sec document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
(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))
| | Definitive Proxy Statement
|X| Definitive Additional Materials
| | Soliciting Material Under Rule 14a-12
LONE STAR STEAKHOUSE & SALOON, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| | No fee required.
|X| 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:
COMMON STOCK, $.01 PAR VALUE PER SHARE, OF LONE STAR STEAKHOUSE &
SALOON, INC.
(2) Aggregate number of securities to which transaction applies:
21,434,908 SHARES OF COMMON STOCK AND OPTIONS TO PURCHASE 3,593,734
SHARES OF COMMON STOCK.
(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): THE
FILING FEE WAS DETERMINED BY MULTIPLYING 0.000107 BY THE SUM OF (I)
$586,244,734, WHICH IS THE PRODUCT OF 21,434,908 OUTSTANDING SHARES
OF LONE STAR STEAKHOUSE & SALOON, INC. COMMON STOCK AND THE
TRANSACTION CONSIDERATION OF $27.35 PER SHARE AND (II) $35,110,781,
WHICH IS THE PRODUCT OF OUTSTANDING OPTIONS TO PURCHASE 3,593,734
SHARES OF COMMON STOCK AND $9.77, WHICH IS THE AMOUNT EQUAL TO THE
EXCESS OF $27.35 PER SHARE OVER THE WEIGHTED AVERAGE EXERCISE PRICE
PER SHARE OF SUCH OUTSTANDING OPTIONS.
(4) Proposed maximum aggregate value of transaction: $621,355,515
(5) Total fee paid: $66,485
| | Fee paid previously with written preliminary materials:
|X| 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: $65,664
(2) Form, Schedule or Registration Statement No.: SCHEDULE 14A
(3) Filing Party: LONE STAR STEAKHOUSE & SALOON, INC.
(4) Date Filed: AUGUST 30, 2006
LONE STAR STEAKHOUSE & SALOON, INC.
224 EAST DOUGLAS
SUITE 700
WICHITA, KANSAS 67202
SUPPLEMENT TO PROXY STATEMENT
NEW AGGREGATE CONSIDERATION OF $27.35 PER SHARE IN CASH
DATE OF RECONVENED SPECIAL MEETING OF STOCKHOLDERS: DECEMBER 12, 2006
YOUR VOTE IS VERY IMPORTANT
---------------------------
December 5, 2006
Dear Stockholder:
On or about October 23, 2006, we mailed to you a definitive proxy
statement relating to a special meeting of stockholders of Lone Star Steakhouse
& Saloon, Inc. to be held on November 30, 2006 for the purpose of voting on a
proposal to adopt the Agreement and Plan of Merger, dated as of August 18, 2006,
by and among Lone Star Steakhouse & Saloon, Inc., Lone Star U.S. Acquisitions
LLC ("Lone Star Acquisitions") and COI Acquisition Corp., an affiliate of Lone
Star Acquisitions. As a result of the transactions contemplated by the merger
agreement, Lone Star Acquisitions and its affiliates will acquire our entire
company, including all of our restaurant operations, which include Lone Star
Steakhouse & Saloon, Texas Land & Cattle Co., Sullivan's Steakhouse, Del
Frisco's Double Eagle Steak House and Frankie's Italian Grille.
On November 30, 2006, the parties amended the original merger agreement
to increase the aggregate consideration to be received by our stockholders as a
result of the transactions contemplated by the merger agreement from $27.10 to
$27.35 per share in cash, without interest. No other amendments were made to the
original merger agreement. The original merger agreement as so amended is
referred to in the accompanying proxy supplement as the "amended merger
agreement." The amendment to the original merger agreement is attached to the
accompanying proxy supplement as Annex A.
At the special meeting of stockholders to act on the original merger
agreement convened on November 30, 2006, we received the requisite vote of our
stockholders to adjourn the special meeting. The special meeting was adjourned
and will be reconvened on Tuesday, December 12, 2006, at 1:00 p.m., Eastern
Time, to allow our stockholders to consider the increased transaction
consideration and amended merger agreement, as well as the other information
that updates the information in the definitive proxy statement previously mailed
to our stockholders. At that time, the special meeting will resume at the
offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, located at Park
Avenue Tower, 65 East 55th Street, New York, New York 10022.
IF YOU HAVE ALREADY SUBMITTED A PROXY, YOU DO NOT NEED TO DO ANYTHING
UNLESS YOU WISH TO CHANGE YOUR VOTE. IF YOU HAVE NOT PREVIOUSLY VOTED OR IF YOU
WISH TO REVOKE OR CHANGE YOUR VOTE, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED WITHOUT DELAY OR PROMPTLY SUBMIT
YOUR PROXY BY TELEPHONE OR OVER THE INTERNET FOLLOWING THE INSTRUCTIONS ON THE
PROXY CARD, EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING.
The steps of the transactions contemplated by the amended merger
agreement remain as follows: (1) we will sell to an affiliate or affiliates of
Lone Star Acquisitions all of the shares of capital stock of certain of our
subsidiaries designated by Lone Star Acquisitions, which sales are referred to
as the "transfers;" and (2) immediately thereafter, COI Acquisition Corp. will
merge with and into us and we will be the surviving corporation in the merger
and become an affiliate of Lone Star Acquisitions. TOGETHER, THE TRANSFERS AND
THE MERGER WILL RESULT IN THE SALE OF OUR ENTIRE COMPANY TO LONE STAR
ACQUISITIONS AND ITS AFFILIATES. WE WILL NOT CONSUMMATE ONE OF THESE
TRANSACTIONS WITHOUT THE OTHER.
As a result of the amended merger agreement, upon completion of the
transfers and the merger, each share of our common stock not held by Lone Star
Acquisitions, COI Acquisition Corp. or us, or by our stockholders who perfect
their appraisal rights under Delaware law, will automatically be converted into
the right to receive an aggregate of $27.35 in cash, without interest.
The consummation of the transactions contemplated by the amended merger
agreement is NOT conditioned on (1) Lone Star Acquisitions obtaining financing
or (2) our obtaining consents to the transactions under any of our real property
leases or under any federal, state, city or local law governing the sale of
liquor that may be applicable.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
ADOPTION OF THE AMENDED MERGER AGREEMENT AND THE APPROVAL OF THE TRANSACTIONS
CONTEMPLATED THEREBY AND "FOR" THE APPROVAL OF THE ADJOURNMENT OF THE SPECIAL
MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE
INSUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING TO ADOPT THE AMENDED
MERGER AGREEMENT AND APPROVE THE TRANSACTIONS CONTEMPLATED THEREBY.
The record date for the special meeting has not changed. Only
stockholders of record at the close of business on October 17, 2006 are entitled
to receive notice of and to vote at the adjourned special meeting. The
accompanying proxy supplement contains additional information about us, Lone
Star Acquisitions and the amended merger agreement. We urge you to read this
document, including the amended merger agreement attached as Annex A, carefully
and in its entirety. We also urge you, if you have not done so already, to read
the definitive proxy statement previously sent to you, carefully and in its
entirety.
YOUR VOTE IS EXTREMELY IMPORTANT. In order to approve the amended
merger agreement and the transactions contemplated thereby, holders of a
majority of the outstanding shares of our common stock entitled to vote must
vote in favor of adopting the amended merger agreement and the transactions
contemplated thereby. IF YOU FAIL TO VOTE IN PERSON OR BY PROXY, OR ABSTAIN FROM
VOTING, IT WILL HAVE EXACTLY THE SAME EFFECT AS VOTING AGAINST ADOPTING THE
AMENDED MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
LONE STAR ACQUISITIONS IS AN AFFILIATE OF LONE STAR FUNDS, A
DALLAS-BASED PRIVATE EQUITY FIRM. NEITHER LONE STAR FUNDS NOR LONE STAR
ACQUISITIONS, DESPITE THE SIMILARITY IN NAME, IS AN AFFILIATE OR ASSOCIATE OF
LONE STAR STEAKHOUSE & SALOON, INC., AND NEITHER LONE STAR FUNDS NOR LONE STAR
ACQUISITIONS HAS ANY RELATIONSHIP WITH LONE STAR STEAKHOUSE & SALOON, INC.,
EXCEPT WITH RESPECT TO THE AMENDED MERGER AGREEMENT. NO MEMBERS OF THE
MANAGEMENT OR THE BOARD OF DIRECTORS OF LONE STAR STEAKHOUSE & SALOON, INC. WILL
BE PARTICIPATING WITH LONE STAR FUNDS OR LONE STAR ACQUISITIONS IN THE PURCHASE
OF LONE STAR STEAKHOUSE & SALOON, INC.
