Exhibit 10.3

 

 

AMENDED AND RESTATED SUBSIDIARY GUARANTY

 

THIS AMENDED AND RESTATED SUBSIDIARY GUARANTY, dated as of October 12, 2016 (as
the same may be amended, restated or otherwise modified from time to time, this
“Guaranty”), made by (i) each of the undersigned (each, a “Guarantor” and
collectively, the “Guarantors” and such terms shall include an Additional
Guarantor that becomes a party to this Guaranty pursuant to Section 16 hereof),
with (ii) KeyBank National Association, as Administrative Agent (herein,
together with its successors and assigns in such capacity, the “Administrative
Agent”), for the benefit of the Creditors (as defined below):

 

RECITALS:

 

(1)     Certain of the Guarantors are party to that certain Subsidiary Guaranty,
dated as of April 19, 2013 (as amended and restated, supplemented or otherwise
modified prior to the date hereof, the “Original Guaranty”).

 

(2)     Except as otherwise defined herein, terms used herein and defined in the
Credit Agreement (as defined below) shall be used herein as therein defined.
Certain terms used herein are defined in Section 1 hereof.

 

(3)     This Guaranty is made pursuant to the Second Amended and Restated Credit
Agreement, dated as of the date hereof (as the same may be amended, restated or
otherwise modified from time to time, the “Credit Agreement”), among Kona Grill,
Inc., a Delaware corporation (together with its successors and assigns, the
“Borrower”), the financial institutions named as lenders therein (together with
their successors and assigns, the “Lenders”), and the Administrative Agent.

 

(4)     Each Guarantor is a direct or indirect Subsidiary of the Borrower.

 

(5)     It is a condition to the making of Loans and LC Issuances under the
Credit Agreement that each Guarantor shall have executed and delivered this
Guaranty.

 

(6)     Each Guarantor will obtain benefits from the Credit Agreement and,
accordingly, desires to execute this Guaranty in order to satisfy the condition
described in the preceding paragraph and to induce the Creditors to extend the
Loan Document Obligations and the Designated Hedge Document Obligations.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Guarantor, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby makes the following representations and warranties to the
Administrative Agent and the other Creditors and hereby covenants and agrees
with the Administrative Agent and each other Creditor as follows:

 

Section 1. Certain Definitions. As used in this Guaranty, the following terms
shall have the meanings herein specified unless the context otherwise requires:

 

“Additional Guarantor” has the meaning provided in Section 16.

 

 
 

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“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.)
and any successor statute, and any rule, regulation, or order promulgated
thereunder, in each case as amended from time to time.

 

“Credit Agreement” has the meaning provided in the Recitals.

 

“Creditor” means the Administrative Agent, each LC Issuer, the Swing Line
Lender, the Lenders and the Designated Hedge Creditors, and the respective
successors and assigns of each of the foregoing.

 

“Designated Hedge Creditor” means each Secured Hedge Provider party to any
Designated Hedge Document.

 

“Designated Hedge Document” means (i) each Designated Hedge Agreement to which
the Borrower or any Guarantor is now or may hereafter become a party, and (ii)
each confirmation, transaction statement or other document executed and
delivered in connection therewith to which the Borrower or any Guarantor is now
or may hereafter become a party.

 

“Designated Hedge Document Obligations” means all obligations and liabilities
owing by the Borrower or any Guarantor under all existing and future Designated
Hedge Documents, in all cases whether now existing, or hereafter incurred or
arising, including any such amounts incurred or arising during the pendency of
any bankruptcy, insolvency, reorganization, receivership or similar proceeding,
regardless of whether allowed or allowable in such proceeding or subject to an
automatic stay under Section 362(a) of the Bankruptcy Code. Notwithstanding the
foregoing, Designated Hedge Document Obligations shall not include any Excluded
Swap Obligations.

 

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Loan Documents to
which such Guarantor is party with respect to, or the grant by such Guarantor of
a security interest to secure, such Swap Obligation (or any guarantee thereof)
is or becomes unlawful under the Commodity Exchange Act or any rule or
regulation promulgated thereunder (or the application or official interpretation
of any provision thereof) by virtue of such Guarantor’s failure for any reason
not to constitute an “eligible contract participant” as defined in the Commodity
Exchange Act at the time any such Loan Document becomes effective with respect
to such related Swap Obligation.

