EXHIBIT 10.1
FIRST AMENDMENT TO JOINT VENTURE AGREEMENT
This First Amendment to Joint Venture Agreement ("Agreement")
is made and entered into this 6th day of September, 1996, effective as of the
19th day of January, 1995 (the "Effective Date"), by and between JUSCO CO., LTD.
("JUSCO"), a company incorporated under the laws of Japan and having its
registered office at 0, 0-Xxxxx, Xxxxxxxxxxxx-xxx, Xxxxxxx-xx, Xxxxx 000, Xxxxx
and THE SPORTS AUTHORITY, INC. ("TSA"), a corporation organized and existing
under the laws of the State of Delaware, United States of America ("U.S.A."),
and having its principal place of business at 0000 Xxxxx Xxxxx Xxxx 0, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000 U.S.A., in accordance with the following terms and
provisions:
WHEREAS, Jusco and TSA entered into a certain Joint Venture Agreement
as of January 19, 1995 (the "JVA") establishing, developing and operating in
Japan sporting goods retail stores stocked and designed along the lines of "TSA
Stores" (as defined in the JVA);
WHEREAS, the joint venture is to be carried out through the
incorporation in Japan of a "Joint Venture Company" (as defined in the JVA) to
be named "Mega Sports Co., Ltd." ("MEGA"); and
WHEREAS, actual formation and operation of MEGA requires certain
refinements and amendments to the JVA;
NOW THEREFORE, Jusco and TSA acknowledge and agree to the following
amendments to the JVA.
1. In Section II entitled "TERMS AND DEFINITIONS" the definition of
"BUSINESS PLAN" shall be deleted in its entirety and shall be replaced by the
following provision:
The plan entitled "Business Plan for Mega Sports Co., Ltd."
and dated as of March 20, 1996 for the four-year period
commencing from February, 1996, which includes a preliminary
schedule for establishing Stores set forth in Section 3.7.
2. In Section II entitled "TERMS AND DEFINITIONS" the definition of
"OPERATIVE DOCUMENTS" shall be deleted in its entirety and shall be replaced by
the following provision:
The Joint Venture Agreement, the Jusco Services Agreement
between Jusco and the Joint Venture Company and the TSA
Services Agreement and License Agreement between TSA and the
Joint Venture Company.
3. In Section II entitled "TERMS AND DEFINITIONS" the
definition of "DATE OF INCORPORATION" shall be changed by deleting "Joint
Venture Agreement" and adding in its place "Joint Venture Company."
4. In Section 3.4 entitled "AUTHORIZED CAPITAL" the figure for
authorized capital of the Joint Venture Company shall be yen 400,000,000 and the
total paid-in capital shall be yen 100,000,000. After that, as a result of the
second issue of capital, the figure for authorized capital shall be yen
1,000,000,000 and the total paid-in capital shall be yen 250,000,000. As a
result of the third issue of capital, the figure for the authorized capital
shall be yen 1,000,000,000 and the total paid-in-capital shall be yen
400,000,000.
5. In Section 3.5. entitled "INITIAL CAPITAL CONTRIBUTIONS" the figures
for Jusco's subscription shall be 980 shares at par, representing 49% of the
issued share capital of the Joint Venture Company. Further, the figures for
TSA's subscription shall be 1,020 shares at par, representing 51% of the issued
share capital of the Joint Venture Company. The figures for Jusco's shares shall
be 2,450 and 3,920 respectively immediately after the second and third issue of
capital. The figures of TSA's shares shall be 2,550 and 4,080 respectively
immediately after the second and third issue of capital.
6. In Section 3.7 entitled "ADDITIONAL FUNDING" the Joint Venture
Company's annual funding goals shall be set in view of the revised plan for
opening TSA Stores below:
YEAR NUMBER OF TSA STORES:
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1995 0
1996 3
1997 4
1998 5
1999 5
7. The last paragraph of Section 3.7 entitled "ADDITIONAL FUNDING" is
deleted in its entirety and shall be replaced by the following provision:
The Parties shall take such steps as are necessary to assure
that the Joint Venture Company shall not issue any other
Shares, convertible bonds and bonds with warrants without
first offering such other Shares or securities to each of the
Jusco JV Shareholder and the TSA JV Shareholder in proportion
to their shareholding in the Joint Venture Company at the time
of issuance so as to enable each Party to maintain its
proportional holding (measured in nominal value) of the issued
share capital of the Joint Venture Company. New Shares,
convertible bonds and bonds with warrants may be issued to
those other than Shareholders if approved by the affirmative
vote of at least two-thirds of the shares represented at a
general meeting of shareholders at which shareholders holding
a majority of the issued and outstanding Shares are present or
represented by proxy. Such resolution shall only be effective
for new shares to be issued for the first time after the
resolution and to be paid up within six (6) months of the date
of the resolution and for convertible bonds and bonds with
warrants to be issued for the first time after the resolution
and to be paid up within six (6) months of the date of the
resolution.
