|
Japan
(State or other jurisdiction of incorporation or organization) |
| |
8000
(Primary Standard Industrial Classification Code Number) |
| |
Not Applicable
(I.R.S. Employer Identification No.) |
|
|
Barbara A. Jones
Greenberg Traurig, LLP 1840 Century Park East, Suite 1900 Los Angeles, CA 90067 Tel: (310) 586-7773 Fax: (310) 586-0273 |
| |
Koji Ishikawa
Greenberg Traurig Tokyo Law Offices Meiji Yasuda Seimei Building, 14F 2-1-1 Marunouchi, Chiyoda-ku Tokyo 100-0005, Japan Tel: +81(0)3-4510-2200 Fax: +81(0)3-4510-2201 |
| |
Barry Grossman
Sarah Williams Jessica Yuan Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, New York 10105 Tel: (212) 370-1300 Fax: (212) 370-7889 |
|
| | ||||||||||||||
Title of each class of
securities to be registered |
| | |
Proposed maximum
aggregate offering price(3) |
| | |
Amount of
registration fee |
| ||||||
Common Shares, no par value(1)(2)
|
| | | | $ | 20,000,000.00 | | | | | | $ | 2,182.00 | | |
| | |
Per ADS
|
| |
Total
|
| ||||||
Initial public offering price
|
| | | $ | • | | | | | $ | • | | |
Underwriting discounts and commissions(1)
|
| | | $ | • | | | | | $ | • | | |
Proceeds to us (before expenses)
|
| | | $ | • | | | | | $ | • | | |
| | |
Page
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| | | | F-1 | | |
(in thousands,
except earnings per share data) |
| |
Six months ended June 30,
|
| |
Year ended December 31,
|
| ||||||||||||||||||||||||||||||
|
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||||
| | | | | | | | |
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | ||||||||
Consolidated Statement of Income Information:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Relaxation Salons
|
| | | $ | 12,476 | | | | | ¥ | 1,344,503 | | | | | ¥ | 2,010,506 | | | | | $ | 35,860 | | | | | ¥ | 3,864,656 | | | | | ¥ | 3,348,042 | | |
Digital Preventative Healthcare
|
| | | | 109 | | | | | | 11,774 | | | | | | 21,025 | | | | | | 405 | | | | | | 43,608 | | | | | | 85,093 | | |
Total revenue
|
| | | | 12,585 | | | | | | 1,356,277 | | | | | | 2,031,531 | | | | | | 36,265 | | | | | | 3,908,264 | | | | | | 3,433,135 | | |
Cost of revenues and operating expenses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenues
|
| | | | 11,777 | | | | | | 1,269,220 | | | | | | 1,533,819 | | | | | | 27,443 | | | | | | 2,957,506 | | | | | | 2,476,267 | | |
Selling, general and administrative expenses
|
| | | | 4,838 | | | | | | 521,364 | | | | | | 411,717 | | | | | | 8,090 | | | | | | 871,862 | | | | | | 842,822 | | |
Impairment loss on long-lived assets
|
| | | | — | | | | | | — | | | | | | 23,604 | | | | | | 413 | | | | | | 44,546 | | | | | | 40,778 | | |
Total cost of revenues and operating expenses
|
| | | | 16,615 | | | | | | 1,790,584 | | | | | | 1,969,140 | | | | | | 35,946 | | | | | | 3,873,914 | | | | | | 3,359,867 | | |
Operating income (loss)
|
| | | $ | (4,030) | | | | | ¥ | (434,307) | | | | | ¥ | 62,391 | | | | | $ | 319 | | | | | ¥ | 34,350 | | | | | ¥ | 73,268 | | |
Other income (expenses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividend income
|
| | | | — | | | | | | 2 | | | | | | 2 | | | | | | ― | | | | | | 2 | | | | | | 2 | | |
Interest income
|
| | | | 6 | | | | | | 674 | | | | | | 556 | | | | | | 12 | | | | | | 1,336 | | | | | | 785 | | |
Interest expense
|
| | | | (56) | | | | | | (6,076) | | | | | | (7,155) | | | | | | (126) | | | | | | (13,591) | | | | | | (15,485) | | |
Gain from bargain purchases
|
| | | | 15 | | | | | | 1,624 | | | | | | 4,343 | | | | | | 60 | | | | | | 6,487 | | | | | | 33,218 | | |
Other, net
|
| | | | 132 | | | | | | 14,142 | | | | | | 5,057 | | | | | | 39 | | | | | | 4,153 | | | | | | 133 | | |
(in thousands, except number of salons, sales
per customer, repeat ratio, and operation ratio) |
| |
Six months ended June 30,
|
| |
Year ended December 31,
|
| ||||||||||||||||||||||||||||||
|
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||||
Other Operating Data: | | | | | | | | ||||||||||||||||||||||||||||||
Financial expense & income(1)
|
| | | $ | (50) | | | | | ¥ | (5,400) | | | | | ¥ | (6,597) | | | | | $ | (114) | | | | | ¥ | (12,253) | | | | | ¥ | (14,698) | | |
Adjusted EBITDA(2)
|
| | | | (3,472) | | | | | | (374,224) | | | | | | 118,049 | | | | | | 1,292 | | | | | | 139,301 | | | | | | 179,997 | | |
CAPEX−paid-out cash basis(3)
|
| | | | 1,181 | | | | | | 127,271 | | | | | | 9,674 | | | | | | 210 | | | | | | 22,675 | | | | | | 110,386 | | |
CAPEX−paid-out cash plus future payment obligation basis(3)
|
| | | | 1,835 | | | | | | 197,721 | | | | | | 104,775 | | | | | | 695 | | | | | | 74,897 | | | | | | 222,278 | | |
Number of salons
|
| | | | | | | | | | 289 | | | | | | 270 | | | | | | | | | | | | 283 | | | | | | 263 | | |
Sales per customer(4)
|
| | | $ | 57.85 | | | | | ¥ | 6,234 | | | | | ¥ | 5,968 | | | | | $ | 56.27 | | | | | ¥ | 6,064 | | | | | ¥ | 5,914 | | |
Repeat ratio(5)
|
| | | | | | | | | | 81.16% | | | | | | 80.63% | | | | | | | | | | | | 81.72% | | | | | | 82.39% | | |
Operation ratio(6)
|
| | | | | | | | | | 40.79% | | | | | | 50.42% | | | | | | | | | | | | 50.36% | | | | | | 49.71% | | |
(in thousands, except adjusted EBITDA
margin) |
| |
As of June 30,
|
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||
|
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||||
Reconciliation of non-GAAP measures:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | (4,110) | | | | | ¥ | (442,971) | | | | | ¥ | 54,045 | | | | | $ | 161 | | | | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Dividend income and interest income
|
| | | | (6) | | | | | | (676) | | | | | | (558) | | | | | | (12) | | | | | | (1,338) | | | | | | (787) | | |
Interest expense
|
| | | | 56 | | | | | | 6,076 | | | | | | 7,155 | | | | | | 126 | | | | | | 13,591 | | | | | | 15,485 | | |
Gain from bargain purchases
|
| | | | (15) | | | | | | (1,624) | | | | | | (4,343) | | | | | | (60) | | | | | | (6,487) | | | | | | (33,218) | | |
Other, net
|
| | | | (132) | | | | | | (14,142) | | | | | | (5,057) | | | | | | (39) | | | | | | (4,153) | | | | | | (133) | | |
Income tax expense
|
| | | | 177 | | | | | | 19,030 | | | | | | 11,429 | | | | | | 148 | | | | | | 15,961 | | | | | | 25,252 | | |
Equity in earnings (loss) of investment
|
| | | | — | | | | | | — | | | | | | (280) | | | | | | (5) | | | | | | (559) | | | | | | 359 | | |
Operating income
|
| | | $ | (4,030) | | | | | ¥ | (434,307) | | | | | ¥ | 62,391 | | | | | $ | 319 | | | | | ¥ | 34,350 | | | | | ¥ | 73,268 | | |
Depreciation and amortization
|
| | | | 307 | | | | | | 33,105 | | | | | | 22,793 | | | | | | 428 | | | | | | 46,174 | | | | | | 44,267 | | |
Losses on sales of directly-operated
salons to franchises |
| | | | 1 | | | | | | 65 | | | | | | 8,721 | | | | | | 89 | | | | | | 9,600 | | | | | | 4,057 | | |
Losses on disposal of property and equipment, net and other intangible assets, net
|
| | | | 250 | | | | | | 26,913 | | | | | | 540 | | | | | | 43 | | | | | | 4,631 | | | | | | 17,627 | | |
(in thousands, except adjusted EBITDA
margin) |
| |
As of June 30,
|
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||
|
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||||
Impairment loss on long-lived assets
|
| | | | — | | | | | | — | | | | | | 23,604 | | | | | | 413 | | | | | | 44,546 | | | | | | 40,778 | | |
Adjusted EBITDA
|
| | | $ | (3,472) | | | | | ¥ | (374,224) | | | | | ¥ | 118,049 | | | | | $ | 1,292 | | | | | ¥ | 139,301 | | | | | ¥ | 179,997 | | |
Adjusted EBITDA margin(7)
|
| | | | (27.6)% | | | | | | (27.6)% | | | | | | 5.8% | | | | | | 3.6% | | | | | | 3.6% | | | | | | 5.2% | | |
(in thousands)
|
| |
As of June 30,
|
| |
As of December 31,
|
| ||||||||||||||||||||||||
| | |
2020($)
|
| |
2020(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| |||||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |||||||||
Consolidated Balance Sheet Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets
|
| | | $ | 38,025 | | | | | ¥ | 4,097,971 | | | | | $ | 44,144 | | | | | ¥ | 4,757,465 | | | | | ¥ | 4,521,978 | | |
Total liabilities
|
| | | | 36,567 | | | | | | 3,940,884 | | | | | | 38,577 | | | | | | 4,157,407 | | | | | | 4,639,533 | | |
Equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock, no par value;
|
| | | | 5,521 | | | | | | 595,000 | | | | | | 5,521 | | | | | | 595,000 | | | | | | 245,000 | | |
Class A common stock, no par value
|
| | | | 1 | | | | | | 100 | | | | | | 1 | | | | | | 100 | | | | | | 100 | | |
Additional paid-in capital
|
| | | | 6,618 | | | | | | 713,267 | | | | | | 6,618 | | | | | | 713,267 | | | | | | 363,267 | | |
Accumulated deficit
|
| | | | (10,654) | | | | | | (1,148,280) | | | | | | (6,545) | | | | | | (705,309) | | | | | | (722,644) | | |
Accumulated other comprehensive income (loss)
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | (278) | | |
Treasury stock, at cost
|
| | | | (28) | | | | | | (3,000) | | | | | | (28) | | | | | | (3,000) | | | | | | (3,000) | | |
Total equity (deficit)
|
| | | | 1,458 | | | | | | 157,087 | | | | | | 5,567 | | | | | | 600,058 | | | | | | (117,555) | | |
Total Liabilities and Equity (Deficit)
|
| | | $ | 38,025 | | | | | ¥ | 4,097,971 | | | | | $ | 44,144 | | | | | ¥ | 4,757,465 | | | | | ¥ | 4,521,978 | | |
| | |
As of June 30, 2020
|
| |||||||||||||||
(in thousands, except share amounts)
|
| |
Actual
|
| |
Pro Forma
|
| |
Pro Forma as
Adjusted(1) |
| |||||||||
Cash and cash equivalents
|
| | | $ | 2,088 | | | | | | • | | | | | | • | | |
Debt
|
| | | $ | 6,842 | | | | | | • | | | | | | • | | |
Shareholders’ equity: | | | | | | | | | | | | | | | | | | | |
Common Shares, no par value−9,999,999 shares authorized; 4,115,000 shares issued and 4,022,500 shares outstanding (excluding 92,500 shares of treasury stocks) as of June 30, 2020
|
| | | | 5,521 | | | | | | • | | | | | | • | | |
Class A Shares, no par value−1 share authorized; 1 share issued and
outstanding as of June 30, 2020 |
| | | | 1 | | | | | | • | | | | | | • | | |
Additional paid-in capital
|
| | | | 6,618 | | | | | | • | | | | | | • | | |
Retained earnings (accumulated deficit)
|
| | | | (10,654) | | | | | | • | | | | | | • | | |
Accumulated other comprehensive loss, net of taxes
|
| | | | — | | | | | | • | | | | | | • | | |
Treasury stock, at cost
|
| | | | (28) | | | | | | • | | | | | | • | | |
Total shareholders’ equity
|
| | | | 1,458 | | | | | | • | | | | | | • | | |
Total capitalization
|
| | | $ | 8,300 | | | | | | • | | | | | | • | | |
|
Assumed initial public offering price per ADS
|
| | | | | | | | | $ | • | | |
|
Net tangible book value per common share before this offering (as of June 30, 2020)
|
| | | $ | • | | | | | | | | |
|
Increase in net tangible book value per common share attributable to
existing shareholders due to the issuance of common shares after June 30, 2020 |
| | | $ | • | | | | | | | | |
|
Pro forma net tangible book value per common share before this offering (as of June 30, 2020)
|
| | | $ | • | | | | | | | | |
|
Increase in net tangible book value per ADS attributable to purchasers in this offering
|
| | | $ | • | | | | | | | | |
|
Pro forma, as adjusted net tangible book value per ADS immediately after this offering
|
| | | | | | | | | $ | • | | |
|
Dilution in pro forma, as adjusted net tangible book value per ADS to purchasers in this offering
|
| | | | | | | | | $ | • | | |
| | |
Common Shares
|
| |
Total Consideration
|
| ||||||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| |
Weighted
Average Price Per Share |
| |||||||||||||||
Existing shareholders(1)
|
| | | | • | | | | | | •% | | | | | $ | • | | | | | | •% | | | | | $ | • | | |
Purchasers in this offering | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total(1)(2) | | | | | • | | | | | | 100% | | | | | $ | • | | | | | | 100% | | | | | $ | • | | |
| | |
Six months ended June 30,
|
| |
Year ended December 31,
|
| ||||||||||||||||||||||||||||||
(in thousands, except earnings per share data)
|
| |
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||
| | | | | | | | |
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |||
Consolidated Statement of Income Information:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Relaxation Salons
|
| | | $ | 12,476 | | | | | ¥ | 1,344,503 | | | | | ¥ | 2,010,506 | | | | | $ | 35,860 | | | | | ¥ | 3,864,656 | | | | | ¥ | 3,348,042 | | |
Digital Preventative Healthcare
|
| | | | 109 | | | | | | 11,774 | | | | | | 21,025 | | | | | | 405 | | | | | | 43,608 | | | | | | 85,093 | | |
Total revenue
|
| | | | 12,585 | | | | | | 1,356,277 | | | | | | 2,031,531 | | | | | | 36,265 | | | | | | 3,908,264 | | | | | | 3,433,135 | | |
Cost of revenues and operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenues
|
| | | | 11,777 | | | | | | 1,269,220 | | | | | | 1,533,819 | | | | | | 27,443 | | | | | | 2,957,506 | | | | | | 2,476,267 | | |
Selling, general and administrative expenses
|
| | | | 4,838 | | | | | | 521,364 | | | | | | 411,717 | | | | | | 8,090 | | | | | | 871,862 | | | | | | 842,822 | | |
Impairment loss on long-lived assets
|
| | | | — | | | | | | — | | | | | | 23,604 | | | | | | 413 | | | | | | 44,546 | | | | | | 40,778 | | |
Total cost of revenues and operating expenses
|
| | | | 16,615 | | | | | | 1,790,584 | | | | | | 1,969,140 | | | | | | 35,946 | | | | | | 3,873,914 | | | | | | 3,359,867 | | |
Operating income (loss)
|
| | | $ | 4,030 | | | | | ¥ | (434,307) | | | | | ¥ | 62,391 | | | | | $ | 319 | | | | | ¥ | 34,350 | | | | | ¥ | 73,268 | | |
Other income (expenses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividend income
|
| | | | — | | | | | | 2 | | | | | | 2 | | | | | | — | | | | | | 2 | | | | | | 2 | | |
Interest income
|
| | | | 6 | | | | | | 674 | | | | | | 556 | | | | | | 12 | | | | | | 1,336 | | | | | | 785 | | |
Interest expense
|
| | | | (56) | | | | | | (6,076) | | | | | | (7,155) | | | | | | (126) | | | | | | (13,591) | | | | | | (15,485) | | |
Gain from bargain purchases
|
| | | | 15 | | | | | | 1,624 | | | | | | 4,343 | | | | | | 60 | | | | | | 6,487 | | | | | | 33,218 | | |
Other, net
|
| | | | 132 | | | | | | 14,142 | | | | | | 5,057 | | | | | | 39 | | | | | | 4,153 | | | | | | 133 | | |
Total other income (expenses)
|
| | | | 97 | | | | | | 10,366 | | | | | | 2,803 | | | | | | (15) | | | | | | (1,613) | | | | | | 18,653 | | |
Income tax expense
|
| | | | 177 | | | | | | 19,030 | | | | | | 11,429 | | | | | | 148 | | | | | | 15,961 | | | | | | 25,252 | | |
Equity in earnings (loss) of investment
|
| | | | — | | | | | | — | | | | | | 280 | | | | | | 5 | | | | | | 559 | | | | | | (359) | | |
Net income (loss)
|
| | | $ | (4,110) | | | | | ¥ | (442,971) | | | | | ¥ | 54,045 | | | | | $ | 161 | | | | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Net earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | (1.02) | | | | | ¥ | (110.12) | | | | | ¥ | 14.72 | | | | | $ | 0.04 | | | | | ¥ | 4.63 | | | | | ¥ | 18.06 | | |
Diluted
|
| | | $ | (1.02) | | | | | ¥ | (110.12) | | | | | ¥ | 12.86 | | | | | $ | 0.04 | | | | | ¥ | 4.06 | | | | | ¥ | 14.04 | | |
| | |
Six months ended June 30,
|
| |
Year ended December 31,
|
| ||||||||||||||||||||||||||||||
(in thousands, except number of salons, sales per
customer, repeat ratio, and operation ratio) |
| |
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||
Other Operating Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial expense & income(1)
|
| | | $ | (50) | | | | | ¥ | (5,400) | | | | | ¥ | (6,597) | | | | | $ | (114) | | | | | ¥ | (12,253) | | | | | ¥ | (14,698) | | |
Adjusted EBITDA(2)
|
| | | | (3,472) | | | | | | (374,224) | | | | | | 118,049 | | | | | | 1,292 | | | | | | 139,301 | | | | | | 179,997 | | |
CAPEX−paid-out cash basis(3)
|
| | | | 1,181 | | | | | | 127,271 | | | | | | 9,674 | | | | | | 210 | | | | | | 22,675 | | | | | | 110,386 | | |
CAPEX−paid-out cash plus future payment obligation basis(3)
|
| | | | 1,835 | | | | | | 197,721 | | | | | | 104,775 | | | | | | 695 | | | | | | 74,897 | | | | | | 222,278 | | |
Number of salons
|
| | | | | | | | | | 289 | | | | | | 270 | | | | | | | | | | | | 283 | | | | | | 263 | | |
Sales per customer(4)
|
| | | $ | 57.85 | | | | | ¥ | 6,234 | | | | | ¥ | 5,968 | | | | | $ | 56.27 | | | | | ¥ | 6,064 | | | | | ¥ | 5,914 | | |
Repeat ratio(5)
|
| | | | | | | | | | 81.16% | | | | | | 80.63% | | | | | | | | | | | | 81.72% | | | | | | 82.39% | | |
Operation ratio(6)
|
| | | | | | | | | | 40.79% | | | | | | 50.42% | | | | | | | | | | | | 50.36% | | | | | | 49.71% | | |
| | |
As of June 30,
|
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||
(in thousands, except adjusted EBITDA
margin) |
| |
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||
Reconciliation of non-GAAP measures:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | (4,110) | | | | | ¥ | (442,971) | | | | | ¥ | 54,045 | | | | | $ | 161 | | | | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Dividend income and interest income
|
| | | | (6) | | | | | | (676) | | | | | | (558) | | | | | | (12) | | | | | | (1,338) | | | | | | (787) | | |
Interest expense
|
| | | | 56 | | | | | | 6,076 | | | | | | 7,155 | | | | | | 126 | | | | | | 13,591 | | | | | | 15,485 | | |
Gain from bargain purchases
|
| | | | (15) | | | | | | (1,624) | | | | | | (4,343) | | | | | | (60) | | | | | | (6,487) | | | | | | (33,218) | | |
Other, net
|
| | | | (132) | | | | | | (14,142) | | | | | | (5,057) | | | | | | (39) | | | | | | (4,153) | | | | | | (133) | | |
Income tax expense
|
| | | | 177 | | | | | | 19,030 | | | | | | 11,429 | | | | | | 148 | | | | | | 15,961 | | | | | | 25,252 | | |
Equity in earnings (loss) of investment
|
| | | | — | | | | | | — | | | | | | (280) | | | | | | (5) | | | | | | (559) | | | | | | 359 | | |
Operating income (loss)
|
| | | $ | (4,030) | | | | | ¥ | (434,307) | | | | | ¥ | 62,391 | | | | | $ | 319 | | | | | ¥ | 34,350 | | | | | ¥ | 73,268 | | |
Depreciation and
amortization |
| | | | 307 | | | | | | 33,105 | | | | | | 22,793 | | | | | | 428 | | | | | | 46,174 | | | | | | 44,267 | | |
Losses on sales of directly-operated salons to
franchises |
| | | | 1 | | | | | | 65 | | | | | | 8,721 | | | | | | 89 | | | | | | 9,600 | | | | | | 4,057 | | |
Losses on disposal of property
and equipment, net and other intangible assets, net |
| | | | 250 | | | | | | 26,913 | | | | | | 540 | | | | | | 43 | | | | | | 4,631 | | | | | | 17,627 | | |
Impairment loss on long-lived assets
|
| | | | — | | | | | | — | | | | | | 23,604 | | | | | | 413 | | | | | | 44,546 | | | | | | 40,778 | | |
Adjusted EBITDA
|
| | | $ | (3,472) | | | | | ¥ | (374,224) | | | | | ¥ | 118,049 | | | | | $ | 1,292 | | | | | ¥ | 139,301 | | | | | ¥ | 179,997 | | |
Adjusted EBITDA margin(7)
|
| | | | (27.6)% | | | | | | (27.6)% | | | | | | 5.8% | | | | | | 3.6% | | | | | | 3.6% | | | | | | 5.2% | | |
| | |
As of June 30,
|
| |
As of December 31,
|
| | ||||||||||||||||||||||||||
(in thousands)
|
| |
2020($)
|
| |
2020(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| | |||||||||||||||||
| | |
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |||||||||
Consolidated Balance Sheet Information:
|
| | | | | | | |||||||||||||||||||||||||||
Total assets
|
| | | $ | 38,025 | | | | | ¥ | 4,097,971 | | | | | $ | 44,144 | | | | | ¥ | 4,757,465 | | | | | ¥ | 4,521,978 | | | | ||
Total liabilities
|
| | | | 36,567 | | | | | | 3,940,884 | | | | | | 38,577 | | | | | | 4,157,407 | | | | | | 4,639,533 | | | | ||
Equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Common stock, no par value;
|
| | | | 5,521 | | | | | | 595,000 | | | | | | 5,521 | | | | | | 595,000 | | | | | | 245,000 | | | | ||
Class A common stock, no par value;
|
| | | | 1 | | | | | | 100 | | | | | | 1 | | | | | | 100 | | | | | | 100 | | | | ||
Additional paid-in capital
|
| | | | 6,618 | | | | | | 713,267 | | | | | | 6,618 | | | | | | 713,267 | | | | | | 363,267 | | | | ||
Accumulated deficit
|
| | | | (10,654) | | | | | | (1,148,280) | | | | | | (6,545) | | | | | | (705,309) | | | | | | (722,644) | | | | ||
Accumulated other comprehensive income (loss)
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | (278) | | | | ||
Treasury stock, at cost
|
| | | | (28) | | | | | | (3,000) | | | | | | (28) | | | | | | (3,000) | | | | | | (3,000) | | | | ||
Total equity (deficit)
|
| | | | 1,458 | | | | | | 157,087 | | | | | | 5,567 | | | | | | 600,058 | | | | | | (117,555) | | | | ||
Total Liabilities and Equity
|
| | | $ | 38,025 | | | | |
¥
|
4,097,971
|
| | | | $ | 44,144 | | | | | ¥ | 4,757,465 | | | | | ¥ | 4,521,978 | | | |
| | |
Six months ended June 30,
|
| |
Year ended December 31,
|
| ||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| ||||||||||||
Number of Salons
|
| | | | 289 | | | | | | 270 | | | | | | 283 | | | | | | 263 | | |
Sales per Customer(1)
|
| | | ¥ | 6,234 | | | | | ¥ | 5,968 | | | | | ¥ | 6,064 | | | | | ¥ | 5,914 | | |
Repeat Ratio(2)
|
| | | | 81.16% | | | | | | 80.63% | | | | | | 81.72% | | | | | | 82.39% | | |
Operation Ratio(2)
|
| | | | 40.79% | | | | | | 50.42% | | | | | | 50.36% | | | | | | 49.71% | | |
| | |
Six months ended June 30,
|
| |
Change (2020 vs 2019)
|
| ||||||||||||||||||||||||||||||
(in thousands, except change % data and Adjusted
EBITDA margin ) |
| |
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
$
|
| |
¥
|
| |
%
|
| ||||||||||||||||||
| | | | | | | | |
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |||
Consolidated Statement of Income Information:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Relaxation Salons
|
| | | $ | 12,476 | | | | | ¥ | 1,344,503 | | | | | ¥ | 2,010,506 | | | | | $ | (6,180) | | | | | ¥ | (666,003) | | | | | | (33.1)% | | |
Digital Preventative Healthcare
|
| | | | 109 | | | | | | 11,774 | | | | | | 21,025 | | | | | | (86) | | | | | | (9,251) | | | | | | (44.0)% | | |
Total revenue
|
| | | | 12,585 | | | | | | 1,356,277 | | | | | | 2,031,531 | | | | | | (6,266) | | | | | | (675,254) | | | | | | (33.2)% | | |
Cost of revenues and operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenues
|
| | | | 11,777 | | | | | | 1,269,220 | | | | | | 1,533,819 | | | | | | (2,455) | | | | | | (264,599) | | | | | | (17.3)% | | |
Selling, general and administrative
expenses |
| | | | 4,838 | | | | | | 521,364 | | | | | | 411,717 | | | | | | 1,017 | | | | | | 109,647 | | | | | | 26.6% | | |
Impairment loss on long-lived assets
|
| | | | — | | | | | | — | | | | | | 23,604 | | | | | | (219) | | | | | | (23,604) | | | | | | (100.0)% | | |
Total cost of revenues and operating expenses
|
| | | | 16,615 | | | | | | 1,790,584 | | | | | | 1,969,140 | | | | | | (1,657) | | | | | | (178,556) | | | | | | (9.1)% | | |
Operating income (loss)
|
| | | $ | (4,030) | | | | | ¥ | (434,307) | | | | | ¥ | 62,391 | | | | | $ | (4,609) | | | | | ¥ | (496,698) | | | | | | (796.1)% | | |
Other income (expenses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividend income
|
| | | | — | | | | | | 2 | | | | | | 2 | | | | | | — | | | | | | — | | | | | | 0.0% | | |
Interest income
|
| | | | 6 | | | | | | 674 | | | | | | 556 | | | | | | 1 | | | | | | 118 | | | | | | 21.2% | | |
Interest expense
|
| | | | (56) | | | | | | (6,076) | | | | | | (7,155) | | | | | | 10 | | | | | | 1,079 | | | | | | (15.1)% | | |
Gain from bargain purchases
|
| | | | 15 | | | | | | 1,624 | | | | | | 4,343 | | | | | | (25) | | | | | | (2,719) | | | | | | (62.6)% | | |
Other, net
|
| | | | 132 | | | | | | 14,142 | | | | | | 5,057 | | | | | | 84 | | | | | | 9,085 | | | | | | 179.7% | | |
Total other income (expenses)
|
| | | | 97 | | | | | | 10,366 | | | | | | 2,803 | | | | | | 70 | | | | | | 7,563 | | | | | | 269.8% | | |
Income tax expense
|
| | | | 177 | | | | | | 19,030 | | | | | | 11,429 | | | | | | 70 | | | | | | 7,601 | | | | | | 66.5% | | |
Equity in earnings (loss) of investment
|
| | | | — | | | | | | — | | | | | | 280 | | | | | | (3) | | | | | | (280) | | | | | | (100.0)% | | |
Net income (loss)
|
| | | $ | (4,110) | | | | | ¥ | (442,971) | | | | | ¥ | 54,045 | | | | | $ | (4,612) | | | | | ¥ | (497,016) | | | | | | (919.6)% | | |
Adjusted EBITDA(1)
|
| | | $ | (3,472) | | | | | ¥ | (374,224) | | | | | ¥ | 118,049 | | | | | $ | (4,568) | | | | | ¥ | (492,273) | | | | | | (417.0)% | | |
Adjusted EBITDA margin(2)
|
| | | | (27.6)% | | | | | | (27.6)% | | | | | | 5.8% | | | | | | — | | | | | | — | | | | | | (574.8)% | | |
| | |
Six months ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Number of Salons
|
| | | | 289 | | | | | | 270 | | |
Sales per Customer(1)
|
| | | ¥ | 6,234 | | | | | ¥ | 5,968 | | |
Repeat Ratio(2)
|
| | | | 81.16% | | | | | | 80.63% | | |
Operation Ratio(2)
|
| | | | 40.79% | | | | | | 50.42% | | |
| | |
Year ended December 31,
|
| |
Change (2019 vs 2018)
|
| ||||||||||||||||||||||||||||||
(in thousands, except change % data and
Adjusted EBITDA margin) |
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| |
$
|
| |
¥
|
| |
%
|
| ||||||||||||||||||
Consolidated Statement of Income Information:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Relaxation Salons
|
| | | $ | 35,860 | | | | | ¥ | 3,864,656 | | | | | ¥ | 3,348,042 | | | | | $ | 4,794 | | | | | ¥ | 516,614 | | | | | | 15.4% | | |
Digital Preventative Healthcare
|
| | | | 405 | | | | | | 43,608 | | | | | | 85,093 | | | | | | (385) | | | | | | (41,485) | | | | | | (48.8)% | | |
Total revenue
|
| | | | 36,265 | | | | | | 3,908,264 | | | | | | 3,433,135 | | | | | | 4,409 | | | | | | 475,129 | | | | | | 13.8% | | |
Cost of revenues and operating expenses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenues
|
| | | | 27,443 | | | | | | 2,957,506 | | | | | | 2,476,267 | | | | | | 4,465 | | | | | | 481,239 | | | | | | 19.4% | | |
Selling, general and administrative expenses
|
| | | | 8,090 | | | | | | 871,862 | | | | | | 842,822 | | | | | | 269 | | | | | | 29,040 | | | | | | 3.4% | | |
Impairment loss on long-lived assets
|
| | | | 413 | | | | | | 44,546 | | | | | | 40,778 | | | | | | 35 | | | | | | 3,768 | | | | | | 9.2% | | |
Total cost of revenues and operating
expenses |
| | | | 35,946 | | | | | | 3,873,914 | | | | | | 3,359,867 | | | | | | 4,770 | | | | | | 514,047 | | | | | | 15.3% | | |
Operating income
|
| | | $ | 319 | | | | | ¥ | 34,350 | | | | | ¥ | 73,268 | | | | | $ | (361) | | | | | ¥ | (38,918) | | | | | | (53.1)% | | |
Other income (expenses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividend income
|
| | | | — | | | | | | 2 | | | | | | 2 | | | | | | — | | | | | | — | | | | | | 0.0% | | |
Interest income
|
| | | | 12 | | | | | | 1,336 | | | | | | 785 | | | | | | 5 | | | | | | 551 | | | | | | 70.2% | | |
Interest expense
|
| | | | (126) | | | | | | (13,591) | | | | | | (15,485) | | | | | | 18 | | | | | | 1,894 | | | | | | (12.2)% | | |
Gain from bargain purchases
|
| | | | 60 | | | | | | 6,487 | | | | | | 33,218 | | | | | | (248) | | | | | | (26,731) | | | | | | (80.5)% | | |
Other, net
|
| | | | 39 | | | | | | 4,153 | | | | | | 133 | | | | | | 37 | | | | | | 4,020 | | | | | | 3,022.6% | | |
Total other income (expenses)
|
| | | | (15) | | | | | | (1,613) | | | | | | 18,653 | | | | | | (188) | | | | | | (20,266) | | | | | | (108.6)% | | |
Income tax expense
|
| | | | 148 | | | | | | 15,961 | | | | | | 25,252 | | | | | | (86) | | | | | | (9,291) | | | | | | (36.8)% | | |
Equity in earnings (loss) of investment
|
| | | | 5 | | | | | | 559 | | | | | | (359) | | | | | | 9 | | | | | | 918 | | | | | | (255.7)% | | |
Net income
|
| | | $ | 161 | | | | | ¥ | 17,335 | | | | | ¥ | 66,310 | | | | | $ | (454) | | | | | ¥ | (48,975) | | | | | | (73.9)% | | |
Adjusted EBITDA(1)
|
| | | $ | 1,292 | | | | | ¥ | 139,301 | | | | | ¥ | 179,997 | | | | | $ | (378) | | | | | ¥ | (40,696) | | | | | | (22.6)% | | |
Adjusted EBITDA margin(2)
|
| | | | 3.6% | | | | | | 3.6% | | | | | | 5.2% | | | | | | — | | | | | | — | | | | | | (30.8)% | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Number of Salons
|
| | | | 283 | | | | | | 263 | | |
Sales per Customer(1)
|
| | | ¥ | 6,064 | | | | | ¥ | 5,914 | | |
Repeat Ratio(2)
|
| | | | 81.72% | | | | | | 82.39% | | |
Operation Ratio(2)
|
| | | | 50.36% | | | | | | 49.71% | | |
| | |
Six months ended June 30,
|
| |
Year ended December 31,
|
| ||||||||||||||||||||||||||||||
| | |
2020($)
|
| |
2020(¥)
|
| |
2019(¥)
|
| |
2019($)
|
| |
2019(¥)
|
| |
2018(¥)
|
| ||||||||||||||||||
| | |
(Unaudited)
|
| | | | ||||||||||||||||||||||||||||||
Net income (loss) attributable to shareholders
|
| | | $ | (4,110) | | | | | ¥ | (442,971) | | | | | ¥ | 54,045 | | | | | $ | 161 | | | | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Net cash provided by operating activities
|
| | | | (3,478) | | | | | | (374,861) | | | | | | 181,561 | | | | | | 73 | | | | | | 7,870 | | | | | | 141,872 | | |
Net cash used in investing activities
|
| | | | (531) | | | | | | (57,255) | | | | | | (25,774) | | | | | | (352) | | | | | | (37,931) | | | | | | (79,388) | | |
Net cash provided by (used in) financing activities
|
| | | | 1,331 | | | | | | 143,555 | | | | | | (144,760) | | | | | | 3,081 | | | | | | 331,994 | | | | | | (74,475) | | |
Net increase (decrease) of cash and cash equivalents during the period
|
| | | | (2,678) | | | | | | (288,561) | | | | | | 11,027 | | | | | | 2,802 | | | | | | 301,933 | | | | | | (11,991) | | |
Cash and cash equivalents at beginning of period
|
| | | $ | 4,766 | | | | | ¥ | 513,621 | | | | | ¥ | 211,688 | | | | | $ | 1,964 | | | | | ¥ | 211,688 | | | | | ¥ | 223,679 | | |
Cash and cash equivalents at end of period
|
| | | $ | 2,088 | | | | | ¥ | 225,060 | | | | | ¥ | 222,715 | | | | | $ | 4,766 | | | | | ¥ | 513,621 | | | | | ¥ | 211,688 | | |
(in thousand JPY)
|
| |
Payments due by period:
|
| |||||||||||||||||||||
| | |
Total
|
| |
Less than
1 year |
| |
1 – 3 years
|
| |
More than
3 years |
| ||||||||||||
Debt obligations
|
| | | ¥ | 737,444 | | | | | ¥ | 357,285 | | | | | ¥ | 146,804 | | | | | ¥ | 233,355 | | |
Operating lease obligations
|
| | | | 1,691,660 | | | | | | 680,555 | | | | | | 790,634 | | | | | | 220,471 | | |
Other contractual commitments
|
| | | | 11,726 | | | | | | 2,005 | | | | | | 4,010 | | | | | | 5,711 | | |
Total
|
| | | ¥ | 2,440,830 | | | | | ¥ | 1,039,845 | | | | | ¥ | 941,448 | | | | | ¥ | 459,537 | | |
Name
|
| |
Age
|
| |
Position(s) with our Company
|
| |||
Kouji Eguchi | | | | | 47 | | | |
Chief Executive Officer and Representative Director
|
|
Fumitoshi Fujiwara | | | | | 54 | | | | Chief Financial Officer and Director | |
Miki Aoki | | | | | 40 | | | | Manager, General Affairs and Director | |
Akira Nojima | | | | | 56 | | | | Independent Director | |
Tomoya Ogawa | | | | | 44 | | | | Independent Director | |
Tsukasa Karyu* | | | | | 65 | | | | Corporate Auditor | |
Osamu Sato* | | | | | 60 | | | | Corporate Auditor | |
Minekazu Shimada* | | | | | 63 | | | | Corporate Auditor | |
Name of Issuance
|
| |
Issuance Date
|
| |
Expiration Date
|
| |
Exercise Price
(per share) |
| |
Number of
Common Shares Granted |
| ||||||
Fourth Series
|
| |
12/24/2015
|
| |
12/21/2025
|
| | | ¥ | 400 | | | | | | 1,539,500 | | |
Fifth Series
|
| |
12/24/2015
|
| |
12/21/2025
|
| | | ¥ | 400 | | | | | | 285,500 | | |
Sixth Series
|
| |
12/22/2016
|
| |
12/21/2026
|
| | | ¥ | 2,000 | | | | | | 230,000 | | |
Seventh Series
|
| |
12/22/2016
|
| |
12/21/2026
|
| | | ¥ | 2,000 | | | | | | 174,000 | | |
Name
|
| |
Grant Date
|
| |
Beginning of
Exercise Period |
| |
End of
Exercise Period |
| |
Exercise
Price (per share) |
| |
Total
Number of Stock Options Granted |
| |
Total
Number of Common Shares Underlying Stock Options |
| ||||||||||||
Osamu Sato
|
| |
12/24/2015
|
| |
12/22/2017
|
| | | | 12/21/2025 | | | | | ¥ | 400 | | | | | | 25(1) | | | | | | 12,500 | | |
Miki Aoki
|
| |
12/24/2015
|
| |
12/22/2017
|
| | | | 12/21/2025 | | | | | ¥ | 400 | | | | | | 50(1) | | | | | | 25,000 | | |
Tomoya Ogawa
|
| |
12/24/2015
|
| |
12/22/2017
|
| | | | 12/21/2025 | | | | | ¥ | 400 | | | | | | 25(1) | | | | | | 12,500 | | |
Minekazu Shimada
|
| |
12/22/2016
|
| |
12/22/2018
|
| | | | 12/21/2026 | | | | | ¥ | 2,000 | | | | | | 5,000(2) | | | | | | 5,000 | | |
Kouji Eguchi
|
| |
10/30/2020
|
| |
10/1/2021
|
| | | | 9/30/2026 | | | | | ¥ | 2,000 | | | | | | 150,000(2) | | | | | | 150,000 | | |
| | |
Common Shares
Beneficially Owned Immediately Prior to this Offering(1) |
| |
Common Shares
Beneficially Owned Immediately After this Offering(1) |
| ||||||||||||||||||
Name of Beneficial Owner
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
| ||||||||||||
Named Executive Officers, Directors, and Corporate Auditors: | | | | | | | | | | | | | | | | | | | | | | | | | |
Kouji Eguchi(2)
|
| | | | 1,884,960 | | | | | | 44.33% | | | | | | • | | | | | | % | | |
Fumitoshi Fujiwara
|
| | | | 40,000 | | | | | | * | | | | | | • | | | | | | * | | |
Miki Aoki(3)
|
| | | | 56,000 | | | | | | 1.32% | | | | | | • | | | | | | * | | |
Akira Nojima
|
| | | | — | | | | | | * | | | | | | • | | | | | | * | | |
Tomoya Ogawa(4)
|
| | | | 41,000 | | | | | | * | | | | | | • | | | | | | * | | |
Tsukasa Karyu
|
| | | | — | | | | | | * | | | | | | • | | | | | | * | | |
Osamu Sato(5)
|
| | | | 30,000 | | | | | | * | | | | | | • | | | | | | * | | |
Minekazu Shimada(6)
|
| | | | 5,000 | | | | | | * | | | | | | • | | | | | | * | | |
All named executive officers, directors, and corporate auditors as a group (eight) persons)
|
| | | | 2,056,960 | | | | | | 48.38% | | | | | | • | | | | | | •% | | |
5% or more Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | | |
Kouji Eguchi(2)
|
| | | | 1,884,960 | | | | | | 44.33% | | | | | | • | | | | | | •% | | |
Persons depositing or withdrawing common
shares or ADS holders must pay: |
| |
For:
|
|
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | | |
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
|
$.05 (or less) per ADS | | | Any cash distribution to ADS holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been common shares and the common shares had been deposited for issuance of ADSs | | | Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders | |
$.05 (or less) per ADS per calendar year | | | Depositary services | |
Registration or transfer fees | | | Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares | |
Expenses of the depositary | | |
Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement)
Converting foreign currency to U.S. dollars
|
|
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or common shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes | | | As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | | | As necessary | |
Name
|
| |
Number of ADSs
|
| |||
Maxim Group LLC
|
| | | | • | | |
•
|
| | | | • | | |
•
|
| | | | • | | |
•
|
| | | | • | | |
Total
|
| | | | • | | |
Underwriting Discounts and Commissions
|
| |
With no exercise of
the option to purchase additional ADSs |
| |
With full exercise
of the option to purchase additional ADSs |
| ||||||
Per ADS
|
| | | US$ | • | | | | | US$ | • | | |
Per ADS For Company Contacts
|
| | | US$ | • | | | | | US$ | • | | |
Total
|
| | | US$ | • | | | | | US$ | • | | |
Description
|
| |
Amount
|
| |||
U.S. Securities and Exchange Commission registration fee
|
| | | $ | • | | |
Financial Industry Regulatory Authority filing fee
|
| | | | • | | |
NASDAQ Capital Market entry and listing fee
|
| | | | • | | |
Accounting and Audit fees and expenses
|
| | | | • | | |
Legal fees and expenses
|
| | | | • | | |
Blue Sky fees and expenses
|
| | | | • | | |
Printing expenses
|
| | | | • | | |
Miscellaneous
|
| | | | • | | |
Total
|
| | | $ | • | | |
| Audited Consolidated Financial Statements as of and for the years ended December 31, 2019 and 2018 | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-9 | | |
|
Unaudited Condensed Consolidated Financial Statements for the Six Months Ended June 30, 2020 and
2019 |
| | | | | | |
| | | | | F-42 | | | |
| | | | | F-44 | | | |
| | | | | F-45 | | | |
| | | | | F-46 | | | |
| | | | | F-47 | | | |
| | | | | F-49 | | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | ¥ | 513,621 | | | | | ¥ | 211,688 | | |
Time deposits
|
| | | | 38,520 | | | | | | 33,020 | | |
Accounts receivable-trade, net
|
| | | | 337,048 | | | | | | 283,001 | | |
Accounts receivable-other
|
| | | | 428,278 | | | | | | 343,205 | | |
Due from shareholder
|
| | | | 8,266 | | | | | | 16,677 | | |
Inventories
|
| | | | 5,511 | | | | | | 6,403 | | |
