property of any other person.
Neither Seller nor SB Forums knows of any potential claim of infringement of any
Intangible Property or proprietary right of any other person that has not been
asserted but that, if asserted, could have a Material Adverse Effect, and there
are no outstanding disputes or other disagreements with respect to any license
or similar agreement or arrangement described in Schedule 4.14 or with respect
to infringement by a third party of any of the Intangible Property owned by SB
Forums. The consummation of the transactions contemplated in this Agreement will
not cause or obligate SB Forums, or the Seller with respect to SB Forums, to
grant any third party any rights or licenses with respect to any Intangible
Property or pay any royalties or other amounts in excess of those being paid by
SB Forums prior to the Closing. SB Forums has taken all steps reasonable to
protect the confidentiality and trade secret status of any material confidential
information of the company, including all confidential Intangible Property owned
or used by SB Forum. All current employees of, and current consultants to, SB
Forums have entered into valid and binding agreements with SB Forums sufficient
to vest title in SB Forums of all Intangible Property created by such employee
or consultant in the scope of his or her employment or consulting relationship
with SB Forums.
4.15 COMPLIANCE WITH LAWS. SB Forums conducts business only in Japan. SB
Forums has complied with and is in compliance with all Japanese statutes, laws,
ordinances, regulations, rules, permits, judgments, orders or decrees ("Laws and
Regulations") applicable to
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it or any of its properties, assets, operations and businesses, and there does
not exist any basis for any claim of default under or violation of any such Laws
and Regulations except such defaults or violations, if any, that in the
aggregate do not and would not be reasonably expected to have a Material Adverse
Effect. SB Forums has not received any opinion or memorandum or legal advice
from any legal counsel to the effect that it is exposed to any liability or
disadvantage that is or may be material to SB Forums. SB Forums is in compliance
with (i) all applicable requirements of all Japanese governmental authorities
with respect to environmental protection, including, without limitation,
regulations establishing quality criteria and standards for air, water, land and
hazardous materials, (ii) all applicable Japanese laws and related rules and
regulations regarding workplace safety and (iii) all applicable Japanese laws
and related rules and regulations affecting labor union activities, civil rights
or employment.
4.16 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. SB Forums has obtained all
licenses, franchises, permits and other governmental authorizations material to
the conduct of its business. Such licenses, franchises, permits and other
governmental authorizations are valid, and SB Forums has not received any notice
that any governmental authority intends to cancel, terminate or not renew any
such license, franchise, permit or other governmental authorization. SB Forums
holds all licenses, franchises, permits and other governmental authorizations
the absence of any of which could have a Material Adverse Effect. The business
of SB Forums is not being conducted, and no properties or assets of SB Forums
relating thereto are owned or are being used by SB Forums, in violation of any
statute, law, ordinance, regulation, rule or permit of any governmental entity
or any judgment, order or decree, and neither Seller nor SB Forums knows of any
alleged violation of any of the foregoing (including, but not limited to those
relating to employment discrimination, occupational safety, hazardous waste,
conservation or corrupt practices).
4.17 LABOR MATTERS. No key employee has been given notice of termination of
employment, and, to the knowledge of Seller or SB Forums, no key employee has
the intention to leave his or her employment. All employee plans and employee
benefits of any kind are set forth on the financial statements. SB Forums has
performed in all material respects all obligations required to be performed by
it under such plans and is in compliance with all applicable Japanese laws,
rules and regulations relating to labor or employment. The consummation of the
transactions contemplated in this Agreement will not entitle any officer or
employee of SB Forums to any additional benefits or payments.
4.18 CERTAIN TRANSACTIONS. There is no transaction, and no transaction now
proposed, to which SB Forums was or is to be a party and in which any director
or officer of SB Forums or any person owning of record or beneficially more than
l0 percent of the outstanding capital stock of any class of the SB Forums or any
associate of any such person had or has a direct or indirect material interest.
4.19 ACCOUNTING PRACTICES. SB Forums makes and keeps accurate books and
records reflecting its respective assets and maintains internal accounting
controls that provide reasonable assurance that (i) transactions are executed
with management's authorization, (ii) transactions are recorded as necessary to
permit preparation of SB Forums' financial statements and to maintain
accountability for the assets of SB Forums, (iii) access to the assets of SB
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Forums is permitted only in accordance with management's authorization, and (iv)
the reported accountability of the assets of SB Forums is compared with existing
assets at reasonable intervals.
4.20 MINUTE BOOKS. SB Forums' minute books, a complete copy of which has been
provided to Buyer, contain complete and accurate records of all meetings and
other corporate actions of its stockholders, Board of Directors and executive
management and committees thereof from April 1, 1997 to the present.
