SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the registrant [ ]
Filed by a party other than the registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement.
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)).
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12.
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DAVE & BUSTER'S, INC.
(Name of Registrant as Specified in Its Charter)
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DOLPHIN LIMITED PARTNERSHIP I, L.P.
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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Preliminary Copy Subject to Completion
Dated May 19, 2003
2003 ANNUAL MEETING OF
SHAREHOLDERS OF DAVE & BUSTER'S, INC.
PROXY STATEMENT
OF
DOLPHIN LIMITED PARTNERSHIP I, L.P.
This proxy statement and the enclosed BLUE proxy card are being
furnished to you, the holders of shares of common stock, par value $.01 per
share, of Dave & Buster's, Inc., a Missouri corporation, in connection with
the solicitation by Dolphin Limited Partnership I, L.P. for use at the June
10, 2003 annual meeting of shareholders of the Company, and at any
adjournments or postponements of the meeting. Dolphin is the Company's
largest shareholder, owning approximately 9.5% of the Company's stock. With
an investment of approximately $12 million in the Company, our interests are
squarely aligned with those of our fellow shareholders. Our only goal is to
maximize value for all shareholders, in which we expect to share
proportionately.
Dolphin is soliciting proxies to elect its slate of three independent
nominees to the Company's board of directors. These directors will be elected
by you, the shareholders. Our objective is to install directors who are
independent of management and untainted by what we believe was the improper
and conflicted conduct of the board of directors in the ultimately failed
process of considering and acting upon proposals for the sale of the
Company. We place substantial focus on this process, which we refer to as
the "sale process," and we think other shareholders should as well. Please
see the discussion on pages 5 to 10.
Our nominees will also be committed to addressing what we believe have
been the Company's disappointing operating results and share price
performance over the past few years. We explain in detail in this proxy
statement the basis for our beliefs and why we think you should support our
nominees. See "Dolphin's Reasons For Seeking Board Representation" below.
The Company recently expanded the size of its board from eight to nine
directors despite the admonishment of Dolphin, its largest shareholder. The
Company has also recently added three directors to the board, two to replace
retiring board members and one to fill the recently created director
position. The director appointed to expand the board is Mr. David B.
Pittaway, who has a prior business relationship with another member of the
board, Mr. Allen J. Bernstein. Even with the addition of the board's three
directors, six of the remaining directors, who presided over the improper
sale process and disappointing operating results, still constitute a
supermajority of the now expanded nine member board. If elected, our
independent nominees will constitute three of the nine directors on the
board, and the shareholders, if they continue to be dissatisfied with the
Company's performance and its board, will be in a position at next year's
annual meeting to replace an additional three directors and thereby effect a
change in board control.
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Although our nominees would constitute only a minority of the Company's
board of directors, they will be strong advocates for advancing shareholder
interests, implementing operating improvements, promoting board independence
and management accountability and maximizing shareholder value.
Specifically, subject to the exercise of their fiduciary duties, our nominees
will promote a platform in the boardroom that includes--
o focusing closely on financial performance, with a thorough review of
the Company's operations and business model;
o aligning management compensation with operating results and
shareholder return;
o designating board leadership unconnected with the prior flawed,
conflicted and failed sale process;
o eliminating the Company's poison pill rights plan;
o destaggering the board to provide for the annual election of all
directors, thereby enhancing the board's accountability to the
shareholders;
o conducting a thorough review of the Company's prior sale process;
o reconstituting the board's special committee that, in our view, should
have actively supervised the sale process, but which in our view
allowed management directors, who we believe had a conflicted agenda,
to take the lead in evaluating potential transactions; see the
discussion on pages 5 to 10; and
o exploring avenues for maximizing shareholder value, which may include
a sale of the Company.
Although our nominees will advocate this platform, we cannot assure you that,
as a minority on the board, they will be successful or that as a result of
their election, shareholder value will be maximized.
The terms of three of the Company's directors expire at the 2003 annual
meeting. At the 2003 annual meeting, Dolphin is nominating three directors,
Edward A. Weinstein, Donald T. Netter and Edward E. Hartline, for election to
this class for terms expiring in 2006.
As we set out in this proxy statement, our nominees collectively have
extensive backgrounds in public company financial oversight and accounting,
the promotion of investor value and corporate law and governance. See page
17. Mr. Weinstein has over 40 years of experience as an independent auditor
of public companies and was formerly a senior partner of the accounting firm
of Deloitte & Touche. Mr. Netter's 20 year career has involved the
management of investment funds whose objective is to bring value to
investors. He has also been a director and senior officer of several public
companies. Mr. Hartline is a founder and the managing partner of Brown
McCarroll, L.L.P., a Texas based law firm. He is an attorney specializing in
corporate law for over 25 years. We believe our nominees will bring to the
board the judgment, experience, energy, independence and objectivity that
shareholders
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can trust and that will be applied exclusively and disinterestedly in the
interests of all shareholders.
See "Information About Dolphin" and "Certain Other Information
Regarding Dolphin's Nominees" for information about Dolphin and its nominees.
Dolphin recommends that you vote to elect each of our three nominees.
Vote the enclosed BLUE proxy card.
The Company has announced that the 2003 annual meeting will be held at
9:00 a.m. local time on June 10, 2003 at 10727 Composite Drive, Dallas, Texas
and that the record date for determining shareholders entitled to notice of
and to vote at the 2003 annual meeting is April 18, 2003.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES OF COMMON
STOCK YOU OWN. DOLPHIN URGES YOU TO MARK, SIGN, DATE AND RETURN THE ENCLOSED
BLUE PROXY CARD PROMPTLY IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH
BELOW. PLEASE DO NOT SIGN ANY PROXY CARD YOU MAY RECEIVE FROM THE COMPANY
EVEN THOUGH IT ALLOWS YOU TO VOTE IN FAVOR OF A PROPOSAL THAT DOLPHIN
SUPPORTS. YOU CAN VOTE FOR THAT PROPOSAL ON THE BLUE DOLPHIN CARD.
You are urged to mark, sign and date the enclosed BLUE proxy card and
return it in the enclosed envelope whether or not you plan to attend the 2003
annual meeting. If you need assistance voting your shares of common stock,
please call Dolphin's information agent, Innisfree M&A Incorporated,
toll-free at 1-888-750-5834 or, if you are a bank or broker, please call
collect at 1-212-750-5833.
If you have already sent in the Company's white proxy card and wish to
change your vote, you have every legal right to do so. Please sign, date and
mail the enclosed BLUE proxy card. Only your last dated and signed proxy card
will count.
This proxy statement and the accompanying BLUE proxy card are first
being furnished to the Company's shareholders on or about May 19, 2003.
DOLPHIN'S REASONS FOR SEEKING BOARD REPRESENTATION
Dolphin seeks to maximize value for all of the Company's shareholders
in which we, as the Company's largest shareholder, expect to share
proportionately. We do not trust the current board to act disinterestedly to
promote shareholder value because of what we believe is misconduct with which
a supermajority of the current board was associated. In this section we
explain to you the basis for our belief that a supermajority of the current
board is tainted by an improper and flawed process to sell the Company that
began in 1999, and ended in failure in the fall of 2002. We also explain our
disappointment with the Company's recent operating results, and top
management compensation that, in our view, is excessive and not aligned with
the operating and share price performance, for which we believe the board
must be held accountable.
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Composition of the Board
Until April 17, 2003, the Company's board of directors had eight
members. Three of these members--David O. Corriveau and James W. Corley,
then the Company's two Co-Chairmen and Co-CEOs, and Walter S. Henrion, then a
consultant to the Company since 1989 and a member of the board's executive
committee--were participants in a flawed, conflicted and failed attempt to
buyout the Company. Four of the directors-- Mark A. Levy, Allen J.
Bernstein, Peter A. Edison and Christopher C. Maguire--served on the special
committee of the board responsible for evaluating and negotiating acquisition
proposals, including the buyout attempt. The eighth director was Bruce H.
Hallett, whose law firm was paid $158,000 by the Company for legal services
in fiscal 2002.
In March and April 2003--beginning almost immediately after Dolphin
publicly criticized the conduct of the board--the Company announced a series
of what it referred to as "planned corporate governance initiatives." See
"The Company's Governance Reforms" below. As part of these initiatives, the
Company reported that Mr. Henrion, who participated in the buyout effort and
whose term of office was to expire in 2003, and Mr. Hallett, whose term of
office was to expire in 2004, were retiring from the board. The board
appointed Patricia P. Priest to fill the vacancy in the 2003 class created by
the resignation of Mr. Henrion. Walter J. Humann was appointed to fill the
vacancy created in the 2004 class by the resignation of Mr. Hallett. The
board was also recently increased to nine by expanding the 2004 class by one
director. David B. Pittaway was appointed to fill the vacancy created by the
expansion of the board. Prior to these actions, Dolphin had publicly opposed
the increase in the size of the board. We feel that the board was wrong to
create an additional directorship in the midst of a proxy contest, where the
incumbent board rather than the shareholders filled the vacancy.
Even with the board's three recently appointed directors, the current
board is still heavily weighted towards the old regime. Six of the nine
directors, a supermajority, were either members of the senior management
buyout group that we believe placed its interests ahead of the shareholders,
or members of the special committee, that failed to restrain this
self-interest. We say that management placed its interests ahead of
shareholders because it told a potential industry acquiror that the merger
proposal that it would support would have to include a management earnout and
other management benefits. See pages 17-18 of the Company's October 2, 2002
preliminary proxy statement. We say that the special committee failed to
restrain this self-interest because the committee did not take the lead in
evaluating proposals for the acquisition of the Company. Rather, according
to the Company's own public disclosure, seven of the nine expressions of
interest to acquire the Company were only considered by senior management who
were directors and the two that reached the special committee both provided
for senior management participation. See pages 16 to 22 of the Company's
October 2, 2002 preliminary proxy statement.
We cannot place trust and confidence to manage the affairs of our
Company in a board that has a supermajority of the old directors, who were
connected with the flawed, conflicted and failed sale process. We also
believe that, if a decision is made to sell the Company, a credible financial
or strategic buyer will be less likely to come forward with proposals that
maximize shareholder value unless the special committee is composed of new
members unconnected with
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the prior sale process. In our view, senior management was conflicted in the
prior sale process. Accordingly, a credible buyer may feel that management
directors driven by self interest might not objectively evaluate a buyout
proposal on its merits, and that directors who were involved with the prior
process in which senior management was self-interested cannot be trusted in the
future to assure the objective evaluation of a buyout proposal. Buyers may
therefore not be inclined to advance proposals whose merit lies in the value and
certainty that shareholders would receive, until there has been a change in
those responsible for considering acquisition proposals.
Our nominees have no connection with the incumbent board. By electing
our three nominees at the 2003 annual meeting, all shareholders will get
vigorous, independent advocates. Importantly, shareholders will be
positioned to change control of the board at the 2004 annual meeting by
electing three additional independent directors.
The Flawed Sale Process and its Implications
Beginning in October 1999, following a significant decline in the
Company's stock price, the Company began to explore various strategic
alternatives. This exploration ultimately led to a proposed buyout
transaction by an affiliate of Investcorp S.A. with the participation of the
Company's senior management. This transaction first took the form of a
$12.00 per share tender offer launched in June 2002, which failed to close
because of insufficient shareholder support, and then took the form of a
proposed $13.50 per share merger. This merger was subject to financing,
failed to gain financing and was withdrawn in October 2002 as a result of
"continuing adverse conditions in the debt financing market." We
characterize this process as flawed, conflicted and failed--
o flawed, because, as we describe below, the special committee of the
board that should have taken an active role in conducting the process
instead only considered the two transactions in which members of
senior management, who were directors, had an interest and did not, as
far as we can tell from the Company's disclosure, consider expressions
of interest that were made by other parties;
o conflicted, because, as we describe below, these members of senior
management, who were also directors, were apparently only prepared to
consider transactions in which they would have an interest, regardless
of what may have been best for shareholders; and
o failed, because, despite the time, energy and substantial
expense--$1.3 million in 2002 alone--that the Company and its
management devoted to this process, it failed to result in an
acquisition transaction or to otherwise bring value to shareholders.
Unless we note otherwise, the information that we present concerning
this process is derived from the Company's preliminary proxy statement
filed with the Securities and Exchange Commission on October 2, 2002 under
cover of Amendment Number 2 to the Company's Schedule 14A. This document is
publicly available on the website of the SEC at www.sec.gov. Please see in
particular "Background of the Merger," found at pages 16 through 22 of that
document.