Prepaid expenses and other current assets
|
| | | | 47,485 | | | | | | 40,044 | | |
Total current assets
|
| | | | 1,378,729 | | | | | | 934,038 | | |
Property and equipment, net
|
| | | | 168,955 | | | | | | 189,058 | | |
Goodwill
|
| | | | 78,282 | | | | | | 63,955 | | |
Other intangible assets, net
|
| | | | 77,638 | | | | | | 76,281 | | |
Investments
|
| | | | 14,044 | | | | | | 51,981 | | |
Long-term accounts receivable-other, net
|
| | | | 106,208 | | | | | | 109,977 | | |
Right-of-use asset−operating lease, net
|
| | | | 1,829,968 | | | | | | 2,083,963 | | |
Lease and guarantee deposits
|
| | | | 769,104 | | | | | | 754,941 | | |
Deferred tax assets, net
|
| | | | 222,505 | | | | | | 228,367 | | |
Deferred offering costs
|
| | | | 57,509 | | | | | | — | | |
Other assets
|
| | | | 54,523 | | | | | | 29,417 | | |
Total assets
|
| | | ¥ | 4,757,465 | | | | | ¥ | 4,521,978 | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | ¥ | 122,590 | | | | | ¥ | 141,319 | | |
Accrued expenses
|
| | | | 447,974 | | | | | | 378,771 | | |
Short-term borrowings and current portion of long-term borrowings
|
| | | | 371,570 | | | | | | 413,744 | | |
Accrued income taxes
|
| | | | 17,834 | | | | | | 13,634 | | |
Advances received
|
| | | | 483,124 | | | | | | 522,301 | | |
Short-term lease liability
|
| | | | 704,024 | | | | | | 768,196 | | |
Other current liabilities
|
| | | | 115,573 | | | | | | 112,847 | | |
Total current liabilities
|
| | | | 2,262,689 | | | | | | 2,350,812 | | |
Long-term borrowings−net of current portion
|
| | | | 150,531 | | | | | | 342,768 | | |
Deposit received
|
| | | | 474,388 | | | | | | 495,259 | | |
Long-term lease liability−net of current portion
|
| | | | 1,136,799 | | | | | | 1,324,156 | | |
Asset retirement obligation
|
| | | | 127,411 | | | | | | 119,519 | | |
Other liabilities
|
| | | | 5,589 | | | | | | 7,019 | | |
Total liabilities
|
| | | | 4,157,407 | | | | | | 4,639,533 | | |
COMMITMENTS AND CONTINGENCIES (NOTE 17) | | | | | | | | | | | | | |
SHAREHOLDERS’ EQUITY (DEFICIT): | | | | | | | | | | | | | |
Common stock, no par value;
9,999,999 shares authorized; 4,115,000 shares issued and 4,022,500 shares outstanding at December 31, 2019; 3,765,000 shares issued and 3,672,500 shares outstanding at December 31, 2018 |
| | | | 595,000 | | | | | | 245,000 | | |
Class A common stock, no par value;
1 share authorized; 1 share issued and 1 share outstanding at December 31, 2019 and 2018 |
| | | | 100 | | | | | | 100 | | |
Treasury stock, at cost−92,500 common shares at December 31, 2019 and 2018
|
| | | | (3,000) | | | | | | (3,000) | | |
Additional paid-in capital
|
| | | | 713,267 | | | | | | 363,267 | | |
Accumulated other comprehensive loss
|
| | | | ― | | | | | | (278) | | |
Accumulated deficit
|
| | | | (705,309) | | | | | | (722,644) | | |
Total shareholders’ equity (deficit)
|
| | | | 600,058 | | | | | | (117,555) | | |
Total liabilities and shareholders’ equity (deficit)
|
| | | ¥ | 4,757,465 | | | | | ¥ | 4,521,978 | | |
|
| | |
Years Ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Revenues: | | | | | | | | | | | | | |
Revenue from directly-operated salons
|
| | | ¥ | 2,031,155 | | | | | ¥ | 1,477,985 | | |
Franchise revenue
|
| | | | 1,833,501 | | | | | | 1,870,057 | | |
Other revenues
|
| | | | 43,608 | | | | | | 85,093 | | |
Total revenues
|
| | | | 3,908,264 | | | | | | 3,433,135 | | |
Cost of revenues and operating expenses: | | | | ||||||||||
Cost of revenue from directly-operated salons
|
| | | | 1,912,893 | | | | | | 1,416,818 | | |
Cost of franchise revenue
|
| | | | 1,019,956 | | | | | | 1,023,975 | | |
Cost of other revenues
|
| | | | 24,657 | | | | | | 35,474 | | |
Selling, general and administrative expenses
|
| | | | 871,862 | | | | | | 842,822 | | |
Impairment loss on long-lived assets
|
| | | | 44,546 | | | | | | 40,778 | | |
Total cost of revenues and operating expenses
|
| | | | 3,873,914 | | | | | | 3,359,867 | | |
Operating income
|
| | | | 34,350 | | | | | | 73,268 | | |
Other income (expense): | | | | | | | | | | | | | |
Dividend income
|
| | | | 2 | | | | | | 2 | | |
Interest income
|
| | | | 1,336 | | | | | | 785 | | |
Interest expense
|
| | | | (13,591) | | | | | | (15,485) | | |
Gain from bargain purchases
|
| | | | 6,487 | | | | | | 33,218 | | |
Other, net
|
| | | | 4,153 | | | | | | 133 | | |
Total other income (expense)
|
| | | | (1,613) | | | | | | 18,653 | | |
Income before income tax expense and equity in earnings (loss) of
investment |
| | | | 32,737 | | | | | | 91,921 | | |
Income tax expense
|
| | | | 15,961 | | | | | | 25,252 | | |
Equity in earnings (loss) of investment
|
| | | | 559 | | | | | | (359) | | |
Net income
|
| | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Net earnings per share | | | | ||||||||||
Basic
|
| | | ¥ | 4.63 | | | | | ¥ | 18.06 | | |
Diluted
|
| | | ¥ | 4.06 | | | | | ¥ | 14.04 | | |
Weighted average shares outstanding | | | | ||||||||||
Basic
|
| | | | 3,747,296 | | | | | | 3,672,501 | | |
Diluted
|
| | | | 4,272,302 | | | | | | 4,721,278 | | |
| | |
Years Ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Net income
|
| | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Foreign currency translation adjustments, net of tax
|
| | | | 278 | | | | | | (278) | | |
Comprehensive income
|
| | | ¥ | 17,613 | | | | | ¥ | 66,032 | | |
| | |
Common stock
|
| |
Class A
common stock |
| |
Treasury stock
|
| |
Additional
paid-in capital |
| |
Accumulated
other comprehensive income (loss) |
| |
Accumulated
deficit |
| |
Total
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2018
|
| | | | 3,765,000 | | | | | ¥ | 245,000 | | | | | | 1 | | | | | ¥ | 100 | | | | | | 92,500 | | | | | ¥ | (3,000) | | | | | ¥ | 363,118 | | | | | ¥ | ― | | | | | ¥ | (778,365) | | | | | ¥ | (173,147) | | |
Cumulative effect of adoption of ASC 842
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | (10,589) | | | | | | (10,589) | | |
Net income
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | 66,310 | | | | | | 66,310 | | |
Foreign currency translation adjustments
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | (278) | | | | | | ― | | | | | | (278) | | |
Stock-based compensation
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | 149 | | | | | | ― | | | | | | ― | | | | | | 149 | | |
Balance, December 31, 2018
|
| | | | 3,765,000 | | | | | | 245,000 | | | | | | 1 | | | | | | 100 | | | | | | 92,500 | | | | | | (3,000) | | | | | | 363,267 | | | | | | (278) | | | | | | (722,644) | | | | | | (117,555) | | |
Issuance of common shares for
cash |
| | | | 350,000 | | | | | | 350,000 | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | 350,000 | | | | | | ― | | | | | | ― | | | | | | 700,000 | | |
Net income
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | 17,335 | | | | | | 17,335 | | |
Foreign currency translation adjustments
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | 278 | | | | | | ― | | | | | | 278 | | |
Balance, December 31, 2019
|
| | | | 4,115,000 | | | | | ¥ | 595,000 | | | | | | 1 | | | | | ¥ | 100 | | | | | | 92,500 | | | | | ¥ | (3,000) | | | | | ¥ | 713,267 | | | | | ¥ | ― | | | | | ¥ | (705,309) | | | | | ¥ | 600,058 | | |
|
| | |
Years Ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income
|
| | | ¥ | 17,335 | | | | | ¥ | 66,310 | | |
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 46,174 | | | | | | 44,267 | | |
Losses on sales of directly-operated salons to franchisees
|
| | | | 9,600 | | | | | | 4,057 | | |
Provision for bad debt
|
| | | | 271 | | | | | | 10,237 | | |
Stock-based compensation
|
| | | | ― | | | | | | 149 | | |
Losses on disposal of property and equipment, net and other intangible assets,
net |
| | | | 4,631 | | | | | | 17,627 | | |
Impairment loss on long-lived assets
|
| | | | 44,546 | | | | | | 40,778 | | |
Gain from bargain purchases
|
| | | | (6,487) | | | | | | (33,218) | | |
Deferred income tax expense
|
| | | | 5,739 | | | | | | 18,468 | | |
Other non-cash (gains) expense−net
|
| | | | (895) | | | | | | 565 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable-trade, net
|
| | | | (66,877) | | | | | | 30,170 | | |
Accounts receivable-other
|
| | | | (36,190) | | | | | | (66,331) | | |
Inventories
|
| | | | 892 | | | | | | 6,921 | | |
Prepaid expenses and other current assets
|
| | | | (39,698) | | | | | | (31,357) | | |
Lease and guarantee deposits
|
| | | | (14,163) | | | | | | 35,488 | | |
Accounts payable
|
| | | | (18,729) | | | | | | 88,512 | | |
Accrued expenses
|
| | | | 116,856 | | | | | | (89,935) | | |
Accrued income taxes
|
| | | | 4,200 | | | | | | 4,510 | | |
Advances received
|
| | | | (39,177) | | | | | | 20,654 | | |
Other current liabilities
|
| | | | 10,226 | | | | | | (9,878) | | |
Deposit received
|
| | | | (20,871) | | | | | | (20,034) | | |
Other assets and other liabilities−net
|
| | | | (9,513) | | | | | | 3,912 | | |
Net cash provided by operating activities
|
| | | | 7,870 | | | | | | 141,872 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of time deposits
|
| | | | (37,900) | | | | | | (40,002) | | |
Proceeds from maturities of time deposits
|
| | | | 6,000 | | | | | | 82,100 | | |
Acquisition of affiliated company securities
|
| | | | ― | | | | | | (49,240) | | |
Acquisition of investment securities
|
| | | | (13,544) | | | | | | (500) | | |
Acquisition of property and equipment
|
| | | | (7,406) | | | | | | (34,298) | | |
Proceeds from sale of property and equipment
|
| | | | 5,000 | | | | | | ― | | |
Cost additions to internal use software
|
| | | | (12,068) | | | | | | (15,817) | | |
Proceeds from sale of intangible assets
|
| | | | ― | | | | | | 2,430 | | |
Acquisition of businesses−net of cash acquired
|
| | | | (3,201) | | | | | | (60,271) | | |
Proceeds from due from shareholder
|
| | | | 8,412 | | | | | | ― | | |
Payment received on short-term loans receivable
|
| | | | 450 | | | | | | 2,310 | | |
Payment received on long-term accounts receivable-other, net
|
| | | | 16,326 | | | | | | 33,900 | | |
Net cash used in investing activities
|
| | | ¥ | (37,931) | | | | | ¥ | (79,388) | | |
|
| | |
Years Ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from issuance of common stock
|
| | | ¥ | 700,000 | | | | | ¥ | ― | | |
Net proceeds from short-term borrowings
|
| | | | ― | | | | | | 180,000 | | |
Proceeds from long-term borrowings
|
| | | | ― | | | | | | 90,000 | | |
Repayment of long-term borrowings
|
| | | | (234,411) | | | | | | (327,475) | | |
Payment of consideration of business acquisitions
|
| | | | (82,812) | | | | | | ― | | |
Payment of deferred offering costs
|
| | | | (43,283) | | | | | | ― | | |
Repayment of corporate bonds
|
| | | | (7,500) | | | | | | (17,000) | | |
Net cash provided by (used in) financing activities
|
| | | | 331,994 | | | | | | (74,475) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 301,933 | | | | | | (11,991) | | |
Cash and cash equivalents at beginning of year
|
| | | | 211,688 | | | | | | 223,679 | | |
Cash and cash equivalents at end of year
|
| | | ¥ | 513,621 | | | | | ¥ | 211,688 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid during the year for:
|
| | | | | | | | | | | | |
Interest
|
| | | ¥ | 11,872 | | | | | ¥ | 17,010 | | |
Income taxes
|
| | | | 24,344 | | | | | | 14,778 | | |
Non-cash investing and financing activities:
|
| | | | | | | | | | | | |
Right-of-use assets obtained in exchange for lease liabilities
|
| | | | 749,008 | | | | | | 766,827 | | |
Purchases of intangible assets included in accrued expenses
|
| | | | 3,321 | | | | | | 791 | | |
Acquisition of businesses included in accrued expenses
|
| | | | 48,901 | | | | | | 111,101 | | |
Deferred offering costs included in accrued expenses
|
| | | | 14,226 | | | | | | ― | | |
| | |
Number of
Relaxation Salons |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Directly-operated
|
| | | | 107 | | | | | | 116 | | |
Franchised
|
| | | | 176 | | | | | | 147 | | |
Total
|
| | | | 283 | | | | | | 263 | | |
| Leasehold improvements | | | Lesser of 10 years or the remaining lease term | |
| Vehicles | | | 6 years | |
| Tools, furniture and fixtures | | | 2−10 years | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Franchise fee and royalty income
|
| | | ¥ | 800,110 | | | | | ¥ | 877,947 | | |
Staffing service revenue
|
| | | | 425,711 | | | | | | 410,788 | | |
Sublease revenue
|
| | | | 607,680 | | | | | | 581,322 | | |
Total
|
| | | ¥ | 1,833,501 | | | | | ¥ | 1,870,057 | | |
| | |
Thousands
of Yen |
| |||
| | |
Fair value of
assets / liabilities |
| |||
Cash and cash equivalents
|
| | | ¥ | 7,124 | | |
Other current assets
|
| | | | 156 | | |
Property and equipment, net
|
| | | | 19,981 | | |
Right-of-use asset−operating lease, net
|
| | | | 126,178 | | |
Lease and guarantee deposits
|
| | | | 23,339 | | |
Deferred tax assets
|
| | | | 1,043 | | |
Other assets
|
| | | | 124 | | |
Total assets acquired
|
| | | | 177,945 | | |
Accrued expenses
|
| | | | (5,500) | | |
Advances received
|
| | | | (1,813) | | |
Other current liabilities
|
| | | | (1,212) | | |
Long-term lease liability
|
| | | | (125,338) | | |
Asset retirement obligations
|
| | | | (16,992) | | |
Total liabilities assumed
|
| | | | (150,855) | | |
Net assets assumed
|
| | | | 27,090 | | |
Fair value of the consideration transferred
|
| | | | 6,000 | | |
Gain from bargain purchase
|
| | | ¥ | 21,090 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
Fair value of
assets/liabilities |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Property and equipment−net
|
| | | ¥ | 27,567 | | | | | ¥ | 108,916 | | |
Right-of-use asset−operating lease, net
|
| | | | ― | | | | | | 241,221 | | |
Goodwill
|
| | | | 22,156 | | | | | | 44,770 | | |
Intangible assets
|
| | | | 6,519 | | | | | | 46,905 | | |
Lease and guarantee deposits
|
| | | | ― | | | | | | 61,240 | | |
Total assets acquired
|
| | | | 56,242 | | | | | | 503,052 | | |
Short-term lease liability
|
| | | | ― | | | | | | (241,221) | | |
Asset retirement obligation
|
| | | | (25,942) | | | | | | (100,711) | | |
Total liabilities assumed
|
| | | | (25,942) | | | | | | (341,932) | | |
Net assets assumed
|
| | | | 30,300 | | | | | | 161,120 | | |
Fair value of the consideration transferred
|
| | | | 23,813 | | | | | | 148,992 | | |
Gain from bargain purchases
|
| | | ¥ | 6,487 | | | | | ¥ | 12,128 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
December 31,
2019 |
| |
December 31,
2018 |
| ||||||
Leasehold improvements
|
| | | ¥ | 215,524 | | | | | ¥ | 231,760 | | |
Vehicles
|
| | | | 7,786 | | | | | | 7,786 | | |
Tools, furniture and fixtures
|
| | | | 19,755 | | | | | | 21,698 | | |
Total
|
| | | | 243,065 | | | | | | 261,244 | | |
Accumulated depreciation and amortization
|
| | | | (74,110) | | | | | | (72,186) | | |
| | | | ¥ | 168,955 | | | | | ¥ | 189,058 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Intangible assets subject to amortization: | | | | | | | | | | | | | |
Software for internal use
|
| | | ¥ | 54,710 | | | | | ¥ | 41,020 | | |
Reacquired franchise rights
|
| | | | 9,802 | | | | | | 7,860 | | |
Other
|
| | | | 10,750 | | | | | | 10,750 | | |
Total
|
| | | | 75,262 | | | | | | 59,630 | | |
Accumulated amortization
|
| | | | (36,694) | | | | | | (22,419) | | |
Net carrying amount
|
| | | | 38,568 | | | | | | 37,211 | | |
Intangible assets not subject to amortization: | | | | ||||||||||
Trademark
|
| | | | 38,922 | | | | | | 38,922 | | |
Goodwill
|
| | | | 78,282 | | | | | | 63,955 | | |
Telephone rights
|
| | | | 148 | | | | | | 148 | | |
Total
|
| | | | 117,352 | | | | | | 103,025 | | |
Total intangible assets
|
| | | ¥ | 155,920 | | | | | ¥ | 140,236 | | |
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020
|
| | | ¥ | 16,410 | | |
2021
|
| | | | 13,514 | | |
2022
|
| | | | 5,362 | | |
2023
|
| | | | 1,740 | | |
2024
|
| | | | 1,392 | | |
Thereafter
|
| | | | 150 | | |
Total
|
| | | ¥ | 38,568 | | |
| | |
Thousands of Yen
|
| |||
Balance at January 1, 2018
|
| | |||||
Goodwill
|
| | | ¥ | 22,645 | | |
Acquisitions of relaxation salons*
|
| | | | 44,770 | | |
Sales of directly-operated salons to franchisees
|
| | | | (3,460) | | |
Balance at December 31, 2018
|
| | |||||
Goodwill
|
| | | | 63,955 | | |
Acquisitions of relaxation salons*
|
| | | | 22,156 | | |
Sales of directly-operated salons to franchisees, and disposal of relaxation salons
|
| | | | (7,829) | | |
Balance at December 31, 2019
|
| | |||||
Goodwill
|
| | | ¥ | 78,282 | | |
| | |
Ownership
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Re.Ra.Ku (Hongkong) Health Science and Technology Co., Limited
|
| | | | ― | | | | | | 44.0% | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Unsecured bank loans (Due through 2025 with weighted average interest
rates of 1.74% as of December 31, 2019 and 2018, respectively) |
| | | ¥ | 342,101 | | | | | ¥ | 576,512 | | |
Current portion of long-term borrowings
|
| | | | (191,570) | | | | | | (233,744) | | |
Total long-term borrowings
|
| | | ¥ | 150,531 | | | | | ¥ | 342,768 | | |
|
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020
|
| | | ¥ | 191,570 | | |
2021
|
| | | | 91,081 | | |
2022
|
| | | | 25,970 | | |
2023
|
| | | | 19,698 | | |
2024
|
| | | | 9,732 | | |
2025
|
| | | | 4,050 | | |
Total
|
| | | ¥ | 342,101 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Beginning balance
|
| | | ¥ | 119,519 | | | | | ¥ | 46,539 | | |
Liabilities incurred
|
| | | | 63,623 | | | | | | 118,832 | | |
Liabilities settled
|
| | | | (55,954) | | | | | | (46,059) | | |
Accretion expense
|
| | | | 223 | | | | | | 207 | | |
Ending balance
|
| | | ¥ | 127,411 | | | | | ¥ | 119,519 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Fixed lease cost(a)
|
| | | ¥ | 851,555 | | | | | ¥ | 817,288 | | |
Variable lease cost(b)
|
| | | | 30,901 | | | | | | 28,774 | | |
Short-term cost
|
| | | | 10,979 | | | | | | 31,691 | | |
Total
|
| | | ¥ | 893,435 | | | | | ¥ | 877,753 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | | | |
Operating cash flows
|
| | | ¥ | 375,270 | | | | | ¥ | 337,293 | | |
Right-of-use assets obtained in exchange for lease liabilities
|
| | | | 749,008 | | | | | | 766,827 | | |
Weighted average remaining lease term (in years)
|
| | | | 3.3 | | | | | | 3.6 | | |
Weighted average discount rate
|
| | | | 1.45% | | | | | | 1.45% | | |
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020
|
| | | ¥ | 708,552 | | |
2021
|
| | | | 560,080 | | |
2022
|
| | | | 346,190 | | |
2023
|
| | | | 143,012 | | |
2024
|
| | | | 69,596 | | |
2025 and thereafter
|
| | | | 62,130 | | |
Total
|
| | | | 1,889,560 | | |
Less: Interest component
|
| | | | (48,737) | | |
Present value of minimum lease payments
|
| | | ¥ | 1,840,823 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Fixed sublease income
|
| | | ¥ | 580,074 | | | | | ¥ | 557,579 | | |
Variable sublease income
|
| | | | 27,606 | | | | | | 23,743 | | |
Total
|
| | | ¥ | 607,680 | | | | | ¥ | 581,322 | | |
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020
|
| | | ¥ | 494,567 | | |
2021
|
| | | | 392,987 | | |
2022
|
| | | | 229,180 | | |
2023
|
| | | | 108,298 | | |
2024
|
| | | | 46,114 | | |
2025 and thereafter
|
| | | | 34,994 | | |
Total
|
| | | ¥ | 1,306,140 | | |
| | |
Thousands of Yen
|
| |||||||||||||||||||||
| | |
Relaxation
Salon |
| |
Digital
Preventative Healthcare |
| |
Corporate
and elimination |
| |
Consolidated
|
| ||||||||||||
Year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues
|
| | | ¥ | 3,864,656 | | | | | ¥ | 43,608 | | | | | ¥ | ― | | | | | ¥ | 3,908,264 | | |
Operating income (loss)
|
| | | | 279,439 | | | | | | (43,056) | | | | | | (202,033) | | | | | | 34,350 | | |
Depreciation and amortization
|
| | | | 34,025 | | | | | | 4,764 | | | | | | 7,385 | | | | | | 46,174 | | |
Total assets
|
| | | | 3,346,739 | | | | | | 29,565 | | | | | | 1,381,161 | | | | | | 4,757,465 | | |
Year ended December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues
|
| | | ¥ | 3,348,042 | | | | | ¥ | 85,093 | | | | | ¥ | ― | | | | | ¥ | 3,433,135 | | |
Operating income (loss)
|
| | | | 362,765 | | | | | | (40,903) | | | | | | (248,594) | | | | | | 73,268 | | |
Depreciation and amortization
|
| | | | 34,898 | | | | | | ― | | | | | | 9,369 | | | | | | 44,267 | | |
Total assets
|
| | | | 3,584,260 | | | | | | 26,843 | | | | | | 910,875 | | | | | | 4,521,978 | | |
| | |
Thousands of Yen
|
| |
Thousands of Yen
|
| ||||||||||||||||||
| | |
2019
|
| |
2018
|
| ||||||||||||||||||
| | |
Domestic
|
| |
Total
|
| |
Domestic
|
| |
Total
|
| ||||||||||||
Income before income taxes
|
| | | ¥ | 32,737 | | | | | ¥ | 32,737 | | | | | ¥ | 91,921 | | | | | ¥ | 91,921 | | |
Income taxes | | | | | | | | | | | | | | | | | | | | | | | | | |
Current
|
| | | | 10,222 | | | | | | 10,222 | | | | | | 6,784 | | | | | | 6,784 | | |
Deferred
|
| | | | 5,739 | | | | | | 5,739 | | | | | | 18,468 | | | | | | 18,468 | | |
Total
|
| | | ¥ | 15,961 | | | | | ¥ | 15,961 | | | | | ¥ | 25,252 | | | | | ¥ | 25,252 | | |
| | |
2019
|
| |
2018
|
| ||||||
Statutory tax rate
|
| | | | 30.6% | | | | | | 30.9% | | |
Increases (reductions) in taxes due to:
|
| | | | | | | | | | | | |
Change in valuation allowance
|
| | | | (10.2) | | | | | | (9.7) | | |
Nondeductible expenses
|
| | | | 3.2 | | | | | | 0.9 | | |
Inhabitant tax-per capita*
|
| | | | 24.5 | | | | | | 3.9 | | |
Effect of business combination
|
| | | | ― | | | | | | 0.5 | | |
Stock-based compensation
|
| | | | ― | | | | | | 0.1 | | |
Other-net
|
| | | | 0.7 | | | | | | 0.9 | | |
Effective income tax rate
|
| | | | 48.8% | | | | | | 27.5% | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Accounts receivable-trade
|
| | | ¥ | 13,485 | | | | | ¥ | 13,485 | | |
Provision for bad debt
|
| | | | 50,271 | | | | | | 50,188 | | |
Goodwill
|
| | | | 1,135 | | | | | | 8,838 | | |
Other prepaid expenses−currently not deductible
|
| | | | 54,235 | | | | | | 74,658 | | |
Asset retirement obligation
|
| | | | 39,013 | | | | | | 36,597 | | |
Operating lease liability
|
| | | | 563,660 | | | | | | 640,678 | | |
Operating loss carryforwards
|
| | | | 95,490 | | | | | | 63,700 | | |
Other
|
| | | | 51,485 | | | | | | 48,567 | | |
Gross deferred tax assets
|
| | | | 868,774 | | | | | | 936,711 | | |
Valuation allowance
|
| | | | (42,395) | | | | | | (45,750) | | |
Total deferred tax assets
|
| | | | 826,379 | | | | | | 890,961 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Property and equipment
|
| | | | (18,141) | | | | | | (18,169) | | |
Intangible assets
|
| | | | (6,485) | | | | | | (1,861) | | |
Right-of-use asset−operating lease
|
| | | | (560,336) | | | | | | (638,109) | | |
Deferred offering costs
|
| | | | (17,609) | | | | | | ― | | |
Advances received
|
| | | | (1,303) | | | | | | (3,604) | | |
Other
|
| | | | ― | | | | | | (851) | | |
Total deferred tax liabilities
|
| | | | (603,874) | | | | | | (662,594) | | |
Net deferred tax assets
|
| | | ¥ | 222,505 | | | | | ¥ | 228,367 | | |
| | |
Operating loss
carryforwards |
| |||
| | |
(Thousands of Yen)
|
| |||
Years ending December 31: | | | | | | | |
Between 2020 and 2023
|
| | | ¥ | 75,596 | | |
Between 2024 and 2027
|
| | | | 78,353 | | |
2028 and thereafter
|
| | | | 157,906 | | |
Total
|
| | | ¥ | 311,855 | | |
| | |
Thousands of Yen
|
| |||||||||||||||
| | |
Before Tax
Amount |
| |
Tax
(Expense) Benefit |
| |
Net of Tax
Amount |
| |||||||||
Year ended December 31, 2018 | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustments
|
| | | | | | | | | | | | | | | | | | |
Amount arising during the period
|
| | | ¥ | (400) | | | | | ¥ | 122 | | | | | ¥ | (278) | | |
Reclassification adjustments for gains and losses realized in net income
|
| | | | ― | | | | | | ― | | | | | | ― | | |
Net change during the year
|
| | | | (400) | | | | | | 122 | | | | | | (278) | | |
Other comprehensive income (loss)
|
| | | ¥ | (400) | | | | | ¥ | 122 | | | | | ¥ | (278) | | |
Year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustments
|
| | | | | | | | | | | | | | | | | | |
Amount arising during the period
|
| | | ¥ | ― | | | | | ¥ | ― | | | | | ¥ | ― | | |
Reclassification adjustments for gains and losses realized in net income
|
| | | | 400 | | | | | | (122) | | | | | | 278 | | |
Net change during the year
|
| | | | 400 | | | | | | (122) | | | | | | 278 | | |
Other comprehensive income (loss)
|
| | | ¥ | 400 | | | | | ¥ | (122) | | | | | ¥ | 278 | | |
| | |
Thousands of Yen
|
| |||
| | |
Foreign currency
translation adjustments |
| |||
Balance at January 1, 2018
|
| | | ¥ | ― | | |
Other comprehensive income (loss) before reclassifications
|
| | | | (278) | | |
Amounts reclassified from accumulated other comprehensive income
(loss) |
| | | | ― | | |
Net change during the year
|
| | | | (278) | | |
Balance at December 31, 2018
|
| | | | (278) | | |
Other comprehensive income (loss) before reclassifications
|
| | | | ― | | |
Amounts reclassified from accumulated other comprehensive income
(loss) |
| | | | 278 | | |
Net change during the year
|
| | | | 278 | | |
Balance at December 31, 2019
|
| | | ¥ | ― | | |
|
| | |
Thousands of Yen
|
| |
Affected line items
in consolidated statements of income |
| |||||||||
| | |
2019
|
| |
2018
|
| |||||||||
Foreign currency translation adjustments
|
| | | ¥ | 400 | | | | | ¥ | ― | | | | Other−net | |
| | | | | (122) | | | | | | ― | | | |
Income tax expense
|
|
| | | | | 278 | | | | | | ― | | | | Net income | |
Total amount reclassified, net of tax
|
| | | ¥ | 278 | | | | | ¥ | ― | | | | | |
| | |
2019
|
| |
2018
|
| ||||||||||||||||||
| | |
Common
|
| |
Class A
|
| |
Common
|
| |
Class A
|
| ||||||||||||
| | |
(Thousands of Yen)
|
| |
(Thousands of Yen)
|
| ||||||||||||||||||
Income (Numerator) | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to shareholders of the Company
|
| | | ¥ | 17,335 | | | | | | — | | | | | ¥ | 66,310 | | | | | | — | | |
| | |
(Number of shares)
|
| |
(Number of shares)
|
| ||||||||||||||||||
Shares (Denominator) | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding
|
| | | | 3,747,295 | | | | | | 1 | | | | | | 3,672,500 | | | | | | 1 | | |
Effect of dilutive instruments:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Stock options
|
| | | | 525,007 | | | | | | ― | | | | | | 1,048,777 | | | | | | ― | | |
Weighted average common shares for diluted
computation |
| | | | 4,272,302 | | | | | | 1 | | | | | | 4,721,277 | | | | | | 1 | | |
| | |
(Yen)
|
| |
(Yen)
|
| ||||||||||||||||||
Earnings per common share attributable to shareholders of the Company
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | ¥ | 4.63 | | | | | ¥ | 4.63 | | | | | ¥ | 18.06 | | | | | ¥ | 18.06 | | |
Diluted
|
| | | ¥ | 4.06 | | | | | ¥ | 4.06 | | | | | ¥ | 14.04 | | | | | ¥ | 14.04 | | |
| | |
Thousands of Yen
|
| |||||||||||||||||||||
| | |
2019
|
| |
2018
|
| ||||||||||||||||||
| | |
Carrying
amount |
| |
Estimated
fair value |
| |
Carrying
amount |
| |
Estimated
fair value |
| ||||||||||||
Long-term borrowings−net of current portion
|
| | | ¥ | (150,531) | | | | | ¥ | (145,600) | | | | | ¥ | (342,768) | | | | | ¥ | (331,065) | | |
| | |
Thousands of Yen
|
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Impairment
loss |
| ||||||||||||
Year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Leasehold improvements
|
| | | ¥ | ― | | | | | ¥ | ― | | | | | ¥ | 161,330 | | | | | ¥ | 9,825 | | |
Right-of-use asset−operating lease
|
| | | | ― | | | | | | ― | | | | | | 1,829,968 | | | | | | 34,721 | | |
Total
|
| | | ¥ | ― | | | | | ¥ | ― | | | | | ¥ | 1,991,298 | | | | | ¥ | 44,546 | | |
Year ended December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Leasehold improvements
|
| | | ¥ | ― | | | | | ¥ | ― | | | | | ¥ | 177,949 | | | | | ¥ | 4,315 | | |
Right-of-use asset−operating lease
|
| | | | ― | | | | | | ― | | | | | | 2,083,963 | | | | | | 36,463 | | |
Total
|
| | | ¥ | ― | | | | | ¥ | ― | | | | | ¥ | 2,261,912 | | | | | ¥ | 40,778 | | |
| Grant date | | | The date to be determined within one year from the date of the Company’s extraordinary general meeting resolution. | |
| Number of Stock Options to be granted | | | Upper limit 150,000 | |
| Number of shares to be issued | | | Upper limit 150,000 shares | |
| Grant date | | | The date to be determined within one year from the date of the Company’s extraordinary general meeting resolution. | |
| Number of Stock Options to be granted | | | Upper limit 300,000 | |
| Number of shares to be issued | | | Upper limit 300,000 shares | |
| | |
June 30,
2020 |
| |
December 31,
2019 |
| ||||||
| | |
(Unaudited)
|
| | | | | | | |||
ASSETS
|
| | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | ¥ | 225,060 | | | | | ¥ | 513,621 | | |
Time deposits
|
| | | | 32,520 | | | | | | 38,520 | | |
Accounts receivable-trade, net of allowances of ¥23,630 and ¥22,920, respectively
|
| | | | 144,246 | | | | | | 337,048 | | |
Accounts receivable-other
|
| | | | 251,348 | | | | | | 428,278 | | |
Due from shareholder
|
| | | | 300 | | | | | | 8,266 | | |
Inventories
|
| | | | 5,880 | | | | | | 5,511 | | |
Prepaid expenses and other current assets
|
| | | | 90,642 | | | | | | 47,485 | | |
Total current assets
|
| | | | 749,996 | | | | | | 1,378,729 | | |
Property and equipment, net
|
| | | | 237,632 | | | | | | 168,955 | | |
Goodwill
|
| | | | 163,008 | | | | | | 78,282 | | |
Other intangible assets, net
|
| | | | 75,538 | | | | | | 77,638 | | |
Investments
|
| | | | 14,044 | | | | | | 14,044 | | |
Long-term accounts receivable-other, net of allowances of ¥135,251 and ¥141,256, respectively
|
| | | | 142,110 | | | | | | 106,208 | | |
Right-of-use asset−operating lease, net
|
| | | | 1,631,410 | | | | | | 1,829,968 | | |
Lease and guarantee deposits
|
| | | | 684,781 | | | | | | 769,104 | | |
Deferred tax assets, net
|
| | | | 211,459 | | | | | | 222,505 | | |
Deferred offering costs
|
| | | | 125,574 | | | | | | 57,509 | | |
Other assets
|
| | | | 62,419 | | | | | | 54,523 | | |
Total assets
|
| | | ¥ | 4,097,971 | | | | | ¥ | 4,757,465 | | |
| | |
June 30,
2020 |
| |
December 31,
2019 |
| ||||||
| | |
(Unaudited)
|
| | | | | | | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | ¥ | 70,196 | | | | | ¥ | 122,590 | | |
Accrued expenses
|
| | | | 437,321 | | | | | | 447,974 | | |
Short-term borrowings and current portion of long-term borrowings
|
| | | | 357,285 | | | | | | 371,570 | | |
Accrued income taxes
|
| | | | 20,939 | | | | | | 17,834 | | |
Advances received
|
| | | | 358,296 | | | | | | 483,124 | | |
Short-term lease liability
|
| | | | 683,026 | | | | | | 704,024 | | |
Other current liabilities
|
| | | | 92,097 | | | | | | 115,573 | | |
Total current liabilities
|
| | | | 2,019,160 | | | | | | 2,262,689 | | |
Long-term borrowings−net of current portion
|
| | | | 380,159 | | | | | | 150,531 | | |
Deposit received
|
| | | | 408,193 | | | | | | 474,388 | | |
Long-term lease liability−net of current portion
|
| | | | 964,973 | | | | | | 1,136,799 | | |
Asset retirement obligation
|
| | | | 158,680 | | | | | | 127,411 | | |
Other liabilities
|
| | | | 9,719 | | | | | | 5,589 | | |
Total liabilities
|
| | | | 3,940,884 | | | | | | 4,157,407 | | |
COMMITMENTS AND CONTINGENCIES (NOTE 12) | | | | | | | | | | | | | |
SHAREHOLDERS’ EQUITY: | | | | | | | | | | | | | |
Common stock, no par value;
9,999,999 shares authorized; 4,115,000 shares issued and 4,022,500 shares outstanding at June 30, 2020 and December 31, 2019 |
| | | | 595,000 | | | | | | 595,000 | | |
Class A common stock, no par value;
1 share authorized; 1 share issued and 1 share outstanding at June 30, 2020 and December 31, 2019 |
| | | | 100 | | | | | | 100 | | |
Treasury stock, at cost−92,500 common shares at June 30, 2020 and December 31, 2019
|
| | | | (3,000) | | | | | | (3,000) | | |
Additional paid-in capital
|
| | | | 713,267 | | | | | | 713,267 | | |
Accumulated deficit
|
| | | | (1,148,280) | | | | | | (705,309) | | |
Total shareholders’ equity
|
| | | | 157,087 | | | | | | 600,058 | | |
Total liabilities and shareholders’ equity
|
| | | ¥ | 4,097,971 | | | | | ¥ | 4,757,465 | | |
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenues: | | | | | | | | | | | | | |
Revenue from directly-operated salons
|
| | | ¥ | 751,267 | | | | | ¥ | 1,045,945 | | |
Franchise revenue
|
| | | | 593,236 | | | | | | 964,561 | | |
Other revenues
|
| | | | 11,774 | | | | | | 21,025 | | |
Total revenues
|
| | | | 1,356,277 | | | | | | 2,031,531 | | |
Cost of revenues and operating expenses: | | | | | | | | | | | | | |
Cost of revenue from directly-operated salons
|
| | | | 866,297 | | | | | | 994,631 | | |
Cost of franchise revenue
|
| | | | 394,906 | | | | | | 529,408 | | |
Cost of other revenues
|
| | | | 8,017 | | | | | | 9,780 | | |
Selling, general and administrative expenses
|
| | | | 521,364 | | | | | | 411,717 | | |
Impairment loss on long-lived assets
|
| | | | ― | | | | | | 23,604 | | |
Total cost of revenues and operating expenses
|
| | | | 1,790,584 | | | | | | 1,969,140 | | |
Operating (loss) income
|
| | | | (434,307) | | | | | | 62,391 | | |
Other income (expense): | | | | | | | | | | | | | |
Dividend income
|
| | | | 2 | | | | | | 2 | | |
Interest income
|
| | | | 674 | | | | | | 556 | | |
Interest expense
|
| | | | (6,076) | | | | | | (7,155) | | |
Gain from bargain purchases
|
| | | | 1,624 | | | | | | 4,343 | | |
Other, net
|
| | | | 14,142 | | | | | | 5,057 | | |
Total other income
|
| | | | 10,366 | | | | | | 2,803 | | |
(Loss) income before income tax expense and equity in earnings of investment
|
| | | | (423,941) | | | | | | 65,194 | | |
Income tax expense
|
| | | | 19,030 | | | | | | 11,429 | | |
Equity in earnings of investment
|
| | | | ― | | | | | | 280 | | |
Net (loss) income
|
| | | ¥ | (442,971) | | | | | ¥ | 54,045 | | |
Net (loss) earnings per share | | | | | | | | | | | | | |
Basic
|
| | | ¥ | (110.12) | | | | | ¥ | 14.72 | | |
Diluted
|
| | | ¥ | (110.12) | | | | | ¥ | 12.86 | | |
Weighted average shares outstanding | | | | | | | | | | | | | |
Basic
|
| | | | 4,022,501 | | | | | | 3,672,501 | | |
Diluted
|
| | | | 4,022,501 | | | | | | 4,203,106 | | |
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net (loss) income
|
| | | ¥ | (442,971) | | | | | ¥ | 54,045 | | |
Foreign currency translation adjustments, net of tax
|
| | | | ― | | | | | | (980) | | |
Comprehensive (loss) income
|
| | | ¥ | (442,971) | | | | | ¥ | 53,065 | | |
| | |
Common stock
|
| |
Class A
common stock |
| |
Treasury stock
|
| |
Additional
paid-in capital |
| |
Accumulated
deficit |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019
|
| | | | 4,115,000 | | | | | ¥ | 595,000 | | | | | | 1 | | | | | ¥ | 100 | | | | | | 92,500 | | | | | ¥ | (3,000) | | | | | ¥ | 713,267 | | | | | ¥ | (705,309) | | | | | ¥ | 600,058 | | |
Net loss
|
| | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | ― | | | | | | (442,971) | | | | | | (442,971) | | |
Balance, June 30, 2020
|
| | | | 4,115,000 | | | | | ¥ | 595,000 | | | | | | 1 | | | | | ¥ | 100 | | | | | | 92,500 | | | | | ¥ | (3,000) | | | | | ¥ | 713,267 | | | | | ¥ | (1,148,280) | | | | | ¥ | 157,087 | | |
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net (loss) income
|
| | | ¥ | (442,971) | | | | | ¥ | 54,045 | | |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 33,105 | | | | | | 22,793 | | |
Losses on sales of directly-operated salons to franchisees
|
| | | | 65 | | | | | | 8,721 | | |
(Recovery of) provision for bad debt
|
| | | | (5,295) | | | | | | 6,895 | | |
Losses on disposal of long-lived assets, net
|
| | | | 26,913 | | | | | | 540 | | |
Impairment loss on long-lived assets
|
| | | | ― | | | | | | 23,604 | | |
Gain from bargain purchases
|
| | | | (1,624) | | | | | | (4,343) | | |
Deferred income tax expense
|
| | | | 11,046 | | | | | | 6,318 | | |
Other non-cash expense (gains)−net
|
| | | | 121 | | | | | | (156) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable-trade, net
|
| | | | 192,093 | | | | | | 108,749 | | |
Accounts receivable-other
|
| | | | 89,518 | | | | | | 108,501 | | |
Inventories
|
| | | | (369) | | | | | | 777 | | |
Prepaid expenses and other current assets
|
| | | | (37,422) | | | | | | (1,570) | | |
Lease and guarantee deposits
|
| | | | 84,323 | | | | | | 51,050 | | |
Accounts payable
|
| | | | (52,394) | | | | | | 42,184 | | |
Accrued expenses
|
| | | | (62,280) | | | | | | (78,015) | | |
Accrued income taxes
