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EXHIBIT 10.36
DATE 12th December 1996
(1) HOME SHOPPING NETWORK INC.
(2) JUPITER SHOP CHANNEL CO;.LTD
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SERVICES AND TRADEMARK LICENCE AGREEMENT
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THIS SERVICES AND TRADEMARK LICENCE AGREEMENT is made the 12th day of December
1996.
BETWEEN:-
(1) HOME SHOPPING NETWORK INC. a company incorporated in the State of
Delaware United States of America whose principal place of business is
at 0000 000xx Xxxxxx Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, XXX
("HSN").
(2) JUPITER SHOP CHANNEL CO;.LTD a company incorporated in Japan whose
principal place of business is at Tokyo Opera City Tower 00X, 00-0
0-xxxxx, XxxxxXxxxxxxx, Xxxxxxxx-xx, Xxxxx 000-00 Xxxxx ("the
Company").
WHEREAS:-
(1) HSN owns thirty per cent (30%) of the Shares.
(2) HSN has agreed to provide the Services and support to the Company as
provided in this Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
In this Agreement and the recitals hereto the following words and
expressions shall save as otherwise specifically provided have the
following meanings:
"APPLICABLE LAW": with respect to a Party, any domestic or foreign,
federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive,
judgement, decree or other requirement of any Governmental Authority
applicable to such Party or its properties, business or assets;
"BUSINESS": the Business as defined in the Shareholders Agreement;
"FEES": those fees as referred to in Clause 4;
"HSN PRIVATE LABEL TRADEMARK": the trademarks for which registration
applications have been or may in the future be filed and/or for which
common law rights have been or may in the future be established
through use belonging to HSN or any of its subsidiaries which relate
solely to HSN's private label products with the exception of those
relating to HSN's private label products with the brand label "Essence
of Time";
"HSN TRADEMARKS": the trademarks (including Home Shopping, Home
Shopping Network and The Home Shopping Network) registered or for
which applications have been or may in the future be filed and/or for
which common law rights have been or may in the future be established
through use belonging to HSN excluding the HSN Private Label
Trademarks;
"PARTY" or "PARTIES": a party or the parties to this Agreement;
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"SERVICES": the services to be provided by HSN to the Company as set
out in Clause 2;
"SHAREHOLDER": a holder of Shares;
"SHAREHOLDERS AGREEMENT": the Shareholders Agreement dated
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and made between Jupiter Programming Co., Ltd(l), HSN(2) and the
Company(3);
"SHARES": ordinary shares of the Company;
"TERRITORY": the country of Japan;
"TRADEMARKS": the HSN Trademarks and the HSN Private Label Trademarks
together.
2. HSN SERVICES
HSN shall provide the Services for the duration of this Agreement
(including any renewal of it whether in full or on some other basis)
exclusively to the Company in the Territory as follows:
2.1 HSN shall at all times (and at no cost to the Company):
2.1.1 provide to the Company photos or samples of products as and
when available;
2.1.2 inform the Company of on-going marketing trends identified in
its customers by item by season and by general market
segments;
2.1.3 provide to the Company either at HSN's principal place of
business or in a manner as may be agreed between HSN and the
Company lists of its best selling products, and the following
information with respect to those products:
(a) product description, specifications and background
information;
(b) selling price(s) and product cost;
(c) time of day airings;
(d) frequency of airings;
(e) return rates;
(f) quantities of the products sold;
(g) whether the product attracted new buyers or repeat
buyers;
(h) sales of units per minute; and
(i) gross profit per minute.
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2.2 HSN will use all reasonable endeavours to:
2.2.1 obtain for the Company access to all HSN products (including
obtaining product rights for the Territory when HSN purchases
new products from its various vendors).
2.2.2 provide that the Company shall have access to the lesser of 15%
of an item's SKUs or 500 units per SKU of HSN's inventory, HSN
will provide such merchandise at HSN's cost for the particular
product. HSN and the Company expect that products that are
subject to check fallout will also be available for allocation
to the Company.
2.3 Without prejudice to HSN's obligations hereunder, the Company will be
permitted to have one of its employees located at HSN to help with the
flow of information and communication between HSN and the Company.
