Schedule 13D Amendment No. 10

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LeXxS7o4JNv8qg6HilOfFYMZwZ8RgQr9e0UQ7MzYD8UfN4/0yRwGcYCC5DBsb5aU tWYtI7i9i9eOQ4kNvs/Zdg== 0001193125-10-036459.txt : 20100222 0001193125-10-036459.hdr.sgml : 20100222 20100222170125 ACCESSION NUMBER: 0001193125-10-036459 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20100222 DATE AS OF CHANGE: 20100222 GROUP MEMBERS: MILL ROAD CAPITAL GP LLC GROUP MEMBERS: SCOTT P. SCHARFMAN GROUP MEMBERS: THOMAS E. LYNCH SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KONA GRILL INC CENTRAL INDEX KEY: 0001265572 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 200216690 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-81402 FILM NUMBER: 10623373 BUSINESS ADDRESS: STREET 1: 7150 EAST CAMELBACK ROAD STREET 2: SUITE 220 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 4809228100 MAIL ADDRESS: STREET 1: 7150 EAST CAMELBACK ROAD STREET 2: SUITE 220 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Mill Road Capital, L.P. CENTRAL INDEX KEY: 0001435260 IRS NUMBER: 205432103 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: TWO SOUND VIEW DRIVE STREET 2: SUITE 300 CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 203-987-3500 MAIL ADDRESS: STREET 1: TWO SOUND VIEW DRIVE STREET 2: SUITE 300 CITY: GREENWICH STATE: CT ZIP: 06830 SC 13D/A 1 dsc13da.htm SCHEDULE 13D AMENDMENT NO. 10 Schedule 13D Amendment No. 10

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 10)*

Kona Grill, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

50047H201

(CUSIP Number)

Mill Road Capital, L.P.

Attn: Thomas E. Lynch

382 Greenwich Avenue

Suite One

Greenwich, CT 06830

203-987-3501

With a copy to:

Peter M. Rosenblum, Esq.

Foley Hoag LLP

155 Seaport Blvd.

Boston, MA 02210

617-832-1151

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

February 22, 2010

(Date of Event which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


		13D		Page 2 of 8 Pages


CUSIP No. 50047H201
1.	Names of reporting persons. Thomas E. Lynch
2.	Check the appropriate box if a member of a group (see instructions) (a) ¨ (b) ¨
3.	SEC use only
4.	Source of funds (see instructions) OO
5.	Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e) ¨
6.	Citizenship or place of organization USA
Number of shares beneficially owned by each reporting person with		7.	Sole voting power
		8.	Shared voting power 899,330
		9.	Sole dispositive power
		10.	Shared dispositive power 899,330
11.	Aggregate amount beneficially owned by each reporting person 899,330
12.	Check if the aggregate amount in Row (11) excludes certain shares (see instructions) ¨
13.	Percent of class represented by amount in Row (11) 9.8%
14.	Type of reporting person (see instructions) IN; HC


		13D		Page 3 of 8 Pages


CUSIP No. 50047H201
1.	Names of reporting persons. Scott P. Scharfman
2.	Check the appropriate box if a member of a group (see instructions) (a) ¨ (b) ¨
3.	SEC use only
4.	Source of funds (see instructions) OO
5.	Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e) ¨
6.	Citizenship or place of organization USA
Number of shares beneficially owned by each reporting person with		7.	Sole voting power
		8.	Shared voting power 899,330
		9.	Sole dispositive power
		10.	Shared dispositive power 899,330
11.	Aggregate amount beneficially owned by each reporting person 899,330
12.	Check if the aggregate amount in Row (11) excludes certain shares (see instructions) ¨
13.	Percent of class represented by amount in Row (11) 9.8%
14.	Type of reporting person (see instructions) IN; HC


		13D		Page 4 of 8 Pages


CUSIP No. 50047H201
1.	Names of reporting persons. Mill Road Capital GP LLC
2.	Check the appropriate box if a member of a group (see instructions) (a) ¨ (b) ¨
3.	SEC use only
4.	Source of funds (see instructions) OO
5.	Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e) ¨
6.	Citizenship or place of organization Delaware
Number of shares beneficially owned by each reporting person with		7.	Sole voting power 899,330
		8.	Shared voting power
		9.	Sole dispositive power 899,330
		10.	Shared dispositive power
11.	Aggregate amount beneficially owned by each reporting person 899,330
12.	Check if the aggregate amount in Row (11) excludes certain shares (see instructions) ¨
13.	Percent of class represented by amount in Row (11) 9.8%
14.	Type of reporting person (see instructions) OO; HC