|
| | | | 3,105 | | | | | | (8,523) | | |
Advances received
|
| | | | (124,828) | | | | | | (160,286) | | |
Other current liabilities
|
| | | | (23,476) | | | | | | 2,790 | | |
Deposit received
|
| | | | (66,195) | | | | | | 2,323 | | |
Other assets and other liabilities−net
|
| | | | 1,704 | | | | | | (4,836) | | |
Net cash (used in) provided by operating activities
|
| | | | (374,861) | | | | | | 181,561 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of time deposits
|
| | | | (13,500) | | | | | | (18,700) | | |
Proceeds from maturities of time deposits
|
| | | | 10,000 | | | | | | ― | | |
Proceeds from sale of affiliated company securities
|
| | | | 50,000 | | | | | | ― | | |
Acquisition of investment securities
|
| | | | ― | | | | | | (8,544) | | |
Acquisition of property and equipment
|
| | | | (70,803) | | | | | | ― | | |
Proceeds from sale of property and equipment
|
| | | | 3,227 | | | | | | ― | | |
Cost additions to internal use software
|
| | | | (9,492) | | | | | | (6,473) | | |
Acquisition of businesses−net of cash acquired
|
| | | | (42,393) | | | | | | (3,201) | | |
Proceeds from due from shareholder
|
| | | | 7,966 | | | | | | 1,793 | | |
Payment received on short-term loans receivable
|
| | | | 225 | | | | | | 225 | | |
Payment received on long-term accounts receivable-other, net
|
| | | | 7,515 | | | | | | 9,126 | | |
Net cash used in investing activities
|
| | | ¥ | (57,255) | | | | | ¥ | (25,774) | | |
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from long-term borrowings
|
| | | ¥ | 330,000 | | | | | ¥ | ― | | |
Repayment of long-term borrowings
|
| | | | (114,657) | | | | | | (121,260) | | |
Payment of installment payables related to business acquisitions
|
| | | | (30,199) | | | | | | (16,000) | | |
Payment of deferred offering costs
|
| | | | (41,589) | | | | | | ― | | |
Repayment of corporate bonds
|
| | | | ― | | | | | | (7,500) | | |
Net cash provided by (used in) financing activities
|
| | | | 143,555 | | | | | | (144,760) | | |
Net (decrease) increase in cash and cash equivalents
|
| | | | (288,561) | | | | | | 11,027 | | |
Cash and cash equivalents at beginning of period
|
| | | | 513,621 | | | | | | 211,688 | | |
Cash and cash equivalents at end of period
|
| | | ¥ | 225,060 | | | | | ¥ | 222,715 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid during the period for:
|
| | | | | | | | | | | | |
Interest
|
| | | ¥ | 4,896 | | | | | ¥ | 6,579 | | |
Income taxes
|
| | | | 4,953 | | | | | | 13,634 | | |
Non-cash investing and financing activities:
|
| | | | | | | | | | | | |
Right-of-use assets obtained in exchange for lease liabilities
|
| | | | 189,240 | | | | | | 240,790 | | |
Purchases of property and equipment included in accrued expenses
|
| | | | 9,548 | | | | | | ― | | |
Payables related to acquisition of businesses included in accrued expenses
|
| | | | 60,902 | | | | | | 95,101 | | |
Deferred offering costs included in accrued expenses
|
| | | | 26,476 | | | | | | 15,184 | | |
| | |
Number of Relaxation Salons
|
| |||||||||
| | |
As of June 30,
2020 |
| |
As of December 31,
2019 |
| ||||||
Directly-operated
|
| | | | 138 | | | | | | 107 | | |
Franchised
|
| | | | 151 | | | | | | 176 | | |
Total
|
| | | | 289 | | | | | | 283 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Franchise fee and royalty income
|
| | | ¥ | 203,568 | | | | | ¥ | 446,197 | | |
Staffing service revenue
|
| | | | 125,227 | | | | | | 190,389 | | |
Sublease revenue
|
| | | | 264,441 | | | | | | 327,975 | | |
Total
|
| | | ¥ | 593,236 | | | | | ¥ | 964,561 | | |
| | |
Thousands of Yen
|
| |||
| | |
Fair value of
assets/liabilities |
| |||
| | |
Six Month Ended
June 30, 2020 |
| |||
Cash and cash equivalents
|
| | | ¥ | 350 | | |
Property and equipment−net
|
| | | | 51,832 | | |
Goodwill
|
| | | | 84,726 | | |
Asset retirement obligation
|
| | | | (48,018) | | |
Net assets assumed
|
| | | | 88,890 | | |
Fair value of the consideration transferred
|
| | | | 87,266 | | |
Gain from bargain purchases
|
| | | ¥ | 1,624 | | |
| | |
Thousands of Yen
|
| |||
Balance at December 31, 2019 | | | | | | | |
Goodwill
|
| | | ¥ | 78,282 | | |
Acquisitions of relaxation salons*
|
| | | | 84,726 | | |
Balance at June 30, 2020 | | | | | | | |
Goodwill
|
| | | ¥ | 163,008 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
As of
June 30, 2020 |
| |
As of
December 31, 2019 |
| ||||||
Unsecured bank loans (Due through 2030 with weighted average interest rates of 1.20% as of June 30, 2020, due through 2025 with weighted average interest rates of 1.74% as of December 31, 2019)
|
| | | ¥ | 557,444 | | | | | ¥ | 342,101 | | |
Current portion of long-term borrowings
|
| | | | (177,285) | | | | | | (191,570) | | |
Total long-term borrowings
|
| | | ¥ | 380,159 | | | | | ¥ | 150,531 | | |
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020 (remainder)
|
| | | ¥ | 91,783 | | |
2021
|
| | | | 122,281 | | |
2022
|
| | | | 68,460 | | |
2023
|
| | | | 61,938 | | |
2024
|
| | | | 51,972 | | |
2025 and thereafter
|
| | | | 161,010 | | |
Total
|
| | | ¥ | 557,444 | | |
|
| | |
Thousands of Yen
|
| |||||||||
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Fixed lease cost(a)
|
| | | ¥ | 372,769 | | | | | ¥ | 433,220 | | |
Variable lease cost(b)
|
| | | | 7,476 | | | | | | 14,952 | | |
Short-term cost
|
| | | | 4,458 | | | | | | 12,247 | | |
Total
|
| | | ¥ | 384,703 | | | | | ¥ | 460,419 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | | | |
Operating cash flows
|
| | | ¥ | 99,758 | | | | | ¥ | 210,917 | | |
Right-of-use assets obtained in exchange for lease liabilities
|
| | | | 189,240 | | | | | | 240,790 | | |
Weighted average remaining lease term (in years)
|
| | | | 3.1 | | | | | | 3.3 | | |
Weighted average discount rate
|
| | | | 1.45% | | | | | | 1.45% | | |
|
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020 (remainder)
|
| | | ¥ | 351,677 | | |
2021
|
| | | | 616,323 | | |
2022
|
| | | | 400,899 | | |
2023
|
| | | | 168,612 | | |
2024
|
| | | | 85,950 | | |
2025 and thereafter
|
| | | | 68,199 | | |
Total
|
| | | | 1,691,660 | | |
Less: Interest component
|
| | | | 43,661 | | |
Present value of minimum lease payments
|
| | | ¥ | 1,647,999 | | |
| | |
Thousands of Yen
|
| |||||||||
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Fixed sublease income
|
| | | ¥ | 260,194 | | | | | ¥ | 316,217 | | |
Variable sublease income
|
| | | | 5,674 | | | | | | 13,184 | | |
Total
|
| | | ¥ | 265,868 | | | | | ¥ | 329,401 | | |
| | |
Thousands of Yen
|
| |||
Year ending December 31: | | | | | | | |
2020 (remainder)
|
| | | ¥ | 218,828 | | |
2021
|
| | | | 383,353 | | |
2022
|
| | | | 235,877 | | |
2023
|
| | | | 115,395 | | |
2024
|
| | | | 53,623 | | |
2025 and thereafter
|
| | | | 39,572 | | |
Total
|
| | | ¥ | 1,046,648 | | |
| | |
Thousands of Yen
|
| |||||||||||||||||||||
| | |
Relaxation
Salon |
| |
Digital
Preventative Healthcare |
| |
Corporate and
elimination |
| |
Consolidated
|
| ||||||||||||
Six months ended June 30, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues
|
| | | ¥ | 1,344,503 | | | | | ¥ | 11,774 | | | | | ¥ | ― | | | | | ¥ | 1,356,277 | | |
Operating loss
|
| | | | (166,200) | | | | | | (21,016) | | | | | | (247,091) | | | | | | (434,307) | | |
Depreciation and amortization
|
| | | | 14,453 | | | | | | 3,771 | | | | | | 14,881 | | | | | | 33,105 | | |
Six months ended June 30, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues
|
| | | ¥ | 2,010,506 | | | | | ¥ | 21,025 | | | | | ¥ | ― | | | | | ¥ | 2,031,531 | | |
Operating income (loss)
|
| | | | 132,984 | | | | | | (18,200) | | | | | | (52,393) | | | | | | 62,391 | | |
Depreciation and amortization
|
| | | | 17,571 | | | | | | 1,191 | | | | | | 4,031 | | | | | | 22,793 | | |
| | |
Six Months Ended June 30,
|
| |||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
| | |
Common
|
| |
Class A
|
| |
Common
|
| |
Class A
|
| ||||||||||||
| | |
(Thousands of Yen)
|
| |
(Thousands of Yen)
|
| ||||||||||||||||||
Income (Numerator) | | | | | | | | | | | | | | | | | | | | | | | | | |
Net (loss) income attributable to
shareholders of the Company |
| | | ¥ | (442,971) | | | | | | ― | | | | | ¥ | 54,045 | | | | | | ― | | |
| | |
(Number of shares)
|
| |
(Number of shares)
|
| ||||||||||||||||||
Shares (Denominator) | | | | | | ||||||||||||||||||||
Weighted average shares outstanding
|
| | | | 4,022,500 | | | | | | 1 | | | | | | 3,672,500 | | | | | | 1 | | |
Effect of dilutive instruments:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Stock options
|
| | | | ― | | | | | | ― | | | | | | 530,605 | | | | | | ― | | |
Weighted average shares for diluted computation
|
| | | | 4,022,500 | | | | | | 1 | | | | | | 4,203,105 | | | | | | 1 | | |
| | |
(Yen)
|
| |
(Yen)
|
| ||||||||||||||||||
(Loss) earnings per common share attributable to
shareholders of the Company |
| | | | | ||||||||||||||||||||
Basic
|
| | | ¥ | (110.12) | | | | | ¥ | (110.12) | | | | | ¥ | 14.72 | | | | | ¥ | 14.72 | | |
Diluted
|
| | | ¥ | (110.12) | | | | | ¥ | (110.12) | | | | | ¥ | 12.86 | | | | | ¥ | 12.86 | | |
| | |
Thousands of Yen
|
| |||||||||||||||||||||
| | |
As of June 30, 2020
|
| |
As of December 31, 2019
|
| ||||||||||||||||||
| | |
Carrying
amount |
| |
Estimated
fair value |
| |
Carrying
amount |
| |
Estimated
fair value |
| ||||||||||||
Long-term borrowings – net of current portion
|
| | | ¥ | (380,159) | | | | | ¥ | (371,327) | | | | | ¥ | (150,531) | | | | | ¥ | (145,600) | | |
| Grant date | | | The date to be determined within one year from the date of the Company’s extraordinary general meeting resolution. | |
| Number of Stock Options to be granted | | | 150,000 | |
| Number of shares to be issued | | | 150,000 shares | |
| Grant date | | | The date to be determined within one year from the date of the Company’s extraordinary general meeting resolution. | |
| Number of Stock Options to be granted | | | 300,000 | |
| Number of shares to be issued | | | 300,000 shares | |
| | | | MEDIROM Healthcare Technologies Inc. | | |||
| | | | By: | | |
/s/ Kouji Eguchi
Name: Kouji Eguchi
Title: Chief Executive Officer |
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Kouji Eguchi
Kouji Eguchi
|
| | Chief Executive Officer and Representative Director (Principal Executive Officer) | | |
November 20, 2020
|
|
|
/s/ Fumitoshi Fujiwara
Fumitoshi Fujiwara
|
| | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | |
November 20, 2020
|
|
|
/s/ Miki Aoki
Miki Aoki
|
| | Director | | |
November 20, 2020
|
|
|
/s/ Akira Nojima
Akira Nojima
|
| | Independent Director | | |
November 20, 2020
|
|
|
/s/ Tomoya Ogawa
Tomoya Ogawa
|
| | Independent Director | | |
November 20, 2020
|
|
| | | | COGENCY GLOBAL INC. | | |||
| | | | By: | | |
/s/ Colleen A. De Vries
Name: Colleen A. De Vries
Title:
Sr. Vice President on behalf of Cogency Global Inc.
|
|
Exhibit 3.1
Articles of Incorporation of Kabushiki Kaisha MEDIROM
Chapter I General Provisions
Article 1 (Company Name)
The company name of this company is “Kabushiki Kaisha MEDIROM”, which is expressed in English as “MEDIROM Healthcare Technologies Inc” (hereinafter referred to as “the Company”).
Article 2 (Purposes)
The purposes of the Company are to engage in the following businesses:
1. | general consulting services related to the Internet; | |
2. | planning, operation, and sale of online advertisement in general; | |
3. | distribution and management services for online advertising; | |
4. | collection and provision of information through the medium of information equipment, systems, and the Internet as well as provision of agency services for those purposes; | |
5. | planning, design, management, and operation of information systems; | |
6. | advertising agency business (including online advertising); | |
7. | development, purchase, sale, and maintenance of computer systems; | |
8. | information processing using computers; | |
9. | e-commerce business and intermediary services for providing information by utilizing networks such as the Internet, etc.; | |
10. | services for provision of information; | |
11. | planning, design, development, manufacture, lease, export, import, sale, and provision of intermediary services for computers, peripheral equipment and software applications; | |
12. | planning and production related to advertising and publicity; | |
13. | production, export, import, sale, and provision of intermediary services for digital publications; | |
14. | marketing research and collection and analysis of various types of information; | |
15. | planning, development, design, production, sale, lease, rental, and management of system for purchasing and selling of goods by utilizing networks, such as the Internet, etc.; | |
16. | planning, production, operation, and sale of websites on the Internet; | |
17. | management of relaxation salon offices; | |
18. | management consulting services; | |
19. | planning, design, and execution of construction work; |
20. | design, manufacture, sale, lease, and provision of intermediary services for beauty and health-care equipment and peripheral equipment; | |
21. | development, planning, and proposal of new goods related to beauty and health as well as sale of medical equipment, devices and supplies, health food (enriched food), and daily household items; | |
22. | intermediary and consulting services related to alliances, mergers, and transfers of operational rights between enterprises; | |
23. | acquisition, possession, and management, etc., of securities; | |
24. | planning, development, and sale of franchises, etc.; | |
25. | general worker dispatching service and specified worker dispatching service pursuant to the Act on Securing the Proper Operation of Worker Dispatching Service and Protecting the Dispatched Workers, etc.; | |
26. | fee-charging recruiting agency service; | |
27. | planning and management of education, training, holding seminars, and lectures related to human resource development and skills development; | |
28. | distance education business; | |
29. | planning, publishing, and selling teaching materials related to human resource development and skills development; | |
30. | provision of employee education and training of various enterprises as well as lectures to various enterprises; | |
31. | insurance agency business; | |
32. | issuing prepaid payment instruments for third-party business pursuant to the Payment Services Act; and | |
33. | Any and all business incidental and relate to the above. |
Article 3 (Location of Head Office)
The Company shall have its head office in Minato-ku, Tokyo.
Article 4 (Organizational Bodies)
The Company shall have the following organizational bodies in addition to meetings of the shareholders and directors:
(1) | Board of directors; | |
(2) | Corporate auditors; |
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(3) | Board of corporate auditors; and | |
(4) | Accounting auditor. |
Article 5 (Method for Public Notice)
Public notices by the Company shall be published in a form of electronic public notice, provided, however, that in the event that the Company is unable to publish public notices in an electronic form due to accidents or any other unavoidable events, the public notices shall be published in the Japanese Official Gazette (Kampo).
Chapter II Shares
Article 6 (Total Numbers of Shares Issuable and Class Shares, etc.)
1. | The total number of shares issuable by the Company shall be ten million (10,000,000) shares. With regard to share classes, the total number of common shares issuable by the Company shall be nine million nine hundred ninety-nine thousand nine hundred ninety-nine (9,999,999) shares, and the total number of Class A shares issuable by the Company shall be one (1) share. | |
2. | The terms and conditions of the Class A share issued by the Company shall be as follows: |
(1) | Voting rights |
The Class A share shall have no voting rights at the meetings of the shareholders, provided, however, this is not the case where it is otherwise specifically provided in laws and regulations.
(2) | Dividends |
Dividends on the Class A share shall be at the same amount as the dividends on the common shares.
(3) | Distribution of residual assets |
The Class A shareholder shall have a right to demand the distribution of residual assets in the same amount as that was distributed to the holders of the common shares.
(4) | Put option and call option of class share |
(i) | The Class A shareholder may demand, at any time in writing, that the Company acquire its Class A share in exchange for payment of cash. | |
(ii) | If the Class A share is transferred to a third party, the Company may acquire the Class A share in exchange for payment of cash regardless of the intention of the transferor. In this respect, when the Class A shareholder transfers its Class A share, the Class A shareholder shall notify the Company in advance in writing of the fact that the Class A share will be transferred and the name of the transferee. |
3
(iii) | When the Class A shareholder dies, the Company shall acquire the Class A share in exchange for payment of cash. | |
(iv) | The prices of the Class A share acquired pursuant to this provision shall be the market value of common shares of the Company: on the day of demand for acquisition in case of subparagraph (i) above; or on the preceding day of the acquisition date in case of subparagraphs (ii) or (iii) above (hereinafter collectively referred to as the “Acquisition Value Base Date”). When the common shares of the Company are listed on the Tokyo Stock Exchange or other similar stock exchange, the market value on the Acquisition Value Base Date shall be the same value as the closing price per common share of the Company at the Tokyo Stock Exchange or such other similar stock exchange on the Acquisition Value Base Date. If there is no closing price on the Acquisition Value Base Date, it shall be based on the closing price on the immediately preceding day of the Acquisition Value Base Date. |
3. | When the Company through a resolution passed by a decision-making body of the Company which is statutorily provided or is set up under these Articles of Incorporation is to pass a resolution on any of the matters listed below, as provided by laws and regulations or these Articles of Incorporation, in addition to the resolution, a resolution passed by at the meeting of class shareholders consisting of the shareholder(s) having Class A share(s) shall be required. |
(1) | request to an heir, etc. to sell his or her shares to the Company; |
(2) | consolidation of shares; |
(3) | issuance of shares; |
(4) | issuance of share option rights; |
(5) | removal of a corporate auditor; |
(6) | reduction of the amount of the stated capital; |
(7) | distribution of property other than cash; |
(8) | amendment to these Articles of Incorporation, transfer of business, dissolution, or liquidation; or |
(9) | corporate restructuring, merger, share split, share exchange, or share transfer. |
4
4. | When the Company acquires the Class A share, the Company shall cancel the Class A share. |
Article 7 (Grant of Rights to Receive an Allotment of Shares)
Where the Company grants its shareholders the right to receive an allotment of its shares or treasury shares it disposes of during the solicitation period for people to subscribe for those shares, the subscription requirements and matters set forth under Article 202, Paragraph (1) of the Companies Act shall be determined by a resolution of the board of directors.
Article 8 (Shareholder Registry Administrator)
1. | The Company shall have a shareholder registry administrator. | |
2. | The shareholder registry administrator and the administrator’s office shall be determined by a resolution of the board of directors. | |
3. | Preparation and maintenance of the Company’s shareholder registry and share option rights registry and other affairs related to the Company’s shareholder registry and share option rights registry shall be entrusted to the shareholder registry administrator and shall not be handled by the Company. |
Article 9 (Rules on Handling of Shares)
The method and fees for handling the Company’s shares shall be governed by the internal rules on the handling of the shares established by the board of directors, in addition to laws and regulations and these Articles of Incorporation.
Chapter III Meeting of Shareholders
Article 10 (Convocation)
The Company shall convene an annual meeting of the shareholders within three (3) months of the last day of each fiscal year, and an extraordinary meeting of the shareholders, as and when required.
Article 11 (Record Date for Annual Shareholders Meetings)
The record date for voting rights at an annual meeting of the shareholders shall be December 31 of the preceding year.
5
Article 12 (Convener and Chairperson)
A CEO shall convene a meeting of the shareholders pursuant to a resolution passed by the board of directors and shall act as the chairman therein, unless otherwise specifically stipulated in laws, regulations or ordinances. If the CEO is unable to so convene or act due to accidents, other directors shall act in place of the CEO, in accordance with the order decided upon in advance by a resolution of the board of directors.
Article 13 (Resolution Method)
1. | Unless otherwise specifically provided by laws and regulations or these Articles of Incorporation, resolutions at a meeting of the shareholders shall be passed by a majority of the votes of shareholders present at the meeting, who are entitled to exercise the voting rights. | |
2. | Resolutions set forth in Article 309, Paragraph (2) of the Companies Act shall be passed at a meeting of the shareholders by two-thirds or more of the votes of the shareholders present at the meeting, with a quorum of one-third or more of the votes of the shareholders who are entitled to exercise their votes. |
Article 14 (Exercise of Voting Rights by Proxy)
1. | A shareholder may exercise voting rights by authorizing another shareholder who has voting rights in the Company as proxy. | |
2. | The shareholder or proxy shall present to the Company a document evidencing the authority for each meeting of the shareholders. |
Chapter IV Meetings of Class Shareholders
Article 15 (Convener and Chairperson)
A CEO shall convene a meeting of class shareholders and shall act as the chairperson herein, unless otherwise specifically stipulated in laws and regulations. If the CEO is unable to so convene due to accidents or is prevented from so convening, other directors shall convene the meeting, in accordance with the order decided up in advance.
Article 16 (Resolution Method)
1. | Unless otherwise specifically provided by laws and regulations or these Articles of Incorporation, resolutions at a meeting of the class shareholders shall be passed by a majority of the votes of class shareholders present at the meeting, who are entitled to exercise the voting rights, with a quorum of a half or more of the votes of the class shareholders who are entitled to exercise their votes. |
6
2. | Resolutions set forth in Article 324, Paragraph (2) of the Companies Act shall be passed at a meeting of the class shareholders by a two-thirds or more of the votes of the class shareholders present at the meeting, with a quorum of a half or more of the votes of the class shareholders who are entitled to exercise their votes. |
Article 17 (Exercise of Voting Rights by Proxy)
1. | A class shareholder or the class shareholder’s statutory agent may exercise voting rights by authorizing another class shareholder who has voting rights in the Company or the other class shareholder’s heir-at-law as proxy. | |
2. | The class shareholder or statutory agent referred to in the preceding paragraph shall present to the Company a document evidencing the authority for each meeting of the class shareholders. |
Chapter V Directors and Board of Directors
Article 18 (Numbers of Directors)
The number of directors of the Company shall be no more than ten (10).
Article 19 (Election of Directors and Corporate Auditors)
1. | A director of the Company shall be elected by a resolution passed by a majority of the shareholders present at a meeting of the shareholders, with a quorum of one-third or more of the votes of the shareholders who are entitled to exercise their voting rights at the meeting of the shareholders. | |
2. | No cumulative voting shall be used for the election of directors. |
Article 20 (Term of Office of Directors)
1. | The term of office of a director shall be until the conclusion of the annual meeting of the shareholders for the last fiscal year ending in one (1) year of the election. | |
2. | The term of office of a director who is elected to fill a vacancy or elected as an additional director shall be the same as the remining term of his or her predecessor or the remaining term of the other incumbent directors. |
7
Article 21 (Convocation and Chairperson of Meetings of Board of Directors)
1. | A CEO shall convene a meeting of the board of directors and shall act as the chairperson of the meetings, unless otherwise specifically stipulated in laws and regulations. If the CEO is unable to so convene or act due to accidents, other directors shall act in place of the CEO, in accordance with the order decided upon in advance by a resolution of the board of directors. | |
2. | A notice to convene a meeting of the board of directors shall be given to each director at least three (3) days before the date set for the meeting, provided, however, in case of emergency, such period may be shortened. |
Article 22 (Representative Directors)
The board of directors shall elect a representative director(s) by a resolution of the board of directors.
Article 23 (Executive Directors)
The board of directors shall elect one (1) CEO (torishimariyaku shacho), and may elect a small number of each vice-president(s) (torishimariyaku fukushacho), senior managing director(s) (senmu torishimariyaku), and managing director(s) (jomu torishimariyaku), as it may be necessary, from among the directors by a resolution of the board of directors.
Article 24 (Waiver of Resolution of Board of Directors)
The Company may deem that a resolution was passed where the requirements under Article 370 of the Companies Act are satisfied.
Article 25 (Rules Concerning Board of Directors)
Any matter related to the board of directors shall be governed by the internal rules concerning the board of directors established by the board of directors as well as laws, regulations and these Articles of Incorporation.
Article 26 (Remuneration)
Any remuneration, bonus and other financial benefit (the “Remuneration, etc.”) to be received by the directors as consideration for the performance of their duties from the Company shall be determined by a resolution at a meeting of the shareholders.
8
Article 27 (Directors Liability Exemption)
1. | Pursuant to the provisions of Article 426, Paragraph 1 of the Companies Act, the Company may exempt directors (including former directors) from their liabilities for loss or damage arising from their negligence or willful misconduct to the extent permitted by laws and regulations by a resolution of the board of directors. | |
2. | Pursuant to the provisions of Article 427 of the Companies Act, the Company may enter into an agreement with non-executive directors to limit their liabilities for loss or damage arising from their conducts under Article 423 of the Companies Act, provided, however, that the maximum amount that the Company may limit under such agreement shall be the higher of: (i) the amount greater than one million (1,000,000) yen and set out in the agreement; and (ii) the amount stipulated in laws and regulations. |
Chapter VI Corporate Auditors and Board of Corporate Auditors
Article 28 (Number of Corporate Auditors)
The number of corporate auditors of the Company shall be no more than three (3).
Article 29 (Election of Corporate Auditors)
The election of corporate auditors of the Company shall be made by a resolution passed by a majority of shareholders entitled to exercise their voting rights, with a quorum of one-third or more of the votes of shareholders who are entitled to exercise their voting rights at the meeting of the shareholders.
Article 30 (Term of Office of Corporate Auditors)
1. | The term of office of a corporate auditor shall be until the conclusion of the annual meeting of the shareholders for the last fiscal year ending within four (4) years of the election. | |
2. | The term of office of a corporate auditor who is elected to fill a vacancy shall be the same as the remaining term of his or her predecessor. |
Article 31 (Convocation of Meetings of Board of Corporate Auditors)
1. | A notice to convene a meeting of the board of corporate auditors shall be given to each corporate auditor at least three (3) days before the date set for the meeting, provided, however, in case of emergency, such period may be shortened. | |
2. | A meeting of the board of corporate auditors may be held without the convocation procedures if all corporate auditors consent. |
9
Article 32 (Full-Time Corporate Auditor)
The board of corporate auditors shall elect full-time corporate auditor(s) by its resolution.
Article 33 (Rules Concerning the Board of Corporate Auditors)
Any matter related to the board of corporate auditors shall be governed by internal rules concerning the board of corporate auditors established by the board of corporate auditors as well as laws, regulations and these Articles of Incorporation.
Article 34 (Remuneration)
Remuneration, etc. for corporate auditors shall be determined by a resolution at a meeting of the shareholders.
Article 35 (Corporate Auditors Liability Exemption)
1. | Pursuant to the provisions of Article 426, Paragraph 1 of the Companies Act, the Company may exempt corporate auditors (including former corporate auditors) from their liabilities for loss or damage arising from negligence or willful misconduct to the extent permitted by laws and regulations by a resolution of the board of directors. | |
2. | Pursuant to the provisions of Article 427 of the Companies Act, the Company may enter into an agreement with corporate auditor to limit their liabilities for loss or damage arising from their conducts under Article 423 of the Companies Act, provided, however, that the maximum amount that the Company may limit under such agreement shall be the higher of: (i) the amount greater than one million (1,000,000) yen and set out in the agreement; and (ii) the amount stipulated in laws and regulations. |
Chapter VII Financial Auditor
Article 36 (Election)
Financial auditor shall be elected by a resolution at a meeting of the shareholders.
10
Article 37 (Term of Office)
1. | The term of office of financial auditor shall be until the conclusion of the annual meeting of the shareholders for the last fiscal year ending within one (1) year of the election. | |
2. | Unless otherwise specifically resolved at the annual meeting of the shareholders, the financial auditor shall be deemed reelected at such annual meeting of the shareholders. |
Chapter VIII Accounts
Article 38 (Fiscal Year)
The Company’s fiscal year shall be a period of one calendar year from January 1 of each year to December 31 of the same year.
Article 39 (Record Date for Dividends from Surplus)
1. | The record date for the year-end dividend of the Company shall be December 31 of each year. | |
2. | In addition to the preceding paragraph, the Company may set a record date to distribute surplus. |
Article 40 (Statute of Limitations on Dividends)
1. | If amounts concerning the dividend are not received after three (3) full years have passed since the date on which the payment of such dividend was attempted, the Company shall be released from its obligation to pay such dividend. | |
2. | No interest shall accrue on the outstanding amount of dividend. |
- END -
11
Exhibit 4.1
MEDIROM HEALTHCARE TECHNOLOGIES INC.
AND
THE BANK OF NEW YORK MELLON
As Depositary
AND
OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES
Deposit Agreement
__________, 2020
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS | 1 |
SECTION 1.1. American Depositary Shares | 1 |
SECTION 1.2. Commission | 2 |
SECTION 1.3. Company | 2 |
SECTION 1.4. Custodian | 2 |
SECTION 1.5. Deliver; Surrender | 2 |
SECTION 1.6. Deposit Agreement | 3 |
SECTION 1.7. Depositary; Depositary’s Office | 3 |
SECTION 1.8. Deposited Securities | 3 |
SECTION 1.9. Disseminate | 3 |
SECTION 1.10. Dollars | 3 |
SECTION 1.11. DTC | 4 |
SECTION 1.12. FEFTA | 4 |
SECTION 1.13. Foreign Registrar | 4 |
SECTION 1.14. Holder | 4 |
SECTION 1.15. Owner | 4 |
SECTION 1.16. Receipts | 4 |
SECTION 1.17. Registrar | 4 |
SECTION 1.18. Replacement | 5 |
SECTION 1.19. Restricted Securities | 5 |
SECTION 1.20. Securities Act of 1933 | 5 |
SECTION 1.21. Shares | 5 |
SECTION 1.22. SWIFT | 5 |
SECTION 1.23. Termination Option Event | 5 |
ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES | 6 |
SECTION 2.1. Form of Receipts; Registration and Transferability of American Depositary Shares | 6 |
SECTION 2.2. Deposit of Shares | 7 |
SECTION 2.3. Delivery of American Depositary Shares | 8 |
SECTION 2.4. Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated American Depositary Shares | 9 |
SECTION 2.5. Surrender of American Depositary Shares and Withdrawal of Deposited Securities | 10 |
SECTION 2.6. Limitations on Delivery, Registration of Transfer and Surrender of American Depositary Shares | 11 |
SECTION 2.7. Lost Receipts, etc. | 12 |
-i-
SECTION 2.8. Cancellation and Destruction of Surrendered Receipts | 12 |
SECTION 2.9. DTC Direct Registration System and Profile Modification System | 12 |
ARTICLE 3. CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES | 13 |
SECTION 3.1. Filing Proofs, Certificates and Other Information | 13 |
SECTION 3.2. Liability of Owner for Taxes | 13 |
SECTION 3.3. Warranties on Deposit of Shares | 14 |
SECTION 3.4. Disclosure of Interests | 14 |
ARTICLE 4. THE DEPOSITED SECURITIES | 15 |
SECTION 4.1. Cash Distributions | 15 |
SECTION 4.2. Distributions Other Than Cash, Shares or Rights | 16 |
SECTION 4.3. Distributions in Shares | 17 |
SECTION 4.4. Rights | 17 |
SECTION 4.5. Conversion of Foreign Currency | 18 |
SECTION 4.6. Fixing of Record Date | 20 |
SECTION 4.7. Voting of Deposited Shares | 21 |
SECTION 4.8. Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities | 22 |
SECTION 4.9. Reports | 23 |
SECTION 4.10. Lists of Owners | 24 |
SECTION 4.11. Withholding | 24 |
ARTICLE 5. THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY | 24 |
SECTION 5.1. Maintenance of Office and Register by the Depositary | 24 |
SECTION 5.2. Prevention or Delay of Performance by the Company or the Depositary | 25 |
SECTION 5.3. Obligations of the Depositary and the Company | 26 |
SECTION 5.4. Resignation and Removal of the Depositary | 27 |
SECTION 5.5. The Custodians | 28 |
SECTION 5.6. Notices and Reports | 28 |
SECTION 5.7. Distribution of Additional Shares, Rights, etc. | 29 |
SECTION 5.8. Indemnification | 29 |
SECTION 5.9. Charges of Depositary | 30 |
SECTION 5.10. Retention of Depositary Documents | 31 |
SECTION 5.11. Exclusivity | 31 |
SECTION 5.12. Information for Regulatory Compliance | 31 |
-ii-
ARTICLE 6. AMENDMENT AND TERMINATION | 31 |
SECTION 6.1. Amendment | 31 |
SECTION 6.2. Termination | 32 |
ARTICLE 7. MISCELLANEOUS | 33 |
SECTION 7.1. Counterparts; Signatures; Delivery | 33 |
SECTION 7.2. No Third Party Beneficiaries | 33 |
SECTION 7.3. Severability | 33 |
SECTION 7.4. Owners and Holders as Parties; Binding Effect | 34 |
SECTION 7.5. Notices | 34 |
SECTION 7.6. Appointment of Agent for Service of Process; Submission to Jurisdiction; Jury Trial Waiver | 35 |
SECTION 7.7. Waiver of Immunities | 35 |
SECTION 7.8. Governing Law | 36 |
-iii-
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of __________, 2020 among MEDIROM HEALTHCARE TECHNOLOGIES INC., a company incorporated under the laws of Japan (herein called the Company), THE BANK OF NEW YORK MELLON, a New York banking corporation (herein called the Depositary), and all Owners and Holders (each as hereinafter defined) from time to time of American Depositary Shares issued hereunder.
