Exhibit 10.19
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
dated January , 1999
by and between
MODUS MEDIA INTERNATIONAL, INC.
and
SASATOKU PRINTING CO., LTD.
Table of Contents
JOINT VENTURE AGREEMENT
WITNESS: ................................................................... 1
ARTICLE 1: THE PARTNERSHIP AND JV COMPANY .................................. 2
1.01. JV Company .......................................................... 2
1.02. Articles of Association ............................................. 2
1.03. Capitalization ...................................................... 2
1.04. Principal Office .................................................... 2
1.05. Term ................................................................ 2
1.06. Property Ownership .................................................. 2
ARTICLE 2: BUSINESS OPERATIONS ............................................. 2
2.01. Business Purposes of JV Company ..................................... 2
2.02. Cooperation of the Party ............................................ 3
2.03. Annual Business Plan ................................................ 3
2.04. Insurance ........................................................... 3
ARTICLE 3: MANAGEMENT AND OPERATIONS OF THE JV COMPANY ..................... 4
3.01. Directors of the JV Company ......................................... 4
3.02. Management Authority ................................................ 5
3.03. Management .......................................................... 5
3.04. Provisions for Dealing with Deadlock ................................ 5
ARTICLE 4: MATTERS RESOLVED BY THE BOARD OF DIRECTORS MEETING .............. 5
4.01. Election of a Chairman .............................................. 5
4.02. Resolution of the Board of Directors ................................ 6
4.03. Quorum of the Board of Directors Meeting ............................ 7
ARTICLE 5: MATTERS RESOLVED BY THE SHAREHOLDERS MEETING .................... 7
5.01. Voting Right ........................................................ 7
5.02. Shareholders Meeting ................................................ 7
ARTICLE 6: ADDITIONAL CAPITAL OF THE JV COMPANY ............................ 8
6.01. Additional Capital Contribution ..................................... 8
6.02. Limitation of the Obligation to Finance of the JV Company ........... 8
ARTICLE 7: DUTIES AND RIGHTS OF AND RESTRICTIONS UPON JV COMPANY ........... 8
7.01. Fiduciary Duties .................................................... 8
7.02. Non-competition and Restrictions .................................... 8
7.03. Release from Non-Competition Obligation ............................. 9
7.04. Order of POD Products ............................................... 9
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ARTICLE 8: ACCOUNTING AND TAXATION ......................................... 9
8.01. Fiscal Year ......................................................... 9
8.02. Maintenance of Books and Records .................................... 9
8.03. Access to Books of Account .......................................... 9
8.04. Financial Statements ................................................ 9
8.05. Quarterly Statements ................................................10
8.06. Taxation ............................................................10
8.07. Deposit of Funds ....................................................10
ARTICLE 9: TRANSFER OR PLEDGE OF INTERESTS .................................10
9.01. Limitation on Right to Transfer Party's Interest ....................10
9.02. Transfer to an Affiliate ............................................10
ARTICLE 10: WITHDRAWAL FROM THE JOINT VENTURE BY ONE PARTNER ...............11
10.01. Transfer of Shares .................................................11
10.02. Fair Value and Approval of the Japanese Government .................11
10.03. Closing of Share Transfer ..........................................11
ARTICLE 11: TERMINATION ....................................................12
11.01. Reasons for Specific Termination ...................................12
11.02. Reasons for General Termination ....................................12
11.03. Effect of Termination ..............................................12
ARTICLE 12: DISSOLUTION OF THE JV COMPANY ..................................12
12.01. Dissolution Procedures .............................................12
12.02. Purchase of Assets Upon Winding-up .................................13
ARTICLE 13: INDEMNIFICATION ................................................13
13.01. Indemnification ....................................................13
13.02. Insurance ..........................................................13
ARTICLE 14: REPRESENTATIONS AND WARRANTIES .................................13
14.01. Organization and Standing ..........................................13
14.02. Authority Relative to this Agreement ...............................13
14.03. Litigation .........................................................14
14.04. Absence of Conflict ................................................14
14.05. Absence of Undisclosed Liabilities .................................14
ARTICLE 15: MISCELLANEOUS ..................................................14
15.01. Waiver of Rights of Partition and Dissolution ......................14
15.02. Severability .......................................................14
15.03. Waivers ............................................................14
15.04. Successors and Assigns .............................................15
15.05. Notices ............................................................15
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15.06. Execution in Counterparts ..........................................15
15.07. Titles and Headings ................................................15
15.08. Governing Law ......................................................15
15.09. Entire Agreement and Modification ..................................15
15.10. Confidential Information ...........................................16
15.11. Language ...........................................................16
iii
JOINT VENTURE AGREEMENT
-----------------------
THIS AGREEMENT (hereinafter "Agreement") is made and entered into this __
day of January, 1999 by and between MODUS MEDIA INTERNATIONAL, INC. ("MMI"), a
Delaware, U.S.A. corporation (hereinafter "MMI") and SASATOKU PRINTING CO.,
LTD., a Japanese corporation (hereinafter "Sasatoku").
WITNESS:
--------
WHEREAS, X.X. Xxxxxxxxx Far East, Ltd. and Sasatoku Insatsu K.K. (the trade
name at that time was Sasatoku Insatsu Kogyo K.K.) entered into an Agreement to
form a joint venture company on September 5, 1991 (the "Original Agreement") and
did form such company (the "JV Company");
WHEREAS, MMI has acquired a certain interest in the JV Company;
WHEREAS, MMI and Sasatoku desire to amend and restate the terms of their
joint business relationship, such relationship to provide, among other things,
Supply Chain Management services to the high tech industry and to other
companies that are generally known for significant use and deployment of
technology, such as banks and other financial institutions, and aerospace
companies, based on MMI's sales and marketing knowledge and global
infrastructure and Sasatoku's printing and manufacturing capabilities and local
market expertise;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreement
hereafter set forth, the parties hereto agree as follows:
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ARTICLE 1: THE PARTNERSHIP AND JV COMPANY
1.01. JV Company
----------------
MMI and Sasatoku (hereafter sometimes collectively referred to as the
"Parties" and singularly referred to as the "Party") shall conduct their venture
through a joint venture company (kabushiki kaisha) formed under the Commercial
Code of Japan called "Donnelley Sasatoku Kabushiki Kaisha" or such other name as
the Parties may agree upon in writing (hereinafter "JV Company"). The English
name of the JV Company shall be "Donnelley Japan/Sasatoku Co., Ltd."
The Parties agree to change the name of the JV Company to Sasatoku Modus
Media Kabushiki Kaisha on or before March 31, 1999. Each partner reserves the
right to cause the JV Company to ceasing using the name of that Party as a part
of the trade name of the JV Company if that Party ceases to be a shareholder in
the JV Company.
1.02. Articles of Association
-----------------------------
The Articles of Association of the JV Company shall be attached hereto as
Exhibit A.
