-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GQWr3wHU5rXGY3A8WEJQw1GUMf473FOfniSIvGI0H+sfFhdUQ5t5N7ws0xuBQphj MmDxT/N69J/Pb9EaLfT26A== 0000922423-02-000736.txt : 20020628 0000922423-02-000736.hdr.sgml : 20020628 20020628152709 ACCESSION NUMBER: 0000922423-02-000736 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20020628 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DOLPHIN LTD PARTNERSHIP I LP CENTRAL INDEX KEY: 0001176314 IRS NUMBER: 061567782 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: 96 COMENTNOS POINT ROAD CITY: STAMFORD STATE: CT ZIP: 06902 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MORTONS RESTAURANT GROUP INC CENTRAL INDEX KEY: 0000883981 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133490149 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42940 FILM NUMBER: 02691382 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PK RD STE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5166271515 MAIL ADDRESS: STREET 1: 3333 NEW HYDE PARK ROAD STREET 2: SUITE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 FORMER COMPANY: FORMER CONFORMED NAME: QUANTUM RESTAURANTS GROUP INC DATE OF NAME CHANGE: 19950315 SC 13D 1 kl06056_sc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Morton's Restaurant Group, Inc. ------------------------------- (Name of Issuer) Common Stock, $.01 par value ----------------------------- (Title of Class of Securities) 619429103 --------- (CUSIP Number) Mr. Donald T. Netter c/o Dolphin Limited Partnerships 96 Cummings Point Road Stamford, Connecticut 06902 (203) 358-8000 -------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 19, 2002 ------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following box: |_|. Page 1 of 18 pages SCHEDULE 13D CUSIP No. 619429103 - ------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Dolphin Limited Partnership I, L.P. 06-156-7782 - ----------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------------------------------------------------------------------------ 3) SEC USE ONLY - ------------------------------------------------------------------------------ 4) SOURCE OF FUNDS WC - ------------------------------------------------------------------------------ 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| ______________________________________________________________________________ 6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7) SOLE VOTING POWER NUMBER OF 254,800 SHARES __________________________________________________________ BENEFICIALLY 8) SHARED VOTING POWER OWNED BY none EACH __________________________________________________________ REPORTING 9) SOLE DISPOSITIVE POWER PERSON 254,800 WITH __________________________________________________________ 10) SHARED DISPOSITIVE POWER none - ------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 254,800 - ------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.1% - ------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON PN - ------------------------------------------------------------------------------- SCHEDULE 13D Item 1. Security and Issuer. ------------------- This Statement on Schedule 13D (the "Statement") relates to the common stock, $.01 par value (the "Common Stock"), of Morton's Restaurant Group, Inc., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 3333 New Hyde Park Road, New Hyde Park, New York 11042. Item 2. Identity and Background. ----------------------- (a) - (c) This statement is being filed by Dolphin Limited Partnership I, L.P. ("Dolphin"). Dolphin is a Delaware limited partnership formed to engage primarily in the business of investing in corporate securities. The address of the principal business and principal offices of Dolphin is 96 Cummings Point Road, Stamford, Connecticut 06902. The general partner of Dolphin is Dolphin Associates LLC, a Delaware limited liability company formed to be the general partner of Dolphin and other investing partnerships. The address of the principal business and principal offices of Dolphin Associates LLC is 96 Cummings Point Road, Stamford, Connecticut 06902. The managing member of Dolphin Associates LLC is Dolphin Holdings Corp. Dolphin Holdings Corp. is a Delaware corporation formed to be the managing member of Dolphin Associates LLC. The address of the principal business and principal offices of Dolphin Holdings Corp. is 96 Cummings Point Road, Stamford, Connecticut 06902. The officers and directors of Dolphin Holdings Corp. and their principal occupations and business addresses are set