Filed by Bowne Pure Compliance





Exhibit 10.20




SUBSCRIPTION AGREEMENT

SHARES OF COMMON STOCK




THIS OFFERING IS MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED.



	 	 	 
	Special Committee of the Board of Directors

	 	Dated as of
	Kona Grill, Inc.

	 	December 22, 2008 
	7150 E. Camelback Road, Suite 220 
	 	 
	Scottsdale, Arizona 85251 
	 	 






SUBSCRIPTION AGREEMENT




1. Subscription. Subject to the terms and conditions set forth in this Agreement, the
undersigned hereby subscribes for and agrees to purchase at the Closing that number of shares of
Common Stock, par value $0.01 per share (the “Shares”) of Kona Grill, Inc., a Delaware
corporation (the “Company”), at the price per share determined by dividing One Million and
00/100 Dollars ($1,000,000.00) by the average closing price per share of the Company’s Common Stock
as quoted on the NASDAQ Global Market for the five trading days prior to the date of this
Agreement. The subscription price shall be payable by check to “Kona Grill, Inc.” The
“Closing” means the closing of the purchase and sale of the Shares pursuant to this
Agreement, and the “Closing Date” shall mean the date and time of the Closing and shall be
on such date and time as is mutually agreed to by the Company and the undersigned, provided that
all conditions precedent contained in Section 2 shall have been either satisfied or waived. The
date and time of the Closing shall be 11:00 a.m., Arizona time, on the Closing Date. The Closing
shall take place at the Phoenix office of Greenberg Traurig, LLP, at 2375 E. Camelback Road, Suite
700, Phoenix, Arizona 85016.



2. Conditions Precedent. The obligations of the undersigned under this Agreement are,
at the option of the undersigned, subject to the satisfaction of the following conditions on or
before the Closing Date:




(a) Valid Issuance; Due Organization. The Shares will, when issued, be validly
issued, fully paid, and non-assessable and that the Company is duly organized, validly
existing, and in good standing under the laws of the state of Delaware.




(b) Debt Financing. The Company shall have received commitments from a third
party lender of at least $3.0 million of new debt financing in the form of a line of credit,
equipment financing, term loan, or other form of debt on or before the Closing Date.




(c) Accuracy of Representations and Warranties. The representations and
warranties of the Company herein contained shall have been true and correct in all material
respects when made, and in addition, shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though made on and as of the
Closing Date, except as affected by transactions contemplated hereby.



3. Representations, Warranties, Covenants, and Acknowledgements. By executing this
subscription agreement, the undersigned hereby represents, warrants, covenants, and acknowledges to
the Company as follows:



(a) The undersigned has been provided access to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2007 filed with the Securities and Exchange Commission (“SEC”)
and all subsequent reports and proxy statements filed by the Company thereafter pursuant to Section
13(a) or 14(a) of the Securities Exchange Act of 1934 (“SEC Reports”) through the SEC’s
EDGAR system. In addition, the undersigned has obtained such information regarding the Company as
the undersigned has reasonably requested, and, particularly, the undersigned has been given
reasonable opportunity to ask questions of, and receive answers from, representatives of the
Company concerning the terms and conditions of the purchase of the Shares and to obtain any additional information concerning the Company’s business to the extent reasonably available so
as to understand more fully the nature of the investment and to verify the accuracy of the
information supplied.


 


 









 





(b) In determining to purchase Shares, the undersigned has relied solely upon the advice of
the undersigned’s legal counsel and accountants or other financial advisors with respect to the
financial, tax, and other considerations relating to the purchase of Shares.



(c) The undersigned was not offered nor sold Shares directly or indirectly, by means of any
form of general advertising or general solicitation, including, but not limited to (i) any
advertisement, article, notice, or other communication published in a newspaper, magazine, or
similar medium of communication or broadcast over television or radio; or (ii) to the knowledge of
the undersigned, any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.



(d) The undersigned (i) can bear the economic risk of the investment in the Shares, including
the total loss of the undersigned’s investment; and (ii) has such knowledge and experience in
business and financial matters as to be capable of evaluating the merits and risks of an investment
in the Shares.



(e) The undersigned understands that no U.S. federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement of the Shares or the
fairness or suitability of the investment in the Shares nor have such authorities passed upon or
endorsed the merits of the offering of the Shares.



(f) The undersigned acknowledges and understands that the Shares are a speculative investment
that involve a high degree of risk and there can be no guarantee of the amount of or type of
profit, if any, to be realized as a result of an investment in the Shares.



(g) The undersigned is presently a bona fide resident of the state listed below and has no
present intention of becoming a resident of any other state or jurisdiction, and the address and
Social Security or Federal I.D. number set forth below are the undersigned’s true and correct
residential address and Social Security or Federal I.D. number.