W I T N E S S E T H:
WHEREAS, the Company desires to provide, as set forth in this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of the Company from time to time with the Depositary or with the Custodian (as hereinafter defined) under this Deposit Agreement, for the creation of American Depositary Shares representing the Shares so deposited and for the execution and delivery of American Depositary Receipts evidencing the American Depositary Shares; and
WHEREAS, the American Depositary Receipts are to be substantially in the form of Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as set forth in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties hereto as follows:
ARTICLE 1. DEFINITIONS
The following definitions shall for all purposes, unless otherwise clearly indicated, apply to the respective terms used in this Deposit Agreement:
SECTION 1.1. American Depositary Shares.
The term “American Depositary Shares” shall mean the securities created under this Deposit Agreement representing rights with respect to the Deposited Securities. American Depositary Shares may be certificated securities evidenced by Receipts or uncertificated securities. The form of Receipt annexed as Exhibit A to this Deposit Agreement shall be the prospectus required under the Securities Act of 1933 for sales of both certificated and uncertificated American Depositary Shares. Except for those provisions of this Deposit Agreement that refer specifically to Receipts, all the provisions of this Deposit Agreement shall apply to both certificated and uncertificated American Depositary Shares.
Each American Depositary Share shall represent the number of Shares specified in Exhibit A to this Deposit Agreement, except that, if there is a distribution upon Deposited Securities covered by Section 4.3, a change in Deposited Securities covered by Section 4.8 with respect to which additional American Depositary Shares are not delivered or a sale of Deposited Securities under Section 3.2 or 4.8, each American Depositary Share shall thereafter represent the amount of Shares or other Deposited Securities that are then on deposit per American Depositary Share after giving effect to that distribution, change or sale.
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SECTION 1.2. Commission.
The term “Commission” shall mean the Securities and Exchange Commission of the United States or any successor governmental agency in the United States.
SECTION 1.3. Company.
The term “Company” shall mean MEDIROM Healthcare Technologies Inc., a company incorporated under the laws of Japan, and its successors.
SECTION 1.4. Custodian.
The term “Custodian” shall mean MUFG Bank Ltd., as custodian for the Depositary in Japan for the purposes of this Deposit Agreement, and any other firm or corporation the Depositary appoints under Section 5.5 as a substitute or additional custodian under this Deposit Agreement, and shall also mean all of them collectively.
SECTION 1.5. Deliver; Surrender.
(a) The term “deliver”, or its noun form, when used with respect to Shares or other Deposited Securities, shall mean (i) book-entry transfer of those Shares or other Deposited Securities to an account maintained by an institution authorized under applicable law to effect transfers of such securities designated by the person entitled to that delivery or (ii) physical transfer of certificates evidencing those Shares or other Deposited Securities registered in the name of, or duly endorsed or accompanied by proper instruments of transfer to, the person entitled to that delivery.
(b) The term “deliver”, or its noun form, when used with respect to American Depositary Shares, shall mean (i) registration of those American Depositary Shares in the name of DTC or its nominee and book-entry transfer of those American Depositary Shares to an account at DTC designated by the person entitled to that delivery, (ii) registration of those American Depositary Shares not evidenced by a Receipt on the books of the Depositary in the name requested by the person entitled to that delivery and mailing to that person of a statement confirming that registration or (iii) if requested by the person entitled to that delivery, execution and delivery at the Depositary’s Office to the person entitled to that delivery of one or more Receipts evidencing those American Depositary Shares registered in the name requested by that person.
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(c) The term “surrender”, when used with respect to American Depositary Shares, shall mean (i) one or more book-entry transfers of American Depositary Shares to the DTC account of the Depositary, (ii) delivery to the Depositary at its Office of an instruction to surrender American Depositary Shares not evidenced by a Receipt or (iii) surrender to the Depositary at its Office of one or more Receipts evidencing American Depositary Shares.
SECTION 1.6. Deposit Agreement.
The term “Deposit Agreement” shall mean this Deposit Agreement, as it may be amended from time to time in accordance with the provisions of this Deposit Agreement.
SECTION 1.7. Depositary; Depositary’s Office.
The term “Depositary” shall mean The Bank of New York Mellon, a New York banking corporation, and any successor as depositary under this Deposit Agreement. The term “Office”, when used with respect to the Depositary, shall mean the office at which its depositary receipts business is administered, which, at the date of this Deposit Agreement, is located at 240 Greenwich Street, New York, New York 10286.
SECTION 1.8. Deposited Securities.
The term “Deposited Securities” as of any time shall mean Shares at such time deposited or deemed to be deposited under this Deposit Agreement, including without limitation, Shares that have not been successfully delivered upon surrender of American Depositary Shares, and any and all other securities, property and cash received by the Depositary or the Custodian in respect of Deposited Securities and at that time held under this Deposit Agreement.
SECTION 1.9. Disseminate.
The term “Disseminate,” when referring to a notice or other information to be sent by the Depositary to Owners, shall mean (i) sending that information to Owners in paper form by mail or another means or (ii) with the consent of Owners, another procedure that has the effect of making the information available to Owners, which may include (A) sending the information by electronic mail or electronic messaging or (B) sending in paper form or by electronic mail or messaging a statement that the information is available and may be accessed by the Owner on an Internet website and that it will be sent in paper form upon request by the Owner, when that information is so available and is sent in paper form as promptly as practicable upon request.
SECTION 1.10. Dollars.
The term “Dollars” shall mean United States dollars.
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SECTION 1.11. DTC.
The term “DTC” shall mean The Depository Trust Company or its successor.
SECTION 1.12. FEFTA.
The term “FEFTA” shall mean the Japanese Foreign Exchange and Foreign Trade Act and related regulations.
SECTION 1.13. Foreign Registrar.
The term “Foreign Registrar” shall mean the entity that carries out the duties of registrar for the Shares and any other agent of the Company for the transfer and registration of Shares, including, without limitation, any securities depository for the Shares.
SECTION 1.14. Holder.
The term “Holder” shall mean any person holding a Receipt or a security entitlement or other interest in American Depositary Shares, whether for its own account or for the account of another person, but that is not the Owner of that Receipt or those American Depositary Shares.
SECTION 1.15. Owner.
The term “Owner” shall mean the person in whose name American Depositary Shares are registered on the books of the Depositary maintained for that purpose.
SECTION 1.16. Receipts.
The term “Receipts” shall mean the American Depositary Receipts issued under this Deposit Agreement evidencing certificated American Depositary Shares, as the same may be amended from time to time in accordance with the provisions of this Deposit Agreement.
SECTION 1.17. Registrar.
The term “Registrar” shall mean any corporation or other entity that is appointed by the Depositary to register American Depositary Shares and transfers of American Depositary Shares as provided in this Deposit Agreement.
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SECTION 1.18. Replacement.
The term “Replacement” shall have the meaning assigned to it in Section 4.8.
SECTION 1.19. Restricted Securities.
The term “Restricted Securities” shall mean Shares that (i) are “restricted securities,” as defined in Rule 144 under the Securities Act of 1933, except for Shares that could be resold in reliance on Rule 144 without any conditions, (ii) are beneficially owned by an officer, director (or person performing similar functions) or other affiliate of the Company, (iii) otherwise would require registration under the Securities Act of 1933 in connection with the public offer and sale thereof in the United States or (iv) are subject to other restrictions on sale or deposit under the laws of Japan, a shareholder agreement or the articles of association or similar document of the Company.
SECTION 1.20. Securities Act of 1933.
The term “Securities Act of 1933” shall mean the United States Securities Act of 1933, as from time to time amended.
SECTION 1.21. Shares.
The term “Shares” shall mean common shares of the Company that are validly issued and outstanding, fully paid and nonassessable and that were not issued in violation of any pre-emptive or similar rights of the holders of outstanding securities of the Company; provided, however, that, if there shall occur any change in nominal or par value, a split-up or consolidation or any other reclassification or, upon the occurrence of an event described in Section 4.8, an exchange or conversion in respect of the Shares of the Company, the term “Shares” shall thereafter also mean the successor securities resulting from such change in nominal value, split-up or consolidation or such other reclassification or such exchange or conversion.
SECTION 1.22. SWIFT.
The term “SWIFT” shall mean the financial messaging network operated by the Society for Worldwide Interbank Financial Telecommunication, or its successor.
SECTION 1.23. Termination Option Event.
The term “Termination Option Event” shall mean any of the following events or conditions:
(i) the Company institutes proceedings to be adjudicated as bankrupt or insolvent, consents to the institution of bankruptcy or insolvency proceedings against it, files a petition or answer or consent seeking reorganization or relief under any applicable law in respect of bankruptcy or insolvency, consents to the filing of any petition of that kind or to the appointment of a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of it or any substantial part of its property or makes an assignment for the benefit of creditors, or if information becomes publicly available indicating that unsecured claims against the Company are not expected to be paid;
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(ii) the Shares are delisted, or the Company announces its intention to delist the Shares, from a stock exchange outside the United States, and the Company has not applied to list the Shares on any other stock exchange outside the United States;
(iii) the American Depositary Shares are delisted from a stock exchange in the United States on which the American Depositary Shares were listed and, 30 days after that delisting, the American Depositary Shares have not been listed on another stock exchange in the United States, nor is there a symbol available for over-the-counter trading of the American Depositary Shares in the United States;
(iv) the Depositary has received notice of facts that indicate, or otherwise has reason to believe, that the American Depositary Shares have become, or with the passage of time will become, ineligible for registration on Form F-6 under the Securities Act of 1933; or
(v) an event or condition that is defined as a Termination Option Event in Section 4.1, 4.2 or 4.8.
ARTICLE 2. | FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES |
SECTION 2.1. Form of Receipts; Registration and Transferability of American Depositary Shares.
Definitive Receipts shall be substantially in the form set forth in Exhibit A to this Deposit Agreement, with appropriate insertions, modifications and omissions, as permitted under this Deposit Agreement. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose, unless that Receipt has been (i) executed by the Depositary by the manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the Depositary or the Registrar or a co-registrar. The Depositary shall maintain books on which (x) each Receipt so executed and delivered as provided in this Deposit Agreement and each transfer of that Receipt and (y) all American Depositary Shares delivered as provided in this Deposit Agreement and all registrations of transfer of American Depositary Shares, shall be registered. A Receipt bearing the facsimile signature of a person that was at any time a proper officer of the Depositary shall, subject to the other provisions of this paragraph, bind the Depositary, even if that person was not a proper officer of the Depositary on the date of issuance of that Receipt.
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The Receipts and statements confirming registration of American Depositary Shares may have incorporated in or attached to them such legends or recitals or modifications not inconsistent with the provisions of this Deposit Agreement as may be required by the Depositary or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which American Depositary Shares may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts and American Depositary Shares are subject by reason of the date of issuance of the underlying Deposited Securities or otherwise.
American Depositary Shares evidenced by a Receipt, when the Receipt is properly endorsed or accompanied by proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York. American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under this Deposit Agreement to any Holder of American Depositary Shares (but only to the Owner of those American Depositary Shares).
SECTION 2.2. Deposit of Shares.
Subject to the terms and conditions of this Deposit Agreement, Shares or evidence of rights to receive Shares may be deposited under this Deposit Agreement by delivery thereof to any Custodian, accompanied by any appropriate instruments or instructions for transfer, or endorsement, in form satisfactory to the Custodian.
As conditions of accepting Shares for deposit, the Depositary may require (i) any certification required by the Depositary or the Custodian in accordance with the provisions of this Deposit Agreement, (ii) a written order directing the Depositary to deliver to, or upon the written order of, the person or persons stated in that order American Depositary Shares representing those deposited Shares, (iii) evidence satisfactory to the Depositary that those Shares have been re-registered in the books of the Company or the Foreign Registrar in the name of the Depositary, a Custodian or a nominee of the Depositary or a Custodian, (iv) evidence satisfactory to the Depositary that any necessary approval for the transfer or deposit has been granted by any governmental body in each applicable jurisdiction and (v) an agreement or assignment, or other instrument satisfactory to the Depositary, that provides for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other property, that any person in whose name those Shares are or have been recorded may thereafter receive upon or in respect of those Shares, or, in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the Depositary.
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The Depositary has been advised that, as of the date of this Deposit Agreement, under FEFTA, it must obtain pre-clearance from the applicable Japanese governmental authority prior to accepting Shares for deposit and that the applicable governmental authority may take up to 30 days to respond to applications for that pre-clearance. Accordingly, persons wishing to deposit Shares should notify the Depositary of that desire at least 30 days in advance. The Depositary shall not accept Shares for deposit until any required pre-clearance has been obtained. The Depositary has been advised that, as of the date of this Deposit Agreement, FEFTA also requires it to notify the applicable governmental authority within 45 days after accepting Shares for deposit. The Company agrees to reimburse the Depositary for its expenses, including fees and expenses of counsel, for applying for any required pre-clearance or notification in connection with deposits of Shares.
At the request and risk and expense of a person proposing to deposit Shares, and for the account of that person, the Depositary may receive certificates for Shares to be deposited, together with the other instruments specified in this Section, for the purpose of forwarding those Share certificates to the Custodian for deposit under this Deposit Agreement.
The Depositary shall instruct each Custodian that, upon each delivery to a Custodian of a certificate or certificates for Shares to be deposited under this Deposit Agreement, together with the other documents specified in this Section, that Custodian shall, as soon as transfer and recordation can be accomplished, present that certificate or those certificates to the Company or the Foreign Registrar, if applicable, for transfer and recordation of the Shares being deposited in the name of the Depositary or its nominee or that Custodian or its nominee.
Deposited Securities shall be held by the Depositary or by a Custodian for the account and to the order of the Depositary or at such other place or places as the Depositary shall determine.
SECTION 2.3. Delivery of American Depositary Shares.
The Depositary shall instruct each Custodian that, upon receipt by that Custodian of any deposit pursuant to Section 2.2, together with the other documents or evidence required under that Section, that Custodian shall notify the Depositary of that deposit and the person or persons to whom or upon whose written order American Depositary Shares are deliverable in respect thereof. Upon receiving a notice of a deposit from a Custodian, or upon the receipt of Shares or evidence of the right to receive Shares by the Depositary, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall deliver, to or upon the order of the person or persons entitled thereto, the number of American Depositary Shares issuable in respect of that deposit, but only upon payment to the Depositary of the fees and expenses of the Depositary for the delivery of those American Depositary Shares as provided in Section 5.9, and of all taxes and governmental charges and fees payable in connection with that deposit and the transfer of the deposited Shares. However, the Depositary shall deliver only whole numbers of American Depositary Shares.
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SECTION 2.4. Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated American Depositary Shares.
The Depositary, subject to the terms and conditions of this Deposit Agreement, shall register a transfer of American Depositary Shares on its transfer books upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Upon registration of a transfer, the Depositary shall deliver the transferred American Depositary Shares to or upon the order of the person entitled thereto.
The Depositary, subject to the terms and conditions of this Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.
The Depositary, upon surrender of certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel the Receipt evidencing those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9) from the Owner of uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and register and deliver to the Owner a Receipt evidencing the same number of certificated American Depositary Shares.
The Depositary may appoint one or more co-transfer agents for the purpose of effecting registration of transfers of American Depositary Shares and combinations and split-ups of Receipts at designated transfer offices on behalf of the Depositary. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Owners or persons entitled to American Depositary Shares and will be entitled to protection and indemnity to the same extent as the Depositary.
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SECTION 2.5. Surrender of American Depositary Shares and Withdrawal of Deposited Securities.
Upon surrender of American Depositary Shares for the purpose of withdrawal of the Deposited Securities represented thereby and payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.9 and payment of all taxes and governmental charges payable in connection with that surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of this Deposit Agreement, the Owner of those American Depositary Shares shall be entitled to delivery (to the extent delivery can then be lawfully and practicably made), to or as instructed by that Owner, of the amount of Deposited Securities at the time represented by those American Depositary Shares, but not any money or other property as to which a record date for distribution to Owners has passed (since money or other property of that kind will be delivered or paid on the scheduled payment date to the Owner as of that record date), and except that the Depositary shall not be required to accept surrender of American Depositary Shares for the purpose of withdrawal to the extent it would require delivery of a fraction of a Deposited Security. That delivery shall be made, as provided in this Section, without unreasonable delay.
As a condition of accepting a surrender of American Depositary Shares for the purpose of withdrawal of Deposited Securities, the Depositary may require (i) that each surrendered Receipt be properly endorsed in blank or accompanied by proper instruments of transfer in blank and (ii) that the surrendering Owner execute and deliver to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be delivered to or upon the written order of a person or persons designated in that order.
Thereupon, the Depositary shall direct the Custodian to deliver, subject to Sections 2.6, 3.1 and 3.2, the other terms and conditions of this Deposit Agreement and local market rules and practices, to the surrendering Owner or to or upon the written order of the person or persons designated in the order delivered to the Depositary as above provided, the amount of Deposited Securities represented by the surrendered American Depositary Shares, and the Depositary may charge the surrendering Owner a fee and its expenses for giving that direction by cable (including SWIFT) or facsimile transmission.
If Deposited Securities are delivered physically upon surrender of American Depositary Shares for the purpose of withdrawal, that delivery will be made at the Custodian’s office, except that, at the request, risk and expense of an Owner surrendering American Depositary Shares for withdrawal of Deposited Securities, and for the account of that Owner, the Depositary shall direct the Custodian to forward any cash or other property comprising, and forward a certificate or certificates, if applicable, and other proper documents of title, if any, for, the Deposited Securities represented by the surrendered American Depositary Shares to the Depositary for delivery at the Depositary’s Office or to another address specified in the order received from the surrendering Owner.
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The Depositary has been advised that, as of the date of this Deposit Agreement, under FEFTA, any Foreign Investor (as defined under FEFTA) expecting to receive delivery of Shares upon surrender of American Depositary Shares must obtain pre-clearance from the applicable Japanese governmental authority prior to accepting that delivery and that the applicable governmental authority may take up to 30 days to respond to applications for that pre-clearance. Accordingly, Owners that are Foreign Investors wishing to surrender American Depositary Shares for the purpose of withdrawal of deposited Shares should apply or advise the persons to whom they intend to direct delivery of Shares to apply for pre-clearance at least 30 days in advance. The Depositary shall not accept surrender of American Depositary Shares for the purpose of withdrawal of Shares until it receives assurances satisfactory to it that any required pre-clearance for delivery of the Shares to be withdrawn to a Foreign Investor has been obtained. The Depositary has been further advised that, as of the date of this Deposit Agreement, under FEFTA, it must notify the applicable Japanese governmental authority within 45 days whenever it delivers deposited Shares upon a surrender of American Depositary Shares. The Company agrees to reimburse the Depositary for its expenses, including fees and expenses of counsel, for making required notifications of that kind.
SECTION 2.6. Limitations on Delivery, Registration of Transfer and Surrender of American Depositary Shares.
As a condition precedent to the delivery, registration of transfer or surrender of any American Depositary Shares or split-up or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, Custodian or Registrar may require payment from the depositor of Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in this Deposit Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Depositary may establish consistent with the provisions of this Deposit Agreement, including, without limitation, this Section 2.6.
The Depositary may refuse to accept deposits of Shares for delivery of American Depositary Shares or to register transfers of American Depositary Shares in particular instances, or may suspend deposits of Shares or registration of transfer generally, whenever it or the Company considers it necessary or advisable to do so. The Depositary may refuse surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities in particular instances, or may suspend surrenders for the purpose of withdrawal generally, but, notwithstanding anything to the contrary in this Deposit Agreement, only for (i) temporary delays caused by closing of the Depositary’s register or the register of holders of Shares maintained by the Company or the Foreign Registrar, or the deposit of Shares, in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities or (iv) any other reason that, at the time, is permitted under paragraph I(A)(1) of the General Instructions to Form F-6 under the Securities Act of 1993 or any successor to that provision.
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The Depositary shall not knowingly accept for deposit under this Deposit Agreement any Shares that, at the time of deposit, are Restricted Securities.
SECTION 2.7. Lost Receipts, etc.
If a Receipt is mutilated, destroyed, lost or stolen, the Depositary shall deliver to the Owner the American Depositary Shares evidenced by that Receipt in uncertificated form or, if requested by the Owner, execute and deliver a new Receipt of like tenor in exchange and substitution for such mutilated Receipt, upon surrender and cancellation of that mutilated Receipt, or in lieu of and in substitution for that destroyed, lost or stolen Receipt. However, before the Depositary will deliver American Depositary Shares in uncertificated form or execute and deliver a new Receipt, in substitution for a destroyed, lost or stolen Receipt, the Owner must (a) file with the Depositary (i) a request for that replacement before the Depositary has notice that the Receipt has been acquired by a bona fide purchaser and (ii) a sufficient indemnity bond and (b) satisfy any other reasonable requirements imposed by the Depositary.
SECTION 2.8. Cancellation and Destruction of Surrendered Receipts.
The Depositary shall cancel all Receipts surrendered to it and is authorized to destroy Receipts so cancelled.
SECTION 2.9. DTC Direct Registration System and Profile Modification System.
(a) Notwithstanding the provisions of Section 2.4, the parties acknowledge that DTC’s Direct Registration System (“DRS”) and Profile Modification System (“Profile”) apply to the American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated securities and holding of security entitlements in those securities through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register that transfer.
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(b) In connection with DRS/Profile, the parties acknowledge that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an Owner in requesting a registration of transfer and delivery as described in paragraph (a) above has the actual authority to act on behalf of that Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.3 and 5.8 apply to the matters arising from the use of the DRS/Profile. The parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile system and otherwise in accordance with this Deposit Agreement shall not constitute negligence or bad faith on the part of the Depositary.
ARTICLE 3. | CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES |
SECTION 3.1. Filing Proofs, Certificates and Other Information.
Any person presenting Shares for deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper. The Depositary may withhold the delivery or registration of transfer of American Depositary Shares, the distribution of any dividend or other distribution or of the proceeds thereof or the delivery of any Deposited Securities until that proof or other information is filed or those certificates are executed or those representations and warranties are made.
SECTION 3.2. Liability of Owner for Taxes.
If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to or in connection with any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares or in connection with a transaction to which Section 4.8 applies, that tax or other governmental charge shall be payable by the Owner of those American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until that payment is made, and may withhold any dividends or other distributions or the proceeds thereof, or may sell for the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares and apply those dividends or other distributions or the net proceeds of any sale of that kind in payment of that tax or other governmental charge but, even after a sale of that kind, the Owner of those American Depositary Shares shall remain liable for any deficiency. The Depositary shall distribute any net proceeds of a sale made under this Section that are not used to pay taxes or governmental charges to the Owners entitled to them in accordance with Section 4.1. If the number of Shares represented by each American Depositary Share decreases as a result of a sale of Deposited Securities under this Section, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.
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SECTION 3.3. Warranties on Deposit of Shares.
Every person depositing Shares under this Deposit Agreement shall be deemed thereby to represent and warrant that those Shares and each certificate therefor, if applicable, are validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of the holders of outstanding securities of the Company and that the person making that deposit is duly authorized so to do. Every depositing person shall also be deemed to represent that the Shares, at the time of deposit, are not Restricted Securities. All representations and warranties deemed made under this Section shall survive the deposit of Shares and delivery of American Depositary Shares.
SECTION 3.4. Disclosure of Interests.
When required in order to comply with applicable laws and regulations or the articles of association or similar document of the Company, the Company may from time to time request each Owner and Holder to provide to the Depositary information relating to: (a) the capacity in which it holds American Depositary Shares, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests and (c) any other matter where disclosure of such matter is required for that compliance. Each Owner and Holder agrees to provide all information known to it in response to a request made pursuant to this Section. Each Holder consents to the disclosure by the Depositary and the Owner or any other Holder through which it holds American Depositary Shares, directly or indirectly, of all information responsive to a request made pursuant to this Section relating to that Holder that is known to that Owner or other Holder. The Depositary agrees to use reasonable efforts to comply with written instructions requesting that the Depositary forward any request authorized under this Section to the Owners and to forward to the Company any responses it receives in response to that request. The Depositary may charge the Company a fee and its expenses for complying with requests under this Section 3.4.
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ARTICLE 4. | THE DEPOSITED SECURITIES |
SECTION 4.1. Cash Distributions.
Whenever the Depositary receives any cash dividend or other cash distribution on Deposited Securities, the Depositary shall, subject to the provisions of Section 4.5, convert that dividend or other distribution into Dollars and distribute the amount thus received (net of the fees and expenses of the Depositary as provided in Section 5.9) to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing those Deposited Securities held by them respectively; provided, however, that if the Custodian or the Depositary shall be required to withhold and does withhold from that cash dividend or other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing those Deposited Securities shall be reduced accordingly. However, the Depositary will not pay any Owner a fraction of one cent, but will round each Owner’s entitlement to the nearest whole cent.
The Company or its agent will remit to the appropriate governmental agency in each applicable jurisdiction all amounts withheld and owing to such agency. The Depositary will forward to the Company or its agent such information from its records as the Company may reasonably request in writing, at the Company’s expense, to enable the Company or its agent to file necessary reports with governmental agencies.
If a cash distribution would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:
(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that cash distribution; or
(ii) sell all Deposited Securities other than the subject cash distribution and add any net cash proceeds of that sale to the cash distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that cash distribution.
If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.
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SECTION 4.2. Distributions Other Than Cash, Shares or Rights.
Subject to the provisions of Sections 4.11 and 5.9, whenever the Depositary receives any distribution other than a distribution described in Section 4.1, 4.3 or 4.4 on Deposited Securities (but not in exchange for or in conversion or in lieu of Deposited Securities), the Depositary shall cause the securities or property received by it to be distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary and any taxes or other governmental charges, in proportion to the number of American Depositary Shares representing such Deposited Securities held by them respectively, in any manner that the Depositary deems equitable and practicable for accomplishing that distribution (which may be a distribution of depositary shares representing the securities received); provided, however, that if in the opinion of the Depositary such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that the Company or the Depositary withhold an amount on account of taxes or other governmental charges or that securities received must be registered under the Securities Act of 1933 in order to be distributed to Owners or Holders) the Depositary deems such distribution not to be lawful and feasible, the Depositary may adopt such other method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and distribution of the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Section 5.9) to the Owners entitled thereto, all in the manner and subject to the conditions set forth in Section 4.1. The Depositary may withhold any distribution of securities under this Section 4.2 if it has not received satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Section 4.2 that is sufficient to pay its fees and expenses in respect of that distribution.
If a distribution to be made under this Section 4.2 would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:
(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that distribution; or
(ii) sell all Deposited Securities other than the subject distribution and add any net cash proceeds of that sale to the distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that distribution.
If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.
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SECTION 4.3. Distributions in Shares.
Whenever the Depositary receives any distribution on Deposited Securities consisting of a dividend in, or free distribution of, Shares, the Depositary may deliver to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing those Deposited Securities held by them respectively, an aggregate number of American Depositary Shares representing the amount of Shares received as that dividend or free distribution, subject to the terms and conditions of this Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including withholding of any tax or governmental charge as provided in Section 4.11 and payment of the fees and expenses of the Depositary as provided in Section 5.9 (and the Depositary may sell, by public or private sale, an amount of the Shares received (or American Depositary Shares representing those Shares) sufficient to pay its fees and expenses in respect of that distribution). In lieu of delivering fractional American Depositary Shares, the Depositary may sell the amount of Shares represented by the aggregate of those fractions (or American Depositary Shares representing those Shares) and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1. If and to the extent that additional American Depositary Shares are not delivered and Shares or American Depositary Shares are not sold, each American Depositary Share shall thenceforth also represent the additional Shares distributed on the Deposited Securities represented thereby.
If the Company declares a distribution in which holders of Deposited Securities have a right to elect whether to receive cash, Shares or other securities or a combination of those things, or a right to elect to have a distribution sold on their behalf, the Depositary may, after consultation with the Company, make that right of election available for exercise by Owners in any manner the Depositary considers to be lawful and practical. As a condition of making a distribution election right available to Owners, the Depositary may require satisfactory assurances from the Company that doing so does not require registration of any securities under the Securities Act of 1933 that has not been effected.
SECTION 4.4. Rights.
(a) If rights are granted to the Depositary in respect of deposited Shares to purchase additional Shares or other securities, the Company and the Depositary shall endeavor to consult as to the actions, if any, the Depositary should take in connection with that grant of rights. The Depositary may, to the extent deemed by it to be lawful and practical (i) if requested in writing by the Company, grant to all or certain Owners rights to instruct the Depositary to purchase the securities to which the rights relate and deliver those securities or American Depositary Shares representing those securities to Owners, (ii) if requested in writing by the Company, deliver the rights to or to the order of certain Owners, or (iii) sell the rights to the extent practicable and distribute the net proceeds of that sale to Owners entitled to those proceeds. To the extent rights are not exercised, delivered or disposed of under (i), (ii) or (iii) above, the Depositary shall permit the rights to lapse unexercised.
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(b) If the Depositary will act under (a)(i) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon instruction from an applicable Owner in the form the Depositary specified and upon payment by that Owner to the Depositary of an amount equal to the purchase price of the securities to be received upon the exercise of the rights, the Depositary shall, on behalf of that Owner, exercise the rights and purchase the securities. The purchased securities shall be delivered to, or as instructed by, the Depositary. The Depositary shall (i) deposit the purchased Shares under this Deposit Agreement and deliver American Depositary Shares representing those Shares to that Owner or (ii) deliver or cause the purchased Shares or other securities to be delivered to or to the order of that Owner. The Depositary will not act under (a)(i) above unless the offer and sale of the securities to which the rights relate are registered under the Securities Act of 1933 or the Depositary has received an opinion of United States counsel that is satisfactory to it to the effect that those securities may be sold and delivered to the applicable Owners without registration under the Securities Act of 1933.
(c) If the Depositary will act under (a)(ii) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon (i) the request of an applicable Owner to deliver the rights allocable to the American Depositary Shares of that Owner to an account specified by that Owner to which the rights can be delivered and (ii) receipt of such documents as the Company and the Depositary agreed to require to comply with applicable law, the Depositary will deliver those rights as requested by that Owner.
(d) If the Depositary will act under (a)(iii) above, the Depositary will use reasonable efforts to sell the rights in proportion to the number of American Depositary Shares held by the applicable Owners and pay the net proceeds to the Owners otherwise entitled to the rights that were sold, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.
(e) Payment or deduction of the fees of the Depositary as provided in Section 5.9 and payment or deduction of the expenses of the Depositary and any applicable taxes or other governmental charges shall be conditions of any delivery of securities or payment of cash proceeds under this Section 4.4.
(f) The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make rights available to or exercise rights on behalf of Owners in general or any Owner in particular, or to sell rights.
SECTION 4.5. Conversion of Foreign Currency.
Whenever the Depositary or the Custodian receives foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary or one of its agents or affiliates or the Custodian shall convert or cause to be converted by sale or in any other manner that it may determine that foreign currency into Dollars, and those Dollars shall be distributed to the Owners entitled thereto. A cash distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners based on exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.9.
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If a conversion of foreign currency or the repatriation or distribution of Dollars can be effected only with the approval or license of any government or agency thereof, the Depositary may, but will not be required to, file an application for that approval or license.
If the Depositary determines that in its judgment any foreign currency received by the Depositary or the Custodian is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof that is required for such conversion is not filed or sought by the Depositary or is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.
If any conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto, the Depositary may in its discretion make that conversion and distribution in Dollars to the extent practicable and permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold that balance uninvested and without liability for interest thereon for the account of, the Owners entitled thereto.
The Depositary may convert currency itself or through any of its affiliates, or the Custodian or the Company may convert currency and pay Dollars to the Depositary. Where the Depositary converts currency itself or through any of its affiliates, the Depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under this Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under this Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Owners, subject to the Depositary’s obligations under Section 5.3. The methodology used to determine exchange rates used in currency conversions made by the Depositary is available upon request. Where the Custodian converts currency, the Custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to Owners, and the Depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the Depositary may receive dividends or other distributions from the Company in Dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by or on behalf of the Company and, in such cases, the Depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor the Company makes any representation that the rate obtained or determined by the Company is the most favorable rate and neither it nor the Company will be liable for any direct or indirect losses associated with the rate.
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SECTION 4.6. Fixing of Record Date.
Whenever a cash dividend, cash distribution or any other distribution is made on Deposited Securities or rights to purchase Shares or other securities are issued with respect to Deposited Securities (which rights will be delivered to or exercised or sold on behalf of Owners in accordance with Section 4.4) or the Depositary receives notice that a distribution or issuance of that kind will be made, or whenever the Depositary receives notice that a meeting of holders of Shares will be held in respect of which the Company has requested the Depositary to send a notice under Section 4.7, or whenever the Depositary will assess a fee or charge against the Owners, or whenever the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary otherwise finds it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable to, any corresponding record date set by the Company with respect to Shares, (a) for the determination of the Owners (i) who shall be entitled to receive the benefit of that dividend or other distribution or those rights, (ii) who shall be entitled to give instructions for the exercise of voting rights at that meeting, (iii) who shall be responsible for that fee or charge or (iv) for any other purpose for which the record date was set, or (b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.1 through 4.5 and to the other terms and conditions of this Deposit Agreement, the Owners on a record date fixed by the Depositary shall be entitled to receive the amount distributable by the Depositary with respect to that dividend or other distribution or those rights or the net proceeds of sale thereof in proportion to the number of American Depositary Shares held by them respectively, to give voting instructions or to act in respect of the other matter for which that record date was fixed, or be responsible for that fee or charge, as the case may be.
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SECTION 4.7. Voting of Deposited Shares.
(a) (a) Upon receipt of notice of any meeting of holders of Shares at which holders of Shares will be entitled to vote, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, Disseminate to the Owners a notice, the form of which shall be in the sole discretion of the Depositary, that shall contain (i) the information contained in the notice of meeting received by the Depositary, (ii) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Japanese law and of the articles of association or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares represented by their respective American Depositary Shares (iii) a statement as to the manner in which those instructions may be given, including an express indication that instructions may be deemed given in accordance with the last sentence of paragraph (b) below, if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company and (iv) the last date on which the Depositary will accept instructions (the “Instruction Cutoff Date”).
(b) Upon the written request of an Owner of American Depositary Shares, as of the date of the request or, if a record date was specified by the Depositary, as of that record date, received on or before any Instruction Cutoff Date established by the Depositary, the Depositary may, and if the Depositary sent a notice under the preceding paragraph shall, endeavor, in so far as practicable, to vote or cause to be voted the amount of deposited Shares represented by those American Depositary Shares in accordance with the instructions set forth in that request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the deposited Shares other than in accordance with instructions given by Owners and received by the Depositary or as provided in the following sentence. If
(i) the Company instructed the Depositary to Disseminate a notice under paragraph (a) above and complied with paragraph (d) below,
(ii) no instructions are received by the Depositary from an Owner with respect to a matter and an amount of American Depositary Shares of that Owner on or before the Instruction Cutoff Date and
(iii) the Depositary has received from the Company, by the business day following the Instruction Cutoff Date, a written confirmation that, as of the Instruction Cutoff Date, (x) the Company wishes a proxy to be given under this sentence, (y) the Company reasonably does not know of any substantial opposition to the matters and (z) the matters are not materially adverse to the interests of shareholders,
then, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to that matter and the amount of deposited Shares represented by that amount of American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that amount of deposited Shares as to that matter.
(c) There can be no assurance that Owners generally or any Owner in particular will receive the notice described in paragraph (a) above in time to enable Owners to give instructions to the Depositary prior to the Instruction Cutoff Date.
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(d) If the Company will request the Depositary to Disseminate a notice under paragraph (a) above, the Company shall give the Depositary notice of the meeting, details concerning the matters to be voted upon and copies of materials to be made available to holders of Shares in connection with the meeting not less than 45 days prior to the meeting date.
SECTION 4.8. Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities.
(a) The Depositary shall not tender any Deposited Securities in response to any voluntary cash tender offer, exchange offer or similar offer made to holders of Deposited Securities (a “Voluntary Offer”), except when instructed in writing to do so by an Owner surrendering American Depositary Shares and subject to any conditions or procedures the Depositary may require.
(b) If the Depositary receives a written notice that Deposited Securities have been redeemed for cash or otherwise purchased for cash in a transaction that is mandatory and binding on the Depositary as a holder of those Deposited Securities (a “Redemption”), the Depositary, at the expense of the Company, shall (i) if required, surrender Deposited Securities that have been redeemed to the issuer of those securities or its agent on the redemption date, (ii) Disseminate a notice to Owners (A) notifying them of that Redemption, (B) calling for surrender of a corresponding number of American Depositary Shares and (C) notifying them that the called American Depositary Shares have been converted into a right only to receive the money received by the Depositary upon that Redemption and those net proceeds shall be the Deposited Securities to which Owners of those converted American Depositary Shares shall be entitled upon surrenders of those American Depositary Shares in accordance with Section 2.5 or 6.2 and (iii) distribute the money received upon that Redemption to the Owners entitled to it upon surrender by them of called American Depositary Shares in accordance with Section 2.5 (and, for the avoidance of doubt, Owners shall not be entitled to receive that money under Section 4.1). If the Redemption affects less than all the Deposited Securities, the Depositary shall call for surrender a corresponding portion of the outstanding American Depositary Shares and only those American Depositary Shares will automatically be converted into a right to receive the net proceeds of the Redemption. The Depositary shall allocate the American Depositary Shares converted under the preceding sentence among the Owners pro-rata to their respective holdings of American Depositary Shares immediately prior to the Redemption, except that the allocations may be adjusted so that no fraction of a converted American Depositary Share is allocated to any Owner. A Redemption of all or substantially all of the Deposited Securities shall be a Termination Option Event.
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(c) If the Depositary is notified of or there occurs any change in nominal value or any subdivision, combination or any other reclassification of the Deposited Securities or any recapitalization, reorganization, sale of assets substantially as an entirety, merger or consolidation affecting the issuer of the Deposited Securities or to which it is a party that is mandatory and binding on the Depositary as a holder of Deposited Securities and, as a result, securities or other property have been or will be delivered in exchange, conversion, replacement or in lieu of, Deposited Securities (a “Replacement”), the Depositary shall, if required, surrender the old Deposited Securities affected by that Replacement of Shares and hold, as new Deposited Securities under this Deposit Agreement, the new securities or other property delivered to it in that Replacement. However, the Depositary may elect to sell those new Deposited Securities if in the opinion of the Depositary it is not lawful or not practical for it to hold those new Deposited Securities under this Deposit Agreement because those new Deposited Securities may not be distributed to Owners without registration under the Securities Act of 1933 or for any other reason, at public or private sale, at such places and on such terms as it deems proper and proceed as if those new Deposited Securities had been Redeemed under paragraph (b) above. A Replacement shall be a Termination Option Event.
