Exhibit 10.1

 

KONA GRILL, INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (“Agreement”), effective as of
September 4, 2018 (the “Effective Date”), is made by and between Kona Grill,
Inc., a Delaware corporation (the “Company”), and Berke Bakay, a resident of the
State of Arizona (the “Executive”).

 

Recitals

 

WHEREAS, the Company and Executive entered into that certain Employment
effective as of March 1, 2018 pursuant to which Executive would be the Company’s
President and Chief Executive Officer (the “Employment Agreement”);

 

WHEREAS, at the Board and Executive believe that based upon the recommendation
of the Executive, it is in the best interests of the Company that Executive
resign as Chief Executive Officer and President and become Executive Chairman of
the Board of Directors;

 

WHEREAS, Executive acknowledges that during the course of his employment,
Executive will have access to and be provided with confidential and proprietary
information and trade secrets of the Company which are invaluable to the Company
and vital to the success of the Company’s business;

 

WHEREAS, the Company and Executive desire to protect such proprietary and
confidential information and trade secrets from disclosure to third parties or
unauthorized use to the detriment of the Company; and

 

WHEREAS, the Company and Executive desire to set forth in this Agreement, the
terms, conditions, and obligations of the parties with respect to such
employment.

 

NOW, THEREFORE, in consideration of the foregoing recitals, premises and mutual
covenants herein contained, and intending to be legally bound hereby, the
Company and Executive hereby agree as follows:

 

1.            Amendment and Restatement. The Employment Agreement is hereby
amended and restated in its entirety as follows:

 

2.            Definitions.

 

2.1        “Board” means the Board of Directors of the Company.

 

2.2        “Cause” means (a) Executive engages in gross misconduct or gross
negligence in the performance of Executive’s duties for the Company or any of
its subsidiaries, (b) Executive embezzles or willfully misappropriates for his
personal use, assets of the Company or any of its subsidiaries, (c) Executive
commits an offense that, if convicted, would constitute a felony involving moral
turpitude, (d) Executive’s violation of Executive’s obligations in Section 8,
and/or breach of any restrictive covenants set forth in Section 10 of this
Agreement, or (e) Executive’s willful and material failure to follow the lawful
and reasonable instructions of the Board; that in each such case (except with
regard to (c), is not cured within 30 calendar days after Executive’s receipt of
written notice from the Board of the alleged cause. No such cure period will be
available for a second violation of (a), (b), (d), or (e) in connection with the
same or similar conduct by Executive).

 

 

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2.3         “Change in Control” means:

 

(a)     a merger, consolidation, statutory exchange or reorganization approved
by the Company’s stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the outstanding voting
securities of the successor corporation are immediately thereafter beneficially
owned directly or indirectly and in substantially the same proportion , by the
persons who beneficially owned the Company’s outstanding voting securities
immediately prior to such transaction;

 

(b)     any transaction or series of related transactions pursuant to which any
person or any group of persons comprising a “group” within the meaning of Rule
13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (other than
the Company or a person that, prior to such transaction or series of related
transactions, directly or indirectly controls, is controlled by or is under
common control with, the Company) becomes directly or indirectly the beneficial
owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) of securities possessing (or convertible into or exercisable for
securities possessing) thirty percent (30%) or more of the total combined voting
power of the Company’s securities (determined by the power to vote with respect
to the elections of Board members) outstanding immediately after the
consummation of such transaction or series of related transactions, whether such
transaction involves a direct issuance from the Company or the acquisition of
outstanding securities held by one or more of the Company’s stockholders;

 

(c)     the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale, transfer or disposition
by the Company of all or a substantial portion of the Company’s assets to
another person or entity which is not a wholly-owned subsidiary of the Company
(i.e., fifty percent (50%) or more of the total assets of the Company).

