Exhibit 10.5(a)
Joint Venture Agreement
dated
September 28, 1993
between
Xxxxx Xxxxx, Inc.
and
Otto-Sumisho Inc.
TABLE OF CONTENTS
Page
----
RECITALS................................................................. 1
ARTICLE I ESTABLISHMENT OF NEWCO......................................... 1
Section 1.01 Form and Characteristics of NEWCO...................... 1
Section 1.02 Initial Investment..................................... 2
ARTICLE II ORGANIZATION AND OPERATION.................................... 3
Section 2.01 Meetings of Shareholders............................... 3
Section 2.02 Board of Directors..................................... 4
Section 2.03 Statutory Auditors..................................... 5
Section 2.04 Executive Officers..................................... 5
Section 2.05 Day-to-Day Operation................................... 6
Section 2.06 Important Matters...................................... 6
Section 2.07 Matters Subject to EBI's Veto Rights................... 7
ARTICLE III ACCOUNTING................................................... 7
Section 3.01 Fiscal Year............................................ 7
Section 3.02 Accounting, Inspection of Records, Etc................. 7
ARTICLE IV COOPERATION OF PARTIES........................................ 7
Section 4.01 General................................................ 7
Section 4.02 Grant of License....................................... 7
Section 4.03 Distribution and License Agreement..................... 8
Section 4.04 Financing.............................................. 9
Section 4.05 Services of EBI or OSI Personnel....................... 9
Section 4.06 Coordination Committee................................. 9
Section 4.07 Non-competition........................................ 10
Section 4.08 Cooperation Outside Japan.............................. 10
ARTICLE V NEW SHARES, RESTRICTION ON TRANSFER............................ 10
Section 5.01 Issuance of New Shares................................. 10
Section 5.02 General Restriction on Transfer........................ 11
Section 5.03 Involuntary Transfer................................... 11
ARTICLE VI TERM AND TERMINATION.......................................... 12
Section 6.01 Effective Date......................................... 12
Section 6.02 Termination for Cause.................................. 13
Section 6.03 Right of Withdrawal.................................... 13
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ARTICLE VII NEGATIVE NET WORTH........................................... 14
Section 7.01 Effect on Transfer of Shares........................... 14
ARTICLE VIII GENERAL PROVISIONS.......................................... 15
Section 8.01 Secrecy................................................ 15
Section 8.02 Force Majeure.......................................... 15
Section 8.03 Notice................................................. 16
Section 8.04 Governing Law.......................................... 16
Section 8.05 Arbitration............................................ 16
Section 8.06 Assignment............................................. 16
Section 8.07 No Implied Waivers..................................... 17
Section 8.08 Entire Agreement....................................... 17
Section 8.09 Headings............................................... 17
Section 8.10 Language............................................... 17
Section 8.11 Final Provision........................................ 17
ii
JOINT VENTURE AGREEMENT
THIS AGREEMENT, made and entered into this 28th day of September 1993, between:
Xxxxx Xxxxx, Inc., a corporation duly organized and existing under the laws of
U.S.A., and having its principal place of business at 00000 Xxxxxxxxx 00xx
Xxxxxx, Xxxxxxx, XX 00000, X.X.X. (hereinafter referred to as "EBI"),
Otto-Sumisho Inc., a corporation duly organized and existing under the laws of
Japan, and having its principal place of business at Sumisho-Otto, Xxxxxxxx
Xxxxxxxx, 00-0 Xxxxxxxxxx-Xxxxxxxx-xxx, Xxxx-xx, Xxxxx, Xxxxx (hereinafter
referred to as "OSI").
WITNESSETH
WHEREAS, EBI is a well reputed seller of outdoor apparels and related goods and
sells its products through catalog and also more than 250 of its own retail
stores in the U.S.A. and Canada and has extensive market information regarding
the manufacture and sale of such apparels and related goods,
WHEREAS, EBI is interested in establishing its presence in Japan and is seeking
a Japanese corporation who is capable to open EBI's retail stores quickly and
operate them efficiently in Japan,
WHEREAS, OSI is a well reputed mail order company mainly targeting apparels and
has extensive market information regarding such apparels in Japan and has a
strong intention to expand its business to retail store operation for the
aforesaid products,
WHEREAS, OSI desires and proposes to collaborate with EBI to establish EBI's
brand presence in Japan by both catalog and retail store operation,
WHEREAS, EBI and OSI desire to collaborate each other in catalog sales in Japan
and agree to conclude a royalty agreement regarding catalog sales in Japan,
WHEREAS, EBI and OSI also desire to form a joint venture company (hereinafter
referred to as "NEWCO") for the import, manufacture and sale of EBI's products
through retail stores in Japan subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants
set forth below, the parties hereby agrees as follows:
ARTICLE I ESTABLISHMENT OF NEWCO
Section 1.01 Form and Characteristics of NEWCO
Subject to the terms and conditions contained in this Article I, the parties
hereto shall cause NEWCO to be incorporated under the laws of Japan as soon as
practicable after this Agreement
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becomes effective pursuant to Section 6.01 hereof, which NEWCO shall be in the
form and shall have the characteristics as described below:
(1) Form: Kabushiki Kaisha (limited liability company)
(2) Name: Xxxxx Xxxxx Japan Kabushiki Kaisha in Japanese and
Xxxxx Xxxxx Japan, Inc. in English.
(3) Principal place of business: Chuo-ku, Tokyo
(4) Principal objects and purpose:
The import and sale of products developed by EBI for its North American
market including its two new retail concepts; i.e., All Week Long and Xxxxx
Xxxxx Home Collection through retail store operation in Japan excluding
Xxxx Xxxxx Xxxxx Edition vehicles, the Xxxxx Xxxxx Maxum Sport Runabout
Boat and the Xxxxx Xxxxx Adventurer cosmetic fragrance and such additional
products for other similar programs.
NEWCO shall also reserve the rights to develop and manufacture products
specifically for the Japanese market under the license to be granted by EBI
pursuant to the Distribution and License Agreement between NEWCO and EBI
referred to in Section 4.03 hereof. The development, manufacture and sale
of such products shall be subject to the prior written approval of EBI. EBI
shall be the owner of all product designs, patents, trademarks and
copyrights developed and/or used by NEWCO.
(5) Authorized capital:
Japanese Yen 4,000,000,000 (Four Billion Japanese Yen), divided into 80,000
(Eighty Thousand) shares of common and voting stock with par value of
Japanese Yen 50,000 (Fifty Thousand Japanese Yen) each.
(6) Articles of Incorporation:
Substantially in the form attached hereto as Exhibit A (the translation of
which is attached hereto as Exhibit B).