This proxy supplement and the form of the proxy are first being sent to
the stockholders on or about December 6, 2006.
Sincerely,
/s/ Gerald T. Aaron
-------------------
Gerald T. Aaron
Secretary
TABLE OF CONTENTS
Page
----
INTRODUCTION...................................................................1
UPDATE TO THE SUMMARY TERM SHEET...............................................1
UPDATE TO QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
AND THE TRANSACTIONS...........................................................5
AMENDMENT TO THE MERGER AGREEMENT.............................................10
UPDATE TO THE SPECIAL MEETING.................................................10
UPDATE TO THE TRANSACTIONS....................................................13
MARKET PRICE OF LONE STAR STEAKHOUSE COMMON STOCK.............................17
FORWARD LOOKING STATEMENTS....................................................17
WHERE YOU CAN FIND ADDITIONAL INFORMATION.....................................18
INCORPORATION BY REFERENCE....................................................18
OTHER PROXY STATEMENT MATTERS.................................................20
Annex A First Amendment, dated as of November 30, 2006, to Agreement
and Plan of Merger, dated as of August 18, 2006, by and among
Lone Star Steakhouse & Saloon, Inc., Lone Star U.S.
Acquisitions LLC and COI Acquisition Corp.
INTRODUCTION
The information provided in the definitive proxy statement previously
mailed to our stockholders on or about October 23, 2006, which we refer to in
this proxy supplement as the "definitive proxy statement," continues to apply,
except as described in this proxy supplement. To the extent information in this
proxy supplement differs from, updates or conflicts with information contained
in the definitive proxy statement, the information in this proxy supplement is
the more current information. If you need another copy of the definitive proxy
statement, please call our proxy solicitor, Innisfree M&A Incorporated,
toll-free at (877) 456-3488. The definitive proxy statement may also be found on
the Internet at http://www.sec.gov. See "Where You Can Find Additional
Information" beginning on page S-18 of this proxy supplement.
UPDATE TO THE SUMMARY TERM SHEET
THIS UPDATED SUMMARY TERM SHEET HIGHLIGHTS SELECTED INFORMATION FROM
THIS PROXY SUPPLEMENT AND THE DEFINITIVE PROXY STATEMENT ABOUT THE PROPOSED
TRANSACTIONS CONTEMPLATED BY THE AMENDED MERGER AGREEMENT AND THE ADJOURNED
SPECIAL MEETING AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO
YOU AS A STOCKHOLDER OF LONE STAR STEAKHOUSE & SALOON, INC. ACCORDINGLY, WE
ENCOURAGE YOU TO READ CAREFULLY THIS ENTIRE PROXY SUPPLEMENT, THE ENTIRE
DEFINITIVE PROXY STATEMENT AND THE OTHER DOCUMENTS TO WHICH WE REFER YOU IN THIS
PROXY SUPPLEMENT AND THE DEFINITIVE PROXY STATEMENT.
AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THE AMENDED MERGER
AGREEMENT, LONE STAR ACQUISITIONS AND ITS AFFILIATES WILL ACQUIRE OUR ENTIRE
COMPANY, INCLUDING ALL OF OUR RESTAURANT OPERATIONS, WHICH INCLUDE LONE STAR
STEAKHOUSE & SALOON, TEXAS LAND & CATTLE CO., SULLIVAN'S STEAKHOUSE, DEL
FRISCO'S DOUBLE EAGLE STEAK HOUSE AND FRANKIE'S ITALIAN GRILLE, AND OUR
STOCKHOLDERS WILL RECEIVE AN AGGREGATE OF $27.35 PER SHARE IN CASH, WITHOUT
INTEREST. TOGETHER, THE TRANSFERS AND THE MERGER WILL RESULT IN THE SALE OF OUR
ENTIRE COMPANY TO LONE STAR ACQUISITIONS AND ITS AFFILIATES. WE WILL NOT
CONSUMMATE ONE OF THESE TRANSACTIONS WITHOUT THE OTHER.
REFERENCES IN THIS PROXY SUPPLEMENT TO "THE COMPANY," "LONE STAR
STEAKHOUSE," "WE," "OUR," "OUR COMPANY" AND "US" MEAN, UNLESS THE CONTEXT
INDICATES OTHERWISE, LONE STAR STEAKHOUSE & SALOON, INC. AND ITS CONSOLIDATED
SUBSIDIARIES; ALL REFERENCES TO "ACQUISITIONS" OR "LONE STAR ACQUISITIONS" REFER
TO LONE STAR U.S. ACQUISITIONS LLC; ALL REFERENCES TO "COI ACQUISITION" OR
"MERGER SUB" REFER TO COI ACQUISITION CORP.; ALL REFERENCES TO "PURCHASE SUB" OR
"PURCHASE SUBS" REFER TO AN AFFILIATE OR AFFILIATES OF LONE STAR ACQUISITIONS
THAT ARE OR WILL BE FORMED TO ACQUIRE THE CAPITAL STOCK OF THE TRANSFERRED
SUBSIDIARIES; ALL REFERENCES TO "ORIGINAL MERGER AGREEMENT" REFER TO THE
AGREEMENT AND PLAN OF MERGER, DATED AS OF AUGUST 18, 2006, BY AND AMONG LONE
STAR STEAKHOUSE & SALOON, INC., LONE STAR U.S. ACQUISITIONS LLC AND COI
ACQUISITION CORP.; ALL REFERENCES TO "MERGER AGREEMENT" OR "AMENDED MERGER
AGREEMENT" REFER TO THE AGREEMENT AND PLAN OF MERGER, DATED AS OF AUGUST 18,
2006, AS AMENDED AS OF NOVEMBER 30, 2006, BY AND AMONG LONE STAR STEAKHOUSE &
SALOON, INC., LONE STAR U.S. ACQUISITIONS LLC AND COI ACQUISITION CORP., AS IT
MAY BE AMENDED FROM TIME TO TIME; ALL REFERENCES TO THE "TRANSFERRED
SUBSIDIARIES" REFER TO OUR DIRECT AND INDIRECT SUBSIDIARIES DESIGNATED BY LONE
STAR ACQUISITIONS, ALL OF THE SHARES OF CAPITAL STOCK OF WHICH WILL BE SOLD BY
US TO PURCHASE SUB PURSUANT TO THE AMENDED MERGER AGREEMENT; ALL REFERENCES TO
"TRANSFERS" REFER TO THE SALE OF THE CAPITAL STOCK OF THE TRANSFERRED
SUBSIDIARIES TO PURCHASE SUB PURSUANT TO THE AMENDED MERGER AGREEMENT; ALL
REFERENCES TO THE "MERGER" REFER TO THE MERGER OF COI ACQUISITION WITH AND INTO
US PURSUANT TO THE AMENDED MERGER AGREEMENT; AND ALL REFERENCES TO THE
"TRANSACTIONS" REFER TO THE TRANSFERS AND THE MERGER.
S-1
AMENDMENT TO MERGER AGREEMENT
o On November 30, 2006, the parties amended the original merger
agreement to increase the aggregate consideration to be
received by our stockholders as a result of the transactions
contemplated by the merger agreement from $27.10 to $27.35 per
share in cash, without interest. No other amendments were made
to the original merger agreement. The amendment to the
original merger agreement is attached to this proxy supplement
as Annex A.
As a result of the amended merger agreement:
o upon completion of the transfers and the merger, each
share of our common stock not held by Lone Star
Acquisitions, COI Acquisition Corp. or us, or by our
stockholders who perfect their appraisal rights under
Delaware law, will automatically be converted into
the right to receive an aggregate of $27.35 in cash,
without interest; and
o a holder of outstanding options to purchase shares of
our common stock, whether or not then vested, at the
effective time of the merger, will be entitled to
receive a cash amount equal to the product of (a) the
amount, if any, by which $27.35 exceeds the exercise
price per share of each option held by such person at
the effective time of the merger, multiplied by (b)
the number of shares subject to such option held by
such person, less any applicable withholdings for
taxes. No consideration will be paid in respect of
any stock options for which the exercise price equals
or exceeds $27.35 per share.
See "Amendment to the Merger Agreement" beginning on page S-10.
THE SPECIAL MEETING
DATE, TIME AND PLACE
o The reconvened special meeting will be held on Tuesday,
December 12, 2006 at 1:00 p.m., Eastern Time, at the offices
of Olshan Grundman Frome Rosenzweig & Wolosky LLP, located at
Park Avenue Tower, 65 East 55th Street, New York, New York
10022, to consider and vote upon proposals to adopt the
amended merger agreement and to approve the transactions
contemplated thereby, and to approve the adjournment of the
special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time
of the special meeting to approve the adoption of the amended
merger agreement and the transactions contemplated thereby.