 

2.4        “Disability” means if by reason of any mental, sensory, or physical
impairment, Executive is unable to perform the essential functions of
Executive’s duties hereunder with reasonable accommodations, unless any such
accommodations would impose an undue hardship on the Company’s business. The
written medical opinion of an independent medical physician mutually acceptable
to the Executive and the Company will determine if Executive has a Disability.

 

2.5        “Good Reason” means (a) any material reduction in the amount or type
of compensation paid to the Executive or material reduction in benefits
inconsistent with benefit reductions taken by other members of Company’s senior
management, both as described in this Agreement; (b) the Board requests
Executive to engage in actions that would constitute illegal or unethical acts;
or (c) any material breach of any contract entered into between the Executive
and the Company or an affiliate of the Company, including this Agreement, which
is not remedied by Company within 30 days after receipt of notice thereof given
by the Executive.

 

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3.         Employment. Subject to the terms and provisions set forth in this
Agreement, the Company hereby employs Executive as the Executive Chairman of the
Board of Directors (the “Board”) of the Company, and the Board shall nominate
and recommend Executive to be a member of the Board during the term of this
Agreement.

 

4.        Employment Term. This Agreement shall have a term of two years
beginning on the Effective Date (the “Employment Period”). During the term of
this Agreement, Executive’s employment may be terminated by the Company with or
without Cause, with or without notice, (except where notice is required in other
provisions of this Agreement) and without resort to any specific disciplinary
procedure or process at any time, subject to the provisions of Section 7 of this
Agreement, and Executive may resign or otherwise terminate his employment with
the Company at any time, with or without Good Reason, with or without notice.
Nothing in writing given to Executive, including this Agreement, and nothing
promised verbally, shall obligate the Company to continue to employ Executive
for any specified duration or period. Executive is requested, as a matter of
professional courtesy, but is not required, to provide the Company with three
weeks’ notice of resignation. Notwithstanding the provisions of this Section,
the provisions of Sections 9, 10 and 11 shall survive the termination of
Executive’s employment and remain in full force and effect thereafter.

 

5.           Positions, Responsibilities and Duties.

 

5.1         Positions. During the period of Executive’s employment with the
Company, Executive shall be employed and serve as the Executive Chairman of the
Company. In such positions, Executive shall have the duties, responsibilities
and authority as reasonably agreed upon between the Executive and the Board
which shall initially consist of serving as the Company’s executive officer
primarily responsible for: i) the Company’s existing and potential banks and
third party lenders; ii) the Company’s landlords for both restaurants and the
corporate office; iii) franchise matters, both domestic and international; iv)
public and investor relations; and v) matters involving investment banking
firms, financings and strategic matters. The parties appreciate that the role of
Executive Chairman requires more duties and responsibilities than those
typically associated with a Chairman of the Board. Executive shall report to the
Board. The Company’s President and Chief Executive Officer shall report to
Executive.

 

5.2        Duties. During the Employment Period, Executive shall use his
reasonable best efforts to perform faithfully and efficiently the duties and
responsibilities contemplated by this Agreement. Notwithstanding the foregoing,
the Executive shall be allowed, to the extent such activities do not
substantially interfere with the performance by Executive of his duties and
responsibilities hereunder, to serve on corporate, civic or charitable boards or
committees, to serve as an executive with Phoenix Rising or to continue to serve
as an investment adviser.

 

6.            Compensation and Other Benefits.

 

6.1         Annualized Base Salary. During the Employment Period, Executive
shall receive an annualized base salary payable in accordance with the Company’s
normal payroll practices of $350,000 per year, which the Board may, in its sole
discretion, increase each year (but not decrease without Executive’s consent,
except if salary reduction is imposed on all the employees of the Company as
part of a general reduction) (“Base Salary”).

 

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6.2          Annual Incentive Bonus.