4.21 INSURANCE. All material properties and operations of SB Forums are
insured for its benefit, in amounts deemed adequate by its Boards of Directors
or management, against all risks usually insured against by persons operating
similar properties or conducting similar operations in the localities where such
properties are located or such operations are conducted under valid and
enforceable policies issued by insurers of recognized responsibility. There are
no claims in excess of $250,000 made under such policies and not contained on
the financial statements. SB Forums has delivered to Buyer true and complete
copies of all such policies as in effect on the date hereof. Such policies will
continue to be in effect after the Closing.
4.22 BANK ACCOUNTS; POWERS OF ATTORNEY. SB Forums has delivered to Buyer (i)
a complete list of the name of each bank in which SB Forums maintains an account
or safe deposit box, the names of all persons authorized to draw thereon or to
have access thereto, and the number for each account and (ii) the names of all
persons, if any, holding powers of attorney from SB Forums and an accurate and
complete summary statement of the terms thereof.
4.23 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by SB Forums and the
Seller directly with Buyer and without the intervention of any other person and
in such manner as not to give rise to any valid claim against any of the parties
for any finder's fee, brokerage commission or like payment.
4.24 NO UNTRUE STATEMENTS. No statement by the Seller or SB Forums contained
in this Agreement, no public statement by SB Forums or by the Seller regarding
SB Forums, and no written statement contained in any certificate or other
document required to be furnished by the Seller or any officer, employee,
counsel or other agent of SB Forums to Buyer pursuant to or in connection with
this Agreement contains or will contain any untrue statement of a material fact,
or omits or will omit to state a material fact necessary in order to make the
statements therein contained not misleading. There is no fact that has had, or
in the future could reasonably be expected to have, a Material Adverse Effect,
other than as specifically set forth as such in this Agreement or the Schedules.
4.25 INTERCOMPANY INDEBTEDNESS. There is no intercompany indebtedness or
payables between SB Forums and the Seller or an Affiliate (as defined in Rule
12b-2 under the Securities Exchange Act of 1934) of the Seller or SB Forums
(collectively, "Intercompany Indebtedness"). Any and all Intercompany
Indebtedness has been forgiven, and Buyer shall have no obligation with respect
to any such Intercompany Indebtedness, including any tax liabilities related
thereto. SB Forums has no third-party indebtedness for borrowed money except as
set forth on the Audited Balance Sheet.
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4.26 APPROVAL FOR TRANSFER OF SHARES. The transfer of the Shares contemplated
hereunder has been duly approved by all requisite corporate action of SB Forums
and Seller.
5. REPRESENTATIONS AND WARRANTIES BY BUYER.
Buyer represents and warrants to the Seller as follows:
5.1 CORPORATE ORGANIZATION. Each of Buyer and KME Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the corporate power and authority to carry on the
business now being conducted by Buyer and to acquire and own the Shares.
Immediately prior to the Closing, the authorized capital stock of KME Parent
will consist of (A) 200,000,000 shares of preferred stock, (B) 200,000,000
shares of non-voting common stock, and (C) 200,000,000 shares of voting common
stock. As of May 30, 2001, there were 65,058,000 shares of common stock of KME
Parent issued and outstanding. KME Parent holds no shares of its own capital.
5.2 AUTHORIZATION OF AGREEMENT; NO VIOLATION. Buyer's Board of Directors has
duly authorized the execution and delivery of this Agreement and the purchase
and the consummation of the other transactions contemplated hereby, by
delegation of authority to a special committee of the Board of Directors. Buyer
has delivered to Seller a true and complete copy, certified by its Secretary, of
the resolutions which have been duly adopted by its Board of Directors
authorizing such execution and delivery and such purchase and the consummation
of such other transactions. Neither the execution, delivery or performance of
this Agreement by Buyer nor the consummation of any of the transactions
contemplated hereby (i) will violate or conflict with any provision of the
Certificate of Incorporation or Bylaws of Buyer or (ii) except for the
Shareholder Approval, will result in any breach of or default under any
provision of any contract or agreement of any kind to which Buyer is a party or
by which Buyer is bound or to which the properties or assets of Buyer are
subject. Buyer has delivered to Seller copies of its Certificate of
Incorporation and all amendments thereto and a copy of its Bylaws, which are
true and complete copies of such instruments as in effect on the date of this
Agreement. The KME Shares have been duly authorized and validly issued and are
fully paid and non-assessable.
5.3 LITIGATION. There are no actions, suits, proceedings or investigations,
either at law or in equity, or before any commission or other administrative
authority in any United States or foreign jurisdiction, of any kind now pending
or threatened or proposed in any manner, or any circumstances which should or
could reasonably form the basis of any such action, suit, proceeding or
investigation, involving Buyer, KME Parent or any of its properties or assets
that (i) question the validity of this Agreement or (ii) seek to delay, prohibit
or restrict in any manner any action taken or contemplated to be taken by Buyer
under this Agreement.
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5.4 BROKERS. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Buyer directly with the Seller and
without the intervention of any other person and in such manner as not to give
rise to any valid claim against any of the parties for a finder's fee, brokerage
commission or like payment.
