Exhibit 10.8
PROMISSORY NOTE AGREEMENT
June 29, 2004
Nihon Shinko Bank Co. Borrower Xxx Tokyo Co.
President Xxxxxxxx Xxxxx
2-28-1 Higashi Hokima
Adachi-ku Tokyo
Cosigner Xxxxxxxx Xxxxx
1-30-1 Nihon Tsutsumi
Taito-ku Tokyo
Borrower agreed respective articles of THE BANKING TRANSACTION CONTRACT
("Contract"), which separately entered into between the parties, and concluded
PROMISSORY NOTE AGREEMENT (this "Agreement") as follows.
Article 1 Borrowing Requirements
Borrower engaged to loan from the bank as follows.
1. Amount 100,000,000 Yen
2. Use Operating capital
3. Date of Loan June 30, 2004
4. Loan Method-
The bank makes a transfer to borrower's name account in a domestic
financial institution (Must have National Bank Data Communication
System) which borrower assigns. In this case, the loan has to be made
when a delegated bank receives capital or when the amount is charged
from the bank account.
Borrower's bank account
Name of financial institution: Mitsui Sumitomo Bank (0009)
Senju Branch (248)
Classification of bank account: Current account
Account number:
Account holder: Xxx Tokyo Co.
5. Principal Reimbursement Period and Payment Method-
(1) Last repayment date June 29, 2006
(2) Repayment period One month
(3) Payment date 29th of the month
(4) First payment date July 29, 2004
(5) Amount of payment 23 payments of 4,167,000 Yen by May 2006
4,159,000 Yen for the last payment
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6. Interest Payment and Payment Method-
(1) Interest payment method Later payment
(2) Interest payment period One month
(3) Interest payment date 29th of the month
(4) First interest payment date July 29, 2004
(5) Amount of first interest payment
From the borrowing date to first interest payment date
7. Interest Rate-
The applicable rate of interest is annually 9.83000% (365 days on the
prorated daily basis) and will be revised from now on by the following
method.
(1) Revision date of application interest rate-
In every three times of the interest payment day
(2) Application rate-
Japanese Xxx XXXXX (annual rate) + annually 9.75% (365 days on the
prorated daily basis)
(3) Japanese Yes TIBOR based on calculation of application interest
rate-
The Japanese xxx XXXXX three months rate is used. The rate is
released at 11:00 a.m. of the two days before business day of an
amendment day by Japan Bank Association.
(4) The application period of the interest rate after amendment-
From the current amendment day to a next amendment day
8. Payments are to be paid in the next business day when the repayment day
of the principal and the pay day of the interest are holiday days.
9. Damage
When a debt is not carried out by this contract, the damage money by
the annual rate of 18% is paid to the amount of money which should be
paid.
10. Covenants
Borrower promises positively the matter set to below.
(1) Duty of presentation of financial statements Borrower shall submit
the following documents to the bank by the due date, respectively
until the debt is paid off.
1. Tax return
It has to be submitted within two months after closing accounts the
every term from September, 2004.
2. Trial balance sheet
It has to be submitted within 10 business days of next month every
quarter from June, 2004.
3. Monthly income statement
It has to be submitted within 10 business days of next month every
month from June, 2004.
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(2) Reporting requirements
Until the debt is paid off, borrower reports with a document to the
bank immediately when the following matter occurs-
1. Change of an officer or capital composition.
2. Occurrence of an important lawsuit.
3. Suspension of business transaction with a major customer.
4 When borrower loans from a third person, a bank transaction
transition table has to be submitted quarterly.
5. Serious damage of casualty loss or damage in process of
operating performance.
(3) Prohibited matters
Until the debt is paid off, borrower does not carry out following
matters without consent by the prior document of the bank.
1. Sale of important property, disposal.
2. Entry to new business, sale, abolition, discontinuance, and
dismissal of the existing business.
3. Merger for liquidation.
4. Lease from the 30 million Yen or more from third parties.
5. The loan, investment, and guarantee to 30 million or more to
third parties.
6. Distribution of profits to stockholders.
7. The conduct which does the serious influence for borrower's
management or financial condition.
(4) Financial restriction
Until the debt is paid off, borrower has to comply with the
standard of following indicator.
1. Interest coverage ratio-
Borrower must maintain more than 1.25 times in the end of
September, 2004 (Note) The definition of interest coverage ratio
is "(Operating profit + interest earned, discount) / interest
paid."
2. Amounts of net assets-
(1) Borrower must maintain more than 200 million during the loan
period.
(2) Borrower must maintain more than 10.0% of equity ratio
during the loan period.