forth on Schedule I and incorporated by reference in this Item 2. (d) - (e) During the last five years, neither Dolphin nor any other person identified in response to this Item 2 was convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction nor as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. (f) Each natural person identified in Item 2 is a citizen of the United States. Item 3. Source and Amount of Funds or Other Consideration. ------------------------------------------------- All purchases of Common Stock by Dolphin were made in the open market and were funded by working capital. The amount of the funds expended by Dolphin for such purchases was $3, 717,241, inclusive of commissions and execution related costs. 2 Item 4. Purpose of Transaction. ---------------------- Dolphin acquired beneficial ownership of the shares of Common Stock to which this Statement relates for investment purposes and to obtain a significant equity interest in the Company. Dolphin may acquire additional shares or other securities of the Company or sell or otherwise dispose of any or all of the shares or other securities of the Company beneficially owned by it. Although Dolphin has not determined a course of action with respect to the Company, Dolphin may take any other action with respect to the Company or any of its securities in any manner permitted by law. In January 2002, counsel for Dolphin contacted the Company's financial advisor and indicated that Dolphin was interested in pursuing a possible acquisition transaction with the Company and asked to receive the Company's standard confidentiality agreement. Counsel to the Company's Special Committee indicated to Dolphin's counsel that Dolphin would be required to execute a confidentiality agreement that contained standstill provisions in order to be permitted to review certain information about the Company. Dolphin attempted to revise certain terms of the confidentiality agreement and to remove the standstill provisions contained therein. On February 8, 2002, counsel to the Company's Special Committee informed counsel to Dolphin that the standstill provisions would not be removed from the Company's standard confidentiality agreement. On February 11, 2002, Dolphin sent a letter to the Chairman of the Special Committee of the Company, a copy of which is attached hereto as Exhibit 99.1. In such letter, Dolphin indicated its objection to the standstill provisions as well as certain other provisions contained in the confidentiality agreement which the Company required Dolphin to execute. On February 20, 2002, in response to a letter from counsel to the Company's Special Committee, Dolphin sent a letter to the Chairman of the Special Committee of the Company expressing, among other things, its belief that the standstill provisions contained in the Company's form of confidentiality agreement would chill the Company's stated objective of fully exploring a potential sale of the Company. A copy of such letter is attached hereto as Exhibit 99.2. On February 27, 2002, Dolphin sent a letter to the Chairman of the Special Committee of the Company indicating, among other things, that based on the Company's exclusion of legitimate potential bidders for the Company as a result of the standstill provisions in the confidentiality agreement, it would be inappropriate for the Company to agree to any breakup or lockup fee or other agreement that could prove more costly to other potential bidders. A copy of such letter is attached hereto as Exhibit 99.3. On March 14, 2002, Dolphin sent a letter to the Chairman of the Special Committee of the Company, a copy of which is attached hereto as Exhibit 99.4. In such letter, Dolphin, among other things, expressed its belief that the standstill provisions contained in the form of confidentiality agreement which the Company required potential bidders to execute failed to serve any business purpose or benefit to the stockholders of the Company. On May 24, 2002, Dolphin sent a letter to the Chairman of the Special Committee of the Company expressing, among other things, its view for the need for a new auction process where neither standstill provisions nor undue burdens would be utilized to repel potential bidders for the Company. A copy of such letter is attached hereto as Exhibit 99.5 3 Except as set forth in this Item 4, Dolphin does not have any present plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of the instructions to Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) As of the date hereof, Dolphin owns an aggregate of 254,800 shares of Common Stock, representing approximately 6.1% of the 4,189,711 shares of Common Stock reported by the Company in its Schedule 14A filed with the Securities and Exchange Commission on June 18, 2002, to be issued and outstanding as of June 12, 2002. (b) As of the date hereof, Dolphin has sole voting and dispositive power over the shares of Common Stock beneficially owned by it. (c) Except as set forth in the attached Schedule II, Dolphin has not effected any transaction in shares of such Common Stock during the 60 days preceding the date hereof. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. ------------------------------------------------------------- Not applicable. Item 7. Material to be Filed as Exhibits. -------------------------------- Exhibit No. Description - ---------- ----------- 99.1 Letter dated February 11, 2002 to the Chairman of the Special Committee of the Company. 99.2 Letter dated February 20, 2002 to the Chairman of the Special Committee of the Company. 99.3 Letter dated February 27, 2002 to the Chairman of the Special Committee of the Company. 99.4 Letter dated March 14, 2002 to the Chairman of the Special Committee of the Company. 99.5 Letter dated May 24, 2002 to the Chairman of the Special Committee of the Company. 4 SIGNATURES After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this Statement is true, complete and correct. Dated: June 28, 2002 DOLPHIN LIMITED PARTNERSHIP I, L.P. by DOLPHIN ASSOCIATES LLC, its general partner, by DOLPHIN HOLDINGS CORP., its managing member, by /s Donald T. Netter ------------------------------- Name: Donald T. Netter Title: Senior Managing Director 5 SCHEDULE I Directors and Officers of Dolphin Holdings Corp.
Name and Position Principal Occupation Principal Business Address - ----------------- -------------------- -------------------------- Donald T. Netter, Senior Managing Director, 96 Cummings Point Road Director, Senior Managing Chief Executive Officer Stamford, Connecticut 06902 Director, Chief Executive and President, Dolphin Officer and President Holdings Corp. Theodore A. DeBlanco, Managing Director and 96 Cummings Point Road Managing Director and Senior Vice President, Stamford, Connecticut 06902 Senior Vice President Dolphin Holdings Corp. Brett J. Buckley, Vice Vice President, Dolphin 96 Cummings Point Road President Dolphin Holdings Corp. Stamford, Connecticut 06902
6 SCHEDULE II Shares purchased by Dolphin Limited Partnership I, L.P. Date Number of Shares Price Per Share Cost1 - ---- ---------------- --------------- ----- 4/30/02 1,000 $ 13.40 $ 13,400 5/10/02 1,900 $ 14.70 $ 27,930 5/22/02 800 $ 14.14 $ 11,312 5/24/02 4,000 $ 14.45 $ 57,800 5/28/02 5,050 $ 14.40 $ 72,720 6/17/02 500 $ 14.00 $ 7,000 6/19/02 1,000 $ 15.18 $ 15,180 6/19/02 14,800 $ 15.12 $223,776 6/20/02 10,000 $ 15.21 $152,100 6/20/02 15,000 $ 15.18 $227,700 6/21/02 2,000 $ 15.01 $ 30,020 6/21/02 3,500 $ 14.75 $ 51,625 Shares sold by Dolphin Limited Partnership I, L.P. Date Number of Shares Price Per Share Proceeds2 - ---- ---------------- --------------- --------- 5/1/02 5,000 $13.95 $69,750 - ----------------- 1 Excludes commissions and other execution-related costs. 2 Excludes commissions and other execution-related costs. 7 EX-99 3 kl06056_ex99-1.txt EXHIBIT 99.1 LETTER Exhibit 99.1 February 11, 2002 Via Federal Express - ------------------- Mr. Lee Cohn Chairman of Special Committee Morton's Restaurant Group, Inc. Big 4 Restaurants 5101 North Scottsdale Road Scottsdale, AZ 85250 Dear Mr. Cohn: As you are aware, for several weeks, Dolphin Limited Partnership I, L.P. ("Dolphin"), the holder of approximately 3 1/2% of the outstanding shares of Morton's Restaurant Group Inc.'s ("MRG" or the "Company") has attempted to participate in the Company's publicly announced process of "exploring its strategic alternatives, including evaluating a potential sale of the Company". According to the Company's statements, such a process "includes discussions with interested parties, as well as an evaluation of any offers that are received". Accordingly, we have repeatedly sought to execute an appropriate confidentiality agreement with the Company's special committee (the "Committee") and its advisors. We find it difficult to conclude that the Committee and the Board are interested in maximizing shareholder value, when you are requiring Dolphin, a significant stockholder to execute a confidentiality agreement containing standstill provisions and provisions which permit the Company to