1.03. Capitalization
--------------------
(1) The JV Company has issued two thousand six hundred twenty (2,620)
shares of capital stock and currently the shares are held by the Parties as
follows: -
(I) MMI: 1,048 shares at 50,000 yen per share
(II) Sasatoku: 1,572 shares at 50,000 yen per share.
(2) No additional shares of the JV Company may be authorized or issued
except upon the mutual written agreement of the Parties.
(3) The Parties agree that they shall not change their proportion of the
shares in the JV Company for the first three (3) years unless otherwise mutually
agreed upon by the Parties. This provision shall not change or foreclose any
rights of the Parties provided for in this Agreement.
1.04. Principal Office
----------------------
The principal office of the JV Company shall be in the central metropolitan
area of Tokyo, Japan, or such other place as the Parties may agree upon in
writing.
1.05. Term
----------
The term of this Agreement shall commence as of the date first above
written and shall continue until terminated pursuant to any provision thereof.
1.06. Property Ownership
------------------------
All assets and property, whether real or personal, tangible or intangible,
owned by the JV Company shall be held and recorded in the name of the JV
Company. All such assets and property shall be deemed to be owned by the JV
Company, and neither Party individually shall have any ownership of such
property. A Party's interest in the JV Company shall be personal property for
all purposes.
ARTICLE 2: BUSINESS OPERATIONS
2.01. Business Purposes of JV Company
-------------------------------------
The business of the JV Company shall be to provide, among other things,
supply chain management, on-demand printing and manufacturing, software
manufacturing, marketing channel programs management, order management and
fulfillment, and other services, principally to the high tech industry, based on
MMI's sales and marketing knowledge and global infrastructure and Sasatoku's
printing, file management and manufacturing and local market expertise. The
parties agree to change the business purposes of the JV Company as follows:
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1. Printing
2. Provide agency services including ordering of components and
assembly of kits for the computer hardware and software industry:
3. Assembly, storage and sale concerning computer hardware and
computer-related parts; and
4. All business ancillary to the above.
Without limiting any other business objective of the JV Company, the
Parties agree that the Parties shall cause the JV Company to compete
aggressively for all opportunities to conduct business with the Microsoft
Corporation in Japan that are consistent with the JV Company's current or
planned product lines.
2.02. Cooperation of the Parties
--------------------------------
(1) MMI: MMI's responsibilities will be focused in the areas of sales and
marketing with emphasis on increasing the customer base for POD. Another primary
responsibility of MMI's will be to develop technology driven solutions with
respect to the file management process.
(2) Sasatoku: Sasatoku will be responsible for plant management and
providing printing and binding experience for POD. Sasatoku will emphasize
efficient processes and quality product. In addition, Sasatoku will have all
management responsibilities for the lettershop business.
(3) Other Cooperation: Either Party or any affiliate thereof (affiliate
means a company or corporation which either Party controls more than 50% of its
voting right, hereinafter "Affiliate") may enter into contracts or agreements
with the JV Company and otherwise enter into transactions or dealings with the
JV Company on an arm's length equivalent basis and derive and retain profits
therefrom, provided that any such contact or agreement or other transaction or
dealing is approved by the Board of Directors of the JV Company (hereinafter
"Board of Directors") which consists of directors appointed by both Parties in
accordance with the provisions of this Agreement. The validity of any such
contract, agreement, transaction or dealing or any payment or profit related
thereof or derived therefrom, shall not be affected by any relationship between
the JV Company and such Party or any of its Affiliates.
2.03. Annual Business Plan
--------------------------
An outline of the business plan of the JV Company for the three year period
from 1999 to the end of 2001 shall be set forth in Exhibit B attached hereto,
and the parties hereby agree that the JV Company shall be managed and operated
in accordance with the business plan outlined therein. This business plan shall
replace in its entirety the business plan provided pursuant to Article 2.03 of
the Original Agreement. A proposed Business Plan based generally on Exhibit B
(at least insofar as it reflects percentages of expense to sales revenues) which
covers each fiscal year of the JV Company, shall be prepared by the
Representative Directors on behalf of the Board of Directors for approval not
later than the commencement of each fiscal year. A change of the Business Plan
shall be deemed or considered to be an amendment or modification of this
Agreement; and therefore, it may be amended or modified only in accordance with
Article 15.09 herein.
2.04. Insurance
---------------
The JV Company shall maintain insurance in such amounts, with such
deductible and against such risks as the Board of Directors deems appropriate
for the business and properties of the JV Company.
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ARTICLE 3: MANAGEMENT AND OPERATIONS OF THE JV COMPANY
3.01. Directors of the JV Company
---------------------------------
(1) Directors
The JV Company shall have 9 directors in total, and the parties
respectively shall have the right to appoint the following number of directors:
Sasatoku: 4 directors (hereinafter "Sasatoku Directors")
MMI: 3 directors (hereinafter "MMI Directors")
Jointly appointed by both parties: 2 directors (hereinafter "JV Directors") If
the parties appoint the same person as a director of the JV Company, such a
director shall be deemed as a JV director. The JV Director shall be deemed
neither the Sasatoku Director nor the MMI Director. Any party may remove the JV
Director in accordance with Article 3.01 (4) herein.
The directors of the JV Company shall be elected and nominated by
resolution of the General Meeting of Shareholders of the JV Company and the
Parties agree to exercise their respective voting rights as a shareholder of the
JV Company so that the persons who are appointed by respective Party will be
elected as directors of the JV Company. The Parties agree to appoint the
following persons as directors of the JV Company:
Sasatoku Directors: Xxxxxxxxx Xxxxxxxx
Takehara Yamada
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
MMI Directors: Xxx Xxxxxxxxxxx
Xxxxx Xxxxxx
Xx Xxxx
JV Directors: Tatsumi Xxxxxx
Xxxxx Aoki
(2) The Representative Directors
The JV Company shall have two (2) or less number of representative
directors. Each of Sasatoku and MMI shall have the right to appoint one
representative director from the Sasatoku Directors or MMI Directors. A JV
director may be appointed as the representative director based on mutual
agreement between the Parties. The Parties agree to appoint the following person
as the representative directors of the JV Company at the time of execution of
this Agreement.
JV Director: Tatsumi Nakano
(3) Statutory Auditor
The JV Company shall have two statutory auditors. Each of Sasatoku and MMI
shall have the right to appoint one statutory auditor. The Parties agree to
appoint the following persons as the statutory auditors:
Sasatoku: Sinji Tanahashi
MMI: Phil Radnidge
(4) Removal or Vacancy of Officers
Either Party at any time, by written notice to the other Party and the JV
Company, may remove any of directors and/or statutory auditors who were
nominated by the relevant Party, including the JV Director, with or without
cause. In case the position of a director of the JV Company becomes vacant for
any reason, the Parties agree to cause their shares to be
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voted to elect as director a person nominated by the Party who nominated the
director whose office is vacant.
Both Parties agree that the JV Company may determine, at any time, to
increase the number of its directors; provided, however, that any increase shall
be in multiples of two, one-half of such increased number of the directors to be
from Sasatoku and one-half to be from MMI.