5.5 AUTHORIZATION AND ISSUANCE OF COMMON STOCK. The KME Shares to be
delivered pursuant to this Agreement shall be duly and validly authorized and,
when issued by the KME Parent and delivered in accordance with the terms of this
Agreement and the KME Parent's Amended and Restated Certificate of
Incorporation, shall be duly and validly issued and fully paid and
non-assessable.
5.6 FINANCIAL STATEMENTS. The Annual Report on Form 10-K for the year ended
December 31, 2000, and the report on From 10-Q for the period ended March 31,
2001, each filed by the KME Parent with the U.S. Securities and Exchange
Commission (File Nos. 001-16061 and 333-36828, respectively) accurately reflect
the financial condition and results of operations of the KME Parent for the
dates and periods specified therein.
5.7 NO UNTRUE STATEMENTS. No statement by Buyer contained in this Agreement
and no written statement contained in any certificate or other document required
to be furnished by any officer, employee, counsel or other agent of Buyer to the
Seller pursuant to this Agreement contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary in
order to make the statements therein contained not misleading.
6. POST-CLOSING COVENANTS OF SELLER.
6.1 FINANCIAL STATEMENTS AND CERTIFICATE. As soon as possible but in no event
later than March 29, 2002, Seller will at its own expense cooperate with Ernst &
Young LLP (the "Selected CPA"), who shall be engaged by Buyer to prepare in
conformity with GAAP and to deliver to Buyer audited balance sheets of SB Forums
as at December 31, 2001, and related statements of income and retained earnings
and changes in financial position for the twelve-month period ended on that
date, together with a report thereon by the Selected CPA, all of which shall be
in form and substance satisfactory to Buyer. Seller will deliver to Buyer at the
time of the delivery to Buyer of such financial statements a certificate
executed by the Seller in which the Seller shall represent and warrant to Buyer
that the financial statements and information provided by Seller to Buyer and/or
Selected CPA with respect to the operations of SB Forums prior to the Closing
Date:
(a) are complete and correct and present fairly and accurately the
financial positions of SB Forums as of the Closing Date, and the results of
operations of SB Forums for the five-month period ended on that date in
conformity with GAAP;
(b) no uncollectible accounts receivable are reflected on said financial
statements without provision for an adequate reserve for uncollectible
amounts;
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(c) as at the Closing Date, there was no material liability that should
properly be reflected or reserved against in a financial statement prepared
in conformity with GAAP which is not fully reflected or reserved against in
said financial statements;
(d) there are no matters of material importance relating to the condition
(financial or otherwise), operations (present or prospective), business
(present or prospective), property, assets or liabilities of SB Forums as of
the Closing Date which have not been appropriately reflected or reserved
against in said financial statements;
(e) SB Forums has good and marketable title to all of its properties and
assets as of the Closing Date, including those reflected in said financial
statements (except as sold or otherwise disposed of in the ordinary course of
business since the date of said financial statements), subject to no
mortgage, pledge, conditional sales contract, lien or other encumbrance,
except the lien of current taxes not yet due and payable;
(f) the provisions for taxes due by SB Forums in said financial
statements are sufficient for all unpaid Taxes, whether or not disputed or
due, in respect of their businesses and operations for all periods ended
prior to or on the Closing Date; and
(g) Neither Seller nor SB Forums knows of any question relating to any of
the Tax Returns or information returns of SB Forums which if determined
adversely to SB Forums would result in the assertion of any Tax deficiency.
6.2 CONSENTS AND APPROVALS. Seller and SB Forums shall use their best efforts
to obtain prior to the Closing all consents, authorizations, and approvals under
all statutes, laws, ordinances, regulations, rules, judgments, decrees, and
orders of any court or governmental agency, board, bureau, body, department or
authority or of any other person required to be obtained by Seller or SB Forums
in connection with the execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby.
6.3 SERVICES AGREEMENT. From the Closing Date through and until December 31,
2006, SBMM shall, at the request of SB Forums, provide any and all of the
services provided to SB Forums for the two year period prior to the Closing
Date, as further set forth on Schedule 6.3, for the fees charged to SB Forums
prior to April 1, 2001, as further set forth on Schedule 6.3, including, but not
limited to, a sublease and/or space sharing agreement entitling SB Forums to
continue to occupy the office space currently occupied by it and SB Forums'
entitlement to receive any and all services related thereto, all on the same
terms and conditions in existence during the two years prior to the April 1,
2001. In connection therewith, SBMM shall provide SB Forums with the consent of
the landlord of such office space consenting to SB Forums' continued occupancy
thereof.
If Kajima Corp. requires SB Forums to vacate the premises while SBMM remains
in possession of the premises pursuant to the Lease Agreement (as described in
Schedule 6.3), then Seller shall reimburse SB Forums for all costs incurred by
SB Forums in procuring a new lease agreement for the lease of comparable space
from a third party.