RECORD DATE AND SHARES ENTITLED TO VOTE
o The record date for the special meeting has not changed. Only
holders of record of our common stock at the close of business
on October 17, 2006, the record date for the special meeting,
are entitled to notice of, and to vote at, the special
meeting. On the record date, 21,434,908 shares of our common
stock were issued and outstanding and held by approximately
295 holders of record.
S-2
VOTE REQUIRED
o In order to approve the amended merger agreement and the
transactions contemplated thereby, holders of a majority of
the outstanding shares of our common stock entitled to vote
must vote in favor of adopting the amended merger agreement
and the transactions contemplated thereby. IF YOU WITHHOLD A
VOTE OR ABSTAIN FROM VOTING ON THE PROPOSAL FOR THE ADOPTION
OF THE AMENDED MERGER AGREEMENT AND THE APPROVAL OF THE
TRANSACTIONS CONTEMPLATED THEREBY, IT WILL HAVE THE SAME
EFFECT AS A VOTE "AGAINST" THE PROPOSAL. Approval of the
proposal to adjourn the special meeting, if necessary or
appropriate, requires the favorable vote of a majority of the
votes cast at the special meeting, in person or by proxy, even
if less than a quorum.
VOTING AGREEMENT
o In connection with the original merger agreement, Jamie B.
Coulter, our Chief Executive Officer, who holds and is
entitled to vote approximately 11.2% of our total common stock
outstanding on the record date, entered into a voting
agreement in which he agreed, among other things, to vote his
shares of our common stock in favor of the adoption of the
original merger agreement and the transactions contemplated
thereby, subject to specified exceptions. As a result of the
amendment to the original merger agreement, Mr. Coulter's
voting agreement terminated in accordance with its terms. Mr.
Coulter has already voted his shares of our common stock in
favor of the adoption of the amended merger agreement and the
transactions contemplated thereby and has indicated that he
does not intend to revoke or change his vote with respect to
the adoption of the amended merger agreement.
See "Update to The Special Meeting" beginning on page S-10.
RECOMMENDATION OF THE BOARD OF DIRECTORS
o After careful consideration, our board of directors has
unanimously determined that the amended merger agreement, the
sale of the transferred subsidiaries and the merger are
advisable and are fair to us and our stockholders, and in our
best interest and the best interest of our stockholders and
has unanimously approved the amended merger agreement, the
sale of the transferred subsidiaries and the merger. The board
of directors unanimously recommends that you vote "FOR" the
adoption of the amended merger agreement and the approval of
the transactions contemplated thereby at the special meeting
and "FOR" the approval of the adjournment of the special
meeting, if necessary or appropriate, to solicit additional
proxies. See "Update to The Transactions --Recommendation of
the Board of Directors" beginning on page S-15.
OPINIONS DELIVERED TO THE BOARD OF DIRECTORS
o In connection with the original merger agreement, our board of
directors received written opinions, each dated August 18,
2006, from North Point Advisors LLC and Thomas Weisel Partners
LLC as to the fairness to our stockholders, from a financial
point of view and as of the date of the opinions, of the
aggregate $27.10 per share transaction consideration payable
pursuant to the original merger agreement. The full text of
North Point's and Thomas Weisel Partners' written opinions are
attached to the definitive proxy statement as Annex B and
Annex C, respectively. In view of the fact that, since August
18, 2006, the aggregate per share transaction consideration
has increased from $27.10 to $27.35 while our financial
S-3
results continue to deteriorate, North Point and Thomas Weisel
Partners were not requested to update their fairness opinions
in connection with the amended merger agreement.
FINANCING FOR THE TRANSACTIONS; SOURCE AND AMOUNT OF FUNDS
o THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE
AMENDED MERGER AGREEMENT IS NOT CONDITIONED ON ACQUISITIONS
OBTAINING FINANCING. The total amount of funds required by
Acquisitions to pay the consideration to be paid for the
transferred subsidiaries and the merger, and to pay related
fees and expenses, is estimated to be approximately $628
million. Acquisitions plans to fund this through its working
capital, borrowings under existing lines of credit and other
sources of immediately available funds. The foregoing estimate
does not take into account the results of the exercise by
stockholders of dissenters' rights under Delaware law which
may result in their receipt of consideration less than, more
than or equal to the transaction consideration which would
have been payable to them under the terms of the amended
merger agreement. See "Update to The Transactions --Financing
for the Transactions; Source and Amount of Funds" beginning on
page S-15.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS
o When considering our board of directors' unanimous
recommendation that our stockholders vote in favor of the
adoption of the amended merger agreement and approval of the
transactions contemplated thereby, you should be aware that
some of our directors and executive officers have interests in
the transactions that are different from, or in addition to,
the interests of our stockholders. See "Update to The
Transactions--Interests of Certain Persons in the
Transactions" beginning on page S-15.
Our board of directors knew about these additional interests
and considered them, among other matters, when it approved the
amended merger agreement and determined that the sale of the
transferred subsidiaries, the merger and the amended merger
agreement are advisable and are fair to us and our
stockholders, and in our best interest and the best interest
of our stockholders.
S-4
UPDATE TO QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers briefly address some commonly asked
questions regarding the adjourned special meeting, the amended merger agreement
and the transactions. These questions and answers may not address all questions
that may be important to you. Please refer to the more detailed information
contained elsewhere in this proxy supplement, the definitive proxy statement,
the appendices to this proxy supplement and the definitive proxy statement and
the other documents we refer to in this proxy supplement and the definitive
proxy statement.
Q. WHY ARE OUR STOCKHOLDERS RECEIVING THIS SUPPLEMENT TO THE DEFINITIVE
PROXY STATEMENT?
A. We are sending you this proxy supplement because on November 30, 2006,
we, Lone Star Acquisitions and Merger Sub amended the original merger
agreement. As a result of this amendment, the aggregate transaction
consideration payable to holders of our common stock upon consummation
of the transactions was increased from the $27.10 per share in cash
provided in the original merger agreement to $27.35 per share in cash.
This proxy supplement provides information with respect to the amended
merger agreement and updates, where applicable, the definitive proxy
statement previously mailed to you.
Q. WHAT SHOULD I DO IF I HAVE ALREADY VOTED MY SHARES?
A. First, carefully read and consider the information contained in this
proxy supplement and the definitive proxy statement, including the
appendices. IF YOU HAVE ALREADY SUBMITTED A PROXY, YOU DO NOT NEED TO
DO ANYTHING UNLESS YOU WANT TO CHANGE YOUR VOTE. IF YOU WANT TO CHANGE
YOUR VOTE, YOU NEED TO SEND IN A NEW PROXY CARD (ONE IS INCLUDED WITH
THIS PROXY SUPPLEMENT), SUBMIT ANOTHER PROXY BY TELEPHONE OR OVER THE
INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD OR ATTEND THE
SPECIAL MEETING AND VOTE IN PERSON. Otherwise, your shares will be
voted on the amended merger agreement as indicated in the proxy card
you sent earlier or pursuant to the proxy you previously submitted by
telephone or over the Internet. If you are a registered holder and you
wish to change your vote, please complete, sign and date the enclosed
proxy card and return it in the postage prepaid envelope provided as
soon as possible or promptly submit your proxy by telephone or over the
Internet following the instructions on the proxy card. If your shares
are held in "street name" by your broker and you wish to change your
vote, you should follow the procedures provided to you by your broker
regarding how to instruct your broker to vote your shares.
Q. WHAT SHOULD I DO IF I HAVE NOT VOTED MY SHARES?
A. First, carefully read and consider the information contained in this
proxy supplement and the definitive proxy statement, including the
appendices. If you are a registered holder and you have not already
submitted a proxy, please complete, sign and date the enclosed proxy
card and return it in the postage prepaid envelope provided as soon as
possible or promptly submit your proxy by telephone or over the
Internet following the instructions on the proxy card. If your shares
are held in "street name" by your broker and you have not already
submitted a proxy, you should follow the procedures provided to you by
your broker regarding how to instruct your broker to vote your shares.
S-5
Q. WHEN AND WHERE IS THE ADJOURNED SPECIAL MEETING?
A. The adjourned special meeting will be reconvened on Tuesday, December
12, 2006 at 1:00 p.m., Eastern Time, at the offices of Olshan Grundman
Frome Rosenzweig & Wolosky LLP, located at Park Avenue Tower, 65 East
55th Street, New York, New York 10022.
Q. WHAT MATTERS WILL WE VOTE ON AT THE SPECIAL MEETING?
A. You will vote on the following proposals:
o to adopt the amended merger agreement and to approve the
transactions contemplated thereby; and
o to approve the adjournment of the special meeting, if
necessary or appropriate, to solicit additional proxies if
there are insufficient votes at the time of the special
meeting to adopt the amended merger agreement and approve the
transactions contemplated thereby.