All expenses incurred in connection with the incorporation of NEWCO, including
without limitation the legal fees for preparation of the Articles of
Incorporation, registration fees and stamp duties shall be borne by the parties
hereto in proportion to the shareholding ratio set forth in Section 1.02 hereof
except to the extent NEWCO is permitted to pay or reimburse such expenses under
the laws of Japan.
Section 1.02 Initial Investment
Each party hereto shall at the incorporation of NEWCO subscribe to and fully pay
for in cash the following number of the shares of NEWCO:
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Shareholder No. of Shares Amount Payable Shareholding Ratio
----------- ------------- ------------------ ------------------
EBI 6,000 J.Y. 300,000,000 30%
OSI 14,000 J.Y. 700,000,000 70%
Total 20,000 J.Y. 1,000,000,000 100%
The payments for the shares of NEWCO subscribed by each party shall be made by
telegraphic transfer remittance to a bank account of NEWCO in Japanese Yen
within fifteen (15) days after obtaining the necessary approval of the Japanese
government regarding the capital contribution by EBI.
OSI and EBI each may designate a Subsidiary Company to become the shareholder of
NEWCO. "Subsidiary" or "Subsidiary Company" means any corporation, partnership
or other entity in which one of the parties owns a 100% interest. In case of any
such designation, the original party remains to be bound by this Agreement. If
the other company ceases to be a Subsidiary, the shares must be retransferred to
the original owner.
ARTICLE II ORGANIZATION AND OPERATION
Section 2.01 Meetings of Shareholders
(1) Ordinary Meeting of Shareholders
An ordinary general meeting of shareholders shall be convened in Japan once a
year in the month of May. Such ordinary meeting shall decide any matter which
requires an approval of the shareholders under the laws of Japan in particular
on:
a. the approval of distribution of profits or handling of losses;
b. the discharge of directors, statutory auditors and accounting
auditors;
c. the election, dismissal and remuneration of directors and statutory
auditors;
d. appointment of the accounting auditors.
(2) Extraordinary Meeting of Shareholders
An extraordinary meeting of shareholders may be convened at any time by the
President of NEWCO in accordance with the resolution of the Board of
Directors.
(3) Notice of Meeting
Notice of a meeting specifying the place, date and hour of the meeting and
general nature of the business to be transacted shall be given not later
than twenty-one (21) days before the date of the meeting, by registered air
mail, telex or facsimile (with telephone confirmation of receipt) to each
shareholder entitled to vote thereat at the address of such
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shareholder appearing on the books of NEWCO. Such notice provided for above
may be waived by a written consent of all shareholders of NEWCO.
(4) Quorum
One or more shareholders holding in the aggregate a two-thirds (2/3)
majority of all shares issued and outstanding, present in person or by
proxy, shall constitute a quorum.
(5) Voting
One share shall be entitled to one vote. If a quorum is present, the
affirmative vote of two-thirds (2/3) or more of the shares entitled to vote
shall become the act of the shareholders, unless a higher number of votes
are required by the laws of Japan. In case of equality of votes, no one
shall have the second or casting vote. Voting by proxy shall be
permissible. Cumulative voting shall not be permitted.
Section 2.02 Board of Directors
(1) Directors
The Board of Directors of NEWCO shall consist of a maximum of six (6)
Directors. Each party hereto shall be entitled to nominate the following
number of the Directors:
EBI Two (2) Directors
OSI Four (4) Directors
Total Six (6) Directors
Each party hereto agrees to vote its shares in NEWCO for the election, as
Directors of NEWCO, of those persons nominated by the other party pursuant
to the above and, in the case of vacancy of any Director due to his
resignation or otherwise, to vote so as to appoint as his replacement a
Director nominated by the party who had originally nominated the Director
whose office becomes vacant. Each party hereto further agrees to cause its
respective nominees to NEWCO's Board of Directors to vote for the election
or appointment of the Representative Directors and the Executive Officers
of NEWCO and otherwise act in accordance with and for the implementation of
this Agreement or determinations and pursuant to the provisions hereof.
Upon a showing of good cause, either party hereto may propose to increase
the number of Directors to ten (10). Representation on the Board of
Directors shall be in proportion to the shareholding ratio of each party.
Such election shall become effective at the next regularly scheduled
meeting of the Board of Directors.
(2) Change in Number of Directors:
If the total number of Directors which constitutes the Board of Directors
of NEWCO is changed or if the shareholding ratio of each party hereto in
NEWCO is changed, the number of the Directors which each party hereto is
entitled to nominate shall be adjusted
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such that the number of the Directors so adjusted shall equitably and
fairly represent the then prevailing shareholding ratio of each party
hereto.
(3) A Chairman and Vice Chairman of the Board of Directors shall be elected.
OSI shall have the right to nominate the Chairman and EBI to nominate the
Vice Chairman. In the event that the Chairman of the Board is not
available, the Vice Chairman shall act in his place.
(4) Meeting of the Board of Directors:
Regular meeting of the Board of Directors shall be held every three (3)
months and a special meeting for any purpose may be called in accordance
with the provisions in Articles of Incorporation.
The meeting of the Board of Directors shall be held within or without Japan
as may be designated in the notice of the meeting. In the absence of such
designation, the meeting shall be held at the principal executive office of
NEWCO.
Notice of meeting of the Board of Directors specifying the place, date and
hour thereof as well as the general description of the business to be
transacted shall be given to each Director no later than twenty-one (21)
days before the meeting, personally or by registered air mail or by telex.
Such notice may be waived by a written consent of all Directors.
(5) Quorum and Voting
Presence in person of the majority of the Directors shall constitute the
quorum of the meeting of the Board of Directors.
Each Director shall be entitled to one (1) vote and any action of the Board
of Directors may be taken by affirmative vote of two-thirds (2/3) or more
of the Directors entitled to vote.
(6) Power of Board - The Board of Directors shall have the absolute powers
necessary for performing the various works of administration and all
actions necessary for achieving the objectives of NEWCO and ensuring the
conduct of its operations and the realization for all possible profits
there from.
Section 2.03 Statutory Auditors
NEWCO shall have a commercially reasonable number, but in any case at least
three (3) statutory auditors, provided that a minimum one statutory auditor
shall be nominated by OSI.
Section 2.04 Executive Officers
The Board of Directors of NEWCO shall elect one of the Directors nominated by
OSI to serve as President of NEWCO and another of the Directors nominated by OSI
to serve as Executive Vice President, and one person nominated by EBI to serve
as General Manager, Retail Stores.