The Company will take reasonable steps to ensure that the information
is kept confidential and that persons with access to such information
will be limited.
2.4 HSN and the Company will work together to minimize, wherever possible,
shipping costs to the Territory. The Company will undertake its own
quality control in the Territory unless HSN does on site inspections
at the point of shipment or has already performed this function. HSN
will be reimbursed for any reasonable incremental costs that it may
properly incur for quality control inspections on behalf of the
Company.
2.5 HSN will use all reasonable endeavours to encourage its vendors to
offer identical pricing and terms to the Company to those that HSN
receives and to assist the Company in refining and/or altering
products to meet the marketing needs of the Territory.
2.6 Any products that are identified for liquidation by HSN will be made
available by HSN to the Company at HSN's liquidation value.
2.7 For all products that HSN is buying for its own purposes, all contacts
with vendors should be through HSN. HSN will use all reasonable
endeavours (having regard to the circumstances) to ensure that the
vendors provide the Company with similar quantities, prices, product
information, and specifications to those that are made available to
HSN. HSN and the Company will use their mutual discretion in
addressing unusual issues.
2.8 HSN will use all reasonable endeavours to ensure that products
requested to be tested and aired by the Company will receive a fair
airing on HSN in the hours between 10 a.m. and midnight. HSN will air
for the Company a minimum of five products per month that the Company
identifies it wants aired. In addition, products in excess of five
items per month may be aired by HSN based on the desirability of the
product from HSN's perspective. Any product of the Company to be aired
must reasonably satisfy basic standard HSN product requirements (for
example quality assurance approval, regulatory compliance).
2.9 HSN will allow the Company to broadcast 3-hour remote programs from
the HSN campus twice per year at times requested by the Company. HSN
will determine
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whether the program should be simultaneously broadcast on one or more
of HSN's programming services. The Company will reimburse HSN for
any reasonable incremental costs that HSN may properly incur in
respect of this broadcast.
2.10 With regard to HSN employees:
(a) The Company shall remains HSN for its reasonable out of pocket
expenses (e.g., travel, hotel, food) incurred in coming to the
Territory in connection with the Services so long as they have
been approved by the Company before they are incurred;
(b) HSN will provide full time two HSN employees dedicated to the
Company at no cost to Company. Such employees may be hired
specifically for these positions, subject to the approval of
Company, whose approval shall not be unreasonably withheld;
(c) All communication between the Company and HSN will generally
be coordinated through the two HSN dedicated employees for day
to day operational matters and through HSN offices for other
general operational matters. Any communication relating to the
Company and its business in Japan will be coordinated by and
through the Company;
(d) The Company will reimburse preapproved reasonable and proper
expenses, including salaries, relating to extended assistance
requested by the Company from other HSN employees other than
the two dedicated HSN employees. Extended assistance means 12
days of work, excluding travel days, in any 6 month period;
(e) The timing of requests by the Company for assistance from
other HSN employees is subject to mutual agreement of the
Parties; and
(f) Neither Shareholder will hire employees of the other
Shareholder.
2.11 With regard to shipping any products direct from the United States of
America to Japanese consumers in the Territory:
(a) HSN will be given reasonable notice;
(b) Assistance given by HSN must be during times reasonably
acceptable to HSN;
(c) The volume of shipments must be approved by HSN (not to be
unreasonably withheld) so as not to interfere with HSN's
ongoing operations;
(d) The Company must provide shipping labels to HSN unless
otherwise agreed;
(e) HSN will use a carrier designated by the Company and
reasonably acceptable to HSN and the Company shall be
responsible for payment, delivery, and all other matters
directly related thereto; and
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(f) Any reasonable incremental costs properly incurred by HSN for
such services will be paid by the Company within 30 days of the
Company receiving an acceptable invoice from HSN.
2.12 HSN will use all reasonable endeavours to secure all on-air rights for
products and related materials for the Territory. If HSN has these
rights, it will provide these to the Company at no cost to the
Company. In addition, HSN will provide at no cost to the Company, all
audio, music, graphics, product B-roll, animated show opens, show
titles, logos, and promotional materials that HSN has from time to
time. Videos will be provided as and when agreed between HSN and the
Company.
