EXHIBIT 10.13
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT, together with all appendices and exhibits
hereto ("Agreement") is made the __th day of February, 1995, by and among
GENERAL TSUSHIN KOGYO KABUSHIKI KAISHA, a Japanese corporation having its
principal place of business at S&S Building, 6-36 Shin Ogawa-machi, Shinjuku-ku,
Tokyo 000 Xxxxx (hereinafter referred to as "GTC"), MTC TELEMANAGEMENT
CORPORATION, an American corporation having its principal place of business at
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx, XX 00000 X.X.X. (hereinafter referred to
as "MTC") and ASSOCIATED STRATEGIC ALLIANCE PARTNERS, an American corporation
having its principal address at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxxx, XX 00000
X.X.X. (hereinafter referred to as "ASAP").
W I T N E S S E T H:
WHEREAS, GTC has been engaged in the sales and installation of
telecommunications products and services;
WHEREAS, MTC has been engaged in the business of developing, producing and
distributing unique, technology-based telecommunication products and services;
WHEREAS, ASAP has been engaged in the business of facilitating new market
development by coordinating relations between American and Japanese business
partners;
WHEREAS, GTC, MTC and ASAP wish to establish the Joint Venture Company
(hereinafter referred to as "NEWCO") under the laws of Japan in order to
actively expand the business of telemanagement products and services in the
country of Japan.
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Organization of the New Company
1. Promptly after the effective date hereof, GTC, MTC and ASAP shall cause
a new company to be organized as a Kabushiki Kaisha under the Commercial Code of
Japan. NEWCO shall be known in the Japanese language as "MTC Japan Kabushiki
Kaisha and in English as "MTC Japan, Ltd."
2. The Articles of Incorporation for NEWCO shall be in both the Japanese
and English languages, attached herewith as Exhibit A.
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3. The authorized capital of NEWCO shall be forty million yen
((Yen)40,000,000). The initial paid-in capital of NEWCO shall be ten million
((Yen) 10,000,000). All shares to be issued by NEWCO shall be non-bearer common
shares having a par value of fifty thousand yen ((Yen)50,000). As the
contribution to the initial capital of NEWCO, (i) GTC shall subscribe to ninety
(90) shares, which shall represent forty five percent (45%) of the shares to be
issued upon incorporation, by paying four million, five hundred thousand yen
((Yen) 4,500,000), (ii) MTC shall subscribe to (ninety) (90) shares, which shall
represent (forty five) percent (45%) of the shares to be issued upon
incorporation, by paying four million, five hundred thousand yen ((Yen)
4,500,000), and (iii) ASAP shall subscribe to twenty (20) shares, which shall
represent ten percent (10 %) of the shares to be issued upon incorporation by
paying one million yen ((Yen) 1,000,000). GTC, MTC and ASAP shall make payment
in full for their respective shares in conformity with GTC's instructions on the
bank or banks to which such payment shall be made and on the time limit for such
payment.
4. The parties hereby agree to notify NEWCO of their intention not to
receive and hold their respective share certificates of NEWCO in accordance with
the Commercial Code of Japan.
5. GTC shall prepare any and all such documents as shall be required for
the incorporation of NEWCO, and MTC and ASAP shall, in conformity with GTC's
instructions promptly execute of cause to execute any such document as shall
require execution by MTC and ASAP and/or their nominees, respectively.
Article 2. Object and Purposes of NEWCO
The business activities of NEWCO shall be to:
(1) Manufacture and distribute telecommunication equipment and
telemanagement products and services;
(2) Distribute telemanagement products and services in Japan and the other
countries of Asia;
(3) Manufacture telemanagement products for distribution in Japan and the
other countries of Asia;
(4) Act as an MTC sales distributor in Japan and the other countries of
Asia; and
(5) Act as an MTC hardware manufacturer and distributor in Japan.
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Article 3. Certain Restrictions upon the Activities of GTC, MTC and ASAP
During the term of this Agreement, and for a period of two years after the
termination of this Agreement, the parties, and their respective employees,
shall not directly or indirectly, engage in, invest in or perform any business
competitive with the business performed by NEWCO, without the prior written
approval of MTC.
Article 4. Directors and Auditor(s) of NEWCO
1. The total number of directors of NEWCO shall consist of five (5)
persons. GTC shall nominate two (2) persons, MTC shall nominate two (2)
directors and ASAP shall nominate one (1) director.
The parties hereto agree to exercise their voting rights to elect the
directors so nominated.