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Each of the President, Executive Vice President, and one of the other Directors
appointed by the Board of Directors shall be also elected as a Representative
Director who is legally authorized to represent NEWCO.
To the extent permitted by the laws of Japan, each of the parties shall cause
the Directors nominated by it to cast their vote at the meeting of the Board of
Directors for election of such Directors nominated by OSI as President and
Executive Vice President of NEWCO and such person nominated by EBI as General
Manager, Retail Stores of NEWCO.
Section 2.05 Day-to-Day Operation
The day-to-day operation and management of NEWCO shall be conducted and
supervised by the President and the other officers of NEWCO within the powers
delegated to them and in accordance with the policies, budgets and business
plans decided or approved by the Board of Directors, subject to all restrictions
and limitations of Japanese law, the Articles of Incorporation and other
restrictions determined by the Board of Directors.
Section 2.06 Important Matters
Any of the actions or matters set forth below shall not be taken or conducted
without the prior approval of the Board of Directors, or if any of such actions
or matters requires an approval of the shareholders, such actions or matters
shall be first approved by the Board of Directors prior to the submission to the
meeting of the shareholders for their approval:
(1) Approval of the five (5) year plan, the annual business plan (including
store opening plan, capital plan, fund raising plan and budget for all
plans), financial statements or declaration of a dividend;
(2) Extending credit to any party in an amount exceeding Japanese Yen one
hundred million (100,000,000 Japanese Yen), except those given in the
ordinary course of business to customers of NEWCO;
(3) Making any loan to, or providing a guarantee in favor of, any party;
(4) Acquisition or disposition of assets or property other than in the ordinary
course of business exceeding the amount contemplated in the approved annual
business plan by more than twenty-five percent (25%);
(5) Borrowing of money exceeding the amount contemplated in the approved annual
business plan by more than twenty-five percent (25%);
(6) The election, dismissal and compensation of the President, Vice President
and the Representative Director of NEWCO;
(7) Important contract or agreement or any amendment thereto or renewal
thereof; and
(8) Other items to be submitted for approval at meeting of shareholders.
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Section 2.07 Matters Subject to EBI's Veto Rights
Notwithstanding anything herein to the contrary, EBI shall have in its sole
discretion the absolute right to veto any action or activity which in its
opinion impinges or compromises the Xxxxx Xxxxx name, image or brand equity.
ARTICLE III ACCOUNTING
Section 3.01 Fiscal Year
The fiscal year of NEWCO shall be one (1) year period ending on the last day of
February of each year, except the initial fiscal year which shall commence on
the date of the incorporation of NEWCO and end on February 28, 1994.
Section 3.02 Accounting, Inspection of Records, Etc.
(1) Books and Records: NEWCO shall keep true and accurate books of account and
records in accordance with sound accounting practices and accounting
principles generally accepted in Japan.
(2) Periodical Report, Etc.: The parties hereto shall cause NEWCO to submit to
each of the parties quarterly unaudited financial reports and other
periodical reports which may be reasonably requested by them and shall keep
them well informed of the operations and financial condition of NEWCO.
(3) Inspection of Books and Records: Each party hereto shall have the right to
access and inspect the books of account and other records of NEWCO and make
extracts and copies therefrom at any reasonable time during business hours
of NEWCO.
(4) Audit, Audit Report: The accounts and records of NEWCO shall be audited by
an independent public accountant appointed by the meeting of shareholders.
An audited financial report (including balance sheet, profit and loss
statement and all notes thereto) shall be submitted to the parties within
sixty (60) days after the end of each fiscal year.
ARTICLE IV COOPERATION OF PARTIES
Section 4.01 General
The parties hereto shall make all reasonable efforts to support the supply and
maximize the sales of the products by NEWCO.
Section 4.02 Grant of License
(1) Subject to Section 1.01 (4), for the sale of the products through retail
store operation by NEWCO, EBI agrees to grant NEWCO the exclusive license
to use the trademarks and logos of EBI to identify and sell the products in
Japan and such other countries as
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mutually agreed on by EBI and NEWCO so long as NEWCO exists and EBI is a
shareholder of NEWCO.
(2) EBI shall provide store operation know-how to NEWCO including but not
limited to the following matters, through the activities of EBI's employees
in Japan, through the training of employees of NEWCO in both Japan and
Redmond and through the supply of necessary documents:
(i) Store design including drawings, layout planning, display and
furniture and fixtures, etc., to cause NEWCO to be able to express and
realize EBI's total concepts in original features.
(ii) Merchandise assortment know-how.
(iii) Promotional materials.
(iv) Advice related to EDP systems including POS software.
(3) EBI agrees to give its assurance to make reasonable efforts to supply all
of NEWCO's requirements of the products upon such terms and conditions as
shall be determined between EBI and NEWCO. In such supply EBI shall grant
NEWCO the "most favored customer terms" and the right to purchase the
products at EBI's cost price on FOB basis without adding any markup of EBI.
NEWCO shall bear the direct costs (salary, travel expenses, etc.) of the
activities of EBI employees of Japan.
Section 4.03 Distribution and License Agreement
(1) To implement EBI's cooperation contemplated in Section 4.02, EBI shall and
all parties hereto shall cause NEWCO to enter into a Distribution and
License Agreement (the "Distribution and License Agreement") as soon as
practical after the incorporation of NEWCO.
(2) All parties hereto agree that the detailed terms and conditions of the
Distribution and License Agreement shall be discussed and agreed upon by
all parties hereto prior to the incorporation of NEWCO, provided that such
conditions as set out below in Sections 4.03 (3) and (4) shall be included
in the Distribution and License Agreement;
(3) As consideration for the Distribution and License Agreement, NEWCO shall
pay to EBI, an up-front fee (and not as an advance) of Japanese Yen
285,000,000 (Two Hundred Eighty-Five Million Japanese Yen) which shall be
paid within fifteen (15) days after the date of execution of the
Distribution and License Agreement; and
(4) NEWCO agrees to pay a royalty of 5% on Net Sales. "Net Sales" shall mean
the selling price to the ultimate consumer less returns and less sales or
similar tax.
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All payments shall be in U.S. dollars at the rate of exchange for
telegraphic transfers quoted by authorized foreign exchange banks in Japan
on the day of remittance and shall be payable at any bank in the USA
designated by EBI. NEWCO shall render account of the sales on a monthly
basis and make estimated royalty payments semi-annually on or before the
tenth (10th) working day of the month following the last month of each
season and will make final seasonal accounting and payment within thirty
(30) days thereafter. The royalty will be payable on all items sold by
NEWCO. Any royalty payment not made when due shall bear interest from the
date that such payment was payable until paid at a rate equal to the less
of (i) twelve percent (12%) per annum, or (ii) the maximum amount permitted
by applicable law. For the purposes of this Agreement, the parties hereto
agree that the seasons shall end on June 30 and December 31.