2.13 HSN will provide to the Company at no cost to the Company access to
any promotion, production technology equipment or software that HSN
owns so long as the technology access relates to television shopping.
HSN must own any rights prior to sublicensing any technology to the
Company.
2.14 The terms of this Clause 2 shall survive termination of the
Shareholders Agreement and HSN shall continue to comply with such
terms (irrespective of whether it remains a Shareholder or not) until
this Agreement expires or terminates pursuant to Clauses 5 or 6.
2.15 HSN hereby agrees to indemnify and hold the Company harmless on demand
from and against any and all costs, liabilities, obligations, losses,
damages, penalties, actions, judgments, expenses and disbursements of
any kind or nature whatsoever in any way relating to or arising out of
this Clause 2.
2.16 The Company hereby agrees to indemnify and hold HSN harmless on demand
from and against any and all costs, liabilities, obligations, losses,
damages, penalties, actions, judgments, expenses and disbursements of
any kind or nature whatsoever, which HSN suffers as a result of a
default by the Company in complying with its direct contractual
obligations to vendors and third party service providers under orders
for goods and/or services (as appropriate) placed directly by the
Company, or to customers of the Company in the Territory, provided
that this Clause 2.16 shall not apply where HSN also has a contractual
relationship with such vendor, third party service provider or
customer and has not complied in full with its obligations to that
vendor, third party service provider or customer or where HSN's actions
or failure to act have caused or contributed to the Company's default.
2.17 Without prejudice to HSN's obligation to provide the Services, the
Company shall:
(a) communicate its product selection to HSN promptly;
(b) where it has any communication with HSN's vendors, communicate
in a professional manner, provided that this Subclause shall not
apply to a vendor with whom the Company is in dispute;
(c) notify HSN promptly of any problems it encounters with the
performance by HSN of HSN's obligations under this Clause 2
(and for this purpose HSN shall inform the Company of the person
or persons at HSN to whom such matters should be addressed and
will keep the Company informed of any change); and
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(d) not intentionally do anything to frustrate the due performance
by HSN of its obligations under this Clause 2.
3. NAMES, LOGOS AND TRADEMARKS
3.1 So far as it proves necessary the Company grants HSN the right subject
to the Company's prior approval to use the appropriate names and logos
of the Company which the Company may designate as being appropriate
for HSN carrying out the Services subject to HSN complying with any
guidelines and conditions imposed by the Company relating to such use.
3.2 Clauses 3.4, 3.5 and 3.7 shall apply for the purposes of Clause 3.1 as
if references to the Company therein were to HSN and vice versa and
references to the HSN Trademarks were to the names and logos of the
Company as referred to in Clause 3.1.
3.3 In consideration of the Company agreeing to pay the Fees to HSN, HSN
hereby grants, to the Company for the duration of this Agreement
(including any renewal of it whether in full or on some other basis)
as follows:
(a) the Company shall have a nontransferable, exclusive licence to
use the HSN Trademarks in the Territory in connection with the
Business;
(b) the Company shall have a nontransferable licence to use the
HSN Private Label Trademarks in the Territory in connection
with selling HSN's private label products in connection with
the Business, which licence shall be exclusive to the Company
except to the extent that a licence or licences or other right
to use the HSN Private Label Trademarks has been granted to
the infomercial joint venture company established by the
Parties and others; and
(c) HSN hereby reserves all rights to the Trademarks, except as
specifically granted herein to the Company, and HSN may
exercise such reserved rights at any time.