2. The statutory auditor(s) of NEWCO shall be as many as two (2)
person(s), one to be nominated by GTC, and one to be nominated by MTC. The
parties agree to exercise their respective voting rights to elect the person(s)
so nominated as statutory auditor(s).
3. Should the position of any director or statutory auditor become vacant,
however occasioned, the parties hereto agree to cause their respective voting
rights exercised to elect a director or statutory auditor nominated by the party
who nominated the preceding director or statutory auditor.
4. If and when any of the parties hereto intends to exercise its voting
right by proxy at any general meeting of shareholders of NEWCO, it shall appoint
any shareholder of NEWCO as its proxy.
Article 5. Staff of NEWCO
1. By the joint appointment of GTC and MTC, NEWCO's Board of Directors
shall appoint, Mr. Xxxxx Xxxxxx as ("President and Representative Director) and
Xx. Xxxx Xxxxxx as a representative director.
2. During the initial period, staff support in Japan shall be provided by
GTC and dedicated product support shall be provided from the USA by MTC and its
affiliated companies in accordance with the terms of this Agreement.
3. Any and all such matters relating to the staffing of NEWCO as are not
provided for herein shall be separately agreed upon in writing by the Board of
Directors at a Board Meeting of NEWCO.
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Article 6. Financing of NEWCO
1. The parties hereto shall make all reasonable efforts to cause NEWCO to
operate on a self-supporting basis.
2. If and when NEWCO requires additional funds for its operation, the
Board of Directors of NEWCO shall direct the representative directors to arrange
commercial lines of credit sufficient to finance NEWCO's on-going operations.
In addition, GTC and MTC shall negotiate in good faith the terms and conditions
upon which GTC and MTC will provide an initial credit facility to NEWCO as set
forth in Exhibit B attached hereto. If such credit facility or other financing
arranged by NEWCO shall be insufficient then each of the parties hereto may
provide additional financing to NEWCO on terms and conditions to be agreed.
3. Unless otherwise agreed upon in advance by the parties hereto in
writing, the parties shall consult with each other to determine the initial
annual budget of NEWCO and sales planning therefor. Subsequent annual budgets
and sales planning will be determined and agreed upon prior to the commencement
of each of NEWCO's fiscal years.
Article 7. Certain Actions by NEWCO
1. The unanimous written consent of GTC, MTC and ASAP shall be required
for any of the actions set forth below of NEWCO:
(1) Changes in the Articles of Incorporation of NEWCO;
(2) The amount of remuneration of directors and statutory auditors;
(3) Payment of dividends;
(4) Approval of any financial statement for each fiscal year period;
and
(5) Acquisition, transfer (including the imposition of liens thereon)
or disposition of any patents, design patents, trademarks or
other intellectual property.
2. As for any of the actions referred to in the preceding paragraph
for which the unanimous written consent of GTC, MTC and ASAP has been given and
for which a resolution of either the general meeting of shareholders or the
Board of Directors is required, the parties hereto shall exercise their voting
rights as the shareholders or, as the case may be, shall cause their respective
nominee directors to exercise their voting rights to adopt the resolution
concerned in conformity with the action for which the unanimous consent of GTC,
MTC and ASAP was given.
3. Any other actions by NEWCO shall be made after the resolution of
a Board Meeting or a Shareholder's Meeting, as appropriate, adopted pursuant to
the Commercial Code and the Articles of Incorporation.
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Article 8. Management of NEWCO
1. The President and Representative Director of NEWCO, as jointly
appointed by GTC and MTC, shall have principal responsibility for the management
and business affairs except for all the actions set forth in Paragraph 1 of
Article 7.
2. The Board of Directors of NEWCO shall have authority to decide
the matters set forth in Paragraph 1 of Article 245 of the Commercial Code
except for all the actions set forth in Paragraph 1 of Article 7 and the
President and Representative Director shall have authority to perform such
matters in accordance with the resolution of the Board of Directors, provided,
however, that the President and Representative Director shall have authority to
decide and perform any other business and management activities other than
Paragraph 1 of Article 245 of the Commercial Code.
3. If any director nominated by the parties hereto performs any
business activity without authorization, the party hereto who nominated such a
director shall indemnify, defend and hold NEWCO, its agents, employees and
clients harmless from any loss damage, liability, claim, cost or expense
(including reasonable attorney's fees) incurred as a result of such unauthorized
act.
Article 9. Board of Directors
1. Except for all the actions set forth in Paragraph 1 of Article 7
hereof and in the Commercial Code and Articles of Incorporation, resolution of
the Board of Directors shall be adopted by a vote of four-fifths (4/5) of all
directors. The President and Representative Director shall be the Chairman of
the Board of Directors.
