Employee
Stock Purchase Plan
(Amended as of August 15,
2005)
(a)
The purpose of the Plan is to provide a means by which Employees of
the Company and certain designated Related Corporations may be
given an opportunity to purchase shares of the Common Stock of the
Company.
(b)
The Company, by means of the Plan, seeks to retain the services of
such Employees, to secure and retain the services of new Employees
and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Related
Corporations.
(c)
The Company intends that the Purchase Rights be considered options
issued under an Employee Stock Purchase Plan.
(a) “ Board ” means the Board of
Directors of the Company.
(b) “ Code ” means the Internal
Revenue Code of 1986, as amended .
(c) “ Committee ” means a committee
appointed by the Board in accordance with Section 3(c) of the
Plan.
(d) “ Common Stock ” means the
common stock of the Company.
(e) “ Company ” means Kona Grill,
Inc., a Delaware corporation.
(f) “ Contributions ” means the
payroll deductions and other additional payments that a Participant
contributes to fund the exercise of a Purchase Right. A Participant
may make payments not through payroll deductions only if
specifically provided for in the Offering, and then only if the
Participant has not already had the maximum permitted amount
withheld through payroll deductions during the Offering.
(g) “ Corporate Transaction ” means
the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following
events:
(i) a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the
Company;
(ii) a sale or other disposition of at least ninety percent
(90%) of the outstanding securities of the Company; or
1.
(iii) a merger, consolidation or similar transaction whether
or not the Company is the surviving corporation.
(h) “ Director ” means a member of
the Board.
(i) “ Eligible Employee ” means an
Employee who meets the requirements set forth in the Offering for
eligibility to participate in the Offering, provided that such
Employee also meets the requirements for eligibility to participate
set forth in the Plan.
(j) “ Employee ” means any person,
including Officers and Directors, who is employed for purposes of
Section 423(b)(4) of the Code by the Company or a Related
Corporation. Neither service as a Director nor payment of a
director’s fee shall be sufficient to make an individual an
Employee of the Company or a Related Corporation.
(k) “ Employee Stock Purchase Plan ”
means a plan that grants Purchase Rights intended to be options
issued under an “employee stock purchase plan,” as that
term is defined in Section 423(b) of the Code.
(l) “ Exchange Act ” means the
Securities Exchange Act of 1934, as amended.
(m) “ Fair Market Value ” means the
value of a security, as determined in good faith by the Board. If
the security is listed on any established stock exchange or traded
on the Nasdaq National Market or the Nasdaq SmallCap Market, the
Fair Market Value of the security, unless otherwise determined by
the Board, shall be the closing sales price (rounded up where
necessary to the nearest whole cent) for such security (or the
closing bid, if no sales were reported) as quoted on such exchange
or market (or the exchange or market with the greatest volume of
trading in the relevant security of the Company) on the Trading Day
prior to the relevant determination date, as reported in The
Wall Street Journal or such other source as the Board deems
reliable.
(n) “ IPO ” means the first offering
of the Common Stock to the public under a registration statement
declared effective under the Securities Act.
(o) “ IPO Date ” the date the Common
Stock is first offered to the public in an IPO.
(p) “ Offering ” means the grant of
Purchase Rights to purchase shares of Common Stock under the Plan
to Eligible Employees.
(q) “ Offering Date ” means a date
selected by the Board for an Offering to commence.
(r) “ Officer ” means a person who
is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated
thereunder.
(s) “ Participant ” means an
Eligible Employee who holds an outstanding Purchase Right granted
pursuant to the Plan.
(t) “ Plan ” means this Kona Grill,
Inc. Employee Stock Purchase Plan.
2.
(u) “ Purchase Date ” means one or
more dates during an Offering established by the Board on which
Purchase Rights shall be exercised and as of which purchases of
shares of Common Stock shall be carried out in accordance with such
Offering.
(v) “ Purchase Period ” means a
period of time specified within an Offering beginning on the
Offering Date or on the next day following a Purchase Date within
an Offering and ending on a Purchase Date. An Offering may consist
of one or more Purchase Periods.
(w) “ Purchase Right ” means an
option to purchase shares of Common Stock granted pursuant to the
Plan.
(x) “ Related Corporation ” means
any parent corporation or subsidiary corporation, whether now or
hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.
(y) “ Securities Act ” means the
Securities Act of 1933, as amended.
(z) "
Trading Day ” means any day on which the
exchange(s) or market(s) on which shares of Common Stock are
listed, whether it be an established stock exchange, the Nasdaq
National Market, the Nasdaq SmallCap Market or otherwise, is open
for trading.
(a)
The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in
Section 3(c). Whether or not the Board has delegated
administration, the Board shall have the final power to determine
all questions of policy and expediency that may arise in the
administration of the Plan.
(b)
The Board (or the Committee) shall have the power, subject to, and
within the limitations of, the express provisions of the
Plan:
(i) To determine when and how Purchase Rights to purchase
shares of Common Stock shall be granted and the provisions of each
Offering of such Purchase Rights (which need not be
identical).