8. In Section 3.9 entitled "CORPORATE NAME OF THE JOINT VENTURE
COMPANY" the Joint Venture Company shall be named "Mega Sports Co., Ltd."
9. In Section 4.4(c), the reference to "Management Services
Agreements" shall be changed to "TSA and Jusco Services Agreements."
10. To Section 4.5 entitled "TRANSACTIONS WITH JUSCO OR TSA; INSURANCE"
a new paragraph shall be added prior to the last paragraph to specify a
potential reimbursement responsibility in connection with U.S.
Merchandise and Store Fixtures, to wit:
To the extent that the Joint Venture Company does not fulfill
its indemnification obligations as provided above in this
Section 4.5 to defend, indemnify and hold harmless the
Provider and its officers, directors, employees,
representatives and
agents, at the Joint Venture Company's expense, from and
against any claim, damage, loss, cost, expense (including
reasonable attorneys' fees) or penalty, or any action
therefor, arising out of or in connection with any services,
goods or facilities provided to the Joint Venture Company
and/or its Subsidiaries by a Provider, including U.S. and
Japan Merchandise or Store Fixtures pursuant to Article 2.3 of
the TSA and Jusco Services Agreements ("Damages"), Jusco and
TSA shall promptly reimburse such Provider, at the expense of
Jusco and TSA, for all such Damages which are not paid
directly by the Joint Venture Company, in proportion to their
shareholding interests in the Joint Venture Company at the
time any such Damages are incurred, including but not limited
to any claims for damaged or defective products, product or
premises liability, failure to comply with product labeling,
instructions, testing or certification requirements, trademark
or other proprietary right or intellectual property
infringement, negligence, defamation, misappropriation, unfair
competition and failure to pay withholding tax.
11. In Section 4.8 entitled "ACTIONS BY BOARD OF DIRECTORS FOR CATEGORY
A ACTIONS" in subsection (vii) is deleted in its entirety and shall be replaced
by the following provision.
The borrowing by the Joint Venture Company which would result
in the borrowing to equity ratio of the Joint Venture Company exceeding the
ratio of twenty to one(20/1);
12. Section VI entitled "Management Services and License Agreements"
shall be re-entitled "Services and License Agreements," Section 6.3 entitled
"MANAGEMENT SERVICES AGREEMENTS" shall be re-entitled "TSA AND JUSCO SERVICES
AGREEMENTS" and Section 6.3 shall be deleted in its entirety and shall be
replaced by the following provision:
Attached hereto as Exhibits C and D, each of which the Parties
shall cause the Joint Venture Company to execute immediately
after the Date of Incorporation, are the forms of agreements
pursuant to which TSA and Jusco, respectively, shall provide
services to the Joint Venture Company.
13. In Section 8.2. entitled "SUBSCRIPTION OF SHARES" the figures for
remittances by the Jusco JV Shareholder and the TSA JV Shareholder shall be yen
49,000,000 for 980 Shares at par, representing 49% of the issued share capital
of the Joint Venture Company, and yen 51,000,000 for 1,020 Shares at par value
of yen 50,000 each, representing 51% of the issued share capital of the Joint
Venture Company, respectively. After that, as a result of the second issue of
capital, the figures for remittances by the Jusco JV Shareholder and the TSA JV
Shareholder shall be yen 122,500,000 for 2,450 Shares at par and yen 127,500,000
for 2,550 Shares at par respectively. As a result of third issue of capital, the
figures for remittances by the Jusco JV Shareholder and the TSA JV Shareholder
shall be yen 196,000,000 for 3,920 Shares at par and yen 204,000,000 for 4,080
Shares at par respectively.
