SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
MORTON'S RESTAURANT GROUP, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(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)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/X/ 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:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
BACKGROUND OF THE MERGER; FAIRNESS--UPDATE
Since the date of our proxy materials on June 18, 2002, various events have
occurred that led Morton's Special Committee and Board of Directors to their
recommendation that stockholders vote FOR the merger with Morton's Holdings, LLC
and Morton's Acquisition Company, affiliates of Castle Harlan Partners III,
L.P., at $17.00 per share in cash.
Because of their affiliation with Castle Harlan Partners III, L.P.,
directors John K. Castle and David B. Pittaway did not participate in or vote at
any of the Board of Directors meetings discussed below. Because Morton's
Holdings intends to offer to senior employees, including directors Allen J.
Bernstein and Thomas J. Baldwin, the opportunity to subscribe for equity
interests in Morton's Holdings, Messrs. Bernstein and Baldwin also did not
participate in or vote at any of the Board meetings discussed below.
On June 18, 2002, High River Limited Partnership, an affiliate of Carl
Icahn, delivered to the Special Committee a signed merger agreement
substantially similar to the merger agreement with Morton's Holdings and
Morton's Acquisition, as in effect at that time, but with a price per share of
$15.00. Morton's immediately issued a press release announcing its receipt of
the High River proposal. As required under the merger agreement with Morton's
Holdings and Morton's Acquisition, the Company promptly notified Morton's
Holdings and Morton's Acquisition of the High River proposal.
The Special Committee met by telephone on June 19, 2002 to consider the High
River proposal. The Special Committee's financial advisor, Greenhill & Co., LLC,
and legal advisor, Richards, Layton & Finger, P.A., also attended this meeting.
After receiving advice from Greenhill and Richards Layton, the Special Committee
determined that the High River proposal was superior to the merger agreement
with Morton's Holdings and Morton's Acquisition, and recommended that, in order
to comply with the Board's fiduciary duties under applicable law, Morton's,
acting through the Special Committee and its advisors, participate in
discussions with High River in an effort to get the best possible deal for
Morton's stockholders, including by attempting to raise the cash consideration
and to eliminate or reduce closing conditions. The Board of Directors met by
telephone later the same day to consider the High River proposal and the Special
Committee's recommendations. Greenhill and Richards Layton also attended this
meeting, as did Schulte Roth & Zabel LLP, counsel to Morton's. The Board
determined to act in accordance with the Special Committee's recommendations,
and the Special Committee subsequently contacted High River to negotiate its
proposal.
On June 21, 2002, after concluding discussions with High River, the Special
Committee met by telephone to determine how to proceed in light of these
discussions. Greenhill and Richards Layton also attended this meeting. Richards
Layton reported that High River was not willing to increase its offer price
above $15.00 per share but it had agreed that its proposed merger would be
conditioned on the receipt of only material liquor license authorizations and
governmental and third party consents rather than all such authorizations and
consents. After receiving advice from Greenhill and Richards Layton, the Special
Committee determined that the revised High River proposal was superior to the
merger agreement with Morton's Holdings and Morton's Acquisition in effect at
that time and recommended that, in order to comply with the Board's fiduciary
duties under applicable law, Morton's terminate the merger agreement with
Morton's Holdings and Morton's Acquisition and enter into the revised High River
proposal. The Board of Directors met by telephone later the same day. Greenhill,
Richards Layton and Schulte Roth also attended this meeting. The Board
determined to act in accordance with the Special Committee's recommendations,
and promptly notified Morton's Holdings and Morton's Acquisition of its
determination.
The Board noted that, as required under customary provisions contained in
the merger agreement with Morton's Holdings and Morton's Acquisition, Morton's
could not terminate that merger agreement until five business days after notice
is provided to Morton's Holdings and Morton's Acquisition, and that Morton's
must cooperate fully with Morton's Holdings and Morton's Acquisition
1
during these five business days with the intent of the parties agreeing on
modifications to that merger agreement. The Board determined that if, at the end
of the five business day period, the revised High River proposal continued to be
superior to the merger agreement with Morton's Holdings and Morton's
Acquisition, then Morton's would terminate that merger agreement and enter into
the revised High River proposal. Morton's issued a press release the same day
setting forth the Board's determinations.