		13D		Page 5 of 8 Pages


CUSIP No. 50047H201
1.	Names of reporting persons. Mill Road Capital, L.P.
2.	Check the appropriate box if a member of a group (see instructions) (a) ¨ (b) ¨
3.	SEC use only
4.	Source of funds (see instructions) WC
5.	Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e) ¨
6.	Citizenship or place of organization Delaware
Number of shares beneficially owned by each reporting person with		7.	Sole voting power 899,330
		8.	Shared voting power
		9.	Sole dispositive power 899,330
		10.	Shared dispositive power
11.	Aggregate amount beneficially owned by each reporting person 899,330
12.	Check if the aggregate amount in Row (11) excludes certain shares (see instructions) ¨
13.	Percent of class represented by amount in Row (11) 9.8%
14.	Type of reporting person (see instructions) PN


CUSIP No. 50047H201				Page 6 of 8 Pages

This Amendment No. 10 (this “Amendment”) to the joint statement on Schedule 13D with respect to the common stock, par value $0.01 per share, of Kona Grill, Inc., a Delaware corporation, filed by the undersigned on June 26, 2008 (the “Initial Filing”), as amended by Amendment No. 1 on Schedule 13D filed by the undersigned on November 14, 2008, with respect to the Initial Filing, as amended by Amendment No. 2 on Schedule 13D filed by the undersigned on December 30, 2008, with respect to the Initial Filing, as amended by Amendment No. 3 on Schedule 13D filed by the undersigned on January 2, 2009, with respect to the Initial Filing, as amended by Amendment No. 4 on Schedule 13D filed by the undersigned on January 30, 2009, with respect to the Initial Filing, as amended by Amendment No. 5 on Schedule 13D filed by the undersigned on March 12, 2009, with respect to the Initial Filing, as amended by Amendment No. 6 on Schedule 13D filed by the undersigned on April 15, 2009, with respect to the Initial Filing, as amended by Amendment No. 7 on Schedule 13D filed by the undersigned on May 18, 2009, with respect to the Initial Filing, as amended by Amendment No. 8 on Schedule 13D filed by the undersigned on June 3, 2009, with respect to the Initial Filing, and as amended by Amendment No. 9 on Schedule 13D filed by the undersigned on January 29, 2010, with respect to the Initial Filing (the “Schedule 13D”), amends the Schedule 13D as follows:

1.	Item 4 of the Schedule 13D shall hereby be amended by inserting the following two paragraphs between the eighth and ninth paragraphs:

“On February 2, 2010, the Fund received a letter from the Issuer, attached hereto as Exhibit 21, in response to the Fund’s letter dated January 28, 2010 regarding its proposal to nominate the Nominees for election to the Issuer’s Board of Directors at the Annual Meeting, in which the Issuer accepted the validity of the Fund’s January 28, 2010 letter for purposes of the advance notice requirement of stockholder nominees in the Issuer’s bylaws. On February 5, 2010, the Fund transmitted a letter to the Issuer, attached hereto as Exhibit 22, acknowledging the Issuer’s February 2, 2010 letter to the Fund. On February 6, 2010, the Fund received a letter from the Issuer, attached hereto as Exhibit 23, in which the Issuer acknowledged the Fund’s February 5, 2010 letter to the Issuer and confirmed the validity of the Fund’s January 28, 2010 nomination letter.

On February 22, 2010, the Fund transmitted a letter to the Issuer, attached hereto as Exhibit 24, pursuant to the applicable provisions of the Delaware General Corporation Law, demanding the opportunity to inspect and make copies of the Issuer’s list of stockholders and certain related materials, in connection with the Fund’s potential solicitation of proxies in support of the Nominees.”

2.	Item 5(c) of the Schedule 13D shall hereby be amended and restated in full as follows:

“(c) No Reporting Person effected any transaction in shares of the Common Stock from January 29, 2010 (the date of the most recent filing on Schedule 13D by the Reporting Persons with respect to the Common Stock) to February 22, 2010.”


CUSIP No. 50047H201				Page 7 of 8 Pages

3.	Item 7 of the Schedule 13D shall hereby be amended by adding the following Exhibits:

“Exhibit 21 Letter from Kona Grill, Inc. to Mill Road Capital, L.P. dated February 2, 2010.