All taxes levied in accordance with the tax laws of Japan on royalty
payments to be made by NEWCO to EBI hereunder shall be borne by EBI. When,
pursuant to such tax laws, NEWCO is required to withhold such taxes and pay
them to the taxing authority on EBI's behalf, NEWCO is hereby authorized to
withhold and deduct such taxes from the applicable payments to EBI,
provided that NEWCO shall furnish EBI with the tax receipts or other
evidence showing the payment of such taxes.
Section 4.04 Financing
(1) The working capital of NEWCO shall be raised by NEWCO through its own
efforts. If NEWCO is not able to borrow sufficient funds from banks or
other financing institutions, each of the parties shall, upon the request
of the Board of Directors of NEWCO, provide NEWCO with such funds in the
form of capital increases or capital contributions all in proportion to the
shareholding ratios of the parties hereto in NEWCO consistent with a well
managed company.
(2) When either party upon mutual agreement and with the approval of the Board
of Directors extends financial assistance to NEWCO by way of a direct loan
or provides a guaranty in favor of a bank or other financial institution,
the parties hereto shall share the risks of the financial assistance so
extended in proportion to their respective shareholding ratios in NEWCO.
Section 4.05 Services of EBI or OSI Personnel
If NEWCO requests the services of one or more of EBI or OSI personnel, on either
an indefinite or temporary basis, EBI or OSI so requested shall make its best
efforts to provide such personnel upon such terms and for such period as agreed
with NEWCO. The compensation for such personnel by NEWCO (or reimbursement of
employment cost to EBI or OSI if appropriate) shall be decided between the
parties concerned.
Section 4.06 Coordination Committee
The parties hereto shall agree that coordination committee (hereinafter referred
to as "Coordination Committee") shall be formed between OSI and NEWCO and shall
agree to cause NEWCO to form such a Coordination Committee.
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The Coordination Committee shall be the institution to discuss, coordinate and
harmonize the relationship between OSI's catalog operation and NEWCO's retail
store operation including exchange of sales records, merchandising planning,
product procurement, sales promotion and other matters which OSI and NEWCO shall
be able to cooperate to enable both OSI and NEWCO to maximize synergy each
other.
The President of NEWCO shall be the Chairman of the Coordination Committee and
shall convene and preside over the meeting of the Coordination Committee in
accordance with the regulations to be agreed among the parties hereto.
Section 4.07 Non-competition
As long as either party is a shareholder of NEWCO and for a period of two (2)
years after it ceases to be a shareholder of NEWCO, neither EBI nor OSI shall
directly or indirectly (including through its Subsidiary Companies or Affiliated
Companies) conduct or cooperate with any third parties in the conduct of
marketing of EBI's products or similar products in Japan and shall refrain from
holding an interest in any other entity engaged in similar activities in Japan.
Such non-competition relates only to retail in shops and to those products which
are identical or similar to the present product line which is the subject matter
of this Agreement, as such product line may be expanded or modified by mutual
consent from time to time. Notwithstanding anything in this Agreement to the
contrary, the non-competition restriction shall not be applicable (i) to the
Non-Defaulting Party in the event that either EBI or OSI ceases to be a
shareholder due to termination for cause (pursuant to Section 6.02), or (ii) in
the event of a valid withdrawal (pursuant to Section 6.03). As used in this
Agreement, "Affiliated Company" means any corporation, partnership or other
entity in which one of the parties owns a controlling interest.
Section 4.08 Cooperation Outside Japan
The parties hereto agree to seriously consider whether future store projects of
EBI's products in other countries within Asia including China are appropriate to
be conducted through a joint venture company formed by and among the parties
hereto and the parties hereto shall present those projects to each other for
consideration. No obligations hereunder shall arise unless a mutually acceptable
joint venture agreement for such additional projects is executed by the parties
hereto.
ARTICLE V NEW SHARES, RESTRICTION ON TRANSFER
Section 5.01 Issuance of New Shares
Whenever NEWCO issues new shares of stock, the parties hereto shall have the
pre-emptive right to subscribe to such new shares in proportion to their
respective shareholding ratios in NEWCO.
If either party does not exercise such pre-emptive right with respect to all or
a part of the shares allocated to it pursuant to the preceding sentence, the
other party shall have the right to subscribe to those shares.
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Section 5.02 General Restriction on Transfer
(1) Except as expressly permitted in Section 1.02 and Section 5.03 hereof, none
of the parties hereto shall sell, transfer, assign, pledge, encumber or
otherwise dispose of the whole or any part of the shares of NEWCO owned by
it, without prior written consent of the other parties. An approval of the
Board of Directors for any transfer of the shares by any party hereto will
be given when such transfer is consented to by the other parties.
(2) To insure the implementation of the restriction under this Section 5.02,
all share certificates which NEWCO issues shall bear the following legend:
"The transfer or other disposition of the shares of the Company shall
be subject to the approval of the Board of Directors of the Company."
Section 5.03 Involuntary Transfer
(1) In the event that, pursuant to Section 6.02 hereof, this Agreement is
terminated by reasons of default by any party hereto (the "Defaulting
Party"), the remaining parties hereto (the "Non-Defaulting Parties") shall
have an option, exercisable by a written notice which shall be given within
thirty (30) days after such termination, either:
a. To purchase the whole shares of NEWCO then owned by the Defaulting
Party at the price per share equal to the net worth price determined
in accordance with the provisions of Section 5.03 (2) below; or
b. To sell the Defaulting Party all of the shares then owned by the
Non-Defaulting Parties at the price per share which shall be higher of
(A) the net worth price determined in accordance with the provisions
of Section 5.03 (2) below and (B) the fair market price per share
determined by the valuer appointed by NEWCO; and to request the
Defaulting Party to assume all outstanding financial obligations
rendered by the Non-Defaulting Parties under Section 4.04.
Such purchases by the Non-Defaulting Parties will be made in the
proportion that their respective shares bear to the total of the
shares owned by the Non-Defaulting Parties, unless otherwise agreed
upon by the Non-Defaulting Parties.
