SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  March 21 , 2019

 

 

KONA GRILL, INC.

 

 

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

001-34082

 

20-0216690

(State or other jurisdiction

of incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification No.)

 

 

15059 N. Scottsdale Road, Suite 300

Scottsdale, Arizona 85254

 

 

(Address of principal executive offices) (Zip Code)

 

 

 

 

 

(480) 922-8100  

 

 

(Registrant's telephone number, including area code)

 

 

Not Applicable

(Former name or former address, if changed from last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐  Pre-commencement communications pursuant to Rule 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 
 

 

Item 1.01 Entry into a Material Definitive Agreement

 

On March 24, 2019, Kona Grill, Inc. (the “Company”) and Continental Stock Transfer & Trust Company entered into Amendment No. 2 to Rights Agreement which amended the Final Expiration Date of such Plan from September 6, 2019 to March 24, 2019.

 

Item 1.02 Termination of a Material Definitive Agreement

 

The information set forth under Items 1.01 and 8.01 of the Current Report on Form 8-K is incorporated herein by reference. As the Company is considering various strategic alternatives, the Company did not want the Rights Agreement, which would have expired on its terms on September 6, 2019, to be a deterrent to any party who might be interested in acquiring equity interests in the Company. Accordingly, the Company entered into Amendment No. 2. to Rights Agreement to accelerate the Final Expiration Date of such Plan.

 

Item 3.03 Material Modifications of Rights of Security Holders

 

The information set forth under Item 1.01 of the Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officer .

 

Hassel Appointment as Director     Effective March 21, 2019, Shawn Hassel was appointed to the Company’s Board of Directors.  Mr. Hassel is the co-founder and Managing Partner of Bestige Holdings, LLC  (“Bestige”), a private investment firm focused on building and developing a portfolio of debt and long-term equity investments in high potential businesses. Prior to founding Bestige in 2016, Mr. Hassel was a Managing Director with Alvarez & Marsal  (“A&M”) where he led the Phoenix Turnaround and Restructuring Practice. Before joining A&M in 2001, Mr. Hassel was a Senior Director with the Corporate Finance and Restructuring practice of Arthur Andersen. He has served and continues to serve as a member of multiple boards. Mr. Hassel earned a bachelor’s degree in finance and accounting from the University of Arizona.

 

Mr. Hassel will serve as Chair of the Company’s Strategic Alternatives Committee, utilizing his experience to advise the Company in reviewing certain strategic alternatives for the purpose of maximizing the enterprise value of the Company.

 

Mr. Hassel is to receive $50,000 for his first month of service on the Board of Directors, with a minimum of $25,000 for each month thereafter.  Mr. Hassel is to receive no less than $150,000 for his services.

 

Jundt Resignation as Chief Executive Officer and Director     Marcus Jundt, the Company’s Chief Executive Officer and a Director, informed the Company on March 22, 2019, that he was resigning as Chief Executive Officer and as a Director effective March 31, 2019.

 

 
 

 

Bakay Resignation as Executive Chairman and Director    Berke Bakay, the Company’s Executive Chairman, informed the Company on March 27, 2019, that he was resigning as the Company’s Executive Chairman effective immediately.

 

Zheng Resignation as Director   Alex Nanyan Zheng informed the Company on March 27, 2019 that he was resigning as a Director effective immediately.

 

CEO Compensation    The Company’s Board of Directors agreed at its January 31, 2019 Board meeting to provide Marcus Jundt, the Company’s Chief Executive Officer, cash compensation effective January 1, 2019  at the rate of  $360,000 per year. Given Mr. Jundt’s resignation effective March 31, 2019, Mr. Jundt received an aggregate of $90,000 pursuant to this annual cash compensation.

 

Board Compensation   Effective March 1, 2019, the Company’s Board of Directors resumed the annual cash retainer of $30,000 for each non-employee director, except for Shawn Hassel, and resumed the annual cash retainer for the Chairperson of the Audit Committee of $10,000 and Chairperson of the Compensation Committee to $5,000.

 

Item 8.01 Other Events

 

On March 4, 2019, the Company retained Piper Jaffray as its financial advisor to assist the Company in exploring and evaluating potential strategic alternatives focused on maximizing stockholder value such as a sale of the Company, merger, financing transactions, or other potential alternatives.