 

“Guaranteed Documents” means, collectively, (i) the Credit Agreement and the
other Loan Documents and (ii) each Designated Hedge Agreement and other
Designated Hedge Document.

 

“Guaranteed Obligations” means, collectively, the Loan Document Obligations and
the Designated Hedge Document Obligations. Notwithstanding the foregoing,
Guaranteed Obligations shall not include any Excluded Swap Obligations.

 

“Guarantors” or “Guarantor” has the meaning provided in the Recitals.

 

“Guaranty” has the meaning provided in the Recitals.

 

“Guaranty Supplement” has the meaning provided in Section 16.

 

“Lender” has the meaning provided in the Recitals.

 

 
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“Loan Document Obligations” means, collectively (i) the principal of and
interest on the Loans made to the Borrower under the Credit Agreement, (ii) all
LC Outstandings and other amounts owing with respect to Letters of Credit issued
under the Credit Agreement, (iii) Banking Services Obligations and (iv) all of
the other Obligations, whether primary, secondary, direct, contingent, fixed or
otherwise, in the case of each of the foregoing whether now existing, or
hereafter incurred or arising, including any such interest or other amounts
incurred or arising during the pendency of any bankruptcy, insolvency,
reorganization, receivership or similar proceeding, regardless of whether
allowed or allowable in such proceeding or subject to an automatic stay under
Section 362(a) of the Bankruptcy Code. Notwithstanding the foregoing, Loan
Document Obligations shall not include any Excluded Swap Obligations.

 

“Subordinated Obligations” has the meaning given to such term in Section 3
hereof.

 

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract, or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Taxes” has the meaning specified in Section 25(a) hereof.

 

Section 2. Guaranty by the Guarantors, etc.

 

(a)     Each Guarantor, jointly and severally, irrevocably and unconditionally
guarantees: (i) to the Administrative Agent, each LC Issuer, the Swing Line
Lender and the Lenders the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all of the Loan Document
Obligations and (ii) to each Designated Hedge Creditor the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all of the Designated Hedge Document Obligations. Such guaranty is an
absolute, unconditional, present and continuing guaranty of payment and not of
collectibility and is in no way conditioned or contingent upon any attempt to
collect from the Borrower or any other Subsidiary or Affiliate of the Borrower,
or any other action, occurrence or circumstance whatsoever. If an Event of
Default shall occur and be continuing under the Credit Agreement or any payment
default shall occur and be outstanding under any Designated Hedge Document, each
Guarantor will, immediately upon (and in any event no later than one Business
Day following) its receipt of written notice from the Administrative Agent
demanding payment hereunder, pay to the Administrative Agent, for the benefit of
the Creditors, in immediately available funds, at the Payment Office, such
amount of the Guaranteed Obligations as the Administrative Agent shall specify
in such notice.

 

(b)     In addition to the foregoing, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees to the Creditors the payment of any
and all Guaranteed Obligations of the Borrower and each other Credit Party,
whether or not due or payable by the obligor thereon, upon the occurrence of an
Insolvency Event in respect of the Borrower or such other Credit Party, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Administrative Agent, for the benefit of the
Creditors, on demand, in such currency and otherwise in such manner as is
provided in the Guaranteed Documents governing such Guaranteed Obligations.

 

(c)     As a separate, additional and continuing obligation, each Guarantor
unconditionally and irrevocably undertakes and agrees, for the benefit of the
Creditors, that, should any amounts constituting Guaranteed Obligations not be
recoverable from the Borrower or any other Credit Party for any reason
whatsoever (including, without limitation, by reason of any provision of any
Guaranteed Document or any other agreement or instrument executed in connection
therewith being or becoming, at any time, voidable, void, unenforceable, or
otherwise invalid under any applicable law), then notwithstanding any notice or
knowledge thereof by the Administrative Agent, any other Creditor, any of their
respective Affiliates, or any other Person, each Guarantor, jointly and
severally, as sole, original and independent obligor, upon demand by the
Administrative Agent, will make payment to the Administrative Agent, for the
account of the Creditors, of all such obligations not so recoverable by way of
full indemnity.