Exhibit 22 Letter from Mill Road Capital, L.P. to Kona Grill, Inc. dated February 5, 2010.

Exhibit 23 Letter from Kona Grill, Inc. to Mill Road Capital, L.P. dated February 6, 2010.

Exhibit 24 Letter from Mill Road Capital, L.P. to Kona Grill, Inc. dated February 22, 2010.”

4.	Except as expressly modified hereby, all provisions of the Schedule 13D shall continue in full force and effect.


CUSIP No. 50047H201				Page 8 of 8 Pages

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


DATE: February 22, 2010

MILL ROAD CAPITAL, L.P.

By:		Mill Road Capital GP LLC,
		its General Partner

By:		/S/ CHARLES M. B. GOLDMAN
		Charles M. B. Goldman Management Committee Director

MILL ROAD CAPITAL GP LLC

By:		/S/ CHARLES M. B. GOLDMAN
		Charles M. B. Goldman Management Committee Director

THOMAS E. LYNCH

By:		/S/ CHARLES M. B. GOLDMAN
		Charles M. B. Goldman, attorney-in-fact

SCOTT P. SCHARFMAN

By:		/S/ CHARLES M. B. GOLDMAN
		Charles M. B. Goldman, attorney-in-fact

EX-21 2 dex21.htm LETTER FROM KONA GRILL, INC. TO MILL ROAD CAPITAL, L.P. Letter from Kona Grill, Inc. to Mill Road Capital, L.P.

Exhibit 21

KONA GRILL

February 2, 2010

VIA FEDERAL EXPRESS

Mill Road Capital, L.P.

382 Greenwich Avenue, Suite One

Greenwich, Connecticut 06830


Attention:		Mr. Thomas E. Lynch
		Mr. Justin Jacobs

Dear Messrs. Lynch and Jacobs:

We received your letter dated January 28, 2010 addressed to Mark S. Robinow, the Chief Financial Officer and Secretary of the Company, which was referred to the Company’s Nominating Committee (the “Committee”) and to the Company’s full Board of Directors (the “Board”). We also have reviewed Amendment No. 9 to the joint Statement on Schedule 13D filed by you with the Securities and Exchange Commission (the “SEC”) on January 29, 2010 (your “Amended Schedule 13D”) which, although not furnished to us by you, we retrieved from the SEC’s EDGAR website. In your letter and as set forth in Item 4 to your Amended Schedule 13D, you indicate Mill Road Capital’s intention to nominate three insurgent director-candidates for election at the next annual meeting of the holders of the Company’s common stock, $.01 par value (the “Company’s Stockholders”).

As you and the Company’s Stockholders are aware, Section 1.13 of the Company’s amended and restated by-laws currently in effect (the “By-laws”) establishes and governs the procedural and substantive requirements for Company Stockholder nominations of non-Board proposed candidates for election to the Board. Specifically, Section 1.13 of the By-laws provides, in relevant part, that:

“A stockholder’s notice to the corporation of nominations for a regular or special meeting of stockholders shall set forth (A) as to each person whom the stockholder proposes to nominate for election or re-election as a director: (1) such person’s name, age, business address and residence address and principal occupation or employment, (2) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or that is otherwise required, pursuant to Regulation 14A under the Securities Exchange Act of 1934 [,as amended (the “Exchange Act”)].”

The Committee, together with the Company’s professional advisors, has reviewed your letter carefully with respect to the requirements of Section 1.13 of the By-laws, and has reported the results of such review to the Board. Based on such review, the Committee has determined that your letter (including for such purpose the Exchange Act and other filings made by or on behalf of Mill Road Capital L.P. (“MRC L.P.”) which you have elected to expressly incorporate by reference in your letter) omits certain disclosures required by Regulation S-K and Schedule 14A and, accordingly, it does not comply in all respects with the requirements of Section 1.13 of the By-laws. In that regard, for your benefit, we refer you specifically to the requirements contained in (i) Item 5(b)(1)(vii) of Schedule 14A (regarding indebtedness); (ii) Item 403(a) of Regulation S-K (regarding the security ownership of certain beneficial owners); and (iii) Item 407(a) of Regulation S-K (regarding director independence).

