SEPARATION AGREEMENT AND RELEASE OF CLAIMS

EXHIBIT 10.25

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

This Separation Agreement and Release Of Claims (hereinafter referred to as the “ Agreement ”) is made and entered into this 6th day of August, 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 MARCUS E. JUNDT (hereinafter referred to as “ Employee ”) (each a “ Party ” and collectively, the “ Parties ”).

RECITALS

WHEREAS , Employee was employed by Employer as President and Chief Executive 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 ended pursuant to Employee’s voluntary resignation of employment, effective May 18, 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, and to settle, compromise and fully and finally release those claims against Employee as set forth in Paragraph 6 herein, have agreed to resolve these matters on the terms and conditions set forth herein; and

WHEREAS , the Parties acknowledge that they are waiving rights and claims described herein in exchange for consideration in addition to anything of value to which they are 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 13 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 . In consideration of the promises set forth herein, and provided Employee does not revoke this Agreement pursuant to Paragraph 13 herein, Employer agrees to treat Employee’s voluntary resignation of employment as a termination by Employer without Cause pursuant and subject to the provisions of Section 6.3 of the Employment Agreement, and accordingly provide Employee with the severance benefits provided for in Section 6.3.1 of the Employment Agreement, subject to the terms and conditions set forth therein. In addition, consistent with Employer’s

agreement to treat Employee’s voluntary resignation as a termination by Employer without Cause pursuant and subject to the provisions of Section 6.3 of the Employment Agreement, Employer further agrees that the provisions set forth in Section 5.3(i) of the Employment Agreement relating to vesting and exercise of stock options held by Employee shall apply. For purposes of clarification and avoidance of doubt, provided Employee does not revoke this Agreement pursuant to Paragraph 13 herein, Employee shall receive the following as a severance benefit: (a) Base Salary earned but unpaid as of the date of Employee’s termination; 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 twelve (12) months (the “ Continuation Period ”) 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 the Continuation Period; and (z) 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 for a period of three (3) months following the Separation Date. 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.

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, and its subsidiaries, parent companies, employee benefit plans, any co-employers or joint employers, and each of such persons and entities, their officers, directors, employees, agents, advisors, 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, directly or indirectly, arisen out of any act or omission to act 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 United States Code or the statutes or codes of any state, including but not limited to Arizona, Minnesota, or South Dakota, 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; fraudulent inducement; 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; or 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.  Release of Certain Claims by Employer . In consideration of Employee’s execution of this Agreement, Employer, for itself, its subsidiaries, parent companies, employee benefit plans, any co-employers or joint employers, and each of such persons and entities, their officers, directors, employees, agents, advisors, attorneys, administrators, representatives, successors, heirs, assigns and all persons acting by, through, under or in concert with them, hereby fully, forever, irrevocably, and unconditionally release and discharge Employee, including his spouse, their marital community, and their respective heirs, estates, representatives, executors, successors, and assigns, from any and all claims which it has or may have against him that are known to Employer as of the Effective Date of this Agreement, or that should be known to Employer as of the Effective Date of this Agreement through the exercise of ordinary care and diligence, which could have, directly or indirectly, arisen out of any act or omission to act occurring from the beginning of time to the Effective Date of this Agreement. Notwithstanding anything set forth herein to the contrary, Employer does not release Employee for any claim not known by it as of the Effective Date of this Agreement that it would not know of through the exercise of ordinary care and diligence, nor does Employer release Employee for any claims based on fraud, willful misconduct, or gross negligence of Employee.

7.  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. Employer also represents and warrants that there are no claims, charges, lawsuits, or any similar matters of any kind filed by it or on its behalf or for its benefit presently pending against Employee 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.

8.  Covenant Not to Sue. The Parties specifically covenant not to file or commence, or threaten to file or commence, any lawsuits, complaints, claims, or charges, either on their own behalf or in any representative capacity, in any state o