 

 
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(d)     All payments by each Guarantor under this Guaranty shall be made to the
Administrative Agent, for the benefit of the Creditors, in such currency and
otherwise in such manner as is provided in the Guaranteed Documents to which
such payments relate.

 

Section 3. Subordination.

 

(a)     Any Indebtedness or other obligations or liabilities of the Borrower now
or hereafter held by any Guarantor (collectively, “Subordinated Obligations”)
are hereby subordinated to the Indebtedness of the Borrower to any Creditor; and
such Subordinated Obligations of the Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for the
Administrative Agent and the other Creditors and be paid over to the
Administrative Agent, for the benefit of the Creditors, on account of the
Indebtedness of the Borrower owing under the Guaranteed Documents to the
Administrative Agent and to the other Creditors, but without affecting or
impairing in any manner the liability of such Guarantor under the other
provisions of this Guaranty. Prior to the transfer by any Guarantor of any note
or negotiable instrument evidencing any Subordinated Obligation of the Borrower
to such Guarantor, such Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination.

 

(b)     If and to the extent that any Guarantor makes any payment to the
Administrative Agent or any other Creditor or to any other Person pursuant to or
in respect of this Guaranty, any reimbursement or similar claim that such
Guarantor may have against the Borrower by reason thereof shall be subject and
subordinate to the prior termination of all of the Commitments and indefeasible
payment in full of all Guaranteed Obligations.

 

Section 4. Guarantors’ Obligations Absolute. The obligations of each Guarantor
under this Guaranty shall be absolute and unconditional, shall not be subject to
any counterclaim, setoff, deduction or defense based on any claim such Guarantor
may have against the Borrower or any other Person, including, without
limitation, the Administrative Agent, any other Creditor, any of their
respective Affiliates, or any other Guarantor, and shall remain in full force
and effect without regard to, and shall not be released, suspended, abated,
deferred, reduced, limited, discharged, terminated or otherwise impaired or
adversely affected by any circumstance or occurrence whatsoever, other than
indefeasible payment in full of, and complete performance of, all of the
Guaranteed Obligations, including, without limitation:

 

(a)     any increase in the amount of the Guaranteed Obligations outstanding
from time to time, including, without limitation, any increase in the aggregate
outstanding amount of the Loans and Letters of Credit above any specific maximum
amount referred to herein or in the Credit Agreement as in effect on the date
hereof, and any increase in any interest rate, Fee or other amount applicable to
any portion of the Guaranteed Obligations or otherwise payable under any
Guaranteed Document;

 

(b)     any direction as to the application of any payment by the Borrower or by
any other Person;

 

(c)     any incurrence of additional Guaranteed Obligations at any time or under
any circumstances, including, without limitation, (i) during the continuance of
a Default or Event of Default, (ii) at any time when all conditions to such
incurrence have not been satisfied, or (iii) in excess of any borrowing base,
sublimit or other limitations contained in the Credit Agreement or any of the
other Guaranteed Documents;

 

 
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(d)     any renewal or extension of the time for payment or maturity of any of
the Guaranteed Obligations, or any amendment or modification of, or addition or
supplement to, or deletion from, the Credit Agreement, any other Guaranteed
Document, or any other instrument or agreement applicable to the Borrower or any
other Person, or any part thereof, or any assignment, transfer or other
disposition of any thereof;

 

(e)     any failure of the Credit Agreement, any other Guaranteed Document, or
any other instrument or agreement applicable to the Borrower or any other
Person, to constitute the legal, valid and binding agreement or obligation of
any party thereto, enforceable in accordance with its terms, or any irregularity
in the form of any Guaranteed Document;

 

(f)     any waiver, consent, extension, indulgence or other action or inaction
(including, without limitation, any lack of diligence, any failure to mitigate
damages or marshal assets, or any election of remedies) under or in respect of
(i) the Credit Agreement, any other Guaranteed Document, or any such other
instrument or agreement, or (ii) any obligation or liability of the Borrower or
any other Person;

 

(g)     any payment made to the Administrative Agent or any other Creditor on
the Guaranteed Obligations that the Administrative Agent or any other Creditor
repays, returns or otherwise restores to the Borrower or any other applicable
obligor pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding;

 