 

(a)     In each calendar year during the Employment Period, beginning in
calendar year 2019, Executive shall be eligible to receive an annual incentive
bonus determined annually by the Board (the “Incentive Bonus”), subject to the
attainment of certain objectives, which shall be established in writing by the
Executive and the Board prior to each Bonus Period. Any payments made under this
Section 6.2(a), shall be paid within 3 1/2 months of the end of the Bonus
Period; the Incentive Bonus is not subject to forfeiture after the conclusion of
the Bonus Period. This provision does not impact Executive’s current
participation in the 2018 performance based program which will continue with the
target level of performance-based bonus at 60% of Base Salary as prorated for
adjustments in 2018.

 

(b)     For the Bonus Period in which the Executive’s employment with the
Company terminates for any reason, the Company shall pay the Executive a pro
rata payment of the portion of the discretionary Incentive Bonus that would have
been earned for such year (determined at the end of the calendar year in which
such termination occurs) multiplied by a fraction, the numerator of which is the
number of days transpired in the calendar year up to and including the date on
which Executive is terminated, and the denominator of which is 365, such payment
shall be made at the time when bonus payments are paid to other senior
executives in accordance with the Company’s normal payroll procedures.

 

(c)     The Executive shall receive such additional bonuses, if any, as the
Board may in its sole and absolute discretion determine.

 

(d)     Any bonuses payable pursuant to this Section 6.2 are sometimes
hereinafter referred to as “Incentive Compensation.” Each period for which
Incentive Compensation is payable under the Agreement is sometimes hereinafter
referred to as a Bonus Period. Unless otherwise specified by the Board or
provided under this Agreement, the Bonus Period shall be the fiscal year of the
Company.

 

6.3        Long-Term Incentive Grants of Stock Options. In each calendar during
the Employment Period, beginning in calendar year 2019, Executive shall be
eligible to be granted long-term incentive grants of stock options (“Stock
Options”) pursuant to a plan determined annually by the Company’s Board and
issued pursuant to a stock option agreement (the “Stock Option Agreement”),
which shall vest 25% each year over a four-year period beginning on the first
anniversary date of the date of grant. Upon the occurrence of termination
without Cause under Section 6.3 or if Executive terminates this Agreement for
Good Reason under Section 6.5 hereof during the term of this Agreement, all
unvested Stock Options scheduled to vest over a period of twelve (12) months
following the date of termination shall immediately vest and be immediately
exercisable. Notwithstanding the foregoing, if any such termination without
Cause or for Good Reason occurs before the first anniversary of this Agreement,
all unvested Stock Options scheduled to vest over a period of twenty-four (24)
months following the date of termination shall immediately vest and be
immediately exercisable. The Stock Option Agreement shall also provide that
after the two year term of this Agreement expires, to the extent Executive is
terminated without Cause or the Executive terminates for Good Reason (as defined
therein) all unvested Stock Options shall immediately vest and be immediately
exercisable. Upon the occurrence of a Change of Control, all unvested Stock
Options shall immediately vest and be immediately exercisable. All or any
portion of the vested Stock Options may be exercised at any one or more times by
Executive during the Employment Period and for a period of three (3) months
following the Employment Period, except as otherwise is provided in the Stock
Option Agreement.

 

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6.4        Benefit Plans. During the Employment Period, Executive shall be
eligible to participate in all pension, 401(k) and other employee pension
benefit plans, policies and programs (the “Retirement Plans”) maintained by the
Company from time to time for the benefit of senior executive officers. During
the Employment Period, Executive, Executive’s spouse, if any, and his eligible
dependents, if any, shall be eligible to participate in and be covered on the
same basis as other senior executive officers of the Company under all the
welfare benefit plans, policies and/or programs maintained by the Company from
time to time including, without limitation, all medical, hospitalization,
dental, disability, life, accidental death and dismemberment and travel accident
insurance plans, policies and/or programs (the “Welfare Benefit Plans”). The
Welfare Plans and the Retirement Plans are sometimes referred to collectively
herein as the “Benefit Plans.” The Company reserves the right to modify, suspend
or discontinue any Benefit Plans at any time without notice to or recourse by
Executive, so long as such action is taken generally with respect to other
similarly situated executives employed by the Company.