withhold information at its discretion from a prospective acquirer. The Company's announced process has been ongoing since May, 2001 with no tangible result having been revealed. We have been informed by the Company's financial adviser, Greenhill & Co., LLC, that this process is expected to conclude in February, 2002. We note that even though the economy has begun to recover and stocks of other restaurant companies have performed well, the share price of MRG has steadily declined from a high of $27.62 on May 2, 2001 to the current share price of $7.40. Further, same store sales, for the three and nine months ended September 30, 2001, declined 14.9% and 8.6%, respectively, while restaurant operating costs for these same periods increased 4% and 4.9%, respectively (an unusual matrix for a company that has a stated intention of reducing costs). In light of the Company's diminished financial results, the Company's existing anti-takeover rights plan, a staggered Board of Directors, lucrative employment contracts with management and change in control agreements, requiring a prospective acquirer to agree to any form of standstill is inappropriate and unnecessary. Further, in May, 2001, the BFMA group (a holder of approximately 10.2% of the Company's outstanding shares) initiated a fully financed offer for the Company at $28.25 per share with a stated willingness to increase its offer if additional value was revealed. Instead of aggressively pursuing this offer the Company prolonged negotiations beyond July 30, 2001, the date on which BFMA's financing commitment expired. We observe that the BFMA group paid approximately $2.0 million in commitment fees and other expenses to pursue a transaction with the Company. Notwithstanding BFMA's desire to pursue a transaction, the Company was unwilling to grant the BFMA group, the Company's second largest shareholder, access to "confirmatory" due diligence unless it too executed a confidentiality agreement that contained standstill provisions. If the Committee intends to end the exploratory process this February having not allowed potential acquirers to participate unless they agree to onerous standstill provisions and without assurance from the Company of reasonable access to all information necessary to make a fully informed offer, then we sincerely hope you have in hand a transaction that truly maximizes shareholder value. It appears that the directors have breached their fiduciary duties of care and loyalty by not aggressively pursuing the BFMA group's proposed transaction, and requiring onerous standstill provisions of large shareholders and preserving an ability to withhold reasonable information from prospective bidders. Further, given the reduced operating results, the significant decline in the share price, and no attractive alternative having come to light in the past ten months, we now strongly believe that this Committee and Board have repeatedly demonstrated a failure to act in the best interest of the shareholders. In this new environment of heightened Board accountability, be assured that the process this Board has sanctioned will have to withstand full scrutiny and we will hold the directors and their advisors fully accountable for any and all improper actions. Sincerely, /s/ Donald T. Netter ------------------------- Donald T. Netter Senior Managing Director cc: Ms. Dianne H. Russell Dr. John J. Connolly Senior Vice President President & Chief Executive Officer Comerica Castle Connolly Medical Ltd. 100 Federal Street 42 West 24th Street 28th Floor Second Floor Boston, MA 02110 New York, NY 10010 Mr. Alan A. Teran Director Good Times, Inc. 601 Corporate Circle Golden, CO 80401 EX-99 4 kl06056_ex99-2.txt EXHIBIT 99.2 LETTER Exhibit 99.2 February 20, 2002 Via Federal Express - ------------------- Mr. Lee Cohn Chairman of Special Committee Morton's Restaurant Group, Inc. Big 4 Restaurants 5101 North Scottsdale Road Scottsdale, AZ 85250 Dear Mr. Cohn: We are in receipt of a letter dated February 19, 2002 from counsel to the Special Committee of Morton's ("MRG" or the "Company"). If counsel's letter reflects the Committee's opinion then the Committee entirely misses the point. A company such as MRG, whose share price has declined by nearly 75% over the past ten months, should be seeking all reasonable means to maximize shareholder value. Rather than chilling an apparently foundering process by requiring unnecessary standstill provisions, all interested parties should have access. Just because other potential bidders (who