Sample Business Contracts


Promissory Note - Kona Grill Las Vegas Inc. and GE Capital Franchise Finance Corp.

Promissory Notes


                                 PROMISSORY NOTE

                                                      Dated as of April 30, 2004
$1,000,000.00                                                Scottsdale, Arizona


         KONA GRILL LAS VEGAS, INC., a Delaware corporation ("Borrower"), for
value received, hereby promises to pay to GE CAPITAL FRANCHISE FINANCE
CORPORATION, a Delaware corporation ("Lender"), whose address is 17207 North
Perimeter Drive, Scottsdale, Arizona 85255, or order, on or before May 1, 2011
(the "Maturity Date"), as herein provided, the principal sum of $1,000,000.00,
and to pay interest on the unpaid principal amount of this Note from the date
hereof to the Maturity Date at the rate of 7.88% per annum on the basis of a
360-day year 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 Agreement dated as of the date
of this Note between Borrower and Lender, 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 Lender 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 $15,526.50 commencing on June 1, 2004, 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 Lender 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 Lender, and (iii) except as otherwise set forth
below, any such prepayment shall be made together with payment of an amount
equal to the sum of:

                  (a) a prepayment fee determined by: (i) calculating the
         decrease (expressed in basis points) in the weekly average yield of
         four-year U.S. Dollar Swaps (as published in Federal Reserve
         Statistical Release H.15[519]) (the "Index") on the Friday immediately
         preceding the week in which the prepayment is made from the date
         hereof, and dividing such decrease by 100; (ii) multiplying the result
         determined in (i) by the prepayment factor shown below corresponding to
         the applicable period of time during which such prepayment is made, and
         (iii) multiplying such product by the principal balance to be prepaid.
         If the Index is unchanged or has increased since the date hereof, no
         prepayment fee shall be due.



                      Loan Year            Variable Rate Factor
                      ---------            --------------------
                                        
                          1                       0.033
                          2                       0.029
                          3                       0.024
                          4                       0.019
                          5                       0.014
                          6                       0.010
                          7                       0.005


         The first Loan Year shall mean the period of time commencing on the
date of this Note and ending on the last day of the twelfth consecutive month
commencing with the month after the month in which this Note is dated, unless
this Note is dated the first day of a month, in which case the first Loan Year
shall mean the twelve consecutive calendar months commencing with the date of
this Note. Each subsequent Loan Year shall mean the
<PAGE>
successive twelve consecutive month period following the preceding Loan Year. If
the Index is unchanged or has increased since the date of this Note, no
prepayment fee shall be due.

         Plus:

                  (b) a prepayment premium equal to:

                           (i) 4% of the amount prepaid if the prepayment is
                  made on or following the date of this Note but prior to the
                  first anniversary of the date of this Note;

                           (ii) 3% of the amount prepaid if the prepayment is
                  made on or following the first anniversary of the date of this
                  Note but prior to the second anniversary of the date of this
                  Note;

                           (iii) 2% of the amount prepaid if the prepayment is
                  made on or following the second anniversary of the date of
                  this Note but prior to the third anniversary of the date of
                  this Note; and

                           (iv) 1% of the amount prepaid if the prepayment is
                  made on or following the third anniversary of the date of this
                  Note but prior to the fourth anniversary of the date 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 Lender declaring the unpaid
principal balance of this Note, accrued interest and all other sums due under
this Note, the Mortgage, the other Loan Documents and any Other Agreements, due
and payable as contemplated below; provided, however, the prohibition on a
partial prepayment and the prepayment fee and prepayment premium, as applicable,
shall not be applicable with respect to a prepayment of this Note in connection
with an application of condemnation proceeds as contemplated by the Mortgage or
as contemplated by the Loan Agreement as a result of a breach and subsequent
cure by Borrower of the Fixed Charge Coverage Ratio required by the Loan
Agreement.

         This Note is secured by the Mortgage and the other Loan Documents. Upon
the occurrence of an Event of Default, Lender 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 the lesser of
the highest rate for which the undersigned may legally contract or the rate of
14% per annum (the "Default Rate"), and such Default Rate shall continue to
apply following a judgment in favor of Lender 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 Lender, in addition to any other sum due Lender
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 Lender 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 Borrower, 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 Lender is
not less than that required by this Note.

         No delay or omission on the part of Lender 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 Lender (including
those fees and expenses

                                       2
<PAGE>
incurred in connection with any appeal) and court costs whether or not a
judicial action is commenced by Lender. 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 Lender under this Note and any other
Loan Documents are subject to the limitation that payments of interest and late
charges to Lender shall not be required to the extent that receipt of any such
payment by Lender would be contrary to provisions of applicable law limiting the
maximum rate of interest that may be charged or collected by Lender. The portion
of any such payment received by Lender 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 such excess portion shall be refunded to Borrower. All
interest paid or agreed to be paid to Lender 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 Lender and its successors and assigns.

                                       3
<PAGE>
         IN WITNESS WHEREOF, Borrower has executed and delivered this Note
effective as of the date first set forth above.

                                      BORROWER:


                                      KONA GRILL LAS VEGAS, INC.,

                                      a Delaware corporation

                                      By /s/ James Spiel
                                         -----------------------------------
                                      Printed Name James Spiel
                                                   -------------------------
                                      Its   Secretary
                                          ----------------------------------

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