(2) The price payable for each share purchased pursuant to the preceding
paragraph (1) shall be an amount determined by dividing:
(i) The net worth of NEWCO as of the end of its immediately preceding
fiscal year or, if requested by the Non-Defaulting Party, the net
worth of NEWCO as of the end of the calendar month that is immediately
preceding the month in which this Agreement is terminated, determined
by the certified public accountant referred to in Section 3.02 (4) in
accordance with the generally accepted accounting principles and
practices consistently applied for auditing NEWCO;
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BY
(ii) The number of all shares of NEWCO then issued and outstanding.
For the foregoing purpose, the net worth of NEWCO shall mean the sum of the
capital and surplus accounts shown on the financial statements prepared by
the said certified public accountant, less the amount of any goodwill and
other intangibles if included in any financial statement as assets of
NEWCO.
(3) If the Non-Defaulting Parties elect to purchase the shares owned by the
Defaulting Party and if the relevant financial statements of NEWCO indicate
negative net worth, the Defaulting Party shall be required to transfer its
shares to the Non-Defaulting Parties without any consideration or payment.
(4) The purchase of the shares pursuant to this Section 5.03 shall be completed
within thirty (30) days after the notice to exercise the option is given to
the Defaulting Party.
(5) No termination of this Agreement nor the purchase or sale of the shares
pursuant to this Section 5.03 shall be construed to release or discharge
the Defaulting Party from its financial obligations under Section 4.03
hereof which remain unperformed or outstanding as of the termination of
this Agreement.
ARTICLE VI TERM AND TERMINATION
Section 6.01 Effective Date
(1) This Agreement shall become effective at the time when all of the following
conditions shall have been satisfied;
(i) All approvals of the government of U.S.A. shall have been obtained and
all filings of reports and documents with the government of U.S.A.
shall have been completed which approvals and filings may be required
for the foreign investment by EBI hereunder;
(ii) All approvals of the government of Japan shall have been obtained and
all filings of reports and documents with the government of Japan
shall have been completed which approvals and filings may be required
for the foreign investment by EBI hereunder.
(2) This Agreement shall remain effective so long as the parties remain the
shareholders of NEWCO.
(3) In the event that the conditions specified in the paragraph (1) of this
Section 6.01 are not satisfied on or before the end of December 1993, any
party may terminate this Agreement by written notice to the other parties,
to take effect immediately, without incurring any liability whatsoever.
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Section 6.02 Termination for Cause
(1) If any of the Events of Default described in this Section 6.02 occurs, the
Non-Defaulting Party shall have the right to terminate this Agreement, to
take effect immediately, by written notice to the Defaulting Party. Any of
the following events shall constitute an Event of Default.
(i) If any party hereto defaults in performance of or violates any
provision of this Agreement, and if such default or violation shall
not have been cured to the reasonable satisfaction of the other
parties hereto within thirty (30) days after a notice of default has
been given by the Non-Defaulting Party to the Defaulting Party;
(ii) If any party hereto shall (a) apply for or consent to the appointment
of a receiver, trustee or liquidator of all or a substantial part of
its assets, (b) be unable, or admit in writing its inability, to pay
debts as they mature, (c) make a general assignment for the benefit or
creditors, (d) be adjudicated bankrupt or insolvent or (e) be the
subject of a petition in bankruptcy or a petition seeking
reorganization or arrangement with creditors to take advantage of any
insolvency law; or
(iii) If any representation or warranty made by any party herein or in
connection herewith shall have been incorrect or misleading in any
material respect when made or confirmed, or any certificate or
statement furnished hereunder proves to have been false or misleading
as of its date in any material respect.
(2) The termination of this Agreement pursuant to the preceding paragraph (1)
and the Non-Defaulting Parties option pursuant to Section 5.03 shall be in
addition and without prejudice to any other rights and remedies permitted
by this Agreement or by law.
Section 6.03 Right of Withdrawal
(1) In the event that the accumulated losses of NEWCO appearing on its balance
sheet audited by the accounting auditors as of the end of its fifth (5th)
financial year after the incorporation of NEWCO and thereafter exceeded
twice the amount of initial investment provided in Section 1.02, any party
hereto may, by notice in writing to all other parties, declare its
intention to withdraw from NEWCO.
If a notice to withdraw is given by any party pursuant to the paragraph
above and all the other parties shall agree to dissolve and liquidate
NEWCO, the parties shall immediately commence legal proceedings for the
dissolution and liquidation of NEWCO.
(2) If any one or more of the parties (the "Rejecting Parties" for the purpose
of this Section 6.03) opposes dissolution and liquidation of NEWCO, then
the Rejecting Parties shall purchase, or arrange to have one or more third
parties invited by it purchase, all shares in NEWCO then held by all the
other parties (the "Withdrawing Parties").
13
When there is more than one Rejecting Party, each Rejecting Party shall
purchase the shares and assume financial obligations of Withdrawing Parties
in the proportion which the number of its shares bears to the total number
of shares held by the Rejecting Parties.
The purchase price of each share to be so purchased under this Section 6.03
shall be an amount determined by dividing:
(i) The net worth of NEWCO as of the end of the calendar month immediately
preceding the month in which such withdrawal proposal shall be made,
determined by the certified public accountant of NEWCO in accordance
with the generally accepted accounting principles and practices
consistently applied for auditing NEWCO.
BY
(ii) The number of all shares of NEWCO then issued and outstanding;
For the foregoing purpose, the net worth of NEWCO shall mean the sum of the
capital and surplus accounts shown on the financial statements of NEWCO
prepared by the said certified public accountant as of the applicable
month-end date, less the amount of accumulated loss, if any, included in
such financial statements. If the financial statements of NEWCO indicate a
negative net worth, the Withdrawing Parties shall be required to transfer
their shares of NEWCO to the Rejecting Parties without any consideration or
payment.
If NEWCO is liquidated in accordance with provisions of this Section 6.03
or by any cause whatsoever, the parties agree to use their best efforts to
take all measures necessary for the settlement of NEWCO's business. At the
time of such liquidation, the parties hereto, in good faith, shall duly
consider, if any, social responsibility NEWCO and the parties hereto may
have to NEWCO's employees and to the public and use reasonable best efforts
to agree on what, if any, action shall be taken.
The parties hereto shall also agree that the liquidation losses to be
incurred by such a liquidation shall be borne by the parties in proportion
to their respective shareholding ratios of the parties hereto in NEWCO.