may not own any stock) have executed agreements containing standstill provisions is of no real consequence. The Company's financial advisor, Greenhill & Co., LLC, will advise you that there is abundant precedent of public companies not requiring standstill provisions in publicly announced auctions or waiving such provisions in order to include potential bidders. Further, given the disappointing operating and share price performance, and no value enhancing transaction having been announced in ten months, it would be improper for a large investor/fiduciary to relinquish any of its rights merely to gain access to additional information. In light of the ceiling imposed on share purchases by the shareholder rights plan, what is gained for the company's owners by a standstill? The shareholders are the true owners of the Company and the Company possesses significant defenses (a shareholder rights plan and a staggered Board of Directors) to forestall any offer that is not ultimately in the best interest of all shareholders. By requiring a standstill, the Committee's actions are disproportionate to the potential threat. A new and disturbing revelation contained in your counsel's letter is the notion that this process has only been ongoing for "several months". What was the Committee doing after the BFMA proposal and, if the current process has been ongoing for only "several months", why would Greenhill & Co. state that the process is expected to conclude at the end of this February? By your public comments, the shareholders have been under the impression that this process started with the BFMA proposal in May, 2001. If the Committee did not aggressively pursue the BFMA $28.25 transaction in May, 2001 and continues to arbitrarily (with no definable business purpose in light of a shareholder rights plan and a staggered Board of Directors) require standstill provisions, while at the same time purporting to be seeking to maximize shareholder value, then it's disingenuous to state that the Special Committee was "pursuing a careful, thorough and deliberate process to attempt to maximize value for all shareholders". If the true objective is to maximize shareholder value, then the Committee is not going about it properly and your counsel's letter makes little sense. If you have produced an attractive value-maximizing transaction then your counsel's time would be better spent negotiating a merger agreement rather than seeking to cover the deficiencies of your purported process. However, if you are unable to produce an attractive transaction after ten months and you did not aggressively pursue the $28.25/share BFMA transaction, and you are still requiring standstills from the true owners of the Company then it would seem difficult for a court to conclude that this Board has been serious about this process, but rather more interested in perpetuating itself. If you have a favorable transaction, disclose it; if you don't, then open this process to all interested parties by not requiring standstills. We urgently await, either the outcome of your process or, amended ground rules to expand the universe of potential bidders. Again, in this new environment of heightened awareness of Boards and managements overstepping their bounds, we will remain attentive and aggressively pursue all available redresses. Very Truly Yours, /s/ Donald T. Netter ------------------------ Donald T. Netter Senior Managing Director cc: Ms. Dianne H. Russell Dr. John J. Connolly Senior Vice President President & Chief Executive Officer Comerica Castle Connolly Medical Ltd. 100 Federal Street 42 West 24th Street 28th Floor Second Floor Boston, MA 02110 New York, NY 10010 Mr. Alan A. Teran Gregory V. Varallo, Esquire Director Richards, Layton & Finger Good Times, Inc. One Rodney Square 601 Corporate Circle P.O. Box 551 Golden, CO 80401 Wilmington, DE 19899 EX-99 5 kl06056_ex99-3.txt EXHIBIT 99.3 LETTER Exhibit 99.3 February 27, 2002 Via Federal Express - ------------------- Mr. Lee Cohn Chairman of Special Committee Morton's Restaurant Group, Inc. Big 4 Restaurants 5101 North Scottsdale Road Scottsdale, AZ 85250 Dear Mr. Cohn: Pursuant to my letter of February 20, 2002 (which you have not responded to), if your process has yielded a transaction, given the fact that you have excluded legitimate potential bidders based on requiring standstill provisions, we believe that it would be most inappropriate for the Board to agree to any breakup fee, lockup, or any other agreement that could prove more costly to other potential