2. If the Board of Directors has reached a deadlock concerning a
proposed resolution, the Chairman shall make his best efforts to reach unanimous
approval to either adopt or reject the resolution concerned.
3. Notice of the convening of a meeting of the Board of Directors
shall be dispatched to each director not less than forty-five (45) days prior to
the date of such meeting. The period of notice may be shortened or the notice
may be dispensed with for a particular meeting by the unanimous consent of all
of the directors.
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Article 10. Records and Books of NEWCO
1. NEWCO shall prepare records and books of accounts in accordance
with the laws, regulations and accounting rules of Japan and shall preserve
these at the office of NEWCO.
2. The parties hereto shall have the right, at their sole expense,
to designate a certified public accountant to audit NEWCO's records and books
once a year.
3. The fiscal year period of NEWCO shall commence on the 1st of
January of each year and end on the 31st day of December of the same year,
provided however, that the first fiscal year period of NEWCO shall commence on
the day of its incorporation until the 31st day of December, 1995.
Article 11. Transfer of Shares of NEWCO
1. Without the prior written consent of MTC and GTC, the parties
shall not transfer, pledge or otherwise encumber of dispose of any of its shares
of NEWCO.
Article 12. Prohibition of Assignment of Rights and Duties
This Agreement or any of the rights or duties hereunder may not be
assigned by the parties hereto without the prior written consent of MTC and GTC.
Article 13. Use of Trade Xxxx
MTC has given permission to NEWCO to use and modify, subject to prior
approval, the "MTC" marks for business promotion during the term of this
Agreement.
Article 14. Notices
1. Any notice or other communication required or permitted to be
given or made under this Agreement, shall be in writing and may be given by
electronic mail, facsimile or registered airmail addressed to the party
concerned at the address of such party or by delivery to the addressee at such
address as shown on Page 1 of this Agreement. Any notice given by registered
mail shall be deemed to have been served seven (7) days after the date of
postmark, and any notice given by other manners shall be deemed to have been
serviced twenty-four (24) hours after date of transmission.
2. If and when the parties hereto respectively shall hereafter
change address as shown on Page 1, written notice shall be promptly given to
that effect to the other parties.
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Article 15. Modification
Any of the provisions of this Agreement may be modified by an
instrument duly executed by the authorized representatives of the parties
hereto.
Article 16. Effective Date, Duration and Termination of this Agreement
1. This Agreement shall become effective upon the date of the last
of all approvals of this Agreement by the Board of Directors of any of the
parties hereto and by the appropriate Japanese authorities in order to implement
their respective rights and duties under this Agreement.
2. Unless terminated earlier in accordance with the provisions of
Paragraph 3 or 4 below of this Article, this Agreement shall continue to be in
full force and effect so long as NEWCO is in existence.
3. This Agreement shall terminate if:
a) any party hereto commences relevant procedures for bankruptcy,
insolvency, receivership, liquidation, or winding up of its
affairs or such procedures are instituted by any third party
against any of the parties hereto;
b) any party shall be merged or consolidated or shall sell all or
substantially all of its assets to a third party; or
c) any party hereto materially violates any provision of this
Agreement and fails to cure or remedy the same within forty-five
(45) days after notice of such breach is provided to such party
by any other party hereto; AND
MTC and GTC hereto agree to the termination of this Agreement and send a notice
of such termination to the party which is subject of any of the acts set forth
in clauses a) - c) of this Paragraph 3. The effective date of termination shall
be the date upon which such notice of termination is dispatched.
4. NEWCO's "Total Quarterly Revenue Due MTC" is NEWCO's invoiced
-------------------------------
usage amount, as calculated quarterly, due MTC from NEWCO for services under
-----------------------
this Agreement plus any amount due to MTC from end user customers signed by
NEWCO and being invoiced directly by MTC. Usage is defined as the amount due to
MTC for services generated by call record activity processed through the MTC
switching network.
MTC reserves the right to terminate this Agreement after one (1) year
if customers signed by NEWCO have not achieved Total Quarterly Revenue Due MTC
-------------------------------
in the twelfth (12) calendar month after the incorporation of NEWCO of $250,000.
-------------
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5. This Agreement shall also terminate if and when the parties
hereto agree to dissolve NEWCO.
Article 17. Effect of Termination
1. If and when this Agreement has been terminated under Paragraph 3 of
Article 16, the parties hereto shall decide either to dissolve NEWCO or to
receive the outstanding shares of NEWCO owned by the other parties hereto.