7150 E. Camelback Rd., Ste 220 • Scottsdale, AZ 85251

P 480.922.8100 • TF 866-328-5662 • F 480.991.6811

The foregoing notwithstanding, because the Committee and the Board otherwise have determined that your letter substantially complies, on its face, with the requirements of Section 1.13 of the By-laws, the Company, acting in good faith, but subject to and assuming the accuracy and completeness of all information, representations and undertakings made by you in your letter (including the aforementioned MRC L.P. filings you have incorporated by reference therein) and further subject to and assuming your recognition of and compliance with Rule 14a-9 referred to below in this correspondence, is not hereby rejecting and does hereby accept the validity of your letter for purposes of Section 1.13 of the By-laws.

Of course, the Company’s determination set forth in the preceding paragraph does not constitute an endorsement or recommendation of your proposed insurgent, opposition director-candidates (or any director-candidates that have not duly nominated by the Committee and recommended by the Committee to the Board and recommended by the Board for election by the Company’s Stockholders) and does not imply and should not be construed by you to mean that the Committee or the Board has determined that the individuals named in your letter have any of the requisite qualifications, personal character, skills, experience, diversity, education and background, or are otherwise appropriate, in any context, to serve as Company directors or that their election to the Board would be in the best interests of the Company and the Company’s Stockholders.

For your benefit, we hereby refer you to Rule 14a-9 under the Exchange Act with respect to the requirement to make prompt, complete and accurate disclosure of all information relating to MRC L.P. and its businesses, subsidiaries, affiliates and associates (including, without limitation, all information relating to the individuals identified in your letter as intended, insurgent opposition director-candidates, and their respective affiliates and associates) (i) that you know or should have reason to know would be material to the Company’s stockholders to enable them to make a fully informed investment or voting decision, to the extent that votes are solicited by you and your affiliates and associates and any other persons who would be deemed to be “participants” in any “solicitation” of the Company’s stockholders undertaken by you or any of the aforementioned persons (as such terms are used in Rule 14a-2 and Item 4 of Schedule 14A, respectively, under the Exchange Act) and (ii) that you know or should have reason to know the Company would deem material (and, therefore, should be made aware of) to enable it to fully and accurately communicate with the Company’s stockholders, as necessary.

For purposes of clarification, this letter does not constitute a waiver, express or implied, of any claims the Company does or may have against MRC L.P. or any of its affiliates or associates (or against any of the persons identified in your letter as intended, insurgent opposition director-candidates or any of their respective affiliates or associates) or that the Company may assert in respect of any solicitation or other activity undertaken by MRC L.P. or any of its affiliates or associates (or by any of the persons identified in your letter as intended, insurgent director-candidates or any of their respective affiliates or associates) arising out of or in connection with the matters set forth in your letter or with respect to any other matter.

If you have any further questions relating to the foregoing, please contact the undersigned at (612) 337-2499.

Very truly yours,

/s/ Tony Winczewski

Anthony L. Winczewski

Nominating Committee Chairman

(on behalf of the Nominating Committee)


cc:		Kona Grill, Inc. Board of Directors
		Mark Robinow
		Clifford E. Neimeth, Esq. (Greenberg Traurig, LL
		Scott A. Weiss, Esq. (Greenberg Traurig, LLP)
		Peter M. Rosenblum, Esq. (Foley Hoag, LLP)

EX-22 3 dex22.htm LETTER FROM MILL ROAD CAPITAL, L.P. TO KONA GRILL, INC. Letter from Mill Road Capital, L.P. to Kona Grill, Inc.

Exhibit 22


		MILL ROAD CAPITAL
		MILL ROAD CAPITAL

February 5, 2010

VIA FEDERAL EXPRESS

Mr. Anthony L. Winczewski

Chairman, Nominating Committee

Kona Grill, Inc.

7150 E. Camelback Road, Suite 220

Scottsdale, Arizona 85251

Re: Your letter dated February 2, 2010

Dear Mr. Winczewski:

We received your letter dated February 2, 2010 in response to Mill Road Capital’s letter dated January 28, 2010 (the “Nomination Letter”) notifying Kona Grill, Inc. of our intention to nominate three persons for election to the Board of Directors of Kona at the upcoming annual meeting. We appreciate your prompt review and response to the Nomination Letter. We are pleased that Kona has acknowledged the validity of the Nomination Letter for purposes of Section 1.13 of Kona’s Amended and Restated Bylaws.