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Article 2 The condition precedent of loan
When the following reason arises, the bank shall not loan to the borrower
before execution of the loan. Even if it is the case where the borrower suffers
damage from it, the bank shall not accept any responsibility. Moreover, borrower
submits a receipt with the bank predetermined style which proves receipt of an
advance at the time of execution of loan to the bank. 1. When it finds out that
all or a part or of the eighth-article is not satisfied. 2. When at least one
reason set to the first and the second clause of the fourth article of The
Banking Transaction Contract.
Article 3 Prepayment
Prepayment (Liquidation) shall not be performed. However, when consent of the
bank is received beforehand, borrower can repay all of debts at the payday of
interest.
Article 4 Payment of loan
Payment of loan in the contract has to be made by transferring to the
following account. Tokyo Mitsubishi Bank (0005), Furikomi Daini Branch (317),
Nihon Shinko Bank Co. If the bank is required, the account can be changed, and
the bank will notify it to borrower immediately.
Article 5 Special agreement for offsetting
Even when there is a debt to borrower from the bank and the bank must carry
out this debt for the reason of arrival, borrower shall not offset this claim to
a bank, and the debt by this contract.
Article 6 Burden of expense
Borrower pays all expenses for creation of the contract.
Article 7 Cosigner
(1) About all the debts that borrower pays to the bank, the cosigner owes
joint and several liability. The consigner follows this contract besides
each provision of The Banking Transaction Contract.
(2) Cosigner does not do offset with the claim of the deposit to borrower's
bank and other credit.
(3) Cosigner does not assert exemption from responsibility, even if the bank
changes and cancels other guarantees by the convenience.
(4) When cosigner carries out liabilities for guarantee, cosigner does not
use the right acquired from the bank without the consent of the bank
during the continuation of dealings with borrower and bank. If there is a
claim of a bank, cosigner will transfer the right or ranking to a bank
gratuitously.
(5) This guarantee is not changed when the cosigner is guaranteeing other
transactions between borrower and the bank. When cosigner guarantees
other transaction between borrower and the bank in the future, it is
dealt with the same manner.
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Article 8 Pronouncement and guarantee
(1) Borrower guarantees that the items mentioned in the contract are true and
accurate.
(2) When there is a procedure needed on statutes, such as a corporate
resolution and articles of association about this contract, borrower and
cosigner who formed a corporation guarantee having completed this
procedure.
(3) Borrower who is an individual guarantees that this contract is what is
concluded for the enterprise to which borrower carries out.
Article 9 Creation of notarized document
When there is a claim of the bank, borrower and cosigner do necessary
procedure immediately in order to draw up the notarized deed which has
recognition of the debt by this contract, and consent of compulsory execution.
For this reason, borrower and cosigner pay all the required expense.
Article 10 Perfection law
(1) The bank shall transfer the loan claim based on the contract at any time,
when a assignee is a proper institutional investor who sets to article 4
of Cabinet Office regulations about the definition specified to Article 2
of the Securities Exchange Act.
(2) When the profits loss reason of the term set to the Banking Transaction
Contract occurs, the bank shall transferred to the loan collection
company based on the special-measures method about claim understanding
employment whose bank selects the loan claim based on this contract.
(3) When transfer of the loan claim based on this article is performed, all
the rights of the bank on this contract and the Banking Transaction
Contract shall be transferred to an assignee. Moreover, an assignee shall
be dealt with as a bank in the contract about a loan claim, and
application of each provision of the Banking Transaction Contract.
Borrower and cosigner shall consent to a transfer of the loan claim to an
assignee, and the transfer of a right beforehand. In this case, borrower
shall not resist an assignee about the reason which may receive a protest
and the other banks acquired to the bank after the notice attainment with
the top concerned. By the claim of the bank, borrower or cosigner shall
give required cooperation of the requirement possession for confrontation
about the transfer.
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Article 11 Registration for credit information organization
Borrower agrees following terms.
(1) The credit records based on the objective fact about this contract are
registered into CCB Co., a credit-records organization, for five years
after the day which repaid the total of debt by the contract during a
contract term. The information is used by the affiliation members for
payment or the investigation and judgment about solvency.
(2) The fact in connection with the application of the security based on this
contract being reported to a credit-records organization from our
company. The credit-records organization stores this information for half
a year and the information should be used by members of the
credit-records organization for the investigation and judgment abou
t solvency.
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BANK TRANSACTION CONTRACT
June 29, 2004
A Xxx Tokyo Co.
President Xxxxxxxx Xxxxx
2-28-1 Higashi Hokima
Adachi-ku Tokyo
B Nihon Xxxxx Bank Co.
0-0-0 Xxxxxxxx Xxxxxxx-xx
Xxxxxxxx Xxxxxxxx 0 Xxxxx
Xxx Xxxxx Xx. ("X") and Nihon Shinko Bank Co. ("B") entered into an agreement as
following.
Article 1 Scope
(1) Each provision of this contract is applied in common about all transactions
to which the loan between A and B.