3.4 Ownership of Trademarks
The Company acknowledges and agrees that:
(a) HSN is and shall at all times remain the exclusive owner of
the Trademarks;
(b) it will not act inconsistently with HSN's ownership interests;
(c) nothing in this Agreement shall give the Company any right,
title or interest in the Trademarks other than the right to use
the Trademarks on the terms of this Agreement;
(d) it will not attack the validity of HSN's ownership of the
Trademarks;
(e) any goodwill arising solely out of the Company's direct use of
the Trademarks shall inure to the benefit of HSN;
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(f) it shall not register (directly or indirectly) any trademark,
trade name or logo identical or substantially similar to any
Trademark. Any registration effected in contravention of this
subclause shall be deemed conclusively to have been effected
on behalf of HSN and upon request shall be transferred to HSN;
(g) the nature and quality of all services rendered in conjunction
with the Trademarks shall conform to reasonable quality and
usage standards set by HSN;
(h) it shall not use the Trademarks in connection with
prescriptions, medications, or pornographic materials without
the prior consent of HSN;
(i) it shall at HSN's request submit samples of materials
containing the HSN Trademarks to enable HSN to confirm that
the Company's services conform to HSN's quality standards. Upon
written notice from HSN, the Company shall take such steps as
are reasonably necessary and which do not unreasonably delay
or otherwise interfere with the Company carrying on the
Business in the ordinary course to bring all services into
conformance with HSN's quality standards; and
(j) it will use the Trademarks in compliance with Applicable Law,
and
(k) it will use the Trademarks in a form approved by HSN (such
approval not to be unreasonably withheld or delayed). Any
requirement imposed by HSN as a condition of their approval
shall be limited to matters necessary to ensure that the
Company's use of the Trademarks complies with this Clause 3.4
and shall not be such as to cause any unreasonable
interference or delay with the Company carrying on the
Business in the ordinary course.
3.5 Infringement
(a) The Company agrees to notify HSN Of.
(i) any unauthorized use or practice of the Trademarks by
third parties as soon as practical after discovery by
the Company of such third party use or practice;
(ii) any legal action or claim alleging a violation of any
of the Trademarks filed, threatened, or asserted
against the Company; and
(iii) any other act, matter or thing that has occurred or may
occur in connection with the licence that the Company
has knowledge of and that may adversely affect the
interests of HSN in the Trademarks.
(b) HSN shall have the right and discretion to bring, control, and
compromise proceedings involving the Trademarks. HSN shall bear
all costs of any such action and any damages or other relief
obtained by HSN as a result of such claim shall be retained
solely by HSN except to the extent that such damages are awarded
in respect of the loss incurred by the Company.
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3.6 HSN shall use its best endeavors to secure for the benefit of the Company
rights to use the trademark and trade name rights of vendors and third
party service providers.
3.7 Termination
Except as otherwise provided herein, upon termination or expiration of
this Agreement, the Company will:
(a) discontinue all use of the HSN Trademarks;
(b) cooperate where necessary with HSN to cancel records of the
licences from all government records;
(c) where practical destroy any retained printed or visual
materials in its possession which include a portion of the HSN
Trademarks; and
(d) perform any act or execute any instrument reasonably necessary
to vest in HSN all right, title and interest in and to the
Trademarks and all goodwill associated therewith in the form
reasonably requested by HSN
4. FEES
4.1 Subject to HSN complying with its obligations in this Agreement and to
Clauses 5 and 6 the Company agrees to pay to HSN from the date of this
Agreement an all inclusive fee of twelve (12) instalments of Yen Thirty
seven million five hundred thousand (Y37,500,000) each in arrears with
the first payment due on the date being six (6) months after the date of
this Agreement and each subsequent payment due on the date six months
thereafter up to a total maximum amount of Yen Four Hundred and fifty
million (Y450,000,000),
which without limitation shall include:
(i) all fees, expenses and other costs of any nature whatsoever
incurred by HSN in providing the Services with the exception
of payments under Clauses 2.9, 2.10 (a) and 2.10 (d); and
(ii) any taxes payable by HSN in respect of any of its obligations
under this Agreement or in respect of any costs, fees and
expenses incurred by HSN in connection with this Agreement.
4.2 All payments by the Company shall be made net of any deduction for or
on account of any taxes which the Company is required by Applicable Law
to deduct. If such tax or amount in respect of tax must be deducted
from any amounts payable or paid by the Company under this Agreement,
the Company shall supply to HSN a tax credit, voucher or other receipt
evidencing the deduction.
5. TERM
This Agreement shall continue in full force and effect (unless
terminated pursuant to Clause 6 hereof) for a period of six (6) years
from the date hereof (unless the Parties have agreed by the expiry
of the fifth (5th) year from the date hereof that the
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Agreement will continue for a longer period either in full or on some
other basis) or if earlier until the Company ceases trading for
whatever reason whereupon this Agreement will automatically terminate
with neither Party having a claim against the other save for any
breach by a Party prior to the date of termination.