2. If and when this Agreement has been terminated under Article 16, the
parties hereto shall cause NEWCO to cease any use of the marks "MTC" upon the
termination of this Agreement.
3. If and when this Agreement has been terminated for any reason, the
following shall occur:
a. MTC shall have the right of first refusal to purchase 100% of the
outstanding shares of NEWCO, "Purchase". Such Purchase shall take place within
ninety (90) days of termination of this Agreement. Purchase price shall be
NEWCO's book price, as determined by an independent auditing firm, with such
firm agreed upon by MTC and GTC. If no agreement can be reached, MTC shall
select a firm.
Article 18. Ancillary Agreements
1. GTC and MTC shall provide an unsecured credit facility to NEWCO in
accordance with the basic terms set forth in Exhibit B and Such additional terms
as may be agreed based on good faith negotiations between GTC and MTC.
2. GTC shall, provide certain facilities and staff which GTC currently
has available to assist NEWCO to start its business operations as set forth in
Exhibit D.
3. MTC shall, upon incorporation of NEWCO, provide products and technical
support to NEWCO in accordance with the terms set forth in Exhibit C.
4. MTC shall, upon incorporation of NEWCO, appoint NEWCO as an MTC sales
distributor and hardware manufacturer in Japan.
5. MTC agrees to appoint NEWCO as MTC's exclusive sales distributor and
hardware manufacturer in Japan providing NEWCO meets the criteria set forth in
Exhibit E.
6. GTC shall, as soon as practicable after incorporation of NEWCO , enter
into an agreement with NEWCO to become a master affiliate (major distributor) of
NEWCO's products and services, upon terms and conditions agreeable to both GTC
and NEWCO.
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7. MTC shall, upon incorporation of NEWCO, provide technical, engineering
and other assistance to enable NEWCO to have MTC Matrix manufactured by third
parties for use and sale by NEWCO in Japan and the other countries of Asia.
Article 19. Other Provisions
1. MTC and ASAP hereby represents and warrants that any of the provisions
of this Agreement or any implementation thereof will not violate any of the
United States laws.
2. GTC hereby represents and warrants that any of the provisions of this
Agreement or any implementation thereof will not violate any of the Japanese
laws.
3. GTC hereby appoints Mr. Shigeru Miki, Esq. as GTC's attorney-in-fact
for the sole purpose of notification given on behalf of GTC, MTC and ASAP,
pursuant to the Japanese Foreign Exchange and Foreign Trade Control Act.
4. GTC, MTC and ASAP shall cause NEWCO to submit to the Japanese Fair
Trade Commission ("FTC") the report on its holding shares of NEWCO within three
(3) months from the end of each and every fiscal year period of NEWCO under the
Act concerning prohibition of private monopoly and maintenance of fair trade in
Japan.
5. NEWCO shall file the required reports with the Ministry of Posts and
Telecommunications, pursuant with the requirements of foreign investment in
Japan.
Article 20. No Waiver of Rights
All waivers hereunder must be made in writing, and failure at any time to
require the other party's performance of any obligation under this Agreement
shall not affect the right subsequently to require performance of that
obligation. No waiver of any breach of any provision of this Agreement shall be
construed as a waiver of any continuing or succeeding breach of such provision
or a waiver or modification of the provision.
Article 21. Attorney's Fees
If any action or arbitration proceeding shall be commenced to enforce this
Agreement or any right arising in connection with this Agreement, the prevailing
party in such action or proceeding shall be entitled to recover from the other
party the reasonable attorney's fees, costs and expenses incurred by such
prevailing party in connection with such action or proceeding and in enforcing
any judgment or award obtained.
Article 22. Severability
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement should be prohibited or applicable law, such
provision or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
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Article 23. Subject Headings
The subject headings of the Articles of this Agreement are included for the
purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
Article 24. Further Assurances
The parties hereto shall each perform such acts, execute and deliver such
instruments and documents, and do all such other things as may be reasonably
necessary to accomplish the transactions contemplated in this Agreement.
The parties agree that this Agreement may be modified from time to time as
agreed by NEWCO's Board of Directors.
Article 25. Entire Agreement
1. This Agreement constitutes the entire agreement between the parties
hereto and supersedes all previous negotiations, agreement, commitments in
respect thereto.
2. Any and all documents attached as Exhibits A through E hereto shall
constitute part of this Agreement, provided, however, that if there are any
discrepancies between any provisions of Exhibit A through E and the provisions
of the main body of this Agreement, the provisions of the main body of this
Agreement shall prevail and provisions of such Exhibits shall be ineffective to
the extent of such discrepancy(ies).