(5) Exercise of Voting Right
Both parties shall agree to exercise their respective voting rights as a
shareholder of the JV Company so that the persons who are appointed by
respective parties from time to time under this Article will be elected as
officers of the JV Company. The parties agree that the JV Company shall no later
than the fifth (5) day of June 1999 convene a General Meeting of Shareholders of
the JV Company the agenda of which shall be the election of these directors and
officers appointed under this Section.
3.02. Management Authority
--------------------------
Except as otherwise provided herein, the Board of Directors of the JV
Company shall have complete and exclusive power and authority to manage, direct
and control the business of the JV Company. Neither Party shall have authority
to act for, or to assume any obligation or responsibility on behalf of, the JV
Company, except with the prior written consent of the Board of Directors.
The Board of Directors shall, except as may be otherwise provided herein,
operate in accordance with the Management Policies and Procedures adopted by the
Board of Directors. The Management Policies and Procedures to be adopted shall
address, by way of example, but not limitation: authority to enter into
agreements on behalf of the JV Company; authority to spend monies of the JV
Company; reimbursement of expenses incurred in promotion of the business of the
JV Company; and banking.
3.03. Management
----------------
Other than the Board of Directors, the management of the JV Company shall
be supplied by the Parties or hired from the outside by the JV Company on an "as
needed" basis, with the JV Company bearing all expenses of such management. It
is initially expected that accounting affairs of the JV Company will be
supported by Sasatoku and Information Technology affairs will be supported by
MMI, with the JV company bearing any out-of-pocket expenses for such services.
Within the constraints of the Business Plan approved by Parties or Board of
Directors, and the JV Company's business purpose, the Board of Directors will be
vested with complete discretion as to the equipment and technology which the JV
Company acquires.
3.04. Provisions for Dealing with Deadlock
------------------------------------------
In the event that the Board of Directors fails to reach agreement following
a reasonable period of deliberation on any matter before it, the Parties shall
confer in good faith with a view toward resolving such matter.
ARTICLE 4: MATTERS RESOLVED BY THE BOARD OF DIRECTORS MEETING
4.01. Election of a Chairman
----------------------------
The Board of Directors may elect a chairman of their meetings and determine
the period for which he is to hold office, but if no such chairman shall be
elected, or if at any meeting the chairman is not present within fifteen (15)
minutes after the time appointed for holding the meeting, the directors present
shall choose someone of their member to be chairman of such meeting.
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4.02. Resolution of the Board of Directors
------------------------------------------
The Board of Directors shall meet upon the request of any director, but in
no event less frequently than quarter-annually. Meetings of the Board of
Directors shall be held at such location as agreed upon by the Board of
Directors. The quorum for the Board of Directors Meeting shall consist of no
less than a majority of the total number of directors (including at Least one
MMI Director and one Sasatoku Director). All decisions of the board of Directors
shall require the affirmative vote of not less than a majority of the Directors
present at a meeting at which a quorum is present, including the affirmative
vote at least one MMI Director and one Sasatoku Director. The following actions
shall require the approval of the affirmative vote of at least two-third (2/3)
of all members of the Board of Directors, including at least one MMI Director
and one Sasatoku Director:
a) the approval of any Business Plan in accordance with Article 2.03
hereof or other strategic or financial plan of the JV Company;
b) the entering into of any contract or agreement having a total
committed aggregate contract price or requiring aggregate
payments in excess of ten million yen (Y10,000,000);
c) (i) the disposition, lease, or exchange of assets of the Company
for which the aggregate consideration of the JV Company's basis,
calculated in accordance with Japanese income tax regulations, is
in excess of ten million yen (Y10,000,000), or (ii) the making of
a capital expenditure or a commitment to make a capital
expenditure in excess of ten million yen (Y10,000,000);
d) the commencement (including the filing of a counterclaim) or
settlement of any material litigation or arbitration to which the
JV Company is, or is to be, a party, or by which it or any of the
property of the JV Company may be affected;
e) the filing with any governmental agency of any material documents
relating directly or indirectly to the business of the JV
Company;
f) the confirmation of annual financial statements;
g) supply and service commitments from third parties in excess of
ten million yen (Y10,000,000) per year;
h) any amendment to the Management Policies and Procedures;
i) the approval of all proposals relating to financing of the
business of the JV Company, including any capital contributions
to be requested from the Parties and the issuance of new capital
shares;
j) the entry into, amendment of or extension of any contract between
the JV Company and either Party or any Affiliate thereof;
k) any change in accounting principles used by the JV Company,
except as required by accounting principles which is generally
accepted as fair and reasonable;
l) authorization of either Party to act for, to assume any
obligation or responsibility on behalf of, the JV Company;
m) an acquisition or disposition of stock or securities of any other
corporation, or an acquisition, disposition or licensing of
patents, designs or trademarks, regardless of value;
n) assignment or sale of more than thirty (30) percent of gross
assets of the business, including goodwill of the JV Company;
o) reorganization or liquidation of the JV Company, merger or
consolidation of the JV Company into any other Company, or an
acquisition by the JV Company of all the assets of any other
company;
p) establishing branches, subsidiaries or distributors outside Japan
or entering joint venture with a third party;
q) the transfer or sale of existing shares;
r) the establishment of the basic personnel policies and the
employment and discharge of the chief employees of the JV
Company;
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s) the approval of any contract between the JV Company and any of
its shareholders or any person connected with a shareholders;
t) the approval of any transactions conducted by a director which
has similar nature to business as the one of the JV Company;
u) the approval of any transactions between the JV Company and the
director, whether such a director conduct as a principal or agent
with respect to the relevant transaction, and any transaction
between the JV Company and a third person by which the JV
Company's interests conflict with the one of the directors;
v) the appointment of independent certified public accountants for
the JV Company;
w) the Payment of dividend; and
x) any Resolutions to be submitted to a General Meeting of
Shareholders.
4.03. Quorum of the Board of Directors Meeting
----------------------------------------------
If at any meeting of the Board of Directors there shall be less than a
quorum present, a majority of the directors in attendance may adjourn the
meeting from time to time until a quorum is obtained.
ARTICLE 5: MATTERS RESOLVED BY THE SHAREHOLDERS MEETING
5.01. Voting Right
------------------
All the resolutions of the General Meeting of Shareholders of JV Company
shall be adopted by voting and shareholders of the JV Company shall be entitled
to one voting right per each share of the JV Company owned and held by it.
5.02 Shareholders Meeting
-------------------------
The Ordinary General Meeting of Shareholders shall be convened by the Board
of Directors, and held in the address of the head office of the JV Company or
other place as set forth in the Articles of Association of the JV Company, at
least once a year. Extraordinary General Meeting of Shareholders shall be held
whenever necessary.