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The Special Committee
In December 1999, the board of the Company established a special
committee of allegedly independent directors to evaluate and negotiate
proposals "in the event that any of the existing or future unsolicited
inquiries developed into a credible proposal." The board took this action
after being advised by director Corriveau that "the Company had been
approached by several financial buyers exploring management's interest in a
`going private' transaction." According to the minutes of the December 14,
1999 meeting of the board of directors,
"the board resolved to constitute a Special Committee of
directors to evaluate, and to negotiate on behalf of the Company,
any merger and acquisition proposals which might be received from
financial buyers that included management participation."
Based upon the inferences that we draw from this, it is our belief that the
board of directors and the special committee were focused on transactions
involving senior management participation. In our view, this was wrong. The
board and the special committee should have been equally focused, from the
outset, on any transaction that would have maximized shareholder value.
The board initially appointed to the special committee four directors,
Mr. Levy, who served as chair, and Messrs. Bernstein, Edison -- now the
Company's Chairman of the Board -- and Maguire. The special committee was
paid in the aggregate $175,000 for its services.
Mr. Maguire. Mr. Maguire is Chief Executive Officer and President of
Cypress Equities, Inc. Cypress Equities, Inc. or its affiliates lease space
to the Company, for which Cypress received from the Company $167,000 in 2000,
$1,242,400 in 2001 and $1,332,000 (including brokerage commissions on
sale-leaseback transactions) in 2002. In December 2000, the Company and an
affiliate of Cypress Equities entered into a sale-leaseback transaction
whereby the Company received $8.0 million in exchange for committing to lease
payments of approximately $23.2 million over 20 years with options for
renewal. The $23.2 million may include the amounts paid by the Company to
Cypress in 2000, 2001 and 2002. Please see the Company's annual proxy
statements for the years 2001, 2002 and 2003 under "Certain Transactions,"
which are available on the SEC's website. In light of these relationships,
in our view, Mr. Maguire had financial ties to the Company that cast serious
doubt on Mr. Maguire's independence from management and therefore Mr. Maguire
should not have served on the special committee.
Mr. Bernstein. Mr. Bernstein resigned from the special committee in
April 2002, citing the need to "devote more of his time and attention to the
sale of Morton's Restaurant Group, Inc., of which he is currently the
Chairman and Chief Executive Officer." In fact, Morton's concluded a going
private transaction in 2002 with the participation of its senior management,
which included Mr. Bernstein. At the time, the Morton's board included John
Castle and David Pittaway, who were, respectively, chairman and senior
managing director of Castle, Harlan Inc., the firm that ultimately acquired
Morton's. With the appointment of Mr. Pittaway to the Company's board,
there are now two Company directors who participated in the Morton's buyout.
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Dolphin owned 6.1% of the Morton's outstanding common stock at the
time, communicated with Morton's management and expressed its own interest in
acquiring Morton's. By reason of Dolphin's involvement, we had a unique
vantage point from which to observe the transaction. Please see Morton's
definitive proxy statement, filed with the SEC under cover of Schedule 14A on
June 18, 2002 and available on the SEC's website, for a discussion of the
background of this transaction, including various communications and
expressions of interest of Dolphin in respect of the transaction.
From June 2001 to March 2002, Greenhill & Co., LLC, the financial
advisor to Morton's special committee contacted or was contacted by
approximately 30 parties regarding a potential transaction with Morton's. On
May 1, 2001, Morton's received an unsolicited letter from BFMA Holding
Corporation, seeking to negotiate the purchase of Morton's by BFMA at a price
of $28.25 per share. BFMA at the time owned over 9% of Morton's stock and
was conducting a proxy contest to elect three directors of Morton's which was
not successful. BFMA included with its proposal a letter from Icahn
Associates Corp. to provide temporary bridge financing for all but $20
million of BFMA's proposal. The remaining $20 million was to be supplied by
equity from BFMA or related parties. BFMA paid Icahn Associates a
non-refundable fee of $1.5 million for the financing commitment. According
to Morton's proxy materials, Greenhill and Morton's counsel had various
contacts with BFMA and its counsel during the period of May through July
2001. Also, Morton's counsel and BFMA's counsel negotiated but failed to
come to terms on a confidentiality agreement. On July 19, 2001, Morton's
issued a press release announcing that BFMA had advised Morton's that BFMA
did not intend to renew the terms of the Icahn Associates financing when it
expired on July 30, 2001. According to Morton's proxy materials, members of
Morton's special committee expressed concern over the legitimacy of BFMA's
proposal and BFMA's and Icahn Associates' intent and ability to consummate
the proposal. However, in a report filed with the SEC but not discussed in
the Morton's proxy materials, Greenhill stated that "although imperfect, BFMA
has demonstrated reasonable ability to finance its proposed offer." On the
basis of this statement, the offer price and the fact that BFMA paid a $1.5
million non-refundable fee to Icahn Associates for the financing commitment,
Dolphin believes that the Morton's special committee and board took an
inappropriate posture toward the BFMA proposal.
In March 2002, the Morton's board accepted a $12.60 per share offer
from Castle Harlan. The Castle Harlan transaction, which was less than half
the value of the BFMA proposal, provided for the participation of senior
management, including Mr. Bernstein. The $12.60 Castle Harlan transaction
was subsequently increased to $17.00 per share in July 2002, but only as a
result of a bidding war initiated by an affiliate of Mr. Icahn.
We are troubled by the Morton's sale transaction. Morton's contacted
or was contacted by approximately 30 parties, regarding potential interest in
a transaction with Morton's. At the end of the sale process, the only
binding bid that resulted from this process was from Castle Harlan, which was
controlled by two members of the board, and in which senior management
participated. After a subsequent series of bids by an unaffiliated third
party, the affiliated group raised its price by almost 35%.
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As the chairman and chief executive officer of Morton's, Mr. Bernstein
was involved in the Morton's transaction both as a director and as a senior
management participant. As a member of the Company's special committee, he
was involved in the Company's sale process, which we criticize for reasons we
describe in this proxy statement. Because of our discomfort with the
Morton's transaction and our problems with the Company's sale process, we
have difficulty with Mr. Bernstein as a director of the Company. Now that
the Company has appointed Mr. Pittaway to fill a vacancy created by the
expansion of the board, we have two directors on the Company's board that
were directors of Morton's and participated in the Morton's buyout.
The Integrity of the Sale Process; Landry's Expression of Interest
In our view, given the expressly stated interest of the Company's
senior management, who were also directors, in participating in any buyout,
it was incumbent on the special committee of the board to take an active role
in managing the Company's sale process. From publicly available sources, it
appears that this was not the case. Rather, as described in the Company's
October 2002 preliminary proxy statement, it was this very senior management
group, whose members expected to participate in the buyout, that conducted
the discussions with third-parties that expressed interest in acquiring the
Company. This group consisted of Messrs. Corriveau, Corley and Henrion, all
directors of the Company. As disclosed in the October 2002 preliminary proxy
statement, Messrs. Corriveau, Corley and/or Henrion met with seven interested
buyers without reported involvement of the special committee. The two
transactions reportedly referred to the special committee were ones in which
members of senior management who were also directors had proposed
participation. To us, this suggests that Messrs. Corriveau, Corley and
Henrion were not inclined to present to the special committee a transaction
without senior management involvement and that the special committee
passively acquiesced in this improper clearance procedure. We think this
behavior was a dereliction by the special committee of its duties, which
undercut the entire sale process and made for a flawed and conflicted
process. This view is reinforced by the treatment of Landry's Restaurants,
Inc., a significant restaurant industry competitor headquartered in Houston,
Texas with an equity market capitalization of approximately $560 million in
May 2003, which expressed interest in acquiring the Company in 2001 in
circumstances that we describe below.
With the exception of the Landry's expression of interest in mid-2001,
the public record does not provide extensive particulars on those expressions
of interest to acquire the Company that were not considered by the special
committee. Details of Landry's negotiations with the Company's senior
management initially came to light as a result of a class action litigation
filed in the Texas District Court in July 2002, captioned L.J. Parnes v.
Corriveau et al., cause no. 02-4912 (July 9, 2002 Dallas County). The
complaint in that action is publicly available from the court.
According to the complaint, Messrs. Corriveau, Corley and Henrion met
in late August 2001 with Tillman Fertitta, Landry's Chairman and Chief
Executive Officer. However, at the meeting--
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"Mr. Fertitta was informed that they [Corriveau, Corley and
Henrion] intended to take the Company private themselves and they
wanted Landry's to sign a standstill agreement to preclude it
from interfering with the going private plan."
Similar disclosure was made in the Company's October 2002 preliminary
proxy statement--
"Among other topics discussed at the meeting, Messrs. Corriveau
and Corley disclosed to Mr. Fertitta that D&B's management,
including themselves, preferred a management-led buyout of D&B to
a sale transaction with a strategic buyer such as Landry's."
The complaint further recites--
"Two months later, on October 23, 2001, defendant Corriveau sent
Fertitta an `outline of the kind of deal a merger would require
for management to obtain its goals' and questioned whether `this
would work' for Landry's. That document indicated that the D&B
shareholders would receive only $9 per share and that the D&B
`management earnouts' would be `10% of EBITDA contributed by D&B
operations for the next 5 years. Paid annually and structured to
reflect a capital gains transaction.'"
This demand was corroborated in the Company's October 2002 preliminary proxy
statement. The disclosure in the proxy statement adds that management also
sought "assurances that D&B management would participate in stock option,
stock grant and other incentive programs offered by Landry's."
The Company's October 2002 proxy materials state that Landry's did not
respond to Mr. Corriveau's correspondence, but do not say why. According to
the complaint, based on statements made by a deposed representative of
Landry's,
"Since it was Landry's view that no one would be entitled to 10%
of EBITDA other than its shareholders, Landry's was uninterested
in such a transaction."
We interpret this to mean that Landry's did not continue its discussions with
the Company because of the statement of senior management that for management
to support a merger transaction there would have to be a 10% EBITDA
management earnout.
We are deeply troubled by these disclosures and the Company's
establishment of a committee whose sole purpose was to evaluate transactions
involving management participation, and we think that other shareholders
should be as well. First, the disclosures demonstrate to us that the
Company's senior management who were directors had as a primary goal the
furthering of their own financial interests, which they appear to have
pursued regardless of whether shareholders would receive greater benefit from
a transaction that did not have senior management participation. As directors
of the Company, Messrs. Corriveau, Corley and Henrion were bound by fiduciary
duties to the Company and its shareholders. We believe, based on the
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recited disclosures, that these directors breached their fiduciary duties to
shareholders by placing their personal interests ahead of the interests of
shareholders.
Second, we believe that shareholders should be aware of the timing of
the Company's disclosure of senior management's statement that it would
require earnout payments and other management benefits in order to support a
transaction with Landry's. Mr. Corriveau sent Mr. Ferttita the outline of
merger terms in October 2001. The discussions with Landry's were not
disclosed at all in the Company's Solicitation/ Recommendation Statement on
Schedule 14D-9 filed in June 2002 in response to the management-supported
tender offer for the Company launched that month. On July 29, 2002, the
Company filed its initial preliminary proxy materials in respect of the
management-supported buyout transaction, briefly mentioning contacts with "a
company engaged in restaurant ownership and operations," but not disclosing
any substance of those negotiations, including references to management
benefits. A similar mention is contained in the Company's revised proxy
materials filed on September 11, 2002. Disclosure of the merger outline was
made for the first time in the Company's October 2, 2002 proxy materials.
The Company announced on October 25, 2002 that the $13.50 merger had been
terminated.
The Company's Governance Reforms
On March 5 and 17, 2003, the Company announced that it was undertaking
certain governance and business initiatives. This announcement came almost
immediately after Dolphin delivered an open letter to the board discussing
the need for corporate governance reforms, as noted below. The Company's
initiatives included formation of a nominating and corporate governance
committee whose Chairman would be Mr. Edison. Also, the Company announced
that Mr. Levy had been designated lead director, "to head executive sessions
of the board and also serve as the primary liaison between management and the
Board." The appointment of a lead director was one of the governance reforms
advocated in Dolphin's March 3 letter. On April 10, 2003, the Company
disclosed that Messrs. Corriveau and Corley would no longer serve as
Co-Chairmen and that instead Mr. Edison would be Chairman of the Company's
board.