16
6.4 AFFILIATE DISCOUNTS. From the Closing Date, through and until December
31, 2006, Seller shall use its commercially reasonable best efforts to cause SB
Forums to receive the same or equivalent discounts, rebates, or other cost
reductions with respect to services performed by Seller or its affiliates as
other similarly situated affiliates of Seller receive with respect to such
services.
6.5 ADDITIONAL POST-CLOSING COVENANTS. Seller will, within 10 business days
after the Closing Date, use commercially reasonable best efforts to: (i) cause
the execution of the amendment of the Consulting Services and Joint Venture
agreements with Click2Learn to transfer such agreements and to release SB Forums
from all benefits, obligations and liabilities thereunder; and (ii) cause Kajima
Corporation to enter into an agreement granting SB Forums the right to share the
SB Forums current office space with SBMM, in form and substance acceptable to
Buyer. Seller shall use commercially reasonable best efforts to deliver to
Buyer, within 90 business days after the Closing Date, evidence of registration
in the name of SB Forums of all trademarks used in the business of SB Forums
that were registered in the name of SOFTBANK Corp.
7. COVENANTS OF BUYER: CONSENTS AND APPROVALS.
Except for the Shareholder Approval, Buyer shall use its commercially
reasonable efforts to obtain prior to the Closing all consents, authorizations
and approvals under all statutes, laws, ordinances, regulations, rules,
judgments, decrees, and orders of any court or governmental agency, board,
bureau, body, department or authority or of any other person required to be
obtained by Buyer in connection with the execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated hereby.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO SELL THE SHARES.
The obligations of Seller to sell the Shares is subject to the fulfillment
prior to or at the Closing of the following conditions:
8.1 BUYER'S PERFORMANCE. There shall not be any material error, misstatement
or omission in the representations and warranties made by Buyer in this
Agreement; all representations and warranties by Buyer contained in this
Agreement or in any written statement delivered by Buyer to Seller pursuant to
this Agreement shall be true in all material respects at and as of the Closing
as though such representations and warranties were made at and as of said time
(except (i) as contemplated by this Agreement and (ii) to the extent, if any,
Seller shall waive the same); and Buyer shall have performed and complied with
all the terms, provisions, and conditions of this Agreement to be performed and
complied with by Buyer at or before the Closing.
8.2 OPINION OF COUNSEL. Seller shall have received an opinion dated the
Closing Date, of Xxxxxxx Procter LLP ("Counsel for Buyer"), in form and
substance satisfactory
17
to Xxxxxxxx & Xxxxxxxx ("Counsel for Seller"), in form and substance as attached
hereto as Exhibit A.
8.3 CONSENTS AND APPROVALS. Except for the Shareholder Approval, Buyer shall
have obtained all consents, authorizations and approvals under all statutes,
laws, ordinances, regulations, rules, judgments, decrees and orders of any court
or governmental agency, board, bureau, body, department or authority or of any
other person required to be obtained by Buyer in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE THE SHARES.
The obligation of Buyer to purchase the Shares is subject to the fulfillment
prior to or at the Closing of the following conditions:
9.1 SELLER'S PERFORMANCE. There shall not be any material error, misstatement
or omission in the representations and warranties made by Seller in this
Agreement; all representations and warranties by Seller contained in this
Agreement or in any written statement delivered by Seller to Buyer pursuant to
this Agreement shall be true at and as of the Closing as though such
representations and warranties were made at and as of said time (except (i) as
contemplated by this Agreement and (ii) to the extent, if any, Buyer shall waive
the same); and Seller shall have performed and complied with all the terms,
provisions and conditions of this Agreement to be performed and complied with by
Seller at or before the Closing.
9.2 OPINIONS OF COUNSEL. Buyer shall also shall have received an opinion,
dated the Closing Date, of Mori Sogo Law Offices, Japanese counsel for SB
Forums, in form and substance satisfactory to Xxxxxxx Procter LLP, in form and
substance as attached hereto as Exhibit B. Buyer shall have received an opinion,
dated the Closing date, of Xxxxxxxx & Xxxxxxxx, U.S. counsel for Seller, in form
and substance satisfactory to Xxxxxxx Procter LLP, Counsel for Buyer, in form
and substance as attached hereto as Exhibit C.
9.3 CONSENTS AND APPROVALS. Seller shall have obtained all consents,
authorization and approvals under all statutes, laws, ordinances, regulations,
rules, judgments, decrees and orders of any court or governmental agency, board,
bureau, body, department or authority or of any other person required to be
obtained by Seller, in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
9.4 FAIRNESS OPINION. A special committee of the Board of Directors of the
KME Parent (the "Special Committee") shall have received an opinion, in form
satisfactory to Counsel to the Buyer, from an investment bank selected by the
Special Committee, that the transactions contemplated by this Agreement are fair
to the Buyer.
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10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements contained in
any certificate or other instrument delivered by or on behalf of Seller or
Buyer, respectively, pursuant to this Agreement shall be deemed representations
and warranties hereunder by the party delivering such certificate or instrument.
