Exhibit 10.23
MARK L.
BARTHOLOMAY
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement
(“Agreement”), dated as of May 11, 2009, is made
by and between Kona Grill, Inc., a Delaware corporation, (referred
to throughout this Agreement as the “Company”), and
Mark L. Bartholomay, a resident of Minnesota, his heirs,
executors, administrators, successors, and assigns (collectively
referred to throughout this Agreement as the
“Executive”).
Recitals
WHEREAS , the Company has
promoted the Executive to Chief Operating Officer and the Executive
has accepted the promotion 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 or misappropriates for his personal use, 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 30 days after receipt of notice and no
such cure period will be available for a second violation).
1.3. “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);
(d) a change in the composition
of the Company’s Board of Directors over a period of eighteen
(18) consecutive months or less such that a majority of Board
members ceases to be comprised of individuals who have been Board
members continuously since the beginning of such period.
1.4. “Disability”
means the Executive’s inability to perform, for a period of
180 consecutive days, substantially all of the duties and
responsibilities of Executive hereunder by reason of mental or
physical disease or condition, with or without reasonable
accommodation as defined by applicable state and federal law, 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 or Executive is required to relocate,
(b) the Executive suffers a reduction of “Base
Salary” or target bonus opportunity, except 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 Chief Operating
Officer of the Company 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 Chief Operating Officer of the
Company. In such position, the Executive shall have the duties,
responsibilities and authority normally associated with the office
and position of Chief Operating Officer of a publicly-held
corporation. The Executive shall report to the Chief Executive
Officer.
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’s restaurants and related corporate personnel.
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 and 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 $261,000 per year, which the Board may, in its
sole discretion, review and may, in its sole discretion, increase
(but not decrease without Executives consent, except if salary
reduction is imposed on the employees of the Company as part of a
general reduction) (“Base Salary”).
5.2. Annual Incentive
Bonus.
a . In each calendar
year during the Employment Period, beginning in calendar year 2009,
the Executive shall be eligible to receive an annual incentive
bonus determined annually at the discretion of the Board (the
“Incentive Bonus”), subject to the attainment of
certain objectives, which shall be established in writing by the
Executive and the Board. Any payments made under this
Section 5.2(a), shall be paid within 3 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 or
Bonus Periods 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 discretionary Incentive Bonus under
Section 5.2(a) for the Bonus Period or Bonus Periods
applicable to the timing of such termination of employment;
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.
Stock options awarded to Executive shall vest in accordance with
the Company’s existing agreements; provided, however, upon
the occurrence of (i) termination without Cause under
Section 6.3 hereof, 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,
and (ii) termination of Executive’s employment following
a Change in Control shall be governed by Section 6.5. All or
any portion of the vested Stock Options may be exercised at any one
or more times by the Executive during the Employment Period and for
a period of three (3) months following the Employment Period.
5.4. Vacation. The
Executive shall be entitled to three (3) weeks of paid
vacation earned ratably over each calendar year during the
Employment Period, to be taken at such times as the Executive and
the Company shall mutually determine and provided that no vacation
time shall unreasonably 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 nor may any accrued but unused
vacation be converted to cash compensation. 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 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.
5.6. Expense
Reimbursement. During and in respect of the Employment
Period, the Executive shall be entitled to receive reimbursement
for reasonable business expenses incurred by the 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.
5.7. Life Insurance.
Executive agrees to cooperate with the Company in obtaining all
life insurance as the Board or any lender deems necessary.
5.8 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 the Executive’s acts or
omissions undertaken during the course and scope of his
employment.
6.
Termination.
6.1. Termination Due to
Death. In the event of the Executive’s death, the
Company will terminate the Executive’s employment hereunder
and the 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 occ