(d) In the case of a Replacement where the new Deposited Securities will continue to be held under this Deposit Agreement, the Depositary may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing the new Deposited Securities and the number of those new Deposited Securities represented by each American Depositary Share. If the number of Shares represented by each American Depositary Share decreases as a result of a Replacement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.
(e) If there are no Deposited Securities with respect to American Depositary Shares, including if the Deposited Securities are cancelled, or the Deposited Securities with respect to American Depositary Shares have become apparently worthless, the Depositary may call for surrender of those American Depositary Shares or may cancel those American Depositary Shares, upon notice to Owners, and that condition shall be a Termination Option Event.
SECTION 4.9. Reports.
The Depositary shall make available for inspection by Owners at its Office any reports and communications, including any proxy solicitation material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of those Deposited Securities by the Company. The Company shall furnish reports and communications, including any proxy soliciting material to which this Section applies, to the Depositary in English, to the extent those materials are required to be translated into English pursuant to any regulations of the Commission.
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SECTION 4.10. Lists of Owners.
Upon written request by the Company, the Depositary shall, at the expense of the Company, furnish to it a list, as of a recent date, of the names, addresses and American Depositary Share holdings of all Owners.
SECTION 4.11. Withholding.
If the Depositary determines that any distribution received or to be made by the Depositary (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge that the Depositary is obligated to withhold, the Depositary may sell, by public or private sale, all or a portion of the distributed property (including Shares and rights to subscribe therefor) in the amounts and manner the Depositary deems necessary and practicable to pay those taxes or charges, and the Depositary shall distribute the net proceeds of that sale, after deduction of those taxes or charges, to the Owners entitled thereto in proportion to the number of American Depositary Shares held by them respectively.
Services for Owners and Holders that may permit them to obtain reduced rates of tax withholding at source or reclaim excess tax withheld, and the fees and costs associated with using services of that kind, are not provided under, and are outside the scope of, this Deposit Agreement.
Each Owner and Holder agrees to indemnify the Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it.
ARTICLE 5. THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY
SECTION 5.1. Maintenance of Office and Register by the Depositary.
Until termination of this Deposit Agreement in accordance with its terms, the Depositary shall maintain facilities for the delivery, registration of transfers and surrender of American Depositary Shares in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep a register of all Owners and all outstanding American Depositary Shares, which shall be open for inspection by the Owners at the Depositary’s Office during regular business hours, but only for the purpose of communicating with Owners regarding the business of the Company or a matter related to this Deposit Agreement or the American Depositary Shares.
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The Depositary may close the register for delivery, registration of transfer or surrender for the purpose of withdrawal from time to time as provided in Section 2.6.
If any American Depositary Shares are listed on one or more stock exchanges, the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registration of those American Depositary Shares in accordance with any requirements of that exchange or those exchanges.
SECTION 5.2. Prevention or Delay of Performance by the Company or the Depositary.
Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Holder:
(i) if by reason of (A) any provision of any present or future law or regulation or other act of the government of the United States, any State of the United States or any other state or jurisdiction, or of any governmental or regulatory authority or stock exchange; (B) (in the case of the Depositary only) any provision, present or future, of the articles of association or similar document of the Company, or any provision of any securities issued or distributed by the Company, or any offering or distribution thereof; or (C) any event or circumstance, whether natural or caused by a person or persons, that is beyond the ability of the Depositary or the Company, as the case may be, to prevent or counteract by reasonable care or effort (including, but not limited to, earthquakes, floods, severe storms, fires, explosions, war, terrorism, civil unrest, labor disputes, criminal acts or outbreaks of infectious disease; interruptions or malfunctions of utility services, Internet or other communications lines or systems; unauthorized access to or attacks on computer systems or websites; or other failures or malfunctions of computer hardware or software or other systems or equipment), the Depositary or the Company is, directly or indirectly, prevented from, forbidden to or delayed in, or could be subject to any civil or criminal penalty on account of doing or performing and therefore does not do or perform, any act or thing that, by the terms of this Deposit Agreement or the Deposited Securities, it is provided shall be done or performed;
(ii) for any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement (including any determination by the Depositary to take, or not take, any action that this Deposit Agreement provides the Depositary may take);
(iii) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Deposited Securities but is not, under the terms of this Deposit Agreement, made available to Owners or Holders; or
(iv) for any special, consequential or punitive damages for any breach of the terms of this Deposit Agreement.
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Where, by the terms of a distribution to which Section 4.1, 4.2 or 4.3 applies, or an offering to which Section 4.4 applies, or for any other reason, that distribution or offering may not be made available to Owners, and the Depositary may not dispose of that distribution or offering on behalf of Owners and make the net proceeds available to Owners, then the Depositary shall not make that distribution or offering available to Owners, and shall allow any rights, if applicable, to lapse.
SECTION 5.3. Obligations of the Depositary and the Company.
The Company assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or Holder, except that the Company agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith.
The Depositary assumes no obligation nor shall it be subject to any liability under this Deposit Agreement to any Owner or Holder (including, without limitation, liability with respect to the validity or worth of the Deposited Securities), except that the Depositary agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith, and the Depositary shall not be a fiduciary or have any fiduciary duty to Owners or Holders.
Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares on behalf of any Owner or Holder or any other person.
Each of the Depositary and the Company may rely, and shall be protected in relying upon, any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.
Neither the Depositary nor the Company shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or any other person believed by it in good faith to be competent to give such advice or information.
The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.
The Depositary shall not be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of American Depositary Shares or Deposited Securities or otherwise.
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In the absence of bad faith on its part, the Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote.
The Depositary shall have no duty to make any determination or provide any information as to the tax status of the Company or any liability for any tax consequences that may be incurred by Owners or Holders as a result of owning or holding American Depositary Shares. The Depositary shall not be liable for the inability or failure of an Owner or Holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.
No disclaimer of liability under the United States federal securities laws is intended by any provision of this Deposit Agreement.
SECTION 5.4. Resignation and Removal of the Depositary.
The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company, to become effective upon the appointment of a successor depositary and its acceptance of that appointment as provided in this Section. The effect of resignation if a successor depositary is not appointed is provided for in Section 6.2.
The Depositary may at any time be removed by the Company by 120 days’ prior written notice of that removal, to become effective upon the later of (i) the 120th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of its appointment as provided in this Section.
If the Depositary resigns or is removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to the Company an instrument in writing accepting its appointment under this Deposit Agreement. If the Depositary receives notice from the Company that a successor depositary has been appointed following its resignation or removal, the Depositary, upon payment of all sums due it from the Company, shall deliver to its successor a register listing all the Owners and their respective holdings of outstanding American Depositary Shares and shall deliver the Deposited Securities to or to the order of its successor. When the Depositary has taken the actions specified in the preceding sentence (i) the successor shall become the Depositary and shall have all the rights and shall assume all the duties of the Depositary under this Deposit Agreement and (ii) the predecessor depositary shall cease to be the Depositary and shall be discharged and released from all obligations under this Deposit Agreement, except for its duties under Section 5.8 with respect to the time before that discharge. A successor Depositary shall notify the Owners of its appointment as soon as practical after assuming the duties of Depositary.
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Any corporation or other entity into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.
SECTION 5.5. The Custodians.
The Custodian shall be subject at all times and in all respects to the directions of the Depositary and shall be responsible solely to it. The Depositary in its discretion may at any time appoint a substitute or additional custodian or custodians, each of which shall thereafter be one of the Custodians under this Deposit Agreement. If the Depositary receives notice that a Custodian is resigning and, upon the effectiveness of that resignation there would be no Custodian acting under this Deposit Agreement, the Depositary shall, as promptly as practicable after receiving that notice, appoint a substitute custodian or custodians, each of which shall thereafter be a Custodian under this Deposit Agreement. The Depositary shall require any Custodian that resigns or is removed to deliver all Deposited Securities held by it to another Custodian.
SECTION 5.6. Notices and Reports.
If the Company takes or decides to take any corporate action of a kind that is addressed in Sections 4.1 to 4.4, or 4.6 to 4.8, or that effects or will effect a change of the name or legal structure of the Company, or that effects or will effect a change to the Shares, the Company shall notify the Depositary and the Custodian of that action or decision as soon as it is lawful and practical to give that notice. The notice shall be in English and shall include all details that the Company is required to include in any notice to any governmental or regulatory authority or securities exchange or is required to make available generally to holders of Shares by publication or otherwise.
The Company will arrange for the translation into English, if not already in English, to the extent required pursuant to any regulations of the Commission, and the prompt transmittal by the Company to the Depositary and the Custodian of all notices and any other reports and communications which are made generally available by the Company to holders of its Shares. If requested in writing by the Company, the Depositary will Disseminate, at the Company’s expense, those notices, reports and communications to all Owners or otherwise make them available to Owners in a manner that the Company specifies as substantially equivalent to the manner in which those communications are made available to holders of Shares and compliant with the requirements of any securities exchange on which the American Depositary Shares are listed. The Company will timely provide the Depositary with the quantity of such notices, reports, and communications, as requested by the Depositary from time to time, in order for the Depositary to effect that Dissemination.
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The Company represents, continuously, that the statements in Article 11 of the form of Receipt appearing as Exhibit A to this Deposit Agreement or, if applicable, most recently filed with the Commission pursuant to Rule 424(b) under the Securities Act with respect to the Company’s obligation to file periodic reports under the United States Securities Exchange Act of 1934, as amended, or its qualification for exemption from registration under that Act pursuant to Rule 12g3-2(b) under that Act, as the case may be, are true and correct. The Company agrees to promptly notify the Depositary upon becoming aware of any change in the truth of any of those statements or if there is any change in the Company’s status regarding those reporting obligations or that qualification.
SECTION 5.7. Distribution of Additional Shares, Rights, etc.
If the Company or any affiliate of the Company determines to make any issuance or distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3) securities convertible into Shares, or (4) rights to subscribe for such securities (each a “Distribution”), the Company shall notify the Depositary in writing in English as promptly as practicable and in any event before the Distribution starts and, if requested in writing by the Depositary, the Company shall promptly furnish to the Depositary either (i) evidence satisfactory to the Depositary that the Distribution is registered under the Securities Act of 1933 or (ii) a written opinion from U.S. counsel for the Company that is reasonably satisfactory to the Depositary, stating that the Distribution does not require, or, if made in the United States, would not require, registration under the Securities Act of 1933.
The Company agrees with the Depositary that neither the Company nor any company controlled by, controlling or under common control with the Company will at any time deposit any Shares that, at the time of deposit, are Restricted Securities.
SECTION 5.8. Indemnification.
The Company agrees to indemnify the Depositary, its directors, employees, agents and affiliates and each Custodian against, and hold each of them harmless from, any liability or expense (including, but not limited to any fees and expenses incurred in seeking, enforcing or collecting such indemnity and the fees and expenses of counsel) that may arise out of or in connection with (a) any registration with the Commission of American Depositary Shares or Deposited Securities or the offer or sale thereof or (b) acts performed or omitted, pursuant to the provisions of or in connection with this Deposit Agreement and the American Depositary Shares, as the same may be amended, modified or supplemented from time to time, (i) by either the Depositary or a Custodian or their respective directors, employees, agents and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Company or any of its directors, employees, agents and affiliates.
The Depositary agrees to indemnify the Company, its directors, employees, agents and affiliates and hold them harmless from any liability or expense that may arise out of acts performed or omitted by the Depositary or any Custodian or their respective directors, employees, agents and affiliates due to their negligence or bad faith.
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SECTION 5.9. Charges of Depositary.
The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering American Depositary Shares or to whom American Depositary Shares are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.3), or by Owners, as applicable: (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable (including SWIFT) and facsimile transmission fees and expenses as are expressly provided in this Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.5, (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.3, 4.3 or 4.4 and the surrender of American Depositary Shares pursuant to Section 2.5 or 6.2, (6) a fee of $.05 or less per American Depositary Share (or portion thereof) for any cash distribution made pursuant to this Deposit Agreement, including, but not limited to Sections 4.1 through 4.4 and Section 4.8, (7) a fee for the distribution of securities pursuant to Section 4.2 or of rights pursuant to Section 4.4 (where the Depositary will not exercise or sell those rights on behalf of Owners), such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a result of the deposit of such securities under this Deposit Agreement (for purposes of this item 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee charged under item 6 above, a fee of $.05 or less per American Depositary Share (or portion thereof) per annum for depositary services, which will be payable as provided in item 9 below, and (9) any other charges payable by the Depositary or the Custodian, any of the Depositary's or Custodian’s agents or the agents of the Depositary's or Custodian’s agents, in connection with the servicing of Shares or other Deposited Securities (which charges shall be assessed against Owners as of the date or dates set by the Depositary in accordance with Section 4.6 and shall be payable at the sole discretion of the Depositary by billing those Owners for those charges or by deducting those charges from one or more cash dividends or other cash distributions).
The Depositary may collect any of its fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to Owners that are obligated to pay those fees.
In performing its duties under this Deposit Agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.
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The Depositary may own and deal in any class of securities of the Company and its affiliates and in American Depositary Shares.
SECTION 5.10. Retention of Depositary Documents.
The Depositary is authorized to destroy those documents, records, bills and other data compiled during the term of this Deposit Agreement at the times permitted by the laws or regulations governing the Depositary.
SECTION 5.11. Exclusivity.
Without prejudice to the Company’s rights under Section 5.4, the Company agrees not to appoint any other depositary for issuance of depositary shares, depositary receipts or any similar securities or instruments so long as The Bank of New York Mellon is acting as Depositary under this Deposit Agreement.
SECTION 5.12. Information for Regulatory Compliance.
Each of the Company and the Depositary shall provide to the other, as promptly as practicable, information from its records or otherwise available to it that is reasonably requested by the other to permit the other to comply with applicable law or requirements of governmental or regulatory authorities.
ARTICLE 6. AMENDMENT AND TERMINATION
SECTION 6.1. Amendment.
The form of the Receipts and any provisions of this Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect that they may deem necessary or desirable. Any amendment that would impose or increase any fees or charges (other than taxes and other governmental charges, registration fees, cable (including SWIFT) or facsimile transmission costs, delivery costs or other such expenses), or that would otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of that amendment has been Disseminated to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold American Depositary Shares or any interest therein, to consent and agree to that amendment and to be bound by this Deposit Agreement as amended thereby. Upon the effectiveness of an amendment to the form of Receipt, including a change in the number of Shares represented by each American Depositary Share, the Depositary may call for surrender of Receipts to be replaced with new Receipts in the amended form or call for surrender of American Depositary Shares to effect that change of ratio. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive delivery of the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.
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SECTION 6.2. Termination.
(a) The Company may initiate termination of this Deposit Agreement by notice to the Depositary. The Depositary may initiate termination of this Deposit Agreement if (i) at any time 60 days shall have expired after the Depositary delivered to the Company a written resignation notice and a successor depositary has not been appointed and accepted its appointment as provided in Section 5.4 or (ii) a Termination Option Event has occurred or will occur. If termination of this Deposit Agreement is initiated, the Depositary shall Disseminate a notice of termination to the Owners of all American Depositary Shares then outstanding setting a date for termination (the “Termination Date”), which shall be at least 90 days after the date of that notice, and this Deposit Agreement shall terminate on that Termination Date.
(b) After the Termination Date, the Company shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary under Sections 5.8 and 5.9.
(c) At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under this Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that remain outstanding, and those Owners will be general creditors of the Depositary with respect to those net proceeds and that other cash. After making that sale, the Depositary shall be discharged from all obligations under this Deposit Agreement, except (i) to account for the net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement and any applicable taxes or governmental charges) and (ii) for its obligations under Section 5.8 and (iii) to act as provided in paragraph (d) below.
(d) After the Termination Date, the Depositary shall continue to receive dividends and other distributions pertaining to Deposited Securities (that have not been sold), may sell rights and other property as provided in this Deposit Agreement and shall deliver Deposited Securities (or sale proceeds) upon surrender of American Depositary Shares (after payment or upon deduction, in each case, of the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of those American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement and any applicable taxes or governmental charges). After the Termination Date, the Depositary shall not accept deposits of Shares or deliver American Depositary Shares. After the Termination Date, (i) the Depositary may refuse to accept surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities (that have not been sold) or reverse previously accepted surrenders of that kind that have not settled if in its judgment the requested withdrawal would interfere with its efforts to sell the Deposited Securities, (ii) the Depositary will not be required to deliver cash proceeds of the sale of Deposited Securities until all Deposited Securities have been sold and (iii) the Depositary may discontinue the registration of transfers of American Depositary Shares and suspend the distribution of dividends and other distributions on Deposited Securities to the Owners and need not give any further notices or perform any further acts under this Deposit Agreement except as provided in this Section.
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ARTICLE 7. MISCELLANEOUS
SECTION 7.1. Counterparts; Signatures; Delivery.
This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of those counterparts shall constitute one and the same instrument. Copies of this Deposit Agreement shall be filed with the Depositary and the Custodians and shall be open to inspection by any Owner or Holder during regular business hours.
The exchange of copies of this Deposit Agreement and manually-signed signature pages by facsimile, or email attaching a pdf or similar bit-mapped image, shall constitute effective execution and delivery of this Deposit Agreement as to the parties to it; copies and signature pages so exchanged may be used in lieu of the original Deposit Agreement and signature pages for all purposes and shall have the same validity, legal effect and admissibility in evidence as an original manual signature; the parties to this Deposit Agreement hereby agree not to argue to the contrary.
SECTION 7.2. No Third Party Beneficiaries.
This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Owners and the Holders and their respective successors and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person.
SECTION 7.3. Severability.
In case any one or more of the provisions contained in this Deposit Agreement or in a Receipt should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Deposit Agreement or that Receipt shall in no way be affected, prejudiced or disturbed thereby.
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SECTION 7.4. Owners and Holders as Parties; Binding Effect.
The Owners and Holders from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions of this Deposit Agreement and of the Receipts by acceptance of American Depositary Shares or any interest therein.
SECTION 7.5. Notices.
Any and all notices to be given to the Company shall be in writing and shall be deemed to have been duly given if personally delivered or sent by domestic first class or international air mail or air courier or sent by facsimile transmission or email attaching a pdf or similar bit-mapped image of a signed writing, addressed to MEDIROM Healthcare Technologies Inc., [Tradepia Odaiba 16F, 2-3-1 Daiba, Minato-ku, Tokyo 135-0091], Attention: _____________, or any other place to which the Company may have transferred its principal office with notice to the Depositary.
Any and all notices to be given to the Depositary shall be in writing and shall be deemed to have been duly given if in English and personally delivered or sent by first class domestic or international air mail or air courier or sent by facsimile transmission or email attaching a pdf or similar bit-mapped image of a signed writing, addressed to The Bank of New York Mellon, 240 Greenwich Street, New York, New York 10286, Attention: Depositary Receipt Administration, or any other place to which the Depositary may have transferred its Office with notice to the Company.
Delivery of a notice to the Company or Depositary by mail or air courier shall be deemed effected when deposited, postage prepaid, in a post-office letter box or received by an air courier service. Delivery of a notice to the Company or Depositary sent by facsimile transmission or email shall be deemed effected when the recipient acknowledges receipt of that notice.
A notice to be given to an Owner shall be deemed to have been duly given when Disseminated to that Owner. Dissemination in paper form will be effective when personally delivered or sent by first class domestic or international air mail or air courier, addressed to that Owner at the address of that Owner as it appears on the transfer books for American Depositary Shares of the Depositary, or, if that Owner has filed with the Depositary a written request that notices intended for that Owner be mailed to some other address, at the address designated in that request. Dissemination in electronic form will be effective when sent in the manner consented to by the Owner to the electronic address most recently provided by the Owner for that purpose.
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SECTION 7.6. Appointment of Agent for Service of Process; Submission to Jurisdiction; Jury Trial Waiver.
The Company hereby (i) designates and appoints the person named in Exhibit A to this Deposit Agreement as the Company's authorized agent in the United States upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement (a “Proceeding”), (ii) consents and submits to the jurisdiction of any state or federal court in the State of New York in which any Proceeding may be instituted and (iii) agrees that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any Proceeding. The Company agrees to deliver to the Depositary, upon the execution and delivery of this Deposit Agreement, a written acceptance by the agent named in Exhibit A to this Deposit Agreement of its appointment as process agent. The Company further agrees to take any and all action, including the filing of any and all such documents and instruments, as may be necessary to continue that designation and appointment in full force and effect, or to appoint and maintain the appointment of another process agent located in the United States as required above, and to deliver to the Depositary a written acceptance by that agent of that appointment, for so long as any American Depositary Shares or Receipts remain outstanding or this Deposit Agreement remains in force. In the event the Company fails to maintain the designation and appointment of a process agent in the United States in full force and effect, the Company hereby waives personal service of process upon it and consents that a service of process in connection with a Proceeding may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices under this Deposit Agreement, and service so made shall be deemed completed five (5) days after the same shall have been so mailed.
EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THIS DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
SECTION 7.7. Waiver of Immunities.
To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any immunity of that kind and consents to relief and enforcement as provided above.
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SECTION 7.8. Governing Law.
This Deposit Agreement and the Receipts shall be interpreted in accordance with and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by the laws of the State of New York.
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IN WITNESS WHEREOF, MEDIROM HEALTHCARE TECHNOLOGIES INC. and THE BANK OF NEW YORK MELLON have duly executed this Deposit Agreement as of the day and year first set forth above and all Owners and Holders shall become parties hereto upon acceptance by them of American Depositary Shares or any interest therein.
MEDIROM HEALTHCARE TECHNOLOGIES INC. | |||
By: | |||
Name: | |||
Title: | |||
THE BANK OF NEW YORK MELLON, as Depositary |
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By: | |||
Name: | |||
Title: |
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AMERICAN DEPOSITARY SHARES | |
(Each American Depositary Share represents | |
_____ deposited Shares) |
THE BANK OF NEW YORK MELLON
AMERICAN DEPOSITARY RECEIPT
FOR COMMON SHARES OF
MEDIROM HEALTHCARE TECHNOLOGIES INC.
(INCORPORATED UNDER THE LAWS OF JAPAN)
The Bank of New York Mellon, as depositary (hereinafter called the “Depositary”), hereby certifies that_____________________, or registered assigns IS THE OWNER OF _________________________
AMERICAN DEPOSITARY SHARES
representing deposited common shares (herein called “Shares”) of MEDIROM Healthcare Technologies Inc., incorporated under the laws of Japan (herein called the “Company”). At the date hereof, each American Depositary Share represents _____ Shares deposited or subject to deposit under the Deposit Agreement (as such term is hereinafter defined) with a custodian for the Depositary (herein called the “Custodian”) that, as of the date of the Deposit Agreement, was MUFG Bank Ltd. located in Japan. The Depositary's Office and its principal executive office are located at 240 Greenwich Street, New York, N.Y. 10286.
THE DEPOSITARY'S OFFICE ADDRESS IS
240 GREENWICH STREET, NEW YORK, N.Y. 10286
1. | THE DEPOSIT AGREEMENT. |
This American Depositary Receipt is one of an issue (herein called “Receipts”), all issued and to be issued upon the terms and conditions set forth in the Deposit Agreement dated as of __________, 2020 (herein called the “Deposit Agreement”) among the Company, the Depositary, and all Owners and Holders from time to time of American Depositary Shares issued thereunder, each of whom by accepting American Depositary Shares agrees to become a party thereto and become bound by all the terms and conditions thereof. The Deposit Agreement sets forth the rights of Owners and Holders and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of those Shares and held thereunder (those Shares, securities, property, and cash are herein called “Deposited Securities”). Copies of the Deposit Agreement are on file at the Depositary's Office in New York City and at the office of the Custodian.
The statements made on the face and reverse of this Receipt are summaries of certain provisions of the Deposit Agreement and are qualified by and subject to the detailed provisions of the Deposit Agreement, to which reference is hereby made. Capitalized terms defined in the Deposit Agreement and not defined herein shall have the meanings set forth in the Deposit Agreement.
2. | SURRENDER OF AMERICAN DEPOSITARY SHARES AND WITHDRAWAL OF SHARES. |
Upon surrender of American Depositary Shares for the purpose of withdrawal of the Deposited Securities represented thereby and payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.9 of the Deposit Agreement and payment of all taxes and governmental charges payable in connection with that surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of the Deposit Agreement, the Owner of those American Depositary Shares shall be entitled to delivery (to the extent delivery can then be lawfully and practicably made), to or as instructed by that Owner, of the amount of Deposited Securities at the time represented by those American Depositary Shares, but not any money or other property as to which a record date for distribution to Owners has passed (since money or other property of that kind will be delivered or paid on the scheduled payment date to the Owner as of that record date), and except that the Depositary shall not be required to accept surrender of American Depositary Shares for the purpose of withdrawal to the extent it would require delivery of a fraction of a Deposited Security. The Depositary shall direct the Custodian with respect to delivery of Deposited Securities and may charge the surrendering Owner a fee and its expenses for giving that direction by cable (including SWIFT) or facsimile transmission. If Deposited Securities are delivered physically upon surrender of American Depositary Shares for the purpose of withdrawal, that delivery will be made at the Custodian’s office, except that, at the request, risk and expense of the surrendering Owner, and for the account of that Owner, the Depositary shall direct the Custodian to forward any cash or other property comprising, and forward a certificate or certificates, if applicable, and other proper documents of title, if any, for, the Deposited Securities represented by the surrendered American Depositary Shares to the Depositary for delivery at the Depositary’s Office or to another address specified in the order received from the surrendering Owner.
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The Depositary has been advised that, as of the date of the Deposit Agreement, under FEFTA, any Foreign Investor (as defined under FEFTA) expecting to receive delivery of Shares upon surrender of American Depositary Shares must obtain pre-clearance from the applicable Japanese governmental authority prior to accepting that delivery and that the applicable governmental authority may take up to 30 days to respond to applications for that pre-clearance. Accordingly, Owners that are Foreign Investors wishing to surrender American Depositary Shares for the purpose of withdrawal of deposited Shares should apply or advise the persons to whom they intend to direct delivery of Shares to apply for pre-clearance at least 30 days in advance. The Depositary shall not accept surrender of American Depositary Shares for the purpose of withdrawal of Shares until it receives assurances satisfactory to it that any required pre-clearance for delivery of the Shares to be withdrawn to a Foreign Investor has been obtained.
3. | REGISTRATION OF TRANSFER OF AMERICAN DEPOSITARY SHARES; COMBINATION AND SPLIT-UP OF RECEIPTS; INTERCHANGE OF CERTIFICATED AND UNCERTIFICATED AMERICAN DEPOSITARY SHARES. |
The Depositary, subject to the terms and conditions of the Deposit Agreement, shall register a transfer of American Depositary Shares on its transfer books upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9 of that Agreement), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Upon registration of a transfer, the Depositary shall deliver the transferred American Depositary Shares to or upon the order of the person entitled thereto.
The Depositary, subject to the terms and conditions of the Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.
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The Depositary, upon surrender of certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel the Receipt evidencing those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.9 of the Deposit Agreement) from the Owner of uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and register and deliver to the Owner a Receipt evidencing the same number of certificated American Depositary Shares.
As a condition precedent to the delivery, registration of transfer, or surrender of any American Depositary Shares or split-up or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, the Custodian, or Registrar may require payment from the depositor of the Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in the Deposit Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Depositary may establish consistent with the provisions of the Deposit Agreement.
The Depositary may refuse to accept deposits of Shares for delivery of American Depositary Shares or to register transfers of American Depositary Shares in particular instances, or may suspend deposits of Shares or registration of transfer generally, whenever it or the Company considers it necessary or advisable to do so. The Depositary may refuse surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities in particular instances, or may suspend surrenders for the purpose of withdrawal generally, but, notwithstanding anything to the contrary in the Deposit Agreement, only for (i) temporary delays caused by closing of the Depositary’s register or the register of holders of Shares maintained by the Company or the Foreign Registrar, or the deposit of Shares, in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities or (iv) any other reason that, at the time, is permitted under paragraph I(A)(1) of the General Instructions to Form F-6 under the Securities Act of 1993 or any successor to that provision.
The Depositary shall not knowingly accept for deposit under the Deposit Agreement any Shares that, at the time of deposit, are Restricted Securities.
The Depositary has been advised that, as of the date of the Deposit Agreement, under FEFTA, it must obtain pre-clearance from the applicable Japanese governmental authority prior to accepting Shares for deposit and that the applicable governmental authority may take up to 30 days to respond to applications for that pre-clearance. Accordingly, persons wishing to deposit Shares should notify the Depositary of that desire at least 30 days in advance. The Depositary shall not accept Shares for deposit until any required pre-clearance has been obtained. The Company agrees to reimburse the Depositary for its expenses, including fees and expenses of counsel, for applying for any required pre-clearance.
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4. | LIABILITY OF OWNER FOR TAXES. |
If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to or in connection with any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares or in connection with a transaction to which Section 4.8 of the Deposit Agreement applies, that tax or other governmental charge shall be payable by the Owner of those American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until that payment is made, and may withhold any dividends or other distributions or the proceeds thereof, or may sell for the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares, and may apply those dividends or other distributions or the net proceeds of any sale of that kind in payment of that tax or other governmental charge but, even after a sale of that kind, the Owner shall remain liable for any deficiency. The Depositary shall distribute any net proceeds of a sale made under Section 3.2 of the Deposit Agreement that are not used to pay taxes or governmental charges to the Owners entitled to them in accordance with Section 4.1 of the Deposit Agreement. If the number of Shares represented by each American Depositary Share decreases as a result of a sale of Deposited Securities under Section 3.2 of the Deposit Agreement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.
5. | WARRANTIES ON DEPOSIT OF SHARES. |
Every person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that those Shares and each certificate therefor, if applicable, are validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of the holders of outstanding securities of the Company and that the person making that deposit is duly authorized so to do. Every depositing person shall also be deemed to represent that the Shares, at the time of deposit, are not Restricted Securities. All representations and warranties deemed made under Section 3.3 of the Deposit Agreement shall survive the deposit of Shares and delivery of American Depositary Shares.
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6. | FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION. |
Any person presenting Shares for deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Depositary may deem necessary or proper. The Depositary may withhold the delivery or registration of transfer of any American Depositary Shares, the distribution of any dividend or other distribution or of the proceeds thereof or the delivery of any Deposited Securities until that proof or other information is filed or those certificates are executed or those representations and warranties are made. As conditions of accepting Shares for deposit, the Depositary may require (i) any certification required by the Depositary or the Custodian in accordance with the provisions of the Deposit Agreement, (ii) a written order directing the Depositary to deliver to, or upon the written order of, the person or persons stated in that order, the number of American Depositary Shares representing those Deposited Shares, (iii) evidence satisfactory to the Depositary that those Shares have been re-registered in the books of the Company or the Foreign Registrar in the name of the Depositary, a Custodian or a nominee of the Depositary or a Custodian, (iv) evidence satisfactory to the Depositary that any necessary approval has been granted by any governmental body in each applicable jurisdiction and (v) an agreement or assignment, or other instrument satisfactory to the Depositary, that provides for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other property, that any person in whose name those Shares are or have been recorded may thereafter receive upon or in respect of those Shares, or, in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the Depositary.
7. | CHARGES OF DEPOSITARY. |
The following charges shall be incurred by any party depositing or withdrawing Shares or by any party surrendering American Depositary Shares or to whom American Depositary Shares are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.3 of the Deposit Agreement), or by Owners, as applicable: (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals hereunder, (3) such cable (including SWIFT) and facsimile transmission fees and expenses as are expressly provided in the Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.5 of the Deposit Agreement, (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.3, 4.3 or 4.4 of the Deposit Agreement and the surrender of American Depositary Shares pursuant to Section 2.5 or 6.2 of the Deposit Agreement, (6) a fee of $.05 or less per American Depositary Share (or portion thereof) for any cash distribution made pursuant to the Deposit Agreement, including, but not limited to Sections 4.1 through 4.4 and 4.8 of the Deposit Agreement, (7) a fee for the distribution of securities pursuant to Section 4.2 of the Deposit Agreement or of rights pursuant to Section 4.4 of that Agreement (where the Depositary will not exercise or sell those rights on behalf of Owners), such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have been charged as a result of the deposit of such securities under the Deposit Agreement (for purposes of this item 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee charged under item 6, a fee of $.05 or less per American Depositary Share (or portion thereof) per annum for depositary services, which will be payable as provided in item 9 below, and (9) any other charges payable by the Depositary or the Custodian, any of the Depositary's or Custodian’s agents or the agents of the Depositary's or Custodian’s agents, in connection with the servicing of Shares or other Deposited Securities (which charges shall be assessed against Owners as of the date or dates set by the Depositary in accordance with Section 4.6 of the Deposit Agreement and shall be payable at the sole discretion of the Depositary by billing those Owners for those charges or by deducting those charges from one or more cash dividends or other cash distributions).
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The Depositary may collect any of its fees by deduction from any cash distribution payable, or by selling a portion of any securities to be distributed, to Owners that are obligated to pay those fees.
The Depositary may own and deal in any class of securities of the Company and its affiliates and in American Depositary Shares.
From time to time, the Depositary may make payments to the Company to reimburse the Company for costs and expenses generally arising out of establishment and maintenance of the American Depositary Shares program, waive fees and expenses for services provided by the Depositary or share revenue from the fees collected from Owners or Holders. In performing its duties under the Deposit Agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions.
8. | DISCLOSURE OF INTERESTS. |
When required in order to comply with applicable laws and regulations or the articles of association or similar document of the Company, the Company may from time to time request each Owner and Holder to provide to the Depositary information relating to: (a) the capacity in which it holds American Depositary Shares, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests and (c) any other matter where disclosure of such matter is required for that compliance. Each Owner and Holder agrees to provide all information known to it in response to a request made pursuant to Section 3.4 of the Deposit Agreement. Each Holder consents to the disclosure by the Depositary and the Owner or other Holder through which it holds American Depositary Shares, directly or indirectly, of all information responsive to a request made pursuant to that Section relating to that Holder that is known to that Owner or other Holder.
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9. | TITLE TO AMERICAN DEPOSITARY SHARES. |
It is a condition of the American Depositary Shares, and every successive Owner and Holder of American Depositary Shares, by accepting or holding the same, consents and agrees that American Depositary Shares evidenced by a Receipt, when the Receipt is properly endorsed or accompanied by proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York, and that American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any notice provided for in the Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under the Deposit Agreement to any Holder of American Depositary Shares, but only to the Owner.
10. | VALIDITY OF RECEIPT. |
This Receipt shall not be entitled to any benefits under the Deposit Agreement or be valid or obligatory for any purpose, unless this Receipt shall have been (i) executed by the Depositary by the manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the Depositary or the Registrar or a co-registrar.
11. | REPORTS; INSPECTION OF TRANSFER BOOKS. |
The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and, accordingly, files certain reports with the Securities and Exchange Commission. Those reports will be available for inspection and copying through the Commission's EDGAR system or at public reference facilities maintained by the Commission in Washington, D.C.
The Depositary will make available for inspection by Owners at its Office any reports, notices and other communications, including any proxy soliciting material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of those Deposited Securities by the Company. The Company shall furnish reports and communications, including any proxy soliciting material to which Section 4.9 of the Deposit Agreement applies, to the Depositary in English, to the extent such materials are required to be translated into English pursuant to any regulations of the Commission.
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The Depositary will maintain a register of American Depositary Shares and transfers of American Depositary Shares, which shall be open for inspection by the Owners at the Depositary’s Office during regular business hours, but only for the purpose of communicating with Owners regarding the business of the Company or a matter related to this Deposit Agreement or the American Depositary Shares.
12. | DIVIDENDS AND DISTRIBUTIONS. |
Whenever the Depositary receives any cash dividend or other cash distribution on Deposited Securities, the Depositary will, if at the time of receipt thereof any amounts received in a foreign currency can in the judgment of the Depositary be converted on a reasonable basis into Dollars transferable to the United States, and subject to the Deposit Agreement, convert that dividend or other cash distribution into Dollars and distribute the amount thus received (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement) to the Owners entitled thereto; provided, however, that if the Custodian or the Depositary is required to withhold and does withhold from that cash dividend or other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing those Deposited Securities shall be reduced accordingly.
If a cash distribution would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:
(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that cash distribution; or
(ii) sell all Deposited Securities other than the subject cash distribution and add any net cash proceeds of that sale to the cash distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that cash distribution.
If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.
Subject to the provisions of Section 4.11 and 5.9 of the Deposit Agreement, whenever the Depositary receives any distribution other than a distribution described in Section 4.1, 4.3 or 4.4 of the Deposit Agreement on Deposited Securities (but not in exchange for or in conversion or in lieu of Deposited Securities), the Depositary will cause the securities or property received by it to be distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary and any taxes or other governmental charges, in any manner that the Depositary deems equitable and practicable for accomplishing that distribution (which may be a distribution of depositary shares representing the securities received); provided, however, that if in the opinion of the Depositary such distribution cannot be made proportionately among the Owners entitled thereto, or if for any other reason the Depositary deems such distribution not to be lawful and feasible, the Depositary may adopt such other method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and distribution of the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement) to the Owners entitled thereto all in the manner and subject to the conditions set forth in Section 4.1 of the Deposit Agreement. The Depositary may withhold any distribution of securities under Section 4.2 of the Deposit Agreement if it has not received satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Article that is sufficient to pay its fees and expenses in respect of that distribution.
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If a distribution to be made under Section 4.2 of the Deposit Agreement would represent a return of all or substantially all the value of the Deposited Securities underlying American Depositary Shares, the Depositary may:
(i) require payment of or deduct the fee for surrender of American Depositary Shares (whether or not it is also requiring surrender of American Depositary Shares) as a condition of making that distribution; or
(ii) sell all Deposited Securities other than the subject distribution and add any net cash proceeds of that sale to the distribution, call for surrender of all those American Depositary Shares and require that surrender as a condition of making that distribution.
If the Depositary acts under this paragraph, that action shall also be a Termination Option Event.
Whenever the Depositary receives any distribution consisting of a dividend in, or free distribution of, Shares, the Depositary may deliver to the Owners entitled thereto, an aggregate number of American Depositary Shares representing the amount of Shares received as that dividend or free distribution, subject to the terms and conditions of the Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including the withholding of any tax or other governmental charge as provided in Section 4.11 of the Deposit Agreement and the payment of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.9 of the Deposit Agreement (and the Depositary may sell, by public or private sale, an amount of Shares received (or American Depositary Shares representing those Shares) sufficient to pay its fees and expenses in respect of that distribution). In lieu of delivering fractional American Depositary Shares, the Depositary may sell the amount of Shares represented by the aggregate of those fractions (or American Depositary Shares representing those Shares) and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.1of the Deposit Agreement. If and to the extent that additional American Depositary Shares are not delivered and Shares or American Depositary Shares are not sold, each American Depositary Share shall thenceforth also represent the additional Shares distributed on the Deposited Securities represented thereby.
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If the Company declares a distribution in which holders of Deposited Securities have a right to elect whether to receive cash, Shares or other securities or a combination of those things, or a right to elect to have a distribution sold on their behalf, the Depositary may, after consultation with the Company, make that right of election available for exercise by Owners in any manner the Depositary considers to be lawful and practical. As a condition of making a distribution election right available to Owners, the Depositary may require satisfactory assurances from the Company that doing so does not require registration of any securities under the Securities Act of 1933 that has not been effected.
If the Depositary determines that any distribution received or to be made by the Depositary (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge that the Depositary is obligated to withhold, the Depositary may sell, by public or private sale, all or a portion of the distributed property (including Shares and rights to subscribe therefor) in the amounts and manner the Depositary deems necessary and practicable to pay those taxes or charges, and the Depositary shall distribute the net proceeds of that sale, after deduction of those taxes or charges, to the Owners entitled thereto in proportion to the number of American Depositary Shares held by them respectively.