(h)     any sale, exchange, release, surrender or foreclosure of, or any
realization upon, or other dealing with, in any manner and in any order, any
property, rights or interests by whomsoever at any time granted, assigned,
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations, or any other liabilities or obligations (including any of those
hereunder), or any portion of any thereof;

 

(i)     any release of any security or any guaranty by or at the direction of
the Administrative Agent or any other Creditor, or any release or discharge of,
or limitation of recourse against, any Person furnishing any security or
guaranty, including, without limitation, any release or discharge of any
Guarantor from this Guaranty;

 

(j)     any Insolvency Event relating to the Borrower or to any of its
properties or assets;

 

(k)     any assignment, transfer or other disposition, in whole or in part, by
the Borrower or any other Person of its interest in any of the property, rights
or interests constituting security for all or any portion of the Guaranteed
Obligations or any other Indebtedness, liabilities or obligations;

 

(l)     any lack of notice to, or knowledge by, any Guarantor of any of the
matters referred to above; or

 

(m)     to the fullest extent permitted under applicable law now or hereafter in
effect, any other circumstance or occurrence, whether similar or dissimilar to
any of the foregoing, that could or might constitute a defense available to, or
a discharge of the obligations of, a guarantor or other surety.

 

 
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Section 5. Waivers. Each Guarantor unconditionally waives, to the maximum extent
permitted under any applicable law now or hereafter in effect, insofar as its
obligations under this Guaranty are concerned, (a) notice of any of the matters
referred to in Section 4, (b) all notices required by statute, rule of law or
otherwise to preserve any rights against such Guarantor hereunder, including,
without limitation, any demand, presentment, proof or notice of dishonor or
non-payment of any Guaranteed Obligation, notice of acceptance of this Guaranty,
notice of the incurrence of any Guaranteed Obligation, notice of any failure on
the part of the Borrower, any of its Subsidiaries or Affiliates, or any other
Person, to perform or comply with any term or provision of the Credit Agreement,
any other Guaranteed Document or any other agreement or instrument to which the
Borrower or any other Person is a party, or notice of the commencement of any
proceeding against any other Person or its any of its property or assets, (c)
any right to the enforcement, assertion or exercise against the Borrower or
against any other Person or any collateral of any right, power or remedy under
or in respect of the Credit Agreement, the other Guaranteed Documents or any
other agreement or instrument, and (d) any requirement that such Guarantor be
joined as a party to any proceedings against the Borrower or any other Person
for the enforcement of any term or provision of the Credit Agreement, the other
Guaranteed Documents, this Guaranty or any other agreement or instrument.

 

Section 6. Subrogation Rights. Until such time as the Guaranteed Obligations
have been paid in full in cash and otherwise fully performed and all of the
Commitments under the Credit Agreement have been terminated, each Guarantor
hereby irrevocably waives all rights of subrogation that it may at any time
otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code, or otherwise) to the claims of the Administrative
Agent and/or the other Creditors against the Borrower, any other Guarantor or
any other guarantor of or surety for the Guaranteed Obligations and all
contractual, statutory or common law rights of reimbursement, contribution or
indemnity from the Borrower or any other Guarantor that it may at any time
otherwise have as a result of this Guaranty.

 

Section 7. Separate Actions. A separate action or actions may be brought and
prosecuted against any Guarantor whether or not action is brought against any
other Guarantor, any other guarantor or the Borrower, and whether or not any
other Guarantor, any other guarantor of the Borrower or the Borrower be joined
in any such action or actions.

 