6. DEFAULT
6.1 Either Party may (without prejudice to its other rights and remedies)
by notice in writing to the other Party terminate this Agreement at
any time during the term of this Agreement if the other Party shall:
6.1.1 have committed any material breach of any of its obligations
hereunder and which such other Party shall not have remedied
(or taken substantive steps to diligently rectify the same)
within fifteen (15) days of receipt of written notification
thereof, or
6.1.2 go into receivership or liquidation or some analogous
procedure,
whereupon this Agreement win automatically terminate with neither
Party having a claim against the other save for any breach by a Party
prior to the date of termination.
6.2 Without prejudice to the rights of the Company under Clause 6.1 if HSN
shall commit a breach of any provision of this Agreement in
circumstances where there is a persistent lack of performance by HSN
and/or where HSN fails to provide products or any of the Services to
the Company on a timely basis or where the performance by HSN of its
obligations under this Agreement is in the Company's opinion in any
other way unsatisfactory then HSN shall, at its own cost, promptly
make arrangements to rectify the problem in the manner requested by
and satisfactory to the Company as dictated by the circumstances
(e.g., provide for another shipment of the product by expedited
transportation or by substitution of another substantially similar
type of product for sale by the Company) and the Parties recognize
that facts and circumstances surrounding each breach may vary but the
Parties agree the following:
(i) HSN shall be responsible for paying all additional
costs that may be incurred by it or the Company,
(ii) The Company may at any time in its discretion suspend
payment of the Fees (or such proportion that the
Company considers appropriate);
(iii) HSN shall also provide commercial remedies to the
Company similar to those that it provides to its
vendors or seeks from its vendors in the normal
course of its business;
(iv) In the event that (other than set out in this
Agreement) a remedy to the particular issue cannot be
agreed within a fifteen (15) days of the issue
arising, then the Presidents of HSN and the Company
(or an authorized person designated by such
Presidents) will attempt to negotiate a mutually
acceptable agreement. In the event that no such
agreement can be reached within a further period of
ten (10) days then the Parties agree that the
arbitration provisions set forth in Clause 13.2 shall
be
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applicable with instructions to the arbitrators that
the panel may award the Company in its sole judgement
and discretion any form of monetary penalty which it
deems appropriate.
7. REPRESENTATIONS AND WARRANTIES
7.1 Each of the Parties hereto represents warrants and undertakes to each
other that:
(a) it is a company duly incorporated and validly existing in all
respects under the laws of the jurisdiction of its incorporation
with full power and authority to own its assets and to carry on
its business as it is now being conducted and no action has been
taken or threatened (whether by it or any third party) for or
with a view to its or their liquidation, receivership or
analogous process; and
(b) so far as it is aware having made reasonable enquiry no
litigation or administrative or arbitration proceedings before
or of any court, judicial, administrative or governmental
authority, arbitrator(s) or other body is taking place, pending
or threatened against it or against any of their respective
assets which might have a material adverse effect on its
business, assets, condition or operations taken as a whole, or
might adversely affect its ability duly and punctually to
perform and observe all its obligations hereunder.
8. INVALIDITY
Should any provision of this Agreement be or become ineffective for
reasons beyond the control of the Parties, the Parties shall use
reasonable efforts to agree upon a new provision which shall as nearly
as possible have the same commercial effect as the ineffective
provision.
9. FORCE MAJEURE
9.1 On the occurrence of an event which would render compliance by a Party
of its obligations under this Agreement:
(a) illegal according to the law of any jurisdiction in which it
is resident or incorporated or of the country in which
performance of the obligation is to take place; or
(b) otherwise impossible to perform;
and that event is also outside of that Partys control, its relevant
obligations under this Agreement shall be suspended indefinitely until
performance by that Party is no longer illegal or impossible (as the
case may be), at which time that Party's obligations under this
Agreement shall resume in full force and effect.
9.2 If the suspension under Clause 9.1 continues for a period of six (6)
months or longer, either Party shall have the right to terminate this
Agreement upon written notice to the other.
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9.3 The Party whose obligations are so suspended shall not be liable to
the other Party for any breach of this Agreement resulting from its
failure to perform those relevant obligations during the period of
suspension.
