JOINT VENTURE AGREEMENT
-----------------------
This Agreement is made as of this 21st day of
July, 2003 by and
between CEO
Produksigon Tanitim ve Arastirma Hizmetleri Ltd Sti, a company organized and
existing under the law of
Turkey and having
principal place of business at 81/2
Buyukdere Cad Kugu Is
Merkezi, Mecidiyekoy, Istanbul, Turkey, 34387
(hereinafter
called "CEO"), and SPAR Group International, Inc. a company organized and
existing under the laws of
the State of Nevada,
USA, having its principal place
of business at 580 White
Plains Road,
Tarrytown, NY, USA,
10591 (hereinafter
called "SPAR"),
WITNESSETH THAT:
WHEREAS, CEO is engaged in the retail
solution businesses in
Turkey, having
a
wide range of clients and
also having various knowledge and human resources with
respect to the retailing
businesses in Turkey;
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, CEO and SPAR are desirous of organizing a corporation to jointly
conduct retail solution
businesses in Turkey (hereinafter called "Territory").
NOW, THEREFORE, in consideration of the mutual
covenants and agreement herein
contained, the parties hereto
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 Territory (hereinafter
called "SPAR Turkey Ltd").
Upon formation,
New Company shall
become a party to
this Agreement.
Article 2. Business
Purposes
The business purposes of the
New Company shall consist of the following:
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1. Provide retail
merchandising and product demonstration services
2. Agency, assistance,
instruction and report of storefront sales activities;
3. Implementation of market
research and analysis of results thereof;
4. Assembly of setups used
for sales promotion;
5. Consulting regarding store
management;
6. Development and sale of
management system regarding retailing;
7. Designing and sale of
database; and
8. Any and all businesses
incidental or relating to any of the foregoing.
Article 3. Trade
Name
The New Company shall be
named in Territory as "SPAR Alan Pazarlama Hizmetleri
Limited Sirketi" and in
English as SPAR Turkey Ltd.
Article 4.
Location
The New Company shall have its main office at 81/4 Buyukdere Cad Kugu Is
Merkezi, Mecidiyekoy,
Istanbul, Turkey, 34387.
Article 5. Articles
of Incorporation
The Articles of Incorporation of the 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 10000 that par value of each share
shall be $10 (ten
USD). At the time of
establishment of New Company,
shares shall be issued and fully subscribed by the
parties hereto as
follow:
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o
CEO: (49%)
4900
shares
o
SPAR: (51%)
5100
shares
All the shares to be issued
by New Company shall be nominal and ordinary shares
Article 7.
Payment
Each of the parties hereto
shall at the same
proportions and at the
same dates
pay in Turkish Liras and in cash the cash the amount equivalent to its
subscribed shares at par value upon issuance of the shares of New Company.
Number of shares may change
according to the value of $100.000 at the time of
incorporation.
CHARPTER II: PREPARATION OF ESTABLISHMENT OF THE NEW
COMPANY
-----------------------------------------------
Article 8.
Preparation of Establishment of the New Company
Each party shall take its
role as described
below for the
preparation
of the
commencement of New Company's business. Any expenses and costs
necessary
for
such preparation shall be borne by each party.
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:
1. localize and set up
software provided by SPAR to work in Turkey;
2. consult on the
organization of merchandising services: and;
3. train the New Company's personnel in how to operate the merchandising
software;
4. give advice on budgeting
and development of each business plan.
SPAR Turkey Ltd
shall
1.
provide office and
facility space to New
Company under the terms of a
supply agreement described in Article 25 herein
2.
arrange meetings with current clients to promote New Company's
services
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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 Turkey 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 a resolution of the Board
of Directors whenever deemed
necessary.
Article 10. Quorum and
Resolution
Except as expressly
otherwise provided in the Articles of
Incorporation of New
Company and the provisions of Turkish Commercial Code, and this Agreement
all
resolutions of the General Meeting of Shareholders shall be adopted by the
presence and affirmative vote
of Shareholders holding at least two thirds of the
shares..