Section 8. Guarantors Familiar with Borrower’s Affairs. Each Guarantor confirms
that an executed (or conformed) copy of each of the Loan Documents has been made
available to its principal executive officers, that such officers are familiar
with the contents thereof and of this Guaranty, and that it has executed and
delivered this Guaranty after reviewing the terms and conditions of the Credit
Agreement, the other Loan Documents and this Guaranty and such other information
as it has deemed appropriate in order to make its own credit analysis and
decision to execute and deliver this Guaranty. Each Guarantor confirms that it
has made its own independent investigation with respect to the creditworthiness
of the Borrower and its other Subsidiaries and Affiliates and is not executing
and delivering this Guaranty in reliance on any representation or warranty by
the Administrative Agent or any other Creditor or any other Person acting on
behalf of the Administrative Agent or any other Creditor as to such
creditworthiness. Each Guarantor expressly assumes all responsibilities to
remain informed of the financial condition of the Borrower and its other
Subsidiaries and Affiliates and any circumstances affecting (a) the Borrower’s
or any other Subsidiary’s or Affiliate’s ability to perform its obligations
under the Credit Agreement and the other Guaranteed Documents to which it is a
party, or (b) any collateral securing, or any other guaranty for, all or any
part of the Borrower’s or such other Subsidiary’s or Affiliate’s payment and
performance obligations thereunder; and each Guarantor further agrees that the
Administrative Agent and the other Creditors shall have no duty to advise any
Guarantor of information known to them regarding such circumstances or the risks
such Guarantor undertakes in this Guaranty.

 

Section 9. Covenant Under Credit Agreement. Each Guarantor covenants and agrees
that on and after the date hereof and until this Guaranty is terminated in
accordance with Section 26 hereof, such Guarantor shall take, or will refrain
from taking, as the case may be, all actions that are necessary to be taken or
not taken so that no Default or Event of Default, is caused by the actions or
inactions of such Guarantor or any of its Subsidiaries.

 

 
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Section 10. Solvency. Each Guarantor represents and warrants to the
Administrative Agent and each of the other Creditors that as of the date such
Guarantor has become a party to this Guaranty, (i) such Guarantor has received
consideration that is the reasonable equivalent value of the obligations and
liabilities that such Guarantor has incurred to the Administrative Agent and the
other Creditors under this Guaranty and the other Loan Documents to which such
Guarantor is a party; (ii) such Guarantor has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is solvent and able to pay its debts as they mature; (iii) such
Guarantor owns property having a value, both at fair valuation and at present
fair salable value, greater than the amount required to pay its debts; and (iv)
such Guarantor is not entering into the Loan Documents to which it is a party
with the intent to hinder, delay or defraud its creditors.

 

Section 11. Continuing Guaranty; Remedies Cumulative, etc. This Guaranty is a
continuing guaranty, all liabilities to which it applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon, and this Guaranty shall remain in full force and effect until terminated
as provided in Section 26 hereof. No failure or delay on the part of the
Administrative Agent or any other Creditor in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly specified are cumulative and
not exclusive of any rights or remedies that the Administrative Agent or any
other Creditor would otherwise have. No notice to or demand on any Guarantor in
any case shall entitle such Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or any other Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for, and neither the
Administrative Agent nor any other Creditor, undertakes any obligation or duty
to, inquire into the capacity or powers of the Borrower or any of its
Subsidiaries or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.

 

Section 12. Application of Payments and Recoveries. All amounts received by the
Administrative Agent pursuant to, or in connection with the enforcement of, this
Guaranty, together with all amounts and other rights and benefits realized by
any Creditor (or to which any Creditor may be entitled) by virtue of this
Guaranty, shall be applied as provided in Section 8.03 of the Credit Agreement.

 

Section 13. Enforcement Expenses. The Guarantors hereby jointly and severally
agree to pay, to the extent not paid pursuant to Section 11.01 of the Credit
Agreement, all out-of-pocket costs and expenses of the Administrative Agent and
each other Creditor in connection with the enforcement of this Guaranty and any
amendment, waiver or consent relating hereto (including, without limitation, the
fees and disbursements of counsel employed by the Administrative Agent or any of
the other Creditors).

 

Section 14. Successors and Assigns. This Guaranty shall be binding upon each
Guarantor and its successors and assigns, and shall inure to the benefit of the
Administrative Agent and the other Creditors and their successors and assigns.

 

Section 15. Entire Agreement. This Guaranty and the other Guaranteed Documents
represent the final agreement among the parties with respect to the subject
matter hereof and thereof, supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof, and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements among the parties. There are no unwritten oral
agreements among the parties.

