JOINT VENTURE AGREEMENT
This Agreement made as of this 1 day of May, 2001 by and between Paltac
Corporation, a company organized and existing
under the law of Japan and having
its principal place of
business at 1-5-9,
Minamikyuhoji-machi,
Chuo-ku, Osaka,
Japan (hereinafter called "PALTAC") and Spar Group,
Inc., a company
organized
and existing under the law of
State of Delaware,
having its principal
place of
business at 580 White Plains Road, Tarrytown, NY, USA (hereinafter called
"SPAR"),
WITNESSETH THAT:
WHEREAS, PALTAC is engaged in the retail
solution businesses in Japan, having a
wide range of clients and
also having various knowledge and human resources with
respect to the retailing
businesses in Japan;
WHEREAS, SPAR is engaged in the retail
solution businesses in the USA,
having
computer software useful for agency,
assistance,
instruction and
reporting of
storefront activities and also having
operational know-how with respect to such
software; and
WHEREAS, PALTAC and SPAR are desirous of
organizing a
corporation
to jointly
conduct retail solution
businesses in Japan (hereinafter called "Territory").
NOW, THEREFORE, in consideration of the mutual
covenants and agreement herein
contained, the parties agree
as follows:
CHAPTER I
ORGANIZATION OF THE NEW COMPANY
Article 1.
Establishment
Promptly after the effective date of this
Agreement,
the parties hereto
shall
cause a new company to be
organized under the
laws of Japan as a stock company
(hereinafter called "New
Company").
Upon formation, New Company
shall become a party to this Agreement.
Upon formation, New Company
shall become a party to this Agreement.
Article 2.
Business Purposes
The business purposes of New
Company shall consist of the followings:
(1) Agency, assistance, instruction
and report of storefront sales activities;
(2) Implementation of market research
and analysis of results thereof;
(3) Manufacturing and sale of setups
used for sales promotion;
(4) Consulting regarding store
management;
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(5) Development and sale of management
system regarding retailing;
(6) Designing and sale of database;
and
(7) Any and all businesses incidental
or relating to any of the foregoing.
Article 3.
Trade Name
New Company shall be named in
Japanese as Kabushiki
Kaisha SPAR FM JAPAN and in
English as SPAR FM JAPAN,
INC.
Article 4.
Location
New Company shall have its
main office at 1-5-9,
Minamikyuhoji-machi,
Chuo-ku,
Osaka, Japan.
Article 5.
Articles of Incorporation
The Articles of Incorporation of New Company shall be in the form attached
hereto as Exhibit
A.
Article 6.
Capital
The total number of shares
which New Company
shall be authorized to issue shall
be 1600 and the par
value of each
share shall be (Y)50,000. At the time of
establishment of New Company,
400 shares shall be issued and fully subscribed by
the parties hereto as
follows:
PALTAC:
200 shares, (Y)10,000,000
SPAR:
200 shares, (Y)10,000,000
All the shares to be issued
by New Company shall be nominal and ordinary shares.
Article 7.
Payment
Each of the parties hereto shall pay in Japanese Yen and in cash the
amount
equivalent to its subscribed
shares at par value
upon issuance of the shares of
New Company.
CHAPTER II
PREPARATION OF ESTABLISHMENT OF NEW COMPANY
Article 8.
Preparation of Establishment of New Company
Each party shall take its
role as described
below for the
preparation
of the
commencement of New Company's
businesses.
Any expenses and costs
necessary for
such preparation shall be
borne by each party.
A. SPAR shall enter into with New Company a license agreement in the form
attached hereto
as Exhibit B (the "License Agreement"). For reference, the
License
Agreement includes the obligations of SPAR to:
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(1) localize and set up software
provided by SPAR to work in Japan;
(2) consult on the organization of
merchandising services; and
(3) train the New Company's personnel in how to operate the merchandising
software.
Also, SPAR shall give advice
on budgeting and development of each business plan.
B. PALTAC shall:
(1) arrange contracts with
clients;
(2) provide office and facility space to New Company under the terms of a
supply agreement
described in Article 26 herein;
(3) set up fast Internet connections
for accessing reports and systems;
(4) prepare and send out instructions
to merchandisers;
(5) hire merchandisers under terms
agreed upon in advance by SPAR and PALTAC;
(6) gain retailers' permission to do
in-store merchandising; and
(7) preparation of annual budget and
business plan to be submitted to the Board
of
Directors.
CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
Article 9.
Ordinary and Extraordinary General Meeting
The Ordinary General Meeting
of Shareholders shall
be convened by resolution of
the Board of Directors and
held in Osaka city,
Japan or any other vicinal place
within 3 months from the last
day of each accounting period of New Company.
An Extraordinary General
Meeting shall be convened by resolution of the Board of
Directors wherever deemed
necessary.
Article 10.
Quorum
A quorum of the General Meeting of Shareholders shall be the shareholders
present either in person or by proxy representing at least 51 % of all
the
issued and outstanding shares
of New Company.
Article 11.
Resolution
Except as expressly
otherwise provided in the Articles of
Incorporation of New
Company, this Agreement or the Commercial
Code of Japan (Law No. 48 of March 9,
1899, as amended,
the
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"Commercial Code"), all
resolutions of the General Meeting of Shareholders shall
be adopted by the affirmative
vote of shareholders
holding at least 51 % of the
shares represented at a
meeting for which there is a quorum.