 

6.5        Expense Reimbursement. During and in respect of the Employment
Period, Executive shall be entitled to receive reimbursement for reasonable
business expenses incurred by Executive in performing his duties and
responsibilities hereunder, including travel, entertainment, parking, business
meetings and professional dues, incurred and substantiated in accordance with
the policies and procedures established from time to time by the Company for
senior executives of the Company.

 

6.6        Life Insurance. Executive agrees to cooperate with the Company in
obtaining at the Company’s sole expense all life insurance as the Board or any
lender deems necessary.

 

6.7        Directors & Officers Insurance. At all times during the Employment
Period, Executive shall be considered an officer of the Company and shall be
covered by D&O Insurance, or any other similar type of insurance, that provides
coverage for Executive’s acts or omissions undertaken during the course and
scope of his employment and maintains coverage of Executive for at least five
(5) years following the Employment Period.

 

7.            Termination

 

7.1        Termination Due to Death. Upon Executive’s death, Executive’s estate
or his legal representative, as the case may be, shall be entitled to: (a) any
Base Salary earned but unpaid as of the date of death; (b) a pro-rata payment of
the portion of the discretionary Incentive Bonus that would have been earned for
such year (determined at the end of the fiscal year in which such termination
occurs) multiplied by a fraction, the numerator of which is the number of days
transpired in the calendar year up to and including the date on which Executive
is terminated by the Company due to death, and the denominator of which is 365,
such payment shall be made at the time when bonus payments are paid to other
senior executives in accordance with the Company’s normal payroll procedures;
(c) any other payments and/or benefits which Executive or Executive’s legal
representative is entitled to receive under any of the Benefit Plans or
otherwise in accordance with the terms of such plan or arrangement; and (d) all
unvested Stock Options scheduled to vest over a period of twelve (12) months
following the date of death.

 

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7.2         Termination Due to the Executive’s Disability. If Executive’s
condition meets the definition of Disability above, the Company may terminate
Executive’s employment upon written notice. If terminated by the Company as
herein provided, the Company shall pay to Executive:

 

(a)       any Base Salary earned but unpaid as of the date of Executive’s
termination due to Disability and for 180 days after said termination as salary
continuation;

 

(b)       a pro-rata payment, for the year of termination, equal to the
Incentive Bonus that would have been earned for such year (determined at the end
of the fiscal year in which such termination occurs) multiplied by a fraction,
the numerator of which is the number of days transpired in the calendar year up
to and including the date on which the Executive is terminated by the Company
due to Disability, and the denominator of which is 365, such payment shall be
made at the time when bonus payments are paid to other senior executives in
accordance with the Company’s normal payroll procedures;

 

(c)       any other payments and/or benefits which the Executive or the
Executive’s legal representative is entitled to receive under any of the Benefit
Plans or otherwise in accordance with the terms of such plan or arrangement; and

 

(d)       all unvested Stock Options scheduled to vest over a period of twelve
(12) months following the date of Disability.

 

7.3        Termination by the Company Without Cause. At any time, the Company
shall have the right to terminate Executive’s employment without cause by
providing written notice to the Executive.

 

7.3.1     Upon any termination pursuant to this Section 7.3, Executive shall be
entitled to (a) Base Salary earned but unpaid as of the date of the Executive’s
termination and