Each Owner and Holder agrees to indemnify the Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it. Services for Owners and Holders that may permit them to obtain reduced rates of tax withholding at source or reclaim excess tax withheld, and the fees and costs associated with using services of that kind, are not provided under, and are outside the scope of, the Deposit Agreement.
13. | RIGHTS. |
(a) If rights are granted to the Depositary in respect of deposited Shares to purchase additional Shares or other securities, the Company and the Depositary shall endeavor to consult as to the actions, if any, the Depositary should take in connection with that grant of rights. The Depositary may, to the extent deemed by it to be lawful and practical (i) if requested in writing by the Company, grant to all or certain Owners rights to instruct the Depositary to purchase the securities to which the rights relate and deliver those securities or American Depositary Shares representing those securities to Owners, (ii) if requested in writing by the Company, deliver the rights to or to the order of certain Owners, or (iii) sell the rights to the extent practicable and distribute the net proceeds of that sale to Owners entitled to those proceeds. To the extent rights are not exercised, delivered or disposed of under (i), (ii) or (iii) above, the Depositary shall permit the rights to lapse unexercised.
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(b) If the Depositary will act under (a)(i) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon instruction from an applicable Owner in the form the Depositary specified and upon payment by that Owner to the Depositary of an amount equal to the purchase price of the securities to be received upon the exercise of the rights, the Depositary shall, on behalf of that Owner, exercise the rights and purchase the securities. The purchased securities shall be delivered to, or as instructed by, the Depositary. The Depositary shall (i) deposit the purchased Shares under the Deposit Agreement and deliver American Depositary Shares representing those Shares to that Owner or (ii) deliver or cause the purchased Shares or other securities to be delivered to or to the order of that Owner. The Depositary will not act under (a)(i) above unless the offer and sale of the securities to which the rights relate are registered under the Securities Act of 1933 or the Depositary has received an opinion of United States counsel that is satisfactory to it to the effect that those securities may be sold and delivered to the applicable Owners without registration under the Securities Act of 1933.
(c) If the Depositary will act under (a)(ii) above, the Company and the Depositary will enter into a separate agreement setting forth the conditions and procedures applicable to the particular offering. Upon (i) the request of an applicable Owner to deliver the rights allocable to the American Depositary Shares of that Owner to an account specified by that Owner to which the rights can be delivered and (ii) receipt of such documents as the Company and the Depositary agreed to require to comply with applicable law, the Depositary will deliver those rights as requested by that Owner.
(d) If the Depositary will act under (a)(iii) above, the Depositary will use reasonable efforts to sell the rights in proportion to the number of American Depositary Shares held by the applicable Owners and pay the net proceeds to the Owners otherwise entitled to the rights that were sold, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.
(e) Payment or deduction of the fees of the Depositary as provided in Section 5.9 of the Deposit Agreement and payment or deduction of the expenses of the Depositary and any applicable taxes or other governmental charges shall be conditions of any delivery of securities or payment of cash proceeds under Section 4.4 of that Agreement.
(f) The Depositary shall not be responsible for any failure to determine that it may be lawful or feasible to make rights available to or exercise rights on behalf of Owners in general or any Owner in particular , or to sell rights.
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14. | CONVERSION OF FOREIGN CURRENCY. |
Whenever the Depositary or the Custodian receives foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary or one of its agents or affiliates or the Custodian shall convert or cause to be converted by sale or in any other manner that it may determine that foreign currency into Dollars, and those Dollars shall be distributed to the Owners entitled thereto. A cash distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners based on exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.9 of the Deposit Agreement.
If a conversion of foreign currency or the repatriation or distribution of Dollars can be effected only with the approval or license of any government or agency thereof, the Depositary may, but will not be required to, file an application for that approval or license.
If the Depositary determines that in its judgment any foreign currency received by the Depositary or the Custodian is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof that is required for such conversion is not filed or sought by the Depositary or is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.
If any conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto, the Depositary may in its discretion make that conversion and distribution in Dollars to the extent practicable and permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold that balance uninvested and without liability for interest thereon for the account of, the Owners entitled thereto.
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The Depositary may convert currency itself or through any of its affiliates, or the Custodian or the Company may convert currency and pay Dollars to the Depositary. Where the Depositary converts currency itself or through any of its affiliates, the Depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under the Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Owners, subject to the Depositary’s obligations under Section 5.3 of that Agreement. The methodology used to determine exchange rates used in currency conversions made by the Depositary is available upon request. Where the Custodian converts currency, the Custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to Owners, and the Depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the Depositary may receive dividends or other distributions from the Company in Dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by or on behalf of the Company and, in such cases, the Depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor the Company makes any representation that the rate obtained or determined by the Company is the most favorable rate and neither it nor the Company will be liable for any direct or indirect losses associated with the rate.
15. | RECORD DATES. |
Whenever a cash dividend, cash distribution or any other distribution is made on Deposited Securities or rights to purchase Shares or other securities are issued with respect to Deposited Securities (which rights will be delivered to or exercised or sold on behalf of Owners in accordance with Section 4.4 of the Deposit Agreement) or the Depositary receives notice that a distribution or issuance of that kind will be made, or whenever the Depositary receives notice that a meeting of holders of Shares will be held in respect of which the Company has requested the Depositary to send a notice under Section 4.7 of the Deposit Agreement, or whenever the Depositary will assess a fee or charge against the Owners, or whenever the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary otherwise finds it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable to, any corresponding record date set by the Company with respect to Shares, (a) for the determination of the Owners (i) who shall be entitled to receive the benefit of that dividend or other distribution or those rights, (ii) who shall be entitled to give instructions for the exercise of voting rights at that meeting, (iii) who shall be responsible for that fee or charge or (iv) for any other purpose for which the record date was set, or (b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.1 through 4.5 of the Deposit Agreement and to the other terms and conditions of the Deposit Agreement, the Owners on a record date fixed by the Depositary shall be entitled to receive the amount distributable by the Depositary with respect to that dividend or other distribution or those rights or the net proceeds of sale thereof in proportion to the number of American Depositary Shares held by them respectively, to give voting instructions or to act in respect of the other matter for which that record date was fixed, or be responsible for that fee or charge, as the case may be.
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16. | VOTING OF DEPOSITED SHARES. |
(a) (a) Upon receipt of notice of any meeting of holders of Shares at which holders of Shares will be entitled to vote, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, Disseminate to the Owners a notice, the form of which shall be in the sole discretion of the Depositary, that shall contain (i) the information contained in the notice of meeting received by the Depositary, (ii) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable provision of Japanese law and of the articles of association or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Shares represented by their respective American Depositary Shares (iii) a statement as to the manner in which those instructions may be given, including an express indication that instructions may be deemed given in accordance with the last sentence of paragraph (b) below, if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company and (iv) the last date on which the Depositary will accept instructions (the “Instruction Cutoff Date”).
(b) Upon the written request of an Owner of American Depositary Shares, as of the date of the request or, if a record date was specified by the Depositary, as of that record date, received on or before any Instruction Cutoff Date established by the Depositary, the Depositary may, and if the Depositary sent a notice under the preceding paragraph shall, endeavor, in so far as practicable, to vote or cause to be voted the amount of deposited Shares represented by those American Depositary Shares in accordance with the instructions set forth in that request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the deposited Shares other than in accordance with instructions given by Owners and received by the Depositary or as provided in the following sentence. If
(i) the Company instructed the Depositary to Disseminate a notice under paragraph (a) above and complied with paragraph (d) below,
(ii) no instructions are received by the Depositary from an Owner with respect to a matter and an amount of American Depositary Shares of that Owner on or before the Instruction Cutoff Date and
(iii) the Depositary has received from the Company, by the business day following the Instruction Cutoff Date, a written confirmation that, as of the Instruction Cutoff Date, (x) the Company wishes a proxy to be given under this sentence, (y) the Company reasonably does not know of any substantial opposition to the matters and (z) the matters are not materially adverse to the interests of shareholders,
then, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to that matter and the amount of deposited Shares represented by that amount of American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that amount of deposited Shares as to that matter.
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(c) There can be no assurance that Owners generally or any Owner in particular will receive the notice described in paragraph (a) above in time to enable Owners to give instructions to the Depositary prior to the Instruction Cutoff Date.
(d) If the Company will request the Depositary to Disseminate a notice under paragraph (a) above, the Company shall give the Depositary notice of the meeting, details concerning the matters to be voted upon and copies of materials to be made available to holders of Shares in connection with the meeting not less than 45 days prior to the meeting date.
17. | TENDER AND EXCHANGE OFFERS; REDEMPTION, REPLACEMENT OR CANCELLATION OF DEPOSITED SECURITIES. |
(a) The Depositary shall not tender any Deposited Securities in response to any voluntary cash tender offer, exchange offer or similar offer made to holders of Deposited Securities (a “Voluntary Offer”), except when instructed in writing to do so by an Owner surrendering American Depositary Shares and subject to any conditions or procedures the Depositary may require.
(b) If the Depositary receives a written notice that Deposited Securities have been redeemed for cash or otherwise purchased for cash in a transaction that is mandatory and binding on the Depositary as a holder of those Deposited Securities (a “Redemption”), the Depositary, at the expense of the Company, shall (i) if required, surrender Deposited Securities that have been redeemed to the issuer of those securities or its agent on the redemption date, (ii) Disseminate a notice to Owners (A) notifying them of that Redemption, (B) calling for surrender of a corresponding number of American Depositary Shares and (C) notifying them that the called American Depositary Shares have been converted into a right only to receive the money received by the Depositary upon that Redemption and those net proceeds shall be the Deposited Securities to which Owners of those converted American Depositary Shares shall be entitled upon surrenders of those American Depositary Shares in accordance with Section 2.5 or 6.2 of the Deposit Agreement and (iii) distribute the money received upon that Redemption to the Owners entitled to it upon surrender by them of called American Depositary Shares in accordance with Section 2.5 of that Agreement (and, for the avoidance of doubt, Owners shall not be entitled to receive that money under Section 4.1 of that Agreement). If the Redemption affects less than all the Deposited Securities, the Depositary shall call for surrender a corresponding portion of the outstanding American Depositary Shares and only those American Depositary Shares will automatically be converted into a right to receive the net proceeds of the Redemption. The Depositary shall allocate the American Depositary Shares converted under the preceding sentence among the Owners pro-rata to their respective holdings of American Depositary Shares immediately prior to the Redemption, except that the allocations may be adjusted so that no fraction of a converted American Depositary Share is allocated to any Owner. A Redemption of all or substantially all of the Deposited Securities shall be a Termination Option Event.
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(c) If the Depositary is notified of or there occurs any change in nominal value or any subdivision, combination or any other reclassification of the Deposited Securities or any recapitalization, reorganization, sale of assets substantially as an entirety, merger or consolidation affecting the issuer of the Deposited Securities or to which it is a party that is mandatory and binding on the Depositary as a holder of Deposited Securities and, as a result, securities or other property have been or will be delivered in exchange, conversion, replacement or in lieu of, Deposited Securities (a “Replacement”), the Depositary shall, if required, surrender the old Deposited Securities affected by that Replacement of Shares and hold, as new Deposited Securities under the Deposit Agreement, the new securities or other property delivered to it in that Replacement. However, the Depositary may elect to sell those new Deposited Securities if in the opinion of the Depositary it is not lawful or not practical for it to hold those new Deposited Securities under the Deposit Agreement because those new Deposited Securities may not be distributed to Owners without registration under the Securities Act of 1933 or for any other reason, at public or private sale, at such places and on such terms as it deems proper and proceed as if those new Deposited Securities had been Redeemed under paragraph (b) above. A Replacement shall be a Termination Option Event.
(d) In the case of a Replacement where the new Deposited Securities will continue to be held under the Deposit Agreement, the Depositary may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing the new Deposited Securities and the number of those new Deposited Securities represented by each American Depositary Share. If the number of Shares represented by each American Depositary Share decreases as a result of a Replacement, the Depositary may call for surrender of the American Depositary Shares to be exchanged on a mandatory basis for a lesser number of American Depositary Shares and may sell American Depositary Shares to the extent necessary to avoid distributing fractions of American Depositary Shares in that exchange and distribute the net proceeds of that sale to the Owners entitled to them.
(e) If there are no Deposited Securities with respect to American Depositary Shares, including if the Deposited Securities are cancelled, or the Deposited Securities with respect to American Depositary Shares become apparently worthless, the Depositary may call for surrender of those American Depositary Shares or may cancel those American Depositary Shares, upon notice to Owners, and that condition shall be a Termination Option Event.
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18. | LIABILITY OF THE COMPANY AND DEPOSITARY. |
Neither the Depositary nor the Company nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Owner or Holder:
(i) if by reason of (A) any provision of any present or future law or regulation or other act of the government of the United States, any State of the United States or any other state or jurisdiction, or of any governmental or regulatory authority or stock exchange; (B) (in the case of the Depositary only) any provision, present or future, of the articles of association or similar document of the Company, or by reason of any provision of any securities issued or distributed by the Company, or any offering or distribution thereof; or (C) any event or circumstance, whether natural or caused by a person or persons, that is beyond the ability of the Depositary or the Company, as the case may be, to prevent or counteract by reasonable care or effort (including, but not limited to earthquakes, floods, severe storms, fires, explosions, war, terrorism, civil unrest, labor disputes, criminal acts or outbreaks of infectious disease; interruptions or malfunctions of utility services, Internet or other communications lines or systems; unauthorized access to or attacks on computer systems or websites; or other failures or malfunctions of computer hardware or software or other systems or equipment), the Depositary or the Company is, directly or indirectly, prevented from, forbidden to or delayed in, or could be subject to any civil or criminal penalty on account of doing or performing and therefore does not do or perform, any act or thing that, by the terms of the Deposit Agreement or the Deposited Securities, it is provided shall be done or performed;
(ii) for any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement (including any determination by the Depositary to take, or not take, any action that the Deposit Agreement provides the Depositary may take);
(iii) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Owners or Holders; or
(iv) for any special, consequential or punitive damages for any breach of the terms of the Deposit Agreement.
Where, by the terms of a distribution to which Section 4.1, 4.2 or 4.3 of the Deposit Agreement applies, or an offering to which Section 4.4 of that Agreement applies, or for any other reason, that distribution or offering may not be made available to Owners, and the Depositary may not dispose of that distribution or offering on behalf of Owners and make the net proceeds available to Owners, then the Depositary shall not make that distribution or offering available to Owners, and shall allow any rights, if applicable, to lapse.
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Neither the Company nor the Depositary assumes any obligation or shall be subject to any liability under the Deposit Agreement to Owners or Holders, except that they agree to perform their obligations specifically set forth in the Deposit Agreement without negligence or bad faith. The Depositary shall not be a fiduciary or have any fiduciary duty to Owners or Holders. The Depositary shall not be subject to any liability with respect to the validity or worth of the Deposited Securities. Neither the Depositary nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares, on behalf of any Owner or Holder or other person. Neither the Depositary nor the Company shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or Holder, or any other person believed by it in good faith to be competent to give such advice or information. Each of the Depositary and the Company may rely, and shall be protected in relying upon, any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Depositary shall not be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of American Depositary Shares or Deposited Securities or otherwise. In the absence of bad faith on its part, the Depositary shall not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities or for the manner in which any such vote is cast or the effect of any such vote. The Depositary shall have no duty to make any determination or provide any information as to the tax status of the Company or any liability for any tax consequences that may be incurred by Owners or Holders as a result of owning or holding American Depositary Shares. The Depositary shall not be liable for the inability or failure of an Owner or Holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit. No disclaimer of liability under the United States federal securities laws is intended by any provision of the Deposit Agreement.
19. | RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF SUCCESSOR CUSTODIAN. |
The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of its election so to do delivered to the Company, to become effective upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by the Company by 120 days’ prior written notice of that removal, to become effective upon the later of (i) the 120th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of its appointment as provided in the Deposit Agreement. The Depositary in its discretion may at any time appoint a substitute or additional custodian or custodians.
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20. | AMENDMENT. |
The form of the Receipts and any provisions of the Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect which they may deem necessary or desirable. Any amendment that would impose or increase any fees or charges (other than taxes and other governmental charges, registration fees, cable (including SWIFT) or facsimile transmission costs, delivery costs or other such expenses), or that would otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of that amendment has been Disseminated to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold American Depositary Shares or any interest therein, to consent and agree to that amendment and to be bound by the Deposit Agreement as amended thereby. Upon the effectiveness of an amendment to the form of Receipt, including a change in the number of Shares represented by each American Depositary Share, the Depositary may call for surrender of Receipts to be replaced with new Receipts in the amended form or call for surrender of American Depositary Shares to effect that change of ratio. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive delivery of the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.
21. | TERMINATION OF DEPOSIT AGREEMENT. |
(a) The Company may initiate termination of the Deposit Agreement by notice to the Depositary. The Depositary may initiate termination of the Deposit Agreement if (i) at any time 60 days shall have expired after the Depositary delivered to the Company a written resignation notice and a successor depositary has not been appointed and accepted its appointment as provided in Section 5.4 of that Agreement or (ii) a Termination Option Event has occurred. If termination of the Deposit Agreement is initiated, the Depositary shall Disseminate a notice of termination to the Owners of all American Depositary Shares then outstanding setting a date for termination (the “Termination Date”), which shall be at least 90 days after the date of that notice, and the Deposit Agreement shall terminate on that Termination Date.
(b) After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary under Sections 5.8 and 5.9 of that Agreement.
(c) At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that remain outstanding, and those Owners will be general creditors of the Depositary with respect to those net proceeds and that other cash. After making that sale, the Depositary shall be discharged from all obligations under the Deposit Agreement, except (i) to account for the net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or governmental charges) and (ii) for its obligations under Section 5.8 of that Agreement and (iii) to act as provided in paragraph (d) below.
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(d) After the Termination Date, the Depositary shall continue to receive dividends and other distributions pertaining to Deposited Securities (that have not been sold), may sell rights and other property as provided in the Deposit Agreement and shall deliver Deposited Securities (or sale proceeds) upon surrender of American Depositary Shares (after payment or upon deduction, in each case, of the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of those American Depositary Shares in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or governmental charges). After the Termination Date, the Depositary shall not accept deposits of Shares or deliver American Depositary Shares. After the Termination Date, (i) the Depositary may refuse to accept surrenders of American Depositary Shares for the purpose of withdrawal of Deposited Securities (that have not been sold) or reverse previously accepted surrenders of that kind that have not settled if in its judgment the requested withdrawal would interfere with its efforts to sell the Deposited Securities, (ii) the Depositary will not be required to deliver cash proceeds of the sale of Deposited Securities until all Deposited Securities have been sold and (iii) the Depositary may discontinue the registration of transfers of American Depositary Shares and suspend the distribution of dividends and other distributions on Deposited Securities to the Owners and need not give any further notices or perform any further acts under the Deposit Agreement except as provided in Section 6.2 of that Agreement.
22. | DTC DIRECT REGISTRATION SYSTEM AND PROFILE MODIFICATION SYSTEM. |
(a) Notwithstanding the provisions of Section 2.4 of the Deposit Agreement, the parties acknowledge that DTC’s Direct Registration System (“DRS”) and Profile Modification System (“Profile”) apply to the American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated securities and holding of security entitlements in those securities through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register that transfer.
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(b) In connection with DRS/Profile, the parties acknowledge that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an Owner in requesting registration of transfer and delivery as described in paragraph (a) above has the actual authority to act on behalf of that Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.3 and 5.8 of the Deposit Agreement apply to the matters arising from the use of the DRS/Profile. The parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile system and otherwise in accordance with the Deposit Agreement, shall not constitute negligence or bad faith on the part of the Depositary.
23. | APPOINTMENT OF AGENT FOR SERVICE OF PROCESS; SUBMISSION TO JURISDICTION; JURY TRIAL WAIVER; WAIVER OF IMMUNITIES. |
The Company has (i) appointed Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168, as the Company's authorized agent in the United States upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Agreement, (ii) consented and submitted to the jurisdiction of any state or federal court in the State of New York in which any such suit or proceeding may be instituted, and (iii) agreed that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding.
EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) THEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
To the extent that the Company or any of its properties, assets or revenues may have or hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares, the Receipts or the Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.
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Exhibit 10.1
CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [****],
HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY
CAUSE
COMPETITIVE HARM TO THE REGISTRANT, IF PUBLICLY DISCLOSED.
Investment Agreement
This Investment Agreement (this “Agreement”) is entered into between Social Entrepreneur 2 Investment Limited Partnership (the “LP”) and Re.Ra.Ku. Co. Ltd. (“Re.Ra.Ku.”) and Kouji Eguchi (“Eguchi”) with regard to the investment into Re.Ra.Ku. by LP set forth in Article 1 (the “Investment”) for the purpose to enhance Re.Ra.Ku.’s enterprise value and cooperate for the achievement of the initial public offering of Re.Ra.Ku.
Article 1 (Description of Investment)
Company’s Name | Re.Ra.Ku. Co. Ltd. |
Number of Authorized Shares | 20,000 shares |
Class and Amount of Shares Subject to Issuance | 100 shares of common stock |
Issuing Price | JPY [****] per share |
Amount of Contribution for Issued Shares | JPY [****] |
Due Date for Contribution | May 10, 2016 |
Relevant Provision of Articles of Incorporation |
Article 7 (Restriction on Transfer of Shares) Transferring any shares of the Company shall be subject to approval by the board of directors of the Company. |
Article 2 (Representations and Warranties of Facts by Re.Ra.Ku. and Eguchi)
As a fundamental condition of the execution of this Agreement and the investment by the LP, each of Re.Ra.Ku. and Eguchi represents and warrants to the LP as truth the following facts:
(1) Re.Ra.Ku. has provided to the LP any documents requested by the LP prior to the execution of this Agreement, and all of those documents are the latest;
(2) Re.Ra.Ku. is a corporation legally incorporated under the laws of Japan and validly existing, and has full authority necessary to conduct the business. Re.Ra.Ku. has necessary capacity and authority to execute this Agreement and perform its responsibility, and no execution and performance violates the Articles of Incorporation of Re.Ra.Ku. or any other rules or contracts to which Re.Ra.Ku. is a party, and all processes necessary for license, permission, filing, etc., in connection with the execution or performance are completed and do not breach any conditions if such conditions are attached;
(3) as of the execution date of this Agreement, Re.Ra.Ku., Eguchi, or any interested persons, etc., shareholders or clients, etc. of the Re.Ra.Ku. or Eguchi are not an anti-social force or quasi-anti-social force (“Anti-Social Force, etc.”), are not in cooperation with or involved in keeping or operation of Anti-Social Force through a supply of money or the like to the Anti-Social Force, etc., or do not have any relations with the Anti-Social Force, etc. Additionally, Re.Ra.Ku. and Eguchi hereby affirm that neither Re.Ra.Ku. nor Eguchi will have any relationships with Anti-Social Forces, etc.; and
(4) representations and warranties made by Re.Ra.Ku. and Eguchi hereunder and documents and information provided by Re.Ra.Ku. and Eguchi for the execution of this Agreement are true and accurate and not missing any necessary facts the lack of which could mislead in all material respects.
Article 3 (Matters Subject to Prior Approval)
Re.Ra.Ku. shall obtain a prior approval in writing by the LP for the following matter:
(1) Filing of dissolution, bankruptcy, institution of corporate reorganization (kaisha kosei), the institution of civil rehabilitation (minji saisei), institution of corporate liquidation, institution of special liquidation (tokubetsu seisan) or any institution of other bankruptcy proceedings; and
(2) Issuance of stock at any price of less than the Issuing Price set forth in Article 1 (strike price in case of stock acquisition rights or bonds with stock acquisition rights).
Article 4 (Matters Subject to Prior Notification)
Re.Ra.Ku. shall notify the LP of facts, in case of matters under the following (1) through (9), prior to a resolution by the board of directors; in case of a matter under the following (10), promptly after any anticipation of the facts, in case of any hardship to anticipate, promptly after the event occurs:
(1) determination or change of anticipated timing of listing to any public stock market (the “IPO”), an anticipated market for the public offering, or underwriter company;
(2) issuance of stocks, stock acquisition rights, or bonds with stock acquisition rights;
(3) approval of transfer of stock;
(4) repurchase of stock by Re.Ra.Ku., elimination of treasury stock, decrease in paid-in capital, or any other change in paid-in capital (including decrease in statutory reserve);
(5) merger, share exchange, share transfer (kabushiki iten), transfer of business, assumption of business, company split (kaisha bunkatsu) or any consolidation of companies or any alliance by capital with third parties;
(6) sale of significant assets;
(7) substantial amount of loan, and substantial amount of repayment of loans;
(8) personnel changes affecting operation;
(9) amendment to the articles of incorporation and other matters for a special resolution at a meeting of shareholders; and
(10) any other matters that materially affect operation of Re.Ra.Ku.
Article 5 (Matters Subject to Report)
Re.Ra.Ku. shall report to the LP the following matters promptly:
(1) matters recorded in the corporate register (delivery of a copy certifying entire items of the corporate register after the completion of update of the record);
(2) monthly balance and monthly cash flow (delivery of trial balance and cash flow sheet);
(3) description of closing balance and tax return (delivery of balance sheet, profit/loss statement, form of tax return, and their supplemental notes);
(4) changes in constituents of shareholders (delivery of shareholders’ registry after the change);
(5) status of business performance, prospective business plan, and anything representing company’s present status (delivery of business plan, projection of profit/loss, and projection of working capital); and
(6) any other matters indicated by the LP.
Article 6 (Resignation or Departure of Directors)
1. Unless permitted by the LP beforehand, Eguchi shall not resign a director of Re.Ra.Ku. before the end of his term or refuse reappointment as a director of Re.Ra.Ku. at the end of his term.
2. Eguchi shall not, whether directly or indirectly, engage in any business competing with Re.Ra.Ku., by himself or through any third parties, during his term as a position of director, corporate auditor or employee of Re.Ra.Ku., and for two years after Eguchi is no longer at the position of director, corporate auditor or employee of Re.Ra.Ku. due to his own fault.
3. The preceding paragraph shall include, but not limited to, cases where Eguchi become an officer or employee of a company, legal entity, or partnership, etc., engaging in the same business as or competing with the one operated by Re.Ra.Ku. and other affiliates.
Article 7 (Investigation)
As it may be necessary, LP may investigate accounting books of Re.Ra.Ku. and other important documents at the head office or other offices of Re.Ra.Ku., and demand Re.Ra.Ku. to report the status of its business activity. In case Re.Ra.Ku. is requested to provide documents or books by the LP or report the status of its business activity, Re.Ra.Ku. shall respond in an immediate manner.
Article 8 (Suspension, withdrawal of capital contribution, purchase request of stock)
1. In the event that any of the following events occur, LP may suspend or withdraw carrying out the Investment or dispose of stocks that the LP acquired in the Investment by a means of purchase by Eguchi or other means:
(1) event where no IPO of Re.Ra.Ku.’s stocks happens when the LP finds it feasible in light of the financial conditions and business performance of Re.Ra.Ku.;
(2) event where Re.Ra.Ku. fails to obtain a prior approval, consult, or report set forth in Article 3, 4, or 5, or where any matters pre-approved, consulted, or reported are untrue;
(3) event where either of Re.Ra.Ku. or Eguchi materially breaches any of provisions hereof, and fails to cure the breach no later than 30 days after the breaching party receives a notice by the LP requesting that breaching party to cure; or
(4) in addition to the foregoing three items, event where Re.Ra.Ku. or Eguchi breaches this Agreement.
2. In addition to the foregoing paragraph, in the event that is considered as reasonable, including the case where any matter significantly affecting Re.Ra.Ku.’s operation occurs, the LP may suspend or withdraw carrying out the Investment or dispose of stocks that the LP acquired in the Investment by a means of purchase by Eguchi or other means.
3. Eguchi shall accept a demand to purchase stocks that is made by the LP to Eguchi pursuant to Paragraph 1; provided, however, that Eguchi may cause any third party designated by Eguchi to purchase stocks owned by the LP.
Article 9 (Purchase Price)
Any of the following prices that is determined by the LP shall be the purchase price acquired by Eguchi or the third party designated by Eguchi set forth in the foregoing article, except for cases permitted by the LP:
(1) price of the LP’s invested amount for the Investment (the “Invested Amount”) multiplied by 1.2;
(2) amount that is arrived after the calculation of the price of the Invested amount multiplied by a compounding interest at 3% per year;
(3) price determined by the LP based on the latest prices of Re.Ra.Ku.’s stock in issuing or selling its stocks;
(4) prices based on the Re.Ra.Ku.’s net book value per share;
(5) prices based on the comparable industry value as determined in the Basic Directive on Property Valuation of the National Tax Agency; or
(6) amount that is arrived by comparing stock prices of other similar companies in respect to the type of business, scale, and profit.
Article 10 (Right to Attend Meeting of Board of Directors)
1. If the LP requests, a person who is designated by the LP may attend a meeting of the board of directors of Re.Ra.Ku. and similar important management meetings as an observer, and may provide an opinion.
2. When Re.Ra.Ku. holds any meeting set forth in the foregoing paragraph, Re.Ra.Ku. shall give a notice to the person set forth in the foregoing paragraph by e-mail or telephone no later than one (1) week; provided, however, that Re.Ra.Ku. is allowed to call the meeting on an “as soon as possible” basis, if it is urgent.
Article 11 (Confidentiality)
LP shall maintain confidential any non-public information in connection with Re.Ra.Ku. that has been received pursuant to this Agreement, and shall not disclose to any third party without Re.Ra.Ku.’s prior consent or reasonable grounds; provided, however, that non-public information shall not include any information that was in the public domain at the time when the LP received the information, any information that became public without LP’s fault after the LP received the information, or any information that the LP lawfully received from any third party.
Article 12 (Expiry of this Agreement)
1. This Agreement shall end when any of the following events occurs:
(1) event where all the parties hereto reach an agreement whereby this Agreement will be terminated;
(2) event where the IPO of Re.Ra.Ku. is completed; or
(3) event where the LP has not become a shareholder or is no longer a shareholder.
2. The end of this Agreement shall be effective prospectively, and shall not affect any rights and obligations that arose out of this Agreement prior to the consummation hereof, except for cases otherwise set forth herein.
Article 13 (Consultation/Others)
1. If it is likely that any performance pursuant to each of the provisions hereof becomes difficult, Re.Ra.Ku. and Eguchi shall inform the LP of that fact promptly, and discuss and determine how to address it between Re.Ra.Ku. and Eguchi.
2. Any matters not stipulated in this Agreement and any doubts arising out of interpretation of this Agreement shall be discussed and determined by the LP, Re.Ra.Ku., and Eguchi.
IN WITNESS WHEREOF, the parties hereto have prepared this Agreement in triplicate, and each of the LP, Re.Ra.Ku., and Eguchi has held one copy.
May 10, 2016
LP: |
HOMAT Hanzomon 4F, 1-12-12 Koujimachi, Chiyoda-ku, Tokyo SocialEntreprenuer 2 Investment Limited Partnership PE&HR Kabushiki Kaisha, General Partner Ryojiro Yamamoto, Representative Director [Stamped Seal] |
Re.Ra.Ku.: |
Column Minami-Aoyama 4F, 7-1-5 Minami-Aoyama, Minato-ku, Tokyo Re.Ra.Ku. Co., Ltd. Kouji Eguchi, Representative Director [Stamped Seal] |
Eguchi: |
3-5-1-1504, Itabashi-ku, Tokyo Kouji Eguchi [Stamped Seal] |
Exhibit 10.2
CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [**],
HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY
CAUSE
COMPETITIVE HARM TO THE REGISTRANT, IF PUBLICLY DISCLOSED.
Investment Agreement
This Investment Agreement (this “Agreement”) is entered into between CCC Marketing Co., Ltd. (the “CCC”) and Re.Ra.Ku. Co. Ltd. (“Re.Ra.Ku.”) and Kouji Eguchi (“Eguchi”).
Article 1 (Purpose of this Agreement)
The purpose of this Agreement is for CCC to contribute to Re.Ra.Ku. set forth in Article 2 (the “Investment”) in order to enhance the Re.Ra.Ku.’s enterprise value and mutually cooperate for achievement of Re.Ra.Ku.’s initial public offering.
Article 2 (Description of Investment)
Re.Ra.Ku. shall issue and CCC shall acquire new common stocks as set forth below (the “Stock”) in accordance with resolutions of the extraordinary shareholders’ meeting, class meeting of common shareholders, class meeting of Class A shareholders, and meeting of the board of directors held on December 21, 2016. Re.Ra.Ku. has conducted a 100-for-1 stock split of its Stock effective as of the end of December 21, 2016, and such the stock split is reflected in the description below.
Company’s Name | Re.Ra.Ku. Co. Ltd. |
Number of Authorized Shares | 100,000 shares |
Class and Amount of Shares Subject to Issuance | 25,000 shares of common stock |
Issuing Price | JPY [****] per share |
Amount of Contribution for Issued Shares | JPY [****] |
Due Date for Contribution | December 28, 2016 |
Relevant Provision of Articles of Incorporation |
Article 7 (Restriction on Transfer of Shares) Transferring any shares of the Company shall be subject to approval by the board of directors of the Company. |
Article 3 (Representations and Warranties of Facts by Re.Ra.Ku. and Eguchi)
1. As a fundamental condition of the execution of this Agreement and the investment by CCC, each of Re.Ra.Ku. and Eguchi represents and warrants to CCC as truth the following facts:
(1) Re.Ra.Ku. has provided to CCC any documents requested by CCC prior to the execution of this Agreement, and all of those documents are the latest;
(2) Re.Ra.Ku. is a corporation legally incorporated under the laws of Japan and validly existing, and has full authority necessary to conduct the business. Re.Ra.Ku. has necessary capacity and authority to execute this Agreement and perform its responsibility, and no execution and performance violates the Articles of Incorporation of Re.Ra.Ku. or any other rules or contracts to which Re.Ra.Ku. is a party, and all processes necessary for license, permission, filing, etc., in connection with the execution or performance are completed and do not breach any conditions if such conditions are attached;
(3) resolutions of each of meetings of shareholders and the board of directors, set forth in Article 2, necessary to carry out the Investment, have been rightly and lawfully adopted;
(4) as of the execution date of this Agreement, Re.Ra.Ku., Eguchi, or any interested persons, etc., shareholders or clients, etc. of the Re.Ra.Ku. or Eguchi are not an anti-social force or quasi-anti-social force (“Anti-Social Force, etc.”), are not in cooperation with or involved in keeping or operation of Anti-Social Force, etc. through a supply of money or the like to the Anti-Social Force, etc., or do not have any relations with the Anti-Social Force, etc.. Additionally, Re.Ra.Ku. and Eguchi hereby affirm that neither Re.Ra.Ku. nor Eguchi will have any relationships with Anti-Social Forces, etc.;
(5) representations and warranties made by Re.Ra.Ku. and Eguchi hereunder and documents and information provided by Re.Ra.Ku. and Eguchi for the execution of this Agreement are true and accurate and not missing any necessary facts the lack of which could mislead in all material respects; and
(6) with respect to potential stocks issued by Re.Ra.Ku., the matters stipulated in the corporate register provided by Re.Ra.Ku. as of September 23, 2016 and the information provided as of December 21, 2016 are full and complete, and no other potential stocks exist.
2. CCC shall make Re.Ra.Ku. recorded to CCC’s shareholder registry as a shareholder promptly after the Investment has been carried out.
Article 4 (Matters Subject to Prior Approval)
Re.Ra.Ku. shall obtain a prior approval in writing by CCC for the following matter:
(1) Filing of dissolution, bankruptcy, institution of corporate reorganization (kaisha kosei), the institution of civil rehabilitation (minji saisei), institution of corporate liquidation, institution of special liquidation (tokubetsu seisan) or any institution of other bankruptcy proceedings; and
(2) Repurchase of shares by Re.Ra.Ku.; and
(3) merger, share exchange, share transfer (kabushiki iten), transfer of business, assumption of business, company split (kaisha bunkatsu) or any consolidation of companies or any alliance by capital with third parties.
Article 5 (Matters Subject to Prior Notification)
Re.Ra.Ku. shall notify CCC of facts, in case of matters under the following (1) through (7), prior to a resolution by the board of directors; in case of a matter under the following (8), promptly after any anticipation of the facts, in case of any hardship to anticipate, promptly after the event occurs:
(1) determination or change of anticipated timing of listing to any public stock market (including the listing to any stock exchange outside of Japan by depositary receipts) (the “IPO”), an anticipated market for the public offering, or underwriter company;
(2) elimination of treasury stock, decrease in paid-in capital, or any other change in paid-in capital (including decrease in statutory reserve);
(3) sale of significant assets;
(4) substantial amount of loan, and substantial amount of repayment of loans;
(5) personnel changes affecting operation;
(6) amendment to the articles of incorporation and other matters for a special resolution at a meeting of shareholders; and
(7) any other matters that materially affect operation of Re.Ra.Ku.
Article 6 (Matters Subject to Report)
Re.Ra.Ku. shall report to CCC the following matters promptly:
(1) matters recorded in the corporate register (delivery of a copy certifying entire items of the corporate register after the completion of update of the record);
(2) monthly balance (delivery of trial balance);
(3) description of closing balance and tax return (delivery of balance sheet, profit/loss statement, form of tax return, and their supplemental notes);
(4) changes in constituents of shareholders (delivery of shareholders’ registry after the change); and
(5) status of business performance, prospective business plan, and anything representing company’s present status (delivery of business plan, projection of profit/loss, and projection of working capital).
Article 7 (Resignation or Departure of Directors)
1. Unless permitted by CCC beforehand, Eguchi shall not resign a director of Re.Ra.Ku. before the end of his term or refuse reappointment as a director of Re.Ra.Ku. at the end of his term.
2. Eguchi shall not, whether directly or indirectly, engage in any business competing with Re.Ra.Ku., by himself or through any third parties, during his term as a position of director, corporate auditor or employee of Re.Ra.Ku., and for two years after Eguchi is no longer at the position of director, corporate auditor or employee of Re.Ra.Ku. due to his own fault.
3. The preceding paragraph shall include, but not limited to, cases where Eguchi become an officer or employee of a company, legal entity, or partnership, etc., engaging in the same business as or competing with the one operated by Re.Ra.Ku. and other affiliates.
Article 8 (Investigation)
As it may be necessary, CCC may investigate accounting books of Re.Ra.Ku. and other important documents at the head office or other offices of Re.Ra.Ku., and demand Re.Ra.Ku. to report the status of its business activity. In case Re.Ra.Ku. is requested to provide documents or books by CCC or report the status of its business activity, Re.Ra.Ku. shall respond in an immediate manner.
Article 9 (Right to Attend Meeting of Board of Directors)
1. If CCC requests, a person who is designated by the CCC may attend a meeting of the board of directors of Re.Ra.Ku. and similar important management meetings as an observer, and may provide an opinion.
2. When Re.Ra.Ku. holds any meeting set forth in the foregoing paragraph, Re.Ra.Ku. shall notify the person set forth in the foregoing paragraph of the meeting and its proposals by e-mail or telephone no later than one (1) week; provided, however, that Re.Ra.Ku. is allowed to call the meeting on an “as soon as possible” basis, if it is urgent.
Article 10 (Confidentiality)
CCC and Re.Ra.Ku. shall maintain confidential any non-public information in connection with the counterparty that has been received pursuant to this Agreement, and shall not disclose to any third party without the counterparty’s prior consent or reasonable grounds; provided, however, that non-public information shall not include any information that was in the public domain at the time when CCC and/or Re.Ra.Ku. received the information, any information that became public without CCC’s fault after the receipt of the information, or any information that the CCC and/or lawfully received from any third party.
Article 11 (End of this Agreement)
1. This Agreement shall end when any of the following events occurs:
(1) event where all the parties hereto reach an agreement whereby this Agreement will be terminated;
(2) event where the IPO of Re.Ra.Ku. is completed; or
(3) event where CCC has not become a shareholder or is no longer a shareholder.
