EX-10.27






SEPARATION AGREEMENT AND GENERAL RELEASE OF ALL CLAIMS




This Separation Agreement and General Release Of All Claims (hereinafter referred to as the
“Agreement”) is made and entered into this 24th day of November, 2009 (hereinafter referred
to as the “Execution Date”) by and between KONA GRILL, INC., a Delaware corporation, its
affiliates, subsidiaries, divisions, successors, and assigns, and the directors, officers, and
agents thereof (hereinafter collectively referred to as “Employer”) and MARK L. BARTHOLOMAY
(hereinafter referred to as “Employee”).



RECITALS




WHEREAS, Employee was employed by Employer as Chief Operating Officer;



WHEREAS, the terms and conditions of Employee’s employment with Employer were most recently
set forth in that certain Executive Employment Agreement dated May 11, 2009 (hereinafter referred
to as the “Employment Agreement”);



WHEREAS, Employee’s employment with Employer was terminated without Cause (as that term is
defined in Section 1.2 of the Employment Agreement), effective November 20, 2009
(hereinafter referred to as the “Separation Date”);



WHEREAS, Employer and Employee, in order to settle, compromise and fully and finally release
any and all claims and potential claims against Employer and the Released Parties (as defined below
in Paragraph 5) arising out of Employee’s employment and the cessation thereof, have agreed to
resolve these matters on the terms and conditions set forth herein; and



WHEREAS, Employee acknowledges he is waiving rights and claims described herein in exchange
for consideration in addition to anything of value to which he is already entitled.



AGREEMENT




NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the
parties agree as follows:



1. Recitals; Effective Date. The recitals set forth above are true, accurate, and
correct, and are incorporated in this Agreement by this reference and made a material part of this
Agreement. This Agreement shall become effective on the eighth calendar day after the Execution
Date so long as Employee has not revoked the Agreement pursuant to Paragraph 12 herein (hereinafter
referred to as the “Effective Date”).



2. Employment-Related Compensation. Employee acknowledges and agrees that he has
received from Employer all compensation to which he is entitled for services provided to Employer
through the Separation Date. Employee further acknowledges and agrees that he is not entitled to,
or has been provided all compensation due for, any accrued vacation or other benefits, and that he
has received reimbursement from Employer of all reasonable business expenses incurred by him
through the Separation Date, if any, in accordance with Employer’s expense reimbursement policy and
practices.



3. Severance Benefits.



(a) In consideration of the promises set forth herein, and provided Employee does not revoke
this Agreement pursuant to Paragraph 12 herein, pursuant to Section 6.3.1 of the Employment
Agreement, Employee shall be entitled to the following severance benefits in return for Employee’s
execution and non-revocation of this Agreement (which Employee acknowledges he must execute and not
revoke in accordance with Section 6.3.1 of the Employment Agreement), subject to the terms
and conditions set forth therein. For purposes of clarification and avoidance of doubt, provided
Employee executes and does not revoke this Agreement pursuant to Paragraph 12 herein, Employee
shall receive the following as severance benefits: (a) Base Salary earned but unpaid as of the
Separation Date; and (b) any other payments and/or benefits which Employee is entitled to receive
under any of the Benefit Plans or otherwise in accordance with the terms of such plan or
arrangement. Additionally, Employee will receive: (x) Base Salary in effect at the time of the
termination for a period of fifteen (15) months following the termination of Employee’s employment
with Employer, in the manner and at such times as the Base Salary otherwise would have been payable
to Employee; (y) continuation of medical and dental benefits in effect under COBRA as of the date
of termination of employment for a period of twelve (12) months (“Continuation Period”)
following the date of termination of Employee’s employment with Employer; and (z) all unvested
Stock Options scheduled to vest over the Continuation Period shall immediately vest and be
immediately exercisable. Employee acknowledges and agrees that he shall not be entitled to any
discretionary Incentive Bonus, or any pro-rata portion of any such bonus, as any severance benefit,
notwithstanding anything to the contrary herein or in Section 6.3.1 of the Employment
Agreement.