The important issues as to the organization and management of the JV
Company as set forth below, shall be presented to the General Meeting of
Shareholders and shall be adopted and resolved by the affirmative vote of
two-thirds (2/3) of the total number of votes representing the total number of
the issued shares:
a) changes in business lines,
b) amendment of the Articles of Association,
c) increase and/or decrease of capital,
d) compensation of a director or auditor,
e) discharge of a director or auditor,
f) a dividend distribution of profit,
g) share split due to capitalization of profit,
h) issuance of new shares or other than common par-value shares,
i) issuance of debentures,
j) transfer of business and/or all or an important part of the assets,
k) investment in other firms, or appropriation of profit or loss arising
from such investment,
1) granting to a third person, other than a current shareholder, the
right to subscribe to new shares,
m) dissolution and/or amalgamation, merger with another company,
n) matters decided by the Board of Directors, which are deemed so
important as may affect the financial and business position of the JV
Company.
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ARTICLE 6: ADDITIONAL CAPITAL OF THE JV COMPANY
6.01. Additional Capital Contribution
-------------------------------------
The parties shall make loans to the JV Company in the proportion of their
respective shares; provided however that the maximum amount of additional loans
to be given to the JV Company on or after the execution date of this Agreement
shall not exceed 900 million (900,000,000) yen in total:
(a) the maximum liability of Sasatoku under such loan shall not exceed 540
million (540,000,000) yen:
(b) the maximum liability of MMI under such loan shall not exceed 360
million (360,000,000) yen.
Except as provided for in Article 6.02 of this Article, neither Party shall
be under any obligation to make any additional capital contributions to the JV
Company. Any additional capital contributions shall be mutually agreed upon by
the Parties in writing.
Such an agreement shall be executed on behalf of the Parties by their
respective duly authorized officers, setting forth the agreement of the Parties
to make such capital contributions, the amounts thereof and the dates for making
the same (or method for determining such dates). Any such contributions so
agreed upon shall be made simultaneously and equally, but in proportion to the
respective Party's shares in the JV Company, and no approval of any Business
Plan shall be deemed to be an agreement to make any additional contributions
contemplated thereby.
6.02. Limitation of the Obligation to Finance of the JV Company
---------------------------------------------------------------
Parties agree that they shall use their best efforts to replace the loans
from the Parties with external bank debt at a future time when the financial
standing of the JV Company makes it appropriate for it to obtain direct
financing.
Based on Parties' agreement provided in Article 6.01, the Parties shall
contribute working capital to the JV Company, in amounts proportionate to their
interests therein, in accordance with its requirement, as shall be requested by
the Board of Directors of the JV Company at least sixty (60) days prior to the
requirement date, up to the maximum described in section 6.01. These
contributions shall be made in the same form and on the same terms by both
Parties. Such contributions may be in the form of loans or increases in capital
as agreed upon between the Parties.
ARTICLE 7: DUTIES AND RIGHTS OF AND RESTRICTIONS UPON JV COMPANY
7.01. Fiduciary Duties
----------------------
The partners shall devote such time to the JV Company as shall be
necessary, in the opinion of the Parties to conduct the JV Company in a prudent
and efficient manner.
7.02. Non-competition and Restrictions
--------------------------------------
Neither Party may, without the written consent of the other Party:
a) make an offer of a similar venture to this JV Company, to a competitor
of the other partner during the Term of this Agreement.
b) possess or assign any of the rights in property of the JV Company for
any purpose;
c) admit a person or entity as an additional partner to this joint
venture;
d) do any act in contravention of this Agreement or the Parties' Policies
and Procedures;
e) except as otherwise permitted in or by this Agreement do any act
within the JV Company which would constitute a breach of its fiduciary
obligations and which would materially and adversely impact the
ordinary business of the JV Company;
f) make any agreement on behalf of the other Party; or
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g) dissolve, terminate, liquidate or wind up the affairs of the JV
Company (except to the extent expressly permitted by this Agreement).
7.03. Release from Non-Competition Obligation
---------------------------------------------
Either party who wishes to conduct any business which has the possibility
of breaching the non-competition obligation provided for in Section 7.02 shall
disclose its business plan to the other party in advance to obtain its consent.
Neither party shall unreasonably withhold such consent. The parties, if
necessary, shall convene either a board of directors meeting or a general
meeting of shareholders, as the case may be, to resolve to release the relevant
party from the non-competition obligation and the scope of such release.
7.04. Order of POD Products
---------------------------
Either party may respectively place an order for the POD products as an
arms length party with the JV Company. The sales price for the POD products
shall be a 10 percent xxxx-up price of the targeted manufacturing cost of the
POD products. For the purpose of this Agreement, the manufacturing costs shall
include all direct costs as well as all operating costs incurred in the JV
Company for manufacturing the POD products.
ARTICLE 8: ACCOUNTING AND TAXATION
8.01. Fiscal Year
-----------------
The books and records of the JV Company shall be kept on an accrual basis.
The fiscal year of the JV Company shall be commenced on December 26 and end on
the following December 25 of each year and the accounts shall be settled as of
the end of each fiscal year.
8.02. Maintenance of Books and Records
--------------------------------------
At all times during the continuance of the JV Company, the JV Company shall
keep or cause to be kept, at the principal office referred to in Article 1.03
hereof, full and complete books of account. The books of account shall be
maintained in a manner that provides sufficient assurance that:
a) transactions of the JV Company are executed in accordance with
the general or specific authorization of the Parties' of the JV
Company;
b) transactions of the JV Company are recorded in such form and
manner as will (i) permit preparation of corporate tax returns
and information returns in accordance with this Agreement and as
required by law, (ii) permit preparation of the JV Company's
financial statements in accordance with accounting principles
which is generally accepted as fair and reasonable, and (iii)
maintain accountability for the JV Company's assets; and
c) the accounting record for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken
with respect to any difference.
8.03. Access to Books of Account
--------------------------------
Each Party shall have the right at all reasonable times during usual
business hours to audit, examine and make copies of extracts of or from the
books of account of the JV Company. Such right may be exercised through any
agent or employee of such Party designated by it or by independent certified
public accountants designated by such partner. Each partner shall bear all
expenses incurred in any examination made for such Party's account.
8.04. Financial Statements
--------------------------
As soon as practicable following the end of each fiscal year (and in any
event no later than 60 days after the end of such fiscal year), the JV Company
shall prepare, or cause to be prepared, and deliver to each Party and the Board
of Directors a statement of income (loss) of the JV Company, a balance sheet for
such fiscal year, a statement of cash flow and a statement of production cost of
the JV Company as of the end of such fiscal year. During the
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three year period described in section 1.03, (3), the JV Company will have its
books and records audited by the same international CPA firm as selected by the
Board of Directors in accordance with section 4.02 v). The firm is to be a "big
five" accounting firm. Appointment of the accounting firm is subject to
agreement between the Parties as to the responsible Party for payment of the
costs and fees for such audit.
8.05. Quarterly Statements
--------------------------
As soon as possible following the end of each fiscal quarter, the JV
Company shall prepare, or cause to be prepared, and deliver to each Party and
the Board of Directors an unaudited statement of income (loss) of the JV
Company, a statement of changes in its financial position for such fiscal
quarter and an unaudited balance sheet of the JV Company as of the end of such
fiscal quarter.