2. The end of this Agreement shall be effective prospectively, and shall not affect any rights and obligations that arose out of this Agreement prior to the consummation hereof, except for cases otherwise set forth herein.
Article 12 (Demand for Purchase of Stock)
1. If Re.Ra.Ku. and/or Eguchi fall into any of the following events, CCC may demand Re.Ra.Ku. and/or Eguchi to purchase all or part of stocks owned by CCC at a price of the issuing price set forth in Article 2 or fair price, whichever is higher:
(1) event where either of Re.Ra.Ku. or Eguchi fails to perform any obligation hereunder and fails to cure no later than 30 days after receiving a demand for cure made by CCC; and
(2) event where warranties hereunder are untrue in material respects, or an event where Re.Ra.Ku. and/or Eguchi fails to provide information that is considered as necessary and significant in order for CCC to contemplate whether to carry out the Investment.
2. In applying the foregoing paragraph, if Re.Ra.Ku. may not repurchase its own shares due to the laws and regulations after a demand for repurchase of shares owned by CCC, Re.Ra.Ku. shall promptly designate a third party who purchases the shares at the price set forth in the foregoing paragraph and cause the third party to purchase the shares owned by CCC.
Article 13 (Compensation for Damages)
If CCC incurred any damages due to the breach of any obligations hereunder or representations and warranties by Re.Ra.Ku. or Eguchi, Re.Ra.Ku. shall compensate for such damages and expenses (including attorney costs to the extent reasonably necessary for CCC to deal with them) that are in the scope of a reasonable causation, out of damages incurred by CCC.
Article 14 (Consultation/Others)
1. If it is likely that any performance pursuant to each of the provisions hereof becomes difficult, Re.Ra.Ku. and Eguchi shall inform CCC of that fact promptly, and CCC, Re.Ra.Ku. and Eguchi shall discuss and determine how to address it.
2. Any matters not stipulated in this Agreement and any doubts arising out of interpretation of this Agreement shall be discussed and determined by CCC, Re.Ra.Ku., and Eguchi.
3. No parties shall assign, set an encumbrance in, or dispose of any rights or obligations in connection with this Agreement to any third parties without prior written consent by the other party.
4. This Agreement shall be governed by the laws of Japan.
5. The Tokyo District Court shall have exclusive first instance jurisdiction over any and all disputes among the parties hereto arising out of this Agreement.
[Intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have prepared this Agreement in triplicate, and each of the CCC, Re.Ra.Ku., and Eguchi has held one copy.
December 22, 2016
CCC: |
16-17 Nampeidaicho, Shibuya-ku, Tokyo CCC Marketing Co., Ltd. Nobu Takeda, Representative Director [Stamped Seal] |
Re.Ra.Ku.: |
Column Minami-Aoyama 4F, 7-1-5 Minami-Aoyama, Minato-ku, Tokyo Re.Ra.Ku. Co., Ltd. Kouji Eguchi, Representative Director [Stamped Seal] |
Eguchi: |
3-5-1-1504, Itabashi-ku, Tokyo Kouji Eguchi [Stamped Seal] |
Exhibit 10.3
Trademark License Agreement
Koji Eguchi ("X") and Medirom Inc. (Y"), in granting Y the use of the registered trademark specified in Article 1 and owned by Y, enter into this Trademark License Agreement (the "Agreement") as follows:
Article 1 (Trademark)
X hereby grants to Y a non-exclusive license to use the following trademark owned by X (the "Trademark"). Y may not grant a third party the right to use the Trademark without the prior written consent of X:
Description
Registration Number: No. 4720144
Classification of Goods and Services: Class 44
Designated Goods or Designated Services: Finger pressure, massage and Shiatsu; chiropractic; moxacauterization; judo therapy; acupuncture; on-site finger pressure; on-site massage and Shiatsu; on-site chiropractic; on-site moxicauterization; on-site judo therapy; and on-site acupuncture
Article 2 (Scope of Non-exclusive Right of Use)
The scope non-exclusive license of the Trademark shall be as follows:
(i) Area: Japan
(ii) Term: As stated in Article 4
(iii) Details: Description of relaxation therapists working at Y's stores
Article 3 (Royalty)
The use of the Trademark shall be free of charge.
Article 4 (Term of this Agreement)
The term of this Agreement shall commence on October 24, 2003 and expire upon the expiration of the term of the Trademark, regardless of the date of signing of this Agreement.
Article 5 (Registration)
1. If Y so desires, X shall cooperate with the procedures for registering Y's non-exclusive license with respect to the Trademark.
2. The allocation of the expenses required for the registration set forth in the preceding paragraph shall be determined by the parties after separate consultation between them.
Article 6 (Trademark Infringement)
1. Y shall promptly inform X of any infringement or threatened Infringement by any third party of which Y becomes aware in connection with the Trademark.
2. If X so desires, Y shall provide X with the necessary cooperation to eliminate such infringement described in the preceding paragraph.
Article 7 (Maintenance and Warranty of the Trademark)
1. X shall maintain the Trademark during the term specified in Article 4.
2. X represents and warrants to Y that the Trademark does not infringe upon the rights of any third party.
Article 8 (Prohibition of Assignment of Rights and Obligations)
Neither X nor Y shall assign or pledge as collateral all or part of the status, rights and obligations under the Agreement to a third party without the prior written consent of the other party.
Article 9 (Compensation for Damages)
If X or Y intentionally or negligently breaches any provision of this Agreement thereby causing damage to the other party, such breaching party shall be liable to compensate for those damages.
Article 10 (Termination)
1. In the event the other party comes under any one of the following items, then the party not falling under any of the following items shall be entitled to terminate this Agreement without notice:
(i) In the event either party has breached its obligations as set forth in this Agreement and has failed to remedy such breach within a reasonable period of time in spite of receiving a demand for remedy from the other party within a reasonable period of time;
(ii) In the event of attachment, provisional attachment, provisional disposition, or procedures for collection of tax delinquency;
(iii) In the event of a petition (either the subject party files itself or a third party (including the other party) files) for bankruptcy, special liquidation, corporate reorganization, or civil rehabilitation;
(iv) | In the event of suspension of payment or insolvency; |
(v) | In the event of suspension of business transactions with banks; |
(vi) | When the competent authorities have ordered the suspension of business; |
(vii) | In the event of any change in major shareholders or directors, business transfer, merger, corporate reorganization, or any other event that has a material influence on the control of the party; |
(viii) | In the event of corporate dissolution; or |
(ix) In the event of any other event similar to any of the preceding items.
2. The termination under the preceding paragraph shall not preclude the claim for damages under the preceding article.
Article 11 (Exclusion of Antisocial Forces)
1. Notwithstanding the provisions of the preceding articles, in the event the other party (including its officers and employees; the same shall apply hereinafter in this article) is found to fall under any of the following items, X and Y (whichever does not fall under any of the following items) may immediately terminate this Agreement. In this article, the persons specified in item (i) of this paragraph shall be referred to as "Antisocial Forces".
(i) When a party is found that the other party falls under any of the following items:
a. | A person who belongs to an organization that is likely to encourage collective or habitual illegal or violent acts; |
b. | A person who has continues to do business, knowing that the person is under the influence of an entity specified in a. of this paragraph or a member of an association specified in a. of this paragraph; |
c. | A person who belongs to an organization subject to punishment under the Act on the Control of Organizations Who Have Conducted Non-Discriminatory Mass Murder (Act No. 147 of 1999) or a person who continuously carries out transactions with such a person, knowing the person belongs to such an organization; |
d. | A person who conceals criminal proceeds, etc. and receives criminal proceeds, etc. as stipulated in the Act on Punishment of Organized Crimes and Regulation of Crime Proceeds, etc. (Act No. 136 of 1999), or a person who is suspected to conduct such acts or is engaged in continuous transactions with such a person while knowing of the person conducts or is suspected to conduct such acts; or |
e. | Persons similar to a. to d. of this paragraph. |
(ii) When a party has committed any of the following acts:
a. | When using fraud, violent acts, or threatening speech; |
b. | When the party has informed that it is an "Antisocial Forces" or that its affiliate is a "Antisocial Forces"; |
c. | When the party, by itself or through a third party, has committed any act that damages or is likely to damage the reputation or reputation of the other party; |
d. | When having interfered with the business of the other party or having committed illegal or improper acts that may interfere with the business of this Agreement party by itself or through a third party, or when it is found that all or part of the interests and effects are directly or indirectly attributable to Antisocial Forces. |
2. | In the event the other party comes under any one of the items in the preceding paragraph (i) or commits any of the acts in the preceding paragraph (ii), X and Y may terminate this Agreement, in whole or in part, without requiring any notice to the other party. |
3. | In the event this Agreement is terminated pursuant to the provisions of the preceding paragraph, the terminated party shall compensate all damages incurred by the terminated party. |
Article 12 (Governing Law)
This Agreement shall be governed by the laws of Japan.
Article 13 (Jurisdiction)
Any dispute concerning this Agreement shall be settled at the Tokyo District Court as the exclusive jurisdictional court of first instance irrespective of the amount of the claim.
Article 14 (Consultation)
Any matter not described in this Agreement or any doubtful matter raised concerning the interpretation of this Agreement shall be settled after the parties' mutual consultation.
This Agreement shall be executed in duplicate as a proof of the execution of this Agreement, and each party shall retain one copy after affixing the parties' respective names and seals.
June 30, 2020
X:
3-5-1-1504, Itabashi, Itabashi-ku, Tokyo
Koji Eguchi [Stamped Seal]
Y:
2-3-1, Daiba, Minato-ku, Tokyo
Medirom Inc. [Stamped Seal]
Exhibit 10.4
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT, IF PUBLICLY DISCLOSED.
DEVELOPMENT AND PRODUCTION AGREEMENT
This Development and Production Agreement (“Agreement”), which is effective as of August 4, 2020 (the “Effective Date”) is made and entered into by and between Matrix Industries, Inc., a Delaware USA corporation with a place of business at 1440 O’Brien Drive, Suite A-1, Menlo Park, California, USA 94025 (“Company”) and MEDIROM Healthcare Technologies Inc., a Japan corporation having a place of business at Tradepia Odaiba 16F, 2-3-1 Daiba, Minato-ku, Tokyo 135-0091, Japan (“Customer”). Company and Customer are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
A. | WHEREAS, Company has developed thermoelectric energy harvesting technology and applied it to wearable devices and offers development services and its thermoelectric energy harvesting modules set forth in Appendix A (the “Products”); |
B. | WHEREAS, the Parties wish to collaborate in the development and deployment of a completed wearable device and service offering described in Appendix A as the “Customer Product”; |
C. | WHEREAS, Customer desires to purchase technical and engineering services (“Development Services”) and Products from Company for incorporation into Customer Products to be sold by Customer in and for use solely in the Territory in the Field (as those terms are defined and set forth in Appendix A); |
D. | WHEREAS, in connection with this Agreement, the Parties are entering into that certain Software License Agreement of even date herewith as attached hereto as Appendix E) (the “SLA”), pursuant to which Company will license to Customer the Firmware (as defined in the SLA) and provide the Support (as defined in the SLA), all as further described in and subject to the terms and conditions of the SLA; and |
E. | WHEREAS, Subject to the terms and conditions of this Agreement, Company is willing to perform the Development Services, and to supply to Customer the Products for use solely in the Territory in the Field on an exclusive basis in the Territory in the Field, all as further described herein and subject to the terms and conditions set forth below. |
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and intending to be legally bound hereby, the Parties agree as follows:
AGREEMENT
1. | Definitions. As used herein, |
a. “Affiliate” means, with respect to any Person, any other Person, which directly or indirectly controls, is controlled by, or is under common control with, such Person. A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, fifty percent (50%) or more of the voting stock or other ownership interest of the other Person, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other Person by any means whatsoever.
b. “Commercialize”, “Commercializing” and “Commercialization” shall mean activities directed to using, marketing, advertising, promoting, exploiting, distributing, importing, selling, offering for sale and/or disposing of a product.
c. “Confidential Information” means, with respect to a Party (“Discloser”), all information of any kind whatsoever, and all tangible and intangible embodiments thereof of any kind whatsoever, which is disclosed by such Party to the other Party (“Recipient”) that is marked or identified as “Confidential” or which is treated by Discloser as confidential or proprietary and which a reasonable person would recognize to be confidential or proprietary from its nature or the manner of its disclosure. Notwithstanding the foregoing, Confidential Information of a Party shall not include information which (i) was publicly known prior to disclosure of such information by the Discloser to the Recipient, (ii) became publicly known, without fault on the part of the Recipient subsequent to disclosure of such information by the Discloser to the Recipient, (iii) was received by the Recipient at any time from a source, other than the Discloser, rightfully having possession of and the right to disclose such information without obligation of confidentiality, or (iv) was independently developed by employees or agents of the Recipient who have not had access to or made use of any information disclosed by the Discloser to the Recipient.
d. “Defect” means any material non-conformance to the Specifications. Products that are subject to a Defect may be referred to herein as “Defective.”
e. “Development Services” means technical and engineering activities provided by Company for the design, development, and preparation for manufacturing of the Product.
f. “Field” means and is limited to the field described in Appendix A under the heading “Field”.
g. “Intellectual Property Rights” means all past, present and future trade secret rights, trademark rights, patent rights, copyrights, moral rights, contract rights, and other proprietary rights in any jurisdiction.
h. “Law” and “Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, regional, provincial, county, city or other political subdivision, agency or other body, domestic or foreign.
i. “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
Page 2 of 35
j. “Specifications” mean the specifications set forth in Appendix C. From time to time, the Development Services and Specifications may be amended upon mutual written agreement by the Parties.
k. “Technology” means and includes all innovations, improvements, suggestions, ideas, apparatuses, methods, processes, inventions (whether or not patentable), discoveries, proprietary information, trade secrets, know-how, protocols, specifications, techniques, works of authorship (including software), algorithms, documentation, designs, diagrams, data, test results, reports, and other forms of technology and information, whether in tangible or intangible form.
l. “Third Party” means any Person other than Company, Customer, and their respective Affiliates.
2. | Product Supply. |
Supply; Exclusivity. Subject to the terms and conditions of this Agreement, Company agrees to sell the Products to Customer within the Territory for use by Customer in the Field. Except for the particular third party that Company has identified to Customer, Company will not provide, directly or indirectly, the Products to any third party for such Third Party, during the Initial Term, to distribute or sell the Products (whether in stand-alone form or as embedded or incorporated into a finished product of such Third Party) within the Field and Territory. For clarity, Company retains at all times the right to (A) Commercialize the Products inside and outside of the Field and inside and outside of the Territory so long as Company does not provide the Products to a Third Party for such Third Party, during the Initial Term, to distribute or sell the Products (whether in stand-alone form or as embedded or incorporated into a finished product of such Third Party) within the Field and Territory, (B) undertake and provide general engineering, customization, and consulting work for or to any Third Party, and (C) Commercialize its own product and supply against prior contractual obligations to Richemont Cartier without restriction other than activity band for consumer lifestyle health monitoring with all of the following characteristics:
i) | Does not have a display; |
ii) | Does not contain GPS or other location capability |
iii) | Does includes heart rate and motion sensing |
iv) | For clarity, industrial, medical, and clinical applications are not considered exclusive. |
b. Prohibited Activities. Neither Customer nor its Affiliates may, directly or indirectly, during the term of this Agreement, (i) export, Commercialize, or otherwise exploit the Products (including as embedded or incorporated into any product of Customer) outside the Field or outside the Territory, or (ii) sell or distribute the Products (including as embedded or incorporated into any product of Customer) to any Person whom Customer or any of its Affiliates knows, or has a reasonable suspicion, has caused or will cause or has permitted or will permit the Products (including as embedded or incorporated into any product of Customer) to be Commercialized outside the Field or outside the Territory.
Page 3 of 35
c. Additional Products. From time to time, the Products listed in Appendix A and the prices listed in Appendix B may be amended by mutual agreement of the Parties.
d. Firmware. Notwithstanding anything to the contrary contained herein or in any attachment hereto (other than the SLA), the Products sold by Company to Customer hereunder expressly exclude the Firmware, which is licensed, not sold, to Customer pursuant to the SLA. Any and all use of the Firmware by Customer and its End Customers (as defined in the SLA) shall be governed by and subject to, the terms and conditions of the SLA.
3. | Purchase of Products. |
a. Forecast and Reports. Customer will provide Company with a twelve (12) months rolling forecast of estimated quantities of the Products which Customer intends to order from Company. The forecast is for planning purposes only and is not binding. Customer will deliver the initial forecast within thirty (30) days after the Effective Date. Thereafter, Customer will deliver the forecast and the reports on a monthly basis by the first business day of each month.
b. Purchase Orders. On the Effective Date, Customer is required to purchase the minimum quantity of Products referenced in Appendix A as Initial Product Purchase Requirement and thereafter, on an annual basis during the term of this Agreement, the Annual Minimum Purchase Requirement referenced in Appendix A. From time to time, Customer will place written purchase orders with Company to purchase additional quantity of Products. Each purchase order shall identify (i) the purchase order number, (ii) the quantity of Products Customer desires to purchase, (iii) delivery address, (iv) the requested shipment date, (v) the price to be paid for the Products, and (vi) any other elements necessary to ensure the timely delivery of the Products. The Parties agree that the shipment dates requested in the purchase order must be at least forty five (45) days after the purchase order is submitted to Company. All purchase orders are subject to acceptance by Company. Company shall indicate its written acceptance of each purchase order within [5] days of receipt thereof, failing which the purchase order shall be deemed accepted. In its acceptance, Company shall notify Customer of the estimated shipping date of the Products. All purchase orders placed under this Agreement are subject to the terms and conditions provided in this Agreement, unless otherwise agreed upon formally in writing between the Parties with signatures of responsible executives. Company agrees to sell to Customer, if ordered, at least 300,000 units of Product during [2] years since the Effective Date provided that this Supply Agreement is in force and that Customer is not and has not been in default on any of its obligations under this Supply Agreement.
c. Shipment, Title and Delivery. All sales of the Products are made Ex Works (Incoterms 2020) Company’s or its supplier’s facility. At the time a Product is delivered to Customer or an agent of Customer, including common carrier, title and risk of loss of the Product shall pass to Customer and Company is not responsible for any subsequent delay in transportation or non-delivery of the Product. Customer shall provide whatever insurance against loss or damage it considers necessary once a Product is shipped from Company or its supplier’s facility, and shall be responsible for all shipping and related costs following shipment of the Product at Company’s or its supplier’s facility.
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d. Order Reschedule or Cancellation. Reschedule or cancellation of any purchase order by Customer prior to shipment will be subject to the terms specified in Appendix B.
e. Reserved.
f. Non-Conforming Orders.
i) | Customer shall inform Company in writing, within thirty (30) days of receipt of Products under a particular purchase order (the “Review Period”), of any claims in which (a) there is a shortfall in the quantity of Products delivered, or (b) a delivered Product is Defective, provided that if a Defect in the Product could not reasonably be discovered by Customer within the Review Period (a “Latent Defect”), Customer shall provide Company with notice of such Latent Defect within thirty (30) days after discovering and confirming such Latent Defect (but in all cases within ninety (90) days of delivery' of the Product to Customer hereunder). Customer will return Defective Products to Company at Company’s expense. Provided that Customer complies with the obligations set forth above in this Section 3(f)(i): |
(1) | in the event of a shortfall in the quantity of Products delivered under a purchase order, Company shall supply as soon as reasonably practicable, but no later than [30] days after receipt of the Products, to Customer any additional Products as is necessary to meet the quantity ordered under such purchase order; |
(2) | in the event that more Products are delivered to Customer than ordered under a purchase order, Customer may elect either to (i) return to Company, at Company’s expense, any Products in excess of the quantity ordered, or (ii) accept any Products in excess of the quantity ordered as against future purchase orders of Products; and |
(3) | in the event a Product is Defective, Company will honor the production warranty provisions as stated in Appendix B. |
ii) | In the event Company or its supplier does not agree with Customer’s determination that Products are Defective, Company shall promptly notify Customer of its dispute. In such event, Customer shall promptly segregate the disputed Products (“Disputed Products”) from the undisputed Products and the Parties will attempt, in good faith, to resolve such dispute. If the Parties cannot resolve such dispute within fifteen (15) days, an independent, neutral, qualified expert that is reasonably acceptable to both Parties shall be asked to inspect and test the Disputed Products. If such expert finds that the Disputed Products are not Defective, Customer shall accept delivery of the Products and pay the fees related to such inspection and testing and shall pay for the Disputed Products in accordance with this Agreement. If such expert finds that the Disputed Products are Defective, Company shall comply with its obligation under Section 3(f)(i)(3) and pay the fees of such inspection and testing. The findings of such inspection and testing shall be final and binding on the Parties and treated as the Company’s Confidential Information. |
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4. | Compliance with Laws. Each Party will comply with all applicable Laws with regard to its Commercialization of the Products (including as embedded or incorporated into any product of Customer) or otherwise regarding such Party’s activities hereunder. Neither Party will engage in any illegal or unethical practices in connection with its Commercialization of the Products (including as embedded or incorporated into any product of Customer) or otherwise regarding such Party’s activities hereunder. Without limiting the foregoing, each Party shall comply, and shall ensure its officers, directors, employees and contractors, subcontractors, agents and any person or entity acting on its behalf or under its control comply, with all applicable anti-corruption Laws, including but not limited to the U.S. Foreign Corrupt Practices Act (“FCPA”). If at any time any potential or actual conflict of interest arises the Party that becomes aware of such conflict shall immediately notify the other Party in writing of the potential or actual conflict. No payments or transfers of value shall be made which have the purpose or effect of public or commercial bribery, acceptance or acquiescence in extortion, kickbacks or other unlawful or improper means of obtaining or retaining business or directing business to any Person. Each Party' shall cooperate fully in the other Party’s efforts to enforce the terms of this provision, including but not limited to providing, upon request from the other Party (a) certification of compliance with this provision as signed by an authorized representative of Customer or Company, as applicable, and (b) reasonable cooperation at the requesting Party’s expense with respect to any investigation relating to this provision. |
5. | Fees. |
a. Product Price. The Products will be sold to Customer at the Product Prices set forth in Appendix B.
b. Taxes and Other Charges. The prices owed by Customer to Company as set forth in this Agreement (including all Software Fees under the SLA) exclude all taxes, whether or not set forth separately. Customer shall be responsible for all sales, use, VAT and other taxes (including taxes based on Customer’s net income), fees and import duties arising from the purchase and delivery of the Products and the licensing of the Firmware. The prices will be subject to an additional charge to cover any applicable tax or government assessments (other than any tax based solely upon Company’s net income) and related interest which Company is at any time obligated to pay or collect in connection with or arising out of transactions between Company and Customer. The prices do not include any transportation or shipping charges, insurance charges, export or special packaging charges. The prices also do not include any charges relating to inspection performed by outside individuals, entities, or agents at the request of Customer.
c. Payment. All payments due under this Agreement will be made in U.S. dollars in accordance with the Payment Terms set forth in Appendix B. Payments shall be made, at the instruction of Company, by either (i) a check to Company, or (ii) electronic transfer of funds to Company’s account. Except as may be expressly provided in this Agreement, all payments made under this Agreement are non-refundable. Failure of a Product to comply with the Specifications will not delay Customer’s obligation to pay for the Product but may be subject to the remedies set forth in Section 3(f).
d. Late Fees. In the event Customer fails to make any payments when due under this Agreement then Customer will be charged a late fee of one and a half percent (1.5%) of the outstanding balance per month or the maximum rate allowed by applicable Law, whichever is lower. Company shall recover any reasonable out-of-pocket expenses incurred in collecting payments due, including, without limitation, any bank charges for returned checks and attorneys’ fees. In the event of any late payment by Customer that is not cured within ten (10) days from the date of notice thereof, Company may decline to make further shipments of the Products until all amounts due and late fees are paid in full, without in any way affecting its rights under this Agreement. Company may enforce the foregoing rights without waiving any and all other rights or remedies it may have for any breach of this Agreement.
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e. Extension of Credit. Company may, in its sole discretion, extend credit to Customer for some or all of the entire amount due to Company hereunder. The amount or terms of credit may be changed or withdrawn completely by Company at any time for any reason.
6. | Intellectual Property. |
a. Company IP. As between the Parties, Company exclusively owns all right, title, and interest in and to (i) the Products and Firmware, including all Technology embodied or incorporated therein and all Intellectual Property Rights therein or thereto, and (ii) all other Technology that is either (i) owned by Company (or its affiliates or third party suppliers or licensors) prior to the Effective Date, (ii) developed, acquired, or otherwise obtained by Company (or its affiliates or third party suppliers or licensors) during the term of this Agreement, and (iii) any improvements, enhancements, modifications, or derivative works of or to any of the foregoing, including all Intellectual Property Rights therein or thereto (collectively, the “Company IP”). There are no implied rights or licenses granted to Customer hereunder and Company expressly reserves all of its Intellectual Property Rights in and to the Company IP (including the Products and Firmware).
b. Company hereby grants to Customer during the term of this Agreement a worldwide, non-exclusive, non-transferable, non-sublicensable license under Company’s Intellectual Property Rights for Customer to (i) use any plans, bill of material(s), documents, specifications, software code (in object code form only), and other materials specific to the Customer Product that are developed by Company in its performance of the Development Services and delivered to Customer hereunder (excluding, in all cases, the Firmware) (collectively, the “Customer Product Plans”) for the sole purpose of making or having made the Customer Product (other than the Product), and (ii) make and have made the Customer Product (other than the Product or the Firmware) in strict accordance with any applicable specifications provided by Company. For the avoidance of doubt, (i) all Customer Product Plans are and shall be deemed to be the Confidential Information of Company and may not be disclosed to any third party or used for any purpose other than manufacturing the Customer Product, (ii) Customer may not modify any Customer Product Plans or the Customer Product without Company’s prior written consent, and (iii) no right or license of any kind is granted hereunder for Customer to make or have made the Product or any component thereof or to make, have made, use, sell, import, export, reproduce, modify, create derivative works of, perform, display, or otherwise exploit the Firmware (which rights, if any, are granted solely under the SLA).
c. Should Customer wish to develop a next-generation product, it will first invite Company to evaluate the requirements and make a proposal and provide Company the opportunity to meet any competitive bids. If Company provides a proposal that is the same or better for Customer, Customer will select Company for the development. During the term of this Agreement, should Company develop a next-generation set of capabilities, it shall, provided that Customer has agreed to appropriate confidentiality and non-use obligations and is not and has not been in breach of this Agreement, provide information on the capabilities to Customer and, at Customer’s request, negotiate in good faith with Customer to offer the capabilities to Customer prior to offering the capabilities to Company’s other customers. For any next-generation development, the Parties shall both use commercially reasonable efforts to provide exclusivity to each other.
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d. Proprietary Notice. Customer will not remove, alter, or conceal any proprietary rights notices, warnings, or disclaimers of Company provided with the Products without Company’s prior written consent.
e. Patent Challenge. During the term of this Agreement, neither Party nor its Affiliates will (i) commence or participate in any action or proceeding (including any patent opposition or re-examination proceeding), or otherwise assert in writing any claim, challenging or denying the validity of any Intellectual Property Rights in or embodied by the Company IP (including the Products) or the Customer Products, as applicable, or (ii) actively assist any other Person or entity in bringing or prosecuting any such patent challenge.
f. Customer Intellectual Property. As between the Parties, Customer owns all rights, title, and interest in the Technology shown in Appendix A that Customer contributes to the Customer Products, including all Intellectual Property Rights therein, but in each instance excluding the Company IP. There are no implied rights or licenses granted to Company hereunder and Company expressly reserves all of its Intellectual Property Rights in and to the Customer Products except as expressly granted hereunder. Customer hereby grants to Company during the term of this Agreement a worldwide, non-exclusive, royalty-free license under all Intellectual Property Rights of Customer to make, have made, import, export, and sell the Products to Customer and to otherwise use and exploit such Intellectual Property Rights to the extent necessary for Company to perform its obligations hereunder or any attachment hereto.
g. Customer Product Plans. Within two (2) weeks after Customer receives the Customer Product Plans from Company (the “Acceptance Period”), Customer will conduct acceptance testing (including in accordance with any criteria and procedures set forth in Appendix A) to evaluate whether such Customer Product Plans conform in all material respects with the specifications and requirements of this Agreement and will provide Company either (i) a written acceptance of the Customer Product Plans or (ii) a written statement of rejection indicating the non-conformities to the specification or requirements requiring correction. In the absence of such criteria and procedures being set forth in Appendix A, acceptance by Customer will be based solely upon such Customer Product Plans’ material conformance to objective criteria to be reasonably derived from the specifications and requirements of this Agreement. The Customer Product Plans and the corresponding Development Services will be deemed irrevocably accepted by Customer if Company does not receive either written acceptance or written rejection regarding such Customer Product Plans within the Acceptance Period. If Company receives a written statement of rejection and confirms that the Customer Product Plans are non-conforming, Company will use commercially reasonable efforts to remedy all identified, material, reproducible non-conformities and will promptly return the reworked Customer Product Plans to Customer for re-testing and reevaluation in accordance with the procedures set forth in this Section 6(g). The foregoing procedure will be repeated until (i) final written acceptance of the Customer Product Plans by Customer, (ii) the parties mutually agree in writing to terminate this Agreement, or (iii) at Company’s election, Company reimburses Customer the amounts it paid to Company for those portions of the Customer Product Plans that are non-conforming. This Section 6(g) sets forth the sole and exclusive remedies of Customer, and the exclusive obligations and liabilities of Company, with respect to all non-conforming Customer Product Plans and the Development Services.
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7. | Term and Termination. |
a. Term. Unless earlier terminated pursuant to this Section 7, this Agreement shall remain in full force for an initial term of two (2) years from the Effective Date or one (1) year from date of first shipment of Customer Products to retailer / in store, whichever is the lesser (the “Initial Term”). This Agreement shall automatically renew for one (1) year terms (each, a Renewal Term”) unless either Party provides written notice of non-renewal to the other Party at least sixty (60) days prior to the end of the Initial Term or the then-current Renewal Term, provided that Company agrees not to issue a notice of non-renewal to Customer so long as Customer is not in material breach of the Agreement at the time of renewal. Further Customer agrees that Customer’s exclusive rights under Section 2.1 hereof will automatically terminate following the Initial Term.
b. Termination for Breach. Either Party may terminate this Agreement, effective immediately, by giving the other Party written notice of termination, if the other Party breaches any of its material obligations under this Agreement and fails to cure such breach to the satisfaction of the terminating Party within thirty (30) days after receiving written notice thereof from the terminating Party. In addition, Company may terminate this Agreement, effective immediately, by giving written notice of termination to Customer if Customer has failed to pay any undisputed amounts owed under this Agreement within thirty (30) days after Customer has received written notice from Company regarding such past due amount.
c. Effects of Termination. In the event that this Agreement is terminated for any reason Company shall have no further obligation to fulfill any new orders for the Products and each Party shall immediately pay to the other party all outstanding amounts due under this Agreement. Neither Party shall be liable for damages of any kind as a result of properly exercising its respective right to terminate this Agreement according to the terms and conditions of this Agreement, and termination will not affect any other right or remedy of either Party. No compensation of any kind (including without limitation any claim for loss of profits, loss of prospective profits, damages, or indemnity) shall be due from either Party to the other solely as a result of termination of this Agreement.
d. Survival. Sections 1, 2(b), 4, 6(a), 6(b), 6(d), 7(d), 8, 9(c), and 10-12, and any outstanding payment obligation of either Party will survive any termination of this Agreement.
8. | Indemnification. |
a. Indemnification by Customer. Customer agrees to defend Company, Affiliates and licensors (directly or indirectly) of Company, and their respective directors, officers, employees and agents (collectively, the “Company Indemnitees”), and shall indemnify and hold harmless the Company Indemnitees, from and against any liabilities, losses, costs, damages, fees or expenses payable to a Third Party, and reasonable attorneys’ fees and other legal expenses with respect thereto arising out of any claim, action, lawsuit, or other proceeding arising out of any theory of liability (collectively, “Losses and Claims”) brought against any Company Indemnitee by a Third Party resulting from or relating to: (i) any activities undertaken by Customer in its further Commercialization of the Products (including as embedded or incorporated into any product of Customer) and excluding Losses and Claims to the extent attributable to any failure or delay by Company in taking reasonable actions to mitigate such Losses and Claims, (ii) infringement, misappropriation, or violation by Customer of any Intellectual Property Rights of a Third Party, other than to the extent Company is obligated to indemnify Customer as set forth in Section 8(b) hereof, (iii) any breach by Customer of any of its representations or warranties or obligations pursuant to this Agreement, or (iv) the gross negligence or willful misconduct of Customer or any Affiliate of Customer.
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b. Indemnification by Company. Company agrees to defend Customer, Affiliates of Customer, and their respective directors, officers, employees and agents (collectively, the “Customer Indemnitees”), and shall indemnify and hold harmless the Customer Indemnitees, from and against any Losses and Claims brought against any Customer Indemnitee by a Third Party to the extent resulting from or relating to: (i) Defects with the Product, other than caused by Customer, and excluding Losses and Claims to the extent attributable to any failure or delay by Customer in taking all necessary actions to mitigate such Losses and Claims, (ii) infringement, misappropriation, or violation by a Customer Indemnity based solely upon the sale or import of the Product as and in the form provided by Company, of any Intellectual Property Rights of a Third Party, (iii) any breach by Company of any of its representations or warranties or obligations pursuant to this Agreement, or (iv) the gross negligence or willful misconduct of Company or any Affiliate of Company, and in all cases excluding all Losses and Claims to the extent attributable to any failure or delay by Customer in taking reasonable actions to mitigate such Losses and Claims . For clarity, Company shall have no obligations under this Section 8(b) to the extent any Losses and Claims arise out of or relate to the modification of the Products by anyone other than Company, the misuse of the Products (including any Commercialization of the Products outside of the Field or the Territory), the combination of the Products with any hardware, products, or services not provided by Company or embedding or incorporating the Products into any products of Customer, or Customer’s gross negligence or willful misconduct or breach of this Agreement (all of the foregoing being subject to Customer’s obligations under Section 8(a)).
c. Procedure. If any Company Indemnitee or Customer Indemnitee (collectively, the “Indemnitee”) intends to claim indemnification under this Section 8, the Indemnitee shall promptly notify the other Party (the “Indemnitor”) of any Loss and Claim for which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel selected by the Indemnitor and reasonably acceptable to the Indemnitee, provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential conflicting interests between such Indemnitee and any other Party represented by such counsel in such proceedings. The Indemnitor shall have the right to settle or compromise any claims for which it is providing indemnification under this Section 8, provided that the consent of the Indemnitee (which shall not be unreasonably withheld, conditioned or delayed) shall be required in the event any such settlement or compromise would adversely affect the interests of the Indemnitee. The indemnity obligation under this Section 8 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to the Indemnitor’s ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Section 8, but the omission to so deliver notice to the Indemnitor will not relieve Indemnitor of any liability that it may have to any Indemnitee otherwise than under this Section 8 other than to the extent such omission impinges on the ability to mitigate or avoid such liability. The Indemnitee under this Section 8 and its employees and legal representatives shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification. For clarity, nothing contained in this Section 8 shall be deemed to apply to the Firmware or Support, which are exclusively addressed in the SLA.
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9. | Representations and Warranties. |
a. Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party as follows:
i) | Corporate Existence. Such Party is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated. |
ii) | Authorization and Enforcement of Obligations. Such Party (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder, and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms. |
iii) | No Consents. All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by such Party in connection with this Agreement have been and will be obtained. |
iv) | Compliance. Each Party will comply with all applicable Laws in exercising its rights and performing its obligations hereunder, including any applicable anti-corruption Laws. |
b. Company Warranties. Company represents and warrants to Customer that: (i) the Products when delivered to Customer will be new, free and clear of all liens, and, for a period of one year following delivery to Customer, will not be Defective (provided that Customer’s sole and exclusive remedies, and Company’s sole and exclusive liability (other than as set forth in Section 8(b)) arising out of or relating to any Defective Products are as set forth in Section 3(f) and the production warranty provisions as stated in Appendix B); and (ii) Company has all rights necessary to provide the Products hereunder, and that none of the Products do or will infringe upon the Intellectual Property Rights or other proprietary rights of any third party (provided that Customer’s sole and exclusive remedies (if any), and Company’s sole and exclusive liability arising out of or relating to any infringement by the Products of any Intellectual Property Rights or other proprietary rights of any third party are as set forth in Section 8(b)); (iii) Company will use commercially reasonable efforts to perform the Development Services hereunder in a timely and professional manner. For the avoidance of doubt, (1) Company shall respond to the Customer within [3] days after Customer contacts in relation to the Product and/or the Development Services, and (2) Company’s exclusive obligations and liabilities with respect to any non-conforming Development Services are as set forth in Section 6(g) hereof.
Company shall have no obligations under this Agreement and a Product shall not be deemed to be Defective to the extent a Product was subject to improper storage, handling, use, abuse, damage, destruction, or modification by anyone other than Company.
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c. Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY LAW, THE PRODUCTS, DEVELOPMENT SERVICES, AND CUSTOMER PRODUCT PLANS ARE PROVIDED “AS IS” WITHOUT WARRANTIES OF ANY KIND, AND COMPANY DISCLAIMS ALL WARRANTIES AND REPRESENTATIONS OF ANY KIND, WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, FITNESS FOR A PARTICULAR PURPOSE, QUIET ENJOYMENT, AND ACCURACY. THIS DISCLAIMER OF WARRANTIES IS AN ESSENTIAL CONDITION OF THIS AGREEMENT.
10. | Limitation of Liability. EXCEPT ARISING OUT OF A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT, OR LIABILITY OF A PARTY FOR ITS BREACH OF SECTION 2 (PRODUCT SUPPLY) HEREOF OR ITS UNAUTHORZED USE OF THE OTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS, TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST PROFITS OR SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THE PRODUCTS OR THIS AGREEMENT (WHETHER FROM BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, OR ANY OTHER FORM OF ACTION), EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. TO THE MAXIMUM EXTENT PERMITTED BY LAW, AND EXCEPT ARISING OUT OF A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT OR ITS UNAUTHORZED USE OF THE OTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS, IN NO EVENT WILL THE TOTAL LIABILITY OF EITHER PARTY UNDER THIS AGREEMENT (OTHER THAN CUSTOMER’S PAYMENT OBLIGATIONS HEREUNDER) EXCEED THE TOTAL AMOUNT OF FEES ACTUALLY PAID BY CUSTOMER TO COMPANY UNDER THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE PRICES SPECIFIED IN THIS AGREEMENT REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT AND THAT COMPANY WOULD NOT HAVE ENTERED INTO THIS AGREEMENT WITHOUT THE FOREGOING LIMITATIONS OF ITS LIABILITY. |
11. | Confidentiality. |
a. Confidentiality Obligations. Each Party agrees that, for so long as this Agreement is in effect and for a period of three (3) years thereafter, the Recipient shall (i) maintain in confidence such Confidential Information using not less than the efforts such Recipient uses to maintain in confidence its own proprietary industrial or technical information of similar kind and value, but in no event using less than reasonable care, (ii) not disclose such Confidential Information to any Third Party without the prior written consent of the Discloser, except for disclosures expressly permitted below, and (iii) not use such Confidential Information for any purpose except those expressly permitted by this Agreement.
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b. Authorized Disclosure. To the extent (and only to the extent) that it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement, the Recipient may disclose Confidential Information belonging to the Discloser in the following instances: (i) regulatory filings; (ii) prosecuting or defending litigation; (iii) subject to Sections 11(c) and 11(d) in complying with applicable Laws and regulations (including, without limitation, the rules and regulations of the Securities and Exchange Commission or any national securities exchange) and with judicial process, if in the reasonable opinion of the Recipient’s counsel, such disclosure is necessary for such compliance; and (iv) disclosure, in connection with the performance of this Agreement and solely on a need-to-know basis, to potential or actual collaborators; potential or actual investment bankers, investors, lenders, or acquirers; or employees, independent contractors (including without limitation consultants and clinical investigators) or agents, each of whom prior to disclosure must be bound by written obligations of confidentiality and non- use no less restrictive than the obligations set forth in this Section 11; provided, however, that the Recipient shall remain responsible for any failure by any Person who receives Confidential Information pursuant to this Section 11 to treat such Confidential Information as required under this Section 11.