(b) Section 9.2 of the Employment Agreement shall be amended in its entirety to read as
follows:



“9.2 Non-Competition. During the Period of Employment and for a period
of twelve (12) months after any termination of employment hereunder for any reason,
the Executive will not, directly or indirectly, engage or invest in, own, manage,
operate, finance, control or participate in the ownership, management, operation,
financing or control of, be employed by, associated with or in any manner connected
with, or render services or advice or other aid to, or guarantee any obligation of,
any person or entity engaged in or planning to become engaged in any business
involving a restaurant or chain of restaurants in the upscale casual dining segment
operating or planning to operate a restaurant within a 10 mile radius of an existing
or planned Company restaurant. Executive agrees that this covenant is reasonable
with respect to its duration, geographical area and scope.”



Notwithstanding the foregoing, all of the terms and conditions of Section 9 of the Employment
Agreement shall continue in full force and effect.



4. Adequate Consideration. Employee acknowledges and agrees that Paragraph 3 of this
Agreement provides substantial consideration to Employee in addition to anything of value to which
he is, as a matter of law, otherwise entitled.



5. Release of All Claims by Employee. In consideration of his receipt of the
severance benefits set forth in Paragraph 3 of this Agreement, Employee, for himself, his spouse
(if any), their marital community (if any), and their respective heirs, estates, representatives,
executors, successors and assigns, hereby fully, forever, irrevocably, and unconditionally release
and discharge Employer, its subsidiaries, parent companies, employee benefit plans, any
co-employers or joint employers, their officers, directors, employees, agents, attorneys,
administrators, representatives, successors, heirs, assigns, and all persons acting by, through,
under, or in concert with them (collectively referred to hereinafter as the “Released
Parties”), from any and all claims which he or they may have against them, or any of them,
which could have arisen out of any act or omission occurring from the beginning of time to the
Effective Date of this Agreement, whether now known or unknown, asserted or unasserted. This
release includes, but is not limited to, any and all claims brought or that could be brought under
any agreement between Employer and Employee (except for this Agreement), as well as any and all
claims brought or that could be brought to pursuant to or under the Americans with Disabilities
Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Civil
Rights Act of 1991, the National Labor Relations Act, the Fair Labor Standards Act, the Employee
Retirement and Income Security Act (ERISA), the Securities and Exchanges Acts of 1933 and 1934; the
Sarbanes-Oxley Act (SOX), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Family
and Medical Leave Act, the Equal Pay Act, the Arizona Constitution, the Arizona Civil Rights Act,
the Arizona Employment Protection Act, Arizona’s wage and hour statutes, and any other statute set
forth in the statutes or codes of any state, including but not limited to Arizona or Minnesota,
that pertain or relate to, or otherwise touches upon, the employment relationship between Employer
and Employee and the Released Parties; including (but not limited to) any and all actions for
breach of contract, express or implied, breach of the covenant of good faith and fair dealing,
express or implied, promissory estoppel, wrongful termination in violation of public policy, all
other claims for wrongful termination and constructive discharge, and all other tort claims,
including, but not limited to, assault, battery, false imprisonment, intentional interference with
contractual relations, intentional or negligent infliction of emotional distress, invasion of
privacy, negligence, negligent investigation, negligent hiring, supervision, or retention,
defamation, intentional or negligent misrepresentation, fraud, and any and all other laws and
regulations relating to employment, employment termination, employment discrimination, harassment,
and/or retaliation, wages, hours, employee benefits, compensation, sexual harassment, and any and
all claims for attorneys’ fees and costs, pursuant to or arising under any federal, state, or local
statute, law, regulation, ordinance, or order. This release of claims expressly includes, but is
not limited to, any and all claims arising out of and/or in any way related to Employee’s
employment with Employer or the circumstances of the termination of that employment, whether known
by him at the time of execution of this Agreement or not, including any such claims that could be
brought for breach of the Employment Agreement, and further including, without limitation, any
claim(s) for any unpaid wages, bonus amounts, or any other compensation from Employer. By signing
this Agreement, however, Employee does not waive any rights or claims that may arise after the
Effective Date of this Agreement, nor does he waive any vested rights he may have under the terms
of any stock option plan or any profit-sharing, retirement, or similar employee welfare benefit
plan administered or sponsored by Employer.