Article 11. 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 require the presence and the affirmative vote
of
shareholders holding at least
2/3 of the capital.
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 on Article 29);
4.
issuance of debentures;
5.
transfer of any part or whole of business;
6. any
and all matters relating to dividends of New Company;
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7.
dissolution or amalgamation;
8.
change in number or length of tenure of Directors;
CHAPTER IV: BOARD OF DIRECTORS AND OFFICERS
-------------------------------
Article 12. Election of
Directors
The Board of Directors of the
New Company shall
consist of four (4)
Directors;
two (2) of whom shall be
elected from among
those appointed
by CEO and 2
whom
shall be elected from those appointed by SPAR. The Chairman of the Board of
Directors shall be elected
from the Directors by the mutual consultation of both
parties. 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 13. Election of Officers
Officers shall be appointed by the Board of directors and serve at their
pleasure.
Article 14. 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 three (3)
years from his assumption of office.
Article 15.
Quorum
Each Director shall have one
(1) voting right in the Board of Directors. Except
as otherwise required in the Articles of Incorporation of New Company, this
Agreement or a majority of the Directors shall constitute a quorum at any
meeting of their 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 16. 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, any meeting of the
Board of Directors may be
held by interactive
video conference
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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 unanimous written consent
resolution executed by each
member of the Board of Directors. The parties hereto
confirm that the prevailing interpretation in Territory is that meetings of
boards of directors may be
held by interactive videoconference. For any proposed
meeting of the Board of
Directors for which SPAR requests, SPAR Turkey Ltd and
SPAR shall cooperate to arrange for such meetings to be held by video
conference. A written record in Turkish of all meetings of the Board of
Directors and all decisions maybe 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 Board 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 17. Important
Matters
In addition to such
matter as required by Articles of Incorporation of New
Company, 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 11
hereof;
2. any
investment or commitment of New Company in amounts individually in
excess of $100,000
(one hundred thousand
USD or in the
aggregate
in
excess of $100,000 (one hundred thousand USD);
3. any loan or
credit taken by New Company
4.
execution, amendment
or termination of agreements or commitments with
CEO, SPAR or their subsidiaries or affiliates;
5.
adoption or amendment of the annual budgets and business plan subject
to consequent approval by the Shareholder's General
Meeting;
6.
adoption or
any material modification of major regulations or
procedures, including any employee rules or handbook;
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7.
change of the auditing firm as provided in Article 20;
8.
initiating or settling
any litigation, arbitration or other formal
dispute settlement
procedures or forgiveness of any obligation owed to
the New Company in excess of $100,000 (one hundred thousand
USD);
9.
preparation of annual
closing of the books
of New Company and the New
Company's annual
financial statements, and changing of accounting
policies and practices
10.
establishment or
amendment to the condition of employment of New
Company officers, provided that the affirmatives vote of
SPAR-nominated
Directors shall not be withheld unreasonably;
11. No sale at
disposition
of or granting a lien, security interest or
similar obligation
with respect to, in one or a series
of related
transactions of New
Company or with
respect to any major strategic
asset of
New Company that crucial to New Company' business;
12. Formation
of any subsidiary of
New Company, entry
into (or subsequent
termination of) any joint venture, partnership or similar
agreements;
13. entering
into, amending or
terminating any contract with/or commitment
to any Director or
shareholder except for
cases foreseen in art 539/2
of the TCC regarding appointment and dismissal of Directors;
and
14. entering
into any agreement or
commitment to provide goods or services
outside Turkey.
CHAPTER V: AUDIT
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Article 18. Accounting
Period
The accounting periods of New Company shall end
on the 30th day of December of
each year.
Article 19. Statutory
Auditors (where required)
A Statutory Auditor shall be appointed by (company), county and (proposed
person) shall be the initial
Statutory Auditor.
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Article 20. Inspection of
Accounting Records and Books
The New Company shall yearly
arrange audit on the
accounting records and
books
and shall submit a report of such audit to
each of the parties
hereto within
thirty (30) days from the
compl