(b) any other payments and/or benefits which the Executive is entitled to
receive under any of the Benefit Plans or otherwise in accordance with the terms
of such plan or arrangement, including, without limitation, a cash payment for
all earned but unused vacation time. Additionally, upon execution of a general
release of claims against the Company and after the expiration of any applicable
rescission or revocation period: Executive will receive (i) Base Salary in
effect at the time of the termination for a period of six (6) months (the
“Continuation Period”) following the termination of Executive’s employment with
the Company, in the manner and at such times as the Base Salary otherwise would
have been payable to Executive, (ii) continuation at the Company’s then share of
the expense for the lesser of (A) the Continuation Period, or (B) until
Executive obtains comparable replacement coverage, of medical and dental
benefits in effect under COBRA as of the date of termination of employment,
(iii) a pro-rata payment for the year of termination equal to the discretionary
Incentive Bonus multiplied by a fraction, the numerator of which is the number
of days transpired in the calendar year up to and including the date on which
the Executive’s employment is terminated rounded to the end of the quarter in
accordance with 5.2(b), and the denominator of which is 365, such payment shall
be made at the time of termination in accordance with the Company’s normal
payroll procedures; and (iv) all unvested Stock Options scheduled to vest over a
period of twelve (12) months following the date of termination shall immediately
vest and be immediately exercisable. Notwithstanding the foregoing, if any such
termination without Cause or for Good Reason occurs before the first anniversary
of this Agreement, all unvested Stock Options scheduled to vest over a period of
twenty-four (24) months following the date of termination shall immediately vest
and be immediately exercisable. In order to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), under no circumstances
may the time or schedule of any payment made, or benefit provided, pursuant to
this Section 7.3.1 be accelerated or subject to a further deferral except as
otherwise permitted or required pursuant to regulations or other guidance issued
pursuant to Section 409A of the Code. In addition, Executive does not have any
right to make any election regarding the time or form of any payment due under
this Section 7.3.1 or any other provision of this Agreement.

 

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7.4        Termination by the Company for Cause, Termination by the Executive
without Good Reason, or Termination because no longer a Director of the Company.
The Executive shall have the right to terminate his employment hereunder without
Good Reason. The Company may terminate Executive’s employment hereunder for
Cause. This Agreement will also be terminated in the event that Executive is no
longer a member of the Board of Directors. In either of these events so occur,
Executive shall be entitled only to: (a) any Base Salary earned but unpaid
through the date of such termination; (b) any other earned and vested payments
and/or benefits that Executive is entitled to receive under any of the Benefit
Plans.

 

7.5        Termination by the Executive for Good Reason. Executive may terminate
the Executive’s employment for Good Reason after providing the Company with
written notice of the Executive’s intent to terminate the Executive’s employment
and the reason(s) therefore. The Company will have 30 days in which to cure the
reason(s) provided by the Executive. At the end of the 30-day period, if the
Company has not cured the Good Reason cause of the Executive’s termination, the
Executive’s employment will terminate following a reasonable transition period
specified by the Company not to exceed 30 days. A termination by the Executive
for Good Reason shall be treated as a Termination by the Company Without Cause
and the provisions of Section 7.3.1 of this Agreement shall apply.

 

8.            Successors.

 

8.1        The Executive. This Agreement is personal to the Executive and,
without the prior express written consent of the Company, shall not be
assignable by the Executive, except that the Executive’s rights to receive any
compensation or benefits under this Agreement may be transferred or disposed of
pursuant to testamentary disposition, intestate succession or pursuant to a
domestic relations order. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s heirs, beneficiaries and/or legal
representatives.

 

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8.2        The Company. This Agreement shall inure to the benefit of and be
binding upon the Company and its respective successors and assigns.

 

9.          Confidential Information.

 

9.1        Non-Disclosure. Executive acknowledges that the Company continually
develops Confidential Information (as defined below), that Executive will obtain
Confidential Information during employment with the Company, that Executive may
develop Confidential Information for the Company, and that Executive may learn
of Confidential Information during the course of employment. Executive will
comply with the policies and procedures of the Company for protecting
Confidential Information obtained from the Company and shall not use or disclose
to any person, corporation or other entity (except as required by applicable law
or for the proper performance of the regular duties and responsibilities of
Executive for the Company) any Confidential Information obtained by Executive
during employment with the Company, or other association with the Company.
Executive understands that this restriction shall continue to apply for one year
after Executive’s employment terminates, regardless of the reason for such
termination.