8.06. Taxation
--------------
The JV Company shall have the accountants provide assistance in the
preparation of tax returns required of the JV Company, as deemed necessary by
the Board of Directors and shall file the same after they have been approved by
the Board of Directors in accordance with the terms of Article 4.02 hereof, but
no later than within 3 months after the end of each fiscal year.
8.07. Deposit of Funds
----------------------
All funds of the JV Company not otherwise utilized shall be deposited from
time to time to its credit in accounts in such banks or trust companies, or
other depositories as the Board of Directors shall select. The JV Company shall
report the balances in any such accounts, as of the last business day of each
month, to the Parties on a regular monthly basis.
8.08. Other Report
------------------
The balance of the debt as of each of the end of the week shall be
submitted to the Parties by the second business day of the immediately following
week. A monthly provisional balance sheet as of the each of the end of month
shall be submitted to the Parties by the l0th day of the immediately following
month.
ARTICLE 9: TRANSFER OR PLEDGE OF INTERESTS
9.01. Limitation on Right to Transfer Party's Interest
------------------------------------------------------
The Parties may not sell, assign, pledge, hypothecate or otherwise
transfer, in any manner, all or any part of its interest, except with the
written consent of the other Party or as permitted by the terms set forth in
this Article.
9.02. Transfer to an Affiliate
------------------------------
Each Party (hereinafter "Selling Party") shall have the right, without the
consent of the other Party (hereinafter "Remaining Party" for the purpose of
this Article), to transfer all, but not less than all, of its interest to any
Affiliate thereof; provided, however, that it shall be a condition to any such
transfer that the Affiliate to which such transfer is made shall have assumed by
written agreement (in form and substance satisfactory to the Remaining Party)
all of the obligations of the transferor under this Agreement; and provided
further, that (i) no such transfer shall relieve the transferor of the Selling
Party's obligations under this Agreement; and (ii) any such transfer shall not
be reasonably likely, in the view of the Remaining Party, to result in any
significant change in the JV Company or in its policies, practices or management
or to affect adversely any material relationships between the JV Company and any
of its customer or supplier. Upon such transfer, the Affiliate shall be admitted
as a Party, in substitution of the Party that was the transferor, and for
purposes of this Agreement shall be deemed a Party.
10
ARTICLE 10: WITHDRAWAL FROM THE JOINT VENTURE BY ONE PARTNER
10.01. Transfer of Shares
-------------------------
(1) Notwithstanding anything contrary herein, each Party shall have the
right to withdraw from the JV Company on or after December 31, 2001 in
accordance with the procedures set forth in this Article.
(2) A Party desiring to sell or transfer all of its shares in the JV
Company (hereinafter "Withdrawing Party"), but not less than all, except in
accordance with Article 9 hereof, shall offer them in writing for purchase by
the other Party (hereinafter "Remaining Party" for the purpose of this Article)
at the fair value (defined in Article 10.02, hereinafter "Fair Value") as of the
end of the last accounting period of the JV Company and the Remaining Party may
elect to purchase such shares within a period of (60) days after the receipt of
the said offer (hereinafter "Withdrawing Notice") which sets forth the terms and
conditions of the sale of the shares. The right to purchase shares under this
Article may be exercised only with respect to all shares so offered, and upon
exercise the purchase price shall be paid in accordance with such payment
conditions agreed upon; however the settlement of the payment shall be made no
later than within (90) days after the date of the Withdrawing Notice.
(3) If the other Party does not exercise its right to purchase the shares
to which it is entitled within the (60) day period specified herein, then the
Withdrawing Party shall foreclose the right to sell its share, but shall have
the right to request to dissolve the JV Company. The other Party shall cause its
shares to vote for dissolution of the JV Company.
10.02. Fair Value and Approval of the Japanese Government
(1) "Fair Value" shall be the price for the shares of the JV Company,
determined in accordance with the method of stock evaluation provided by the
Japanese Inheritance Tax and the Notification of Inheritance Tax Evaluation by
JV Company's independent certified public accountant designated by the Board of
Directors, and shall include no amount for goodwill.
(2) Transfer of shares under this Article shall be subject to the
validation or approval of the Japanese government, if required, and shall not
become effective until such validation or approval has been obtained. When such
validation or approval is required, the period of time prescribed in Article
10.01 above during which the acceptance by the other Party or the sale or
transfer to a third party is required to be made, shall be extended to the time
at which such government validation or approval is obtained.
10.03. Closing of Share Transfer
--------------------------------
(1) The closing of the purchase of the Withdrawing Party's entire interest
upon exercise of the purchase option pursuant to Article 10.01.(1) shall take
place on the withdrawal date, at which time the Remaining Party shall (i) pay
the withdrawal purchase price (Fair Value of the shares defined in Article
10.02) in immediately available funds, to the Withdrawing Party, and (ii)
deliver to the Withdrawing Party instruments, in a form reasonably satisfactory
to the Withdrawing Party, under which the Remaining Party (A) shall assume and
agree to perform and discharge any obligation of the JV Company after the date
of such closing and the Withdrawing Party shall thereby be released from any
obligation to make such capital contributions, and (B) shall agree to indemnify
and hold harmless the Withdrawing Party with respect to all obligations and
liabilities of the JV Company.
(2) The Withdrawing Party shall concurrently deliver to the Remaining Party
the share certificates of the JV Company and an instrument of assignment, in a
form reasonably satisfactory to the Remaining Party, under which the Withdrawing
Party will transfer and assign to the Remaining Party all right, title and
interest of the Withdrawing Party in and to its entire interest in the JV
Company, free of all liens and encumbrances; and the Withdrawing Party shall
thereafter deliver such other documents as the Remaining Party may reasonably
require to confirm and perfect such assignment. Such agreements shall take into
account the
11
remaining length of contracts the JV Company shall have with third parties so as
to insure no interruption in the performance required of the JV Company under
such third party contracts.
ARTICLE 11: TERMINATION
11.01. Reasons for Specific Termination
---------------------------------------
This Agreement shall be terminated upon the event or events first occurring
as set forth as follows:
a) The unanimous written agreement of the Parties to terminate this
Agreement;
b) Upon the occurrence of any circumstances, other than those
circumstances referred to in this Agreement, which by law would
require that the JV Company be dissolved.
c) The deadlock set forth in Article 3.05 can not be resolved for a
period of six months by the Board of Directors, even after Parties'
mutual discussion in good faith.
d) This Agreement is materially breached by either Party and such default
is not cured within (30) day's written notice from aggrieved Party
specifying the nature of such default. The aggrieved Party shall be
entitled to purchase the shares of the JV Company owned by the
breaching Party which may be enforceable within (30) days from the
effective date of termination of this Agreement by giving notice to
that effect in writing to the breaching Party. In such an event, the
shares of the stock shall be transferred to the aggrieving Party by
Fair Value defined in Article 10.02. Provided, however, that exercise
of the right to purchase the shares shall not constitute discharge of
any antecedent liability to the other Party.
e) Either Party cease to owns shares of stock in the JV Company, except
for the share transfer made under Article 9.02.
