Exhibit 10.16
MARCUS E. JUNDT
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive
Employment Agreement (this “Agreement”), dated as of
September 26, 2006, is made by and between Kona Grill, Inc., a
Delaware corporation, having its principal offices at
7150 East Camelback Road, Suite 220, Scottsdale, Arizona
85251 (the “Company”), and Marcus E. Jundt, a
resident of South Dakota (the “Executive”).
Recitals
WHEREAS
, the Company desires to employ the Executive and the Executive
desires to be employed by the Company upon the terms and conditions
set forth herein;
WHEREAS, to retain Executive,
the Company is willing to offer substantial compensation to
Executive in the form of salary and other benefits;
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 the Executive hereby agree as follows:
1. Definitions.
1.1 . “Board”
means the Board of Directors of the Company.
1.2 . “Cause”
means (a) the Executive engages in gross misconduct or gross
negligence in the performance of the Executive’s duties for
the Company or any of its subsidiaries, (b) the Executive
embezzles assets of the Company or any of its subsidiaries,
(c) the Executive is convicted (including a plea of guilty or
nolo contendere) of a felony involving moral turpitude,
(d) the Executive’s breach of any restrictive covenant
set forth in Section 8 of this Agreement, or (e) the
Executive’s willful and material failure to follow the lawful
and reasonable instructions of the Board, which, in each such case
(except with regard to (c), is not cured within a reasonable period
of time after receipt of notice).
1.3. “Corporate
Transaction” means the direct or indirect sale or other
disposition for value (to an entity or person unrelated or
unaffiliated with the Company) of the equity interests in the
Company or the assets of the Company.
1.4. “Disability”
means the Executive’s inability to render, for a period of
180 consecutive days, services hereunder by reason of mental or
physical disease or disability, as determined by the written
medical opinion of an independent medical physician mutually
acceptable to the Executive and the Company. The Company shall
comply with the Americans with Disabilities Act and any other
applicable federal or state laws in making a determination whether
Executive’s condition constitutes “Disability”
for purposes of this Agreement.
1.5. “Good
Reason” means and will be deemed to exist if, without the
Executive’s consent, (a) the Executive suffers a material
diminution in the Executive’s duties, responsibilities or
effective authority or any adverse changes in the Executive’s
titles or positions, (b) the Executive suffers a reduction of
“Base Salary” or target bonus opportunity as set forth
below; or (c) the Company fails to pay any earned compensation
or to provide for the Executive’s vested benefits when due
and payable and which, in each such case, is not cured within a
reasonable period of time after receipt of notice.
2. Employment.
Subject to the terms and provisions set forth in this Agreement and
specifically as provided in Section 4.1, the Company hereby
agrees that the Executive shall be employed as the President and
Chief Executive Officer of the Company and shall be a member of the
Board, and the Executive hereby accepts such employment.
3. Employment Term
. The Executive’s employment under this Agreement shall
be at-will. Executive’s employment may be terminated by the
Company with or without Cause, with or without notice, and without
resort to any specific disciplinary procedure or process at any
time, subject to the provisions of Section 6 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
(3) weeks’ notice of resignation.
4. Positions,
Responsibilities and Duties .
4.1. Positions .
During the period of the Executive’s employment with the
Company (the “Employment Period " ), the Executive
shall be employed and serve as the President and Chief Executive
Officer of the Company and as a member of the Board. In such
positions, the Executive shall have the duties, responsibilities
and authority normally associated with the office and position of
President and Chief Executive Officer and member of the Board of a
publicly-held corporation. The Executive shall report to the Board.
All other employees of the Company shall report to the Executive
and/or his designees.
4.2. Duties. During
the Employment Period, the Executive shall have complete
responsibility for and authority over all day-to-day operations of
the Company. Additionally, during the Employment Period, the
Executive shall devote substantially all of his business time,
during normal business hours, to the business and affairs of the
Company and the Executive shall use his reasonable best efforts to
perform faithfully and efficiently the duties and responsibilities
contemplated by this Agreement; provided, however,
that the Executive shall be allowed, to the extent such activities
do not substantially interfere with the performance by the
Executive of his duties and responsibilities hereunder, to manage
the Executive’s personal, financial and legal affairs.
Notwithstanding the foregoing, the Executive shall be permitted
(a) to continue to serve as an officer of Jundt Associates,
Inc. and (b) to the extent that the Board gives its advance
written consent and that such activities do not substantially
interfere with the performance by the Executive of his duties and
responsibilities hereunder, to serve on corporate, civic or
charitable boards or committees.
5. Compensation and Other
Benefits.
5.1. Base Salary.
During the Employment Period, the Executive shall receive a base
salary payable in accordance with the Company’s normal
payroll practices of $300,000 per year, which the Board may, in its
sole discretion, review and may, in its sole discretion, increase
(but not decrease) (“Base Salary”).
5.2. Annual
Incentive Bonus.
a . In
each calendar year during the Employment Period, beginning in
calendar year 2006, the Executive shall be eligible to receive an
annual target incentive bonus of $150,000 (the “Incentive
Bonus”), based upon the attainment of certain objectives,
which shall be established by the Executive and the Board. Any
payments made under this Section 5.2(a), shall be paid within
2 and 1/2 months of the end of the Bonus Period provided the
Incentive Bonus is no longer subject to a substantial risk of
forfeiture.
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 portion
(based upon the period ending on the date on which the
Executive’s employment with the Company terminates) of the
Incentive Bonus otherwise payable under Section 5.2(a)
for the Bonus Period in which such termination of employment
occurs; provided, however, that the Bonus Period for purposes of
this Section 5.2(b) shall be deemed to end on the last day
of the fiscal quarter of the Company during which the
Executive’s employment so terminates.
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 5.2 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.
5.3 Stock Options.
Upon the execution of this Agreement by the parties hereto, the
Company shall grant Executive One Hundred Thousand (100,000) stock
options (the “Stock Options”) to purchase Common Stock
of the Company under (and therefore subject to all terms and
conditions of) the Company’s 2005 Stock Award Plan (the
“Company’s Stock Plan”) at an exercise price
equal to $16.40 per share, which is equal to 110% of the closing
price per share of the Company’s Common Stock as quoted on
the NASDAQ Capital Market. The Stock Options will be granted as
incentive stock options to the extent possible under the
Company’s Stock Plan and applicable law. The Stock Options
shall vest in accordance with the Company’s existing
guidelines; provided , however , upon the occurrence
of either (i) a Change in Control or (ii) termination
without Cause under Section 6.3 hereof, all unvested Stock
Options shall vest immediately and become exercisable. All or any
portion of the vested Stock Options may be exercised at any one or
more times by the Executive during the Term of Employment and for a
period of twelve (12) months following the Term of Employment.
The Stock Options shall be granted pursuant to certain restrictions
as defined from time to time by the Company in its sole
discretion.
5.4. Vacation. The
Executive shall be entitled to three (3) weeks of paid
vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually
determine and provided that no vacation time shall significantly
interfere with the duties required to be rendered by the Executive
hereunder. Any vacation time not taken by Executive during any
calendar year may not be carried forward into any succeeding
calendar year. Any earned but unused vacation time will be paid out
to Executive at the time of his termination in accordance with
applicable law.
5.5. Benefit Plans.
During the Employment Period, the 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,
the Executive, the 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 d