 

 
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Section 16. Amendments; Additional Guarantors. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent acting at the direction of the requisite
number of Lenders, if any, required pursuant to Section 11.12 of the Credit
Agreement, and the applicable Guarantor or Guarantors, as the case may be, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. Upon the execution and delivery by any
Person of a guaranty supplement in substantially the form of Exhibit A hereto
(each, a “Guaranty Supplement”), (a) such Person shall be referred to as an
“Additional Guarantor” and shall become and be a Guarantor hereunder, and each
reference in this Guaranty to a “Guarantor” shall also mean and be a reference
to such Additional Guarantor, and each reference in any other Loan Document to a
“Guarantor” shall also mean and be a reference to such Additional Guarantor, and
(b) each reference herein to “this Guaranty”, “hereunder”, “hereof” or words of
like import referring to this Guaranty, and each reference in any other Loan
Document to the “Guaranty”, “thereunder”, “thereof” or words of like import
referring to this Guaranty, shall mean and be a reference to this Guaranty as
supplemented by such Guaranty Supplement.

 

Section 17. Headings Descriptive. The headings of the several Sections of this
Guaranty are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Guaranty.

 

Section 18. Severability. Any provision of this Guaranty that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 19. Right of Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (such term to mean
any “Event of Default” as defined in the Credit Agreement or any payment default
under any Designated Hedge Document after any applicable notice and grace
period), each Creditor is hereby authorized at any time or from time to time,
without notice to any Guarantor or to any other Person, any such notice being
expressly waived, to the fullest extent permitted under applicable law now or
hereafter in effect, to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held or
owing by such Creditor to or for the credit or the account of such Guarantor,
against and on account of the obligations and liabilities of such Guarantor to
such Creditor under this Guaranty, irrespective of whether or not the
Administrative Agent or such Creditor shall have made any demand hereunder and
although said obligations, liabilities, deposits or claims, or any of them,
shall be contingent or unmatured. Each Creditor agrees to promptly notify the
relevant Guarantor after any such set off and application, provided, however,
that the failure to give such notice shall not affect the validity of such set
off and application.

 

Section 20. Notices. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing and mailed,
sent by facsimile or delivered, (a) if to any Guarantor, at the address
specified for it in the Credit Agreement (or if no such address is specified, to
it c/o the Borrower), with a courtesy copy to the Borrower at its address
specified in or pursuant to the Credit Agreement, (b) if to the Administrative
Agent, to it at its Notice Office, (c) if to any Lender, at its address
specified in or pursuant to the Credit Agreement, and (d) if to any Designated
Hedge Creditor, at such address as such Designated Hedge Creditor shall have
specified in writing to each Guarantor and the Administrative Agent; or in any
case at such other address as any of the Persons listed above may hereafter
notify the others in writing. All such notices and communications shall be
mailed, sent via facsimile, sent by overnight courier or delivered, and shall be
effective when received.

 

 
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Section 21. Reinstatement. If claim is ever made upon the Administrative Agent
or any other Creditor for rescission, repayment, recovery or restoration of any
amount or amounts received by the Administrative Agent or any other Creditor in
payment or on account of any of the Guaranteed Obligations and any of the
aforesaid payees repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (b) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the Borrower), then and in such event (i) any such judgment, decree,
order, settlement or compromise shall be binding upon each Guarantor,
notwithstanding any revocation hereof or other instrument evidencing any
liability of the Borrower, (ii) each Guarantor shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or otherwise recovered or
restored to the same extent as if such amount had never originally been received
by any such payee, and (iii) this Guaranty shall continue to be effective or be
reinstated, as the case may be, all as if such repayment or other recovery had
not occurred.

 

Section 22. Sale of Capital Stock of a Guarantor. In the event that all of the
capital stock of one or more Guarantors is sold or otherwise disposed of or
liquidated in compliance with the requirements of Section 7.02 of the Credit
Agreement (or such sale or other disposition has been approved in writing by the
Required Lenders (or all Lenders, as applicable, if required by Section 11.12 of
the Credit Agreement)) and the proceeds of such sale, disposition or liquidation
are applied, to the extent applicable, in accordance with the provisions of the
Credit Agreement, such Guarantor shall, in accordance with Section 11.12(d) of
the Credit Agreement, be released from this Guaranty and this Guaranty shall, as
to each such Guarantor or Guarantors, terminate, and have no further force or
effect.