(2) Guarantee transactions when A secures it with B and a third person shall be
included in transaction of the preceding clauses.
(3) In the case where separately different agreement from this contract between
A and B is performed, the agreement has priority over the provision to
which this agreement corresponds.
Article 2 Interest and monetary damage
(1) It paid comparatively about interest, the amount of guarantees, a
commission, and payment, and the agreement of time and a method should be
agreed between A and B. However, when there is change of the financial
situation, A or B shall ask for deliberations about changing these into the
thing of the generally accepted to be rational to other party.
(2) When change arises in the preservation situation of the claim of B by
change of the financial situation of A, and the change in a collateral
value, suppose that it is the same as the preceding clause about change of
the interest rate.
(3) A pays the damage money of the rate of 18% of years to the amount which
should be paid, when the debt over B is not carried out. The calculation
method is used 365 days on the prorated daily basis.
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Article 3 Mortgage
(1) security whose B accepts that A is suitable when loss or reduction of value
arises about mortgage with which B is provided, when the credit situation
of A or the cosigner of A gets worse, when the considerable reason which
needs the preservative attachment of B arises and B set and charges a
considerable period -- or -- increase -- security -- it shall provide, and
a guarantor shall be found and added.
(2) When A does not carry out the debt over B, B collects or disposes of
mortgage by the procedure of a court or the method generally accepted to be
suitable, time, the price, etc. Despite in order of a court, the balance
which deducted expenses from the acquisition money can be appropriated for
liquidation of the debt of A. When the debt of A remains in addition after
appropriating acquisition money for liquidation of a debt, A shall be
immediately repaid to B and a surplus arises into acquisition money, B
shall change this into a right holder.
(3) When A does not carry out the debt over B, B shall be collected or disposed
of also about the negotiable securities of the personal property of A, and
a promissory note. It is altogether dealt with according to the preceding
clause.
(4) The lien of the mortgage naturally materialized by legal regulation is
included in this security.
Article 4 Loss of the profits of a term
(1) When at least one thing for which A is set to below arises, naturally A
shall lose the profits of a term about all the debts over B, even if there
is no notice from B, and shall repay a debt immediately.
1. When a statement of bankruptcy files, when a civil reorganization
procedure starts, when a reorganization-of-corporation procedure
starts, when a corporation consolidation start, or when a special
clearance starts.
2. When the disposition by suspension of business of a clearinghouse is
received.
3. When a dismissal command is received or when the resolution of a
dismissal occurs.
4. In addition to third clause, when A states the procedure in which a
specific mediation court participates about debt arrangement. Or when
abolition of business is expressed itself and the fact accepted to
have stopped payment occurs.
5. When the notice of a command of provisional seizure, preservation
seizure, and seizure is shipped to A or a cosigner.
6. When the time of not answering offer of the mortgage, the increase of
mortgage based on the third article first clause, a cosigner's
selection, or an additional claim.
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(2) When at least one thing for which A is set to below arises, naturally A
shall lose the profits of a term about all the debts over B and shall repay
a debt immediately with a petition from B. The profits of a term should be
lost, when a claim did not reach on time by the reason A neglects the
notification of address change and A does not receive the claim which it
should usually have reached from B.
1. When the performance of debt to B is delayed.
2. When seizure or auction procedure about the object of mortgage starts.
3. When the profits of a term are lost about the corporate bond which A
publishes.
4. When the profits of a term are lost about that to which the total
amount exceeds 1 million yen with debts other than the debt based on
this contract in A. Or although fulfillment duty occurred about that
to which the total amount exceeds 1 million yen in the liabilities for
guarantee which A performed to the debt which a third person pays,
when the fulfillment cannot be performed.
5. When the transaction contract with B is broken.
6. When the presentation to B based on the transaction contract with B or
report duty is neglected in spite of the reminder of B. Or when
presentation or a report including faithless contents of documents is
performed.
7. When the financial restriction matter set to the transaction contract
with B is broken.
8. When the whereabouts of A becomes unknown because of A.
9. When a cosigner corresponds at least one of each of the number of the
preceding clause or this clause.
10. When the considerable thing for which trouble is caused to liquidation
of the debt of A besides the preceding clause arises.
(3) A shall notify the fact to B with a document immediately, when the concern
generated or when the situation set to the second clause occurs is
produced.
Article 5 Offsetting and appropriation by B
(1) When A must carry out the debt over B by arrival of a term, loss of the
profits of a term, or generating of a claim-for-compensation debt, etc., B
shall offset the debt and claims, such as deposit of A, regardless of the
term of the claim at any time.
(2) When offset is possible in the previous clause, B can omit a prior notice
and a predetermined procedure, can receive refund of deposit with other
bank instead of A, and can also appropriate it for liquidation of a debt.
In this case, B shall notify the result to A.