3. The parties agree to finalize and execute a side agreement(s) as
deemed necessary, "Side Agreement" provided by MTC to the other parties within
sixty (60) days of the execution of this Agreement.
Article 26. Arbitration
All disputes arising among the parties to this Agreement shall be resolved
exclusively by arbitration in the country of the principal office of the party
against which the claim is entered, in accordance with the arbitration rules of
the arbitration associated in that location. Arbitration in Japan shall be
conducted in Tokyo at and in accordance with the rules of the Japan Commercial
Arbitration Association and arbitration in the United States shall be conducted
in San Francisco, California at the International Committee of the American
Arbitration Association in accordance with the rules of the American Arbitration
Association.
Judgment upon the award entered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
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Article 27. Governing Law and Languages
This Agreement shall be governed by the laws of Japan. This Agreement
shall be executed in English and Japanese languages and the text hereof in both
languages shall be equally valid as among the parties hereof.
IN WITNESS WHEREOF, the parties hereto having caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
General Tsushin Kogyo Kabushiki Kaisha
By: Xxxx Xxxxxx /s/
---------------
Name: Xxxx Xxxxxx
-----------
Title: President, CEO
--------------
MTC Telemanagement Corporation
By: Xxxxxx X. Xxxxxxxxx /s/
-----------------------
Name: Xxxxxx X. Xxxxxxxxx
-------------------
Title: President, CEO
--------------
Associated Strategic Alliance Partners
By: Xxxxx X. Xxxxxx /s/
-------------------
Name: Xxxxx X. Xxxxxx
---------------
Title: President, CEO
--------------
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EXHIBIT A
ARTICLES OF INCORPORATION
-------------------------
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ARTICLES OF INCORPORATION
OF
MTC JAPAN Ltd.
--------------
Duly Notarized on ___________________, 1994
in accordance with the approval of the
---
Meeting of Promoters as of _____________, 1994
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ARTICLES OF INCORPORATION
OF
MTC JAPAN, Ltd.
CHAPTER I. GENERAL PROVISIONS
------------------------------
Article 1. Corporate Name
The name of the Company shall be EMU TI-SHI- JAPAN KABUSHIKIKAISHA (in
--
"Katakana"). In English language it shall be known as MTC Japan Ltd.
Article 2. Purposes
The purposes of the Company shall be to:
(1) Manufacture and distribute telecommunication equipment and
telemanagement products and provide services in relation to the
products;
(2) Export and distribute telemanagement products and services in Japan and
the other countries of Asia;
(3) Manufacture telemanagement products for distribution in Japan and the
other countries of Asia;
(4) Act as MTC's exclusive service provider and hardware manufacturer and
distributor in Japan and other countries of Asia; and
(5) Undertake any and all businesses incidental to the foregoing activities
(The purpose of the Company will be subject to further negotiation with
the Legal Affairs Bureau.)
Article 3. Location of Head Office
The company shall have its head office in Shinjuku-ku, Tokyo.
Article 4. Method of Public Notice
Public notices of the Company shall be published in the Official Gazette.
CHAPTER II. SHARES
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Article 5. Number of Shares to be Issued
The total number of shares authorized to be issued by the Company shall be
eight thousand (800).
Article 6. Amount of Each Share Having Par Value
All shares to be issued by the Company shall have a par value of fifty
thousand yet ((Yen)50,000).
Article 7. Types of Share Certificates
All share certificates to be issued by the Company shall be in registered
and non-bearer form and in four (4) denominations of one (1) share certificate,
ten (10) share certificate, fifty (50) share certificate and one hundred (100)
share certificate.
Article 8. Restriction on Transfer of Shares
1. Transfers of shares of the Company shall require the approval of
the board of directors.
2. If the board of directors does not approve an application for a
particular share transfer, the board of directors shall designate another
transferee for such share transfer.
Article 9. Share Handling
The procedure for registration of transfer of shares, registration of
pledge of shares, indication of trust estate, re-issue of share certificates and
any other proceedings concerning share handling and relevant fees therefor shall
be governed by Share Handling Regulations adopted by resolution of the board of
directors.
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Article 10. Suspense of Alteration of Entries in the
Register of Shareholders
1. The Company shall suspend alterating any entry in the register of
shareholders from the date following the end of each fiscal year to the date on
which the ordinary general meeting of shareholders shall be completed.