 

Section 23. Contribution Among Guarantors. Each Guarantor, in addition to the
subrogation rights it shall have against the Borrower under applicable law as a
result of any payment it makes hereunder, shall also have a right of
contribution against all other Guarantors in respect of any such payment pro
rata among the same based on their respective net fair value as enterprises,
provided any such right of contribution shall be subject and subordinate to the
prior payment in full of the Guaranteed Obligations (and such Guarantor’s
obligations in respect thereof).

 

Section 24. Full Recourse Obligations; Effect of Fraudulent Transfer Laws, etc.
It is the desire and intent of each Guarantor, the Administrative Agent and the
other Creditors that this Guaranty shall be enforced as a full recourse
obligation of each Guarantor to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
If and to the extent that the obligations of any Guarantor under this Guaranty
would, in the absence of this sentence, be adjudicated to be invalid or
unenforceable because of any applicable state or federal law relating to
fraudulent conveyances or transfers, then the amount of such Guarantor’s
liability hereunder in respect of the Guaranteed Obligations shall be deemed to
be reduced ab initio to that maximum amount that would be permitted without
causing such Guarantor’s obligations hereunder to be so invalidated.

 

 
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Section 25. Payments Free and Clear of Setoffs, Counterclaims and Taxes, etc.

 

(a)     All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense and, except as provided for in this
Section 25(a), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax, imposed on or measured by
the net income or net profits of a Creditor pursuant to the laws of the
jurisdiction under which such Creditor is organized or the jurisdiction in which
the principal office or Applicable Lending Office of such Creditor is located or
any subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect to such non excluded taxes, levies imposts, duties,
fees, assessments or other charges (all such nonexcluded taxes levies, imposts,
duties, fees assessments or other charges being referred to collectively as
“Taxes”). If any Taxes are so levied or imposed, the applicable Guarantor agrees
to pay the full amount of such Taxes and such additional amounts as may be
necessary so that every payment by it of all amounts due hereunder, after
withholding or deduction for or on account of any Taxes will not be less than
the amount provided for herein. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, the applicable Guarantor agrees to reimburse
each Creditor, upon the written request of such Creditor for taxes imposed on or
measured by the net income or profits of such Creditor pursuant to the laws of
the jurisdiction in which such Creditor is organized or in which the principal
office or Applicable Lending Office of such Creditor is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction
in which the principal office or Applicable Lending Office of such Creditor is
located and for any withholding of income or similar taxes imposed by the United
States of America as such Creditor shall determine are payable by, or withheld
from, such Creditor in respect of such amounts so paid to or on behalf of such
Creditor pursuant to the preceding sentence, which request shall be accompanied
by a statement from such Creditor setting forth, in reasonable detail, the
computations used in determining such amounts. The applicable Guarantor will
furnish to the Administrative Agent within 45 days after the date the payment of
any Taxes, or any withholding or deduction on account thereof, is due pursuant
to applicable law certified copies of tax receipts, or other evidence
satisfactory to the applicable Creditor, evidencing such payment by the
applicable Creditor. Each applicable Guarantor will indemnify and hold harmless
the Administrative Agent and each Creditor, and reimburse the Administrative
Agent or such Creditor upon its written request, for the amount of any Taxes so
levied or imposed and paid or withheld by such Creditor.

 

(b)     Notwithstanding anything to the contrary contained in this Section 25,
(i) any applicable Guarantor shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or other similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from any amounts payable hereunder for the account of any Creditor that
is not a United States Person (as such term is defined in Section 7701(a)(30) of
the Code) for United States federal income tax purposes and that has not
provided to the Borrower such forms that establish a complete exemption from
such deduction or withholding; and (ii) any applicable Guarantor shall not be
obligated pursuant to this Section 25 hereof to gross-up payments to be made to
a Creditor in respect of income or similar taxes imposed by the United States or
any additional amounts with respect thereto if such Creditor has not provided to
the Borrower such forms.

 

Section 26. Termination. After the termination of all of the Commitments and all
Designated Hedge Documents, when no LC Outstandings exist and when all Loans and
other Guaranteed Obligations (other than unasserted indemnity obligations) have
been paid in full, this Guaranty will terminate and the Administrative Agent, at
the request and expense of the Borrower and/or any of the Guarantors, will
execute and deliver to the Guarantors an instrument or instruments acknowledging
the satisfaction and termination of this Guaranty.