On June 28, 2002, within the five business day period, Morton's Holdings and
Morton's Acquisition delivered to the Special Committee a signed amendment to
their merger agreement that raised the merger consideration to $15.00 per share,
removed the closing condition that would have required Morton's to obtain prior
to closing all authorizations necessary to maintain liquor licenses following
consummation of the merger, and modified the condition requiring governmental
and third party consents to the merger so that only material consents would be
required. Morton's Holdings and Morton's Acquisition also submitted a signed
equity commitment letter reflecting the increased merger consideration. The
Special Committee met by telephone later the same day to consider the impact of
the revised offer. Greenhill and Richards Layton also attended this meeting. The
Special Committee noted that, pursuant to the terms of the merger agreement with
Morton's Holdings and Morton's Acquisition, unless the Special Committee and the
Board determined that the revised High River proposal continued to be superior,
the Company was required to accept the merger agreement with Morton's Holdings
and Morton's Acquisition. After receiving advice from Greenhill and Richards
Layton, the Special Committee determined that the revised High River proposal
was no longer superior to the merger agreement with Morton's Holdings and
Morton's Acquisition, as they had agreed to amend it, and, accordingly, that the
Board was required to approve and adopt the amendments proposed by Morton's
Holdings and Morton's Acquisition. The Board of Directors then met by telephone
later the same day. Greenhill, Richards Layton and Schulte Roth also attended
this meeting. The Board determined to act in accordance with the Special
Committee's recommendations, and Morton's promptly entered into the amendment to
the merger agreement with Morton's Holdings and Morton's Acquisition. Morton's
then issued a press release disclosing these events.
On July 9, 2002, High River delivered to the Special Committee a signed
merger agreement substantially similar to the merger agreement with Morton's
Holdings and Morton's Acquisition, as amended, but with a price per share of
$16.00. Morton's promptly notified Morton's Holdings and Morton's Acquisition of
the revised High River proposal, and Morton's Holdings and Morton's Acquisition
soon thereafter delivered to the Special Committee a signed amendment to their
merger agreement that raised the merger consideration to $16.00 per share.
Morton's Holdings and Morton's Acquisition also submitted a signed equity
commitment letter reflecting the increased merger consideration. The Special
Committee then met by telephone to consider the two revised offers. Greenhill
and Richards Layton also attended this meeting. After receiving advice from
Greenhill and Richards Layton, the Special Committee determined that, in view of
the matching offer from Morton's Holdings and Morton's Acquisition, the High
River proposal was not superior to the merger agreement with Morton's Holdings
and Morton's Acquisition, as they had agreed to amend it, and, accordingly, that
the Board was required to approve and adopt the amendment proposed by Morton's
Holdings and Morton's Acquisition. The Board of Directors then met by telephone
later the same day. Greenhill, Richards Layton and Schulte Roth also attended
this meeting. The Board determined to act in accordance with the Special
Committee's recommendations, and Morton's promptly entered into the amendment to
the merger agreement with Morton's Holdings and Morton's Acquisition. The next
morning Morton's issued a press release disclosing these events.
Late in the evening on July 9, 2002, Morton's received a conditional
proposal from High River that included a signed merger agreement substantially
similar to the merger agreement with Morton's Holdings and Morton's Acquisition,
as amended, but with a price per share of $17.00. Unlike previous offers by High
River, however, this proposal was conditioned on Morton's, by the close of
business on
2
July 10, 2002, exempting High River from Morton's stockholders rights agreement
to permit High River to "negotiate, enter into agreements and arrangements, and
otherwise join, with others, to acquire Morton's." The Special Committee met by
telephone on July 10, 2002 to consider the revised High River proposal. Richards
Layton and Greenhill also attended this meeting. The Special Committee noted
that taking the action required by High River was prohibited by a provision in
the merger agreement with Morton's Holdings and Morton's Acquisition and could
subject the Company to substantial damages for breach of contract. Additionally,
Morton's would be at risk of losing the transaction with Morton's Holdings and
Morton's Acquisition and never reaching closing on a High River transaction.
Richards Layton noted that it had raised these issues with High River, but that
High River did not appear willing to remove the condition. The Board of
Directors then met by telephone to consider the revised High River proposal.