(h) The undersigned (i) if an individual, is at least 21 years of age; (ii) if an individual,
is a United States citizen; (iii) if an individual, has adequate means of providing for the
undersigned’s current needs and personal contingencies; (iii) has no need for liquidity in the
undersigned’s investments; and (iv) represents and warrants that all investments in and commitments
to non-liquid investments are, and after the undersigned’s investment in the Shares will be,
reasonable in relation to the undersigned’s net worth and current needs.



(i) The undersigned acknowledges that the Company is relying on exemptions from the
registration requirements of the Securities Act and afforded by applicable state statutes and
regulations.



(j) The undersigned understands that the Shares will not be registered under the Securities
Act or the securities laws of any state and are subject to restrictions on transfer.



(k) The undersigned is acquiring the Shares in the ordinary course of business for its own
account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered under the Securities Act or under an
exemption from such registration and in compliance with applicable federal and state securities
laws, and the undersigned does not have a present arrangement to effect any distribution of the
Shares to or through any person or entity.



(l) The undersigned agrees that the undersigned will not sell or otherwise transfer or dispose
of the Shares or any portion thereof unless such Shares are registered under the Securities Act and
any applicable state securities laws or the undersigned obtains an opinion of counsel that is
satisfactory to the Company that such Shares may be sold in reliance on an exemption from such
registration requirements.


 


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(m) The undersigned understands that the Company has no obligation or intention to register
the Shares for resale or transfer under the Securities Act or any state securities laws, and there
is no assurance that the Company will be able to make available such information or other
information that would make available any exemption from the registration requirements of any such
laws.



(n) The undersigned understands that no federal or state agency, including the Securities and
Exchange Commission or the securities commission or authorities of any other state, has approved or
disapproved the Shares or made any finding or determination as to the fairness of the Shares for
investment.



(o) The undersigned is not subject to back-up withholding provisions of Section 3406(a)(1) of
the Internal Revenue Code.



(p) If subject to the Employee Retirement Income Security Act (“ERISA”), the undersigned is
aware of and has taken into consideration the diversification requirements of Section 404(a)(3) of
ERISA in determining to purchase the Shares and the undersigned has concluded that the purchase of
the Shares is prudent.



(q) If the undersigned is acquiring the Shares in a fiduciary capacity, (i) the above
representations, warranties, agreements, acknowledgments, and understandings shall be deemed to
have been made on behalf of the person or persons for whose benefit such Shares are being acquired,
(ii) the name of such person or persons is indicated below under the subscriber’s name, and (iii)
such further information as the Company deems appropriate shall be furnished regarding such person
or persons.



(r) Neither the Company nor any person representing or acting on behalf of the Company, or
purportedly representing or acting on behalf of the Company, has made any representations,
warranties, agreements, or statements other than those referenced herein that influenced or
affected the undersigned’s decision to purchase the Shares.



(s) The foregoing representations and warranties are true and accurate as of the date hereof
and shall survive the delivery of payment. The undersigned understands that the Company is relying
upon the truth and accuracy of the representations, warranties, agreements, acknowledgements, and
understandings set forth herein in order to determine the suitability of the undersigned to acquire
Shares. The undersigned agrees promptly to notify the Company of any changes to any of the
foregoing.



4. Representations and Warranties of the Company. By executing this subscription
agreement, the Company hereby represents and warrants to the undersigned as follows:



(a) The Company’s SEC Reports do not contain a misstatement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading as of the filing date of the relevant report. Since the filing of the SEC Reports, no
other report, proxy statement, or other document has been required to be filed by the Company
pursuant to Section 13(a) or 14(a) of the Exchange Act that has not been filed.




5. General Information.




(a) The undersigned is:



	 	 	 	 	 
	 

	 	(X )
	 	An individual*
	 
	 	 	 	 
	 

	 	(  )
	 	A corporation
	 
	 	 	 	 
	 

	 	(  )
	 	A partnership
	 
	 	 	 	 
	 

	 	(  )
	 	A trust
	 
	 	 	 	 
	 

	 	(  )
	 	Other                     





 


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*If held as joint tenants with right of survivorship, community property, or tenants in
common, signatures of all parties are required. Each Co-Holder (other than a spouse) must complete
and sign a separate subscription agreement.




	 	(c)	 	PLEASE PRINT NAME(S) IN WHICH YOUR SHARES ARE TO BE REGISTERED







James R. Jundt

 



 






Social Security or Employer Identification Number of each Holder:

 



 






Country of Principal Residence:
                          
              
               
                    




Business Address




 



(No P.O. Boxes please)




City                                         State                     Zip Code                     Country                                        



The purpose of the following information is to assure the Company that it may rely on the exemption
from the registration requirements of the Securities Act and of any applicable state statutes or
regulations.