(ii) To designate from time to time which Related
Corporations of the Company shall be eligible to participate in the
Plan.
(iii) To construe and interpret the Plan and Purchase
Rights, and to establish, amend and revoke rules and regulations
for the administration of the Plan. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in
the Plan, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in
Section 15.
(v) Generally, to exercise such powers and to perform such
acts as it deems necessary or expedient to promote the best
interests of the Company and its Related Corporations and to carry
out the intent that the Plan be treated as an Employee Stock
Purchase Plan.
3.
(c)
The Board may delegate administration of the Plan to a Committee of
the Board composed of one (1) or more members of the Board. If
administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the
administration of the Plan. If administration is delegated to a
Committee, references to the Board in this Plan and in the Offering
document shall thereafter be deemed to be to the Board or the
Committee, as the case may be.
(d)
All determinations, interpretations and constructions made by the
Board in good faith shall not be subject to review by any person
and shall be final, binding and conclusive on all
persons.
4.
Shares of Common Stock
Subject to the Plan .
Subject to the
provisions of Section 14 relating to adjustments upon changes
in securities, the shares of Common Stock that may be sold pursuant
to Purchase Rights shall not exceed in the aggregate 125,000 shares
of Common Stock, plus an annual increase to be added on the first
day of the fiscal year of the Company for a period of ten
(10) years, commencing on the first day of the fiscal year
that begins on January 1, 2006 and ending on (and including)
the first day of the fiscal year that begins on January 1,
2015 (each such day, a “Calculation Date”), equal to
the lesser of (i) one and one-half percent (1.5%) of the
shares of Common Stock outstanding on each such Calculation Date
(rounded down to the nearest whole share); or (ii) 100,000
shares of Common Stock. Notwithstanding the foregoing, the Board
may act, prior to the first day of any fiscal year of the Company,
to increase the share reserve by such number of shares of Common
Stock as the Board shall determine, which number shall be less than
each of (i) and (ii). If any Purchase Right granted under the
Plan shall for any reason terminate without having been exercised,
the shares of Common Stock not purchased under such Purchase Right
shall again become available for issuance under the
Plan.
5.
Grant of Purchase Rights;
Offering .
(a)
The Board may from time to time grant or provide for the grant of
Purchase Rights to purchase shares of Common Stock under the Plan
to Eligible Employees in an Offering (consisting of one or more
Purchase Periods) on an Offering Date or Offering Dates selected by
the Board. Each Offering shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate,
which shall comply with the requirement of Section 423(b)(5)
of the Code that all Employees granted Purchase Rights shall have
the same rights and privileges. The terms and conditions of an
Offering shall be incorporated by reference into the Plan and
treated as part of the Plan. The provisions of separate Offerings
need not be identical, but each Offering shall include (through
incorporation of the provisions of this Plan by reference in the
document comprising the Offering or otherwise) the period during
which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering
Date, and the substance of the provisions contained in
Sections 6 through 9, inclusive.
4.
(b)
If a Participant has more than one Purchase Right outstanding under
the Plan, unless he or she otherwise indicates in agreements or
notices delivered hereunder: (i) each agreement or notice
delivered by that Participant shall be deemed to apply to all of
his or her Purchase Rights under the Plan, and (ii) a Purchase
Right with a lower exercise price (or an earlier-granted Purchase
Right, if different Purchase Rights have identical exercise prices)
shall be exercised to the fullest possible extent before a Purchase
Right with a higher exercise price (or a later-granted Purchase
Right if different Purchase Rights have identical exercise prices)
shall be exercised.
(a)
Purchase Rights may be granted only to Employees of the Company or,
as the Board may designate as provided in Section 3(b), to
Employees of a Related Corporation. Except as provided in
Section 6(b), an Employee shall not be eligible to be granted
Purchase Rights under the Plan unless, on the Offering Date, such
Employee has been in the employ of the Company or the Related
Corporation, as the case may be, for such continuous period
preceding such Offering Date as the Board may require, but in no
event shall the required period of continuous employment be greater
than two (2) years. In addition, the Board may provide that no
Employee shall be eligible to be granted Purchase Rights under the
Plan unless, on the Offering Date, such Employee’s customary
employment with the Company or the Related Corporation is more than
twenty (20) hours per week and/or more than five
(5) months per calendar year.
(b)
The Board may provide that each person who, during the course of an
Offering, first becomes an Eligible Employee shall, on a date or
dates specified in the Offering which coincides with the day on
which such person becomes an Eligible Employee or which occurs
thereafter, receive a Purchase Right under that Offering, which
Purchase Right shall thereafter be deemed to be a part of that
Offering. Such Purchase Right shall have the same characteristics
as any Purchase Rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such Purchase Right is granted shall
be the “Offering Date” of such Purchase Right
for
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