14. A new Section 10.7 entitled "BOARD APPROVAL OF TRANSFERS OF SHARES"
is added to Section X, to wit: "Notwithstanding the provisions of Sections 10.1
through 10.6 above, after the Parties have fully complied with the requirements
of such Sections, Article 8 of the Company's Articles of Incorporation shall
apply, which provides that any transfer of Shares shall be subject to approval
by the Board of Directors by way of an unanimous vote of all the Directors in
office. Such action shall be regarded as a Category A Action and shall be
governed by the provisions of Section 4.8."
15. Sections 11.2 (a) and (b) are deleted in their entirety
and shall be replaced by the following provisions:
11.2. TERMINATION. This Agreement may be terminated at any time
BY TSA OR JUSCO, AS THE CASE MAY BE, IF:
(a) The other Party shall materially
default in the performance of any of the covenants, terms and
conditions of this Agreement and shall fail to cure such
default within sixty (60) calendar days after receipt of
notice in writing from the terminating Party of such default,
giving reasonable particulars of such default and of the
intention of the Party serving the notice to terminate this
Agreement unless such default is cured; provided, however,
that if such default cannot reasonably be cured within sixty
(60) calendar days, no termination shall occur so long as the
Party against which default has been declared continues to use
its best efforts to cure such default;
AUTOMATICALLY, IF:
(b) Either Party shall be judicially
declared bankrupt or insolvent, make an assignment for the
benefit of, or enter into a compromise with, its creditors;
initiate bankruptcy or insolvency proceedings of any kind or
proceedings for the appointment of a receiver, manager,
judicial manager or similar official with respect to it or any
of its assets or become a party to dissolution proceedings;
provided, however, that no termination shall occur if any such
action is stayed, dismissed or reversed within sixty (60)
calendar days of the initiation of such action and the subject
Party provides satisfactory evidence of the same within such
period.
16. Section 11.4 is deleted in its entirety and shall be replaced
by the following provision:
11.4. EFFECT OF TERMINATION UNDER SECTION 11.2(B). Upon a
termination of this Agreement under Section 11.2(b), the
Parties agree that the Joint Venture Company shall be
voluntarily dissolved and liquidated, provided that no
dissolution and liquidation shall occur upon such a
termination (or as otherwise provided in the Joint Venture
Company's Articles of Incorporation) if the non-bankrupt
holders of all of the remaining Shares elect to continue the
existence of the Joint Venture Company, in which case the
bankrupt holders shall vote with the non-bankrupt to approve
such continuance (including any necessary amendment of the
Articles of Incorporation to effect such continuance) and the
non-bankrupt holders shall purchase all (but not less than
all) of the Shares then owned by the bankrupt Party or any of
its direct or indirect wholly-owned Subsidiaries by serving
written notice to such Party and paying for such Shares in
accordance with Section 11.3. As a part of a dissolution and
liquidation, the non-bankrupt Party shall have the right (but
not the obligation) to purchase all, but not less than all, of
the assets of the Joint Venture Company at a price
equal to the Fair Market Value thereof determined in
accordance with an Appraisal. The Party exercising its rights
under this Section 11.4 shall do so by serving written notice
to the other Party and the Joint Venture Company within thirty
(30) calendar days after the date of termination. The closing
shall be held within forty-five (45) days of the Parties'
receipt of the final appraisal of the assets of the Joint
Venture Company unless otherwise agreed by the Parties. The
purchase price of the assets purchased under this Section 11.4
must be paid in Japanese Yen in immediately available and
transferable funds through a transfer of funds to a banking
account to be designated at that time by the Joint Venture
Company. As a condition to the closing, the Parties shall
procure that the Joint Venture Company shall deliver to the
Party exercising its rights hereunder such instruments of
transfer as such Party may reasonably request, transferring
the assets free and clear of any lien or encumbrance other
than, with respect to real estate, encumbrances of record that
do not materially interfere with the use of the property for
the conduct of a retail store.
17. In all other respects the JVA remains unmodified. In any conflict
or inconsistency between the provisions of this Agreement and the provisions of
the JVA, the provisions of this Agreement shall govern.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed as of the date first above written by its duly authorized officer or
officers.
JUSCO CO. , LTD.
By: /S/ XXXXXX XXXXX
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Name: Xxxxxx Xxxxx
Title: Chairman and CEO
THE SPORTS AUTHORITY, INC.
By: /S/ XXXX X. XXXXX
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Name: Xxxx X. Xxxxx
Title: Chairman of the Board and CEO