All representations, warranties, and agreements made by Seller, or Buyer in this
Agreement or pursuant hereto, including the schedules to this Agreement, and all
statements contained in any certificate or other instruments delivered by or on
behalf of the parties pursuant to this Agreement shall survive the Closing and
any investigation made by or on behalf of any Seller or Buyer, as the case may
be for a period of 24 months. Notwithstanding the foregoing, (i) any
representations, warranties and agreements with respect to Taxes shall survive
for the applicable statute of limitations and (ii) any representations,
warranties and agreements with respect to title ownership shall survive
indefinitely.
10.2 SELLER'S INDEMNIFICATION OBLIGATIONS. Subject to the terms and
conditions of this Section 10.2, Seller agrees to indemnify and hold Buyer,
Buyer's Affiliates, and their respective officers, directors, employees, agents,
successors and assigns harmless against and in respect of any and all debts,
obligations and other liabilities (whether absolute, accrued, contingent, fixed
or otherwise, or whether known or unknown, due or to become due or otherwise),
monetary damages, fines fees, penalties, interest obligations, deficiencies,
losses and expenses (including without limitation amounts paid in settlement,
interest, court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) damages, claims, obligations, liabilities, interest, penalties, and
expenses (including, without limitation, reasonable attorneys' fees and costs)
(collectively "Damages") arising out of, connected with or related to this
Agreement, including but not limited to, the following:
(a) any and all debts, liabilities, and obligations of SB Forums of any
nature, (whether absolute, accrued, known or unknown, liquidated or
unliquidated, due or to become due, contingent or otherwise) existing or
incurred on or prior to the Closing Date, or arising out of any transaction
or event occurring on or prior to the Closing Date, to the extent that such
debts, liabilities or obligations were not reflected or reserved against in
the consolidated financial statements of SB Forums as at April 30, 2001,
referred to in Section 4.6;
(b) any and all Damages to Buyer resulting from the breach of any
representation, warranty or covenant contained in this Agreement or any
misrepresentation by Seller or SB Forums contained in this Agreement or any
statement or agreement to be delivered or caused to be delivered by Seller
or SB Forums pursuant to this Agreement or resulting from Seller's or SB
Forum's failure to perform any provision of this Agreement to be performed
by Seller or SB Forums;
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(c) any and all expenses, Taxes, debts, liabilities, and obligations of
Seller or SB Forums incurred or to be incurred by Seller or SB Forums in the
preparation of this Agreement and the performance of the terms and
provisions of this Agreement;
(d) and any and all actions, suits, demands, assessments or judgments
with respect to any claim arising out of or relating to the subject matter
of the indemnification; and
(e) any and all Damages with respect to the purchase agreement between
SB Forums and Y.K. Son Kosan regarding the planning and sponsorship of
conferences and events relating to the computer industry.
Seller acknowledges and agrees that the obligations under this Section 10.2
and otherwise under this Agreement are the sole obligations of Seller and
that Seller shall have no right to contribution from SB Forums for any of
Seller's indemnification obligations, Damages incurred or other liabilities
relating to or arising from this Agreement. Seller also hereby fully and
finally releases, acquits and forever discharges Buyer and KME Parent, and
each of their present and former directors, officers, employees,
representatives and agents, from and against any and all claims, demands,
actions, suits, liabilities, losses and Damages, in connection with or
arising out of Seller's relationship as a shareholder of KME Parent.
10.3 BUYER'S INDEMNIFICATION OBLIGATIONS. Subject to the terms and
conditions of this Section 10.3 and to Section 10.6 of this Agreement, Buyer
agrees to indemnify and hold Seller, Seller's Affiliates and their respective
officers, directors, employees, agents, successors and assigns harmless against
any Damages, arising out of, connected with or related to this Agreement,
including but not limited to, the following:
(a) any misrepresentation or breach of warranty of Buyer contained in
this Agreement or in any Schedule of Buyer or in any certificate delivered
by Buyer at the Closing; provided that any claim for indemnification by
Seller under this Paragraph (a) may be made no later than a date six months
from and after the Closing Date; and
(b) any breach of any covenant of Buyer contained in this Agreement.
10.4 LIABILITY FOR TAXES. Seller shall be liable for, shall indemnify and
hold the Buyer, Buyer's affiliates, and their respective officers, directors,
employees, agents, successors and assigns harmless from and against, and shall
make payment of (i) any Taxes imposed on the SB Forums attributable to any tax
period ending prior to or on the Closing Date (the "Pre-Closing Period"), (ii)
any Taxes of Seller or SB Forums resulting from or attributable to the
transactions described in this Agreement, (iii) any Taxes of Seller or SB Forums
for which Buyer is or may be liable under a transferee liability or similar
theory, and (iv) with respect to any Tax periods that began before but end after
the Closing Date, Taxes imposed for the portion of such periods that are deemed
to close on the Closing Date.