 

9.2        “Confidential Information.” For purposes of this Agreement,
“Confidential Information” means any and all information of the Company or
concerning the business or affairs of the Company that is not generally known by
others with whom any of them compete or do business, or with whom any of them
plan to compete or do business. Confidential Information includes, without
limitation, such information relating to: (i) the development, research,
testing, marketing, strategies, and financial activities of the Company, (ii)
the products and services, present and in contemplation, of the Company, (iii)
inventions, processes, operations, administrative procedures, databases,
programs, systems, flow charts, software, firmware and equipment used in the
business of the Company, (iv) the costs, financial performance and strategic
plans of the Company, (v) the people and organizations with whom the Company has
or had business relationships and the substance of those relationships.
Confidential Information also includes all information that the Company received
belonging to others with any understanding, express or implied, that it would
not be disclosed.

 

9.3        Documents. All documents, records, tapes and other media of every
kind and description relating to the business, present or otherwise, of the
Company and any copies, in whole or in part, thereof (“Documents”), whether or
not prepared by Executive, shall be the sole and exclusive property of the
Company. Executive shall safeguard all Documents and shall surrender to the
Company at the time Executive’s employment terminates, or at such earlier time
or times as the Board or its designee may specify, all Documents then in
Executive’s possession or control.

 

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10.       Restrictive Covenants. In return for the Company’s (i) promise to
grant Executive access to certain of the Company’s Confidential Information, and
(ii) the Company’s actual grant to Executive of access to certain of its
Confidential Information, (iii) the opportunity for employment as the Company’s
Executive Chairman, and (iv) the valuable pay and benefits in this Agreement
that are intended, in part, to reward Executive for developing and protecting
the Company’s Confidential Information, Executive makes the following
commitments.

 

10.1        Non-Solicitation. During the Employment Period and for a period of
six months after any termination of employment hereunder for any reason,
Executive will not, directly or indirectly, (i) induce or attempt to induce any
employee of the Company to leave the employ of the Company; (ii) in any way
interfere with the relationships between the Company and any such employee of
the Company; (iii) employ or otherwise engage as an employee, independent
contractor or otherwise any such employee of the Company; or (iv) induce or
attempt to induce any customer, supplier, licensee or other person or entity
that has done business with the Company within twenty-four (24) months of
Executive’s last day of employment to cease doing business with the Company or
in any way interfere with the relationship between any such customer, supplier,
licensee or other business entity and the Company.

 

10.2         Non-Competition. During the Employment Period and for a period of
six months after any termination of employment hereunder for any reason (other
than a termination of Executive’s employment by the Company for Cause),
Executive will not engage in, manage, operate, or participate in the management
or operation of, be employed by or render services or advice, or guarantee any
obligation of, any person or entity engaged in or planning to become engaged in
any business involving a chain of restaurants in the upscale/polished casual
dining segment operating on a national or regional level. Notwithstanding the
foregoing, the Company acknowledges that the Executive is an investment advisor
and nothing herein shall prevent Executive from investing in or owning, directly
or indirectly, securities of publicly-traded restaurant businesses or from
serving on a board of a publicly-traded restaurant company not reasonably deemed
by the Board to be a competitor of the Company. Executive agrees that this
covenant is reasonable with respect to its duration, geographical area and
scope.

 

10.3         Notification of Restrictive Covenants. Executive acknowledges that
the Company may serve notice upon any party in the restaurant or food service
industries with whom Executive accepts employment, consulting engagement,
engagement as an independent contractor, partnership, joint venture or other
association if the Company reasonably believes that Executive’s activities may
constitute a violation of Executive’s obligations under Section 10.1 or 10.2
above. Such notice may inform the recipient that Executive is party to this
Agreement and may include a copy of this Agreement or relevant portions thereof.