Contrary to the assertion in your letter, however, our records indicate that a copy of Amendment No. 9 to Mill Road Capital’s joint statement on Schedule 13D was delivered to Kona’s principal executive office at 7150 E. Camelback Road in Scottsdale, Arizona on February 1, 2010, the first business day after Amendment No. 9 was filed with the Securities and Exchange Commission.

Please address any correspondence or questions regarding this letter to Mill Road Capital, L.P., Attn: Justin Jacobs, telephone (203) 987-3505, facsimile (203) 621-3280 (with a copy to our counsel, Foley Hoag LLP, 155 Seaport Blvd., Boston, MA 02210, Attn: Peter M. Rosenblum, Esq. and Paul Bork, Esq., telephone (617) 832-1000, facsimile (617) 832-7000).


Very truly yours,

Mill Road Capital, L.P.

By:		Mill Road Capital GP LLC,
		its General Partner

By:		/s/ Thomas E. Lynch
		Thomas E. Lynch Management Committee Director and Chairman


cc:		Peter M. Rosenblum, Esq.
		Paul Bork, Esq.

382 Greenwich Avenue, Suite One • Greenwich, CT 06830 • (203) 987-3500

EX-23 4 dex23.htm LETTER FROM KONA GRILL, INC. TO MILL ROAD CAPITAL, L.P. Letter from Kona Grill, Inc. to Mill Road Capital, L.P.

Exhibit 23

KONA GRILL

February 6, 2010

VIA ELECTRONIC MAIL AND FEDERAL EXPRESS

Mill Road Capital, L.P.

382 Greenwich Avenue, Suite One

Greenwich, Connecticut 06830

Attention:

Mr. Thomas E. Lynch

Mr. Justin Jacobs

Dear Messrs. Lynch and Jacobs:

We received your letter dated February 5, 2010, which was addressed to Anthony Winczewski, Chairman of the Company’s Nominating Committee (the “Committee”) and referred by him to the Company’s full Board of Directors (the “Board”).

This confirms, as expressed in our last correspondence to you, that the Board accepted the validity of your letter assuming your compliance with Rule 14a-9 under the Exchange Act with respect to the requirement to make complete and accurate disclosure of all information relating to Mill Road Capital, L.P. (“MRC L.P.”) and its businesses, subsidiaries, affiliates and associates (including, without limitation, all information relating to the individuals identified in your letter as intended, insurgent director-candidates, and their respective affiliates and associates) (i) that you know or should have reason to know would be material to the Company’s stockholders to enable them to make a fully informed investment or voting decision, to the extent that votes are solicited by you and your affiliates and associates and any other persons who would be deemed to be “participants” in any “solicitation” of the Company’s stockholders undertaken by you or any of the aforementioned persons (as such terms are used in Rule 14a-2 and Item 4 of Schedule 14A, respectively, under the Exchange Act) and (ii) that you know or should have reason to know the Company would deem material (and, therefore, should be made aware of) to enable it to fully and accurately communicate with the Company’s stockholders, as necessary.

This letter does not constitute a waiver, express or implied, of any claims the Company may have against MRC L.P. or any of its affiliates or associates (or against any of the persons identified in your letter as intended, insurgent director-candidates or any of their respective affiliates or associates) or that the Company may assert in respect of any activity undertaken by MRC L.P. or any of its affiliates or associates (or by any of the persons identified in your letter as intended, insurgent director-candidates or any of their respective affiliates or associates) arising out of or in connection with the matters set forth in your letter or any other matter.

If you have any further questions relating to the foregoing, please contact the undersigned at (612) 337-2499.

Very truly yours,

/s/ Tony Winczewski

Anthony L. Winczewski

Nominating Committee Chairman

(On behalf of the Nominating Committee)

cc:

Clifford E. Neimeth, Esq. (Greenberg Traurig, LLP)

Scott K. Weiss, Esq. (Greenberg Traurig, LLP)

Peter M. Rosenblum, Esq. (Foley Hoag, LLP)

Paul Bork, Esq. (Foley Hoag, LLP)

EX-24 5 dex24.htm LETTER FROM MILL ROAD CAPITAL, L.P. TO KONA GRILL, INC. Letter from Mill Road Capital, L.P. to Kona Grill, Inc.

Exhibit 24

Mill Road Capital, L.P.