 

Item 9.01 Financial Statements and Exhibits

 

 

(d)

Exhibits

 

Exhibit No.   Description
     
4.1   Amendment No. 2 to Rights Agreement by and between Kona Grill, Inc. and Continental Stock Transfer & Trust Company dated March 24, 2019

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: March 28, 2019

KONA GRILL, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Christi Hing

 

 

 

Christi Hing

 

 

 

Chief Financial Officer

 

 

Exhibit 4.1

 

AMENDMENT NO. 2 TO RIGHTS AGREEMENT

 

Amendment No. 2 (this “ Amendment ”), dated as of March 24, 2019 (the “ Effective Date ”), by and between Kona Grill, Inc., a Delaware corporation (the “ Company ”), and Continental Stock Transfer & Trust Company, as Rights Agent (the “ Rights Agent ”), to the Rights Agreement, dated as of September 6, 2016, by and between the Company and the Rights Agent (the “ Rights Agreement ”), as amended by that certain Amendment No. 1 to Rights Agreement, dated May 2, 2018, by and between the Company and the Rights Agent (the “ First Amendment ”). Unless otherwise defined herein, all capitalized terms shall have the meanings given to such terms in the Rights Agreement.

 

WHEREAS, the Company desires to make certain amendments to the Rights Agreement, as amended by the First Amendment, to provide for a new Final Expiration Date under the Rights Agreement;

 

WHEREAS, Section 27 of the Rights Agreement permits the Company to, from time to time, supplement or amend any provision of the Rights Agreement in accordance with the terms of such Section 27; and

 

WHEREAS, pursuant to, and in accordance with, Section 27 of the Rights Agreement, the Company hereby amends, and directs the Rights Agent to amend, the Rights Agreement as set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing premises and mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Rights Agent, intending to be legally bound, hereby agree as follows:

 

SECTION 1.  Amendment to Section 1 . The definition of the following term in Section 1 of the Rights Agreement is hereby deleted in its entirety and substituted therefor is the following:

 

““ Final Expiration Date ” means the close of business on March 24, 2019.”

 

SECTION 2.  Effective Date; Effectiveness; Certification . This Amendment shall be effective as of Effective Date. Except as expressly modified by this Amendment and the First Amendment, the Rights Agreement and its exhibits shall remain in full force and effect. The officer of the Company executing this Amendment hereby certifies to the Rights Agent that this Amendment to the Rights Agreement is in compliance with Section 27 of the Rights Agreement and the certification contained in this SECTION 2 shall constitute the certification required by Section 27 of the Rights Agreement.

 

SECTION 3.  Governing Law . This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and, for all purposes, shall be governed by, and construed in accordance with, the laws of such State applicable to contracts made and to be performed entirely within such State.

 

 
 

 

SECTION 4.  Severability . The terms, provisions, covenants or restrictions of this Amendment shall be deemed severable and the invalidity or unenforceability of any term, provision, covenant or restriction shall not affect the validity or enforceability of any other term, provision, covenant or restriction hereof. If any term, provision, covenant or restriction of this Amendment, or the application thereof to any person or circumstance, is held to be prohibited by or invalid, illegal or unenforceable under applicable law in any respect by a court of competent jurisdiction, such term, provision, covenant or restriction shall be ineffective only to the extent of such prohibition or invalidity, illegality or unenforceability, without invalidating the remainder of such term, provision, covenant or restriction or the remaining terms, provisions, covenants and restrictions of this Amendment. In lieu of such illegal, invalid or unenforceable term, provision, covenant or restriction, there shall be added automatically as part of this Amendment a legal, valid and enforceable term, provision, covenant or restriction, as applicable, as similar in terms to such illegal, invalid or unenforceable term, provision, covenant or restriction as may be possible under applicable law.

 

SECTION 5.  Descriptive Headings . Descriptive headings of the Sections of this Amendment are inserted for convenience only and shall not control or affect the meaning or construction of any provision hereof.

 

SECTION 6.  Counterparts . This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument.

 

[Signature page follows]

 

 
 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the Effective Date.

 

  COMPANY:
   
  KONA GRILL, INC.
   
   
  By:  /s/Christi Hing
  Name:  Christi Hing
  Its:  Secretary

 

 

  RIGHTS AGENT:
   
  CONTINENTAL STOCK TRANSFER & TRUST COMPANY
   
   
  By:  /s/ Ana Gois
  Name:  Ana Gois
  Its:  Vice President