2. In addition to the preceding paragraph, whenever necessary, the
Company may, by giving prior public notice, temporarily suspend alterating any
entry in the register of shareholders or fix the record in accordance with a
resolution of the board of directors.
CHAPTER III. GENERAL MEETINGS OF SHAREHOLDERS
Article 11. Procedures to Convene
1. An ordinary general meeting of shareholders shall be convened
within three (3) months following the end of each fiscal year period, and an
extraordinary general meeting of shareholders shall be convened from time to
time whenever necessary.
2. The president shall convene a general meeting of shareholders
pursuant to a resolution of the board of directors except as otherwise provided
for in the laws and government laws and regulations.
Article 12. Chairman of General Meetings
The president shall act as the chairman at a general meeting of
shareholders. When the president is unable to act as a chairman, one of other
directors, in accordance with the order previously determined by a resolution of
the board of directors, shall act as the chairman.
Article 13. Matters to be Resolved at General Meeting
The resolution of the following matters shall be made by unanimous
agreement of all the shareholders present at general meeting of shareholders,
including any vote by proxy:
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(1) Any changes in the Articles of Incorporation;
(2) The amount of the remuneration of directors and auditor;
(3) Payment of dividends;
(4) Approval of financial statements and other accounting documents for
fiscal year period;
(5) Acquisition, transfer (including the imposition of liens thereon), or
disposition of any patents design patents, trademarks or other
intellectual property.
Article 14. Method of Resolution
Except for the matters provided for in the preceding Article 13 and except
as otherwise provided for in the laws or government laws and regulations, any
resolutions of a general meeting of shareholders shall be adopted by a majority
vote at a meeting at which shareholders holding shares representing of more than
one half of the total number of the issued shares are present.
Article 15. Exercise of Voting Rights by a Proxy
A shareholder may exercise his vote by proxy. In such a case, the person
holding the proxy shall submit to the Company a document evidencing power of
representation at each general meeting of shareholders.
Article 16. Minutes
The substance of proceedings at a general meeting or shareholders and the
results thereof shall be recorded in the minutes of the meetings, which shall be
kept at the office of the Company after the chairman and the directors present
have signed their names or affixed their names and seals thereto.
2. A shareholder may have access to any minutes or other company records
at any time during business hours of the Company and may make copies hereof.
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CHAPTER 4, Directors and Auditors
Article 17. Number of Directors and Auditors
The Company shall have up to five (5) directors and one auditor.
Article 18. Election of Directors and Auditors
1. The directors and auditor of the Company shall be elected at a general
meeting of shareholders.
2. The election of directors shall not be based on cumulative voting.
Article 19. Term of Office
1. The terms of office or directors shall expire at the close of the
ordinary general meeting of shareholders held with respect to the settlement of
accounts for the last fiscal year period ending within one (1) year after their
assumption of office.
2. The term of office of a director elected to fill a vacancy shall
expire at the time when the term of office of the other directors then in office
shall expire.
3. The term of office of an auditor shall expire at the close of the
ordinary general meeting of shareholders held with respect to the settlement of
accounts for the last fiscal year period ending within three (3) years after
their assumption of office.
Article 20. Representative Director and Director with
Managing Position
1. The board of directors shall elect a President, one or more Senior
Managing directors and Managing directors, among the directors.
2. The President and Senior Managing Director shall represent the
Company, respectively.
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Article 21. Procedures of Convening a Meeting of the
Board of Directors
1. The President shall convene a meeting of the board of directors, and
act as a chairman of such meeting. When the President is unable to convene or
act as a chairman, one of the other directors, in accordance with the order
previously determined by a resolution of the board of directors shall convene a
meeting of the board of directors and may act as a chairman.
2. A notice of a meeting of the board of directors shall be dispatched to
each director at least forty-five (45) days prior to the date of such meeting,
provided, however, that the period of notice may be shortened or the notice may
be dispensed with by the unanimous consent of all the directors.
Article 22. Method of Adopting Resolution
Resolutions of the meeting of the board of directors shall require the
presence of not less than four fifth of all the directors and shall be adopted
by a majority of the directors present at the meeting.
Article 23. Remuneration for Directors and Auditors
Remuneration of the directors and auditor shall be determined by the
resolution of a general meeting of shareholders, respectively.
CHAPTER 4, Accounts
Article 24. Fiscal Year Period and the Settlement of
Accounts
The fiscal year period of the Company shall commence on January 1 of each
year and end on December 31 of the same year.
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Article 25. Disposition of Profit
Except as otherwise provided for in the laws and government laws and
regulatory, the profit for each fiscal year period shall be disposed of upon
approval of a general meeting of shareholders.