By returning your proxy card or submitting your vote by telephone or
over the Internet, you will also authorize the proxies named on the
proxy card to consider and take action upon such other business as may
properly come before the special meeting or any adjournment thereof.
None of the proposals to be acted upon at the special meeting is
conditioned upon the approval of any other proposal.
Q. HOW DOES OUR BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
A. Our board of directors recommends that you vote:
o "FOR" the adoption of the amended merger agreement and
approval of the transactions contemplated thereby; and
o "FOR" the adjournment of the special meeting, if necessary or
appropriate, to solicit additional proxies.
Q. WHAT ARE THE REQUIRED VOTES FOR THE PROPOSALS?
A. In order to approve the amended merger agreement, holders of a majority
of the outstanding shares of our common stock entitled to vote must
vote in favor of adopting the amended merger agreement and the
transactions contemplated thereby. IF YOU WITHHOLD A VOTE OR ABSTAIN
FROM VOTING ON THE PROPOSAL FOR THE ADOPTION OF THE AMENDED MERGER
AGREEMENT AND THE APPROVAL OF THE TRANSACTIONS CONTEMPLATED THEREBY, IT
WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE PROPOSAL. Approval of
the proposal to adjourn the special meeting, if necessary or
appropriate, requires the favorable vote of a majority of the votes
cast at the special meeting, in person or by proxy, even if less than a
quorum.
Q. WHO MAY ATTEND THE SPECIAL MEETING?
A. All of our stockholders who owned shares on October 17, 2006, the
record date for the special meeting, may attend.
S-6
Q. WHO MAY VOTE AT THE SPECIAL MEETING?
A. The record date for the special meeting has not changed. Only holders
of record of our common stock as of the close of business on October
17, 2006, the record date for the special meeting, may vote at the
special meeting. As of the record date, we had 21,434,908 outstanding
shares of common stock entitled to vote.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A. Yes, but your broker will only be permitted to vote your shares of our
common stock if you instruct your broker how to vote. You should follow
the procedures provided to you by your broker regarding how to instruct
your broker to vote your shares. Failure to instruct your broker to
vote your shares will have exactly the same effect as voting against
adoption of the amended merger agreement and the transactions
contemplated thereby.
Q. WHAT HAPPENS IF I WITHHOLD MY VOTE OR ABSTAIN FROM VOTING?
A. IF YOU WITHHOLD A VOTE OR ABSTAIN FROM VOTING ON THE PROPOSAL FOR THE
ADOPTION OF THE AMENDED MERGER AGREEMENT AND THE APPROVAL OF THE
TRANSACTIONS CONTEMPLATED THEREBY, IT WILL HAVE THE SAME EFFECT AS A
VOTE "AGAINST" THE PROPOSAL. Approval of the proposal to adjourn the
special meeting, if necessary or appropriate, requires the favorable
vote of a majority of the votes cast at the special meeting, in person
or by proxy, even if less than a quorum, and, therefore, withholding a
vote or abstaining from voting will have no effect on the proposal to
adjourn the special meeting.
Q. WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
A. Under stock market rules currently in effect, brokerage firms and
nominees have the authority to vote their customers' unvoted shares on
certain "routine" matters if the customers have not furnished voting
instructions within a specified period prior to the special meeting.
However, the proposal to adopt the amended merger agreement and the
transactions contemplated thereby and the proposal to adjourn the
special meeting, if necessary or appropriate, to solicit additional
proxies, are not considered "routine" matters and hence brokerage firms
and nominees will not be able to vote the shares of customers from whom
they have not received voting instructions with regard to the proposal
to adopt the amended merger agreement and the transactions contemplated
thereby or the proposal to adjourn the special meeting. If you hold
your shares directly in your own name, they will not be counted as
shares present for the purposes of establishing a quorum or be voted if
you do not provide a proxy or attend the special meeting and vote the
shares yourself.
Broker non-votes occur when shares held by a broker are not voted with
respect to a proposal because (1) the broker has not received voting
instructions from the beneficial owner of the shares and (2) the broker
lacks the authority to vote the shares at the broker's discretion.
Broker non-votes will have no effect on the proposal to adjourn the
special meeting, if necessary or appropriate, to solicit additional
proxies because broker non-votes will not be considered votes cast, but
will be counted as shares present and entitled to vote for the purposes
of determining the presence of a quorum. With regard to the proposal to
adopt the amended merger agreement and the transactions contemplated
thereby, the shares represented by broker non-votes will also be
considered present at the special meeting for the purposes of
determining a quorum, but will have the same effect as a vote "AGAINST"
the proposal because holders of a majority of the outstanding shares of
our common stock entitled to vote must vote in favor of the adoption of
the amended merger agreement and the transactions contemplated thereby
in order for this proposal to be approved.
S-7
Q. IF I HAVE GIVEN A PROXY, MAY I CHANGE MY VOTE?
A. Yes. Until your proxy is voted at the special meeting, you can revoke
your proxy and change your vote in any of the following ways:
o by giving written notice of the revocation to our Secretary;
o by properly submitting another proxy by mail, telephone or the
Internet, with a later date; or
o by voting in person at the special meeting (if your shares are
registered directly on our books and not held through a
broker, bank or other nominee).
If you have instructed a broker to vote your shares, the
above-described options for changing your vote do not apply; instead,
you must follow the instructions received from your broker to change
your vote.
Your attendance at the special meeting will not in and of itself
constitute a revocation of your proxy.
Q. WHAT ARE THE PROPOSED TRANSACTIONS?
A. In the proposed transactions, we will sell to Purchase Sub all of the
shares of capital stock of the transferred subsidiaries and,
immediately thereafter, Merger Sub will merge with and into us and we
will be the surviving corporation in the merger. As a result of the
transactions contemplated by the amended merger agreement, Acquisitions
and its affiliates will acquire our entire company, including all of
our restaurant operations, which include Lone Star Steakhouse & Saloon,
Texas Land & Cattle Co., Sullivan's Steakhouse, Del Frisco's Double
Eagle Steak House and Frankie's Italian Grille, and our stockholders
will receive an aggregate of $27.35 per share in cash, without
interest. Together, the transfers and the merger will result in the
sale of our entire company to Acquisitions and its affiliates. We will
not consummate one of these transactions without the other. As a result
of the transactions, we will cease to be a publicly traded company, and
we will become an affiliate of Acquisitions.
Q. IF THE TRANSACTIONS ARE COMPLETED, WHAT WILL I BE ENTITLED TO RECEIVE
FOR MY SHARES AND WHEN WILL I RECEIVE IT?
A. As a result of the amended merger agreement, at the effective time of
the merger, each outstanding share of our common stock (other than
shares held by Acquisitions, Merger Sub or us, and other than shares
held by stockholders properly exercising appraisal rights pursuant to
Section 262 of the General Corporation Law of the State of Delaware)
automatically will be converted into the right to receive the
transaction consideration of an aggregate of $27.35 in cash, without
interest. All shares of our common stock held by Acquisitions, Merger
Sub or us will be retired and cancelled and no payment will be made in
respect of those shares.
Pursuant to Delaware law, holders of shares of our common stock will
have the right to dissent from the transactions and receive the fair
value of their shares. For a complete description of the procedures
that must be followed to dissent from the transactions, see "The
Transactions--Appraisal or Dissenters' Rights" in the definitive proxy
S-8
statement, as well as the text of Section 262 of the General
Corporation Law of the State of Delaware, set forth in Annex D to the
definitive proxy statement.
After the transactions are completed, we will arrange for a letter of
transmittal to be sent to each of our stockholders. The transaction
consideration will be paid to each stockholder once that stockholder
submits a properly completed and duly executed letter of transmittal,
properly endorsed stock certificates and any other required
documentation.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After we complete the transactions, you will receive written
instructions informing you how to send in your stock certificates in
order to receive the transaction consideration of $27.35 per share. You
will receive your cash payment as soon as practicable after receipt of
the stock certificates representing the shares of our common stock that
you own, together with the completed documents requested in the
instructions. PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY
CARD.
Q. WHERE CAN I FIND MORE INFORMATION ABOUT LONE STAR STEAKHOUSE & SALOON,
INC.?
A. We file periodic reports and other information with the Securities and
Exchange Commission, which we refer to as the "SEC." This information
is available at the SEC's public reference facilities, and at the
Internet site maintained by the SEC at http://www.sec.gov. For a more
detailed description of the information available, please see the
section of this proxy supplement entitled "Where You Can Find
Additional Information."
