EXHIBIT 10.8(b)
EQUIPMENT PROMISSORY NOTE
$_______________ Dated as of ______, 2005
Scottsdale Arizona
KONA GRILL , INC., a Delaware corporation ("Borrower"), for value
received, hereby promises to pay to GE CAPITAL FRANCHISE FINANCE CORPORATION, a
Delaware corporation ("GE"), whose address is 00000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000, or order, on or before _______________, 2012 (the
"Maturity Date"), as herein provided, the principal sum of $_______________, and
to pay interest on the unpaid principal amount of this Note from the date hereof
to the Maturity Date at the _____ rate of _________% per annum on the basis of a
360-day year consisting of twelve consecutive 30-day months, such principal and
interest to be paid in immediately available funds and in lawful money of the
United States. Initially capitalized terms which are not otherwise defined in
this Note shall have the meanings set forth in that certain Loan and Security
Agreement dated as of _________________ between Borrower and GE, as such
agreement may be amended, restated and/or supplemented from time to time (the
"Loan Agreement").
Interest on the principal amount of this Note for the period commencing
with the date such principal amount is advanced by GE through the last day in
the month in which this Note is dated shall be due and payable upon delivery of
this Note. Thereafter, principal and interest shall be payable in consecutive
monthly installments of $____________ commencing on ______________ 1, 2005, and
continuing on the first day of each month thereafter until the Maturity Date, at
which time the outstanding principal and unpaid accrued interest shall be due
and payable.
Borrower may prepay this Note in full, but not in part (except as
otherwise set forth below), including all accrued but unpaid interest hereunder
and all sums advanced by GE pursuant to the Loan Documents and any Other
Agreements, provided that (i) no Event of Default has occurred under any of the
Loan Documents or any Other Agreements, (ii) any such prepayment shall only be
made on a regularly scheduled payment date upon not less than 30 days prior
written notice from Borrower to GE, and (iii) except as otherwise set forth
herein, any such prepayment shall be made together with payment of an amount
equal to the sum of:
(a) a prepayment fee equal to 1% of the amount prepaid; and
(b) a prepayment premium equal to the positive difference (if any)
between (i) the present value of the stream of monthly principal and
interest payments due under the Note from the date of such prepayment
through the scheduled Maturity Date (the "Remaining Scheduled Term"),
calculated using the interpolated yield, at the time of such prepayment,
of the two U.S. Dollar Interest Rate Swaps (as published in Federal
Reserve Statistical Release H.15[519]
xxxx://xxx.xxxxxxxxxxxxxx.xxx/xxxxxxxx/X00/) whose terms most closely
match the Remaining Scheduled Term, and (ii) the present value of the
stream of monthly principal and interest payments due under this Note from
the date of such prepayment through the scheduled Maturity Date,
calculated using the interpolated yield, as of the Closing Date, of the
two U.S. Dollar Interest Rate Swaps whose terms most closely match the
originally scheduled term of this Note.
The foregoing prepayment fee and prepayment premium, as applicable, shall
be due and payable regardless of whether such prepayment is the result of a
voluntary prepayment by Borrower or as a result of GE declaring the unpaid
principal balance of this Note, accrued interest and all other sums due under
this Note, the other Loan Documents and any Other Agreements, due and payable as
contemplated below.
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Upon execution of this Note, Xxxxxxxx shall authorize GE to establish
arrangements whereby all payments of principal and interest hereunder are
transferred by Automated Clearing House Debit initiated by GE directly from an
account at a U.S. bank in the name of Borrower to such account as GE may
designate or as GE may otherwise designate. Each payment of principal and
interest hereunder shall be applied first toward any past due payments under
this Note (including payment of all Costs (as herein defined)), then to accrued
interest, and the balance, after the payment of such accrued interest, if any,
shall be applied to the unpaid principal balance of this Note; provided,
however, each payment hereunder after an Event of Default has occurred shall be
applied as GE in its sole discretion may determine.
This Note is secured by the Loan Agreement and the other Loan Documents.