ARTICLE VII NEGATIVE NET WORTH
Section 7.01 Effect on Transfer of Shares
Upon any purchase of shares of NEWCO pursuant to Section 5.03 (1)(a) or Section
6.03 (2) hereof by the Non-Defaulting Parties or the Rejecting Parties, as the
case may be (hereinafter called the "Transferee"), the Transferee (except as
otherwise provided in the last sentence of this paragraph) shall assume the then
outstanding financial assistance required by Section 4.04 hereof or otherwise of
the Defaulting Party or of the Withdrawing Parties whose shares are so
purchased, as the case may be, (hereinafter called the "Transferor"); provided,
however, that if the net worth of NEWCO determined in accordance with Section
5.03 (2) or Section 6.03 (2), as
14
the case may be (the "Net Worth"), is negative, the Transferor shall pay to the
Transferee an amount equal to the lesser of (A) the Transferor's share of the
financial assistance required by Section 4.04 hereof or otherwise actually
incurred by the Transferor and assumed by the Transferee upon the closing of the
sale of its shares, and (B) the Transferor's pro rata share based on its
shareholding in NEWCO of the Net Worth, which for purposes of such determination
shall be deemed to be a positive number. In any case where the Rejecting Parties
shall arrange to have one or more third parties purchase the shares of NEWCO
held by any Withdrawing Parties, (i) such third parties shall assume the then
outstanding financial assistance required by Section 4.04 hereof or otherwise of
the Defaulting Party and (ii) each third party shall enter into an agreement
with the remaining parties, in form and substance satisfactory to the remaining
parties, pursuant to which it shall become a party hereto and be bound by the
terms and conditions hereof. Anything herein notwithstanding, the Defaulting
party shall remain liable for any payments to NEWCO which it had agreed to make
prior to the date that the shares are transferred to the Non-Defaulting Parties.
ARTICLE VIII GENERAL PROVISIONS
Section 8.01 Secrecy
The parties hereto agree to keep strictly confidential and not to disclose to
any third party any technical, financial or marketing information acquired from
the other parties or from NEWCO relating to the transactions contemplated
hereby. The parties further agree to exercise their best efforts to compel
compliance by their respective employees with the provisions of this Section
8.01.
The obligations under this Section 8.01 shall not apply to any information:
(1) Which is or becomes generally available to the public through no breach by
the non-disclosing party of its obligation hereunder;
(2) Which is lawfully acquired by the non-disclosing party from any third
party;
(3) Which is already known to the non-disclosing party at the time of
disclosure from the disclosing party;
(4) Disclosure of which is compelled by the laws, regulations, decrees or
orders of the courts or any government or its agencies or subdivisions.
Section 8.02 Force Majeure
In any event of any failure or delay in the performance of this Agreement due to
war, civil commotion, labor dispute, fire, natural disaster, or any other cause
whatsoever beyond the reasonable control of a party hereto whose performance is
affected thereby, the party so affected shall not be liable for such failure or
delay, or results thereof. Upon the occurrence of any of the above events, the
party being affected by such event shall, without delay, notify in writing the
other party of the same, and the parties hereto shall meet and discuss
appropriate or necessary steps or actions to be taken to deal with the
situation.
15
Section 8.03 Notice
(1) Any notice, request and other correspondence under and in connection with
this Agreement shall be in the English language and be sent by cable,
telex, registered air mail or personal delivery from one party to the other
party at their respective addresses as specified at the beginning of this
Agreement or at the addresses notified pursuant to paragraph (3) of this
Section 8.03. In the event of notice by cable or telex, the sending party
shall confirm receipt of such notice by telephone.
(2) The notice, request, and other correspondence pursuant to this Section 8.03
shall be deemed validly received by the addressee upon expiration of
forty-eight (48) hours after transmission, in the case of cable or telex,
on the fifteenth (15th) day after mailing in the case of registered air
mail, or, immediately upon delivery to the party in the case of personal
delivery.
(3) Any party shall, upon a change of its address, notify the other parties of
such change in accordance with the procedures provided for in this Section
8.03.
Section 8.04 Governing Law
This Agreement shall be construed in accordance with and governed by the laws of
Japan, without giving effect to internal U.S. principles of the conflict of
laws.
Section 8.05 Arbitration
Any dispute, controversy or difference which may arise among the parties hereto,
out of or in relation to or in connection with this Agreement or for the breach
thereof shall be amicably settled by consultation among the parties in
accordance with the following procedure. In the event that such disputes are not
resolved at any step, either party may elect to elevate the resolution process
to the next step:
Step 1: The matter shall be reviewed by the senior management of EBI and OSI.
Step 2: The matter shall be reviewed by the senior management of the principals
of each of the parties.
Step 3: All such disputes, controversies and differences, if not settled
amicably at a prior step, shall be finally settled by arbitration to be held in
London, United Kingdom under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by three arbitrators appointed in accordance
with the said Rules. The award of such arbitration shall be final and binding
upon the parties thereto. Judgment upon such arbitration award may be entered in
any court having jurisdiction over the parties or their assets.
Section 8.06 Assignment
Except as expressly provided for herein, none of the parties shall assign or
transfer all or any part of this Agreement or any of its rights and/or
obligations hereunder to any third party without the prior written consent of
all of the other parties.
16
Section 8.07 No Implied Waivers
The failure of any party at any time to require performance by the other parties
of any provision hereof shall in no way affect the right to require such
performance at any time thereafter. Nor shall the waiver by any party of a
breach of any provision hereof constitute a waiver of any succeeding breach of
the same or any other provision nor constitute a waiver of the provision itself.
Section 8.08 Entire Agreement
This Agreement sets forth the entire agreement and understanding of the parties
hereto relating to the subject mater contained herein and merges all prior
discussions among the parties and none of the parties hereto shall be bound by
any previous agreement, negotiation, commitment and writing other than as
expressly stated in this Agreement.
This Agreement may not be amended or supplemented in any manner orally or
otherwise except by an instrument in writing signed by a duly authorized
representative of each of the parties hereto.
Section 8.09 Headings
The headings or captions to Articles, Sections or paragraphs of this Agreement
are to facilitate reference only, do not form a part of this Agreement, and
shall not in any way affect the interpretations hereof.
Section 8.10 Language
This Agreement is in the English language only, which language shall be
controlling in all respects. No translation, if any, of this Agreement into any
language shall be of any force or effect in the interpretation of this Agreement
or in a determination of the intent of any of the parties.
Section 8.11 Final Provision
In the event any phrase, sentence or paragraph of this Agreement shall for any
reason be held invalid or unenforceable, the remaining provisions of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
17
IN WITNESS WHEREOF, the parties shall have caused this Agreement to be executed
by their duly authorized representatives on the day and year first above
written.
Witness
Xxxxx Xxxxx, Inc. Spiegel, Inc.