Q. WHO CAN HELP ANSWER MY QUESTIONS?
A. If you have questions about the adjourned special meeting, the amended
merger agreement or the transactions after reading this proxy
supplement and the definitive proxy statement, you should contact our
proxy solicitor, Innisfree M&A Incorporated, at 501 Madison Avenue,
20th Floor, New York, New York 10022 or call Innisfree toll-free at
(877) 456-3488.
S-9
AMENDMENT TO THE MERGER AGREEMENT
On November 30, 2006, we, Lone Star Acquisitions and Merger Sub entered
into a First Amendment to the Agreement and Plan of Merger, dated as of August
18, 2006, among Lone Star Acquisitions, Merger Sub and us. The definitive proxy
statement includes the original merger agreement as Annex A thereto and also
includes a summary of the original merger agreement, beginning on page 51 of the
definitive proxy statement. A copy of the amendment to the original merger
agreement is attached as Annex A to this proxy supplement and is incorporated by
reference into this discussion.
The amendment to the original merger agreement provides for an increase
in the aggregate transaction consideration payable to holders of our common
stock upon consummation of the transactions from the $27.10 per share in cash,
without interest, provided in the original merger agreement to $27.35 per share
in cash, without interest. The increase in the aggregate transaction
consideration will be effected by increasing the consideration payable in
respect of the merger portion of the transactions from $6.33 per share to $6.58
per share, resulting in an increase in the aggregate transaction consideration
from $27.10 per share to $27.35 per share.
As a result of the amended merger agreement:
o upon completion of the transfers and the merger, each share of
our common stock not held by Lone Star Acquisitions, COI
Acquisition Corp. or us, or by our stockholders who perfect
their appraisal rights under Delaware law, will automatically
be converted into the right to receive an aggregate of $27.35
in cash, without interest; and
o a holder of outstanding options to purchase shares of our
common stock, whether or not then vested, at the effective
time of the merger, will be entitled to receive a cash amount
equal to the product of (a) the amount, if any, by which
$27.35 exceeds the exercise price per share of each option
held by such person at the effective time of the merger,
multiplied by (b) the number of shares subject to such option
held by such person, less any applicable withholdings for
taxes. No consideration will be paid in respect of any stock
options for which the exercise price equals or exceeds $27.35
per share.
AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THE AMENDED MERGER
AGREEMENT, ACQUISITIONS AND ITS AFFILIATES WILL ACQUIRE OUR ENTIRE COMPANY,
INCLUDING ALL OF OUR RESTAURANT OPERATIONS, WHICH INCLUDE LONE STAR STEAKHOUSE &
SALOON, TEXAS LAND & CATTLE CO., SULLIVAN'S STEAKHOUSE, DEL FRISCO'S DOUBLE
EAGLE STEAK HOUSE AND FRANKIE'S ITALIAN GRILLE, AND OUR STOCKHOLDERS WILL
RECEIVE AN AGGREGATE OF $27.35 PER SHARE IN CASH, WITHOUT INTEREST. TOGETHER,
THE TRANSFERS AND THE MERGER WILL RESULT IN THE SALE OF OUR ENTIRE COMPANY TO
ACQUISITIONS AND ITS AFFILIATES. WE WILL NOT CONSUMMATE ONE OF THESE
TRANSACTIONS WITHOUT THE OTHER.
UPDATE TO THE SPECIAL MEETING
DATE, TIME AND PLACE
As described in the definitive proxy statement, the special meeting of
our stockholders was originally scheduled for November 30, 2006. The special
meeting was convened on that date and we received the requisite vote of our
stockholders needed to adjourn the special meeting. The special meeting was
adjourned and will be reconvened on Tuesday, December 12, 2006, at 1:00 p.m.,
Eastern Time, to allow our stockholders to consider the increased transaction
consideration and amended merger agreement. At that time, the special meeting
will resume at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
located at Park Avenue Tower, 65 East 55th Street, New York, New York 10022.
S-10
PURPOSE OF THE SPECIAL MEETING
THE SPECIAL MEETING IS BEING RECONVENED TO CONSIDER AND VOTE UPON THE
TRANSACTIONS CONTEMPLATED BY THE AMENDED MERGER AGREEMENT, AS A RESULT OF WHICH
ACQUISITIONS AND ITS AFFILIATES WILL ACQUIRE OUR ENTIRE COMPANY, INCLUDING ALL
OF OUR RESTAURANT OPERATIONS, WHICH INCLUDE LONE STAR STEAKHOUSE & SALOON, TEXAS
LAND & CATTLE CO., SULLIVAN'S STEAKHOUSE, DEL FRISCO'S DOUBLE EAGLE STEAK HOUSE
AND FRANKIE'S ITALIAN GRILLE, AND OUR STOCKHOLDERS WILL RECEIVE AN AGGREGATE OF
$27.35 PER SHARE IN CASH, WITHOUT INTEREST.
Specifically, at the special meeting, we will ask holders of our common
stock to consider and vote on the following proposals:
1. To adopt the Agreement and Plan of Merger, dated as of August
18, 2006, as amended as of November 30, 2006, by and among
Lone Star Steakhouse & Saloon, Inc., Lone Star U.S.
Acquisitions LLC and COI Acquisition Corp., an affiliate of
Lone Star Acquisitions, pursuant to which we will sell to an
affiliate or affiliates of Lone Star Acquisitions all of the
shares of capital stock of certain of our subsidiaries
designated by Lone Star Acquisitions and, immediately
thereafter, COI Acquisition will merge with and into us, and
we will be the surviving corporation in the merger and become
an affiliate of Lone Star Acquisitions; and
2. To approve the adjournment of the special meeting, if
necessary or appropriate, to solicit additional proxies if
there are insufficient votes at the time of the special
meeting to adopt the amended merger agreement and approve the
transactions contemplated thereby.
By returning your proxy card or submitting your vote by telephone or
over the Internet, you will also authorize the proxies named on the proxy card
to consider and take action upon such other business as may properly come before
the special meeting or any adjournment thereof.
Our board of directors has unanimously determined that the transfers,
the merger and the amended merger agreement are advisable and are fair to us and
our stockholders, and in our best interest and the best interest of our
stockholders. Accordingly, the board of directors has unanimously approved the
amended merger agreement and the transactions contemplated thereby. The board of
directors unanimously recommends that you vote "FOR" the adoption of the amended
merger agreement and the approval of the transactions contemplated thereby at
the special meeting and "FOR" the approval of the adjournment of the special
meeting, if necessary or appropriate, to solicit additional proxies.
RECORD DATE AND SHARES ENTITLED TO VOTE
The record date for the special meeting has not changed. Only holders
of record of our common stock at the close of business on October 17, 2006, the
record date for the special meeting, are entitled to notice of, and to vote at,
the special meeting. On the record date, 21,434,908 shares of our common stock
were issued and outstanding and held by approximately 295 holders of record.
VOTE REQUIRED; VOTING AGREEMENT
In order to adopt the amended merger agreement and approve the
transactions contemplated thereby, holders of at least a majority of the
outstanding shares of our common stock entitled to vote must vote in favor of
S-11
adopting the amended merger agreement and the transactions contemplated thereby.
Each holder of our common stock is entitled to one vote for each share held of
record on the record date. IF YOU WITHHOLD A VOTE OR ABSTAIN FROM VOTING ON THE
PROPOSAL RELATING TO THE ADOPTION OF THE AMENDED MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, IT WILL HAVE THE SAME EFFECT AS A VOTE
"AGAINST" THE PROPOSAL.
Approval of the proposal to adjourn the special meeting, if necessary
or appropriate, requires the favorable vote of a majority of the votes cast at
the special meeting, in person or by proxy, even if less than a quorum. For the
proposal to adjourn the special meeting, abstentions will have no effect on the
outcome, since an abstention is not a vote cast.
In connection with the original merger agreement, Jamie B. Coulter, our
Chief Executive Officer, who holds and is entitled to vote approximately 11.2%
of our total common stock outstanding on the record date, entered into a voting
agreement in which he agreed, among other things, to vote his shares of our
common stock in favor of the adoption of the original merger agreement and the
transactions contemplated thereby, subject to specified exceptions. As a result
of the amendment to the original merger agreement, Mr. Coulter's voting
agreement terminated in accordance with its terms. Mr. Coulter has already voted
his shares of our common stock in favor of the adoption of the amended merger
agreement and the transactions contemplated thereby and has indicated that he
does not intend to revoke or change his vote with respect to the adoption of the
amended merger agreement.