6. No Pending Claims. Employee represents and warrants that there are no claims,
charges, lawsuits, or any similar matters of any kind filed by him or on his behalf or for his
benefit presently pending against Employer or the Released Parties, or any of them, in any forum
whatsoever, including, without limitation, in any state or federal court, or before any federal,
state, or local administrative agency, board, or governing body.



7. Covenant Not to Sue. Employee specifically covenants not to file any lawsuits,
complaints, claims, or charges, either on his own behalf or in any representative capacity, in any
state or federal court or before any federal, state, or local administrative agency, board, or
governing body against Employer or the Released Parties, or any of them, on and/or for any and all
of the claims released by this Agreement.



8. Preclusive Effect of Agreement. Employee acknowledges, understands, and agrees
that this Agreement may be pled as a complete bar to any action or suit before any court or
administrative body with respect to any lawsuit, complaint, charge, or claim under federal, state,
local, or other law relating to any possible claim that existed or may have existed against
Employer or the Released Parties, or any of them, arising out of any event occurring from the
beginning of time through the Effective Date of this Agreement.



9. Return of Employer Property. Prior to or on the date Employee signs this
Agreement, Employee agrees to and shall return to Employer all Employer property in his actual or
constructive possession, if he has not already done so, including, but not limited to, all key
cards, access badges, keys, credit cards, computers, books, and records belonging to Employer.



10. Non-Admission. Execution of this Agreement and compliance with its terms shall
not be considered or deemed an admission by Employer of any liability whatsoever, or as an
admission by Employer of any violation of Employee’s rights or the rights of any other person, a
violation of any order, law, statute or duty, or breach of any duty owed to Employee or any other
person. Employer specifically disclaims any and all such liability.



11. Review. A copy of this Agreement was delivered to Employee on November 23, 2009.
Employee is advised that he has twenty-one (21) days from the date he is presented with this
Agreement to consider this Agreement. If Employee executes this Agreement before the expiration of
twenty-one (21) days, he acknowledges that he has done so for the purpose of expediting the payment
of the consideration provided for herein, and that he has expressly waived his right to take
twenty-one (21) days to consider this Agreement.



12. Revocation. Employee may revoke this Agreement for a period of seven (7) days
after he signs it. Employee agrees that if he elects to revoke this Agreement, he will notify
Employer, in writing (care of Daniel B. Pasternak, Greenberg Traurig, LLP, 2375 East Camelback
Road, Suite 700, Phoenix, Arizona 85016), via certified mail, on or before the expiration of the
revocation period. Receipt of proper and timely notice of revocation by Employer cancels and voids
this Agreement. Provided that Employee does not provide notice of revocation, this Agreement will
become effective upon expiration of the revocation period, as provided in Paragraph 1 above.



13. Knowing and Voluntary; ADEA Waiver.  Employee represents and warrants that he was
advised by Employer to consult with an attorney of his own choosing concerning the provisions set
forth herein, and that he has thoroughly discussed all aspects of this Agreement with counsel of
his choosing, or that he had the opportunity to do so. Employee further represents and warrants
that he has carefully read and fully understands all of the provisions of this Agreement, including
the fact that he is releasing all claims and potential claims against Employer and the Released
Parties, and that he is entering into this Agreement, without coercion, and with full knowledge of
its significance and the legal consequences thereof. Employee represents and warrants that as part
of this Agreement, he is knowingly and voluntarily releasing and waiving any claims he believes he
may have under the Age Discrimination in Employment Act.



14. Acknowledgement and Confirmation of Continuing Obligations. Employee acknowledges
and confirms that the obligations set forth in Sections 8 and 9 of the Employment Agreement
continue after, and shall survive, Employee’s termination of employment with Employer.