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10.5 PROCEDURE FOR INDEMNIFICATION CLAIMS. In the case of any claim or
demand of a third party that may give rise to a claim for indemnification by the
Buyer or Seller, as the case may be hereunder (in such capacity, the
"Indemnified Party"), or if the Indemnified Party obtains knowledge of any
circumstance that may give rise to such a claim for indemnification hereunder,
such Indemnified Party shall give prompt written notice of such claim, demand or
circumstance (described in reasonable detail) to the Buyer or Seller, as the
case may be (in such capacity, the "Indemnifying Party"); provided that the
failure to provide such notice shall not affect the obligation of the
Indemnifying Party hereunder except to the extent, if any, that the lack of
prompt notice adversely affects the ability of the Indemnifying Party to defend
against or diminish the losses arising out of such claim, demand or
circumstance. The Indemnifying Party shall have the right to defend and to
direct the defense against any such claim or demand, in its name or in the name
of the Indemnified Party, as the case may be, at the expense of the Indemnifying
Party, and with counsel mutually approved by the Indemnifying Party and
Indemnified Party unless (i) such claim or demand seeks an order, injunction or
other equitable relief against the Indemnified Party or (ii) the Indemnified
Party shall have reasonably concluded that there is a conflict of interest
between the Indemnified Party and the Indemnifying Party in the conduct of the
defense of such claim or demand. Notwithstanding anything in this Agreement to
the contrary, the Indemnified Party shall, at the expense of the Indemnifying
Party, cooperate with the Indemnifying Party, and keep the Indemnifying Party
fully informed, in the defense of such claim or demand. The Indemnified Party
shall have the right to participate in the defense of any claim or demand with
counsel employed at its own expense; provided, however, that, in the case of any
claim or demand described in clause (i) or (ii) above or as to which the
Indemnifying Party shall not in fact have employed counsel to assume the defense
against such claim or demand, the reasonable fees and disbursements of such
counsel shall be at the expense of the Indemnifying Party. The Indemnifying
Party shall have no indemnification obligations with respect to any such claim
or demand which shall be settled by the Indemnified Party without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any action in any manner
that would admit the fault or guilt of, or otherwise materially and adversely
affect, the Indemnified Party.
10.6 SETOFF. If from time to time and at any time Buyer shall be entitled to
be paid any amount under the provisions of this Agreement, Buyer shall be
entitled, if it so elects, to set off such amount against the then unpaid amount
of the Purchase Price. Such right of set off shall be in addition to and not in
substitution of any other rights Buyer shall be entitled to under the provisions
of Section 10 of this Agreement or otherwise.
11. NONCOMPETITION.
Neither the Seller, SBMM, nor any of their controlled Affiliates will,
without the prior written consent of the Buyer, (a) for a period of five years
after the Closing Date, directly or indirectly, anywhere in Japan engage in any
promotional enterprise or activity which competes with the business as now
conducted by SB Forums or any other trade show, conference or similar business
hereafter conducted by Buyer (the "Prohibited Operations"), or directly or
indirectly employ, engage, contract for or solicit the services in any capacity
of any person who
21
is employed by Seller in the operation of the SB Forums' business on the date
hereof; or (b) use for its own benefit or divulge or convey to any third party,
any confidential information relating to the SB Forums' business, including,
without limitation, exhibitor, advertiser, customer, attendee and supplier
lists, formulae, trade know-how, secrets, consultant contracts, pricing
information, marketing plans, product development plans, business acquisition
plans and all other information relating to the operation of the Business not in
the public domain or otherwise publicly available. Information which enters the
public domain or is publicly available loses its confidential status hereunder
so long as neither the Seller nor its affiliates directly or indirectly cause
such information to enter the public domain. Notwithstanding the foregoing,
Seller's continuing ownership interest in the KME Parent shall not be a
violation of this provision.
The Seller acknowledges that the restrictions contained in this Section 11
are reasonable and necessary to protect the legitimate interests of the Buyer
and were necessary to induce the Buyer to enter into this Agreement, and that
any breach by the Seller of any provision hereof will result in irreparable
injury to the Buyer. The Seller acknowledges that, in addition to all remedies
available at law, the Buyer shall be entitled to equitable relief (without the
necessity of posting any bond), including injunctive relief, and an equitable
accounting of all earnings, profits or other benefits arising from such breach
and shall be entitled to receive such other damages, direct or consequential,
whether or not foreseeable or known to Seller, arising from such breach as may
be appropriate.
In the event that any court or other body of competent jurisdiction
determines that the duration, geographic scope, or both, of this Section 11 are
unreasonable and that such provision is to that extent unenforceable, the
parties hereto agree that this Section 11 shall remain in full force and effect
for the greatest time period and in the greatest areas that would not render it
unenforceable.