S-12
UPDATE TO THE TRANSACTIONS
BACKGROUND OF THE TRANSACTIONS
The definitive proxy statement describes the background of the
transactions up to and including September 8, 2006. The discussion below
supplements that description up to and including the date of this proxy
supplement.
On October 16, 2006, we issued a press release announcing our 2006
third quarter financial results which, among other things, demonstrated the
continued deterioration of our Lone Star Steakhouse & Saloon flagship concept,
as evidenced by a 9.4% decrease for our 2006 third quarter in comparable store
sales for that concept. On December 4, 2006, we issued a press release updating
our comparable store sales figures for the first eight weeks of our 2006 fourth
quarter, which showed a 13.2% decrease in comparable store sales for the Lone
Star Steakhouse & Saloon concept during this period.
On October 25, 2006, we sent a letter to our stockholders highlighting
some of the primary reasons that led our board of directors to determine that
the transactions are in the best interest of our stockholders.
On or about October 31, 2006, we were served with an amended complaint
and motion for temporary injunction in the purported class action brought in the
District Court of Sedgwick County, Kansas, on behalf of Superior Partners, an
alleged stockholder of ours, and all others similarly situated. The amended
complaint, which also names as defendants Jamie B. Coulter, our Chief Executive
Officer, and our directors Fred B. Chaney, Ph.D., William B. Greene, Jr., Clark
R. Mandigo, Mark Saltzgaber, Thomas C. Lasorda, Michael A. Ledeen, Ph.D.,
Anthony Bergamo and John D. White (the "Individual Defendants"), alleges two
claims arising out of the proposed transactions: (1) a claim against the
Individual Defendants for breach of fiduciary duty; and (2) a claim against the
Individual Defendants and us for failure to disclose purportedly material
information regarding the proposed transactions. The claim against Lone Star
Funds contained in the original complaint was dropped. The amended complaint
seeks an injunction blocking our sale, compensatory and rescissory damages, pre-
and post-trial interest and costs. We filed an opposition to the temporary
injunction and a motion to dismiss the amended complaint. After the parties
engaged in limited expedited discovery, on November 17, 2006, the District Court
held a hearing on plaintiff's motion for a temporary injunction and our motion
to dismiss, and denied both motions. We believe that these claims are without
merit and intend to continue to defend this action vigorously.
On November 2, 2006, members of our board of directors participated in
a telephone conference call to discuss the proxy solicitation process and status
of the transactions.
On November 7, 2006, we sent a letter to our stockholders in order to
provide them with additional detail regarding the process undertaken by the
board of directors in reaching the decision to sell our company, as well as the
board of directors' views with respect to our valuation.
On November 17, 2006, we sent a letter to one of our institutional
stockholders with respect to the ability of potential third-party buyers to
submit an alternative proposal to acquire us and perform a comprehensive due
diligence review of our company.
On or about November 17, 2006, Leo Kwalik, an alleged shareholder of
ours, filed a separate purported class-action complaint against us, also in the
District Court of Sedgwick County, Kansas. This complaint, which also names as
defendants our directors Fred B. Chaney, Ph.D., William B. Greene, Jr., Clark R.
Mandigo, Mark Saltzgaber, Thomas C. Lasorda, Michael A. Ledeen, Ph.D., Anthony
Bergamo and John D. White (the "Director Defendants"), alleges a claim against
S-13
the defendants for breach of fiduciary duty also arising out of the proposed
transactions. This complaint seeks: (1) a declaratory judgment that the merger
agreement was entered into in breach of defendants' fiduciary duties and is
therefore unenforceable; (2) an injunction against consummation of the merger
agreement unless and until we implement procedures to obtain the highest price
for stockholders; (3) an injunction directing the Director Defendants to
exercise their fiduciary duties to obtain a transaction in the best interest of
our stockholders; (4) a constructive trust in favor of plaintiff against any
benefits improperly received by defendants; and (5) costs and disbursements in
the action, including attorneys' and experts' fees. We believe that this claim
is without merit and intend to defend this action vigorously.
On November 20-21, 2006, certain of our executive officers and
directors met with several of our institutional stockholders regarding the
transactions. Following these meetings, representatives of the Company, Lone
Star Funds and their respective advisors discussed what had transpired at these
meetings and had preliminary conversations with respect to a potential amendment
to the original merger agreement.
On November 22, 2006, our board of directors held a telephonic meeting
at which the board members received an update on the meetings that had taken
place with our institutional stockholders and the preliminary conversations that
had occurred regarding a potential amendment to the original merger agreement.
During the week of November 26, 2006, discussions regarding a potential
amendment to the original merger agreement continued among the Company, Lone
Star Funds and their respective legal and financial advisors. On November 29,
2006, our board of directors met again to discuss the status of the discussions
regarding a potential amendment, the status of the stockholder vote on the
original merger agreement and the potential alternatives available to our
company.
On the morning of November 30, 2006, representatives of Lone Star Funds
and our company had further discussions regarding an amendment to the original
merger agreement. During these discussions, the parties agreed to an increase in
the aggregate transaction consideration from $27.10 per share in cash to $27.35
per share in cash. Counsel for the respective parties proceeded to document this
agreement in an amendment to the original merger agreement.
On November 30, 2006, after having carefully considered the terms of
the amended merger agreement, the board of directors unanimously declared the
sale of the transferred subsidiaries, the merger and the amended merger
agreement advisable, fair to and in the best interests of us and our
stockholders, approved the sale of the transferred subsidiaries, the merger and
the amended merger agreement, and resolved to recommend that our stockholders
adopt the amended merger agreement and approve the transactions contemplated
thereby.
On November 30, 2006, Acquisitions, Merger Sub and we executed the
amendment to the original merger agreement.
Also on November 30, 2006, we convened our special meeting of
stockholders, at which we received the requisite vote of our stockholders needed
to adjourn the special meeting. The special meeting was adjourned until December
12, 2006, at 1:00 p.m., Eastern Time, to allow our stockholders to consider the
increased transaction consideration and amended merger agreement.
Later in the day on November 30, 2006, we issued a press release
announcing the signing of the amendment to the original merger agreement and the
adjournment of the special meeting.
S-14
RECOMMENDATION OF THE BOARD OF DIRECTORS
After careful consideration, our board of directors has unanimously
determined that the amended merger agreement, the sale of the transferred
subsidiaries and the merger are advisable and are fair to us and our
stockholders, and in our best interest and the best interest of our stockholders
and has unanimously approved the amended merger agreement and the transactions
contemplated thereby. The board of directors unanimously recommends that you
vote "FOR" the adoption of the amended merger agreement and the approval of the
transactions contemplated thereby at the special meeting and "FOR" the approval
of the adjournment of the special meeting, if necessary or appropriate, to
solicit additional proxies.
FINANCING FOR THE TRANSACTIONS; SOURCE AND AMOUNT OF FUNDS
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE AMENDED MERGER
AGREEMENT IS NOT CONDITIONED ON ACQUISITIONS OBTAINING FINANCING. The total
amount of funds required by Acquisitions to pay the consideration to be paid for
the transferred subsidiaries and the merger, and to pay related fees and
expenses, is estimated to be approximately $628 million. Acquisitions plans to
fund this through its working capital, borrowings under existing lines of credit
and other sources of immediately available funds. The foregoing estimate does
not take into account the results of the exercise by stockholders of dissenters'
rights under Delaware law which may result in their receipt of consideration
less than, more than or equal to the transaction consideration which would have
been payable to them under the terms of the amended merger agreement.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS
The information below reflects the effects of the amendment to the
original merger agreement and updates certain information presented in "The
Transactions--Interests of Certain Persons in the Transactions" beginning on
page 44 of the definitive proxy statement.
TREATMENT OF STOCK OPTIONS
As a result of the amended merger agreement, a holder of outstanding
options to purchase shares of our common stock, whether or not then vested, at
the effective time of the merger, will be entitled to receive a cash amount
equal to the product of (a) the amount, if any, by which $27.35 exceeds the
exercise price per share of each option held by such person at the effective
time of the merger, multiplied by (b) the number of shares subject to such
option held by such person, less any applicable withholdings for taxes. No
consideration will be paid in respect of any stock options for which the
exercise price equals or exceeds $27.35 per share.
Each of our directors and executive officers owns vested and/or
unvested options with exercise prices of less than $27.35 per share. The
following table sets forth the cash consideration that the directors and
executive officers, individually and as a group, will be entitled to receive
under the amended merger agreement in consideration for the cancellation of
unvested and vested options held by such directors and executive officers.