In its March announcements, the Company stated to its shareholders,
"[A]s you know, public companies are subject to new laws
regarding corporate governance, including composition of the
Board and Board committees. With this in mind, last year we
proactively undertook a thorough review of our governance
practices and procedures with the goal of not only meeting the
requirements of the new laws, but also enhancing our overall
corporate governance policies. We made this issue a top
priority, and set it as an agenda item for our regularly
scheduled Board meeting on March 4, 2003. Our objective is to
institute Board changes in an orderly and constructive way."
(emphasis supplied by us). We have reviewed the minutes of the meetings of
the Company's board of directors obtained by us from the Company following a
demand that we made under Missouri law. Prior to March 4, 2003, only one
brief reference to corporate governance reform appeared in these minutes,
from a board meeting on November 12, 2002. This reference reads in its
entirety as follows:
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"Mr. Corley then asked Mr. Gary Singer and Mr. Tom Leary of
O'Melveny and Myers LLP to join the meeting to give a
presentation on recent corporate governance developments in light
of the Sarbanes-Oxley legislation and recent NYSE proposed rule
changes."
As far as we can tell from the minutes, this was the only consideration given
by the board to governance issues prior to the March 4, 2003 meeting.
We note, moreover, that the actions taken at the March 4, 2003 board
meeting followed by one day our delivery on March 3, 2003 of a letter to the
board. In this letter, we challenged the independence and credibility of the
board and the special committee, primarily for the reasons described above,
and advocated the appointment of an independent, lead director and other
reforms included in our platform. We question, therefore, if the Company is
being fully candid with its shareholders on the impetus for and timing of the
Company's governance reform measures. We think the answer is NO.
Mr. Edison was a member of the special committee formed to evaluate and
negotiate acquisition proposals. For the reasons we describe above, we
believe that this committee did not act properly to protect and promote the
interests of shareholders, where senior management who were also directors
may have reasonably been suspected of placing their own financial benefit
ahead of shareholder interests. We ask shareholders to consider whether Mr.
Edison is an appropriate choice to lead a board where one of the key
objectives is to promote independence from management. We think the answer is
NO.
As noted, on March 5, 2003, the Company publicly announced to
shareholders that Mr. Levy had been appointed lead director. The only
disclosure that the lead director position had been abolished appears in a
brief statement in Mr. Levy's biography in the Company's 2003 definitive
proxy materials. We ask shareholders to consider whether, having announced
in a letter to shareholders and a press release the appointment of a lead
director as the second of the Company's governance initiatives, the Company
was correct in not giving equal prominence to the abolition of this position.
We think the answer is NO.
David B. Pittaway is the director that the Company appointed to fill
the vacancy in the class of directors whose term expires in 2004, created by
the expansion of the board. The Company discloses in its 2003 definitive
proxy materials that Mr. Pittaway is a senior managing director of Castle
Harlan, Inc. We think that you should be aware that--
o Castle Harlan was the investment firm that acquired Morton's
Restaurant Group (see "The Special Committee" above);
o Messrs. Bernstein, Pittaway and John Castle, chairman of Castle
Harlan, comprised the executive committee of the board of directors of
Morton's Restaurant Group;
o Mr. Castle had originally been on the special committee of the
Morton's board formed to evaluate acquisition proposals;
11
o Approximately three months after Mr. Castle resigned from the special
committee--but not the board--Castle Harlan made its bid for Morton's
Restaurant Group;
o Mr. Pittaway was a director of Morton's at the time;
o Mr. Bernstein, as a member of Morton's senior management, participated
in that buyout; and
o With the recent appointment of Mr. Pittaway, we now have two directors
on the Company's board, Messrs. Pittaway and Bernstein, who were on
the Morton's board at the same time that they were participating in
the buyout of Morton's by Castle Harlan.
Dolphin believes that to promote diversity of views on the board there
should not be business relationships among the independent directors. Both
Mr. Bernstein and Mr. Pittaway were connected with the Morton's sale
process. As reflected in their biographies in the Company's proxy materials,
both continue to be connected with Morton's, Mr. Bernstein as its chairman
and chief executive officer and Mr. Pittaway as senior managing director of
its owner. We ask shareholders to consider whether they would have selected
a second director with an affiliation with Morton's for a position on the
Company's board as an independent director. We think the answer should be NO.
In Summary
The recently expanded board of directors still contains a supermajority
who are tainted by the sale process. Each of the six continuing directors
was either actively involved in the buyout or served on the special committee
charged with overseeing the process.
For the reasons set forth in this section:
o we believe the Company's sale process, in which the Company received
various expressions of interest but focused only on those that
promoted senior management participation, was flawed and improper;
o we believe the Landry's exchange demonstrates that the management
directors acted improperly and in contravention of their fiduciary
duties to shareholders by placing their financial interests ahead of
the interests of shareholders;
o we believe the special committee, which we understand based on the
Company's public disclosure reacted only to two proposals in which
senior management was interested and did not take up consideration of
other expressions of interest made by third parties, did not, we
believe, properly discharge its duties to shareholders;
o we believe the members of the special committee should be held
accountable for ceding to the clearly interested management directors
significant aspects of the sale process and failing to actively
implement procedures designed to achieve the best and highest value
for shareholders; and
12
o we believe the directors who served on the special committee and the
board during this process should not be entrusted with the
responsibility of promoting governance reform, board independence and
maximizing shareholder value.
The improprieties that characterized the Company's sale process
undermine the trust that we, as the Company's largest shareholder, and all
other shareholders are entitled to place in the Company's board of
directors. We believe that the only way to restore this trust is to elect
new directors who are truly independent and whose only agenda is to advance
shareholder interests and maximize shareholder value for all.
Recent Financial Performance Compared with Management Compensation
The Company's operating income, net income, diluted earnings per share,
EBITDA and EBITDA margin have all declined for the second consecutive year,
while compensation of the Company's top management personnel, Messrs.
Corriveau and Corley, remains substantially in excess of the compensation
awarded these executives in fiscal 1999. We think that this is wrong and
further undermines our confidence in the business judgment and oversight of
the current board.
The following information for fiscal years 1999 through 2002 (other
than per share prices) is derived from the Company's press release of April
8, 2003, its annual reports on Form 10-K for the years ended January 30,
2000, February 4, 2001, February 3, 2002 and February 2, 2003, and its proxy
statements for the Company's 2002 and 2003 annual meetings of shareholders.
We compare the Company's results beginning in fiscal 1999, because in that
year the Company's stock price experienced a precipitous decline--the effects
of which continue to be felt--well in advance of the general downturn in the
securities markets.
13
- ------------------------ ----------------------------------------------------------------------------------------------------------
Fiscal Year Ended*
- ------------------------ ----------------------------------------------------------------------------------------------------------
Change--
January 30, 2000 February 4, 2001 February 3, 2002 February 2, 2003 2002 compared
(F1999) (1) (F2000) (F2001) (F2002) (2) to 1999
- ------------------------ -------------------------- -------------------------- --------------------------- ------------------------
Number of complexes at 23 27 31 32 9
fiscal year end
- ------------------------------- ------------ ------------ ------------ ------------ -------
Comparable Store (2.5%) 3.6% (2.8%) (3.2%) N/A
Revenues(3)
- ------------------------------- ------------ ------------ ------------ ------------ -------
Operating Income $ 18,955,000 $ 27,966,000 $ 19,697,000 $ 15,246,000 (19.6%)
- ------------------------------- ------------ ------------ ------------ ------------ -------
EBITDA(4) $ 38,839,000 $ 53,682,000 $ 48,390,000 $ 45,302,000 16.6%
- ------------------------------- ------------ ------------ ------------ ------------ -------
EBITDA margin(5) 15.7% 16.2% 13.5% 12.1% (22.9%)
- ------------------------------- ------------ ------------ ------------ ------------ -------
Net income (loss) $ 5,205,000 $ 12,245,000 $ 7,578,000 ($ 1,748,000) N/A
- ------------------------------- ------------ ------------ ------------ ------------ -------
Diluted earnings $ 0.39 $ 0.94 $ 0.58 ($ 0.13) N/A
(loss) per share (EPS)
- ------------------------------- ------------ ------------ ------------ ------------ -------
High/low share price $29.00 /$5.50 $11.875 /$6.0625 $10.80 /$5.45 $13.25 /$7.40 N/A
of the Company's
common stock during
the fiscal year
- ------------------------------- ------------ ------------ ------------ ------------ -------
Total compensation of $ 775,000 $ 1,743,000(6) $ 1,427,000 $ 1,285,000 65.9%
Messrs. Corriveau and
Corley
- ------------------------------- ------------ ------------ ------------ ------------ -------
* The Company's fiscal year ends on the Sunday after the Saturday closest to
January 31.
1 After the effect of change in accounting principle in fiscal 1999; before
the effect change in accounting principle, the Company reported net income
of $9,892,000 and diluted earnings per share of $0.75. The change in
accounting principal related to the Company's adoption of Statement of
Position 98-5 in the first quarter of 1999. This requires the Company to
expense all start-up and preopening costs as they are incurred instead of
deferring such costs and amortized them over the twelve-month period
following the opening of each store. The cumulative effect of this
accounting change was $4,687,000 (after-tax).
2 After the effect of change in accounting principle in fiscal 2002; before
change in accounting principle, the Company reported net income of
$5,348,000 and diluted net earnings per share of $0.40. Inclusive of merger
related expenses incurred in fiscal 2002 of $1.3 million. The change in
accounting principle in fiscal 2002 related to the adoption of SFAS 142.
Following an impairment evaluation made by the
14
Company pursuant to SFAS 142, the Company recorded a write-off of all of
its goodwill in the amount of $5,348,000 (after-tax). In previous years,
the Company's goodwill amortization was approximately $220,000 (after-tax)
per year.
3 Measured with respect to stores open for one full year. Percentage
indicates change in comparable store revenues from prior fiscal year.
4 Defined as earnings before interest expense, income taxes, depreciation and
amortization, as derived from the Company's consolidated statements of
income.
5 Defined as EBITDA as a percentage of sales.
6 Includes restricted stock award valued at $960,000.
The Company's operating income, net income, diluted earnings per share,
EBITDA and EBITDA margin have all declined since fiscal 2000, even after
excluding merger related expenses in fiscal 2002 and despite the opening of
four new complexes in fiscal 2001 and one new complex in fiscal 2002.
Operating income and EBITDA margins were both lower in fiscal 2002 than they
were in fiscal 1999. (We do not compare net income and earnings per share
because of the change in accounting principles in these years.) The
Company's per share price has declined from fiscal 1999, without meaningful
recovery. In contrast, the S&P Small Cap Restaurant Index, which the Company
uses as its peer group index for the stock price performance graph contained
in its proxy statements, has risen from the 1999 fiscal year end by
approximately 55%.
We believe that the publicly traded companies whose business is most
comparable to the Company's are CEC Entertainment Inc. (operator of Chuck E.
Cheese's restaurants) (NYSE: CEC) and Total Entertainment Restaurant Corp.
(operator of Fox and Hound and Bailey's restaurants) (NASDAQ: TENT). Both are
restaurant companies which, like the Company, derive a significant portion of
their revenues from games and similar entertainment operations offered to
patrons. We are unaware of any other public companies with a similar
business model. CEC is geared towards families with children, while Total
Entertainment, like the Company, is intended to appeal to adults. The
Company's fiscal 2002 diluted earnings per share, before change in accounting
principle, were essentially the same as fiscal 1999's diluted earnings per
share, after change in accounting principle. In contrast and despite recent
adverse economic conditions, diluted earnings per share of CEC Entertainment
and Total Entertainment were higher in fiscal 2002 by approximately 55% and
386%, respectively, than they were in fiscal 1999.
Notwithstanding the recent decline in the Company's financial
performance, the combined total annual compensation of Messrs. Corriveau and
Corley has risen by approximately 66% from fiscal 1999 to fiscal 2002. Their
compensation as a percentage of the Company's net income was 14.9% in fiscal
1999 compared to 24.0% (before the effect of change in accounting principal)
in fiscal 2002. Although this compensation modestly declined in absolute
terms from fiscal 2000 to fiscal 2002, compensation as a percentage of the
Company's net income rose in each of fiscal years 2001 and 2002.