/s/ X. Xxxxxx /s/ X.X. Xxxx
------------------------------------- ----------------------------------------
X. Xxxxxx X.X. Xxxx
President & CEO Vice Chairman,
President & CEO
Witness
Otto-Sumisho Inc. Sumitomo Corporation
/s/ X. Xxxxxx /s/ X. Xxxxxx
------------------------------------- ----------------------------------------
X. Xxxxxx X. Xxxxxx
Representative Director Executive Vice President
Chairman and President
18
EXHIBIT A
[In Japanese]
A-1
EXHIBIT B
ARTICLES OF INCORPORATION
CHAPTER I GENERAL PROVISIONS
ARTICLE 1 TRADE NAME
The name of the Company shall be Xxxxx Xxxxx Japan Kabushiki Kaisha and Xxxxx
Xxxxx Japan Inc. in English.
ARTICLE 2 HEAD OFFICE
The company shall have its head office at Chuo-Ku, Tokyo, Japan.
ARTICLE 3 PURPOSE
The purpose of the Company shall be to carry out the following businesses:
(1) Import, export, purchase, sale, wholesaling, retailing, acting as agent,
and acting as commission agent of the following goods:
(i) Raw cotton, raw silk, wool, flax and hemp, and textile raw materials
and products.
(ii) Paper, pulp, rubber, leather, products made therefrom, footwear, and
general merchandise (nichiyohin zakkarui).
(iii) Furniture and wooden products, hand tools, and household machinery
and tools.
(iv) Glass, plastic, dyes, pigments, and paint products, as well as raw
materials therefor.
(v) Ceramics and earthen products, cement raw materials, and products made
thereof.
(vi) Marine products, processed foods made therefrom, dairy products,
chemical seasonings and flavorings, garden plants, fertilizer, feed,
oils and fats and oil and fat products, alcoholic beverages, drinks,
and canned and bottled foods.
(vii) Musical instruments, records, toys and games, sports equipment,
office and stationery supplies, and household appliances.
(viii) Precious metals, personal ornaments, jewelry, rough precious stones,
and products made therefrom.
B-1
(ix) Pharmaceuticals, non-pharmaceutical medical products, pharmaceuticals
for animal use, chemicals, and cosmetics, as well as raw materials
therefor.
(2) Productions and sales of Men's, Ladies', Children's wear, apparel related
goods, and other ornaments (Soshoku-zakka).
(3) All lines of business incidental or relating to the foregoing.
ARTICLE 4 PUBLIC NOTICES
4.1 Public notice to be issued by the Company shall be published in the
Official Gazette (Kanpo).
4.2 Notices of the Company to all shareholders recorded in the Register of
Shareholders shall be given by registered mail to those shareholders
residing in Japan and by registered express airmail to those shareholders
residing outside Japan.
CHAPTER II SHARES
ARTICLE 5 TOTAL NUMBER OF SHARES
The total number of shares authorized to be issued by the Company shall be
80,000 (Eighty Thousand) shares.
ARTICLE 6 PAR VALUE OF SHARE
All shares to be issued by the Company shall be common par value shares and the
amount of each par value share shall be 50,000 Yen (Fifty Thousand Japanese Yen)
each.
ARTICLE 7 DENOMINATIONS OF SHARE CERTIFICATES
7.1 Share certificates of the Company shall be all registered, and the
denominations shall be following five kinds: one share certificate, ten
shares certificate, one hundred shares certificate, one thousand shares
certificate and ten thousand shares certificate.
7.2 Share certificates in denominations other than those set forth in the
preceding paragraph may be issued by the resolutions of the Board of
Directors.
ARTICLE 8 PRE-EMPTIVE RIGHT TO NEW SHARES
Shareholders of the Company shall have pre-emptive rights to subscribe to all
shares to be issued by the Company.
B-2
ARTICLE 9 HANDLING OF SHARES
Registration of transferred shares and other procedures for handling shares
shall be decided by the Board of Directors.
ARTICLE 10 NOTIFICATION
10.1 Shareholders or their legal agents shall report to the Company their names,
addresses, and seals (or signatures in the case of foreigners for whom the
use of signatures is customary.)
10.2 In case of any change in any of the matters mentioned in the preceding
paragraph, the same notification requirements shall apply.
ARTICLE 11 CLOSING OF REGISTER OF SHAREHOLDERS
11.1 The Company shall suspend any alterations of the entries in the register of
shareholders each year from the next day of the end of each fiscal year to
the end of the corresponding ordinary general meeting of shareholders.
11.2 In addition to the cases contemplated in the preceding paragraph, the
Company may, by giving public notice beforehand whenever necessary,
temporarily suspend alterations of the entries in the register.
CHAPTER III GENERAL MEETING OF SHAREHOLDERS
ARTICLE 12 TIME OF CALL
An ordinary general meeting of shareholders shall be convened within three (3)
months from the close of each fiscal year, and an extraordinary general meeting
of shareholders shall be held whenever necessary.
ARTICLE 13 CONVENER AND CHAIRMAN
General meeting of shareholders shall be convened by the President in accordance
with a resolution of the Board of Directors and the chairmanship of the meeting
shall be assumed by him. In case the President is unable to preside, another
director shall preside in accordance with an order predetermined by the
resolution of the Board of Directors.
ARTICLE 14 RESOLUTION
The general meeting of shareholders shall require as a quorum the presence of
shareholders owning a two-thirds (2/3) majority of all shares issued and the
affirmative vote of two-thirds
B-3
(2/3) or more of the shares entitled to vote shall become the act of the
shareholders, unless a higher number of votes are required by the laws of Japan.
ARTICLE 15 VOTE BY PROXY
Shareholders may exercise their votes by proxy. In such case the proxy must file
with the Company a document evidencing his authority each time the meeting of
shareholders is held.
ARTICLE 16 MINUTES OF GENERAL MEETINGS
16.1 The proceedings of the General Meeting of Shareholders and the results
thereof shall be recorded in the minutes of the meeting in Japanese
language which shall bear the signatures or the names and seals of the
chairman and of the directors in attendance. The original thereof shall be
kept at the head office for ten (10) years.
16.2 The minutes mentioned in the preceding paragraph shall be translated into
English and, upon the chairman affixing his signature or name and seal
thereto, shall be kept in the same manner as the Japanese language minutes.
Copies of this English translation shall be sent within thirty (30) days
after the meeting to all shareholders resident outside of Japan by
registered express airmail.
CHAPTER IV DIRECTORS AND BOARD OF DIRECTORS
ARTICLE 17 NUMBER OF DIRECTORS
The number of directors of the Company shall be less then ten (10).
ARTICLE 18 ELECTION OF DIRECTORS
The directors shall be elected by the general meeting of shareholders.
Cumulative voting shall not be used for the election of directors.