12. MISCELLANEOUS.
12.1 ASSURANCE OF FURTHER ACTION. From time to time after the Closing and
without further consideration from Buyer, but at Buyer's expense, Seller shall
execute and deliver, or cause to be executed and delivered, to Buyer such
further instruments of sale, conveyance, assignment, transfer and delivery and
take such other action as Buyer may reasonably request in order to more
effectively sell, convey, assign, transfer and deliver and reduce to the
possession of Buyer any and all of the Shares and consummate the transactions
contemplated hereby.
12.2 EXPENSES. Each of the parties will pay all of its own legal and
accounting fees and other expenses incurred in the preparation of this Agreement
and the performance of the terms and provisions of this Agreement. Seller shall
bear all expenses and commission resulting from its sales and marketing efforts
for the sale of the SB Forums. In addition, Seller shall pay all transfer,
income and other taxes incurred by Seller in connection with the sale of the SB
Forums pursuant to the terms of this Agreement
12.3 WAIVER. The parties hereto may by written agreement (i) extend the time
for or waive or modify the performance of any of the obligations or other acts
of the parties hereto or
22
(ii) waive any inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this Agreement.
12.4 NOTICES. All notices, requests or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered or mailed
first class certified mail postage prepaid addressed as follows: if to Buyer, to
Xxxxxxx Xxxxx, Key3Media Group, Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000, (with a copy to, Xxx Xxxxxxxxx, Esq. and Xxxxxxx X. Xxxxx,
P.C.); if to Seller, to Xxx Xxxxxx (with a copy to Xxxxxxx X. Xxxxx, Esq.); or
to such other address as may have been furnished in writing to the party giving
the notice by the party to whom notice is to be given.
12.5 ENTIRE AGREEMENT. This Agreement, the schedules and exhibits attached
hereto embody the entire agreement among the parties and there have been and are
no agreements, representations or warranties, oral or written among the parties
other than those set forth or provided for in this Agreement. This Agreement may
not be modified or changed, in whole or in part, except by a supplemental
agreement signed by each of the parties.
12.6 RIGHTS UNDER THIS AGREEMENT; NONASSIGNABILITY. This Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assignable by any party without the
prior written consent of the other parties; provided, however, that Buyer may
assign all or any part of its rights under this Agreement and delegate all or
any part of its obligations under this Agreement to one or more corporations all
or substantially all of the capital stock or equity interests of which are owned
by Buyer, in which event all of the rights and powers of Buyer, and remedies
available to it hereunder shall extend to and be enforceable by each such
subsidiary. Seller may assign all or any part of its rights under this Agreement
and delegate all or any part of its obligations under this Agreement to any
affiliate under common control with, controlled by or controlling Seller or
Softbank Corp., a Japanese corporation, including, without limitation, any other
partnership or other entity of which any direct or indirect subsidiary of
Softbank Corp. is a general partner or has investment discretion, or any
employees of any of the foregoing, in which event all the rights and powers of
Seller, and remedies available to it hereunder shall extend to and be
enforceable by each subsidiary; provided, however that Seller may not delegate
its obligations under this to any affiliate with a creditworthiness less than
the creditworthiness of Seller.
Nothing contained in this Agreement is intended to confer upon any person,
other than the parties to this Agreement and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
12.7 GOVERNING LAW, JURISDICTION AND VENUE. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware. The
parties hereto agree that all actions or proceedings initiated by either party
hereto and arising directly or indirectly out of this Agreement which are
brought pursuant to judicial proceedings shall be litigated in a Federal or
state court located in the State of New York in the United States of America.
The parties hereto expressly submit and consent in advance to such jurisdiction
and agree that service of summons and complaint or other process or papers may
be made by registered or certified mail addressed to the relevant party at the
address to which notices are to
23
be sent pursuant to this Agreement. The parties hereto waive any claim that a
Federal or state court located in the State of New York is an inconvenient forum
or an improper forum based on lack of venue.
12.8 HEADINGS; REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES. The headings
of the Sections, paragraphs and subparagraphs of this Agreement are solely for
convenience and reference and shall not limit or otherwise affect the meaning of
any of the terms or provisions of this Agreement. The references herein to
Sections, Exhibits and Schedules, unless otherwise indicated, are references to
sections of and exhibits and schedules to this Agreement.
12.9 APPLICABLE CURRENCY. All monetary amounts set forth in this Agreement
are intended to represent and be denominated in currency of the United States of
America.
12.10 COUNTERPARTS/FACSIMILES. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but which together
constitute one and the same instrument. This Agreement may be executed by
facsimile signature.
12.11 SEVERABILITY; CONSTRUCTION. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction. The language used
in this Agreement shall be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction shall be applied
against any party.
12.12 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
KEY3MEDIA EVENTS, INC.
By:___________________________________
President
SOFTBANK AMERICA INC.
By:___________________________________
Title:
SOFTBANK FORUMS JAPAN, INC.
By:___________________________________
Title:
WITH RESPECT TO SECTIONS 6.3 AND
11 ONLY;
SOFTBANK MEDIA & MARKETING CORP.