15. Confidentiality. Employee agrees to keep confidential, and to not divulge, the
existence and terms of this Agreement, its negotiation, its execution, and/or its implementation to
any person or organization, including but not limited to current or former employees of Employer or
the Released Parties, members of the press and media, and other members of the public.
Notwithstanding the foregoing, Employee may permissibly disclose the existence and terms of this
Agreement to his spouse, however, his spouse shall be bound to the confidentiality provisions set
forth in this paragraph, and they specifically agree to not divulge the existence and terms of this
Agreement, its negotiation, its execution, and/or its implementation to any person or organization,
including but not limited to employees or former employees of Employer or the Released Parties,
members of the press and media, and other members of the public. This paragraph shall not prohibit
Employee and his attorney(s) from disclosing the terms of this Agreement to his tax advisor(s) to
the extent necessary to prepare his income tax returns and to represent his in connection with any
proceedings relating thereto, or from advising a governmental taxing authority of the consideration
being paid to him, or of the existence of this Agreement in response to a question or questions
posed by such taxing authority.  The parties agree that it shall not be a breach of this Agreement
if Employee’s disclosure of such information has been compelled through the issuance of compulsory
legal process, provided, however, that in such case, Employee agrees to give Employer reasonable
notice (care of Daniel B. Pasternak, Greenberg Traurig, LLP, 2375 East Camelback Road, Suite 700,
Phoenix, Arizona 85016) of the order or subpoena in question and an opportunity to challenge the
disclosure of any such information before the appropriate court or agency. It shall not be a
breach of this paragraph for Employee to disclose the terms of this Agreement in a suit to enforce
the terms of this Agreement or defend a claim that this Agreement has been breached. Employee
understands and agrees that this confidentiality provision is a material term of this Agreement,
and that his agreement to this provision concerning confidentiality is a material inducement to
Employer’s willingness to enter into this Agreement.



16. Cooperation. Employee agrees, for a reasonable period of time following the
Separation Date, to provide reasonable assistance to Employer (including assistance with litigation
and arbitration matters), upon Employer’s reasonable request, concerning Employee’s previous
employment-related responsibilities. Such assistance may include, but is not limited to,
communicating and/or meeting with Employer’s attorneys, giving deposition testimony, attending
depositions, reviewing pleadings, including discovery pleadings, and attending and giving testimony
in court and arbitration proceedings.



17. Non-Disparagement. Neither Employee nor Employer, nor anyone acting on such
party’s behalf will make any derogatory or disparaging statement about the other party, to any
individual or entity, including but not limited to, such party’s actual or potential clients,
customers, vendors, business partners, suppliers, employees, financial or credit institutions, or
the media, nor directly or indirectly take any action which is intended to embarrass any of them.
For purposes of this Paragraph 17, a disparaging statement is any communication, oral or written,
which would cause to tend to cause the recipient of the communication to question the business
condition, integrity, competence, fairness, or good character of the person to whom or entity to
which the communication relates.



18. Amendment. This Agreement shall be binding upon the parties and may not be
amended, supplemented, changed, or modified in any manner, orally or otherwise, except by an
instrument in writing of concurrent or subsequent date signed by both of the parties hereto.



19. Entire Agreement. This Agreement contains and constitutes the entire
understanding and agreement between the parties hereto with respect to the subject matter hereof,
and, except as otherwise provided herein, cancels all prior or contemporaneous oral or written
understandings, negotiations, agreements, commitments, representations, and promises in connection
herewith.



20. Paragraph Titles. The paragraph titles in this Agreement are for convenience
only; they form no part of this Agreement and shall not affect its interpretation.



21. Construction. The parties hereto acknowledge and agree that each party has
participated in the drafting of this Agreement and has had the opportunity to have this document
reviewed by the respective legal counsel for the parties hereto and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be applied to the interpretation of this Agreement. No inference in favor of, or against, any
party shall be drawn from the fact that one party has drafted any portion hereof.



22. Execution in Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original as against any party
whose signature appears thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when one or more counterparts hereof, individually
or taken together, shall bear the signatures of the parties reflected hereon as the signatories.
Facsimile signatures shall be sufficient and fully binding.