ARTICLE 19 TERM OF OFFICE OF DIRECTOR
19.1 The term of office of each director shall terminate with the close of the
last ordinary general meeting of shareholders relating to the last fiscal
year to close within two (2) years after assumption of his office.
19.2 The term of office of a director whose assumption of office has been
effected to fill a vacancy or meet the increase in the number of such
office-holders shall be the same as the unexpired period of the term of the
other directors in office.
B-4
ARTICLE 20 REPRESENTATIVE DIRECTOR AND EXECUTIVE OFFICERS
20.1 The Board of Directors may by resolution elect from among themselves
President.
20.2 The Board of Directors may by resolution elect from among themselves two or
more representative directors.
ARTICLE 21 MEETING OF BOARD OF DIRECTORS
The meeting of the Board of Directors shall be convened by the President and the
chairmanship of the meeting shall be assumed by him. In case the President is
unable to preside, another director shall preside in accordance with an order
predetermined by the resolution of the Board of Directors.
ARTICLE 22 NOTICE OF MEETING OF BOARD OF DIRECTORS
The notice of a meeting of the Board of Directors shall be sent to each director
and auditor at least twenty-one (21) days prior to the date of meeting. The
period may be shortened in the case of emergency.
ARTICLE 23 RESOLUTION
The meetings of the Board of Directors shall require as a quorum the presence of
a majority directors and the resolutions thereat shall be adopted by two-thirds
(2/3) or more votes of all directors.
ARTICLE 24 MINUTES OF MEETING OF BOARD OF DIRECTORS
The proceedings of the meetings of the Board of Directors and the results
thereof shall be recorded in the minutes of the meeting, which shall bear the
signature or the names and seals of the chairman, the directors and auditor
present at the meeting, and shall be kept by the Company.
ARTICLE 25 REMUNERATIONS
The remuneration and retirement allowance of directors shall be determined by
resolution of a general meeting of shareholders.
CHAPTER V AUDITOR
ARTICLE 26 NUMBER OF AUDITORS
The number of auditors of the Company shall be at least three (3).
B-5
ARTICLE 27 TERM OF OFFICE OF AUDITOR
27.1 The term of office of each auditor shall terminate with the close of the
last ordinary general meeting of shareholders relating to the last fiscal
year to close within three (3) years after assumption of his office.
27.2 The term of office of an auditor whose assumption of office has been
effected to fill a vacancy shall be the same as the remainder of the term
of his predecessor.
ARTICLE 28 REMUNERATIONS
The remuneration and retirement allowance of the auditor shall be determined by
resolution of a general meeting of shareholders.
CHAPTER VI ACCOUNTS
ARTICLE 29 FISCAL YEAR
The fiscal year of the Company shall be from the first day of March each year to
the last day of February the following year.
ARTICLE 30 DIVIDEND FROM PROFIT AND INTERIM DIVIDENDS
30.1 Dividends from profit shall be paid to shareholders who are listed in the
Register of Shareholders as of the end of each fiscal year.
30.2 The Company may, with the resolution of the Board of Directors, pay interim
dividends to the shareholders and pledgees recorded in the register of the
Company as of the end of August each year.
30.3 The Company shall be relieved of any obligation to pay dividends from
profit, interim dividends, or other dividends which have not been claimed
after the lapse of three (3) years from the date the dividend was declared.
CHAPTER VII MISCELLANEOUS PROVISIONS
ARTICLE 31 NOTICES AND REPORTS TO NON-RESIDENTS
Notices, reports, and communications to all shareholders, directors, and
statutory auditors resident outside Japan, other than those to be given by
public notice, shall have translations in English attached.
B-6
CHAPTER VIII MISCELLANEOUS
ARTICLE 32 SHARES TO BE ISSUED INITIALLY AND THE VALUE THEREOF
The number of shares to be issued upon the establishment of the Company shall be
20,000 (Twenty Thousand) shares and the issued-price of one share shall be
50,000 Yen (Fifty Thousand Japanese Yen) each.
ARTICLE 33 INITIAL TERM OF DIRECTORS AND AUDITOR
Notwithstanding anything contained in ARTICLE 19 and 27, the term of the initial
directors and auditor of the Company shall terminate with the close of the first
ordinary general meeting of the shareholders of the Company.
ARTICLE 34 THE FIRST FISCAL YEAR OF THE COMPANY
Notwithstanding anything contained in ARTICLE 29, the first fiscal year of the
Company shall be from the date of its establishment to February 28, 1994.
ARTICLE 35 PROMOTERS
The names, addresses of the promoter, with the number of shares subscribed, are
as follows:
Otto Sumisho Inc.
00-0 Xxxxxxxxxx-Xxxxxxxx-Xxx, Xxxx-xx, Xxxxx 000 Xxxxx
14,000 Shares
For the purpose of incorporation of Xxxxx Xxxxx Japan Kabushiki Kaisha, the
promoter have made these Articles of Incorporation and have hereinto afixed
their names and seals.
Date: September 10th, 1993
Promoter:
Otto-Sumisho Inc.
Representative Director Kiyotomo Sakuma
----------------------------------------
Representative Director Xxxxxx Xxxxxxxxx
----------------------------------------
X-0
Xxxxxxxxx 00, 0000
XXXXXXXXXX
Reference is made to the Joint Venture Agreement dated September 28, 1993
between Xxxxx Xxxxx, Inc. (EBI) and Otto-Sumisho Inc. (OSI), granting license
and providing various services to the new company to be established by both
parties against the up-front fee of Yen 285,000,000 and running royalty of five
per cent (5%).
EBI and OSI hereby agree and confirm that the above up-front fee of Yen
285,000,000 consists of the following consideration for each license, right and
service rendered by EBI:
Proto-type store design Yen 20 Million
Working drawings 20
Concept manual 20
Detailed store lay-out 20
Plan-O-Gram 20
Store Graphic 20
Advertising information 20
Store operation know-how 40
Technical advisory service 15
Exclusive sales rights 45
Right to use trademark/logos 45
EBI shall not be responsible for any fees or taxes caused by such breakdown,
except for any taxes upon EBI's incomes in the amount of such tax had the above
breakdown not been done. OSI agrees to reimburse EBI for any additional taxes
incurred by EBI due to such breakdown.
Acknowledged and agreed to:
XXXX XXXXX, INC. XXXX-SUMISHO INC.
/s/ Xxxx Xxxxxx /s/ Kiyotomo Sakuma
------------------------------------- ----------------------------------------
Xxxx Xxxxxx, President & CEO Kiyotomo Sakuma, Chairman & President