S-15
Total
Consideration
Number of Consideration Consideration for
Shares for Number of for Total Number Cancellation
Subject to Cancellation Shares Cancellation of Shares of Unvested
Unvested of Unvested Subject to of Vested Subject to and Vested
Name Options Options(1) Vested Options Options(1) Options Options(1)
---- ---------- --------------- -------------- ------------- ------------ -------------
Jamie B. Coulter 48,750 $ -(2) 1,178,639 $17,297,801 1,227,389 $17,297,801
John D. White 45,000 -(2) 265,000 4,720,313 310,000 4,720,313
Gerald T. Aaron 26,250 -(2) 158,750 2,832,188 185,000 2,832,188
Deidra Lincoln 15,000 -(2) 84,576 1,492,338 99,576 1,492,338
Mark Mednansky 101,250 318,000 8,750 -(3) 110,000 318,000
Jon W. Howie 53,350 62,330 12,750 73,900 66,100 136,230
Fred B. Chaney 24,375 41,250 5,625 3,150 30,000 44,400
William B. Greene, Jr. 24,375 41,250 19,225 213,270 43,600 254,520
Clark R. Mandigo 24,375 41,250 19,225 213,270 43,600 254,520
Mark Saltzgaber 24,375 41,250 37,425 414,740 61,800 455,990
Thomas Lasorda 24,375 41,250 42,425 479,990 66,800 521,240
Michael Ledeen 24,375 41,250 52,425 610,490 76,800 651,740
Anthony Bergamo 60,625 78,625 16,875 12,075 77,500 90,700
All directors and
executive officers as
a group 496,475 $ 706,455 1,901,690 $28,363,525 2,398,165 $29,069,980
-----------------------
(1) Under the amended merger agreement, no consideration will be paid in
respect of any stock options for which the exercise price equals or
exceeds $27.35 per share. Accordingly, these options will be cancelled
and all of the rights of the holders of these options will terminate at
the effective time of the merger, and the holders of these options will
not receive any payment in respect of these options.
(2) The exercise price of all unvested options held by these individuals
equals or exceeds $27.35 per share.
(3) The exercise price of all vested options held by Mr. Mednansky equals
or exceeds $27.35 per share.
S-16
MARKET PRICE OF LONE STAR STEAKHOUSE COMMON STOCK
Our common stock is quoted on Nasdaq under the symbol "STAR." As of
October 17, 2006, there were approximately 295 holders of record of our common
stock. The following table sets forth, for the periods indicated, the high and
low prices during the day for our common stock, as reported on Nasdaq.
High Low
------------------------------ --------- ---------
CALENDAR 2004
First Quarter $ 29.98 $ 23.15
Second Quarter $ 33.03 $ 24.73
Third Quarter $ 27.47 $ 20.70
Fourth Quarter $ 28.17 $ 23.84
CALENDAR 2005
First Quarter $ 29.60 $ 25.66
Second Quarter $ 31.98 $ 27.61
Third Quarter $ 31.14 $ 24.02
Fourth Quarter $ 27.07 $ 22.56
CALENDAR 2006
First Quarter $ 29.09 $ 22.96
Second Quarter $ 28.50 $ 24.33
Third Quarter $ 28.25 $ 22.55
Fourth Quarter (through December 1, 2006) $ 28.46 $ 26.98
FORWARD LOOKING STATEMENTS
This proxy supplement includes and incorporates by reference statements
that are not historical facts. These forward-looking statements are based on our
and/or, where applicable, Acquisitions' current estimates and assumptions and,
as such, involve uncertainty and risk. Forward-looking statements include the
information concerning possible or assumed future results of operations and also
include those preceded or followed by words such as "anticipates," "believes,"
"thinks," "could," "estimates," "expects," "intends," "may," "should," "plans,"
"targets" and/or similar expressions. There may be events in the future that
cannot be accurately predicted or over which there is no control. Stockholders
should be aware that the occurrence of the events described in this proxy
supplement or in the documents incorporated herein by reference could have a
material adverse effect on our business, operating results and financial
condition or ability to consummate the transactions contemplated by the amended
merger agreement. Examples of these risks include without limitation:
o risk factors disclosed in our Annual Report on Form 10-K for
the fiscal year ended December 27, 2005 incorporated by
reference in this proxy supplement;
o the risk that the amended merger agreement could be
terminated, including under circumstances that would require
us to reimburse expenses up to $1.5 million or pay a
termination fee of $18 million; and
o costs and charges related to the transactions.
S-17
The forward-looking statements are not guarantees of future
performance, events or circumstances, and actual results may differ materially
from those contemplated by the forward-looking statements.
The forward-looking statements contained in this proxy supplement are
excluded from the safe harbor protection provided by the Private Securities
Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as
amended.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our stockholders may read and copy the documents
incorporated by reference, and any reports, statements or other information we
have filed at the SEC's public reference room located at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. You may also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at 100
F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. The SEC
also maintains an Internet site that contains reports and other information
regarding issuers that file electronically with the SEC. Our filings with the
SEC are also available to the public through this web site at www.sec.gov.
If you have questions about the special meeting, the amended merger
agreement or the transactions after reading this proxy supplement, you may
contact our proxy solicitor, Innisfree M&A Incorporated, at 501 Madison Avenue,
20th Floor, New York, New York 10022 or call Innisfree toll-free at (877)
456-3488.
We have not authorized anyone to give you any information or to make
any representation about the transactions or any of the parties involved that
differs from or adds to the information contained in this proxy supplement or in
the documents we have publicly filed with the SEC. Therefore, if anyone should
give you any different or additional information, you should not rely on it.
The information contained in this proxy supplement speaks only as of
the date indicated on the cover of this proxy supplement unless the information
specifically indicates that another date applies.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information filed with
it, which means that we can disclose important information to you by referring
you to the documents containing such information. The information incorporated
by reference is an important part of this proxy supplement, and information
filed later by us with the SEC will automatically update and supersede this
information.
We incorporate by reference the documents listed below and, with
respect to this proxy supplement, any future filings made with the SEC by us
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
which we refer to as the "Exchange Act":
o our Annual Report on Form 10-K for the fiscal year ended
December 27, 2005, as amended on Form 10-K/A on April 26,
2006;
o our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 21, 2006;
o our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 13, 2006;
S-18
o our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 5, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
January 11, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
February 8, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
March 14, 2006;*
o our Current Report on Form 8-K, as filed with the SEC on
May 2, 2006;*
o our Current Report on Form 8-K, as filed with the SEC on
May 9, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
June 15, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
July 26, 2006;*
o our Current Report on Form 8-K, as filed with the SEC on
August 2, 2006;*
o our Current Report on Form 8-K, as filed with the SEC on
August 18, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
August 21, 2006;
o our Current Report on Form 8-K, as filed with the SEC on
October 17, 2006;*
o our Current Report on Form 8-K, as filed with the SEC on
October 19, 2006; and
o our Current Report on Form 8-K, as filed with the SEC on
December 1, 2006.
-----------------------
* Portions of these reports were furnished to the SEC under Item
2.02 (Results of Operations and Financial Condition) or Item
7.01 (Regulation FD Disclosure). Pursuant to General
Instruction B(2) and (6) of Form 8-K, the portions of these
reports submitted under Items 2.02 and 7.01 are not deemed to
be "filed" for purposes of Section 18 of the Exchange Act or
otherwise subject to the liabilities of that section. We are
not incorporating by reference those portions of these reports
that are not deemed to be "filed" for purposes of Section 18
of the Exchange Act, and will not incorporate by reference
those portions of future filings of reports on Form 8-K into a
filing under the Securities Act of 1933, as amended, or the
Exchange Act or into this proxy supplement that are not deemed
to be "filed" for purposes of Section 18 of the Exchange Act.
All documents and reports filed by us pursuant to Section 13(a), 13(c),
14, or 15(d) of the Exchange Act after the date of this proxy supplement and on
or prior to the date of the special meeting are deemed to be incorporated by
reference in this proxy supplement, and only for the purpose of this proxy
supplement, from the date of filing of such documents or reports, except as to
any portion of any future annual or quarterly reports or proxy statements which
is not deemed to be filed under those sections. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this proxy
supplement will be deemed to be modified or superseded for purposes of this
proxy supplement, and only for the purposes of this proxy supplement, to the
extent that any statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
S-19
proxy supplement modifies or supersedes such statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this proxy supplement.
Any person receiving a copy of this proxy supplement may obtain,
without charge, upon written or oral request, a copy of any of the documents
incorporated by reference except for the exhibits to such documents. Requests
should be directed to our proxy solicitor, Innisfree M&A Incorporated, at 501
Madison Avenue, 20th Floor, New York, New York 10022, or call Innisfree
toll-free at (877) 456-3488. If you would like to request any of this
information, please notify us as soon as possible in order to receive the
information before the special meeting is reconvened.