At a time when the deterioration in the Company's business should have
been readily apparent, the compensation committee of the board recommended,
and the board approved, an increase in the base salary of Messrs. Corriveau
and Corley from $500,000 to $600,000, effective as of April 1, 2002. In our
letter to the board of March 3, 2003, we strongly criticized the
15
increases in senior management compensation at a time when the Company's
financial performance was trending in the opposite direction. We now read in the
Company's 2003 definitive proxy materials that Messrs. Corriveau and Corley
agreed to reduce their base salary by 20% in fiscal 2003, from $600,000 to
$480,000 each. We believe that this stated reduction is largely illusory. The
reduced base salary is only slightly lower than the base salary of $498,000
earned by each of Messrs. Corriveau and Corley in fiscal 2001 and substantially
above what they earned in fiscal 1999. Moreover, Messrs. Corriveau and Corley
can earn back half of their pay "cuts" if the Company's diluted earnings per
share in fiscal 2003 increases by 50% over fiscal 2002 diluted earnings per
share of $0.40 (before the effect of change in accounting principal). They can
earn back their entire pay "cuts" if the increase equals 100%. A 50% increase
would be almost the same as the Company's earnings per share in fiscal 2001 and
substantially less than the Company's published guidance of $0.77 to $0.85 in
diluted earnings per share for fiscal 2003; a 100% increase would still be less
than the Company's earnings per share in fiscal 2000.
We also note--
o the Company's issuance of retention bonuses of $100,000 to each of
Messrs. Corriveau and Corley in 2001--in addition to regular bonuses
in the same amount--at the time of a downturn in the Company's
business and when senior management was considering a buyout of the
Company in which it was to participate; and
o the large issuances of management options following the steep decline
of the Company's stock price in 1999. In the last three fiscal years,
the Company issued options to purchase over 2,000,000 shares --
representing approximately 13% of fully diluted shares of the Company
-- at weighted average exercise prices between $6.82 and $8.62, which
were reflective of the depressed price of the stock. In total, the
stock options outstanding at the end of the Company's 2002 fiscal year
represent more than 16% of the fully diluted shares of the Company.
We believe that the board of directors is ultimately answerable to the
shareholders for the operating performance of the Company. The board and its
compensation committee are certainly accountable for the compensation awarded
to the Company's senior executive officers. In light of the Company's recent
financial performance, and the compensation of top management compared with
those results, we believe that change is needed in the boardroom.
Even with the Company's recent addition of three directors, the
continuing directors, who presided over the Company's prior sale process and
its recent disappointing operating results, remain a supermajority--six of
nine directors-- of the board. We do not know if the directors recently
appointed by those six incumbent board members will act vigorously to expose
and correct the serious governance and oversight deficiencies that we have
identified. We cannot tell if they are incentivized to guide the Company
towards improved operating results and to maximize shareholder value. We
believe that our independent director slate will, subject to their fiduciary
duties to all shareholders, be resolute in pursuing these goals. As the
Company's largest shareholder, we have the ultimate financial incentive of
maximizing value for all shareholders.
16
THE DOLPHIN PLATFORM
Dolphin is focused on the goal of maximizing shareholder value in which
we will share proportionately. We think this can be accomplished by
repairing the Company's operating results, and by exploring potential value
maximizing transactions for the shareholders. We also think that it is
important to promote trust in the leadership of the board. We believe that
this can be accomplished through focusing on operating results, installing
key drivers for growth, aligning top management compensation with share
performance and exploring potential value maximizing transactions. We think
that this should be done through the election of directors possessing
independence and integrity, who have the necessary financial and business
acumen, who will champion initiatives to improve corporate democracy and who
will oppose any conduct that furthers the personal benefits of management
directors at your expense. The directors on our independent slate intend
to pursue these goals, subject to the exercise of each director's fiduciary
duties, although we cannot assure you that, as a minority on the board, they
will be successful or that as a result of their election, shareholder value
will be maximized.
Our Nominees
Our nominees are committed to pursuing these goals and collectively
have the background, experience and incentive to see them through. Our slate
consists of--
o Edward A. Weinstein, a retired senior partner of Deloitte & Touche,
LLP from its New York merger, acquisitions and restructuring unit;
o Donald T. Netter, Dolphin's senior managing director; and
o Edward E. Hartline, the managing partner of the Texas-based law firm
of Brown McCarroll, LLP.
Mr. Weinstein brings to our slate over 40 years' experience in public
company financial and accounting matters, including mergers and acquisitions.
His credentials as a public company accountant clearly qualify him as an
"audit committee financial expert" for purposes of Section 407 of the
Sarbanes-Oxley Act of 2002 and the SEC rules.
Mr. Netter, representing the Company's largest shareholder with an
investment in the Company of approximately $12 million, has 20 years'
experience in managing investments in public and private companies and has
also been a director of and senior officer of several public companies. Mr.
Hartline is a leading corporate attorney in the region where the Company is
headquartered, has restaurant company board experience and brings to our
slate over 25 years of legal expertise for implementing needed governance
reforms. Collectively, these nominees are dedicated to promoting Dolphin's
platform of maximizing shareholder value and promoting independence for the
board and its committees, subject to the exercise of each director's
fiduciary duties.
For additional information concerning our nominees, see "Certain
Information Regarding Dolphin's Nominees" below.
17
Our Platform
If elected, our nominees will work with other committed, independent
members of the board to expose and correct the flaws of the prior sale
process; explore the possible sale of the Company and other strategic
transactions with the sole objective of maximizing shareholder value;
dismantle the Company's anti-takeover devices; install truly independent
directors in leadership positions on the board; and focus on improving
operating results and instituting a management compensation structure that
rewards performance, in each case, subject to the exercise of the
directors' fiduciary duties. Specifically, our nominees will advocate--
o focusing on operating performance. We believe that the board must
conduct a thorough review of the Company's operations and business
model, with a view to improving financial performance and the share
price. This review should include further opportunities for reducing
the Company's $24.3 million in corporate overhead for fiscal 2002
(excluding merger expenses) and ways to optimize use of the Company's
facilities. We also believe that the Company should engage an
independent industry consultant to assist in the review process. We
expect that our nominees may have other specific proposals for
improving the Company's performance, after they are elected and have
access to the Company's non-public operating data.
o aligning management compensation with operating results and
shareholder return. We do not believe that management should be
rewarded with increased compensation unless the increase is justified
by improved operating results, a higher share price and/or other
measures of enhanced shareholder value. Furthermore, no additional
options should be issued to the currently existing top management.
o designating a Chairman of the Board and a lead director unconnected to
the prior sale process. We believe that these positions should be
filled by directors, such as our nominees, who are elected,
independent and unconnected with the prior sale process. In all
events, we believe that the board must conduct regular meetings
without the participation of management directors.
o eliminating the Company's poison pill rights plan. We believe that
Missouri law provides adequate protection against coercive takeover
proposals. These include a two-thirds shareholder vote requirement for
mergers and asset sales; a requirement for shareholder unanimity on
action by written consent; and the authority of a board to consider
non-economic factors and long-term ramifications in reviewing takeover
proposals. A poison pill goes beyond these protections. It tends to
chill discourse among shareholders and inhibit collective action in
the exercise of the shareholder franchise for fear of forming a
"group" that triggers the draconian dilution apparatus of the pill.
The board of directors may redeem or otherwise terminate the rights
plan without shareholder action.
o destaggering the board to provide for the annual election of all
directors. We believe that directors should be held accountable to
shareholders for their performance on an
18
annual basis and that a staggered board improperly shields directors
from scrutiny. Eliminating the Company's staggered board requires an
amendment to the Company's charter, which under Missouri law must be
approved by shareholders. Under the Company's charter, 85% of the
outstanding shares must vote to approve this amendment.
o conducting a thorough review of the Company's prior sale process. We
believe that to restore trust and credibility to the Company, it is
important to fully investigate and to correct the conflicts that we
believe beset the prior sale process;
o reconstituting the board's special committee. According to statements
of management on the last two earnings calls, the special committee
remains in place but is not active. We think this is wrong. We believe
that this committee should be active and that it should be composed
solely of newly elected, independent directors who have not previously
served in this capacity. We also believe that, if a decision is made
to sell the Company, a credible, unaffiliated financial or strategic
buyer will not likely come forward unless the special committee is
composed of new members unconnected with the prior process. We intend
to seek substantial representation for our nominees on this committee;
o exploring methods to maximize shareholder value, which may include a
sale of the Company. We believe that the special committee, together
with newly retained professional advisors, should examine all possible
methods of maximizing shareholder value, which may include a sale of
the Company. If a decision is made to sell the Company, the newly
constituted special committee, and not senior management, should
actively conduct the process.
THE PROPOSALS
Dolphin is soliciting proxies from the holders of shares of common
stock to elect three nominees to fill the seats of the Company's
directorships that expire at the 2003 annual meeting. The directors whose
terms expire at the annual meeting are James W. Corley, the Company's Chief
Executive Officer; Peter A. Edison, the current Chairman of the Board; and
Patricia P. Priest, who was appointed by the board to fill a vacancy
occasioned by the retirement of Mr. Henrion in April 2003. Dolphin is also
seeking proxy authority to vote on another proposal that, according to the
Company's definitive proxy materials, will also be brought before the 2003
annual meeting.
The election of directors requires a majority of the votes cast in the
election. The other proposal also requires a majority of the votes cast
on the matter. See "Voting Procedures" below.
Dolphin recommends that you vote FOR each of Proposal Nos. 1 and 2 by
checking the appropriate boxes and signing, dating and returning the enclosed
BLUE proxy card.
19
Election of Directors to Terms Expiring in 2006
Proposal No. 1 -- Election of Dolphin's Nominees as Directors to Terms
Expiring in 2006
Proposal No. 1 provides for the election of Edward E. Hartline, Donald
T. Netter and Edward A. Weinstein to serve as directors until the 2006 annual
meeting of shareholders. See "Certain Other Information Regarding Dolphin's
Nominees" for information concerning the background and experience of Messrs.
Weinstein, Netter and Hartline. If elected, Dolphin's nominees would
constitute three of the Company's nine directors.
Each of Dolphin's nominees has consented to being named herein as a
nominee for director of the Company and has agreed to stand for election as a
director.
Although we have no reason to believe that any of our nominees will be
unable to serve as a director, if any Dolphin nominee is not available to
serve, we expect that the remaining Dolphin nominees, upon taking office,
would seek to work with the other non-conflicted members of the Company's
board to fill the vacancy with an individual willing to consider and
implement our platform to maximize shareholder value, subject to the exercise
of the director's fiduciary duties.
Dolphin recommends a vote in FAVOR of this proposal.
Ratification of the Appointment of Independent Accountants (Company
Proposal)
Proposal No. 2 -- Ratification of Ernst & Young LLP as the Company's
Independent Accountants
Proposal No. 2 provides for the ratification of the appointment by the
Company's board of directors of Ernst & Young LLP as the Company's
independent auditors to audit the Company's financial statements for fiscal
2003. See "Auditors" for further information regarding Ernst & Young LLP.
Dolphin recommends a vote in FAVOR of this proposal.
INFORMATION ABOUT DOLPHIN
Dolphin's nominees and certain other persons named below may be deemed
to be "participants" in this proxy solicitation, as the term participant is
defined in Schedule 14A promulgated under the Securities Exchange Act of
1934. Dolphin is a Delaware limited partnership that is engaged in the
business of investing in corporate securities, including both active
investment and investment arbitrage. The address of the principal business
and principal offices of Dolphin is c/o Dolphin Holdings Corporation, 96
Cummings Point Road, Stamford, Connecticut 06902.
The general partner of Dolphin is Dolphin Associates, LLC, a Delaware
limited liability company that is engaged in the business of investing in
corporate securities, including both active investment and investment
arbitrage. The address of the principal business and principal
20
offices of Dolphin Associates, LLC is c/o Dolphin Holdings Corporation, 96
Cummings Point Road, Stamford, Connecticut 06902.
The managing member of Dolphin Associates LLC is Dolphin Holdings
Corporation, a Delaware corporation engaged in managing partnerships that
directly and indirectly invest in publicly traded corporate securities,
including both active investments and investment arbitrage. The address of
the principal business and principal offices of Dolphin Holdings Corporation
is 96 Cummings Point Road, Stamford, Connecticut 06902. Donald T. Netter is
Chairman, Chief Executive Officer, President and Senior Managing Director of
Dolphin Holdings Corporation. The business address of Mr. Netter is c/o
Dolphin Holdings Corporation, 96 Cummings Point Road, Stamford, Connecticut
06902. The other officers of Dolphin Holdings Corporation and their principal
occupations and business addresses are set forth on Schedule I to this proxy
statement. These persons may also solicit proxies on Dolphin's behalf so
that they may be deemed participants in our solicitation.
As of the date of this proxy statement, Dolphin owns an aggregate of
1,262,800 shares of common stock representing approximately 9.5% of the
outstanding shares.