Upon the occurrence of an Event of Default, GE may declare the entire unpaid
principal balance of this Note, accrued interest, if any, and all other sums due
under this Note and any Loan Documents or Other Agreements due and payable at
once without notice to Borrower. All past-due principal and/or interest shall
bear interest from the due date to the date of actual payment at a rate (the
"Default Rate") equal to at the lesser of (i) the highest rate for which the
undersigned may legally contract or (ii) the rate of 14% per annum, and such
Default Rate shall continue to apply following a judgment in favor of GE under
this Note. If Borrower fails to make any payment or installment due under this
Note within five days of its due date, Borrower shall pay to GE, in addition to
any other sum due GE under this Note or any other Loan Document, a late charge
equal to 5% of such past-due payment or installment (the "Late Charge"), which
Late Charge is a reasonable estimate of the loss that may be sustained by GE due
to the failure of Borrower to make timely payments. All payments of principal
and interest due hereunder shall be made (i) without deduction of any present
and future taxes, levies, imposts, deductions, charges or withholdings, which
amounts shall be paid by Xxxxxxxx, and (ii) without any other right of
abatement, reduction, setoff, defense, counterclaim, interruption, deferment or
recoupment for any reason whatsoever. Borrower will pay the amounts necessary
such that the gross amount of the principal and interest received by GE is not
less than that required by this Note.
No delay or omission on the part of GE in exercising any remedy, right or
option under this Note shall operate as a waiver of such remedy, right or
option. In any event, a waiver on any one occasion shall not be construed as a
waiver or bar to any such remedy, right or option on a future occasion. Borrower
hereby waives presentment, demand for payment, notice of dishonor, notice of
protest, and protest, notice of intent to accelerate, notice of acceleration and
all other notices or demands in connection with delivery, acceptance,
performance, default or endorsement of this Note. All notices, consents,
approvals or other instruments required or permitted to be given by either party
pursuant to this Note shall be given in accordance with the notice provisions in
the Loan Agreement. Should any indebtedness represented by this Note be
collected at law or in equity, or in bankruptcy or other proceedings, or should
this Note be placed in the hands of attorneys for collection after default,
Borrower shall pay, in addition to the principal and interest due and payable
hereon, all costs of collecting or attempting to collect this Note (the
"Costs"), including reasonable attorneys' fees and expenses of GE (including
those fees and expenses incurred in connection with any appeal) and court costs
whether or not a judicial action is commenced by GE. This Note may not be
amended or modified except by a written agreement duly executed by the party
against whom enforcement of this Note is sought. In the event that any one or
more of the provisions contained in this Note shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Note, and this
Note shall be construed as if such provision had never been contained herein or
therein. Time is of the essence in the performance of each and every obligation
under this Note.
Notwithstanding anything to the contrary contained in any of the Loan
Documents, the obligations of Borrower to GE under this Note and any other Loan
Documents are subject to the limitation that payments of interest and late
charges to GE shall not be required to the extent that receipt of any such
payment by GE would be contrary to provisions of applicable law limiting the
maximum rate of interest that may be charged or collected by GE. The portion of
any such payment received by GE that is in excess of the maximum interest
permitted by such provisions of law shall be credited to the principal balance
of this Note or if such excess portion exceeds the outstanding principal balance
of this Note, then
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such excess portion shall be refunded to Borrower. All interest paid or agreed
to be paid to GE shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and/or spread throughout the full term of this Note
(including, without limitation, the period of any renewal or extension thereof)
so that interest for such full term shall not exceed the maximum amount
permitted by applicable law.
This obligation shall bind Borrower and its successors and assigns, and
the benefits hereof shall inure to GE and its successors and assigns.
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IN WITNESS WHEREOF, Xxxxxxxx has executed and delivered this Note
effective as of the date first set forth above.
BORROWER:
KONA GRILL _______, INC.,
a Delaware corporation
By /s/ Xxxxx Xxxxx
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Printed Name: Xxxxx Xxxxx
Its: Secretary
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