Greenhill, Richards Layton and Schulte Roth also attended this meeting. The
Special Committee informed the Board of its discussions. At the Board's
direction, Morton's sent a letter to Morton's Holdings and Morton's Acquisition
requesting that they agree to amend their merger agreement to permit Morton's to
amend its stockholders rights agreement in the manner required by High River.
Morton's Holdings and Morton's Acquisition soon thereafter replied in writing
that they saw no legitimate reason to amend their merger agreement, noting that
the provision in their existing merger agreement is customary, that each of the
proposed forms of merger agreement submitted by High River contained the same
provision and that recent events indicated that the provision was not a
deterrent to a potential bidder willing to make a bona fide superior proposal to
all Morton's stockholders. Morton's Holdings and Morton's Acquisition also noted
that High River could seek a co-bidder at any time if it submitted a superior
proposal that became the winning bid, and that, although High River claimed to
be prepared to purchase the Company itself, it was now requiring the ability to
make a joint bid.
Later that day, after receiving the response from Morton's Holdings and
Morton's Acquisition, the Special Committee's counsel sent a letter to High
River requesting that it remove the new condition. The Special Committee advised
High River that it was prepared to recommend High River's revised proposal as
superior to the merger agreement with Morton's Holdings and Morton's Acquisition
if High River removed the condition. The Special Committee and the Board met
jointly by telephone later that evening. Greenhill, Richards Layton and Schulte
Roth also attended this meeting. Richards Layton apprised the Special Committee
and Board members of the response from Morton's Holdings and Morton's
Acquisition, and indicated that it had not received a response from High River.
The Special Committee and Board members agreed to meet again the next day in
anticipation of High River's response.
In the early afternoon of July 11, 2002, the Special Committee again
attempted to contact High River to discuss its conditional proposal, but High
River was not willing to discuss it. Later the same afternoon, Mr. Icahn sent a
letter to Greenhill expressing his dissatisfaction with the Special Committee,
the Board of Directors and Castle Harlan. Mr. Icahn also stated that he is
willing to "discuss" the matters raised in his July 9, 2002 letter and to go
forward with the transaction only under unspecified "appropriate circumstances."
After receiving the letter, the Special Committee again attempted to contact
High River, whose only comment was "what we have to say for now is in the
Greenhill letter." Later the same afternoon, the Special Committee met by
telephone to consider High River's letter and the status of the bidding process.
Richards Layton and Greenhill also attended this meeting. The Special Committee
again discussed how taking the action required by High River was prohibited by a
provision in the merger agreement with Morton's Holdings and Morton's
Acquisition, could subject the Company to substantial damages for breach of
contract, and, accordingly, could result in the Company losing the transaction
with Morton's Holdings and Morton's Acquisition and never reaching closing on a
High River transaction. Among other things, the Special Committee discussed
various provisions of High River's proposed form of merger agreement that would
allow High River to terminate the agreement as a direct result of its requiring
Morton's to breach the merger agreement with Morton's Holdings and Morton's
Acquisition. For example, the proposed High River agreement
3
contained a closing condition requiring that there not be any lawsuit against
Morton's that would reasonably be expected to have a material adverse effect on
Morton's. If Morton's breached the merger agreement with Morton's Holdings and
Morton's Acquisition, they could have sued Morton's for breach of contract,
potentially subjecting Morton's to substantial damages and permitting High River
to claim that Morton's failed to satisfy this closing condition under the
proposed High River agreement. Additionally, the proposed High River agreement
contained a representation and warranty by Morton's that Morton's has not
breached any material contract in such a way that would reasonably be expected
to have a material adverse effect on Morton's; it also contained a closing
condition requiring that this and certain other representations and warranties
be true. Taking the action required by High River could have constituted a
breach of the merger agreement with Morton's Holdings and Morton's Acquisition
and, as discussed in the previous example, the potential costs of a breach of
contract lawsuit could permit High River to claim that Morton's violated this
representation and warranty.
After receiving advice from Greenhill and Richards Layton, the Special
Committee was unable to conclude that the $17 per share conditional High River
proposal, when considered with potential costs and risks involved in complying
with the condition, was superior to the binding $16.00 per share merger
agreement with Morton's Holdings and Morton's Acquisition.