Additional information about Dolphin and Dolphin's nominees including
information regarding the beneficial ownership of common stock is set forth
under the heading "Certain Other Information Regarding Dolphin's Nominees"
and in Annex A attached to this proxy statement.
Dolphin has retained Innisfree to act as an advisor and to provide
consulting and analytic services and solicitation services in connection with
this proxy solicitation. Innisfree is a proxy service company. It mails
documents to shareholders, responds to shareholder questions and solicits
shareholder votes for many companies. Innisfree does not believe that it or
any of its directors, officers, employees, affiliates or controlling persons,
if any, is a "participant" in this proxy solicitation or that Schedule 14A
requires the disclosure of certain information concerning Innisfree. The
business address of Innisfree is 501 Madison Avenue, New York, New York
10022. Innisfree has informed Dolphin that, as of the date of this proxy
statement, it does not hold any shares of the Company's common stock for its
own account or for the accounts of others.
BACKGROUND OF AND REASONS FOR THE PROXY SOLICITATION
Background
On various dates from June 14, 2002 through March 26, 2003 Dolphin
purchased a total of 1,327,800 shares of common stock in the open market for
a total purchase price of $12,589,218 and sold in July 2002 a total of 65,000
shares of common stock in the open market for a total sales price of
$865,563, in each case including commissions and related costs. The details
of these purchases and sales are set forth in Annex A attached to this proxy
statement. All of the purchases were funded by working capital.
In September 2002, Mr. Netter sought a meeting with the Company's
senior management, while the Investcorp acquisition proposal with the
participation of senior management was pending, but his request was not
honored. On October 4, 2002, Mr. Netter sent
21
a letter to the Company for distribution to the board's independent directors.
In the letter, Mr. Netter voiced concerns about the Company's sale process based
upon the complaint in the Texas class action litigation referred to above. Mr.
Netter believed that the sale process had been "slanted" in favor of senior
management participation, as described above under "Dolphin's Reasons For
Seeking Board Representation." Mr. Levy, in his capacity as Chairman of the
special committee, responded to Mr. Netter by letter dated October 9, 2002, in
which he stated that the members of the special committee were aware of their
fiduciary obligations "and had fulfilled and would continue to fulfil those
obligations." Mr. Netter responded to Mr. Levy by letter dated October 22, 2002
and in a subsequent telephone conversation. In Mr. Netter's letter and
conversation, he told Mr. Levy that he found Mr. Levy's statements difficult to
justify on the basis of publicly available information. On October 24, 2002,
Investcorp requested, and the special committee subsequently agreed, to
terminate the then pending merger agreement between an Investcorp affiliate and
the Company citing "continuous adverse conditions in the debt financing market,"
according to a press release issued by the Company on the following day.
On December 5, 2002, the Company held its earnings call for the third
quarter of fiscal 2002. The Company reported a 3.5% decline in comparable
store sales and a 27.3% drop in diluted earnings per share for the quarter,
and management acknowledged a disappointing quarter. The Company provided
guidance on diluted earnings per share for fiscal 2003 of $0.77 to $0.85. In
response to an investor question, management said that the special committee
continued to remain in place but was inactive.
On January 27, 2003, Mr. Netter and Brett Buckley, a Vice President of
Dolphin Holding Corporation, on their own toured the Company's facilities in
Dallas. The following day, Mr. Netter and Mr. Buckley met with William C.
Hammett, Jr., the Company's chief financial officer, at the Company's
headquarters in Dallas. Although the Dolphin representatives had been told
that at least one of the Co-Chief Executive Officers would be present,
neither was available to attend the meeting. In the meeting with Mr.
Hammett, the parties discussed the Company's historical results, the
Company's previously announced guidance, the Company's general business model
and the actions of senior management who were directors during the course of
the Company's sale process. On February 11, 2003, Mr. Buckley had a follow-on
telephone conversation with Mr. Hammett to discuss these same subjects.
On March 3, 2003, Dolphin sent a letter to the Company's board of
directors stating that it intended to nominate a slate of three independent
directors at the Company's 2003 annual meeting. The letter, which was filed
with Dolphin's Statement on Schedule 13D on that day, also made many of the
same points set forth above under "Dolphin's Reasons For Seeking Board
Representation." On March 5, 2003, the Company issued a press release
describing "planned corporate governance initiatives" that its board had
adopted on the previous day.
On March 10, 2003, Mr. Edison left a telephone message for Mr. Netter,
which Mr. Netter returned later that day. Mr. Edison informed Mr. Netter
that he was calling in his capacity as Chairman of the Company's recently
formed nominating and corporate governance committee. According to Mr.
Edison, the board had suggested calling Mr. Netter for recommendations on
candidates for new board members. Mr. Netter inquired concerning the board's
timing for selecting the candidates and requested that Mr. Edison call him
again when the board's deadline was approaching. Mr. Edison said that he
would do so. Mr. Netter also
22
inquired whether the Company was considering expanding the size of the board of
directors, to which Mr. Edison replied that such an expansion was a possibility.
On March 11, 2003, Dolphin sent a letter to the Company requesting
minutes of board and shareholder meetings and shareholder information
customarily made available in proxy contests or otherwise required by
Missouri Law. Also on this date, Dolphin issued a press release disclosing
its requests and characterizing the Company's announced corporate governance
initiatives as "too little, too late." In the release, Dolphin admonished
the Company not to expand the board without a shareholder vote.
On March 17, 2003, the Company sent an open letter to shareholders,
reiterating the "governance initiatives" that it had described in its March
5, 2003 press release.
On March 18, 2003, the Company responded to Dolphin's request for
information by offering to provide only a record list of shareholders
following the record date. On March 20, 2003, Dolphin sent a letter to the
Company and issued a press release stating that it was establishing a
deadline of the close of business on March 21, 2003 for the Company to comply
with Dolphin's request for shareholder and other information. On March 21,
2003, the Company sent a letter to Dolphin's counsel stating that the Company
would comply with Dolphin's information request. The Company subsequently
furnished to Dolphin requested information.
On March 24, 2003, the Company issued a press release announcing that
April 18, 2003 had been selected as the record date for the 2003 annual
meeting of the Company's shareholders and that June 10, 2003 had been
selected as the date of this meeting.
On April 8, 2003, the Company conducted its fourth quarter and fiscal
year end earnings call. The Company again reported a drop-off in comparable
store revenues for the quarter, this time of 4.8%, and a drop in diluted
earnings per share of 33.3% for the quarter, compared to the fourth quarter
of fiscal 2001. Management confirmed the previously announced diluted
earnings per share guidance for fiscal 2003, but withdrew any quarterly
guidance. In response to an investor question, management again stated that
the special committee continued to remain in place, but was not active.
Mr. Edison called Mr. Netter on April 8, 2003, to state that the board
was ready to "lock in" new board members and to inquire whether Dolphin had
selected its nominees. Mr. Netter responded that Dolphin would identify its
nominees in advance of the April 12, 2003 deadline imposed under the
Company's by-laws. On April 10, 2003, Dolphin delivered a letter to the
Company notifying the Company of the Dolphin nominees and providing the
required information concerning the nominees.
Also on April 10, 2003, the Company sent a letter to shareholders and
issued a press release describing additional governance and business
initiatives.
On April 11, 2003, Mr. Netter telephoned Mr. Edison, who was now
Chairman of the Company's board as well as Chairman of its nominating and
corporate governance committee, to inform him that Dolphin had submitted its
slate of nominees to the Company. Mr. Netter also inquired of Mr. Edison
about the contemplated size of the board, and Mr. Edison replied that it was
likely that two directors would be added. This would bring the size of the
board to nine,
23
taking into account Mr. Henrion's retirement as a director, which was announced
by the Company in its release on the previous day. Mr. Edison called Mr. Netter
back, and Mr. Netter, who was then travelling, returned the call several hours
later. In their conversation, Mr. Edison stated that he would like to interview
the Dolphin nominees. Mr. Netter responded that he wanted to discuss Mr.
Edison's request with the other nominees over the weekend and would get back to
Mr. Edison on Monday.
On April 14, 2003, Dolphin issued a press release, publicly disclosing
its slate of nominees and their qualifications. In the release, Dolphin
reiterated its demand that the board not be expanded without a shareholder
vote. As promised, Mr. Netter called Mr. Edison, and the two discussed the
board's selection of additional directors, the Dolphin nominees, the
continued reactive role of the special committee and the prior sale process.
Later in the day, Mr. Edison called back Mr. Netter saying that he continued
to be interested in interviewing the other two Dolphin nominees and in
working out a mutually acceptable arrangement. Mr. Edison suggested that the
nominating committee might be prepared to include one of the Dolphin nominees
among the board's appointed directors, but that the nominee could not be Mr.
Netter. Mr. Edison later called back again and explained that a number of
directors were opposed to Mr. Netter because of what he had written in his
March 3, 2003 letter to the board and that it had become a "personal" issue
with some of the directors. Mr. Netter stated that the "facts were the
facts," that what occurred with Landry's was a tremendous breach of trust and
that the board should do what is in the best interests of shareholders.
Also on this date, Mr. Edison sent a letter to Mr. Netter reiterating
Mr. Edison's request to interview the Dolphin nominees. Mr. Netter responded
by letter of April 15, 2003 that Dolphin was not proposing candidates for
cherry picking by the board. Mr. Netter stated that Dolphin did not have
confidence that any single candidate selected by the board, regardless of
qualification, would be able to achieve the necessary reforms. Rather, Mr.
Netter said, Dolphin was hoping to elect a slate of highly qualified
directors, with complementary skills, background and expertise, who were
committed to Dolphin's platform of business, transactional and governance
reforms. In the letter, Dolphin also stated that the election of Dolphin's
proposed slate of directors would empower shareholders to effect a change in
control of the board in 2004 if necessary, and that if the Company were
interested in "pursuing true governance reforms with the participation of our
independent director slate, [Dolphin] will be pleased to introduce all of our
nominees to you and provide whatever additional demonstration you may
reasonably require of their quality and integrity."
On April 17, 2003, the Company publicly announced the selection of
three additional directors, the retirement of another director, Bruce
Hallett, and the expansion of the board to nine directors. Mr. Edison wrote
to Mr. Netter on April 18, 2003 expressing regret that his committee had not
had the opportunity to interview the Dolphin candidates and informing Mr.
Netter of the appointment of the board directors and the expansion of the
board announced the previous day.
On April 23, 2003, Dolphin sent a "stop, look and listen" letter to
shareholders, informing them of Dolphin's intention to solicit their proxies
for the election of the Dolphin slate and requesting that they not return any
proxy card furnished to them by the Company. In the letter, Dolphin noted
particularly that, notwithstanding the three recently appointed directors,
the
24
incumbent directors constituted a supermajority of the now expanded board of
nine, occupying six of the nine positions.
On May 6, 2003, the Company filed its definitive proxy materials.
These materials included a proposal of Renaissance Capital, Inc., which
provided that the shareholders request the Company's board of directors to
pursue a sale of the Company, or all or substantially all of its business and
assets, with the assistance of a nationally recognized investment banking
firm, with a view to consummating such transactions not later than February
28, 2004.
On May 9, 2003, Mr. Edison called Mr. Netter and proposed that, in
exchange for Dolphin withdrawing its proxy contest, the Company would expand
its board to ten directors and that Mr. Netter would be appointed to the
board. Mr. Netter said he would then get back to Edison with a response.
On May 12, 2003, after reaching one of the other nominees over the
weekend, Mr. Netter called Mr. Edison in order to reply to Mr. Edison's
proposal. Mr. Netter said that it was Dolphin's view that a board of ten
would be large and unwieldy and that, in view of the support that it had
received, Dolphin felt that it should have greater representation on the
board. Also, if Dolphin were to reach an understanding with the Company,
this would have to include agreement on the size of the board, the board
committees and their composition and the identities of the directors who
would be up for election in 2004. Mr. Edison inquired whether Dolphin was
looking for two directors. Mr. Netter replied that this would be an
improvement, but that Dolphin would need to look at the entire package. Mr.
Edison stated that he would need to speak to others and would get back to Mr.
Netter.
On May 13, 2003, Mr. Edison called Mr. Netter and Mr. Netter later
returned the call. Mr. Edison said that "we just can't get there on two
people," although Mr. Netter had not said that two board representatives
would be acceptable to Dolphin. Mr. Edison continued that the board could
remain at nine directors, including Mr. Netter, and that Mr. Netter could
choose the committee on which he wished to serve. Mr. Netter replied that
this would probably not work for Dolphin, but that he would get back to Mr.