382 Greenwich Avenue, Suite One

Greenwich, CT 06830

February 22, 2010

VIA CERTIFIED MAIL AND FEDERAL EXPRESS

Kona Grill, Inc.

7150 E. Camelback Road

Suite 220

Scottsdale, AZ 85251

Re:

Demand to Inspect Stocklist Materials Pursuant to Section 220 of the General Corporation Law of the State of Delaware

Ladies and Gentlemen:

Mill Road Capital, L.P. (the “Record Holder”) is the record holder of 1,000 shares of common stock, par value $0.01 per share (the “Common Stock”), of Kona Grill, Inc., a Delaware corporation (the “Company”), and is the beneficial owner of 899,330 shares of Common Stock (including the 1,000 shares held of record stated above).

Pursuant to Section 220 of the General Corporation Law of the State of Delaware (the “DGCL”), as the record and beneficial owner of the shares of Common Stock stated above, the Record Holder hereby demands that it and its attorneys, representatives and agents be given, during the Company’s usual business hours, the opportunity to inspect the following stocklist materials of the Company and to make copies and/or extracts therefrom:

(a) A complete record or list of the stockholders of the Company, certified by the Company’s transfer agent(s) and/or registrar(s), setting forth the name, telephone number and address of, and the number, series and class of shares of stock of the Company registered in the name of, each stockholder as of the date hereof, and as of any record date established or to be established for the 2010 annual meeting of stockholders of the Company, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the “Annual Meeting”). The date hereof and any such record date are each referred to separately as a “Determination Date”;

(b) Relating to the list of stockholders and all other information referred to in paragraph (a) above, electronic media containing such information, the computer processing data necessary for the Record Holder to make use of such information on electronic media and a hard copy printout of such information in order of descending balance of number of shares of stock for verification purposes;

(c) All daily transfer sheets showing changes in the names, telephone numbers and addresses of the Company’s stockholders or in the number, series or class of shares of stock of the Company held by the Company’s stockholders that have occurred after the date hereof and before (i) any subsequent Determination Date and (ii) the conclusion of the Annual

Kona Grill, Inc.

Page 2

Meeting that are in or come into the possession of the Company or its transfer agent(s), or that can reasonably be obtained from brokers, dealers, banks, clearing agencies or voting trusts or their nominees after the date of the stockholder list referred to in paragraph (a) above and before the conclusion of the Annual Meeting;

(d) Any stop transfer lists or stop lists relating to any shares of stock of the Company and any additions, deletions, changes or corrections made thereto from the date of the earliest list referenced in paragraph (a) above.

(e) All information in, or that comes into, the Company’s or its transfer agent(s)’ or registrar(s)’ possession or control or that can reasonably be obtained from brokers, dealers, banks, clearing agencies, voting trusts or their nominees or from other nominees of any central certificate depository system relating to the names and addresses and telephone numbers of, and the number, series and class of shares of stock of the Company as of each Determination Date held by, the participating brokers and banks named in the individual nominee names of Cede & Co. or other similar depositories or nominees, including (i) respondent bank lists, and all omnibus proxies and related respondent bank proxies and listings issued pursuant to Rule 14b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) all “Weekly Security Position Listing Daily Closing Balances” reports issued by The Depository Trust Company with respect to the Company’s stock;

(f) All information in, or that comes into, the Company’s possession or control or that can reasonably be obtained from brokers, dealers, banks, clearing agencies, voting trusts or their nominees or from nominees of any central certificate depository system relating to the names and addresses and telephone numbers of, and the shares of stock of the Company held by, the non-objecting beneficial owners of the stock of the Company as of each Determination Date, including such information which is obtainable pursuant to Rule 14b-1(c) or Rule 14b-2(c) under the Exchange Act, on electronic media, along with such computer processing data as is necessary for the Record Holder to make use of such information on electronic media, and a hard copy printout of such information in order of descending balance for verification purposes. If such information is not in the Company’s possession, custody or control, such information should be requested from Broadridge Financial Solutions, Inc. – Investor Communications Services; and

(g) All lists on electronic media and the relevant processing data and printouts (as described in paragraph (b) above) containing the name and address of, and the number, series and class of shares of stock of the Company attributable to, any participant in any employee stock ownership plan, employee stock purchase plan or other employee compensation or benefit plan of the Company in which the decision to vote shares of stock of the Company held by such plan is made, directly or indirectly, individually or collectively, by the participants in the plan and the method(s) by which the Record Holder or its agents may communicate with each such participant, as well as the name, affiliation and telephone number of the trustee or administrator of each such plan, and a detailed explanation of the treatment not only of shares for which the trustee or administrator receives instructions from participants, but also shares for which either the trustee or administrator does not receive instructions or shares that are outstanding in the plan but are unallocated to any participant.