Article 26. Distribution of Dividends
Dividends on shares shall be paid to shareholders or registered pledges
appearing on the Register of shareholders as of the last day of each fiscal year
period.
Supplementary Provision
Article 27. Shares to be Issued upon Incorporation
The total amount of shares to be issued at the time of incorporation of the
Company shall be two hundred (200) shares having par value and the issue price
of fifty thousand (50,000) yen per share.
Article 28. Initial Fiscal Year Period
The initial fiscal year period of the Company shall commence on the day of
its incorporation and end on December 31, 1995.
Article 29. The Initial Term of Office of Directors and
Auditor
The initial term of office of directors and auditor shall expire at the
close of the ordinary general meeting of shareholders held with respect to the
settlement of accounts for the last fiscal year period ending within one year
after their assumption of office.
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Article 30. Promoters
The names and addresses of the promoters and the number of shares
subscribed to by such promoters upon incorporation are as follows:
Promoters Number of Shares
--------- ----------------
(Name) one (1) share
(Address)
(Name) one (1) share
(Address)
For the purpose of incorporation of said MTC Japan K.K., these Articles of
Incorporation have been prepared and the promoters have hereinbelow set forth
their names and addresses and affixed their seals:
Promoters
---------
(Name)
(Address)
(Name)
(Address)
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EXHIBIT B
UNSECURED CREDIT FACILITY TO BE PROVIDED BY GTC AND MTC
-------------------------------------------------------
Set forth below are the basic terms and conditions upon which GTC and MTC
shall provide an initial unsecured credit facility to NEWCO in the total
aggregate amount of (Yen) 100,000,000. Additional terms and conditions shall be
agreed to by GTC, MTC and NEWCO in good faith, as soon as possible after the
establishment of NEWCO.
1. TOTAL AGGREGATE AMOUNT OF CREDIT FACILITY:
(Yen) 100,000,000
2. ADVANCES: Advances shall be made in increments of (Yen) 10,000,000, to be
funded equally by MTC and GTC. Each advance shall be evidenced by a
promissory note duly executed by NEWCO.
3. TERM: The term of the credit facility shall be ten years.
4. LOAN FEES: None.
5. REPAYMENT AND INTEREST:
(a) Interest on the unpaid principal amount of each advance shall accrue
from the date of the advance until repaid in full at the fixed rate of three
percent per annum, for the actual number of days elapsed.
(b) No interest or principal shall be due and payable until a period of
five years, calculated from the first day of the month following the month in
which the advance is made, has elapsed ("Grace Period").
(c) The principal amount of each advance shall be repaid in twenty equal
quarterly installments in arrears, commencing on the last day of the first three
calendar months after the end of the Grace Period.
(d) Accrued interest during the Grace Period shall be repaid in 20
equal installments, together with the interest on the outstanding principal
amount of each advance, on the same date as the repayment of the principal
amount of the advance.
6. Optional Prepayments:
NEWCO may, upon at least one business day's prior written notice to GTC and
MTC, prepay the outstanding principal amount of any advance in whole, provided
that any such prepayment must be accompanied by payment of all accrued interest
to the date of such prepayment on the amount prepaid.
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EXHIBIT C
PRODUCTS SUPPLY AGREEMENT (Products and Services)
AND TECHNICAL SUPPORT
Upon incorporation of NEWCO, MTC shall provide products and services to
NEWCO, as requested by NEWCO, at the prices set forth below.
1. Products MTC shall initially provide to NEWCO shall include:
(a) Matrix Boxes (both single and multi line).
(b) As determined by MTC, Passport and related platform products at a cost
equal to MTC's loaded carrier cost plus ten percent.
2. MTC shall also provide NEWCO, promptly upon request, with complete
technical support, including:
(a) ESA Computer and software to provide communication facility to/from MTC
make NEWCO operational in terms of order entry and customer service in Japan;
(b) Sample data and specifications of MTC's billing software to allow third
party customization of the billing/invoicing system for the Japanese market.
(c) MTC shall use its best efforts, based upon production capacities, to
provide NEWCO with up to 50 Matrix Boxes per month for a period of up to four
(4) months.
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EXHIBIT D
OFFICE FACILITY AND STAFFING PROVIDED BY GTC
GTC shall provide the following office facility for NEWCO at the time of
establishment of NEWCO.
1. Dedicated office space at the S&S Building, co-located with GTC.
2. Furniture and office equipment to fully create an operational facility
for NEWCO.
3. On an as needed basis, staff support by assigning employees of GTC to
assist NEWCO staff with daily operations.