10. COSTS
Each of the Parties hereto shall pay its own costs, charges and
expenses connected with the preparation and implementation of this
Agreement and the transactions contemplated by it.
11. NOTICES
Any notice or other communication given or made under this Agreement
shall be in writing in English and, without prejudice to the validity
of any other method of service, may be delivered via facsimile or
personally or by courier addressed as follows:
(a) If to the Company:
Jupiter Shop Channel Co;. Ltd.
Tokyo Opera City Tower 35F
20-2, Nishi-Shinjuku 3-chome
Xxxxxxxx-xx
Xxxxx 000-00
Xxxxx
Attention: President
Fax: 00-0-0000-0000
(b) If to HSN:
0000 000xx Xxxxxx Xxxxx, Xx. Xxxxxxxxxx
Xxxxxxx 00000
X.X.X.
Attention: President
Fax: 000-000-0000
or to such other address or facsimile number as the relevant addressee
may hereafter by notice hereunder substitute.
12. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of Japan.
13. DISPUTES
13.1 Other than as provided in Clause 6.2, in the event of a disagreement
among the Parties, including a disagreement regarding this Agreement,
or any breach thereof, each Party will use its best efforts to resolve
such disagreement amicably and where applicable the Party in breach
shall promptly take all reasonable steps to remedy such breach. If, at
the end of fifteen(15) days from the occurrence of such disagreement
or breach, no resolution has been reached the President of each Party
or an authorized person designated by the President of each Party will
meet to resolve the matter. If they, too,
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are unable to reach a mutually agreeable resolution within thirty
(30) days of the matter being referred to them, the matter will be
arbitrated in accordance with Clause 13.2.
13.2 Any and all disputes with respect to which such authorized persons
failed to reach a mutually agreeable resolution shall be finally
settled by arbitration conducted in London under UNCITRAL Arbitration
Rules by three (3) arbitrators (none of whom shall be Japanese or US
citizens) in the English language. The award shall be final and
binding upon the Parties.
14. ENTIRE AGREEMENT
This Agreement replaces, supersedes and cancels all other previous
and contemporaneous arrangements, understandings, representations or
agreements between the Parties either oral or written with respect
to the subject matter of this Agreement and expresses and constitutes
the entire agreement between the Parties.
15. NO PARTNERSHIP/AGENCY
Nothing herein contained shall be construed or deemed to constitute a
partnership or joint venture between the Parties and save as
expressly herein provided no Party shall hold itself out as the
agent of the other.
16. SURVIVAL OF PROVISIONS
The expiry or earlier termination of this Agreement shall not
operate to terminate any provisions which are expressed to continue
in force thereafter.
17. EXECUTION
This Agreement may be executed in counterparts (which may be
exchanged by facsimile transmissions) each of which shall be an
original and which together shall constitute one document. Without
prejudice to the foregoing, if this Agreement shall initially be
exchanged by facsimile transmissions as aforesaid the Parties shall
as soon as reasonably possible thereafter arrange for the signature
and exchange of original signed copies of this Agreement.
18. NO ASSIGNMENT
No Party may assign its rights under this Agreement.
19. WAIVERS, REMEDIES CUMULATIVE, AMENDMENTS, ETC.
19.1 No failure or delay by any of the Parties in exercising any right,
power or privilege under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise by any of the
Parties of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or
privilege.
19.2 The rights and remedies herein provided are cumulative and not
exclusive of any rights and remedies provided by law.
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19.3 No provision of this Agreement may be amended, modified, waived,
discharged or terminated, otherwise than by the express written
agreement of the Parties nor may any breach of any provision of this
Agreement be waived or discharged except with the express written
consent of the Parties not in breach.
20. ENGLISH LANGUAGE
Where, this or any other English language agreement between the
Parties or referred to herein is translated into Japanese for the
convenience of the Parties or some of them the English language
version hereof/thereof shall for all purposes be deemed to be the
definitive and binding version thereof.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement on
the date first written above.
HOME SHOPPING NETWORK INC.,
By its duly authorized executive officer
Name: /s/ Xxxxxxx X.X. XxXxxxxx
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Title: President
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JUPITER SHOP CHANNEL CO;. LTD.
By its duly authorised executive officer
Name: /s/
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Title: President
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