 

Section 27. Enforcement Only by Administrative Agent. The Creditors agree that
this Guaranty may be enforced only by the action of the Administrative Agent,
acting upon the instructions of the Required Lenders, and that no Creditor shall
have any right individually to seek to enforce or to enforce this Guaranty, it
being understood and agreed that such rights and remedies may be exercised by
the Administrative Agent, for the benefit of the Creditors, upon the terms of
this Guaranty.

 

 
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Section 28. General Limitation on Claims by Guarantors. NO CLAIM MAY BE MADE BY
ANY GUARANTOR AGAINST THE ADMINISTRATIVE AGENT OR ANY OTHER CREDITOR, OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THEM,
FOR ANY DAMAGES OTHER THAN ACTUAL COMPENSATORY DAMAGES IN RESPECT OF ANY CLAIM
FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY OR ANY OF THE OTHER
GUARANTEED DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH; AND EACH GUARANTOR HEREBY, TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, WAIVES, RELEASES AND AGREES NOT TO SUE OR COUNTERCLAIM UPON ANY
SUCH CLAIM FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

 

Section 29. Creditors Not Fiduciary to Guarantors. The relationship among any
Guarantor and its Affiliates, on the one hand, and the Administrative Agent and
the other Creditors, on the other hand, is solely that of debtor and creditor,
and the Administrative Agent and the other Creditors have no fiduciary or other
special relationship with any Guarantor or any of its Affiliates, and no term or
provision of any Guaranteed Document, no course of dealing, no written or oral
communication, or other action, shall be construed so as to deem such
relationship to be other than that of debtor and creditor.

 

Section 30. Counterparts. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts
including, by way of facsimile transmission or other electronic transmission
capable of authentication, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the same
instrument.

 

Section 31. Governing Law; Venue; Waiver of Jury Trial

 

(a)     THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES
(OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW).

 

(b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS GUARANTY, EACH GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS GUARANTY OR OTHER DOCUMENT RELATED THERETO. EACH GUARANTOR WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

(c)     EACH GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS GUARANTY OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS GUARANTY, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH GUARANTOR HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS GUARANTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 31 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

 

 
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Section 32. Amendment and Restatement of Original Guaranty. The parties to this
Guaranty agree that, on the Closing Date, the terms and provisions of the
Original Guaranty shall be and hereby are amended, superseded and restated in
their entirety by the terms and provisions of this Guaranty. All obligations
incurred under the Original Guaranty which are outstanding on the Closing Date
shall continue as Guaranteed Obligations under (and shall be governed by the
terms of) this Guaranty and the other Loan Documents. Without limiting the
foregoing, upon the effectiveness hereof: (a) all references in any existing
Loan Documents to the “Guaranty” shall be deemed to refer to this Guaranty and
(b) all obligations constituting “Guaranteed Obligations” (as referred to and
defined in the Original Guaranty) which are outstanding on the Closing Date
shall continue as Guaranteed Obligations under this Guaranty.

 

[Signature page follows.]

 

 
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and
delivered as of the date first above written.

 

 

KONA RESTAURANT HOLDINGS, INC.

 

 

KONA SUSHI, INC.

 

 

KONA MACADAMIA, INC.

 

 

KONA BALTIMORE, INC.

 

 

KONA GRILL INTERNATIONAL HOLDINGS, INC.

 

 

KONA GRILL INTERNATIONAL, INC.

 

 

KONA GRILL PUERTO RICO, INC.

 

 

 

 

 

 

By:

/s/ Berke Bakay

 

 

Name:

Berke Bakay

 

 

Title:

President

 

 

 

 

 

 

 

 

 

  KONA TEXAS RESTAURANTS, INC.                     By: /s/ Christi Hing    
Name: Christi Hing  

 

Title:

Secretary

 

 

 
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Accepted by:

 

 

 

 

 

 

KEYBANK NATIONAL ASSOCIATION,

 

 

as Administrative Agent

 

 

 

 

 

 

 

 

 

 

By:

/s/ J.E. Fowler

 

 

 

Name: J.E. Fowler

 

 

 

Title: Managing Director

 

 

 

 

 

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