The Board of Directors then met by telephone later the same day. Greenhill,
Richards Layton and Schulte Roth also attended this meeting. The Special
Committee informed the Board of its discussions and that it would be prepared to
recommend the High River proposal if the condition was removed. At the direction
of the Board, the Company issued a press release that evening disclosing the
developments. Also that evening, the Company issued a press release disclosing a
letter that Mr. Bernstein sent to Mr. Icahn responding to Mr. Icahn's earlier
letter.
On July 12, 2002, Morton's mailed a letter to its stockholders. The letter
informed Morton's stockholders of the Board's determination that the offer from
Morton's Holdings and Morton's Acquisition was the best offer to emerge from the
sale process. The letter further expressed Morton's belief that the offer from
Morton's Holdings and Morton's Acquisition was the best and only real offer and
that the conditions that were contained in the then-current High River proposal
made that proposal "neither superior nor real" and "completely illusory."
On the morning of July 15, 2002, High River delivered to the Special
Committee a signed merger agreement substantially similar to the merger
agreement that it had delivered on July 9, 2002. Although the High River
proposal remained conditioned on Morton's amending the stockholders rights
agreement as previously proposed, the revised High River proposal no longer
required this to occur in a manner that would breach Morton's existing merger
agreement with Morton's Holdings and Morton's Acquisition. Morton's promptly
notified Morton's Holdings and Morton's Acquisition of the revised High River
proposal. Later that afternoon, Morton's Holdings and Morton's Acquisition
delivered to the Special Committee a signed amendment to their merger agreement
that raised the merger consideration to $17.00 per share. Morton's Holdings and
Morton's Acquisition also submitted a signed equity commitment letter reflecting
the increased merger consideration. The Special Committee met by telephone to
consider the two revised offers. Greenhill and Richards Layton also attended
this meeting. After receiving advice from Greenhill and Richards Layton, the
Special Committee determined that, in view of the matching offer from Morton's
Holdings and Morton's Acquisition, the High River proposal was not superior to
the merger agreement with Morton's Holdings and Morton's Acquisition, as they
had agreed to amend it, and, accordingly, that the Board was required to approve
and adopt the amendment proposed by Morton's Holdings and Morton's Acquisition.
The Board of Directors then met by telephone later the same day. Greenhill,
Richards Layton and Schulte Roth also attended this meeting. The Board
determined to act in accordance with the Special Committee's recommendations,
and Morton's promptly entered into the amendment to the merger agreement with
Morton's Holdings and Morton's Acquisition. Later that day Morton's issued a
press release disclosing these events.
4
The Board of Directors of the Company, and Morton's Holdings, Morton's
Acquisition, Castle Harlan Partners III, L.P., John K. Castle and David B.
Pittaway, continue to believe that the merger agreement with Morton's Holdings
and Morton's Acquisition and the proposed merger are substantively and
procedurally fair to, and in the best interests of, Morton's unaffiliated
stockholders. In reaching this conclusion, such persons considered the factors
set forth in the Company's proxy statement under the captions "Reasons for the
Recommendations of the Special Committee and the Board of Directors--Fairness of
the Merger to Stockholders" and "Position of Morton's Holdings, Morton's
Acquisition, CHP, John K. Castle and David B. Pittaway as to the Fairness of the
Merger", respectively, as well as the following:
- the $17.00 per share cash merger consideration represents a substantial
increase over the prior $13.50 price, and represents a premium of
approximately 49% over the closing market price of $11.44 on March 25,
2002, the last full trading day before the parties entered into the
original merger agreement, and a premium of approximately 158% over the
closing market price of $6.60 on February 14, 2002, the last full trading
day before Morton's Holdings submitted its initial proposal to acquire
Morton's; and
- Morton's Holdings and Morton's Acquisition are prepared and able to close
sooner and, accordingly, with a higher degree of certainty, than High
River because they have already received substantially all required
regulatory and third party consents and approvals, while High River has
not yet commenced seeking any such consents and approvals. Accordingly,
stockholders are likely to receive their cash more quickly (although no
assurance can be given to such effect).
5