Edison.
On the evening of May 14, 2003, Mr. Netter called Mr. Edison and they
had a discussion similar to the one the previous day.
On May 15, 2003, the Company announced that Renaissance Capital was
withdrawing its proposal.
CERTAIN OTHER INFORMATION REGARDING
DOLPHIN'S NOMINEES
Set forth below are the name, age, business address, present principal
occupation, employment history and directorships of each of Dolphin's
nominees for at least the past five years. This information has been
furnished to Dolphin by the respective Dolphin nominees. Each of Dolphin's
nominees has consented to serve as a director of the Company. Each of
25
Dolphin's nominees is at least 18 years of age. None of the entities referenced
below is a parent or subsidiary of the Company.
Dolphin Nominee Age Business Address
- --------------- --- ----------------
Edward A. Weinstein 67 433 East 56 Street
Apt. 15A
New York, New York 10022
Donald T. Netter 41 c/o Dolphin Holdings Corporation
96 Cummings Point Road
Stamford, Connecticut 06902
Edward E. Hartline 56 c/o Brown McCarroll, L.L.P.
1111 Bagby
47th Floor
Houston, Texas 77002
Mr. Weinstein is a retired senior partner of Deloitte & Touche LLP
where he served, among other things, as head of the New York merger and
acquisitions and restructuring unit. Prior to his retirement from Deloitte &
Touche in 1998, he served as an audit partner and auditor for 40 years. Mr.
Weinstein has extensive experience with publicly traded retail specialty,
discount, supermarket and department store chains. His practice also
included publicly traded clients in manufacturing, financial services,
telecommunications, computer services and real estate. Mr. Weinstein has
managed, planned and directed tax, accounting, consulting, actuarial and
valuation support for mergers, acquisitions, business divestitures and the
offering of public securities. He also has consulted on financial and tax
restructurings, provided accounting and financial consulting services in
commercial litigation and arbitration and served as an arbitrator in
commercial accounting disputes. Since 1998, Mr. Weinstein has been an
independent consultant and advisor to industry, not-for-profit organizations
and government and an arbitrator to the securities industry. Mr. Weinstein
has been an adjunct professor of accounting and auditing at New York
University and has lectured on accounting and auditing at the Columbia
University Graduate School of Business. He has also written extensively on
accounting and auditing and spoken on these matters in the USA, Japan, the
United Kingdom, and Israel. Mr. Weinstein is a member of the American
Institute of Certified Public Accountants and a former President of the New
York State Society of Certified Public Accountants.
Mr. Netter has been Chairman, Chief Executive Officer, President and
Senior Managing Director, for more than five years, of Dolphin Holdings
Corporation, a private company engaged in managing partnerships that directly
and indirectly invest in publicly traded corporate securities, including both
active investments and investment arbitrage. Dolphin Holdings Corporation is
the managing member of the general partner of Dolphin. From 1989 through
1993, Mr. Netter was co-general partner of RLR Partners L.P., the general
partner of Ballantrae Partners, L.P., a New York based private investment
partnership that was engaged in acquiring significant stakes in public
companies, merger arbitrage and leveraged acquisitions. Following
Ballantrae's leveraged acquisition of Damon Corporation in 1989 and until its
sale in 1993, Mr.
26
Netter was a director and held officerships of Damon, a significant participant
in the clinical laboratory testing business. He currently serves as a director
of The Aristotle Corporation (NASDAQ: ARTL), a holding company which, through
its subsidiaries, is a leading manufacturer and global distributor of
educational, health and agricultural products. From 1993 to 1999, Mr. Netter was
a director and officer of Independence Holding Company (NASDAQ: INHO), a holding
company engaged through its subsidiaries principally in the life and health
insurance business. He also is an officer of Geneve Corporation, a family-held
private investment concern, and a member of the Executive Council of The
Rockefeller University, New York, New York.
Mr. Hartline was a founder and since 1991 has been a Managing Partner
of Brown McCarroll, L.L.P., a law firm with offices in Houston, Austin,
Dallas and Longview, Texas. He specializes in tax, corporate and mergers and
acquisitions law. Mr. Hartline is a member of the board of directors of two
Texas-based private companies, Cordua Restaurants and 1776, Inc. Cordua
operates restaurants serving Latin American and South American fare and
offers catering services with a variety of themes and price points. 1776,
Inc. operates family eating establishments offering breakfast, lunch and
dinner and catering services. Mr. Hartline has been the chairman of the
board of the Houston Law Review since 2001 and has been a board member for
the past 20 years. He also serves as a judge for the Police Civil Service
Commission of the City of Houston.
Each of Messrs. Weinstein, Netter and Hartline has entered into a
nominee agreement with Dolphin, pursuant to which Dolphin has agreed to
indemnify the nominee for certain liabilities, losses, claims, damages and
expenses, including reasonable attorneys' fees and expenses, in connection
with any action, investigation or other proceeding involving the nominee as a
result of his nomination as a director of the Company. Also, in connection
with the nomination of Messrs. Weinstein and Hartline, Mr. Netter has agreed
to direct up to $10,000 to a qualifying charity designated by each of Mr.
Weinstein and Mr. Hartline.
27
The number of shares of the Company's common stock beneficially owned
and the percentage of beneficial ownership of each of Dolphin's nominees as
of the date of this proxy statement are as follows:
Number of Shares Percentage
Dolphin Nominee Beneficially Owned (1),(2) Ownership (3)
- --------------- -------------------------- -------------
Edward A. Weinstein 1,262,800 (4) 9.5%
Donald T. Netter 1,262,800 (5) 9.5%
Edward E. Hartline 1,262,800 (4) 9.5%
---------------------------------------------
Total 1,262,800 (6) 9.5%
(1) Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with
respect to securities. Shares of common stock subject to stock
options and warrants currently exercisable or exercisable within 60
days are deemed outstanding for purposes of computing the percentage
ownership of any group of which the holder is a member, but are not
deemed outstanding for computing the percentage ownership of any
other person. Except as indicated by footnote, and subject to
community property laws where applicable, the persons named in the
table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
(2) Under the rules of the SEC, Dolphin's nominees may be deemed to be
members of a group and, as a result, each Dolphin nominee may be
deemed to beneficially own shares of common stock beneficially owned
by each of the other Dolphin nominees. Each of Dolphin's nominees
disclaims beneficial ownership of the shares of common stock
beneficially owned by any of the other Dolphin nominees.
(3) Calculated based on based upon 13,362,785 shares of common stock
that the Company has informed us were issued and outstanding as of
April 18, 2003, the record date for the shares entitled to vote at
the 2003 annual meeting.
(4) Messrs. Weinstein and Hartline may be deemed to beneficially own the
1,262,800 shares of common stock beneficially owned by Dolphin
Limited Partnership I, L.P. Each of Messrs. Mr. Weinstein and
Hartline disclaims beneficial ownership of the shares of common
stock beneficially owned by Dolphin Limited Partnership I, L.P.
(5) Consists of 1,262,800 shares of common stock owned by Dolphin
Limited Partnership I, L.P. Mr. Netter is the Chairman, Chief
Executive Officer, President and Senior Managing Director of Dolphin
Holdings Corporation, the managing member of Dolphin Associates
LLC. Dolphin Associates LLC is the general partner of Dolphin
Limited Partnership I, L.P. Mr. Netter has sole voting and
dispositive power with
28
respect to the 1,262,800 shares of common stock owned by Dolphin
Limited Partnership I, L.P.
(6) Consists of 1,262,800 shares of common stock owned by Dolphin
Limited Partnership I, L.P.
All of Dolphin's nominees are citizens of the United States.
Except as set forth in this proxy statement or in the Annexes hereto,
to the best knowledge of Dolphin, none of Dolphin, any of the persons
participating in this proxy solicitation on behalf of Dolphin, Dolphin's
nominees and, with respect to items (i), (vii) and (viii) of this paragraph,
any associate (within the meaning of Rule 14a-1 of the Securities Exchange
Act of 1934) of the foregoing persons (i) owns beneficially, directly or
indirectly, any securities of the Company, (ii) owns beneficially, directly
or indirectly, any securities of any parent or subsidiary of the Company,
(iii) owns any securities of the Company of record but not beneficially, (iv)
has purchased or sold any securities of the Company within the past two
years, (v) has incurred indebtedness for the purpose of acquiring or holding
securities of the Company, (vi) is or has within the past year been a party
to any contract, arrangement or understanding with respect to any securities
of the Company, (vii) since the beginning of the Company's last fiscal year
has been indebted to the Company or any of its subsidiaries in excess of
$60,000 or (viii) has any arrangement or understanding with respect to future
employment by the Company or with respect to any future transactions to which
the Company or any of its affiliates will or may be a party. In addition,
except as set forth in this proxy statement or in the Annexes hereto, to the
best knowledge of Dolphin, none of Dolphin, any of the persons participating
in this proxy solicitation on behalf of Dolphin, Dolphin's nominees and any
associates of the foregoing persons, has had or is to have a direct or
indirect material interest in any transaction or proposed transaction with
the Company in which the amount involved exceeds $60,000, since the beginning
of the Company's last fiscal year.
Except as set forth in this proxy statement or in the Annexes hereto,
to the best knowledge of Dolphin, none of Dolphin's nominees, since the
beginning of the Company's last fiscal year, has been affiliated with (i) any
entity that made or received, or during the Company's current fiscal year
proposes to make or receive, payments to or from the Company or its
subsidiaries for property or services in excess of five percent of either the
Company's or such entity's consolidated gross revenues for its last full
fiscal year, or (ii) any entity to which the Company or its subsidiaries were
indebted at the end of the Company's last full fiscal year in an aggregate
amount exceeding five percent of the Company's total consolidated assets at
the end of such year. None of Dolphin's nominees is, or during the Company's
last fiscal year has been, affiliated with any law or investment banking firm
that has performed or proposes to perform services for the Company.
To the best knowledge of Dolphin, none of the corporations or
organizations in which the Dolphin's nominees have conducted their principal
occupation or employment was a parent, subsidiary or other affiliate of the
Company, and Dolphin's nominees do not hold any employment position or office
with the Company or have any family relationship with any executive officer
or director of the Company or have been involved in any proceedings, legal or
otherwise, of the type required to be disclosed by the rules governing this
solicitation.
29
AUDITORS
According to information contained in the Company's proxy statement,
the Company's board of directors has appointed Ernst & Young LLP as the
independent accountants to audit the Company's financial statements for
fiscal 2003. Ernst & Young LLP has audited the Company's financial
statements since 1995. The Company has stated in its proxy statement that
representatives of Ernst & Young LLP are expected to be available at the 2003
annual meeting and will have an opportunity to make a statement if such
representatives so desire and are expected to be available to respond to
appropriate questions.
Dolphin recommends that you vote FOR the ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors for
fiscal 2003. See Proposal No. 2 under "The Proposals."
SOLICITATION OF PROXIES
Dolphin has retained Innisfree to act as an advisor in connection with
this proxy solicitation. In connection with its retention by Dolphin,
Innisfree has agreed to provide consulting and analytic services and
solicitation services with respect to banks, brokers, institutional investors
and individual shareholders. Dolphin has agreed to pay Innisfree a fee for
its services estimated to be not more than $25,000 and to reimburse Innisfree
for its reasonable out-of-pocket expenses. Dolphin also has agreed to
indemnify Innisfree against certain liabilities and expenses in connection
with this proxy solicitation, including liabilities under the federal
securities laws. Approximately 25 employees of Innisfree will engage in the
solicitation. Proxies may be solicited by mail, advertisement, telephone,
facsimile or in person. Solicitations may be made by persons employed by or
affiliated with Dolphin. However, no person will receive additional
compensation for such solicitation other than Innisfree.
Banks, brokerage houses and other custodians, nominees and fiduciaries
will be requested to forward the proxy materials to the beneficial owners of
shares of common stock for which they hold of record and Dolphin will
reimburse them for their reasonable out-of-pocket expenses.
The expenses related directly to this proxy solicitation are expected
to aggregate approximately $450,000 and will be borne by Dolphin. These
expenses include fees and expenses for attorneys, proxy solicitors, printing,
postage, filing expenses and other costs incidental to the solicitation. Of
this estimated amount, approximately $300,000 has been spent to date. The
actual costs and expenses could be materially different than the estimated
amounts and, in particular, could be substantially higher if for any reason
litigation is instituted in connection with the matters related to this proxy
statement.