Kona Grill, Inc.

Page 3

The Record Holder demands that all modifications, additions or deletions to any and all information referred to in paragraphs (a) through (g) above be immediately furnished to the Record Holder as such modifications, additions or deletions become available to the Company or its agents or representatives.

Upon presentment of appropriate documentation therefor, the Record Holder will bear the reasonable costs incurred by the Company, including those of its transfer agent(s) or registrar(s), in connection with the production of the information demanded.

The purpose of this demand is to enable the Record Holder to communicate with the Company’s other stockholders on matters relating to their interests as stockholders and to consider the solicitation of proxies in connection with the Record Holder’s proposal to nominate three (3) persons for election to the Company’s Board of Directors at the Annual Meeting, as described in the letter from the Record Holder to the Company dated January 28, 2010.

The Record Holder hereby designates and authorizes each of Peter M. Rosenblum, Esq. and Paul Bork, Esq. of Foley Hoag LLP, and any other persons designated by either of the foregoing or by the Record Holder, acting singly or in any combination, to conduct the inspection and copying herein requested. It is requested that (i) with respect to the information regarding the record and beneficial owners of the capital stock of the Company as of the date hereof, the materials identified above be made available to the designated parties no later than March 1, 2010, and (ii) with respect to all other information, all materials identified above relating to such information be made available to the designated parties as soon as it becomes available to the Company. Pursuant to Section 220 of the DGCL, you are required to respond to this demand within five (5) business days after the date hereof. Accordingly, please advise the Record Holder’s counsel, Peter M. Rosenblum, Esq. of Foley Hoag LLP, at (617) 832-1151 or Paul Bork, Esq. of Foley Hoag LLP, at (617) 832-1113, as promptly as practicable within the requisite timeframe, when and where the items requested above will be made available to the Record Holder. If the Company contends that this request is incomplete or is otherwise deficient in any respect, please notify the Record Holder immediately in writing, with a copy to each of Peter M. Rosenblum, Esq., and Paul Bork, Esq., Foley Hoag LLP, 155 Seaport Boulevard, Boston, MA 02210, facsimile (617) 832-7000, setting forth the facts that the Company contends support its position and specifying any additional information believed to be required. In the absence of such prompt notice, the Record Holder will assume that the Company agrees that this request complies in all respects with the requirements of the DGCL. The Record Holder reserves the right to withdraw or modify this request at any time.

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Kona Grill, Inc.

Page 4


Very truly yours,

Mill Road Capital, L.P.

By:		Mill Road Capital GP LLC,
		its General Partner

By:		/s/ Thomas E. Lynch
		Thomas E. Lynch
		Management Committee Director and Chairman

cc:	Peter M. Rosenblum, Esq.

Paul Bork, Esq.

State of Connecticut)

)ss:

County of Fairfield)

I, Thomas E. Lynch, the Senior Managing Director of Mill Road Capital, L.P. (the “Record Holder”) and a Management Committee Director of Mill Road Capital GP LLC, the sole general partner of the Record Holder, being sworn, state that:

1.	I executed the foregoing letter, and the information and facts stated therein (including the information regarding the Record Holder’s ownership and the purpose of this demand for inspection) is true and correct,

2.	Such demand for inspection is reasonably related to the Record Holder’s interest as a stockholder and is not desired for a purpose which is in the interest of a business or object other than the business of the Company, and

The foregoing letter contains a designation of each of Peter M. Rosenblum, Esq. and Paul Bork, Esq. of Foley Hoag LLP, and any other persons designated by either of the foregoing, or by the Record Holder, acting singly or in any combination, as the undersigned’s attorney or agent to conduct the inspection demanded by the Record Holder, and that the letter and this verification are the undersigned’s power of attorney authorizing the foregoing persons to act on behalf of the undersigned.

/s/ Thomas E. Lynch

Thomas E. Lynch

Subscribed and sworn to before me

this 18th day of February, 2010.

/s/ Theresa C. Engh

Notary Public

My commission expires: May 31, 2010

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