Article 12.
Important Matters
In addition to such matters
as required by the Articles of Incorporation of New
Company or the Commercial
Code, any resolutions of the following matters by the
General Meeting of
Shareholders shall
require the affirmative vote of at least
two-thirds of the votes of
the shareholders present:
(1) any amendment or modification of
the Articles of Incorporation;
(2) increase or decrease in the
authorized capital or paid-in capital;
(3) issuance of new shares or any other kind of equity securities or
instruments
convertible into equity securities or the decision to
undertake
a Public
Offering (as defined in Article 30);
(4) issuance of debentures;
(5) transfer of any part or whole of
business;
(6) any and all matters relating to
dividends of New Company;
(7) dissolution or
amalgamation;
(8) change in number or length of
tenure of Directors;
CHAPTER IV
BOARD OF DIRECTORS AND OFFICERS
Article 13.
Election of Directors
The Board of Directors of New
Company shall
consist of 4
Directors; 2 of
whom
shall be elected from among those appointed by PALTAC and 2 of whom shall
be
elected from among those appointed by SPAR. The Chairman of the Board of
Directors shall be elected
from the Directors by the mutual consultation of both
parties and Robert Brown shall be the initial Chairman of the Board of
Directors. In case of any increase or
decrease in the number of Directors, the
representation stipulated
above shall be unchanged and pro-rata at all times.
Article 14.
Election of Officers
A President & Chief Executive Officer (CEO) and a Vice President & Chief
Operating Officer (COO) shall be appointed
from among
Directors appointed by
PALTAC by the consultation with SPAR. The President & CEO shall be the
Representative Director. The
initial President & CEO shall be Juro Yamagishi and
the initial Vice President
& COO shall be Shunichiro Tajiri.
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Article 15.
Office of Director
The term of office of each
Director shall expire at the close of the
Ordinary
General Meeting of
Shareholders which relates to the closing of accounts last
to
occur within 2 years from his
assumption of office.
Article 16.
Quorum
Each Director shall have 1 voting right in the
Board of Directors.
Except as
expressly otherwise required in the Articles of
Incorporation of New
Company,
this Agreement, or the Commercial Code, a majority of the Directors shall
constitute a quorum at any meeting of the Board of Directors, and all
resolutions shall be adopted by the
affirmative vote of more than two-thirds of
the votes of the Directors
present.
Article 17.
Ordinary Meeting of the Board of Directors
The Ordinary Meeting of the Board of Directors
shall be held quarterly, and an
Extraordinary Meeting of the Board of Directors
shall be held when
necessary,
both of which shall be convened in accordance with the provisions of the
Articles of Incorporation. To the extent then permitted by
the Commercial Code
or prevailing interpretation thereof, any
meeting of the Board of Directors may
be held by interactive video conference or other similar electronic or
telephonic means, and any action that may be
taken by the Board of Directors at
a meeting thereof (whether in person or video
conference)
may be effected
in
lieu of such meeting by a
unanimous written consent resolution executed by each
member of the Board of
Directors. The parties hereto confirm that the
prevailing
interpretation in Japan is that meetings of boards of directors
may be held by
interactive video conference.
For any proposed meeting of the Board of Directors
for which SPAR requests, PALTAC and SPAR shall cooperate to arrange for such
meetings to be held by video conference. A written record in Japanese of
all
meetings of the Board of
Directors and all
decisions made by it together
with
English translation thereof shall be made
as promptly as practicable after each
meeting of the Board of
Directors by one of the Directors selected by the Board
of Directors at each
meeting, kept in the records of the Company
and signed or
sealed by each of the
Directors.
Article 18.
Important Matters
In addition to such matters
as required by the Articles of Incorporation of New
Company or the Commercial
Code, the following matters of the Board of Directors'
meeting shall require the
affirmative vote of
more than two-thirds of the votes
of the Directors:
(1) any proposal to the General
Meeting of
Shareholders or action by the Board
of Directors for
the matters as provided in Article 12 hereof;
(2) any investment or commitment of New Company in amounts
individually
in
excess of
(Y)10,000,000 or in the aggregate in excess
of(Y)10,000,000;
(3) any loan or credit taken by New
Company in amounts
individually in
excess
of (Y)10,000,000
or in the aggregate in excess of(Y)10,000,000;
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(4) execution, amendment or termination of agreements or commitments with
PALTAC, SPAR or
their subsidiaries or affiliates;
(5) adoption or amendment of the
annual budgets and business plan;
(6) adoption or any material
modification of major
regulations or
procedures,
including any
employee rules or handbook;
(7) change of the auditing firm as
provided in Article 21;
(8) initiating or settling any
litigation,
arbitration or other formal dispute
settlement
procedures or forgiveness of any obligation owed the New
Company
in excess of
(Y)10,000,000;
(9) approval of annual closing of the books of the New
Company and the New
Company's annual
financial statements,
and changing of accounting policies
and practices or
the New Company's accounting periods;
(10) establishment
or amendment to the
conditions of
employment of New Company
Officers,
provided that the
affirmative vote of
SPAR-nominated
Directors
shall not be
withheld