The purpose of the proposals in this proxy statement is to advance the
interests of all the Company's shareholders. Therefore, Dolphin believes
that its expenses related to this proxy solicitation should be borne by the
Company and it intends to seek reimbursement of such expenses from the
Company whether or not this proxy solicitation is successful. The question
of reimbursement of the expenses of Dolphin by the Company will not be
submitted to a shareholder vote.
30
If you have any questions about this proxy solicitation or voting your
shares or require assistance, please contact:
Innisfree M&A Incorporated
501 Madison Avenue
New York, New York 10022
Toll Free: (888) 750-5834
Banks and Brokers call collect: (212) 750-5833
OTHER MATTERS
This proxy solicitation is being made by Dolphin and not on behalf of
the board of directors or management of the Company. Dolphin is not aware of
any other matters to be brought before the Company's 2003 annual meeting,
except as set forth herein. Should other matters be brought before the 2003
annual meeting, by having signed and returned the enclosed BLUE proxy card,
you will have authorized the persons named as proxies in the enclosed BLUE
proxy card to vote on all such matters in their discretion.
The Company's filings with the SEC contains information regarding (1)
financial information of the Company; (2) securities ownership of certain
beneficial owners and management of the Company; (3) the committees of the
board of directors; (4) the meetings of the board of directors and all
committees thereof; (5) the business background and employment biographies of
the Company's nominees for election to the board of directors; (6) the
compensation and remuneration paid and payable to the Company's directors and
management; and (7) the Company's stock price performance in relation to an
assumed group of "peers" or market-based indices. Shareholders are referred
to the Company's filings for this information.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
The Company's proxy statement with respect to the 2003 annual meeting
indicates that proposals of the Company's shareholders intended to be
presented at the Company's 2004 annual meeting must be received by the
Company no later than January 1, 2004 in order for them to be considered for
inclusion in the Company's proxy statement. The Company's shareholders are
hereby referred to the Company's proxy statement in connection with the 2003
annual meeting for such information.
INFORMATION REGARDING THE COMPANY
The information concerning the Company contained in this proxy
statement has been taken from or is based upon documents and records on file
with the SEC and other publicly available information. Dolphin has no
knowledge that would indicate that statements relating to the Company
contained in this proxy statement in reliance upon publicly available
information are inaccurate or incomplete. Dolphin, however, has not been
given access to the books and records of the Company, was not involved in the
preparation of such information and statements, and is not in a position to
verify, or make any representation with respect to the accuracy or
completeness of, any such information or statements.
31
VOTING PROCEDURES
Who is entitled to vote?
If the Company's stock records show that you are a shareholder as of
the close of business on the record date for the 2003 annual meeting, you are
entitled to vote the shares of common stock that you held on such date. Even
if you sell your shares after the record date for the 2003 annual meeting,
you will retain the right to execute a proxy in connection with the 2003
annual meeting. Each outstanding share of common stock entitles its holder
to cast one vote for each matter to be voted upon.
Can I attend the meeting?
All shareholders of record of the Company's common stock at the close
of business on April 18, 2003, the record date for the 2003 annual meeting,
or their designated proxies, are authorized to attend the 2003 annual
meeting. If your shares are held of record by a bank, broker or other
nominee, you will need to obtain a "legal proxy" form from your bank or
broker if you wish to vote at the 2003 annual meeting.
What constitutes a quorum? How will abstentions and broker non-votes be
counted?
The holders of a majority of the Company's common stock outstanding and
entitled to vote, present in person or represented by proxy, will constitute
a quorum at the 2003 annual meeting. Votes cast in person or by proxy at the
2003 annual meeting will be tabulated by the inspector of elections appointed
for the 2003 annual meeting to determine whether or not a quorum is present.
The inspector of elections will treat abstentions as shares that are present
and entitled to vote for purposes of determining the presence of a quorum,
but abstentions will have the effect of a vote against all matters submitted
to a vote of shareholders.
Shares as to which voting instructions are given as to at least one of
the matters to be voted on or which the nominee has the discretion to vote on
at least one of the matters presented at the 2003 annual meeting will be
deemed to be represented at the meeting and be counted for purposes of
determining whether a quorum is present, even if the nominee may not exercise
discretionary voting power with respect to other matters and voting
instructions have not been received from the beneficial owner (a "broker
non-vote"). Shares as to which a proxy is submitted to us without
instructions will deemed to be represented at the meeting and be counted for
purposes of determining the presence of a quorum, and our representatives
will vote your shares in favor of Proposals Nos. 1 and 2. Broker non-votes
will not be counted as votes for, nor the withholding of authority for, the
election of our three nominees (Proposal No. 1).
How do I vote?
Voting by proxy for holders of shares registered in the name of a
brokerage firm or bank. If your shares are held by a broker, bank or other
nominee (i.e., in "street name"), only your bank or broker can give a proxy
with respect to your shares. You should receive a proxy card from your bank
or broker which you must return in the envelope provided in order to have
your shares voted. If you have not received a proxy card from your bank or
broker, you may contact it
32
directly to provide it with instructions on how you wish to vote. If you need
assistance in dealing with your bank or broker, please contact Innisfree at
(888) 750-5834 .
Voting by proxy for holders of shares registered directly in the name
of the shareholder. If you hold your shares in your own name as a holder of
record, you may vote your shares by marking, signing, dating and mailing the
BLUE proxy card in the postage-paid envelope that has been provided to you by
Dolphin. To vote your shares in accordance with your instructions at the
2003 annual meeting, we must receive your proxy as soon as possible but, in
any event, prior to the 2003 annual meeting.
Vote in person. If you are a registered shareholder and attend the
2003 annual meeting, you may vote in person by completing a ballot provided
for this purpose at the meeting. You may also deliver your completed BLUE
proxy card at the meeting to a representative of Dolphin. "Street name"
shareholders who wish to vote at the 2003 annual meeting will need to obtain
a "legal proxy" form from the broker, bank or other nominee that holds their
shares of record and must bring that document to the meeting in order to vote
in person at the 2003 annual meeting. If you need assistance, please contact
Innisfree at (888) 750-5834 .
What should I do if I receive a proxy card which is not BLUE?
If you submit a proxy to us by signing and returning the enclosed BLUE
proxy card, do NOT sign or return the proxy card or follow any voting
instructions provided by the Company's board of directors unless you intend
to change your vote, because only your latest-dated proxy will be counted.
Can I revoke my proxy instructions?
You may revoke your proxy at any time before it has been exercised by:
o submitting a written revocation with the Corporate Secretary of
the Company or Innisfree;
o submitting a duly executed proxy bearing a later date with the
Corporate Secretary of the Company or Innisfree; or
o appearing in person and voting by ballot at the 2003 annual
meeting as described above under "How do I vote? -- Vote in
Person."
Any shareholder of record as of the record date of the 2003 annual
meeting attending the 2003 annual meeting may vote in person whether or not a
proxy has been previously given, but the presence (without further action) of
a shareholder at the 2003 annual meeting will NOT constitute revocation of a
previously given proxy.
If you choose to revoke a proxy by giving written notice or a
later-dated proxy to the Corporate Secretary of the Company, we would
appreciate if you would assist us in representing the interests of
shareholders on an informed basis by sending us a copy of your revocation or
33
proxy or by calling Innisfree, at (888) 750-5834 . Banks and brokers call
collect at (212) 750-5833. Remember, your latest-dated proxy is the only one
that counts.
Will other matters be voted on at the annual meeting?
We are not now aware of any matters to be presented at the 2003 annual
meeting other than the election of directors and the ratification of the
appointment of the Company's independent auditors . If any other matters
not described in the proxy statement are properly presented at the 2003
annual meeting, including matters incidental to the conduct of the 2003
annual meeting, proxies will be voted in accordance with the best judgment of
the proxy holders.
If I plan to attend the annual meeting, should I still submit a proxy?
Whether you plan to attend the 2003 annual meeting or not, we urge you
to submit a proxy. Returning the enclosed BLUE proxy card will not affect
your right to attend the 2003 annual meeting.
How will my shares be voted?
If you give a proxy on the accompanying BLUE proxy card, your shares
will be voted as you direct. If you submit a proxy to us without
instructions, our representatives will vote your shares in favor of Proposal
Nos. 1 and 2. Submitting a BLUE proxy card will entitle our representatives
to vote your shares in accordance with their discretion on matters not
described in this proxy statement that may arise at the 2003 annual meeting,
including matters incident to the conduct of the 2003 annual meeting. Unless
a proxy specifies otherwise, it will be presumed to relate to all shares held
of record on the record date for the 2003 annual meeting by the person who
submitted it.
How can I receive more information?
If you have any questions about giving your proxy or about our
solicitation, or if you require assistance, please call Innisfree at (888)
750-5834 . Banks and brokers call collect at (212) 750-5833.
--------------------------------------
Your vote is important. No matter how many or how few shares you own, please
vote to elect Dolphin's nominees by marking, signing, dating and mailing the
enclosed BLUE proxy card promptly.
DOLPHIN LIMITED PARTNERSHIP I, L.P.
May 19, 2003
34
SCHEDULE I
Directors and Officers of Dolphin Holding Corporation
Name and Position Principal Occupation Principal Business Address
- ----------------- -------------------- --------------------------
Donald T. Netter Chairman, Chief 96 Cummings Point Road
Chairman, Chief Executive Officer, Stamford, Connecticut 06902
Executive Officer, President and Senior
President and Senior Managing Director,
Managing Director Dolphin Holdings
Corporation
Theodore A. De Blanco Managing Director and 96 Cummings Point Road
Managing Director and Senior Vice President, Stamford, Connecticut 06902
Senior Vice President Dolphin Holdings
Corporation
Brett J. Buckley Vice President, 96 Cummings Point Road
Vice President Dolphin Holdings Stamford, Connecticut 06902
Corporation
35
ANNEX A
TRANSACTIONS IN COMMON STOCK
The following table sets forth information with respect to all
purchases and sales of common stock of the Company by Dolphin during the past
two years. Except as set forth below, to the knowledge of Dolphin, no
participant in this solicitation or Dolphin has purchased or sold securities
of the Company within the past two years.