 

10.4        Injunctive Relief. Executive acknowledges and agrees that the
Company will have no adequate remedy at law, and would be irreparably harmed, if
Executive breaches or threatens to breach any of the provisions of this Section
10 of this Agreement. Executive agrees that the Company shall be entitled to
equitable and/or injunctive relief to prevent any breach or threatened breach of
this Section 10, and to specific performance of each of the terms of such
Section in addition to any other legal or equitable remedies that the Company
may have. Executive further agrees that he shall not, in any equity proceeding
relating to the enforcement of the terms of this Section 10, raise the defense
that the Company has an adequate remedy at law.

 

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10.5        Special Severability. The terms and provisions of this Section 10
are intended to be separate and divisible provisions and if, for any reason, any
one or more of them is held to be invalid or unenforceable, neither the validity
nor the enforceability of any other provision of this Agreement shall thereby be
affected. It is the intention of the parties to this Agreement that the
potential restrictions on the Executive’s future employment imposed by this
Section 10 be reasonable in both duration and geographic scope and in all other
respects. If for any reason any court of competent jurisdiction shall find any
provisions of this Section 10 unreasonable in duration or geographic scope or
otherwise, the Executive and the Company agree that the restrictions and
prohibitions contained herein shall be effective to the fullest extent allowed
under applicable law in such jurisdiction.

 

11.          Miscellaneous.

 

11.1        Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Arizona, applied without reference to
principles of conflict of laws.

 

11.2       Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

 

11.3        Indemnification. The Company agrees that if Executive is made a
party or is threatened to be made a party, or is required to appear as a witness
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a “Proceeding”), by reason of the fact that he is or was a
director or officer of the Company, whether or not the basis of such Proceeding
is alleged action in an official capacity as a director, officer, employee or
agent while serving as a director, officer, employee or agent, he shall be
indemnified and held harmless by the Company (unless the Executive’s actions or
omissions constitute gross negligence or willful misconduct) to the fullest
extent authorized by law, as the same exists or may hereafter be amended,
against all costs and expenses incurred or suffered by Executive in connection
therewith, and such indemnification shall continue as to Executive even if
Executive has ceased to be an officer, director or agent, or is no longer
employed by the Company and shall inure to the benefit of his heirs, executors
and administrators. Executive agrees to fully cooperate with the Company should
any Proceeding commence.

 

11.4        Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other parties or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

To the Company:

 

Kona Grill, Inc.

15059 North Scottsdale Road, Suite 300

Scottsdale, Arizona 85454

 

Attn: Chair of the Compensation Committee

 

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If to the Executive:

 

Berke Bakay

Kona Grill, Inc.

15059 North Scottsdale Road, Suite 300

Scottsdale, Arizona 85454

 

or to such other address as (a) indicated in the Company’s employment records,
or (b) any party shall have furnished to the others in writing in accordance
herewith. Notices and communications shall be effective when actually received
by the addressee.

 

11.5        Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state or local income taxes to the extent the same
required to be withheld pursuant to any applicable law or regulation.

 

11.6        Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

 

11.7        Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

 

11.8        Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same Agreement.

 

11.9        Entire Agreement. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect thereto.

 

11.10      Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of the Executive’s employment under this
Agreement for any reason to the extent necessary to the intended provision of
such rights and the intended performance of such obligations.

 

11.11      Attorneys’ Fees and Costs. In the event of any claim, controversy, or
dispute arising out of or relating to this Agreement, or breach hereof, the
prevailing party shall be entitled to recover reasonable attorneys’ fees and
costs in connection with any court proceeding.

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the
Company has caused this Agreement to be executed in its name on its behalf, all
as of the day and year first above written.

 

KONA GRILL, INC.

 

/s/ Richard J. Hauser

 

By: Richard J. Hauser, Chairman of the

      Compensation Committee of the Board

      of Directors

 

 

 

 

EXECUTIVE:

 

/s/ Berke Bakay

 

By: Berke Bakay

 

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