The above described facility shall be provided according to the following
conditions:
1. During the start-up period, defined as NEWCO able to perform at a better
than break-even level (revenue exceeds expenses) for three successive months, at
no cost.
2. When NEWCO's business performance demonstrates the capability to pay
"rent", a fee shall be negotiated in good faith between the management of GTC
and NEWCO.
3. When NEWCO's business performance demonstrates the capability to sustain
dedicated office facilities in location outside the S&S Building, and it is
determined beneficial to increasing marketshare, the management of NEWCO shall
coordinate with the management of GTC a move to another building.
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EXHIBIT E
EXCLUSIVITY AGREEMENT
1. MTC shall, upon the incorporation of NEWCO, appoint NEWCO as its
exclusive ("Exclusive") sales distributor in Japan provided that NEWCO meet the
following criteria:
a. For NEWCO to quality for and maintain Exclusive status, NEWCO must
meet the Total Quarterly Revenue Due MTC as provided herein and as shown in
===============================
Table 1. If NEWCO does not meet and maintain the Total Quarterly Revenue
=======================
Due MTC in Table 1, MTC, at its sole discretion, reserves the right to
=======
modify NEWCO's Exclusive status.
b. NEWCO agrees to use its best efforts to grow and expand its master
affiliate or sales distribution base in Japan. NEWCO further agrees that
after one year, master affiliate representation shall be distributed such
that no single master affiliate organization shall represent more than 40%
as measured by three successive months of NEWCO's monthly net revenue
sales.
c. NEWCO agrees to use its best efforts to promote the sale of NEWCO
products and services throughout the major geographical markets in Japan.
For the purposes of this Section, Exclusive shall mean that during the term
of this Agreement, that NEWCO meets the criteria as stated in Section 1(a) (b)
and (c) above, MTC agrees not to establish a Joint Venture Agreement with any
other entity in Japan for the purpose of selling and marketing the same MTC
products and services being marketed and sold by NEWCO.
2. MTC shall, upon the incorporation of NEWCO, appoint NEWCO as its
exclusive ("Exclusive") hardware manufacturer for the Matrix Box, any equipment
which provides similar functions and any similar equipment which provides new or
additional features or is designed as successor equipment for the Matrix Box to
NEWCO and shall not sell, supply, license or otherwise make available Matrix
Boxes or the technology embodied therein to any other entity in Japan provided
that NEWCO meet the following criteria:
a. NEWCO agrees to meet and maintain the criteria as set forth under
Section 1 as specified hereunder in this Exhibit E.
b. NEWCO agrees to meet and maintain manufacturing standards
consistent with ISO 9000 (International Standards of Operations) and MTC.
- 25 -
For the purposes of this Section, Exclusive shall mean that during the
term of this Agreement that NEWCO meets the criteria as stated in Section 2 (a)
and (b) above. MTC agrees not to contract with any other entity in Japan for the
purposes of manufacturing the Matrix Box.
MTC agrees that during the term of this Agreement that NEWCO maintains
its status as Exclusive, MTC will forward requests for Matrix Box orders,
intended for installation at the end user customer premise in Japan, to NEWCO.
3. NEWCO understands that (i) MTC currently distributes its products and
services through a network of independent master affiliates ("MTC MAs") located
in the USA and around the world, and (ii) MTC MAs further contract with
independent contractor organizations and individuals known as Sub-Affiliates
("Subs") to distribute MTC products and services, and (iii) both MTC MAs and
Subs currently market and sell MTC products and services, including the Matrix
Box, in Japan, and (iv) current MTC MAs and current and future Subs, will
continue to be authorized to sell and market MTC products and services in Japan.
Furthermore, MTC agrees to promote to MTC MAs (i) that for the purposes
of marketing continuity and to promote the best interests of MTC and NEWCO, MTC
MAs and Subs seek a contact with NEWCO. NEWCO agrees that such reference shall
not entitle NEWCO to any association, claim or contractual relationship with
such MTC MAs or Subs and understands that MTC has no control over the decision
of the MTC MAs and Subs as to whether they elect to abide by the promotions of
MTC.
- 26 -
MTC JAPAN
February, 1995
TABLE 1
QUARTER - YEAR 1 1 2 3 4
TOTAL QUARTERLY REVENUE DUE MTC $50,000 $543,600 $1,468,883 $3,831,741
QUARTER - YEAR 2 1 2 3 4
TOTAL QUARTERLY REVENUE DUE MTC $5,838,297 $7,863,297 $9,955,797 $12,318,297