If and whenever any Confidential Information is disclosed in accordance with this Section 11(b), such disclosure shall not cause any such information to cease to be Confidential Information except to the extent that such permitted disclosure results in a public disclosure of such information (otherwise than by breach of this Agreement). Where reasonably possible and subject to Sections 11(c) and 11(d), the Recipient shall notify the Discloser of the Recipient’s intent to make such disclosure pursuant to Section 11(b) sufficiently prior to making such disclosure so as to allow the Discloser adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information.
c. Required Disclosure. A Recipient may disclose Confidential Information pursuant to interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency or as otherwise required by Law; provided however, that the Recipient shall notify the Discloser promptly upon receipt thereof, giving (where practicable) the Discloser sufficient advance notice to permit it to oppose, limit or seek confidential treatment for such disclosure, and to file for patent protection if relevant; and provided, further, that the Recipient shall furnish only that portion of the Confidential Information which it is advised by counsel is legally required whether or not a protective order or other similar order is obtained by the Discloser.
d. Securities Filings. In the event either Party proposes to file with the Securities and Exchange Commission or the securities regulators of any state or other jurisdiction a registration statement or any other disclosure document which describes or refers to this Agreement under the Securities Act of 1933, as amended, the Securities Exchange Act, of 1934, as amended, or any other applicable securities Law, the Party shall notify the other Party of such intention and shall provide such other Party with a copy of relevant portions of the proposed filing not less than ten (10) Business Days prior to such filing (and any revisions to such portions of the proposed filing a reasonable time prior to the filing thereof), including any exhibits thereto relating to the Agreement, and shall use reasonable efforts to obtain confidential treatment of any information concerning the Agreement that such other Party requests be kept confidential, and shall only disclose Confidential Information which it is advised by counsel is legally required to be disclosed. No such notice shall be required under this Section 11(d) if the substance of the description of or reference to this Agreement contained in the proposed filing has been included in any previous filing made by the either Party hereunder or otherwise approved by the other Party.
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e. Terms of Agreement. The existence and the terms and conditions of the Agreement that the Parties have not specifically agreed to disclose pursuant to Sections 11(d) or 11(g) shall be considered Confidential Information of both Parties. Either Party may disclose such terms to a bona fide potential licensee, investor, investment banker, acquiror, merger partner or other potential financial partner, and their attorneys and agents, provided that each such Person to whom such information is to be disclosed is informed of the confidential nature of such information and has entered into a written agreement with the Party requiring such Person to keep such information confidential.
f. Injunctive Relief. The Parties hereto understand and agree that remedies at Law may be inadequate to protect against any breach of any of the provisions of this Section 11 by either Party or their employees, agents, officers or directors or any other person acting in concert with it or on its behalf. Accordingly, each Party shall be entitled to seek injunctive relief by a court of competent jurisdiction against any action that constitutes any such breach of this Section 11.
g. Publicity. Each Party agrees not to issue any press release or other public statement disclosing information relating to the content of this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed, provided however, that any disclosure which is required by Law or the rules of a securities exchange, as reasonably advised by the disclosing Party’s counsel, may be made subject to the following. The Parties agree that any such announcement will not contain the Confidential Information or any other confidential business or technical information and, if disclosure of any such information is required by Law, the Parties will use reasonable efforts to minimize such disclosure and obtain confidential treatment for any such information which is disclosed to a governmental agency. Each Party agrees to provide to the other Party a copy of any public announcement regarding this Agreement or the subject matter thereof as soon as reasonably practicable under the circumstances prior to its scheduled release. Each Party shall provide the other with an advance copy of any such announcement at least ten (10) business days prior to its scheduled release. Each Party shall have the right to expeditiously review and recommend changes to any such announcement and, except as otherwise required by Law, the Party whose announcement has been reviewed shall remove any information the reviewing Party reasonably deems to be inappropriate for disclosure.
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12. | General Terms and Conditions. |
a. Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties to the other shall be in writing and addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor. Such notices shall be deemed to have been sufficiently given if and at the moment it is delivered in person, transmitted by facsimile (upon receipt by the sender of a positive transmission report), by express courier service (upon signature of the receipt), or by registered letter with return receipt or its equivalent (upon execution of the return receipt by the recipients) to the following persons and addresses:
If to Customer: MEDIROM, Inc.
Tradepia Odaiba 16F, 2-3-1
Daiba, Minato-ku
Tokyo 135-0091
Japan
Attention: CEO
If to Company: Matrix Industries, Inc.,
1440 O’Brien Drive, Suite A-1
Menlo Park, California, USA 94025
Attention: CEO
b. Governing Law: Venue. This Agreement and all related agreements shall be governed by and construed in accordance with the laws of the State of New York, USA without regard to the conflicts of law principles thereof. The parties further agree that the state and federal courts located in any competent jurisdiction in New York shall have exclusive jurisdiction and venue for all matters regarding the existence, interpretation, execution, validity, enforceability, performance and termination of this Agreement. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
c. Dispute Resolution. In the event of any dispute between the parties relating to, resulting from or arising out of this Agreement, a Party may notify the other Party in writing of such dispute providing details of the subject matter of the dispute and any relevant documentation. Up to one (1) duly authorized executive officer of each Party shall promptly attempt to settle such dispute within a period of three (3) months after notice. If the executive officers of the Parties are unable to resolve the issue within three (3) months after notice, the dispute may be submitted by either Party to the court stipulated in Section 12(b)(provided that Company may at any time bring an action anywhere in the world to protect or enforce its Intellectual Property Rights and Confidential Information).
d. Independent Contractors. Each Party acknowledges that the parties shall be independent contractors and that the relationship between the parties shall not constitute a partnership, joint venture or agency. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior consent of the other Party to do so.
e. Waiver. The waiver by a Party of any right hereunder, or of any failure to perform or breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by the other Party, whether of a similar nature or otherwise. Any waiver must be in writing and signed by an authorized representative of the waiving Party.
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f. Further Assurance. Each Party will duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes, or to better assure and confirm to such other Party its rights and remedies under this Agreement.
g. Construction. The singular will include the plural and the plural will include the singular. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The words “include” and “including” will be deemed to be followed by the phrase “but not limited to”, “without limitation”, “inter alia” or words of similar import. The rights and remedies provided herein shall be cumulative and not exclusive of any other rights or remedies provided by law or in equity, unless expressly stated otherwise.
h. Severability. In the event that any provision of this Agreement is declared invalid, unenforceable or void to any extent, such provision shall be modified, if possible, by reducing its duration and scope to allow enforcement of the maximum permissible duration and scope. In any event, such declaration shall not affect the remaining provisions of this Agreement. Any declaration of such invalidity, unenforceability or void provision in any jurisdiction shall not invalidate or render unenforceable or void such provision in any other jurisdiction.
i. English Language. This Agreement was negotiated and executed in English, and the original language version shall be controlling. All communications and notices to be made or given pursuant to this Agreement shall be in English.
j. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A signature transmitted via facsimile or electronic means shall be deemed to be and shall be as effective as an original signature upon confirmation of transmission.
k. Force Majeure. Neither Party will be responsible for any failure or delay in the performance of all or any part of this Agreement caused by force majeure, including, without limitation, acts of God and nature, intervention of government, war or threat of war, conditions similar to war, acts of terrorism, sanctions, blockades, embargoes, strikes, lockouts, or other similar causes or circumstances which cannot reasonably be prevented by the Party the performance of which is delayed (“Force Majeure”). The affected Party shall promptly give written notice to the other Party whenever such Force Majeure becomes reasonably foreseeable, and shall use all reasonable commercial efforts to overcome the effects of the Force Majeure as promptly as possible, and shall promptly give written notice to the other Party of the cessation of such Force Majeure.
l. Attorneys’ Fees. In any action or other legal proceeding between the Parties for relief based in whole or in part on this Agreement (or the breach thereof), the prevailing Party shall be entitled to recover (in addition to any other relief awarded or granted) its reasonable costs and expenses (including attorneys’ fees) incurred in the proceeding.
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m. Waiver. Any waiver by either Party of the breach of any of the terms or conditions of this Agreement will not be considered as a continuing waiver or a waiver of any prior or subsequent breach of the same or any other terms or conditions.
n. Entire Agreement. This Agreement (including its Appendices (including the SLA) which are hereby incorporated herein) contains the entire understanding of the parties with respect to the subject matter hereof. All express or implied representations, agreements and understandings, either oral or written, regarding the subject matter of this Agreement heretofore made are expressly superseded by this Agreement. Each Party confirms that it is not relying on any representations or warranties of the other Party or its representatives except as specifically set forth herein. No amendment or modification of this Agreement will be binding upon the parties unless in writing and duly executed by authorized representatives of both parties. In the event of a conflict between the terms and conditions of this Agreement or any other attachment hereto, on the one hand, and the terms and conditions of the SLA, on the other hand, the terms and conditions of the SLA shall control with respect to the subject matter thereof (including with respect to the Firmware and Support).
o. Assignment. Neither Party may assign this Agreement without the other Party’s prior written consent, not to unreasonably withheld or delayed, provided, however, in the event of a transfer or sale by a Party to a third party of all or substantially all of the business or assets of the assigning Party to which this Agreement relates then the assigning Party shall be required to assign this Agreement to such third party, the other Party’s consent shall not be required for such assignment, and this Agreement (including all supply obligations hereunder) will continue on in full force and effect. In the event of any assignment by a Party in accordance with this Section 12(o), the assigning Party’s rights and obligations herein shall be binding upon its successor and assigns. Any attempted assignment or delegation in violation of this Section 12(o) shall be void and of no effect. In the event of any assignment by a Party in accordance with this Section 12(o), the assigning Party shall notify the other Party of such fact in advance.
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Signature Page to Development and Production Agreement
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
Company | Customer | |||
MATRIX Industries, Inc. | MEDIROM, Inc. | |||
By: | /s/ Akram Boukai | By: | /s/ Kouji Eguchi | |
Name: Akram Boukai | Name: Kouji Eguchi | |||
Title: CEO | Title: CEO |
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Appendix A
General Terms and Conditions
Territory
Asia
Product(s):
· | Product: Matrix thermoelectric power module for “MOTHER” smart tracker wearable device |
· | Customer Product: “MOTHER” activity band for consumer lifestyle health monitoring including hardware, related firmware, mobile phone application, and related cloud infrastructure |
Field
Activity band for consumer lifestyle health monitoring Includes:
· | Heart rate and motion sensing |
· | “MOTHER” brand, worldwide |
Excludes:
· | Analog and digital watches |
· | Industrial, medical, and clinical applications |
· | Display |
· | GPS |
Exclusivity
· | Exclusivity period shall be 1 year from the date that Customer receives the DVT sample unit (whichever is earlier, but no later than February 2021) |
· | Should Customer fail to meet an agreed-to forecast, Customer shall have 3 months’ time to remedy by placing orders, or this exclusivity provision is null and void |
Contributed Technologies
· | Customer shall be solely responsible for the development of a mobile phone application and associated cloud infrastructure and shall retain Intellectual Property Rights for this contributed Technology |
· | Company shall retain Intellectual Property Rights for all other technologies that are incorporated in Customer Product |
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Appendix A (cont’d)
Financial arrangements
CUSTOMER
· | Shall assume all costs of sales of the Customer Product including direct purchase from a mutually agreed contract manufacturer, inventory, sales channel and distribution expenses |
· | Payment of Non-Recurring Engineering charges to Company |
· | Acceptance of the risk of change in the cost of the non-Company bill of materials items and related manufacturing services |
· | Customer shall purchase a minimum of 100,000 units during the first 6 months since the first shipment of the Customer Products (“Initial Product Purchase Requirement”) |
· | [***] |
Company
· | Shall sell its thermoelectric power module and associated components directly to the chosen contract manufacturer |
· | These General Terms and Conditions of Sale may be extended to a contract manufacturer for the purpose of manufacturing the Customer’s product |
o | Customer shall request such an extension in writing for acceptance by Company |
o | A credit application to Company from the contract manufacturer will be also required |
o | Should the contract manufacturer fail to pay invoices on time or otherwise violate the terms of the credit application and agreement, this extension may be revoked by Company after notifying Customer and allowing 15 days for corrective action |
· | The purchase price shall include an activation fee that is included in the purchase price |
· | A software maintenance fee shall be applied to the mutually agreed number of active units that are in use by Customer’s customers and shall be invoiced by Company to Customer on a quarterly basis |
· | Company shall have the right to purchase the Customer Product from the contract manufacturer on the same terms and conditions and at the same prices as Customer. Customer hereby grants to Company a limited, non-exclusive, non-transferrable, non-sublicensable (solely with respect to any units of Customer Products purchased by Company for resale as contemplated herein), right and license, in the United States of America, Canada, Mexico, the United Kingdom, and the European Union to use Customer’s trademarks, service marks, and logos incorporated on any such Customer Products or their packaging that are owned by Customer during the term of the Agreement or any extension thereof, but excluding any Company IP ("Customer Marks”) in connection with the marketing, promotion, sale, licensing, distribution, resale and support of such Customer Products. It is understood and agreed that Customer shall retain all right, title and interest in and to Customer Marks. Company's use of Customer Marks will not tarnish, blur, or dilute the quality associated with the Customer Trademarks or the associated goodwill. Any goodwill accruing from Company's use of such Customer Marks will automatically vest in Customer. |
· | [***] |
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Appendix B
Production Terms and Conditions
General Terms and Conditions of Sale
Item | Description |
Pricing | In US Dollars |
Payment terms | Net 30 days from the date of invoice, with prior credit approval |
Production Lead time | 12-weeks ARO |
Production Warranty |
One
year from shipment date.
A Return Material Authorization (RMA) is required prior to Company’s acceptance of a customer return request. For authorized returns, Company may replace, repair, or refund the purchase price of the Defective Products at its sole option. |
Governing law | New York |
Shipment terms | Ex-Works (EXW), Incoterms® 2020 |
Sales taxes | To be paid by the Customer unless the Customer supplies a valid resale certificate at the time of order placement |
Minimum Annual Purchase Quantity (units) | 100,000 |
Minimum production line item purchase quantity (units) | 10,000 |
Reschedule and Cancellation Terms
Days Before Shipment | Reschedule/Push-Out | Cancellation Liability |
0 to 30 | No reschedule allowed | 100% of the purchase price |
31 to 60 | Up to 30 days, one time only | 75% of the purchase price |
61 to 90 | Up to 60 days, one time only | 50% of the purchase price |
90 days or more | Unlimited reschedule push-out | Cancellation allowed with no liability |
End-of-life in production
Company may notify Customer of end-of-life with 6 months of advance notification and an additional 6 months to request shipment of lifetime buys
Company shall use commercially reasonable efforts to provide replacement components that are equivalent to or better than the discontinued components
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Appendix B (cont’d)
Non-Recurring Engineering Charges
[***]
Unit Pricing in Production
[***]
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Appendix C
Specification
[to be added]
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Appendix D
Development Services
[***]
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Appendix E
Software License Agreement
This Software License Agreement (this “Agreement”), which is effective as of August 4, 2020 (the “Effective Date”) is made and entered into by and between Matrix Industries, Inc., a Delaware USA corporation with a place of business at 1440 O’Brien Drive, Suite A-1, Menlo Park, California, USA 94025 (“Company”) and MEDIROM Healthcare Technologies Inc., a Japan corporation having a place of business at Tradepia Odaiba 16F, 2-3-1 Daiba, Minato-ku, Tokyo 135-0091, Japan (“Customer”). Company and Customer are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
A. | WHEREAS, in connection with this Agreement, the Parties are entering into that certain Development and Production Agreement on even date herewith (the “DPA”), pursuant to which the Parties are collaborating in the development and deployment of a completed wearable device and service offering described in Appendix A to the DPA as the “Customer Product”, and Company will be performing certain Development Services and supplying certain Products for incorporation into the Customer Product solely in the Territory in the Field (as those terms are defined and set forth in the DPA); |
B. | WHEREAS, Company and its suppliers have developed certain software that will be customized by Company for the Customer Product and installed by Company in the Products supplied by Company to Customer under the DPA [***] (the foregoing, together with any associated documentation and any updates thereto made available to Customer hereunder, collectively, the “Firmware”), which Firmware is to be provided and licensed by Company to Customer in the Territory in the Field as part of the Products supplied by Company under the DPA, solely for incorporation by Customer into Customer Products for use by Customer’s customers and end users of the Customer Products (collectively, “End Users”) solely as part of Customer Products (collectively, the “Purpose”); and |
C. | WHEREAS, Subject to the terms and conditions of this Agreement, Company is willing to license the Firmware to Customer and to provide the software maintenance and second-level support for the Firmware further described below, all as further described herein and subject to the terms and conditions set forth below. |
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and intending to be legally bound hereby, the Parties agree as follows:
AGREEMENT
1. Definitions. As used herein,
“Confidential Information” means (i) the Firmware and (ii) all other information or materials of any kind whatsoever, including all tangible and intangible embodiments thereof of any kind whatsoever, which is disclosed or made available by Company to Customer hereunder. With respect to the foregoing item (ii), Confidential Information shall not include information which (a) was publicly known prior to disclosure of such information by Company to Customer and/or the Manufacturer, (b) became publicly known, without fault on the part of Customer and/or the Manufacturer subsequent to disclosure of such information by Company to Customer and/or the Manufacturer, (c) was received by Customer and/or the Manufacturer at any time from a source, other than Company, rightfully having possession of and the right to disclose such information without obligation of confidentiality, or (d) was independently developed by employees or agents of Customer who have not had access to or made use of any information disclosed by Company to Customer. For clarity, the Firmware shall not be subject to the foregoing exclusions in items (a)-(d) and shall at all times remain, and shall be deemed and treated by Customer, its employees, contractors, suppliers, agents and End Users as the Confidential Information of Company.
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2. Limited License.
2.1 Firmware. Company hereby grants to Customer, subject to the terms and on the conditions of this Agreement, including Sections 2.3 and 3 and Customer’s payment to Company of the applicable Activation Fee (defined below) for the applicable Firmware installed on each unit of Product supplied by Company to Customer under the DPA, a limited, non-transferable, non-sublicensable (except as expressly provided herein) and non-exclusive license solely in the Territory in the Field, to: (i) use the Firmware, in object code form only, that is installed, or provided by Company to Customer hereunder for installation on, Products supplied by Company to Customer under the DPA solely for incorporation by Customer into Customer Products for use by End Users as part of Customer Products; (ii) make a reasonable number of reproductions of the Firmware (including any updates thereto made available to Customer hereunder) made available by Company to Customer hereunder solely for installation on Products supplied by Company to Customer under the DPA, and to install such Firmware on such Products, in each case that are incorporated into Customer Products for use by End Users as part of Customer Products; and (iii) to use the API and documentation included among the Firmware provided by Company to Customer hereunder for the sole purpose of developing and supporting a mobile application for End Users that will interface with the Firmware on the Customer Products (the “Customer App”), in each of the foregoing (i)-(iii), in furtherance of the Purpose and for no other purposes (collectively, the “License”). The License is also conditioned upon Customer’s full and continuing compliance with the terms and conditions set forth in the DPA and any other attachment thereto.
2.2 Number of Licenses; Sublicenses. Customer acknowledges and agrees that the Firmware is licensed on a per unit of Product basis, that the License with respect to the Firmware installed on each unit of Product attaches to such Product, and that no right or license of any kind is granted to Customer to install, execute, or otherwise use more instances of the Firmware than the corresponding number of units of Products supplied by Company to Customer under the DPA. During the term of this Agreement, Customer shall have the right to grant pass-through sublicenses of the rights granted in item (i) of the License to End Users in the Territory in the Field with respect to their particular unit of Customer Product purchased from Customer for the sole purpose of making personal, non-commercial use of such Customer Product; provided, Customer may only grant such sublicenses pursuant to written agreements with each End User containing terms and conditions consistent with and no less protective of Company than those set forth in this Agreement, including the restrictions and obligations set forth in Sections 3, 4, 5, 7, 8.2 and 8.3. Provided that Customer shall not have any liability of any kind whatsoever for any breach of Sections 3,4,5,7, 8.2 and 8.3 by any End User.
2.3 Open Source Software. [***]If a software component included with or in the Firmware is licensed under an open source software license that is incompatible with the terms and conditions of this Agreement, the terms and conditions of such open source software license will take priority over this Agreement solely with respect to such incompatibility and solely with respect to Customer’s and End Users’ use of such software component. Company shall have no responsibility or liability for Customer’s and its end Customer’s use of any such third party open source software, including their respective compliance with and the application of any corresponding open source license terms to the Customer App or any other software of Customer or its other suppliers, licensors or End Users. For clarity, nothing in this Section 2.3 will (i) broaden Company’s representations or warranties or indemnification obligations to Customer; (ii) waive, limit, or disclaim any limitations of liability of Company set forth in this Agreement; or (iii) amend the scope of any license granted to Customer with respect to any proprietary portions of the Firmware.
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2.4 Support and Maintenance.
(i) Customer will be solely responsible for performing training, support (including providing routine reports, call-in customer services, and on-site service calls), maintenance, and other services requested or required by End Users. Customer may not refer any End Users to Company for such support and services. Provided that Company shall use its best efforts to respond to inquiries from Customer concerning support and maintenance.
(ii) So long as Customer has not breached this Agreement and provided Customer remains in full and continuing compliance with the terms and conditions set forth in the DPA and any other attachment thereto, and subject to Customer’s continued payment of the Support Fees (defined below), Company agrees to use commercially reasonable efforts to respond to Customer requests for second-level support and maintenance with respect to the Firmware (collectively, “Support”); provided, that Support shall not include, and Company shall have no obligation under this Agreement (or the DPA or any other attachment thereto) to: (a) provide any maintenance, support or other services directly to Customer’s End Users nor to respond directly to any requests from Customer’s End Users for maintenance or support; (b) provide any maintenance or support with respect to the Customer App or any issues, complaints or questions related thereto; (c) provide any maintenance or support outside of Company’s regular business hours nor any on site services; or (d) provide any upgrades, enhancements, customizations, integrations, installations, new versions or any new or additional functionality. Company may, from time to time, provide certain updates for Firmware (such as bug fixes, etc.), which Customer shall promptly install, or require to be installed, on the Customer Products. Company will be responsible for providing Support only to Customer. Notwithstanding the foregoing, Company shall provide maintenance, support or other services directly to End Users to whom Company has sold the Customer Products (“Company’s End Users”) and respond directly to any requests from Company’s End Users for maintenance or support.
3. Restrictions. Customer acknowledges that the Firmware contains valuable trade secrets of Company and its licensors and suppliers and constitutes the Confidential Information of Company. Accordingly, and except as may be permitted under Section 2.4, Customer agrees that it may not: (i) modify, adapt, alter, translate, or create derivative works of the Firmware; (ii) build a product or service using similar ideas, features, functions, or graphics of the Firmware; (iii) except as expressly provided in Section 2, sublicense, resell, rent, lease, transfer or assign Firmware or its use, or offer the Firmware on a time share basis to any third party; (iv) reverse engineer, decompile, decode, or disassemble the Firmware; or (v) otherwise attempt to derive the source code or algorithms for or included in the Firmware or attempt to gain access to any underlying code or algorithms used in or to implement or deploy the Firmware. For clarity, Customer receives no right or license hereunder (nor pursuant to the DPA or any other attachment thereto) to any source code to the Firmware nor any of the algorithms contained therein.
4. Ownership.
4.1 Firmware. Subject to the licenses expressly granted to Customer hereunder, all right, title and interest in and to the Firmware and any Technology embodied or incorporated therein and all Intellectual Property Rights (as those terms are defined in the DPA) therein and thereto are and shall be owned solely and exclusively by Company.
4.2 Feedback. To the extent Customer, its employees, or any End Users of the Firmware provide Company with any suggestions, ideas, enhancement requests, recommendations or feedback regarding the Firmware, or Company otherwise conceives of or creates any ideas, enhancements, improvements, or modifications to the Firmware (collectively, “Feedback and Improvements”), Company will be free to use, disclose, commercialize, license, and exploit such Feedback and Improvements without any restriction. Feedback and Improvements may also be used to improve the Firmware for other customers of Company.
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5. Confidentiality.
5.1 Confidentiality Obligations. Customer agrees that, for so long as this Agreement is in effect and for a period of three (3) years thereafter (other than with respect to the Firmware, for which the obligations of this Section 5 shall apply in perpetuity), Customer shall (i) maintain in confidence such Confidential Information using not less than the efforts such Recipient uses to maintain in confidence its own proprietary industrial or technical information of similar kind and value, but in no event using less than reasonable care, (ii) not disclose such Confidential Information to any Third Party (as defined in the DPA) without the prior written consent of Company, except for disclosures to the Manufacturer and disclosures expressly permitted below in furtherance of the Purpose, and (iii) not use such Confidential Information for any purpose except those expressly permitted by this Agreement in furtherance of the Purpose.
5.2 Authorized Disclosure. To the extent (and only to the extent) that it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement in furtherance of the Purpose, Customer may disclose Confidential Information belonging to Company in the following instances: (i) regulatory filings; (ii) prosecuting or defending litigation; (iii) subject to Section 5.3 in complying with applicable Laws (as defined in the DPA) and regulations (including, without limitation, the rules and regulations of the Securities and Exchange Commission or any national securities exchange) and with judicial process, if in the reasonable opinion of Customer’s counsel, such disclosure is necessary for such compliance; and (iv) disclosure, in connection with the performance of this Agreement and solely on a need-to-know basis, to the Manufacturer, potential or actual collaborators; potential or actual investment bankers, investors, lenders, or acquirers; or employees, independent contractors (including without limitation consultants and clinical investigators) or agents, each of whom prior to disclosure must be bound by written obligations of confidentiality and non-use no less restrictive than the obligations set forth in this Section 5; provided, however, that Customer shall remain responsible for any failure by any Person (as defined in the DPA) who receives Confidential Information pursuant to this Section 5 to treat such Confidential Information as required under this Section 5.
If and whenever any Confidential Information is disclosed in accordance with this Section 5.2, such disclosure shall not cause any such information to cease to be Confidential Information except to the extent that such permitted disclosure results in a public disclosure of such information (otherwise than by breach of this Agreement). Where reasonably possible and subject to Section 5.3, Customer shall notify Company of Customer’s intent to make such disclosure pursuant to this Section 5.2 sufficiently prior to making such disclosure so as to allow Company adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information.
5.3 Required Disclosure. Customer may disclose Confidential Information pursuant to interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency or as otherwise required by Law; provided however, that Customer shall notify Company promptly upon receipt thereof, giving (where practicable) Company sufficient advance notice to permit it to oppose, limit or seek confidential treatment for such disclosure, and to file for patent protection if relevant; and provided, further, that Customer shall furnish only that portion of the Confidential Information which it is advised by counsel is legally required whether or not a protective order or other similar order is obtained by Company.
5.4 Terms of Agreement. The existence and the terms and conditions of the Agreement shall be considered Confidential Information of each Party. Each Party may disclose such terms to the Manufacturer, a bona fide potential licensee, investor, investment banker, acquiror, merger partner or other potential financial partner, and their attorneys and agents, or otherwise as required by applicable laws and regulations; provided that, where practicable, each such Person to whom such information is to be disclosed is informed of the confidential nature of such information.
5.5 Injunctive Relief. The Parties hereto understand and agree that remedies at Law may be inadequate to protect against any breach of any of the provisions of this Section 5 by Customer or its employees, agents, officers, directors, End Users or any other person acting in concert with it or on its behalf. Accordingly, Company shall be entitled to seek injunctive relief by a court of competent jurisdiction against any action that constitutes any such breach of this Section 5.
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5.6 Ownership and Return of Confidential Information. All Confidential Information of Company shall remain the sole property of Company. Upon the termination of this Agreement, or at any time upon written request of Company, Customer shall return Company’s Confidential Information and not keep any copies thereof.
6. Payment Terms.
6.1 Firmware Activation Fees. Customer will pay Company the software activation fees set forth in Appendices A & B attached to the DPA, on a per unit basis, for the Firmware installed on each unit of Product supplied by Company to Customer under the DPA (with respect to each such unit, the “Activation Fee” and collectively, the “Activation Fees”) at the time and in the manner set forth in the DPA.
6.2 Support Fees. Customer will pay Company the annual software maintenance fees set forth in Appendices A & B attached to the DPA, on a per unit basis, based on the total number of active units of Customer Products during such applicable year (the “Support Fees”, and together with the Activation Fees, collectively, the “Software Fees”) at the time and in the manner set forth in the DPA.
7. Disclaimer. By its nature, the Firmware may contain errors, bugs, and other problems that could cause system failure. In addition, the Firmware may not have any documentation, and any documentation in existence may be inaccurate or incomplete. Company PROVIDES THE FIRMWARE, SUPPORT AND ANY RELATED DOCUMENTATION TO CUSTOMER ON AN “AS-IS” AND “WITH ALL FAULTS” BASIS WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, AND COMPANY, ON BEHALF OF ITSELF AND ITS AFFILIATES, SUPPLIERS AND LICENSORS, MAKES NO AND HEREBY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND REGARDING THE FIRMWARE, SUPPORT, AND ANY RELATED DOCUMENTATION, OR THE USE OR OPERATION OF THE FIRMWARE, SUPPORT, AND ANY RELATED DOCUMENTATION, AND HEREBY SPECIFICALLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS, IMPLIED OR OTHERWISE, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AVAILABILITY, AND NON-INFRINGEMENT.
8. Indemnification; Consequential Damages Waiver; Limitation of Liability.
8.1 Indemnification. Each Party shall indemnify, defend, and hold harmless the other Party and its officers, directors, employees, and contractors from and against any and all liabilities, losses, damages, costs, and other expenses (including reasonable attorneys’ fees) resulting from any claim or suit arising out of or related to (i) the indemnifying Party’s material breach of this Agreement; (ii) any use or misuse (including any use outside of the express scope of the licenses granted hereunder) of the Firmware, Support or Customer Products by the indemnifying Party or any of its officers, directors, employees, and contractors or any of their End Users of the Firmware, Support or Customer Products; (iii) the other Party’s compliance with any explicit instructions or specifications provided by the indemnifying Party; (iv) in the case of the Customer, (x) the modification of the Firmware by anyone other than Company; (y) the combination of the Firmware with any product, component, software, or service not provided by Company without Company’s written consent, not to be unreasonably withheld.
8.2 Consequential Damages Waiver. EXCEPT WITH RESPECT TO THE OBLIGATIONS SET FORTH IN SECTION 5 AND SECTION 8.1, AND EXCLUDING ANY UNAUTHORIZED USE OF THE FIRMWARE BY THE CUSTOMER, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS, LOSS OF USE, LOSS OF DATA, INTERRUPTION OF BUSINESS OR ANY INCIDENTAL, SPECIAL, INDIRECT, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND ARISING OUT OF OR RELATING TO THIS AGREEMENT, HOWEVER INCURRED, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE BY THE OTHER PARTY.
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8.3 Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL THE TOTAL, CUMULATIVE LIABILITY OF COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY CONTRACT YEAR EXCEED THE SOFTWARE FEES ACTUALLY PAID TO COMPANY DURING THE IMMEDIATELY PRIOR CONTRACT YEAR.
9. Term and Termination.
9.1 Term; Termination. This Agreement shall remain in full force during the term of the DPA for so long as the DPA remains in effect and Customer remains in full and continuing compliance with the terms and conditions of this Agreement and those set forth in the DPA and any other attachment thereto; provided, Company may terminate or suspend, in its sole discretion, its obligations to provide Support hereunder, effective immediately, by giving Customer written notice of termination or suspension, if Customer breaches any of its material obligations under this Agreement and fails to cure such breach to the satisfaction of Company within thirty (30) days after receiving written notice thereof from Company or if Customer has failed to pay any undisputed amounts owed under this Agreement within thirty (30) days after Customer has received written notice from Company regarding such past due amount; and further provided, Customer may terminate this Agreement, effective immediately, by giving Company written notice of termination or suspension, if Company breaches any of its material obligations under this Agreement and fails to cure such breach to the satisfaction of Company within thirty (30) days after receiving written notice thereof from Customer or if Company fails to provide the Support to Customer.
9.2 Effect of Termination. In the event that this Agreement is terminated pursuant to Article 9.1 Company shall have no further obligation to provide Support and Customer shall immediately pay to Company all outstanding amounts due under this Agreement. Customer shall not be liable for damages of any kind as a result of properly exercising its respective right to suspend performance or terminate this Agreement according to the terms and conditions of this Agreement, and such suspension or termination, as applicable, will not affect any other right or remedy of either Party. No compensation of any kind (including without limitation any claim for loss of profits, loss of prospective profits, damages, or indemnity) shall be due from either Party to the other solely as a result of such suspension or termination of this Agreement. For clarity, upon termination or expiration of the DPA for any reason, Company shall have no further obligation to fulfill any new orders for the Products and the License shall thereby cease to apply with respect any new or additional Products not supplied by Company to Customer, including with respect to any Customer Products that do not incorporate Products supplied by Company to Customer.
10. General Terms and Conditions.
10.1 Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties to the other shall be in writing and addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor. Such notices shall be deemed to have been sufficiently given if and at the moment it is delivered in person, transmitted by facsimile (upon receipt by the sender of a positive transmission report), by express courier service (upon signature of the receipt), or by registered letter with return receipt or its equivalent (upon execution of the return receipt by the recipients) to the following persons and addresses:
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If to Customer: MEDIROM, Inc.
Tradepia Odaiba 16F, 2-3-1
Daiba, Minato-ku
Tokyo 135-0091
Japan
Attention: CEO
If to Company: Matrix Industries, Inc.,
1440 O’Brien Drive, Suite A-1
Menlo Park, California, USA 94025
Attention: CEO
10.2 Governing Law: Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, USA without regard to the conflicts of law principles thereof. The parties further agree that the state and federal courts located in ay competent jurisdiction in New York shall have exclusive jurisdiction and venue for all matters regarding the existence, interpretation, execution, validity, enforceability, performance and termination of this Agreement(provided that Company may at any time bring an action anywhere in the world to protect or enforce its Intellectual Property Rights and Confidential Information). The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
10.3 Dispute Resolution. In the event of any dispute between the parties relating to, resulting from or arising out of this Agreement, a Party may notify the other Party in writing of such dispute providing details of the subject matter of the dispute and any relevant documentation. Up to one (1) duly authorized executive officer of each Party shall promptly attempt to settle such dispute within a period of three (3) months after notice. If the executive officers of the Parties are unable to resolve the issue within three (3) months after notice, the dispute may be submitted by either Party to the courts stipulated in Section 10.2.
10.4 Independent Contractors. Each Party acknowledges that the parties shall be independent contractors and that the relationship between the parties shall not constitute a partnership, joint venture or agency. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior consent of the other Party to do so.
10.5 Waiver. The waiver by a Party of any right hereunder, or of any failure to perform or breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by the other Party, whether of a similar nature or otherwise. Any waiver must be in writing and signed by an authorized representative of the waiving Party.
10.6 Construction. The singular will include the plural and the plural will include the singular. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The words “include” and “including” will be deemed to be followed by the phrase “but not limited to”, “without limitation”, “inter alia” or words of similar import. The rights and remedies provided herein shall be cumulative and not exclusive of any other rights or remedies provided by law or in equity, unless expressly stated otherwise.
10.7 Severability. In the event that any provision of this Agreement is declared invalid, unenforceable or void to any extent, such provision shall be modified, if possible, by reducing its duration and scope to allow enforcement of the maximum permissible duration and scope. In any event, such declaration shall not affect the remaining provisions of this Agreement. Any declaration of such invalidity, unenforceability or void provision in any jurisdiction shall not invalidate or render unenforceable or void such provision in any other jurisdiction.
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10.8 English Language. This Agreement was negotiated and executed in English, and the original language version shall be controlling. All communications and notices to be made or given pursuant to this Agreement shall be in English.
10.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A signature transmitted via facsimile or electronic means shall be deemed to be and shall be as effective as an original signature upon confirmation of transmission.
10.10 Force Majeure. Neither Party will be responsible for any failure or delay in the performance of all or any part of this Agreement caused by force majeure, including, without limitation, acts of God and nature, intervention of government, war or threat of war, conditions similar to war, acts of terrorism, sanctions, blockades, embargoes, strikes, lockouts, or other similar causes or circumstances which cannot reasonably be prevented by the Party the performance of which is delayed (“Force Majeure”). The affected Party shall promptly give written notice to the other Party whenever such Force Majeure becomes reasonably foreseeable, and shall use all reasonable commercial efforts to overcome the effects of the Force Majeure as promptly as possible, and shall promptly give written notice to the other Party of the cessation of such Force Majeure.
10.11 Waiver. Any waiver by either Party of the breach of any of the terms or conditions of this Agreement will not be considered as a continuing waiver or a waiver of any prior or subsequent breach of the same or any other terms or conditions.
10.12 Entire Agreement. This Agreement (including all attachments hereto which are hereby incorporated herein) contains the entire understanding of the parties with respect to the subject matter hereof. All express or implied representations, agreements and understandings, either oral or written, regarding the subject matter of this Agreement heretofore made are expressly superseded by this Agreement. Each Party confirms that it is not relying on any representations or warranties of the other Party or its representatives except as specifically set forth herein. No amendment or modification of this Agreement will be binding upon the parties unless in writing and duly executed by authorized representatives of both parties.
10.13 Assignment. Neither Party may assign this Agreement without the other Party’s prior written consent, not to unreasonably withheld or delayed, provided, however, in the event of a transfer or sale by a Party to a third party of all or substantially all of the business or assets of the assigning Party to which this Agreement relates then the assigning Party shall be required to assign this Agreement to such third party, the other Party’s consent shall not be required for such assignment, and this Agreement (including all supply obligations hereunder) will continue on in full force and effect. In the event of any assignment by a Party in accordance with this Section 10.13, the assigning Party’s rights and obligations herein shall be binding upon its successor and assigns. Any attempted assignment or delegation in violation of this Section 10.13 shall be void and of no effect.
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Appendix A
[***]
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Appendix F
Costed Bill of Materials (Preliminary)
[to be added]
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Appendix G
Preliminary Development Schedule
[***]
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Exhibit 21.1
List of Subsidiaries of the Registrant
Legal Name of the Subsidiary | Jurisdiction | |
Bell Epoc Wellness Inc. | Japan | |
Decollte Wellness Corporation | Japan | |
JOYHANDS WELLNESS Inc. | Japan | |
Medirom Human Resources Inc. | Japan |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the inclusion in this Registration Statement of MEDIROM Healthcare Technologies Inc. on Form F-1 of our report dated September 10, 2020 with respect to our audits of the consolidated financial statements of MEDIROM Healthcare Technologies Inc. as of, and for the years ended, December 31, 2019 and 2018, which includes an emphasis of matter paragraph as to significant uncertainty related to the future outcome from the outbreak associated with the COVID-19 pandemic, appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our firm under the heading “Experts” in such prospectus.
Our report refers to the adoption of new method of accounting for leases as of January 1, 2018.
/s/ Baker Tilly US, LLP
Baker Tilly US, LLP (formerly Squar Milner LLP)
Irvine, California
November 20, 2020
Exhibit 99.1
November 1, 2020
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Ladies and Gentlemen:
We are the former independent registered public accounting firm for Medirom Healthcare Technologies Inc. (the “Company”). We have read the Company’s disclosure set forth in the Registration Statement under “Changes in Registrant’s Certifying Accountant” and are in agreement with the disclosure in such Registration Statement, insofar as it pertains to our firm.
Sincerely, |
/s/ Squar Milner LLP |