Please answer every question. If the answer to any question is “None” or “Not
Applicable” please so state. Your answers will at all times be kept strictly confidential.
However, by signing this subscription agreement, you agree that the Company may present such
information to such parties as it deems appropriate if called upon to verify the information
provided or to establish the availability of an exemption from registration under the Securities
Act or any state securities statutes or regulations, or if the contents are relevant to any issue
in any action, suit, or proceeding to which the Company or any agent of the Company involved in
offering the Shares is a party or by which it is or may be bound. Your investment in the Shares
will not be accepted until the Company determines that you satisfy all of the suitability
standards.



6. Representations as to Accredited Investor Status. The undersigned has read the
definition of “Accredited Investor” from Rule 501 of Regulation D attached hereto as Exhibit
A, and certifies that either (check one):



(a)     o     The undersigned is an “Accredited Investor” for one or more of the following
reasons:




	 	þ	 	(i) The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net worth with
his or her spouse, presently exceeds $1,000,000;

	 
	 	o	 	(ii) The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000 in each of
the two most recent years, or joint income with their spouse in excess
of $300,000 in each of those years (in each case including foreign
income, tax exempt income and full amount of capital gains and losses
but excluding any income of other family members and any unrealized
capital appreciation) and has a reasonable expectation of reaching the
same income level in the current year;





 


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	 	o	 	(iii) The undersigned is a director or executive officer of the
Company which is issuing and selling the Shares;

	 
	 	o	 	(iv) The undersigned is a corporation, partnership, Massachusetts
business trust, or non-profit organization within the meaning of
Section 501(c)(3) of the Internal Revenue Code, in each case not formed
for the specific purpose of acquiring the Shares and with total assets
in excess of $5,000,000;


 



 


	 
	 	o	 	(v) The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Shares, where the purchase is directed by a “sophisticated person” as
defined in Regulation 506(b)(2)(ii);

	 
	 	o	 	(vi) The undersigned is an entity all the equity owners of which are
“accredited investors” within one or more of the above categories.
If relying upon this Category alone, each equity owner must
complete a separate copy of this Questionnaire;


 



 


(describe entity)






(b) o The undersigned is not an “Accredited Investor,” but has completed a
separate statement concerning the undersigned’s knowledge and experience in financial and business
matters. Kindly provide sufficient detail so that the Company’s legal counsel may conclude that
the undersigned is capable of evaluating the merits and risks of investment in the Company.



If the answer to Question 6 is that the undersigned is an “Accredited Investor,” the
questionnaire is complete and please simply sign below. Any potential investor that is not an
“Accredited Investor” also must complete a supplemental questionnaire from the Company to assure
compliance with state and federal securities laws.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



 


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IN WITNESS WHEREOF, intending to irrevocably bind the undersigned and the personal
representatives, successors, and assigns of the undersigned and to be bound by this subscription
agreement, the undersigned is executing this Agreement on the date indicated.



Dated this 22nd day of December, 2008.



	 	 	 
	James R. Jundt

	 	/s/ James R. Jundt
	 

	 	 
	PRINT Name of Individual who, or
other entity which, is subscribing.

	 	Signature
	 
	 	 
	 

	 	 
	PRINTED Name of Co-Holder if the
Shares are to be held as joint
tenants with right of survivorship,
community property, or tenants in
common.

	 	Signature of Co-Holder






Accepted on December 22, 2008




KONA GRILL, INC.

a Delaware corporation



	 	 	 	 	 
	By: 

Name:

	 	/s/ Marcus E. Jundt
 

Marcus E. Jundt
	 	 
	 

	 	 	 	 
	Title:

	 	CEO and President	 	 
	 

	 	 	 	 





 


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EXHIBIT A




DEFINITION OF “ACCREDITED INVESTOR”

FROM RULE 501 OF REGULATION D




“Accredited investor” shall mean any person who comes within any of the following categories,
or who the issuer reasonably believes comes within any of the following categories, at the time of
the sale of the securities to that person:



1. Any bank as defined in section 3(a)(2) of the Act or any savings and loan association or
other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934; insurance company as defined in Section 2(13) of the Act; investment company
registered under the Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; employee
benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974,
if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of $5,000,000; or, if a
self-directed plan, with investment decisions made solely by persons that are accredited investors;



2. Any private business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940;



3. Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of $5,000,000;



4. Any director, executive officer, or general partner of the issuer of the securities being
offered or sold, or any director, executive officer, or general partner of a general partner of
that issuer;



5. Any natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his purchase exceeds $1,000,000;



6. Any natural person who had an individual income in excess of $200,000 in each of the two
most recent years or joint income with that person’s spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the current year;



7. Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed by a sophisticated person as described
in Rule 506(b)(2)(ii); and



8. Any entity in which all of the equity owners are accredited investors.