bidders. We further note that the Company has consistently released its fourth quarter earnings near the end of January and, as such, the release of 2001's fourth quarter results is materially late. The Company has repeatedly moved the release date from "late January" to "early February", to "mid-February", to "the end of February". Logically, the Company has been in possession of the results for some time and there has been a significant amount of adverse trading in the stock during this period. It would be most unfortunate, if the results together with any other released information, when disclosed, are materially inconsistent with the Company's fairly recent prior guidance and disclosures issued on December 10, 2001 and January 7, 2002. Very Truly Yours, /s/ Donald T. Netter ------------------------- Donald T. Netter Senior Managing Director cc: Ms. Dianne H. Russell Dr. John J. Connolly Senior Vice President President & Chief Executive Officer Comerica Castle Connolly Medical Ltd. 100 Federal Street 42 West 24th Street 28th Floor Second Floor Boston, MA 02110 New York, NY 10010 Mr. Alan A. Teran Gregory V. Varallo, Esquire Director Richards, Layton & Finger Good Times, Inc. One Rodney Square 601 Corporate Circle P.O. Box 551 Golden, CO 80401 Wilmington, DE 19899 EX-99 6 kl06056_ex99-4.txt EXHIBIT 99.4 LETTER Exhibit 99.4 March 14, 2002 Via Federal Express - ------------------- Mr. Lee Cohn Chairman of Special Committee Morton's Restaurant Group, Inc. Big 4 Restaurants c/o Triple LC Box 616 7942 West Bell Road C-5 Glendale, AZ 85308 Dear Mr. Cohn: Although we received a response dated February 19th from counsel to the Independent Committee regarding our letter of February 11th, we have received no response regarding our letters of February 20th and 27th. Having reviewed the Company's materially delayed (March 14, 2002) fourth quarter earnings release and 2002 first quarter forecast, not surprisingly, we found several key elements lacking. We note that (i) including 2001 fourth quarter pre-tax non-recurring charges aggregating $1.8 million, the Company reported 2001 fourth quarter net income of $1.7 million ($.41/share), materially inconsistent with the Company's December 10, 2001 guidance of "may report a loss for the fourth quarter and year", (ii) there is no mention of the Company's potential delisting from the NYSE referenced in the Company's disclosure of January 7th, (iii) there is no reference of the "implementation of certain cost reduction programs", discussed in the Company's October 23rd press release, and extremely appropriate in light of continued depressed results, (iv) oddly the Company is forecasting continued difficulty, while many of the Company's comparable competitors are forecasting improved operations and (v) the Company, even after nearly a year, "is continuing the process of exploring its strategic alternatives, including evaluating a potential sale of the Company." Clearly, the Company has been in possession of its 2001 fourth quarter results for some time and, therefore, had a legal obligation to promptly correct the misleading statement issued on December 10, 2001. This behavior is not tolerated by the SEC and will not be tolerated by the Company's shareholders. Failure to update the shareholders on the prospect of a NYSE delisting appears to be a material omission. The failure to even mention cost cutting initiatives with continued forecasted adverse results, suggests continued management neglect. If the Company has recently implemented a significantly less costly health insurance plan for new waiters which represents material savings, this should be disclosed. Given 2001 results and the first quarter 2002 forecast, we logically expect senior management bonuses to be zero and no further incentives to be granted at these share price levels. If key competitors are seeing a return to improved profitability, what's wrong with our Company? If management is unable to put forth any concrete ideas on how to enhance results and continues to seek cover in the terrible events of September 11th when other companies are presently forecasting a return to expanding profits, perhaps it's now appropriate for the Independent Committee to seek changes in senior management. After nearly a year of not having presented any alternative transaction, it's now time to level the playing field and invite all interested bidders into the data room being supervised by the Company's banker, Greenhill Partners, without requiring onerous standstill provisions. Failure