11.02.Reasons for General Termination
-------------------------------------
In the event that either Party enters bankruptcy (hasan), composition
(wagi), reorganization (kosei), liquidation (seisan), or arrangement (seiri)
proceedings under the relevant jurisdiction, or becomes insolvent due to its
being unable to pay its debts as they become due (hereinafter "Insolvent
Party"), the other Party shall have the right to terminate this Agreement
forthwith by giving written notice to the Insolvent Party.
11.03. Effect of Termination
----------------------------
The JV Company shall be dissolved in accordance with Article 12, except
that the cause of termination is (i) withdrawal from the JV Company by either
Party in accordance with Article 10, or (ii) either Party exercises the right to
purchase the shares in the JV Company under precedent Article 11.01(d).
ARTICLE 12: DISSOLUTION OF THE JV COMPANY
12.01.Dissolution Procedures
----------------------------
(1) If an event occurs that results in a dissolution of the JV Company,
then at the time of such event both Parties shall proceed as promptly as
practicable to wind-up the affairs of the JV Company and distribute the assets
thereof in accordance with the applicable Japanese Commercial Code; provided,
however that the assets of the JV Company shall be liquidated in an orderly and
businesslike manner so as not to involve undue sacrifice by the JV Company or
either Party. A final accounting shall be settled to the satisfaction for both
Parties.
As a general rule, the assets of the JV Company shall be sold at the time
of dissolution; however some or all of the assets of the JV Company may be
retained by the JV
12
Company for distribution to the Parties based on the Parties' consent. The fair
market value of any assets retained by the JV Company shall then be determined
by the Parties' mutual agreement or by such appraisal procedures to which they
shall in good faith agree. Any assets retained for distribution in accordance
herewith shall be distributed at an agreed value.
(2) In the event that the liabilities of the JV Company exceed its assets,
both Parties shall contribute to the JV Company an amount of the balance of the
liabilities over its assets in immediately available funds in accordance with
each Party's proportional share in the JV Company.
12.02. Purchase of Assets Upon Winding-up
-----------------------------------------
If the Parties determine to sell any assets, either Party shall have the
right to purchase the assets at any sale.
ARTICLE 13: INDEMNIFICATION
13.01. Indemnification
-----------------------
(1) The JV Company shall indemnify, to the full extent permitted by law,
any person, corporation or Party who was or is a party to, or is threatened to
be made a party to, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, investigative, or
otherwise, by reason of the fact that such persons is or was a representative or
agent of the JV Company, or is or was serving at the request of the JV Company
as an agent of the JV Company. The indemnification provided for in this Article
shall be made only as authorized in any specific case upon a determination that
(i) indemnification is proper in the circumstances, (ii) the conduct of the
representative or agent did not constitute a willful violation of the terms of
this Agreement, (iii) the representative or agent acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
JV Company, and (iv) with respect to any criminal proceeding, the representative
or agent had no reasonable cause to believe his conduct was unlawful.
(2) To the full extent permitted by law, the indemnification provided by
this Article shall include expenses (including attorney's fees), judgments,
fines, and amounts paid in settlement, and any such expenses may be paid by the
JV Company in advance of the final disposition of any action, suit or
proceeding.
13.02. Insurance.
------------------
The JV Company may, to the fullest extent permitted by law, purchase and
maintain insurance against any liability that may be asserted against any person
entitled to indemnity pursuant to Article (13.01) hereof.
ARTICLE 14: REPRESENTATIONS AND WARRANTIES
Each Party hereby represents and warrants to the other Parties as follow:
14.01. Organization and Standing
--------------------------------
It is a corporation duty organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has the corporate
power to own its properties and to carry on its business as it is presently
being conducted. To the best knowledge and belief of each Party, (i) the
character of the properties owned or leased by it and the nature of the business
transacted by it do not require that it be qualified to do business in any other
jurisdiction, or (ii) it has been qualified to do business in all other
jurisdictions in which its business requires it to be qualified.
14.02 Authority Relative to this Agreement
------------------------------------------
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duty authorized
by its Board of directors or
13
pursuant to procedures authorized by its board of directors, and this Agreement
is binding and enforceable in accordance with its terms.
14.03. Litigation
-----------------
It is not a party to any pending or, to the best of its knowledge
threatened, litigation or other proceeding which, if adversely determined, would
have a material adverse effect upon the JV Company's or the Parties' tangible or
intangible assets or operations.
14.04. Absence of Conflict
--------------------------
Neither the execution, delivery or performance by it of this Agreement or
of any other agreements which are being executed and delivered simultaneously
herewith to which it is a party, nor the consummation of the transactions herein
or therein contemplated, nor the fulfillment of or compliance with the terms and
conditions hereof or thereof, will conflict with its Certificate of
Incorporation, by-laws or other instrument pursuant to which it is organized, or
result in a breach of or constitute a default under or conflict with any
material contract, agreement or instrument to which it is a party or by which it
or any of its properties are bound, or any law, rule, or regulation applicable
to it or any of its properties. Any third party, governmental or administrative
consents or approvals which are required in connection with the foregoing have
been obtained and are in full force and effect.
14.05. Absence of Undisclosed Liabilities
-----------------------------------------
There are no material debts, liabilities, contracts or other obligations,
other than those liabilities and obligations which are being expressly assumed
by the JV Company, pursuant to this Agreement and the other agreements delivered
simultaneously herewith, and except as otherwise contemplated herein or therein,
which will impact upon the JV Company in a materially adverse manner.
ARTICLE 15: MISCELLANEOUS
15.01. Waiver of Rights of Partition and Dissolution
----------------------------------------------------
Each of the Parties hereby waives all rights it may have, at any time,
to maintain any action for partition or sale of the JV Company's properties as
now or hereafter permitted under any applicable statutes or other laws. Each of
the Parties hereby waives and renounces its rights to seek a court decree of
dissolution or to seek the appointment of a court receiver for the JV Company as
now or hereafter permitted under any applicable statutes or other laws. Neither
Party may effect a dissolution of the JV Company except as provided in this
Agreement.
15.02. Severability
-------------------
In case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision or provisions shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or provisions or the remaining provisions of this Agreement,
and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained herein, unless
such a construction would be unreasonable.
15.03. Waivers
--------------
No consent or waiver, express or implied, by either Party to or of any
breach or default by the other Party in the performance by the other Party of
its obligations under this Agreement shall be deemed or construed to be a
consent or waiver to or of any other breach or default by such other Party of
the same or any other obligation of such Party hereunder. The failure of a Party
to exercise any right conferred in this Agreement within the time required shall
cause such right to terminate with respect to the transaction or circumstances
14
giving rise to such right, but not to any such right arising as a result of any
other transaction or circumstances.