OTHER PROXY STATEMENT MATTERS
A form of proxy is enclosed for your use. Please complete, date, sign
and return the proxy as soon as possible in the enclosed envelope, which
requires no postage if mailed in the United States, or submit your proxy by
telephone or over the Internet following the instructions on the proxy card. A
prompt submission of your proxy will be appreciated.
This proxy supplement does not constitute an offer to sell or to buy,
or a solicitation of an offer to sell or to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any person to whom it is
not lawful to make any offer or solicitation in such jurisdiction.
S-20
ANNEX A
-------
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of
November 30, 2006 (this "AMENDMENT"), is by and among Lone Star Steakhouse &
Saloon, Inc., a Delaware corporation (the "COMPANY"), Lone Star U.S.
Acquisitions LLC, a Delaware limited liability company ("PURCHASER") and COI
Acquisition Corp., a Delaware corporation ("MERGER SUB") and an affiliate of
Purchaser. All capitalized terms used and not otherwise defined herein have the
meanings ascribed to them in the Merger Agreement.
RECITALS
WHEREAS, the parties have entered into that certain Agreement and Plan
of Merger, dated as of August 18, 2006 (the "MERGER AGREEMENT"); and
WHEREAS, the parties desire to amend the Merger Agreement in the manner
more particularly described below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties, and agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1.01. AMENDMENT TO THE MERGER AGREEMENT. The dollar amount
"$6.33" set forth in Section 1.4(b) of the Merger Agreement is hereby amended to
be "$6.58".
Section 1.02 GENERAL PROVISIONS.
(a) GOVERNING LAW. This Amendment shall be deemed to be made in, and in
all respects shall be interpreted, construed and governed by and in accordance
with the internal laws of, the State of Delaware, without regard to the
conflicts of law principles thereof. In any action between any of the parties
arising out of or relating to the subject matter of this Amendment: (a) each of
the parties irrevocably and unconditionally consents and submits to the
exclusive jurisdiction and venue of the state and federal courts located in the
State of Delaware (and agrees not to commence any such action except in such
courts) and irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action brought in such court has been
brought in an inconvenient forum; (b) if any such action is commenced in a state
court, then, subject to applicable law, no party shall object to the removal of
such action to any federal court located in the State of Delaware; (c) each of
the parties irrevocably waives the right to trial by jury and (d) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with the Merger Agreement.
(b) COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which together shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(c) SEVERABILITY. In case any provision in this Amendment shall be held
invalid, illegal or unenforceable in a jurisdiction, such provision shall be
modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
(d) BINDING AGREEMENT; NO ASSIGNMENT. This Amendment shall be effective
only if it is signed by the Purchaser, Merger Sub and the Company. Thereafter,
this Amendment shall be binding upon and inure to the benefit of the Purchaser,
Merger Sub, the Company and each of their successors and assigns. No party to
this Amendment shall assign this Amendment, by operation of law or otherwise, in
whole or in part, without the prior written consent of the other parties hereto.
(e) NO OTHER AMENDMENTS. Except as set forth herein, the terms and
provisions of the Merger Agreement will remain in full force and effect in
accordance with their terms. On or after the date of this Amendment, each
reference in the Merger Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import referring to the Merger Agreement shall mean
and be a reference to the Merger Agreement as amended by this Amendment, and
this Amendment shall be deemed to be a part of the Merger Agreement.
IN WITNESS WHEREOF, the Company, Purchaser and Merger Sub have duly
executed this Amendment, all as of the date first written above.
LONE STAR STEAKHOUSE & SALOON, INC., a
Delaware corporation
By: /s/ Jamie B. Coulter
----------------------------------------
Jamie B. Coulter, Chief Executive Officer
LONE STAR U.S. ACQUISITIONS LLC, a Delaware
limited liability company
By: /s/ Marc L. Lipshy
----------------------------------------
Marc L. Lipshy, Vice President
COI ACQUISITION CORP., a Delaware corporation
By: /s/ Marc L. Lipshy
----------------------------------------
Marc L. Lipshy, Vice President
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your shares of Lone Star
Steakhouse & Saloon, Inc. common stock for the 2006
Special Meeting of Stockholders.
YOU CAN VOTE TODAY IN ONE OF THREE WAYS:
1. VOTE BY TELEPHONE -- Please CALL TOLL-FREE AT 1-866-853-9729 ON A
TOUCH-TONE TELEPHONE and follow the simple recorded instructions. Your vote
will be confirmed and cast as you directed. (Toll-free telephone voting is
available for residents of the U.S. and Canada only. If outside the U.S. or
Canada, call 1-215-521-1342.)
OR
2. VOTE BY INTERNET -- Please access HTTPS://WWW.PROXYVOTENOW.COM/STAR and
follow the simple instructions on the screen. Please note you must type an
"s" after http.
----------------------------------------
| |
| |
----------------------------------------
You may vote by telephone or Internet 24 hours a day, 7 days a week.
Your telephone or Internet vote authorizes the named proxies to vote
your shares in the same manner as if you had executed a WHITE proxy
card.
OR
3. VOTE BY MAIL--If you do not have access to a touch-tone telephone or to the
Internet, please complete, sign, date and return the WHITE proxy card in
the envelope provided to: Lone Star Steakhouse & Saloon, Inc., c/o
Innisfree M&A Incorporated, FDR Station, P.O. Box 5154, New York, NY
10150-5154.
TO VOTE BY MAIL PLEASE DETACH PROXY CARD HERE AND RETURN IN THE
ENVELOPE PROVIDED
--------------------------------------------------------------------------------
----- PLEASE MARK
| X | YOUR VOTE AS IN
----- THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. To adopt the Agreement and Plan of Merger, dated as of FOR AGAINST ABSTAIN 3. In their discretion, the Proxies are
August 18, 2006, as amended as of November 30, 2006 |_| |_| |_| authorized to consider and take
(the "Merger Agreement"), by and among Lone Star action upon such other matters as may
Steakhouse & Saloon, Inc. (the "Company"), Lone Star properly come before the meeting or
U.S. Acquisitions LLC ("Lone Star Acquisitions") and any adjournment thereof.
COI Acquisition Corp., an affiliate of Lone Star
Acquisitions, pursuant to which the Company will sell
to an affiliate or affiliates of Lone Star Acquisitions
all of the shares of capital stock of certain of the
Company's subsidiaries designated by Lone Star
Acquisitions, and, immediately thereafter, COI
Acquisition Corp. will merge with and into the Company,
and the Company will be the surviving corporation in
the merger and become an affiliate of Lone Star
Acquisitions.
2. To approve the adjournment of the special meeting, if FOR AGAINST ABSTAIN The undersigned revokes any prior
necessary or appropriate, to solicit additional proxies |_| |_| |_| proxies to vote the shares covered by
if there are insufficient votes at the time of the this proxy. Date:
special meeting to adopt the Merger Agreement and ____________________________, 2006
approve the transactions contemplated thereby.
-----------------------------------------
Signature
-----------------------------------------
Signature
NOTE: Please sign exactly as your name
or names appear on this Proxy. When
shares are held jointly, each holder
should sign. When signing as executor,
administrator, attorney, trustee or
guardian, please give full title as
such. If the signer is a corporation,
please sign full corporate name by duly
authorized officer, giving full title as
such. If signer is a partnership, please
sign in partnership name by authorized
person.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED REPLY ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
PLEASE VOTE TODAY!
SEE REVERSE
SIDE FOR THREE EASY WAYS TO VOTE.
TO VOTE BY MAIL PLEASE DETACH PROXY CARD HERE AND RETURN IN THE
ENVELOPE PROVIDED
--------------------------------------------------------------------------------
LONE STAR STEAKHOUSE & SALOON, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LONE STAR STEAKHOUSE & SALOON, INC. (THE "COMPANY")
FOR USE AT THE SPECIAL MEETING OF STOCKHOLDERS OF THE COMPANY
TO BE HELD AT 1:00 P.M., EASTERN TIME, ON TUESDAY, DECEMBER 12, 2006
P
R The undersigned hereby appoints Jamie B. Coulter, John D. White, and each
O of them, attorneys and proxies with full power of substitution to vote in
X the name of and as proxy for the undersigned all the shares of common stock
Y of the Company held of record by the undersigned on October 17, 2006 at the
Special Meeting of Stockholders of the Company to be held at 1:00 p.m.,
Eastern Time, on Tuesday, December 12, 2006, at the offices of Olshan
Grundman Frome Rosenzweig & Wolosky LLP, located at Park Avenue Tower, 65
East 55th Street, New York, New York 10022, and at any adjournment thereof.
PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE
VOTED FOR PROPOSALS 1 AND 2.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)