JOINT VENTURE AGREEMENT
THIS AGREEMENT, made and entered into this day of , 199 by and between X having its principal office at (hereinafter referred to as "X") and Y , having its principal office at _____________ (hereinafter referred to as "Y Corporation") and Mr. Y residing at _____________(hereinafter referred to as "MR. Y"; Y Corporation and MR. Y are hereinafter collectively referred to as "Y").
WHEREAS, X and Y desire to establish in Japan a new company to be jointly owned for the purpose of sale of .
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Formation of New Company
1. The parties hereto shall proceed to form a new corporation which shall be a company limited (Kabushiki Kaisha) under the laws of Japan (hereinafter referred to as "NEW COMPANY") having Articles of Incorporation which correspond to the English version attached hereto as Exhibit I and made a part hereof.
2. The procedures for incorporation of NEW COMPANY shall be undertaken in accordance with the laws and regulations of Japan and such practices as are applied to incorporation of a company limited as soon as this Agreement becomes effective.
3. X shall proceed to file with the Bank of Japan a notification for acquisition of shares in NEW COMPANY, to be issued at the time of its incorporation, under the Foreign Exchange and Foreign Trade Control Law of Japan, immediately after execution of this Agreement.
Article 2. Subscription and Payment for Shares
1. The number of shares authorized to be issued by NEW COMPANY shall be ______________ (___) shares of common stock, each share having par value of Fifty Thousand Yen (\50,000).
2. At the time of incorporation of NEW COMPANY (___) shares having an aggregate par value of ____________ Yen (\___) shall be issued.
3. X shall subscribe to _____________ (___) shares and will pay therefor in cash at the rate of Fifty Thousand Yen (\50,000) per share.
4. Y Corporation and promoters designated by it shall subscribe to ___________ (___) shares and will pay therefor in cash at the rate of Fifty Thousand Yen (\50,000) per share.
5. MR. Y shall subscribe to _________ ( ___) shares and will pay therefor in cash at the rate of Fifty Thousand Yen (\50,000) per share.
Article 3. Business Activities of NEW COMPANY
The business activities of NEW COMPANY shall be as follows:
(2) To do any and all business incidental to the above.
Article 4. Directors and Statutory Auditors of
1. The number of the directors of NEW COMPANY shall be three (3) and that of the statutory auditors shall be one (1). X shall nominate one (1) director and Y shall nominate two (2) directors and the statutory auditor. Y shall designate one of its nominee directors to be a Representative Director and President of NEW COMPANY. X and Y agree to cause their respective voting rights exercised to elect the directors and statutory auditor so nominated.
2. Should the position of any director become vacant, however occasioned, the parties hereto agree to cause their respective voting rights exercised to elect a director nominated by the party who nominated the predecessor director. The same shall apply to the statutory auditor.
Article 5. Certain Actions by NEW COMPANY
All of the actions of NEW COMPANY set forth below shall not be effected unless and until resolved at the general meeting of shareholders of NEW COMPANY by affirmative vote of two-thirds or more of the total voting shares issued.:
Article 6 Transfer, etc. of Shares of NEW COMPANY
1. Each party will have the right to subscribe to any additional shares of NEW COMPANY which may be authorized or issued after the effective date of this Agreement in proportion to its ownership of shares immediately prior to such authorization or issuance.
2. X and Y agree to include a provision in the Articles of Incorporation of NEW COMPANY that any transfer of the shares of NEW COMPANY shall be subject to the approval of the Board of Directors.
Further, X and Y shall cause the directors of NEW COMPANY nominated by them respectively in accordance with this Agreement to approve any such transfer of shares of NEW COMPANY as shall be made by either of the parties hereto in accordance with this Agreement.
3. Notwithstanding the pertinent provisions in the Commercial Code of Japan concerning transfer of shares, the transfer of which is restricted by the Articles of Incorporation, without prior written consent of the other party neither X nor Y shall transfer, pledge, or otherwise encumber or dispose of any of its shares in NEW COMPANY owned by it except in accordance with the provisions of Paragraph 4 below.
4. If, notwithstanding the present intentions of the parties, either party desires at some future time to sell all (but not less than all) of its shares in NEW COMPANY, it shall first offer to sell such shares to the other party. The party desiring to sell its shares (the "Prospective Seller") shall give a written notice to that effect to the other party (the "Prospective Buyer"). Then, if the Prospective Buyer or its designee promptly expresses its interest in purchasing such shares, both parties shall, within four (4) weeks from the receipt by the Prospective Buyer of such notice, agree upon an independent certified public accountant or other suitable expert available in Japan and shall retain such accountant or expert to conduct an audit and appraisal of NEW COMPANY and to determine a fair price to be paid for the shares proposed to be sold. Any expenses required for such accountant or expert shall be at the joint expense of the Prospective Seller and the Prospective Buyer. Within sixty (60) days from the receipt by the Prospective Buyer of a notice of such accountant or expert on the fair price determined by it, the Prospective Buyer or its designee shall have an irrevocable option to buy all (but not less than all) of the shares proposed to be sold for such fair price. In the event that the Prospective Buyer or its designee shall fail to exercise such option, the Prospective Seller may sell such shares to any outside buyer or buyers; provided, however, (i) such sale shall not be at a price less than the aforesaid fair price, (ii) such sale shall be made within sixty (60) days following the expiration of the aforesaid sixty (60) days' option period, and (iii) the Prospective Seller shall obtain a written undertaking from the outside buyer or buyers to fully respect and abide by the terms and conditions of this Agreement as a successor to the Prospective Seller. It being understood, however, that if any governmental validation or expiration of a waiting period is required to validly consummate any sale referred to above, as far as the observance of the time limit referred to above is concerned, execution within the time limit of a definite sales contract to be performed within sixty (60) days or less following the grant of such validation or expiration of such waiting period shall be deemed sufficient.
Article 7. Assignment Prohibited
This Agreement or any of the rights or duties hereunder may not be assigned by any of the parties hereto without the prior written consent of the other party.
Article 8. Notices
1. Any notice or other communication required or permitted to be given or made under this Agreement shall be in writing and may be given by registered mail addressed to the party concerned at such party's address first set forth above or NEW COMPANY at its principal office or by delivery to the addressee at such address (any notice to MR. Y shall be deemed to have been given if same notice is given to Y Corporation) and any notice so given shall be deemed to have been served upon receipt by the addressee.
2. If and when one of the parties hereto shall hereafter change its address first set forth above, it shall promptly give a written notice to that effect to the other parties.
Article 9. Modification
Any of the provisions of this Agreement may be modified by the parties hereto by an instrument duly executed by the authorized representatives of the parties hereto.
Article 10. Effective Date, Duration, and
1. This Agreement shall become effective upon expiration of the necessary waiting period after filing of a notification referred to in Article 1, Paragraph 3 hereof.
2. Unless terminated earlier in accordance with the provisions of Paragraph 3 below of this Article, this Agreement shall continue to be in full force and effect so long as NEW COMPANY is in existence.
3. This Agreement shall terminate and be of no further effect,
Article 11. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto and supersedes all previous negotiations, agreements and commitments in respect thereto.
Article 12. Arbitration
Any dispute or difference which may arise among the parties hereto out of or in connection with this Agreement shall be finally settled by arbitration pursuant to the Commercial Arbitration Rules of the Japan Commercial Arbitration Association, by which each party hereto is bound. The arbitration shall be held in Tokyo, Japan.
Article 13. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of Japan.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their representatives thereunto duly authorized on the day and year first above written.