15.04. Successors and Assigns
-----------------------------
Upon assignment in accordance with this Agreement, this Agreement shall be
binding upon and shall inure to the benefit of the successors and permitted
assigns of the parties hereto and is not intended to confer upon any other
persons any rights or remedies hereunder. except that the JV Company shall be an
express third party beneficiary under this Agreement.
15.05. Notices
--------------
Any notices and other communications provided for hereunder shall, unless
otherwise stated herein be in writing and delivered or sent by certified mail,
postage prepaid, to each Party, at its address set forth below (or at such other
address as shall be designated for such purpose by such Party in a written
notice to the other Party):
a) To MMI: 000 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxxxx 00000
Unites States of America
ATTN:.
b) To Sasatoku: 7 Owaki Sakac Machi
Toyoake-City, Alchi-xxx
Japan
ATTN.: Somu-bu, Xxxx-xx
Notices shall be deemed to have been given upon receipt.
15.06. Execution in Counterparts
--------------------------------
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become a binding
agreement when one or more counterparts have been signed by both Parties hereto
and delivered to each Party.
15.07. Titles and Headings
--------------------------
Titles and headings to Articles herein are inserted for the convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
15.08.Governing Law
-------------------
This Agreement shall be governed by and construed in accordance with the
laws of Japan. Notwithstanding this Article 15.08, United States tax and other
laws and regulations which could be detrimental to MMI shall be taken into
consideration in implementing this Agreement.
15.09.Entire Agreement and Modification
---------------------------------------
(1) This written Agreement together with the Exhibits A and B attached
hereto and any written amendments thereof, constitutes the entire agreement
between the Parties relating to the subject matter herein, and it is the final
expression of the agreement between the Parties. The terms included herein may
not be contradicted by evidence of any prior agreement or of a contemporaneous
oral agreement, but may be explained or supplemented by (i) course of dealing or
performance; and (ii) evidence of consistent additional terms except where this
written Agreement is a complete and exclusive statement of the terms agreed
upon.
(2) No change in, addition to or waiver of the terms and conditions herein
shall be binding upon any Parties, unless approved by it in writing.
(3) The Parties hereby agree that this Amended and Restated Joint Venture
Agreement shall replace the Original Agreement and the Amendment Agreement Dated
15
January 31, 1994 between Sasatoku Insatsu Kogyo K.K. and X.X. Xxxxxxxxx Far
East Ltd., in its entirety.
15.10. Confidential Information
-------------------------------
The Parties hereto shall not disclose or otherwise divulge to any third
person or persons any secret or confidential information of any Party hereto
which may have come to their knowledge through the joint project contemplated
herein. The obligation set forth in this Article of the Parties hereto shall
survive any termination or cancellation of this Agreement.
15.11. Language
---------------
This Agreement shall be executed in English language, which language shall
control. A Japanese translation of this Agreement which is verified by both
Parties shall be attached hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year written below.
Date: January , 1999
Place: Westwood MA, U.S.A.
MODUS MEDIA INTERNATIONAL, INC.,
By: /s/ Xxxx Xxxxxxx
-------------------------------
Title: Senior Vice President
Name: Xxxx Xxxxxxx
Date: January , 1999
Place: Tokyo, Japan
SASATOKU PRINTING CO., LTD., formerly
Sasatoku Insatsu Kogyo K.K.
By: /s/ Xxxxxxxxx Xxxxxxxx
-------------------------------
Title: Representative Director, President
Name: Xxxxxxxxx Xxxxxxxx
16
EXHIBIT A
Articles of Association
of
DONNELLEY SASATOKU K.K.
[Translation]
*****************************************
ARTICLES OF ASSOCIATION
OF
DONNELLEY SASATOKU K.K.
*****************************************
as of June 5, 1997
- 1 -
ARTICLES OF ASSOCIATION
-----------------------
CHAPTER I
GENERAL PROVISIONS
ARTICLE 1. COMPANY NAME
-----------------------
-
The name of the Company is "Sasatoku Doneri Kabushiki Kaisha ", which is
expressed in English as Donnelley Sasatoku K.K.
ARTICLE 2. PURPOSE
------------------
The Company shall engage in the following businesses:
1. Printing; and
2. All other business activities incidental to the foregoing.
ARTICLE 3. LOCATION OF HEAD OFFICE
----------------------------------
The head office of the Company shall be located in Shinjuku-ku, Tokyo.
ARTICLE 4. METHOD OF PUBLIC AND OTHER NOTICES
---------------------------------------------
Public notices of the Company shall be carried in the KAMPO [Official
Gazette].
CHAPTER II
SHARES OF STOCK
ARTICLE 5. TOTAL NUMBER OF SHARES AUTHORIZED TO BE ISSUED
---------------------------------------------------------
The total number of shares authorized to be issued by the Company shall be
10,480 shares.
- 2 -
ARTICLE 6. PRICE PER SHARE
--------------------------
All shares to be issued by the Company shall be par-value shares. The price
per share shall be Y50,000.
ARTICLE 7. RIGHTS OF FRACTIONAL SHAREHOLDERS
--------------------------------------------
(1) Shareholders recorded in the Fractional Shares Original Register as
fractional shareholders shall be vested with the right to receive dividends from
profit and monetary distributions pursuant to Article 293-5 of the Commercial
Code.
(2) Where a shareholder is deemed to be vested with the right to subscribe
to new shares, convertible debentures or warrant bonds, the fractional
shareholders of the previous paragraph shall have subscription rights thereof.
ARTICLE 8. SHARE CERTIFICATES
-----------------------------
(1) All shares certificates to be issued by the Company shall be nominative
shares of 1, 50, 100, 1,000 and other share certificate denominations.
(2) Share certificates shall not be issued where a request for
non-possession of share certificates is presented to the Company.
ARTICLE 9. RESTRICTIONS ON ASSIGNMENT OF SHARES
-----------------------------------------------
Any assignment of shares of the Company shall require the approval of the
Board of Directors.
ARTICLE 10. CHANGE IN HOLDER
----------------------------
(1) Applications to change the holder of a Company share must be made using
the Company's prescribed application form, signed and sealed and submitted with
the share certificate attached.
- 3 -
(2) When shares are acquired other than by assignment, written evidence of
the reason therefor must be submitted together with the share certificate, as
the Company may request.
ARTICLE 11. RECORDING OF PLEDGES AND DESIGNATION OF PROPERTY IN TRUST
---------------------------------------------------------------------
Any application to record a pledge of Company shares or to designate
property in trust must be made using the Company's prescribed application form,
signed and sealed and submitted with the share certificate attached. The same
applies to cancellation of such record or designation.
ARTICLE 12. REISSUANCE OF SHARE CERTIFICATES
--------------------------------------------
(1) Any application for reissuance of a share certificate by reason of
split, amalgamation or soiling must be made using the Company's prescribed
application form, signed and sealed and submitted with the share certificate
attached.
(2) To apply for reissuance of a lost share certificate, application must
be made using the Company's prescribed application form, signed and sealed and
submitted with the original or a certified copy of the nullification attached.