By:___________________________________
Title:________________________________
SCHEDULE 4.14
INTANGIBLE PROPERTY
4.14(a)
SEE ALSO, ATTACHMENT.
Application Applied Registration Registration Trademark Targeted
Number Date Number Date Service
1992-249996 1992/9/30 3049834 1995/6/30 XXXXXXX 41
(in Japanese)
1992-249853 1992/9/30 3093085 1995/11/30 INTEROP 41
1992-249852 1992/9/30 3144857 1996/4/30 INTEROP 35
1992-249854 1992/9/30 3144858 1996/4/30 (Design A: 35
black triangle
and dots)
1992-249855 1992/9/30 3144859 1996/4/30 (Design A: 41
black triangle
and dots)
1992-249998 1994/9/30 3308650 1997/5/23 Xxxxxxx 41
1992-249856 1992/9/30 3345547 1997/9/12 XXXXXXX 41
1992-249858 1992/9/30 3366771 1997/12/19 DIGITAL WORLD 41
1992-58577 1995/6/14 4068519 1997/10/17 (Design B: N+I) 35
1995-58578 1995/6/14 4071697 1997/10/24 (Design B: N+I) 41
1992-249857 1992/9/30 3323115 1997/6/20 DIGITAL WORLD 41
Targeted Service
Class 35: Planning and operation of exhibitions for commercial or advertisement
purposes, Advertisement service, Advise upon marketing, etc. Class 41: Planning
and operation of seminars, etc.
Class 42: Database service, Test and Study of Computers
Application Applied Registration Registration Trademark Targeted
Number Date Number Date Service
1997-150322 1997/8/22 4248374 1999/3/12 Web INNOVATION 35
1997-150325 1997/8/22 4248375 1999/3/12 TECHNOLOGY/PERFORMANCE/MANAGEMENT 35
1997-150326 1997/8/22 4248376 1999/3/12 STRATEGIC NETWORKS 35
1997-150328 1997/8/22 4248377 1999/3/12 Web INNOVATION 41
1997-150331 1997/8/22 4248378 1999/3/12 TECHNOLOGY/PERFORMANCE/MANAGEMENT 41
1997-150334 1997/8/22 4307174 1999/8/20 Web INNOVATION 42
1997-150336 1997/8/22 4307175 1999/8/20 SUPPORT/SERVICES/CONFERENCE/& 42
EXPO WEST
1997-150337 1997/8/22 4307176 1999/8/20 TECHNOLOGY/PERFORMANCE/MANAGEMENT 42
1997-150338 1997/8/22 4307177 1999/8/20 STRATEGIC NETWORKS 42
1999-39405 1997/8/22 4358931 2000/2/4 Web INNOVATION 35
1999-39406 1997/8/22 4358932 2000/2/4 SUPPORT/SERVICES/CONFERENCE/& 35
EXPO WEST
1999-39407 1997/8/22 4358933 2000/2/4 TECHNOLOGY/PERFORMANCE/MANAGEMENT/ 35
CONFERENCE&EXPO
1997-150330 1997/8/22 Declined - SUPPORT/SERVICES/CONFERENCE/& 41
EXPO WEST
1997-150333 1997/8/22 Declined - SOFTBANK 42
FORUMS/Interactive/CONFERENCE
& EXPO
1999-39408 1999/5/7 4359975 2000/2/10 STRATEGIC NETWORKS 35
Application Applied Registration Registration Trademark Targeted
Number Date Number Date Service
1999-88750 1999/9/30 Pending Pending Linux Conference 35/41
2000-42269 2000/4/20 Pending Pending INTER P EYE 35
2000-42270 2000/4/20 Pending Pending INTER P EYE 35
SCHEDULE 6.3
SERVICES TO BE PERFORMED
BY SOFTBANK MEDIA & MARKETING CORP.
Service Monthly Fee
1.* From the Closing Date, through and until 715,838*
December 31, 2006, SBMM shall provide maintenance (Japanese Yen)
services for SB Forums' computer network and human
resource services consistent with past practices
as requested by SB Forums with respect to the
business of SB Forums. *This figure consists of a
fee of 681,750 for services and 34,088 for
consumption tax.
2.** For the term of the Lease Agreement, as 2,457,589**
extended, between Kajima Corp. and SBMM (f/k/a (Japanese Yen)
SOFTBANK Publishing, Inc.), dated November 30,
2001, SBMM shall sublease to SB Forums the space
currently occupied by SB Forums under the prior
sublease arrangement between SBMM and SB Forums.
The sublease rental charge to SB Forums may only
be increased upon an increase by Kajima Corp. to
SBMM for the full premises, and only in an amount
equal to the percentage increase by Kajima Corp.
to SBMM's lease rental charge for the same period.
**This fee includes office rent, utilities (water
and electric) , interest on the self deposit, and
consumption tax.