Transaction Number Price Per
Date Type of Shares Share*
---- ---- --------- ------
6/14/02 Purchase 5,100 $12.01
6/17/02 Purchase 6,900 $12.01
6/18/02 Purchase 56,700 $12.01
6/19/02 Purchase 31,300 $12.01
6/20/02 Purchase 4,000 $12.00
6/21/02 Purchase 73,000 $12.014
6/24/02 Purchase 23,000 $12.047
7/10/02 Purchase 70,000 $11.008
7/11/02 Purchase 20,000 $11.103
7/12/02 Purchase 31,900 $11.444
7/15/02 Sale 65,000 $13.316
7/19/02 Purchase 62,000 $12.817
7/24/02 Purchase 600 $12.66
7/29/02 Purchase 10,000 $13.01
9/11/02 Purchase 20,500 $13.02
9/26/02 Purchase 50,000 $10.212
10/25/02 Purchase 70,000 $8.123
10/28/02 Purchase 20,000 $8.118
10/29/02 Purchase 10,000 $8.142
10/30/02 Purchase 5,000 $7.86
11/19/02 Purchase 2,500 $7.66
11/20/02 Purchase 2,500 $7.76
11/21/02 Purchase 2,500 $7.756
11/25/02 Purchase 1,000 $7.62
11/27/02 Purchase 5,000 $7.951
11/29/02 Purchase 5,000 $8.023
12/2/02 Purchase 3,300 $7.837
12/3/02 Purchase 5,000 $7.871
12/4/02 Purchase 2,500 $8.008
12/5/02 Purchase 15,800 $8.14
12/6/02 Purchase 20,000 $8.297
12/9/02 Purchase 2,900 $8.449
12/10/02 Purchase 300 $8.66
12/11/02 Purchase 10,300 $8.747
12/12/02 Purchase 10,100 $8.821
36
Transaction Number Price Per
Date Type of Shares Share*
---- ---- --------- ------
12/13/02 Purchase 8,500 $8.656
12/16/02 Purchase 5,000 $8.66
12/17/02 Purchase 4,500 $8.77
12/18/02 Purchase 5,000 $8.71
12/19/02 Purchase 5,000 $8.61
12/20/02 Purchase 5,000 $8.559
1/2/03 Purchase 800 $8.593
1/3/03 Purchase 2,500 $8.613
1/6/03 Purchase 5,000 $8.81
1/7/03 Purchase 2,500 $8.81
1/8/03 Purchase 2,500 $8.71
1/9/03 Purchase 1,000 $8.72
1/10/03 Purchase 1,000 $8.72
1/13/03 Purchase 1,000 $8.72
1/13/03 Purchase 1,000 $8.66
1/14/03 Purchase 2,000 $8.71
1/15/03 Purchase 2,000 $8.69
1/15/03 Purchase 2,000 $8.423
1/16/03 Purchase 2,000 $8.463
1/17/03 Purchase 2,000 $8.55
1/21/03 Purchase 1,000 $8.50
1/22/03 Purchase 1,000 $8.40
1/23/03 Purchase 1,000 $8.36
1/23/03 Purchase 1,000 $8.23
1/24/03 Purchase 1,000 $8.17
1/24/03 Purchase 500 $8.01
1/27/03 Purchase 500 $8.083
2/10/03 Purchase 200 $7.613
2/11/03 Purchase 800 $7.713
2/14/03 Purchase 1,000 $7.683
2/20/03 Purchase 20,000 $7.76
2/20/03 Purchase 6,000 $7.733
2/20/03 Purchase 1,500 $7.723
2/20/03 Purchase 2,400 $7.713
2/20/03 Purchase 3,000 $7.71
2/20/03 Purchase 12,100 $7.668
2/20/03 Purchase 2,900 $7.658
2/20/03 Purchase 4,300 $7.638
2/20/03 Purchase 11,000 $7.618
2/20/03 Purchase 1,000 $7.598
2/20/03 Purchase 1,200 $7.588
2/20/03 Purchase 1,800 $7.578
2/20/03 Purchase 500 $7.568
37
Transaction Number Price Per
Date Type of Shares Share*
---- ---- --------- ------
2/20/03 Purchase 200 $7.558
2/21/03 Purchase 400 $8.223
2/21/03 Purchase 1,300 $8.213
2/21/03 Purchase 1,300 $8.203
2/21/03 Purchase 4,500 $8.193
2/21/03 Purchase 500 $8.183
2/21/03 Purchase 1,600 $8.173
2/21/03 Purchase 1,300 $8.171
2/21/03 Purchase 1,600 $8.163
2/21/03 Purchase 2,000 $8.153
2/21/03 Purchase 9,100 $8.143
2/21/03 Purchase 800 $8.133
2/21/03 Purchase 300 $8.06
2/21/03 Purchase 6,800 $8.04
2/21/03 Purchase 200 $7.94
2/21/03 Purchase 5,500 $7.883
2/21/03 Purchase 7,000 $7.83
2/24/03 Purchase 2,700 $8.263
2/24/03 Purchase 2,000 $8.26
2/24/03 Purchase 2,900 $8.256
2/24/03 Purchase 4,200 $8.253
2/24/03 Purchase 2,800 $8.25
2/24/03 Purchase 13,900 $8.243
2/24/03 Purchase 5,200 $8.24
2/24/03 Purchase 4,900 $8.233
2/24/03 Purchase 300 $8.23
2/24/03 Purchase 3,700 $8.213
2/24/03 Purchase 2,000 $8.211
2/24/03 Purchase 400 $8.183
2/24/03 Purchase 1,900 $8.17
2/24/03 Purchase 2,200 $8.163
2/24/03 Purchase 2,900 $8.153
2/24/03 Purchase 7,700 $8.32
2/25/03 Purchase 2,300 $8.31
2/25/03 Purchase 2,200 $8.293
2/25/03 Purchase 10,000 $8.29
2/25/03 Purchase 7,000 $8.283
2/25/03 Purchase 5,000 $8.273
2/25/03 Purchase 3,400 $8.27
2/25/03 Purchase 11,000 $8.263
2/25/83 Purchase 3,800 $8.26
2/25/03 Purchase 600 $8.259
2/25/03 Purchase 9,000 $8.253
38
Transaction Number Price Per
Date Type of Shares Share*
---- ---- --------- ------
2/25/03 Purchase 4,200 $8.25
2/25/03 Purchase 7,600 $8.243
2/25/03 Purchase 1,400 $8.24
2/25/03 Purchase 2,000 $8.223
2/26/03 Purchase 11,900 $8.31
2/26/03 Purchase 6,600 $8.30
2/26/03 Purchase 5,800 $8.29
2/26/03 Purchase 4,200 $8.28
2/26/03 Purchase 2,000 $8.273
2/26/03 Purchase 2,500 $8.27
2/26/03 Purchase 2,900 $8.263
2/26/03 Purchase 7,800 $8.26
2/26/03 Purchase 500 $8.253
2/26/03 Purchase 6,400 $8.243
2/26/03 Purchase 1,000 $8.242
2/26/03 Purchase 4,400 $8.24
2/26/03 Purchase 500 $8.23
2/26/03 Purchase 2,200 $8.223
2/26/03 Purchase 1,100 $8.22
2/26/03 Purchase 1,000 $8.213
2/27/03 Purchase 1,200 $8.313
2/27/03 Purchase 32,100 $8.27
2/27/03 Purchase 37,600 $8.263
2/27/03 Purchase 100 $8.26
2/27/03 Purchase 500 $8.253
2/27/03 Purchase 1,400 $8.25
2/27/03 Purchase 200 $8.24
2/27/03 Purchase 1,000 $8.233
2/27/03 Purchase 1,000 $8.223
2/27/03 Purchase 4,200 $8.22
2/27/03 Purchase 3,000 $8.213
2/28/03 Purchase 20,000 $8.31
2/28/03 Purchase 5,900 $8.293
2/28/03 Purchase 7,000 $8.292
2/28/03 Purchase 5,000 $8.29
2/28/03 Purchase 7,000 $8.283
2/28/03 Purchase 20,000 $8.27
2/28/03 Purchase 8,900 $8.263
2/28/03 Purchase 3,700 $8.26
2/28/03 Purchase 1,000 $8.253
2/28/03 Purchase 2,000 $8.243
3/3/03 Purchase 14,900 $8.36
3/3/03 Purchase 1,000 $8.33
39
Transaction Number Price Per
Date Type of Shares Share*
---- ---- --------- ------
3/3/03 Purchase 10,400 $8.32
3/3/03 Purchase 4,500 $8.313
3/3/03 Purchase 1,600 $8.31
3/3/03 Purchase 400 $8.303
3/3/03 Purchase 2,100 $8.293
3/3/03 Purchase 200 $8.29
3/3/03 Purchase 500 $8.28
3/3/03 Purchase 7,900 $8.27
3/3/03 Purchase 4,500 $8.253
3/11/03 Purchase 35,000 $8.15
3/17/03 Purchase 26,000 $8.773
3/20/03 Purchase 15,900 $8.935
3/21/03 Purchase 5,400 $9.02
3/25/03 Purchase 1,500 $8.986
3/26/03 Purchase 4,100 $8.99
* Includes commissions and execution related costs.
40
ANNEX B
OWNERSHIP OF COMMON STOCK
Each share of common stock is entitled to one vote on each of the
proposals and the common stock is the only class of securities of the Company
entitled to vote on the proposals. The Company has informed us that there
were 13,362,785 shares of common stock that were issued and outstanding as of
April 18, 2003, the record date for the shares entitled to vote at the 2003
annual meeting.
The following table sets forth the share ownership of all persons who,
to the knowledge of Dolphin, beneficially own more than 5% of the outstanding
shares of common stock as of the date of this proxy statement. The
information with respect to each shareholder, other than Dolphin and except
as otherwise indicated, is derived from the definitive proxy materials filed
by the Company with the SEC with respect to the 2003 annual meeting.
Number of Shares Percentage
Shareholder Beneficially Owned (1) Ownership
- ----------- ---------------------- ---------
Dolphin Limited Partnership I, L.P. 1,262,800 9.5%
Barclays Global Investors, NA (2) 1,088,497 8.1%
Dimensional Fund Advisors, Inc. (3) 735,780 5.5%
David O. Corriveau (4) 799,384 5.8%
James W. Corley (5) 814,385 5.9%
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. Shares of common stock subject to stock options and
warrants currently exercisable or exercisable within 60 days are deemed
outstanding for purposes of computing the percentage ownership of the
person holding the options and the percentage ownership of any group of
which the holder is a member, but are not deemed outstanding for
computing the percentage ownership of any other person. Subject to
community property laws where applicable, to the knowledge of Dolphin,
the persons named in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned
by them.
(2) Based upon a Schedule 13G filed with the SEC on February 12, 2003. The
address of Barclays Global Investors, NA is 45 Fremont Street, San
Francisco, California 94105.
41
(3) Based upon a Schedule 13F filed with the SEC for the quarter ending
March 31, 2003. The address of Dimensional Fund Advisors is 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401.
(4) Includes 326,667 shares subject to options exercisable within 60 days
and 60,000 shares of restricted stock for which Mr. Corriveau has sole
voting power only. Mr. Corriveau shares voting and dispositive power
with respect to 74,545 shares owned of record by a family limited
partnership. Mr. Corriveau disclaims beneficial ownership with respect
to such shares. Substantially, all of the shares owned directly by Mr.
Corriveau have been pledged as collateral to secure various personal
bank loans and margin trading in personal brokerage accounts.
(5) Includes 326,667 shares subject to options exercisable within 60 days
and 60,000 shares of restricted stock for which Mr. Corley has sole
voting power only. Mr. Corley shares voting and dispositive power with
respect to 99,559 shares owned of record by a family limited
partnership. Mr. Corley disclaims beneficial ownership with respect to
such shares.
42
FORM OF PROXY SOLICITED ON BEHALF OF
DOLPHIN LIMITED PARTNERSHIP I, L.P.
The undersigned shareholder of Dave & Buster's, Inc., a Missouri
corporation (the "Company"), on April 18, 2003 (the "record date"), hereby
appoints Donald T. Netter or Brett Buckley or either of them, each with full
power of substitution, to act as proxies for the undersigned, and to vote all
shares of common stock, par value $.01 per share, of the Company, which the
undersigned would be entitled to vote if personally present at the 2003
Annual Meeting of Shareholders of the Company to be held on June 10, 2003,
and at any and all postponements and adjournments thereof as indicated on
this proxy.
IF YOU SIGN, DATE AND RETURN THIS CARD WITHOUT INDICATING YOUR VOTE ON
ONE OR MORE OF THE FOLLOWING PROPOSALS, YOU WILL BE DEEMED TO HAVE VOTED IN
FAVOR OF PROPOSAL NOS. 1 AND 2. IF YOU VOTE OR ABSTAIN WITH RESPECT TO ONE
OR MORE OF THE FOLLOWING PROPOSALS, THIS PROXY CARD WILL REVOKE ANY
PREVIOUSLY EXECUTED REVOCATION OF PROXY WITH RESPECT TO SUCH PROPOSALS.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
DOLPHIN STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF PROPOSAL
NOS. 1 AND 2.
Proposal No. 1 -- Election of Edward A. Weinstein, Donald T. Netter and
Edward E. Hartline as Directors with Terms Expiring in 2006
FOR [ ] AGAINST [ ]
(Instruction: If you wish to vote for the election of certain of the
nominees, but not all of them, check the "FOR" box above and write the name
of the person(s) you do not wish elected in the following space:
________________________________________. If no box is marked above with
respect to this Proposal, the undersigned will be deemed to vote for such
Proposal, except that the undersigned will not be deemed to vote for the
election of any candidate whose name is written in the space provided above.)
Proposal No. 2 -- Ratification of Appointment of Ernst & Young LLP as
Independent Accountants
FOR [ ] AGAINST [ ] ABSTAINS [ ]
43
And in the discretion of the proxies appointed hereunder, on such other
business as may properly come before the meeting.
IMPORTANT: THIS PROXY MUST BE SIGNED AND DATED TO BE VALID.
Dated:
---------------------------
---------------------------
Signature:
---------------------------
Signature (if held jointly):
---------------------------
Title or Authority
Please sign exactly as name appears hereon. If shares are registered in more
than one name, the signature of all such persons should be provided. A
corporation should sign in its full corporate name by a duly authorized
officer, stating his or her title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full
title as such. If a partnership, please sign in the partnership name by an
authorized person. The proxy card votes all shares in all capacities.
PLEASE MARK, SIGN AND DATE THIS PROXY BEFORE MAILING THE PROXY IN THE
ENCLOSED ENVELOPE.
If you have any questions or need assistance in voting your shares,
please contact Innisfree M&A Incorporated toll-free at 1-888-750-5834 or if
you are a bank or broker please call collect at 1-212-750-5833.
44