to do this makes a mockery of the Company's purported sale process. As we discussed in prior letters, with a shareholder rights plan and staggered Board of Directors, we fail to see the business purpose or benefit to the shareholders by excluding legitimate potential bidders based on standstill provisions. We expanded our prior significant shareholdings. Again, if you have a favorable transaction, disclose it; if you don't, open the process to all interested parties by not requiring standstill provisions. We urgently await, either the outcome of your purported process or, amended ground rules to expand the logical universe of potential bidders. In this new environment of heightened awareness of Boards and managements overstepping boundaries, we will pursue all avenues to ensure that issues of inadequate and faulty disclosure are rectified, poor operating results are addressed and, most importantly, that there is a fair and open process in place to maximize shareholder value. Sincerely, /s/ Donald T. Netter ------------------------- Donald T. Netter Senior Managing Director cc: Ms. Dianne H. Russell Dr. John J. Connolly Senior Vice President President & Chief Executive Officer Comerica Castle Connolly Medical Ltd. 100 Federal Street 42 West 24th Street 28th Floor Second Floor Boston, MA 02110 New York, NY 10010 Mr. Alan A. Teran Gregory V. Varallo, Esquire Director Richards, Layton & Finger Good Times, Inc. One Rodney Square 601 Corporate Circle P.O. Box 551 Golden, CO 80401 Wilmington, DE 19899 Fidelity Management - 18.8% Capital Research - 9.5% Dimensional Fund -4.8% Hanawalt - 2.4% High Rock Asset Management -2.3% EX-99 7 kl06056_ex99-5.txt EXHIBIT 99.5 LETTER Exhibit 99.5 May 24, 2002 VIA FACSIMILE & FEDERAL EXPRESS - ------------------------------- Mr. Lee Cohn Chairman of Special Committee Morton's Restaurant Group, Inc. Big 4 Restaurants c/o Triple LC Box 616 7942 West Bell Road C-5 Glendale, AZ 85308 Dear Mr. Cohn: Our organization has been reflecting on the events of the past year surrounding Morton's, its recent SEC filings, BFMA's May 14, 2002 letter, and the acquisition offer made by the Carl Icahn group on May 21, 2002. We find it surprising that, after Morton's Board of Directors conducted a purported comprehensive search for an acquirer over the past year and was apparently unable to elicit a transaction exceeding Castle Harlan's $12.60 per share in cash, a fully financed offer to acquire Morton's for $13.50 per share in cash has surfaced based solely on publicly available information and from a financial acquirer rather than an industry participant. Considering the recently improved economic climate and demand for restaurant properties as well as the Company's cost cutting initiatives and reduced amount of net debt outlined in its most recent public filings, we strenuously recommend that any newly executed merger agreement permit the Special Committee to proactively retest the market without penalty by conducting a reinvigorated auction. Unlike the prior auction, neither a standstill agreement nor undue burden should be utilized to repel potential acquirers. With significant public scrutiny of and potential legal liability for directors that act improperly, before this situation gets irretrievably out of hand, the Special Committee must aggressively remove any conflicts at the Board and advisory level and initiate an unfettered auction. As a significant shareholder, we are skeptical that a majority of shareholders will support any transaction at the current price level. In the absence of a real auction and/or a transaction which represents fair value for the shareholders, we postulate that it may be more productive to seek to install new directors at the upcoming annual meeting in order to carefully review the historical actions of this Board and management and oversee a new auction. We sincerely hope that the Special Committee seizes this new opportunity to correct prior actions. Very truly yours, /s/ Donald T. Netter ------------------------ Donald T. Netter Senior Managing Director cc: Ms. Dianne H. Russell Dr. John J. Connolly Senior Vice President President & Chief Executive Officer Comerica Castle Connolly Medical Ltd. 100 Federal Street 42 West 24th Street 28th Floor Second Floor Boston, MA 02110 New York, NY 10010 Mr. Alan A. Teran Gregory V. Varallo, Esquire Director Richards, Layton & Finger Good Times, Inc. One Rodney Square 601 Corporate Circle P.O. Box 551 Golden, CO 80401 Wilmington, DE 19899 -----END PRIVACY-ENHANCED MESSAGE-----