(3) When B performs offset or refund in the previous two clauses, about
calculation of the interest of debts and credits, monetary damage, etc.,
the period is made last until the day of the calculation execution by B.
Moreover, when there is no agreement about an interest rate between A and
B, it shall be set by B.
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Article 6 Offsetting by A
(1) When A must carry out the debt over B by arrival of a term, B shall offset
the debt and claims, such as deposit of A, before the term of the claim
except for the following case.
1. When there are restrictions for liquidation and offset.
2. When contrary to the agreement which restricts the liquidation between
A and B before a term.
(2) When A offsets the bond of claims, offset deposit, the notice of offset on
the deed and passbook have to be immediately submitted to B.
(3) When A offsets, the interest of debts, credits, and monetary damage carry
out by the day of arrival of the notice of offset. In this case, when there
is a law of a special commission about liquidation before a term, it is
based on the law.
Article 7 Assignment to appropriation by B
In liquidation and the fifth article of offsetting and appropriation by B, when
insufficient for extinguishing the debt total amount of A, B shall be
appropriated by the proper way, and A cannot object to the appropriation.
Article 8 Assignment to appropriation by A
(1) When A offsets by the sixth article and it is insufficient for repaying
total debt amount of B, A can specify the method of appropriation by the
notice by the document to B.
(2) When A does not carry out specification by the preceding clause, B can be
appropriated by the proper method, and A cannot object to the
appropriation.
(3) When there is a possibility that B may have a trouble with the preservative
attachment by specification of the first clause, B can object without being
late by a written document. In consideration of the existence of security,
the guarantee, the importance, the difficulty of disposal, the merits and
demerits of time for performance, etc., B specifies the way of
appropriation.
(4) When B appropriates according to the preceding two clauses, B shall specify
the method about term the debt which is not due as if at which the term had
arrived.
Article 9 Risk-bearing and exculpatory clause
(1) When the deed which A submitted to B is lost, damaged, delay in an
incident, a calamity, and the accident in the middle of transportation, A
shall repay a debt based on the account book, or record of a check of B. In
this case, A pays the damage except for the case where it is the cause of
B.
(2) When the mortgage which was made a pledge from A to B suffers, except for
the case where it is the cause of B, A shall pay the damage.
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(3) B pays careful attention to and compares the seal and a signature of the
deed which A submitted and admits it is indifferent from originals, even if
there is an accident of forgery, alteration, and plagiarism in the seal or
a signature, damage is taken as the burden of A. A shall take
responsibility according to the publication of the deed.
(4) A should pay B all the expense which A requests to cooperate in order to
preserve or to use the right to A of B, and to collect or dispose of
security.
Article 10 Modification of notifications
(1) A sends a written notification immediately when to change of a seal,
signature, name, trade name, representative, and the address.
(2) When A neglected the notification of the preceding clause, neither the
notice which B performed by the cause of A -- A does not receive the claim
from B -- nor the sent documents was delay or it did not arrive, it should
reach at the time which should usually reach.
Article 11 Report and investigation
(1) A submits periodically the copy of balance sheet, income statement, tax
return, and other documents which B requires about the property,
management, and investigation of business condition of A.
(2) Other than the preceding clause, A submits or reports documents without
delay when B requires these documents about the property, management, and
investigation of business condition of A.
(3) When A faces or is likely to have a serious change about business
condition, property, management of A, A shall report immediately the
matter.
(4) When A or a cosigner receive the referee of guardianship, assistance, and
auxiliary start, A submits the fact to B. When notifications have changed
or canceled, it should be treated as the same manner.
Article 12 Applicable location
Each provision of this written contract is applied to many other transaction
between main and branch offices of A and B.
Article 13 Proper law and agreement jurisdiction
(1) Proper law of the contract and transactions based on the contract is
applied to Japanese law.
(2) When you need to file a lawsuit (mediation is included) about the
transactions based on this written contract, Tokyo District Court is the
exclusive agreement jurisdictional court for the first trial.
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Article 14 Cancellation of the contract
This contract is cancelable when the transactions set to the first article are
completed, and when there is no debt which A pays to B, and when either A or B
notifies to another party with a written document. Article 15 Registration for
credit information organization A as an individual agrees following terms.
1. The credit records based on the objective fact about the money consumption
sell-and-lease agreement ("individual contract") concerning the enterprise
nature fund individually concluded based on this written contract are
registered into CCB Co.("the credit-records organization"), for five years
after the day which repaid the total of debt by the individual contract
during a contract term. The information is used by the affiliation members
for payment or the investigation and judgment about solvency.
2. The fact in connection with the application of the security based on this
contract being reported to a credit-records organization from B. The
credit-records organization stores this information for half a year and the
information should be used by members of the credit-records organization
for the investigation and judgment about solvency.
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