ARTICLE 13. FEES
Whenever an application is made subject to the preceding three articles,
the fee prescribed by the Company must be paid.
ARTICLE 14. CLOSURE OF THE SHAREHOLDERS REGISTER
------------------------------------------------
(1) The Company shall suspend all changes in the entries in the
shareholders register from the day following the last day of the business year
until the final day of the Regular General Meeting of Shareholders.
(2) In cases other than the above item, whenever necessary to ascertain
those persons who should exercise rights as shareholders or pledgees for a
distribution of interim dividend, etc., changes in the shareholders register may
be suspended by
- 4 -
resolution of the Board of Directors or a record date may be determined. In such
case, two weeks prior public notice of the period of suspension or record date
shall be given.
ARTICLE 15. REPORTING OF SHAREHOLDERS' ADDRESSES
------------------------------------------------
The Company's shareholders, registered pledgees, or their legal agents or
representatives must report their names, addresses, and seals on the Company's
prescribed form. The same shall apply to any change occurring in the reported
items.
CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
ARTICLE 16. CONVOCATION
-----------------------
An Ordinary General Meeting of Shareholders of the Company shall be
convened within three (3) months after the end of each business year, and
Extraordinary General Meetings of Shareholders shall be convened from time to
time as necessary.
ARTICLE 17. CHAIRMAN
--------------------
(1) A representative director shall serve as chairman of a general meeting
of shareholders. If the representative director is not available, one of the
other directors may serve in his stead by a resolution of the Board of Directors
Meeting.
(2) If all directors are not available, one of the shareholders present may
serve in their stead by election from among the shareholders in attendance.
ARTICLE 18. RESOLUTIONS
-----------------------
Unless otherwise provided by law or order or by these Articles of
Association, all resolutions of a general meeting of shareholders shall require
an affirmative vote of the shareholders in attendance holding a majority of
voting shares.
- 5 -
ARTICLE 19. EXERCISE VOTE BY PROXY
----------------------------------
(1) A shareholder may exercise his vote by a proxy who is a shareholder of
the Company. In such a case, a proxy shall file with the Company a document
establishing his power of representation.
(2) A shareholder shall not provide the proxy authority of the previous
paragraph to more than one person.
ARTICLE 20. MINUTES
-------------------
The substance of the proceedings at a General Meeting of Shareholders and
result thereof shall be recorded in minutes of the meeting, and shall bear the
signatures or names and seals of the chairman and directors in attendance and be
preserved at the head office for ten (10) years.
CHAPTER IV
DIRECTORS, REPRESENTATIVE DIRECTORS AND
THE BOARD OF DIRECTORS
ARTICLE 21. NUMBER OF DIRECTORS AND AUDITORS
--------------------------------------------
The Company shall have at least three (3) but no more than ten
(10) directors and no more than two (2) auditors.
ARTICLE 22. ELECTION OF DIRECTORS AND AUDITORS
----------------------------------------------
(1) The Company's directors and auditors shall be elected by a majority
vote at a general meeting of shareholders attended by shareholders holding at
least one-third of all outstanding shares.
(2) Cumulative voting for the election of Directors shall not be permitted.
- 6 -
ARTICLE 23. TERM OF OFFICE OF DIRECTORS AND AUDITORS
----------------------------------------------------
(1) The term of office of a director shall terminate at the close of the
Ordinary General Meeting of Shareholders for the last business year within two
(2) years following assumption of office, and the term of office of an auditor
shall terminate at the close of the Ordinary General Meeting of Shareholders for
the last business year within three (3) years following assumption of office.
(2) The term of office of a director elected to fill a vacancy or due to an
increase in the number of directors shall correspond to the remaining term of
office of the other directors.
(3) The term of office of an auditor elected to fill a vacancy shall
correspond to the remaining term of office of his predecessor.
ARTICLE.24. CONVENING OF BOARD OF DIRECTORS MEETINGS
----------------------------------------------------
A notice of the Board of Directors Meeting shall be issued to each director
and auditor three days prior to the date of the meeting; however, in time of
emergency, this period may be shortened, or omitted with the consent of all
directors and auditors.
ARTICLE 25.RESOLUTION OF BOARD OF DIRECTORS MEETINGS
----------------------------------------------------
A resolution of the Board of Directors Meeting shall be adopted by the
affirmative vote of a majority of those directors present at a meeting attended
by a majority of the directors of the Company.
ARTICLE 26. MINUTES OF BOARD OF DIRECTORS MEETING
-------------------------------------------------
The substance of the proceedings at the Board of Directors Meeting and
result thereof shall be recorded in minutes of the meeting, and shall bear the
signatures or names and seals of the chairman and directors in attendance and be
preserved at the head office for ten (10) years.
- 7 -
ARTICLE 27. REPRESENTATIVE DIRECTORS AND OFFICER-DIRECTORS
----------------------------------------------------------
The Company shall have one or more representative directors, and a few
senior managing directors and managing directors as necessary, as may be elected
by a resolution of the Board of Directors from among themselves.
ARTICLE 28. PERFORMANCE OF DUTIES
---------------------------------
(1) Representative directors shall supervise the work of the Company, and
the senior managing director and managing director shall assist the
representative director and be delegated a portion of such work.
(2) If representative directors are unable to perform their duties, another
director shall act on behalf of the representative directors in an order
determined in advance by the Board of Directors.
ARTICLE 29. COMPENSATION AND RETIREMENT BONUSES
-----------------------------------------------
Compensation and retirement bonuses for the directors and auditors shall be
separately decided by a resolution of the General Meeting of Shareholders.
CHAPTER V
ACCOUNTING
ARTICLE 30. BUSINESS YEAR
-------------------------
The business year of the Company shall be the one-year period commencing on
December 26 and ending on December 25 of the following year.
ARTICLE 31. DISTRIBUTION OF PROFITS
-----------------------------------
Dividends from profit shall be paid to shareholders and registered pledgees
who are listed in the Register of Shareholders as of the end of each business
year, as well as to fractional shareholders of Article 7(1) as of the same date.
- 8 -
ARTICLE 32. DISTRIBUTION OF INTERIM PROFITS
-------------------------------------------
The Company may make a distribution of money, by a resolution of a meeting
of the Board of Directors pursuant to the provisions of Article 293-5 of the
Commercial Code, to shareholders and registered pledgees registered in the
Register of Shareholders as of six month prior to the end of the business year,
as well as to fractional shareholders of Article 7(1) as of the same date.
ARTICLE 33. RELEASE FROM OBLIGATION TO PAY DIVIDENDS
----------------------------------------------------
The Company shall be relieved of any obligation to pay dividends from
profit and interim dividends of the preceding article which have not been
claimed after the lapse of five (5) full years from the date the dividend was
declared.
- 9 -
Exhibit B
BUSINESS PLAN OF
DONNELLEY SASATOKU K.K.
FROM Year of 1999 TO 2001
(to be completed based on mutual discussion between the parties)