23. Arbitration.



(a) Except for actions seeking an injunction, which shall not be subject to arbitration, the
parties agree to submit all disputes, controversies, and claims arising out of or relating to this
Agreement or relating to Employee’s former employment with Employer, to private, confidential,
final, and binding arbitration before a single arbitrator in the greater Phoenix, Arizona
metropolitan area, pursuant to the Employment Arbitration Rules of the American Arbitration
Association.



(b) Either party may initiate the arbitration process by delivering a written request for
arbitration to the other party within the time limits which would apply to the filing of a civil
complaint in Arizona state court. A late request will be void. If Employee and Employer are
unable to agree upon a neutral arbitrator, the party requesting arbitration will obtain a list of
arbitrators from the American Arbitration Association. An arbitrator shall thereafter be selected
off of this list using the process of alternate strikes, with the party that did not initiate
arbitration having the first strike. The arbitrator shall be bound by the provisions and
procedures set forth in the Employment Arbitration Rules of the American Arbitration Association.
The arbitrator shall determine the prevailing party in the arbitration. All administrative
expenses of arbitration, e.g., arbitrator’s fees, court reporter fees, etc., will be borne equally
by both parties. Each party shall bear its own respective attorneys’ fees or taxable costs. The
arbitrator shall have the authority to order any legal and equitable remedy which would be
available in a civil or administrative action on the claim(s) at issue, including an award of
attorneys’ fees and costs.



(c) Except for injunctive matters, arbitration shall be the exclusive means of resolving any
dispute(s) under or identified in this Agreement and no other action shall be brought in any court
or administrative forum for such disputes. However, nothing in this Section shall affect National
Labor Relations Board proceedings or petitions for judicial review of a decision issued by any
state civil rights agency, with appropriate authority, after an administrative hearing.



(d) If any court of competent jurisdiction declares that any part of this Section of this
Agreement pertaining to arbitration of disputes is illegal, invalid, or unenforceable, such a
declaration will not affect the legality, validity, or enforceability of the remaining parts of the
Agreement, and the illegal, invalid, or unenforceable part will no longer be part of this Agreement
in accordance with the provisions set forth in this Agreement in Section 25. The parties hereto
agree that the United States District Court for the District of Arizona or the Superior Court of
Maricopa County, Arizona (but only if the United States District Court lacks jurisdiction), shall
have the authority to enter a judgment to enforce the arbitration decision, and shall irrevocably
constitute the sole and exclusive forum for enforcing any arbitration decision.



(e) THIS ARBITRATION PROVISION IS A WAIVER OF ALL RIGHTS TO A CIVIL JURY TRIAL FOR CLAIMS,
INCLUDING CLAIMS RELATING TO A DISPUTED TERMINATION, STATE LAW-BASED CONTRACT AND TORT CLAIMS,
AND/OR A CLAIM FOR UNLAWFUL HARASSMENT OR EMPLOYMENT DISCRIMINATION, TO THE EXTENT ALLOWED BY LAW.



24. Choice of Law and Venue. This Agreement shall be governed by the laws of the
State of Arizona, without regard to the conflicts of laws principles thereof. Except as provided
in Section 23 above, with respect to any litigation based on, arising out of, or in connection with
this Agreement, the parties expressly submit to the personal jurisdiction of the District Court for
the District of Arizona or the Superior Court of Maricopa County, Arizona (but only if the United
States District Court lacks jurisdiction), and the parties hereby expressly waive, to the fullest
extent permitted by law, any objection that they may now or hereafter have to the laying of venue
of any such litigation brought in any such court referred to above, including without limitation
any claim that any such litigation has been brought in an inconvenient forum.



25. Severability. Should any provision in this Agreement or any provision of any
agreement incorporated or referenced herein, be declared or determined by any court to be illegal
or invalid, the validity of he remaining parts, terms, or provisions shall not be affected, and the
illegal or invalid part, term, or provision shall be deemed not to be a part of this Agreement.



26. Waiver. The failure of a party to insist upon strict adherence to any obligation
of this Agreement shall not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement. Any waiver of any
provision of this Agreement must be in a written instrument signed and delivered by the party
waiving the provision.



27. Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of, as applicable, the parties’ respective successors, assigns, heirs, estates, and
representatives.



28. Defined Terms. Capitalized terms set forth herein not defined in this Agreement
shall have the meaning and definition provided for them in the Employment Agreement.



29. Attorneys’ Fees and Costs. Employee and Employer agree that each party will bear
its own costs and attorneys’ fees in connection with all matters related to the subject matter of
this Agreement and the settlement of those matters encompassed by this Agreement. Should any legal
action be commenced arising out of this Agreement, the prevailing party in any such action shall be
entitled to an award of attorneys’ fees and costs incurred therein.



30. Waiver of Notice Provision by Employee. Employee waives any right Employee may
have had to notice in advance of termination of employment, including but not limited to any such
right that might have or may arise under or out of Section 6.3 of the Employment Agreement.



31. Indemnification. Employer agrees that if Employee is made a party to or involved
in, or is threatened to be made a party to or otherwise to be involved in, any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by
reason of the fact that he is or was an officer or employee of Employer or is or was serving at the
request of Employer as an officer, member, employee or agent of another corporation, limited
liability corporation, partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether or not the basis of such Proceeding is Employee’s
alleged action in an official capacity while serving as an officer, member, employee or agent,
Employee shall be indemnified, protected, defended, and held harmless by Employer against any and
all liabilities, losses, expenses, judgments, penalties, fines and amounts reasonably paid in
settlement or as a result of a judgment in connection therewith, and shall be advanced reasonable
expenses (including attorneys’ fees and costs) as and when incurred in connection therewith, to the
fullest extent legally permitted or authorized by Employer’s By-laws or, if greater, by the laws of
the State of Delaware, as may be in effect from time to time, except that this Section 31 shall not
apply to the following Proceedings: (a) any Proceeding initiated or brought voluntarily by
Employee against Employer or its directors, officers, employees, or other indemnified parties,
unless the Board has authorized or consented to the initiation of the Proceeding (or any part of
the Proceeding), (b) for an accounting of profits made from the purchase and sale (or sale and
purchase) by Employee of securities of Employer within the meaning of Section 16(b) of the Exchange
Act or any similar successor statute, and (c) any litigation brought against Employee by Employer
under Sections 14, 15, and/or 17 of this Agreement. The rights conferred on Employee by this
Section 31 shall not be exclusive of any other rights which Employee may have or hereafter acquire
under any statute, Employer’s By-laws, agreement, vote of stockholders or disinterested directors,
or otherwise. The indemnification and advancement of expenses provided for by this Section 31
shall continue until and terminate upon the latest of: (a) the statute of limitations applicable
to any claim that could be asserted against Employee or Employer with respect to which he may be
entitled to indemnification under this Section 31; (b) ten years after the date that Employee has
ceased to serve as a director or officer of Employer or as a director, officer, employee, member,
or agent of any other corporation, limited liability corporation, partnership, joint venture, trust
or other enterprise at the request of Employer; or (c) if, at the later of the dates referred to in
(a) and (b) above, there is a pending Proceeding in respect of which Employee is granted rights of
indemnification under this Section 31, one year after the final termination of such Proceeding,
including any and all appeals. The indemnification and advancement of expenses provided for by
this Section 31 shall inure to the benefit of Employee’ heirs, executors and administrators.



32. D&O Insurance. Notwithstanding the separation of his employment with Employer,
Employee shall continue to be covered under Employer’s Director and Officer liability insurance
policy(ies) to the extent permitted and provided for under the terms and conditions of that
policy(ies).



By signing below, the parties acknowledge that they have carefully read and fully understand
all of the provisions of this Agreement and that they are voluntarily entering into this Agreement.



	 	 	 
	/s/ Mark L. Bartholomay	 	Kona Grill, Inc.,
	Mark L. Bartholomay	 	a Delaware corporation
	“Employee”	 	“Employer”
	Dated: November 24, 2009
	 	By: /s/ Marc A. Buehler

Title: President and Chief Executive Officer

Dated: November 24, 2009